Of the Southern District of Indiana, sitting by designation. ^

In the

United States Court of Appeals

For the Seventh Circuit

No. 10-2887

NEWPAGE WISCONSIN SYSTEM INC. and

NPWSI RETIREE HEALTH PLAN,

Plaintiffs-Appellants,

v.

UNITED STEEL, PAPER & FORESTRY,

RUBBER, MANUFACTURING, ENERGY ALLIED

INDUSTRIAL AND SERVICE WORKERS

INTERNATIONAL UNION, AFL–CIO/CLC, et al.,

Defendants-Appellees.

Appeal from the United States District Court

for the Western District of Wisconsin.

No. 10-cv-41-bbc—Barbara B. Crabb, Judge.

ARGUED APRIL 5, 2011—DECIDED JULY 12, 2011

Before EASTERBROOK, Chief Judge, BAUER, Circuit Judge,

and YOUNG, District Judge.

^

EASTERBROOK, Chief Judge. NewPage Wisconsin System

Inc. operates paper mills in Wisconsin. It provides
2 No. 10-2887

health care as a fringe benefit for current and former

workers. Its Retiree Health Plan is governed by a series

of collective bargaining agreements between NewPage

Wisconsin and the United Steel Workers Union. (The

agreements were made by predecessors of both NewPage

Wisconsin and the Union, but we use the current

names for simplicity.) NewPage Wisconsin recently

closed several mills as a cost-saving measure. Seeking

further savings, it eliminated the subsidy for medical

care of retirees who are 65 or older.

Asserting that this change violated both the CBA and

the Retiree Health Plan, the Union filed suit in

December 2009 under §301 of the Labor Management

Relations Act (LMRA), 29 U.S.C. §185, and §502 of the

Employee Retirement Income Security Act (ERISA), 29

U.S.C. §1132. That suit is not the subject of this appeal,

however, because it was filed in the Southern District

of Ohio.

Five weeks after the Union filed its suit in Ohio,

NewPage Wisconsin filed a declaratory-judgment action

in the Western District of Wisconsin. This suit

raises the same substantive issues as the Union’s but

did not last long: the district court dismissed it on the

pleadings. 2010 U.S. Dist. LEXIS 71511 (W.D. Wis. July 16,

2010). The court held that it did not have subjectmatter jurisdiction over the ERISA claim because

§502(a)(3) does not authorize relief when “plan administrators . . . seek declaration of their right to reduce or

deny benefits.” Id. at *22. The court concluded that it had

jurisdiction over the LMRA claim but exercised its dis-
No. 10-2887 3

cretion to dismiss in favor of the Union’s suit in Ohio.

Id. at *28–29. NewPage Wisconsin’s appeal challenges

both aspects of the district court’s decision.

Declaratory judgment actions are authorized, see 28

U.S.C. §2201, as long as there is an actual controversy

between the two parties. MedImmune, Inc. v. Genentech,

Inc., 549 U.S. 118, 127 (2007). Yet §2201 is not a grant of

subject-matter jurisdiction, so the district court properly

looked to the substantive claims to determine whether

it had jurisdiction. Franchise Tax Board v. Construction

Laborers Vacation Trust, 463 U.S. 1 (1983); Ameritech

Benefit Plan Committee v. Communication Workers of

America, 220 F.3d 814, 818 (7th Cir. 2000).

Section 502(a)(3) of ERISA states that a civil action may

be brought “by a participant, beneficiary, or fiduciary . . .

to obtain appropriate equitable relief” or to enforce

any terms of the plan. Although NewPage Wisconsin

is a fiduciary and can therefore request “appropriate

equitable relief” from a district court, relief properly

called “legal” rather than “equitable” is not covered by

§502(a)(3)—and not all equitable relief is “appropriate”

in a given suit. See CIGNA Corp. v. Amara, 131 S. Ct. 1866

(2011); Sereboff v. Mid Atlantic Medical Services, Inc., 547

U.S. 356 (2006); Great-West Life & Annuity Insurance Co. v.

Knudson, 534 U.S. 204 (2002); Mertens v. Hewitt Associates,

508 U.S. 248 (1993).

NewPage Wisconsin wants the district court to

declare that the changes it made to the Retiree Health

Plan are consistent with its legal obligations. Looking

at NewPage Wisconsin’s complaint, we cannot identify
4 No. 10-2887

any request for “appropriate equitable relief” that would

bring its claim within §502(a)(3). The complaint neither

requests equitable relief nor asks the court for help in

enforcing the Plan. See Massey Ferguson Division of

Varity Corp. v. Gurley, 51 F.3d 102, 103 (7th Cir. 1995)

(dictum); Transamerica Occidental Life Insurance Co. v.

DiGregorio, 811 F.2d 1249 (9th Cir. 1987).

The district judge assumed that, if a complaint does not

seek relief authorized by §502(a)(3), there cannot be

subject-matter jurisdiction. Yet jurisdiction depends on

a claim arising under federal law, not on whether a particular remedy is available or whether a claim is sound

on the merits. See Bell v. Hood, 327 U.S. 678 (1946).

Section 502(a) concerns remedies, not jurisdiction. We

know from Grable & Sons Metal Products, Inc. v. Darue

Engineering & Manufacturing, 545 U.S. 308, 316–20 (2005),

that statutory authority to supply a remedy is a sufficient but not a necessary component of federal jurisdiction. Although §502(a)(3) does not authorize equitable

relief for an employer, there remains §2201, which authorizes declaratory judgments.

The jurisdictional counterpart to §502(a) is §502(e),

which says that district courts have jurisdiction of

actions “under this subchapter”. NewPage Wisconsin

made a claim for a declaratory judgment “under this

subchapter”—that is, under ERISA. Whether a claim is

good differs from the question whether a district court

possesses jurisdiction, a matter of adjudicatory competence. See, e.g., Morrison v. National Australia Bank Ltd., 130

S. Ct. 2869, 2876–77 (2010). A federal district court is
No. 10-2887 5

the right forum for a dispute about the meaning of

ERISA and the validity of changes to a welfarebenefit plan.

The district judge may have been thrown off by

the fact that declaratory-judgment suits often are

defensive in nature, as this one is. To decide whether

a declaratory-judgment action comes within federal

jurisdiction, a court must dig below the surface of the

complaint and look at the underlying controversy. If a

well-pleaded complaint by the defendant (the “natural”

plaintiff) would have arisen under federal law, then

the court has jurisdiction when the “natural” defendant

brings a declaratory-judgment suit. See Public Service

Commission v. Wycoff Co., 344 U.S. 237, 248 (1952);

DeBartolo v. HealthSouth Corp., 569 F.3d 736 (7th Cir.

2009); Wisconsin v. Ho-Chunk Nation, 512 F.3d 921 (7th Cir.

2008).

The Union has made the court’s work easy by

describing the controversy in its Ohio complaint (where

it was the plaintiff):

Defendants’ repudiation of the terms of the Plan is

actionable under ERISA §502(a)(1)(B) and (a)(3). . . .

These ERISA provisions allow a participant or

beneficiary to bring a civil action “to recover

benefits due to him under the terms of his plan,

to enforce his rights under the terms of the plan,

or to clarify his rights to future benefits under

the terms of the plan, . . .”.

The Union asked the court to “permanently enjoin Defendants from terminating or modifying retiree health in-
6 No. 10-2887

surance coverage provided to Class Members under

the collectively-bargained agreements.” The Union’s

request that the district court prevent NewPage Wisconsin from altering the Plan arises under §502(a)(3) as

well as §502(a)(1). Because the Union’s suit thus came

within the grant of jurisdiction in §502(e), this mirrorimage suit by the Plan’s sponsor also is within federal subject-matter jurisdiction.

Suppose this is wrong. A court still must inquire

whether another statute supplies jurisdiction. See Brill

v. Countrywide Home Loans, Inc., 427 F.3d 446 (7th Cir.

2005). Under 28 U.S.C. §1331, “district courts shall have

original jurisdiction of all civil actions arising under the

Constitution, laws, or treaties of the United States”.

The Supreme Court has held that ERISA claims are

“necessarily federal in character by virtue of the clearly

manifested intent of Congress.” Metropolitan Life

Insurance v. Taylor, 481 U.S. 58, 67 (1987). See also Bartholet

v. Reishauer A.G. (Zürich), 953 F.2d 1073 (7th Cir. 1992);

Winstead v. J.C. Penney Co., 933 F.2d 576, 580 (7th Cir.

1991) (noting that §1331 would provide subject-matter

jurisdiction even if §502(e) did not). Nothing in §502

supersedes or abrogates §1331, and the Supreme Court

has suggested that §1331 provides subject-matter jurisdiction independently of §502(e). See Peacock v. Thomas,

516 U.S. 349, 354 (1996). State law regulating pension

and welfare-benefit plans has been displaced, see, e.g.,

Aetna Health Inc. v. Davila, 542 U.S. 200 (2004), so the

claim in this litigation must arise under federal law.

Jurisdiction is appropriate under both §502(e) and §1331.
No. 10-2887 7

The district court found that it had jurisdiction to

consider the LMRA claim. 2010 U.S. Dist. LEXIS 71511 at

*17. Yet §185(a) of the LMRA authorizes suit only for

“violations of contracts between an employer and a

labor organization representing employees”, and

NewPage Wisconsin’s complaint did not allege that the

Union had violated the CBA. How could the district

court have subject-matter jurisdiction over the LMRA

claim but not the ERISA claim? It must have jurisdiction over both, or neither; we think that “both” is

right given the mirror-image approach to deciding

whether a declaratory action arises under federal law.

The reason why the district court distinguished the

ERISA claim from the LMRA claim is language in

Newell Operating Co. v. United Auto Workers, 532 F.3d 583

(7th Cir. 2008). The situation of Newell was materially

identical to this case: an employer changed the terms of

its welfare plan and then sued the participants seeking

declaratory relief under both ERISA and the LMRA.

The district court there believed it had jurisdiction over

the LMRA claim but lacked jurisdiction to hear the

ERISA claim. In affirming that decision, we said:

[A] complaint cannot invoke ERISA §502(a)(3)

jurisdiction by the mere assertion, without more,

that ERISA will be violated. If the Committee

administers the Plan as written, it will enforce

the terms of the Plan and vindicate its fiduciary

duties under ERISA—the retirees’ dissatisfaction

notwithstanding.

532 F.3d at 589. We did not mention the mirrorimage approach to determining whether a declaratory-
8 No. 10-2887

judgment action arises under federal law or inquire

what the natural plaintiffs might have alleged had

they filed a complaint.

Newell’s incomplete analysis was a consequence of a

deficient presentation by the litigants. The briefs in

Newell focused on whether the fiduciary’s complaint

asked for “appropriate equitable relief”; the parties assumed that a negative answer would imply the absence

of jurisdiction. We have explained why this is not

the right perspective. Now that the subject has been

explored more fully, we conclude that Newell—

which no other circuit has followed—cannot be treated

as authoritative on the question of subject-matter jurisdiction in declaratory-judgment actions about plans

covered by ERISA.

Overruling a precedent is not a step we take lightly.

We are mindful of the potential for “disruption,

confusion, and uncertainty” that can result. John R. Sand

& Gravel Co. v. United States, 552 U.S. 130, 139 (2008).

See also Buchmeier v. United States, 581 F.3d 561, 565–66

(7th Cir. 2009) (en banc). Nevertheless a correction is

required, because this circuit stands alone. Newell

departed from our own precedent about the mirrorimage rule in declaratory-judgment actions, which the

parties’ briefs in Newell regrettably neglected. See, e.g.,

County Materials Corp. v. Allan Block Corp., 502 F.3d 730,

734 (7th Cir. 2007); Northeast Illinois Regional Commuter

R.R. v. Hoey Farina & Downes, 212 F.3d 1010, 1014 (7th

Cir. 2000); GNB Battery Technologies, Inc. v. Gould, Inc.,

65 F.3d 615, 619 (7th Cir. 1995). See also Samuel C. Johnson
No. 10-2887 9

1988 Trust v. Bayfield County, No. 09-2876 (7th Cir. June 17,

2011) (reiterating the mirror-image approach).

Last year part of Newell was overruled by Envision

Healthcare, Inc. v. PreferredOne Insurance Co., 604 F.3d

983, 985–86 & n.1 (7th Cir. 2010) (appellate review of a

decision to dismiss a declaratory-judgment action in

favor of a suit pending elsewhere is deferential rather

than plenary, as Newell and some predecessors had

held). We now overrule the remainder of Newell. This

opinion has been circulated to all active judges under

Circuit Rule 40(e). None requested a hearing en banc.

The second question presented by this appeal is

whether the district court abused its discretion by

deciding that the Ohio litigation is the appropriate

forum for resolution of the parties’ controversy. Appellate review is deferential, as we held in Envision

Healthcare. Events have overtaken this aspect of the

district court’s decision.

NewPage Wisconsin’s suit in Wisconsin and the

Union’s suit in Ohio raise the same substantive issues—

did NewPage Wisconsin violate either the LMRA or

ERISA when it amended the Plan?—yet the parties differ:

the Union’s suit in Ohio named NewPage Corporation as

the defendant, while NewPage Wisconsin filed the action

in Wisconsin. NewPage Corporation is the parent of

NewPage Consolidated Papers Inc., which is the parent

of NewPage Wisconsin. The Union did not argue in

Ohio, and has not argued here, that members of this

holding-company structure have failed to respect

corporate formalities or that there is any other reason
10 No. 10-2887

why NewPage Corporation, as an indirect investor in

NewPage Wisconsin, should be liable under either

ERISA or the LMRA. See United States v. Bestfoods, 524

U.S. 51 (1998). When the Union realized that it had

sued the wrong entity, it moved to amend its complaint

to join NewPage Wisconsin. But the district court

rejected that amendment as futile because the court

lacks personal jurisdiction over NewPage Wisconsin. It

found that NewPage Wisconsin is outside the reach

of Ohio’s long-arm statute. Clendenning v. NewPage Corp.,

2010 U.S. Dist. LEXIS 112897 at *38–40 (S.D. Ohio

Oct. 12, 2010). The court added that NewPage Corporation is neither a signatory of the CBA nor a fiduciary of

the ERISA plan. It therefore dismissed the Union’s suit.

When dismissing the Wisconsin litigation, the district

judge assumed that the parties’ controversy would soon

be resolved elsewhere. That assumption is no longer

warranted. Even if the Sixth Circuit should reinstate

the Ohio suit, the Wisconsin action would remain

farther advanced. (The appeal in the Sixth Circuit will

not be argued until this fall.) Because the Wisconsin

district court has subject-matter jurisdiction over

all issues, and personal jurisdiction over all of the contestants, the declaratory-judgment suit now seems a

more attractive means of handling the controversy than

it did while the Ohio litigation was ongoing. On

remand, the district court should employ “considerations of practicality and wise judicial administration”

(Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995)) to

decide whether to address the merits, or again wait

for developments in Ohio.
No. 10-2887 11

The judgment is vacated, and the case is remanded

for proceedings consistent with this opinion.

7-12-11