In the

United States Court of Appeals

For the Seventh Circuit

____________

Nos. 04-1071 & 04-1096

JAMES A. BAKER, RAYMOND WOLFE and

WILLIAM PATE, on behalf of themselves 

and all others similarly situated,

Plaintiffs-Appellants, Cross-Appellees,

v.

ALFRED D. KINGSLEY, DAVID D. JONES, JR.,

ROBERT L. FIX, et al.,

Defendants-Appellees, Cross-Appellants.

____________

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 03 C 1750—Robert W. Gettleman, Judge.

____________

ARGUED SEPTEMBER 15, 2004—DECIDED OCTOBER 27, 2004

____________

Before FLAUM, Chief Judge, and COFFEY and KANNE,

Circuit Judges.

FLAUM, Chief Judge. Plaintiffs-appellants, individually

and on behalf of all others similarly situated, initiated this

suit in Illinois state court alleging that defendants-appellees

violated the Illinois Wage Payment and Collection Act

(“Illinois Wage Act”), 820 ILCS § 115/5. Defendants removed
2 Nos. 04-1071 & 04-1096

the case to the United States District Court for the Northern

District of Illinois, citing as the basis for the court’s jurisdiction the complete preemption of plaintiffs’ claim by § 301

of the Labor Management Relations Act (“LMRA”), 29

U.S.C. § 185. Thereafter, plaintiffs amended their complaint, adding a claim for breach of fiduciary duty in violation

of the Employee Retirement Income Security Act (“ERISA”),

29 U.S.C. §§ 1022 and 1104. The district court then granted

defendants’ motion to dismiss plaintiffs’ ERISA claim, held

that the Illinois Wage Act claim was not preempted by the

LMRA, and remanded the case to state court. Plaintiffs now

appeal the dismissal of the ERISA claim and defendants

cross-appeal the remand order. For the reasons stated herein, we reverse and remand for further proceedings consistent with this opinion.

I. Background

Plaintiffs-appellants were employees of Outboard Marine

Corporation (“OMC”) in its Waukegan, Illinois, manufacturing and production facility. According to their second amended

complaint, on or about September 11, 1997, defendant

Greenmarine Holdings, LLC completed a takeover of OMC

and installed the individually named defendants as directors.

In September 1999, defendants anticipated having to close

OMC’s Waukegan plant over a two-year period as part of

the takeover. Because the then-existing collective bargaining agreement with the International Marine and Machinists

Association (“IMMA”) was set to expire in October 1999,

defendants negotiated an extension of the agreement

(“Shutdown Agreement”) by promising to pay IMMA members, including the named plaintiffs, certain severance and

retention wage supplements if they worked to the end of the

Shutdown Agreement, or until the actual shutdown of the

Waukegan plant. 
Nos. 04-1071 & 04-1096 3

The Waukegan plant closed on December 21, 2000, and

OMC filed for bankruptcy the following day. In the aftermath, OMC terminated its employee health plan and failed

to pay the wage supplements provided for in the Shutdown

Agreement.

Plaintiffs’ first claim alleges that defendants’ failure to

pay the Shutdown Agreement’s wage supplements violated

the Illinois Wage Act. In their second claim, plaintiffs allege

that defendants violated their fiduciary duty under ERISA

by failing to notify plaintiffs of the likely termination of the

OMC Health Plan and by failing to fund the plan. This

appeal follows the district court’s order dismissing the

ERISA claim and remanding the Illinois Wage Act claim.

II. Discussion

A. Appellate Jurisdiction

We first must decide whether we have appellate jurisdiction over the parties’ cross-appeals. The only challenge to

our jurisdiction comes from plaintiffs-appellants who assert

that 28 U.S.C. § 1447(d) precludes the exercise of appellate

jurisdiction over defendants’ cross-appeal of the remand of

the Illinois Wage Act claim. Nevertheless, we have an independent duty to determine that jurisdiction exists before we

can proceed to the merits of either appeal. See ITOFCA, Inc.

v. MegaTrans Logistics, Inc., 235 F.3d 360, 363 (7th Cir.

2000).

Our general appellate jurisdiction derives from 28 U.S.C.

§ 1291, which provides in relevant part: “The courts of appeals . . . shall have jurisdiction of appeals from all final

decisions of the district courts of the United States.” “Whether

a decision is final for purposes of § 1291 generally depends

on whether the decision by the district court ‘ends the

litigation on the merits and leaves nothing for the court to
4 Nos. 04-1071 & 04-1096

do but execute the judgment.’ ” ITOFCA, 235 F.3d at 363

(quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 467

(1978)).

The “final decision” requirement of § 1291 restricts piecemeal appeals. See id. Ordinarily, a party is precluded from

appealing a district court’s order resolving some but not all

of the claims in a case. See United States v. Ettrick Wood

Prods., Inc., 916 F.2d 1211, 1217 (7th Cir. 1990). Where,

however, a district court has resolved all federal claims and

has remanded the remaining claims to state court, we have

appellate jurisdiction to review the federal claims, the district

court having nothing of the matter left on its docket. See, e.g.,

Hileman v. Maze, 367 F.3d 694, 696 (7th Cir. 2004) (reviewing dismissal of federal claims where district court declined

to retain jurisdiction over state-law claims); McCullah v.

Gadert, 344 F.3d 655, 656 (7th Cir. 2003) (same). The district

court’s order dismissed plaintiffs’ ERISA claim and remanded the Illinois Wage Act claim, leaving it with nothing

to do but enter judgment on the former. Accordingly, the

dismissal of the ERISA claim is an appealable “final decision.” 

A remand order that marks the end of litigation in federal

court, like the order issued in this case, is also a “final

decision.” See Kircher v. Putnam Funds Trust, 373 F.3d 847,

848 (7th Cir. 2004) (citing Quackenbush v. Allstate Ins. Co.,

517 U.S. 706, 711-15 (1996)). There is, however, an additional

obstacle to appellate jurisdiction over remand orders. The

general grant of appellate jurisdiction in 28 U.S.C. § 1291

is limited by § 1447(d), which states in relevant part: “An

order remanding a case to the State court from which it was

removed is not reviewable on appeal or otherwise.” Apart

from a specific exception for civil rights cases, the language

of § 1447(d) is unqualified and would seem to suggest that

the courts of appeals lack jurisdiction over all remand

orders. As we have explained before, however, the Supreme

Court has read § 1447, the statute governing removals and
Nos. 04-1071 & 04-1096 5

remands, as a whole and has interpreted the limitation on

appellate jurisdiction in subsection (d) in relation to the

reasons for remand set forth in subsection (c). See Adkins v.

Ill. Cent. R.R. Co., 326 F.3d 828, 831 (7th Cir. 2003)

(discussing Thermtron Prods., Inc. v. Hermansdorfer, 423

U.S. 336 (1976), abrogated on different ground by

Quackenbush, 517 U.S. 706); Kircher, 373 F.3d at 848-49

(same). 

In its first case dealing with the issue, the Supreme Court

held that “only remand orders issued under § 1447(c) and

invoking the grounds specified therein that removal was

improvident and without jurisdiction are immune from

review under § 1447(d).” Thermtron, 423 U.S. at 346. The

Court phrased its statement of the rule in this way to

reflect the language of § 1447(c), which permitted remand

“[i]f at any time before final judgment it appears that the

case was removed improvidently and without jurisdiction.”

In 1988, Congress amended § 1447(c) to permit remand

when “it appears that the district court lacks subject matter

jurisdiction” or when a defect in removal procedure is raised

in a motion to remand within 30 days of removal. See

Judicial Improvements and Access to Justice Act, Pub. L.

No. 100-702, Title X, § 1016(c), 102 Stat. 4642 (Nov. 19,

1988). Accordingly, the Supreme Court’s next statement of

the scope of § 1447(d) reflected the language of the amended

statute: “As long as a district court’s remand is based on a

timely raised defect in removal procedure or on lack of subject-matter jurisdiction—the grounds for remand recognized

by § 1447(c)—a court of appeals lacks jurisdiction to entertain an appeal of the remand order under § 1447(d).” Things

Remembered, Inc. v. Petrarca, 516 U.S. 124, 127-28 (1995).

In an important case revealing the limits of the Thermtron

rule, the Supreme Court addressed a split among the circuits

as to “whether a district court has discretion to remand a

removed case to state court when all federal-law claims

have dropped out of the action and only pendent state-law
6 Nos. 04-1071 & 04-1096

1 Carnegie-Mellon was decided before the passage in 1990 of 28

U.S.C. § 1367, which expressly authorized district courts to decline to exercise supplemental jurisdiction over a state-law claim

if all claims within the court’s original jurisdiction had been

dismissed. See Judicial Improvements Act of 1990, Pub. L. 101-650,

Title III, § 310, 104 Stat. 5089 (Dec. 1, 1990).

claims remain.” Carnegie-Mellon Univ. v. Cohill, 484 U.S.

343, 348 (1988).1

 Though the question came to the Court on

appeal from a remand order, the Court reached the merits

of the appeal without doubting the circuit court’s, or its own,

appellate jurisdiction. See id. at 345-57; see also Rothner v.

City of Chicago, 879 F.2d 1402, 1409 (7th Cir. 1989) (noting

that the majority and dissent in Carnegie-Mellon agreed

that the remand order was reviewable).

In accordance with this case law, our appellate review is

barred by § 1447(d) only as to “remands based on grounds

specified in § 1447(c).” Things Remembered, 516 U.S. at 127,

quoted in Benson v. Si Handling Sys., Inc., 188 F.3d 780,

782 (7th Cir. 1999). Stated obversely, if a district court’s remand is based on a ground other than a timely raised defect

in removal procedure or lack of subject-matter jurisdiction—i.e., the discretionary exercise of the power to decline supplemental jurisdiction pursuant to § 1367—then

§1447(d) does not affect our § 1291 appellate jurisdiction.

We recently applied this rule in Adkins v. Illinois Central

Railroad Company, 326 F.3d 828 (7th Cir. 2003). There, the

plaintiffs filed suit in state court alleging several state-law

claims against non-diverse defendants. One of the defendants removed the case, arguing that the state-law claims

were completely preempted by the federal Locomotive

Inspection Act. Later, one of the defendants filed a thirdparty complaint against Amtrak, a federal instrumentality.

The district court initially accepted the “complete preemption”

argument and concluded that removal was proper, based on
Nos. 04-1071 & 04-1096 7

the presence of a federal question (and, implicitly, supplemental jurisdiction over the remaining claims). The court then

dismissed on preemption grounds all claims that the plaintiffs

had asserted against the removing defendant. Finally, finding

that none of the other defendants was arguing that complete

preemption created federal question jurisdiction, the court

concluded that the case must be remanded to state court for

lack of jurisdiction. See Adkins, 326 F.3d at 830.

We recognized in Adkins that the district court’s remand

order was not entirely clear with respect to its own jurisdiction and was subject to at least two interpretations. The

order could be regarded as based on the district court’s conclusion that it never had jurisdiction over the remaining

claims because there was no federal question. Though we

noted that the district court may have made a mistake in

not recognizing its supplemental jurisdiction under § 1367,

we concluded that such a mistake “does not defeat the bar

found in § 1447(d).” Id. at 833. Similarly, the fact that the

“district court did not think that Amtrak saved its jurisdiction,” even if this belief was erroneous, rendered the order

unreviewable. Id. at 834 (emphasis in original).

We went on to find in Adkins that the district court’s order was subject to an alternative reading, namely, that it

believed that it continued to have jurisdiction over the case,

but that remand was appropriate for some other reason,

such as a discretionary exercise of the power to decline supplemental jurisdiction. We explained that if this latter

reading was correct, “then our appellate jurisdiction would

be secure and we would have to consider the merits of the

district court’s decision.” Adkins, 326 F.3d at 834. Based on

this alternative interpretation of the district court’s order, we

considered the merits of the remand and concluded that the

Locomotive Inspection Act did not completely preempt the

plaintiffs’ state-law claims. Id. at 835.

Section 1447(d), as construed in the decisions of the

Supreme Court and this Circuit, is not a bar to appellate
8 Nos. 04-1071 & 04-1096

review of the district court’s remand order in this case. As

in Adkins, the order is not entirely clear as to jurisdiction.

It might be read as based on a determination by the court

that, after dismissal of the ERISA claim, no basis remained

for jurisdiction over the Illinois Wage Act claim. Alternatively, the order can be read to reflect the court’s belief that

it had jurisdiction over the case after dismissing the ERISA

claim, but that the remand was appropriate as a discretionary exercise of its power to decline supplemental jurisdiction. Appellate review is unavailable under the first reading,

but is permitted under the second. 

In its order, the district court dismissed plaintiffs’ ERISA

claim, held that the Illinois Wage Act claim was not preempted by the LMRA, and then stated, “the court notes that

there remains no basis for exercising federal jurisdiction over

the instant dispute, which consists solely of plaintiff[s’] Wage

Act claim.” Though this tends to support the first interpretation, a thorough examination of the order as a whole persuades us that the second interpretation is correct.

First, the district court stated that it had decided to remand

“[r]ather than reach the merits of defendants’ remaining

arguments [for dismissal].” This phrasing suggests a recognition that retaining supplemental jurisdiction was an

available option. Second, the court stated that it “need not

reach the merits of defendants’ other arguments in support

of dismissal” of the Illinois Wage Act claim. The use of “need

not,” rather than “may not” or “cannot,” again suggests that

the court was aware of its discretion under § 1367. Finally,

the court, having decided to remand, went on to quash service as to defendant Katz. In doing so, it must have intended

to exercise supplemental jurisdiction. If the district court

believed that its finding of no preemption divested it of

jurisdiction over the claim, it would have gone no further

than remanding the case as to defendant Katz as well. Having determined that there is no statutory basis for its subject

matter jurisdiction, a district court, which is a court of
Nos. 04-1071 & 04-1096 9

limited jurisdiction, should proceed no further than determining whether to dismiss or transfer the case. Cf. Sheldon

v. Sill, 49 U.S. (8 How.) 441, 449 (1850) (“Courts created by

statute can have no jurisdiction but such as the statute

confers.”).

We conclude that the district court, having dismissed the

ERISA claim, believed that it retained supplemental jurisdiction over the state-law claim and exercised its discretion

to remand it. Our appellate jurisdiction to review this order

is firmly established. See Carnegie-Mellon, 484 U.S. at 345-

57; Adkins, 326 F.3d at 834; see also Kircher, 373 F.3d at

850 (“District courts should relinquish supplemental

jurisdiction under certain circumstances, remanding to state

court if the suit originated there. 28 U.S.C. §§ 1367(c), 1441(c).

We know from Carnegie-Mellon that § 1447(d) does not

foreclose review of such a remand.”).

At oral argument, plaintiffs ultimately conceded that the

district court had supplemental jurisdiction over the Illinois

Wage Act claim, noting simply that the district court had

“decline[d] to take it.” Plaintiffs argued, however, that our

appellate jurisdiction extends only to review of the district

court’s decision to decline supplemental jurisdiction, but not

to its preemption determination. We disagree. Review of the

district court’s exercise of discretion in declining supplemental jurisdiction necessarily entails review of its decision on

preemption. 

Section 1367(a) provides: “[I]n any civil action of which

the district courts have original jurisdiction, the district

courts shall have supplemental jurisdiction over all other

claims that are so related to claims in the action within

such original jurisdiction that they form part of the same

case or controversy under Article III of the United States

Constitution.” Section 1367(c)(3) grants district courts authority to decline to exercise supplemental jurisdiction and

remand a case “if . . . the district court has dismissed all
10 Nos. 04-1071 & 04-1096

claims over which it has original jurisdiction.” Accordingly,

the authority to remand pursuant to § 1367 extends only to

claims that are not within the district court’s original

jurisdiction. See Adkins, 326 F.3d at 847-48 (Ripple, J.,

dissenting); Borough of West Mifflin v. Lancaster, 45 F.3d

780, 787 (3rd Cir. 1995) (“nothing in § 1367(c) authorizes a

district court to decline to entertain a claim over which is

has original jurisdiction”); Gaming Corp. of Am. v. Dorsey &

Whitney, 88 F.3d 536, 542 (8th Cir. 1996) (“A district court

has no discretion to remand a claim that states a federal

question.”); In re City of Mobile, 75 F.3d 605, 607 (11th Cir.

1996) (“Section 1367(c) cannot be fairly read as bestowing

on district courts the discretion to remand to a state court

a case that includes a properly removed federal claim.”). It

is an abuse of discretion for a district court to remand a

federal claim that is properly before it.

Even if our appellate jurisdiction extends only to review

of the district court’s decision to decline supplemental jurisdiction, which we do not here hold, we must review the

district court’s preemption decision to determine whether it

had original jurisdiction over the Illinois Wage Act claim. If

the claim is preempted by § 301 of the LMRA, then it was

within the district court’s original jurisdiction and to

remand it was an abuse of discretion. Thus, whether or not

our appellate jurisdiction is limited as plaintiffs suggest, we

must complete the preemption analysis to determine

whether it was within the district court’s power to remand.

B. Illinois Wage Act Claim

Having established that we have appellate jurisdiction

over the district court’s remand order, we review de novo its

determination that plaintiffs’ Illinois Wage Act claim is not

preempted by § 301 of the LMRA. See Tifft v. Commonwealth

Edison Co., 366 F.3d 513, 516 (7th Cir. 2004) (citing Bastien

v. AT&T Wireless Servs., Inc., 205 F.3d 983, 987 (7th Cir.

2000)).
Nos. 04-1071 & 04-1096 11

Section 301 provides: “Suits for violation of contracts between an employer and a labor organization representing

employees . . . may be brought in any district court of the

United States having jurisdiction of the parties.” 29 U.S.C.

§ 185(a). The Supreme Court has construed the preemptive

force of § 301 to be “so powerful as to displace entirely any

state cause of action for violation of contracts between an

employer and a labor organization.” Franchise Tax Bd. of

Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1,

23 (1983) (internal quotations omitted), quoted in Beneficial

Nat’l Bank v. Anderson, 539 U.S. 1, 7 (2003). “Any such suit

is purely a creature of federal law, notwithstanding the fact

that state law would provide a cause of action in the

absence of § 301.” Id. 

Even where a plaintiff relies on state law in a complaint

and makes no mention of § 301, the federal statute will

displace the state-law claim to ensure uniform interpretation

of collective bargaining agreements. See Atchley v. Heritage

Cable Vision Assocs., 101 F.3d 495, 498 (7th Cir. 1996). The

Supreme Court has cautioned, however, that “not every

dispute concerning employment, or tangentially involving

a provision of a collective-bargaining agreement, is pre-empted

by § 301 or other provisions of the federal labor law.” AllisChalmers Corp. v. Lueck, 471 U.S. 202, 211 (1985), quoted

in In re Bentz Metal Prods. Co., Inc., 253 F.3d 283, 286 (7th

Cir. 2001) (en banc). To determine whether a state-law claim

is preempted, we must look at the “legal character” of the

claim: a “question of state law, entirely independent of any

understanding embodied in the collective bargaining agreement,” may go forward as a state-law claim, Livadas v.

Bradshaw, 512 U.S. 107, 124-25 (1994); whereas a claim,

the resolution of which “is sufficiently dependent on an interpretation of the CBA,” will be preempted. Bentz Metal,

253 F.3d at 286. If a state-law claim requires reference to,

but not interpretation of, a collective bargaining agreement,

the claim is not preempted. Id. at 285.
12 Nos. 04-1071 & 04-1096

Defendants argue that plaintiffs’ Illinois Wage Act claim

is preempted by § 301 of the LMRA. The Wage Act provides:

“Every employer shall pay the final compensation of separated employees in full, at the time of separation, if possible,

but in no case later than the next regularly scheduled

payday for such employee.” 820 ILCS § 115/5. Plaintiffs’

complaint alleges that defendants violated the Act by failing

to pay IMMA members the Shutdown Agreement’s wage

supplements following closure of the Waukegan plant.

In Metalcrafters v. McNeil, 784 F.2d 817 (7th Cir. 1986),

we considered whether a similar claim under the Illinois

Wage Act was preempted by § 301 of the LMRA. There, the

union alleged that the employer had violated the Illinois

Wage Act by failing to pay vacation benefits and argued

that the claim merely required application of an unequivocal

term in the collective bargaining agreement. The collective

bargaining agreement, however, did not explicitly provide

for the vesting of the vacation benefits under the circumstances of the case.

We reasoned that deciding whether an employer has

honored its contract and complied with the Act, “requires

interpreting the contract, unless, perhaps, the particular

contractual provision is so clear as to preclude all possible

dispute over its meaning.” McNeil, 784 F.2d at 824. Because

the employees’ entitlement to the vacation benefits was

“fairly debatable,” we held that the claim required interpretation of the collective bargaining agreement and, therefore,

was preempted by § 301 of the LMRA. See id. at 824-25

(quoting Allis-Chalmers, 471 U.S. at 219 n.13).

After McNeil, the Supreme Court considered a claim under

a California law similar to the Illinois Wage Act. See Livadas,

512 U.S. 107. In Livadas, a supermarket employee, who had

been working under a collective bargaining agreement,

demanded immediate payment of earned wages upon her

discharge, as required by the California law. The store
Nos. 04-1071 & 04-1096 13

manager refused, referring to a company policy of mailing

payments from a central payroll office. Though the employee

received a check for the correct amount three days later, she

alleged that her employer was liable for a statutory penalty

of a sum equal to three days’ wages for the delay between

her discharge and the date the payment was received.

Livadas, 512 U.S. at 110-11.

The Supreme Court determined that, because there was

no dispute between the parties as to the amount of three

days’ wages, or therefore the amount of the statutory penalty, there was no need to interpret the collective bargaining agreement. According to the Court, the claim primarily

required reference to a calendar, and thus it found the collective bargaining agreement to be “irrelevant” to the dispute

apart from “the simple need to refer to bargained-for wage

rates in computing the penalty.” Livadas, 512 U.S. at 125.

The Court held that the claim was not preempted.

Though Livadas cautioned against finding preemption

where reference to the collective bargaining agreement is

needed only for computation of damages, it did not undermine our analysis in McNeil or the rule that § 301 provides

the exclusive cause of action for contract disputes under collective bargaining agreements. The holding of Livadas applies

only “when the meaning of contract terms is not the subject

of dispute.” Livadas, 512 U.S. at 124; see also Atchley, 101

F.3d at 500 (finding preemption of a claim brought under an

Indiana wage payment law which required interpretation

of the collective bargaining agreement to determine

whether, and on what date, the employer had an obligation

to pay wage increases and bonuses).

Under McNeil and Livadas, we hold that the LMRA preempts plaintiffs’ Illinois Wage Act claim. Sections 18(a) and

19(a) of the Shutdown Agreement require that the retention

and severance wage supplements be paid to “Waukegan

Plant Bargaining Unit employees covered by this Agreement
14 Nos. 04-1071 & 04-1096

whose employment with the Company is terminated or who

are permanently laid off, pursuant to Section 8(I)(b) of this

Agreement.” Defendants argue that eligibility for wage

supplements under the Shutdown Agreement, and thus

liability under the Illinois Wage Act, turns on whether

plaintiffs were terminated or permanently laid off “pursuant to Section 8(I)(b).” Section 8(I)(b) refers to employees

who are laid off or terminated “due to the transfer or

relocation of work . . . to other OMC facilities, subcontracting of work to outside companies . . . , subcontracting of

work to subcontractors to perform bargaining unit work

within the plant . . . , and/or the consolidation or discontinuance of operations.”

Sections 18(a) and 19(a), by their explicit reference to

§ 8(I)(b), necessarily exclude employees terminated or permanently laid off pursuant to § 8(I)(c), according to defendants’

argument. The latter subsection refers to layoffs and terminations “due to the sale of all or substantially all of the

assets of the Waukegan Plant.” Defendants argue that the

sale of assets in a bankruptcy proceeding could be interpreted to fall within § 8(I)(c) rather than § 8(I)(b) and that,

therefore, the Shutdown Agreement excludes from entitlement to the wage supplements employees terminated due to

bankruptcy. This interpretation of the Shutdown Agreement

may or may not be correct, an issue on which we do not

comment, but it is at least tenable. To determine plaintiffs’

entitlement to the wage supplements, a court would have to

interpret, not merely reference, these provisions of the

Shutdown Agreement. Accordingly, the claim is preempted

by § 301 of the LMRA.

Plaintiffs raise three arguments in response to defendants’

proposed interpretation of the Shutdown Agreement. First,

to show that liability for the wage supplements is uncontested, plaintiffs point to OMC’s failure to contest its liability

before the bankruptcy court. Even if this could be deemed

an admission or a waiver by OMC, defendants are not

bound by the litigation choices of a distinct entity.
Nos. 04-1071 & 04-1096 15

2 Defendants urge us to rule on the merits of the § 301 claim, but,

because the district court has not had an opportunity to address

the arguments for dismissal, we decline to do so at this time.

Second, plaintiffs assert that defendants’ interpretation

of the Shutdown Agreement is “spurious” because “[l]ayoffs

are layoffs.” Plaintiffs’ counter-position, however, merely

lends support to the conclusion that contractual interpretation is required. Because defendants’ interpretation is

plausible, and demonstrates a genuine dispute between the

parties that can affect liability, it is a sufficient basis for

preemption.

Finally, plaintiffs argue that defendants’ failure to present this interpretation of the Shutdown Agreement to the

district court results in forfeiture of the argument. Though

the district court did not address this issue of contract

interpretation in its order, defendants’ motion and reply

briefs filed with the district court both referred to the need

for interpretation of §§ 18 and 19 of the Shutdown Agreement

and the reply explicitly argued that the district court would

need to determine “whether and how, if at all, the sale of

assets in bankruptcy affects the calculation of severance

payments under applicable sections of the Shutdown CBA.

(See id. §§ 8(I)(b)-(c), 19 and 20(a)).” This was sufficient to

preserve the issue.

The resolution of plaintiffs’ Illinois Wage Act claim requires

interpretation of the Shutdown Agreement. Accordingly, the

claim, even though presented under state law, is a § 301

claim under the LMRA. In light of the complete preemptive

power of § 301, the claim arises under federal law and

remand was improper. See Tifft, 366 F.3d at 516 (citing 28

U.S.C. §§ 1331, 1441(a)). Upon remand from this Court, the

district court shall consider defendants’ arguments in favor

of dismissal of the § 301 claim.2
16 Nos. 04-1071 & 04-1096

C. ERISA Claim

Plaintiffs’ complaint alleges that defendants breached their

fiduciary duty under ERISA. The district court dismissed

the claim, holding that defendants could not be ERISA fiduciaries under the facts alleged. Accepting as true all wellpleaded factual allegations and drawing all reasonable inferences in plaintiffs’ favor, we review de novo whether

plaintiffs’ complaint states a claim for which relief can be

granted. See Fed. R. Civ. P. 12(b)(6); McCullah v. Gadert,

344 F.3d 655, 657 (7th Cir. 2003).

A claim for breach of fiduciary duty under ERISA is only

valid against a “fiduciary.” Plumb v. Fluid Pump Serv., Inc.,

124 F.3d 849, 854 (7th Cir. 1997). A person is a fiduciary

with respect to an ERISA plan, “to the extent [ ] he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority

or control respecting management or disposition of its assets.”

29 U.S.C. § 1002(21)(A). Because a person is deemed a fiduciary only “to the extent” he or she exercises discretionary

authority, “a person may be an ERISA fiduciary for some

purposes, but not for others.” Plumb, 124 F.3d at 854 (citations omitted). “In assessing whether a person can be held

liable for breach of fiduciary duty, a court must ask whether

[that] person is a fiduciary with respect to the particular

activity at issue.” Id. (internal quotations omitted).

Plaintiffs’ complaint alleges that defendants violated

§§ 102 and 404 of ERISA in two ways: (1) by failing to

provide “reasonable advance notice” of the termination of

the OMC Health Plan so that plaintiffs could avoid a break

in coverage; and (2) by failing to fund the OMC Health Plan.

We must determine first whether these are cognizable duties

under ERISA, and second whether defendants can be fiduciaries with respect to these two particular activities under

the facts alleged.
Nos. 04-1071 & 04-1096 17

In addressing whether there was a duty to provide notice

of the future termination of the OMC Health Plan, the

district court explained that on February 20, 2001, OMC

filed a motion in the bankruptcy court to approve defendants’

termination of the plan pursuant to 11 U.S.C. §§ 1113 and

1114. Thereafter, the unions, including the IMMA, asked for

a delay of 120 days in any termination of the plan to permit

participants to seek group coverage. The bankruptcy court

denied this request and granted OMC’s motion for termination in its entirety, authorizing and directing the debtors to

terminate their medical plans “as soon as reasonably practicable.” From this, the district court concluded that “the

notice, or dearth thereof, afforded participants of the plan’s

termination was not a matter of the exercise of discretionary authority on the part of the defendants, and cannot be

characterized as a breach of fiduciary duty.” The district

court held that, to the extent plaintiffs’ ERISA claim is

based on inadequate notice regarding the termination of the

plan, it fails to state a claim upon which relief can be

granted.

Plaintiffs argue that the district court misunderstood the

complaint and that it does not allege that the termination

of the plan violated a fiduciary duty. Rather, plaintiffs argue that the alleged breach occurred long before the bankruptcy court issued its order. Plaintiffs point to paragraphs

77 through 81 of the second amended complaint, wherein

they allege the following: by late 2000, defendants knew

that OMC was faltering and that there was a “significant

risk that the OMC Health Plan would be terminated”;

defendants did not warn plaintiffs of this “significant risk”

or that defendants might exercise their right to terminate

the plan without notice; defendants failed to so warn

plaintiffs because they did not wish to alarm creditors of

OMC; defendants breached their fiduciary duty to the extent they put the interests of OMC and Greenmarine ahead

of plaintiffs’ interests; and plaintiffs could have obtained
18 Nos. 04-1071 & 04-1096

group health insurance had they been given reasonable

advance notice of the likely termination of the plan.

Defendants respond that this theory of liability must fail

as a matter of law because there is no fiduciary duty owed

to plan participants in terminating a plan, and it follows

that there is never a fiduciary duty to inform plan participants

of a risk of plan termination. The premise of defendants’

argument is firmly established. See Lockheed Corp. v. Spink,

517 U.S. 882, 890 (1996); Johnson v. Georgia-Pacific Corp., 19

F.3d 1184, 1188 (7th Cir. 1994). Defendants’ broad conclusion, however, does not necessarily follow.

The Supreme Court has held that an employer breaches

its fiduciary duty by lying to employees in order to induce

them to surrender their benefits. Varity Corp. v. Howe, 516

U.S. 489, 506 (1996). In interpreting the limits of this holding, several Circuits have held that there is no fiduciary

duty to inform plan participants of a future risk. See Sprague

v. General Motors Corp., 133 F.3d 388, 406 (6th Cir. 1988)

(“We are not aware of any court of appeals decision imposing fiduciary liability for a failure to disclose information

that is not required to be disclosed. At least three circuits

have held that there is no fiduciary duty to disclose planned

changes in benefits or even the termination of the plan before those actions become official. Pocchia v. NYNEX Corp.,

81 F.3d 275, 278 (2d Cir. 1996); Payonk v. HMW Indus.,

Inc., 883 F.2d 221, 229 (3d Cir. 1989); Stanton v. Gulf Oil

Corp., 792 F.2d 432, 435 (4th Cir. 1986). A fortiori, there

can be no fiduciary duty to disclose the possibility of a future change in benefits.”).

We reached the same conclusion in Vallone v. CNA

Financial Corporation, 375 F.3d 623 (7th Cir. 2004). There,

the plaintiffs alleged a breach of fiduciary duty in the

defendant’s failure to warn plan participants of the possibility that benefits would be terminated. We observed that

“[i]n this circuit, a breach of fiduciary duty exists if fiduci-
Nos. 04-1071 & 04-1096 19

aries ‘mislead plan participants or misrepresent the terms

or administration of a plan.’ ” Vallone, 375 F.3d at 640

(quoting Anweiler v. Am. Elec. Power Serv. Corp., 3 F.3d 986,

991 (7th Cir. 1993)). Nevertheless, we held that “the lack of

a specific warning that welfare benefits are terminable

would not alone create a breach of fiduciary duty.” Id. at 642.

We affirmed the district court’s grant of summary judgment

in favor of the defendants, explaining that “the employer

must have set out to disadvantage or deceive its employees,

as in Varity, in order for a breach of fiduciary duty to be

made out” and finding that there was no evidence of such

an intent to deceive. Id. at 642.

Although there is no fiduciary duty under ERISA to disclose the likelihood of a future termination of a plan, under

Varity, the same may not be true where the employer intentionally misleads the plan participants about the future of

the plan, through statements or omissions. Plaintiffs allege

that defendants “directly and indirectly, continued to give

good assessments of OMC’s prospects, even after these

defendants knew that the company was likely to fail and that

there was a significant risk the OMC Health Plan would be

terminated,” and that defendants failed to disclose the imminent termination to plaintiffs “at least in part because

they did not wish to alarm creditors of OMC.” 

We hold that these vague allegations of “assessments” of

the general economic well-being of an employer, especially

in the absence of specific allegations of intent to deceive, are

not sufficient to state a claim for breach of fiduciary duty

under ERISA. Under the facts alleged, the failure to

disclose the likelihood of bankruptcy and plan termination

may have been an innocent byproduct of the company’s efforts to keep from its creditors and competitors information

it had no duty to disclose. Furthermore, if we were to create

a new fiduciary duty, as plaintiffs request, we run the risk of

disturbing the carefully delineated corporate disclosure
20 Nos. 04-1071 & 04-1096

laws. We decline to do so here, where there is no wellpleaded allegation of intent to deceive the plan participants.

As to notice, plaintiffs also argue that it was a breach of

fiduciary duty under 29 U.S.C. § 1022, to fail to notify

plaintiffs in the summary plan description (“SPD”) of the

risk that their health benefits could be terminated without

notice. Section 1022 provides that the summary plan description shall include the “circumstances which may result in

disqualification, ineligibility, or denial or loss of benefits”

and “shall be sufficiently accurate and comprehensive to

reasonably apprise such participants and beneficiaries of

their rights and obligations.” 29 U.S.C. § 1022. The parties

agree that the SPD provided to plaintiffs states that coverage will end “when the Plan is terminated by the Company.”

Though the plan states that the employer “shall have the

right to terminate the Plan without notice to the Participants

or their Dependants,” this additional language does not

appear in the SPD. 

We conclude that the SPD’s firm and unqualified statement that termination of the plan by the company will end

coverage, is sufficient to satisfy § 1022 because it reasonably

apprises plan participants of a circumstance which will result

in loss of benefits. See Mers v. Marriott Int’l Group Accidental Death and Dismemberment Plan, 144 F.3d 1014, 1024

(7th Cir. 1998). The SPD does not encourage the plan

participants to incorrectly assume that they would receive

notice of the plan’s termination and it is sufficient to alert

participants of the need to inquire further to determine if

there were any conditions for termination. It was unnecessary to state explicitly in the SPD what is already suggested,

namely, that the company may terminate the plan without

more.

Plaintiffs also allege that defendants violated § 404 of

ERISA by failing to fund the OMC Health Plan. Section 404

provides: “[A] fiduciary shall discharge his duties with
Nos. 04-1071 & 04-1096 21

respect to a plan solely in the interest of the participants

and beneficiaries and . . . for the exclusive purpose of: (i)

providing benefits to participants and their beneficiaries;

and (ii) defraying reasonable expenses of administering the

plan.” 29 U.S.C. § 1104(1)(A). Plaintiffs allege that defendants

breached their fiduciary duty by failing to provide long term

funding to the plan, relying on articles X and XI of the plan

as the source of the duty. Article X, entitled “Plan Financing,” includes the following provisions: 

The Employer shall make contributions in such amounts

and at such times as determined by the Company in

accordance with a funding method and policy consistent

with Plan objectives.

All contributions under this Plan shall be paid to the

Trustee. All assets of the Trust Fund, including investment income, shall be retained for the exclusive benefit

of Participants and their beneficiaries . . . and shall not

revert to or inure to the benefit of the Employer.

Plaintiffs argue that this reveals “an intent that the Plan

should be set up as a trust, with assets, and not operate on

a pay as you go basis” and that “[t]hough it is peculiar to

use ‘Employer’ and ‘Company’ in the same sentence in this

way, the intent is that the ‘Company’ as fiduciary will fix

and collect the amounts due from the ‘Employer,’ so as to

carry out the objective of creating a trust, with assets, and

a secure basis of funding.” Though defendants dispute that

there was any obligation to fund the plan within its terms,

they have not demonstrated that plaintiffs’ interpretation

of the plan’s language is incorrect as a matter of law. Drawing all reasonable inferences in plaintiffs’ favor, we find

that there is a cognizable duty under the specific language

of this plan, such that plaintiffs’ claim should not be

dismissed at this early stage. 

The final step in our analysis is to determine whether the

district court was correct to conclude as a matter of law that
22 Nos. 04-1071 & 04-1096

defendants were not fiduciaries with respect to funding the

plan. The district court cited § 11.6 of the plan which

provides:

The assets of this Plan shall be invested by a

“Management Committee.” The “Management Committee” shall be appointed by and serve at the pleasure of

the Board of Directors of the Company to assist in the

investment of the assets of this Plan. Such persons may

be the Company’s Vice President and Treasurer, VicePresident of Human Resources and the Director of

Employee Benefits . . . . The Management Committee

shall have full power and authority to invest and

reinvest the assets of the Plan.

Relying on this language, the district court concluded that

“[a]lthough section 11.6 suggests that defendants may properly be characterized as fiduciaries with respect to their

appointment responsibilities regarding the Management

Committee, nothing in the OMC Health Plan suggests that

defendants were fiduciaries with respect to the investment

of the plan’s assets or the plan’s funding.” The court held

that plaintiffs failed to state a claim because defendants

were not fiduciaries with respect to the particular activity

of funding the plan.

Plaintiffs rely on Leigh v. Engle, 727 F.2d 113, 133-35 (7th

Cir. 1984), for the proposition that the power to appoint and

remove members of the Administrative and Management

Committees can, in some circumstances, create a duty to

monitor the administrators’ actions. The fiduciary duty to

oversee the plan administrators in Leigh arose from the

defendants’ close relationship with, and control over, the

administrators. Leigh, 727 F.2d at 134-35 n.33. We concluded that, though the defendants “were not obliged to

examine every action taken by [the administrators], . . . we

think that [the defendants] were obliged to take prudent

and reasonable action to determine whether the administra-
Nos. 04-1071 & 04-1096 23

tors were fulfilling their fiduciary obligations.” Id. at 135.

This liberal standard for fiduciary status has been reiterated in several of our subsequent decisions. See, e.g., Plumb,

124 F.3d at 855 (“It is true that a person can become a

fiduciary with respect to a particular activity even if there

is no formal written allocation of the duty.”); Mutual Life

Ins. Co. of N.Y. v. Yampol, 840 F.2d 421, 425 (7th Cir. 1988)

(noting “this court’s consistently broad reading” of the

definition of an ERISA fiduciary); Ed Miniat, Inc. v. Globe

Life Ins. Group, Inc., 805 F.2d 732, 736 (7th Cir. 1986) (“[I]n

Leigh we held that fiduciaries responsible for selecting and

retaining their close business associates as plan administrators had a duty to monitor appropriately the administrators’

action. . . . Similarly, the corporate plaintiffs here may well

have some duty to monitor the actions of the plan administrator and the insurance company administering the Plan.”)

(citations omitted).

Plaintiffs’ complaint alleges that defendants “had very

specific involvement and control over the above described

Committee, by their power to appoint the members of such

Committee and expressly delegate certain authority and in

effect allocate their members’ responsibilities based on their

areas of respective expertise.” Though plaintiffs’ allegations

provide little detail about the management committee’s

funding decisions, we cannot say at this early stage in the

litigation that plaintiffs can prove no set of facts in support

of their claim that would entitle them to relief. See Conley

v. Gibson, 355 U.S. 41, 45-46 (1957). The district court erred

in holding that defendants cannot be ERISA fiduciaries

with regard to funding the plan.

III. Conclusion

For the foregoing reasons, we REVERSE the district court’s

dismissal of plaintiffs’ ERISA claim only insofar as it is
24 Nos. 04-1071 & 04-1096

based on a fiduciary duty to fund the plan, REVERSE the

district court’s remand of the Illinois Wage Act claim, and

REMAND for further proceedings consistent with this

opinion.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—10-27-04