*The HONORABLE ANDREW W. BOGUE, United States District

Judge for the District of South Dakota, sitting by

designation.

 1The Honorable Richard H. Kyle, United States District Judge

for the District of Minnesota.

___________

No. 94-2940

___________

Ross Fuller, as Trustee of *

the International Association *

of Entrepreneurs of America *

Benefit Trust, *

* Appeal from the United States

Appellant, * District Court for the

* District of Minnesota.

v. *

*

James E. Ulland, as *

Commissioner of Commerce of *

the State of Minnesota, ** Appellee. * ___________

 Submitted: November 2, 1995

 Filed: February 21, 1996 ___________

Before WOLLMAN and MORRIS SHEPPARD ARNOLD, Circuit Judges, and

BOGUE,* District Judge.___________

WOLLMAN, Circuit Judge.

Ross Fuller, as Trustee of the International Association of

Entrepreneurs of America Benefit Trust (the "Trustee"), appeals

from the district court's1 judgment dismissing his action against

James E. Ulland, Commissioner of Commerce of the State of Minnesota

(the "Commissioner") for injunctive and declaratory relief under

the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§

1001-1461 (1988). The district court rejected the Trustee's claim
 2

Section 1132(a)(3) provides that a civil action may be

brought "by a participant, beneficiary, or fiduciary (A) to enjoin

any act or practice which violates any provision of [ERISA] or the

terms of the plan or (B) to obtain other equitable relief (i) to

redress such violations or (ii) to enforce any provisions of

[ERISA] or the terms of the plan."

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of exclusive federal jurisdiction and dismissed the action under

the abstention doctrine of Younger v. Harris, 401 U.S. 37 (1971).

Fuller v. Ulland, 858 F. Supp. 931 (D. Minn. 1994). Although we

are essentially in accord with the district court's reasoning, we

conclude that the case should have been stayed rather than

dismissed, and thus we remand for entry of a stay. See

International Ass'n of Entrepreneurs of America v. Angoff, 58 F.3d

1266, 1271 (8th Cir. 1995), cert. denied, 116 S. Ct. 774 (1996). 

I.

The International Association of Entrepreneurs of America

Benefit Trust (the "Trust") provides a plan of workers'

compensation insurance to numerous employers in twenty-one states,

including Minnesota. After requesting certain information from the

Trust to determine whether it was complying with Minnesota

insurance law, the Commissioner issued a cease and desist order

requiring the Trust to stop offering or selling its insurance

program in Minnesota until it complied with appropriate Minnesota

licensure requirements. 

The cease and desist order gave the Trust thirty days in which

to request a contested case hearing in the matter, the order to

become final if no such request was filed. The Trustee requested

a hearing, but noted that he was doing so only to prevent the cease

and desist order from becoming final. Simultaneously, the Trustee

filed a federal court action for declaratory and injunctive relief

under 29 U.S.C. §§ 1132 (a)(3), claiming ERISA preemption of the

state court regulations.2
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Specifically, the Trustee sought a judgment declaring that (1)

the Trust and the plan administered by it constitute an "employee

welfare benefit plan" as defined by ERISA, 29 U.S.C. § 1002(1), and

that the Trust and plan also constitute a "multiple employer

welfare arrangement" as described in ERISA, 29 U.S.C. §

1002(40)(A), and (2) the regulatory process underlying the order,

as it relates to the plan, is inconsistent with, and preempted by,

ERISA. The Trustee further sought a judgment enjoining the

Commissioner from: (1) prohibiting the Trust from conducting

business in Minnesota; (2) subjecting the Trust to the regulatory

scheme applied to insurance companies, including requirements for

purchasing workers' compensation insurance; or (3) taking any

action inconsistent with the provisions of ERISA. Finally, the

Trustee asserted a claim under 42 U.S.C. § 1983, alleging that the

Commissioner's actions and the regulatory scheme itself violate the

United States Constitution.

The district court dismissed the Trustee's action under the

principles of Younger abstention. Younger directs federal courts

to abstain from hearing cases when (1) there is an ongoing state

judicial proceeding which (2) implicates important state interests,

and when (3) that proceeding affords an adequate opportunity to

raise the federal questions presented. Middlesex County Ethics

Comm. v. Garden State Bar Ass'n, 457 U.S. 423, 432 (1982). The

district court found that the state proceeding brought by the

Commissioner satisfied each of the Younger preconditions.

II.

We review a district court's decision to abstain under Younger

principles for abuse of discretion. See Warmus v. Melahn, 62 F.3d

252, 257 (8th Cir. 1995) (applying abuse of discretion standard to

Younger decision); see also Wilton v. Seven Falls Co., 115 S. Ct.

2137, 2144 (1995) (holding that a district court's decision to

dismiss or stay a federal declaratory judgment action in favor of
 3

The Trustee claims, for the first time on appeal, that the

state action was not ongoing at the time of the filing of the

federal action. We reject this claim. The state proceedings began

with the issuance of the Cease and Desist Order one month before

the trustee filed his federal action.

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a parallel state proceeding is reviewed only for abuse of

discretion). 

The first two requirements of Younger abstention are clearly

satisfied here. The state civil enforcement proceeding was ongoing

at the time the suit was filed,3 and the state's interest in

enforcing its insurance laws is important, see California State

Auto Ass'n v. Maloney, 341 U.S. 105, 109-10 (1951) (noting that the

nature of the insurance industry necessitates pervasive state

regulation). The controversy, then, centers on the third

requirement -- whether the state court action affords an adequate

opportunity to present the Trustee's ERISA preemption defense.

ERISA provides generally that its provisions shall preempt state

laws that relate to a covered plan and which are not specifically

exempt from preemption. 29 U.S.C. § 1144(a). The Trustee contends

that federal courts have exclusive jurisdiction over claims

resolving issues of ERISA preemption of state law and that thus the

ERISA claims cannot be resolved in the state proceedings.

Specifically, the Trustee relies on 29 U.S.C. § 1132 (a)(3), which

empowers participants to sue to enjoin any act or practice that

violates any provision of ERISA, and 29 U.S.C. § 1132(e)(1), which

grants federal district courts exclusive subject matter

jurisdiction over such injunctive actions. 

To benefit from ERISA preemption, however, a plan must first

establish that it is an ERISA-covered plan, fund or program.

Wisconsin Educ. Ass'n Ins. Trust v. Iowa State Bd., 804 F.2d 1059,

1060 (8th Cir. 1986); Williams v. Wright, 927 F.2d 1540, 1543 (11th

Cir. 1991). In Wisconsin Education Ass'n, we noted Congress'

concern that certain entrepreneurs would claim ERISA status in an
 4

In fact, one court has found that the International

Association of Entrepreneurs, as operating in Virginia, is not an

ERISA covered plan. See Int'l Ass'n of Entrepreneurs of Am. Ben.

Trust v. Foster, 883 F. Supp 1050, 1061 (E.D. Va. 1995).

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attempt to use the ERISA preemption doctrine to escape state

insurance regulation. 804 F.2d at 1063 (citing H.R.Rep. No. 1785,

94th Cong., 2d Sess. 48 (1977)). Some courts have minimized this

problem by premising federal jurisdiction to determine ERISA

preemption on a finding of ERISA status. See MDPhysicians &

Assoc., Inc. v. State Bd. of Ins., 957 F.2d 178, 182 (5th Cir.),

cert. denied, 506 U.S. 861 (1992); Elco Mechanical Contractors,

Inc. v. Builders Supply Assoc. of West Virginia, 832 F. Supp. 1054

(S.D. W. Va. 1993); Plog v. Colorado Ass'n of Soil Conservation

Dists., 841 F. Supp. 350 (D. Colo. 1993). Whether we view a

finding of ERISA-covered status to be a prerequisite to

establishing federal jurisdiction or simply a hurdle to cross

before moving on to the preemption issues, a finding of noncoverage will eliminate the need for any further federal

involvement. Thus, if the state court finds that the Trust is not

an ERISA-covered plan, the preemption issues will be moot.4

 

We need not determine whether federal jurisdiction over the

preemption issues exists in this case because our recent decision

in Angoff, 58 F.3d at 1269, establishes that, at the very least,

the state court has concurrent jurisdiction to determine ERISA

status. In Angoff we held that although ERISA establishes the

right of an ERISA fiduciary to an injunction against practices

violative of ERISA and permits only federal courts to issue such

injunctions, the statute nowhere makes federal courts the exclusive

forum for deciding ERISA status of plans or fiduciaries. Id. As

we stated in Angoff, "what [appellant] asserts to be an exclusive

federal jurisdiction to decide ERISA status by declaration is

actually an exclusive federal jurisdiction to grant certain types

of declaratory and injunctive relief once ERISA status has been

established by either a state or federal court." Id. at 1270.
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Accordingly, given the presumption in favor of concurrent

jurisdiction absent congressional instructions to the contrary, and

the statute's silence with respect to the power to declare ERISA

status, a claim of ERISA status can be asserted defensively in a

state court action. Id.

Because the state court is competent to decide the threshold

issue of ERISA status, and because a finding that the Trust is not

an ERISA-covered plan will moot the remaining federal claims, the

third Younger requirement is satisfied. Thus, the district court

did not abuse its discretion in abstaining in this case.

III.

We next address whether the district court should have

dismissed the federal action or stayed it until the state court

resolved the issue of ERISA status. In Angoff, we stated that "so

long as a possibility of return to federal court remains, a stay

rather than a dismissal is the preferred mode of abstention." 58

F.3d at 1271 (citing Wilton, 115 S. Ct. at 2143 n.2). We find this

principle to be equally applicable to the present case. A state

court determination that the Trust is not an ERISA-covered plan

will end the matter. However, if the state court decides

otherwise, return to federal court to determine whether the

Commissioner's actions are preempted by ERISA will be appropriate.

The judgment of dismissal is vacated, and the case is remanded

to the district court for entry of a stay.
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A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.