controlling the litigation and obtaining a transfer to federal court by federal preemption when
the defendantraises a federal question in the responsive pleadings. Speciale, 147 F.3d at 614-15.

As the Seventh Circuit pointed out in Speciale, the Supreme Court created an exception
to the well-pleaded complaint rule where Congress has completely preempted a given area of
state law. Speciale, 147 F.3d at 615 (citing Avco Corp. v. Aero Lodge No. 735, etc., 390 U.S.
557 (1968)). Complete preemption permits “recharacterization” of a plaintiff's state law claim
as a federal claim so that removal is proper. Jd. Whether or not a cause of action has been
completely preempted is determined by the intent of Congress. Jd. The Supreme Court has
explicitly expanded the “complete preemption” exception to include all state actions falling
within the scope of § 502(a) of ERISA.” Jd. (citing Taylor, 481 U.S. at 67).

However, as the Seventh Circuit pointed out, there is a second federal “preemption”
doctrine. Speciale, 147 F.3d at 615.

This doctrine serves as a defense to a state law action but does not confer federal

question jurisdiction. This doctrine is known as “conflict preemption.” Conflict

preemption is based upon § 514(a)* of ERISA. “Complete preemption” under §

502(a) encompasses all claims by a participant or beneficiary to enforce his rights
under an ERISA plan whereas “conflict preemption” under § 514(a) preempts any

*Section 502(a) of ERISA provides:
A civil action may be brought —
(1) by a participant or beneficiary —

(A) for the relief provided for in subsection (c) of this section, or

(B) 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 ...

3Section 514(a) of ERISA provides:

Except as provided in subsection (b) of this section, the provisions of this subchapter and
subchapter IIT of this chapter shall supersede any and all State laws insofar as they may now or
hereafter relate to any employee benefit plan described in section 1003(a) of this title and not
exempt under section 1003(b) of this title.


Gauf, 188 F.3d at 768. As an employee of Wal-Mart, she was covered under Wal-Mart’s
Associates’ Health and Welfare Plan. The Plan reimbursed Gauf for her medical treatment on
the condition that Gauf reimburse the plan to the extent of any judgment or settlement received
relating to the accident. In a separate tort action against the driver of the other automobile
involved in the accident, Gauf received a verdict in her favor and collected $36,000.
Subsequently, the plaintiff, the Administrative Committee of the Associates’ Health and Welfare
Plan, filed a separate lawsuit in federal court, seeking an order compelling Gauf to reimburse the
Plan for the benefits it had paid to her relating to the accident. The plaintiff based its claim on
the ERISA governed plan. /d. The court in Gauf found that there was federal jurisdiction over
the plaintiff's action because the complaint stated a claim under ERISA’s civil enforcement
provision, § 502(a)(3). /d. at 771. In so finding, Gauf distinguished its decision from Speciale
and Blackburn. Specifically, the court stated,

Blackburn and Speciale do not govern the case that we have before us today. As

we already noted, unlike the situations in those cases, the complaint here states

a claim under ERISA § 502(a)(3), and is therefore within our jurisdiction. In

Blackburn and Speciale, there were no such federal claims under ERISA §

502(a)(3) or otherwise; the claims removed were state claims (a tort action and

a motion to adjudicate liens).
Id. at 771. Here, unlike Gauf, and like Blackburn and Speciale, the Wal-Mart Committee

invokes § 502(a)(3) of ERISA as a defense to plaintiff's motion. Therefore, federal jurisdiction

does not govern that defense.”

"In its response in opposition to Varco’s motion to remand, the Wal-Mart Committee
notes that, “[o]ut of an abundance of caution,” it has filed an independent action in federal court
against Varco under ERISA to enforce the terms of the Plan. (Resp. at 2 n.2) In contrast to the
current case, there may be federal jurisdiction over the Wal-Mart Committee’s independent

(continued...)


and entered judgment in favor of Wal-Mart. On appeal, the plaintiff argued that the district court
did not have federal jurisdiction because the motion to adjudicate fell under her well-pleaded
complaint which alleged a state law claim of personal injury, neither of which presented a federal
question nor permitted complete preemption under ERISA. The Seventh Circuit agreed with the
plaintiff and reversed and remanded the case to the district court with directions to remand the
case to state court for lack of federal subject matter jurisdiction. Jd. at 617.

In its decision, the Seventh Circuit held that there was no federal subject matter
jurisdiction because the plaintiffs request for apportionment could not be recharacterized as a
suit to enforce her rights under the terms of the Plan, and therefore it was not completely
preempted under § 502(a). Id. at 616. The court explicitly held that “in a state cause of action
where there are adversarial claims to a settlement fund between an ERISA plan subrogation
claim and other statutory medical liens, there is no preemption under § 502(a) and the allocation
of the funds is a matter for the state court under which original jurisdiction arose.” Jd. In so
finding, the court reasoned that although the plaintiff was entitled to bring a claim under the
Wal-Mart plan, “her claim of personal injury was not a cause of action that falls within the scope
of an ERISA provision nor did her state law claim require resolution of an interpretation of the
contract governed by federal law.” Jd. at 615.

Inits reasoning, the court in Speciale discussed Blackburn v. Sundstrand Corp., 115 F.3d

493 (7th Cir. 1997), another nearly identical scenario to the immediate case.’ As discussed in

>The Wal-Mart Committee attempts to distinguish Blackburn and Speciale by arguing that

these two cases involved removal under § 1441(b), not §1441(c). Section 1441(c) of Title 28
permits removal “[w]henever a separate and independent claim or cause of action, which would
(continued...)


state law that may “relate to” an ERISA plan, but is not a basis for federal
jurisdiction.

Speciale 147 F.3d at 615 (emphasis added).

As it argued in Speciale, the Wal-Mart Committee argues again that the complete
preemption under § 502(a) has occurred. However, following the Seventh Circuit’s rationale in
Speciale as explained below, the court finds this is not a case of complete preemption under §
502(a) but is rather merely conflict preemption under § 514(a). Therefore, there is no basis for
federal jurisdiction here.

In Speciale, the plaintiff was an employee of Wal-Mart and a participant in Wal-Mart
Stores, Inc. Associates Health and Welfare Plan. As a result of an automobile accident, she
sustained injuries, and the Plan paid $54,051.07 toward the costs of her medical care. The
plaintiff filed a personal injury action against the driver of the other car in Illinois state court and
accepted $45,000 in settlement. The plaintiff then filed a motion to adjudicate liens in state
court, listing sixteen providers, including Wal-Mart, who were asserting claims against the
settlement fund.* Wal-Mart, acting independently, removed the action to the federal district
court under 28 U.S.C. § 1441(b), maintaining that because the Plan arose under and was
governed by ERISA, the plaintiff's motion to adjudicate was completely preempted. The district

court concluded that the claim was preempted under § 502(a) of ERISA, 29 U.S.C. § 1132(a),

“The plaintiff in Speciale filed her motion to adjudicate liens in state court after she
settled her case. Here, Varco filed her motion to adjudicate liens in state court while still
considering a settlement offer. However, this distinction in timing is irrelevant to the outcome
of this case. As in Speciale, there is no evidence or allegation that the Wal-Mart Committee’s
subrogation right has been questioned. See Speciale, 147 F.3d at 617. All that remains here is
a determination on the apportionment of the funds under state law. See id.

5


under the Constitution, treaties, or laws of the United States.”® As the Seventh Circuit stated in
both Speciale and Blackburn, a tort suit based on a personal injury claim arising from an
automobile accident does not arise under the Constitution, treaties, or laws of the United States.
Speciale, 147 F.3d at 616 (citing Blackburn, 115 F.3d at 494). Therefore, here, as in Speciale
and Blackburn, “the petition to apportion the fund invoked the ancillary jurisdiction of the state
court and was part of that original, non-removable action.” See id. Therefore, Varco’s motion
to adjudicate does not present a federal question under 28 U.S.C. § 1331, and her case was
improperly removed to federal court under 28 U.S.C. § 1441(b).

Further, Administrative Committee v. Gauf, 188 F.3d 767 (7th Cir. 1999), does not alter

this conclusion. In Gauf, the defendant, Patricia Gauf, was injured in an automobile accident.

°As the Seventh Circuit noted in Speciale, although the issue of the Wal-Mart
Committee’s removal under §1441(b) was not raised by Varco, it is necessary to clarify the fact
that the Wal-Mart Committee’s removal was procedurally defective. See Speciale, 147 F.3d at
616 n.4. A prerequisite to removal under § 1441(b) is § 1441(a), which allows for removal to
a district court, “by the defendant or the defendants...” 28 U.S.C. § 1441(a). Unless all
defendants consent to removal, or the petition explains why the other defendants have not
consented, the removal is considered defective. Speciale, 147 F.3d at 616 n.4. Here, the Wal-
Mart Committee argues that Varco’s motion to adjudicate liens could have been brought as a
separate action, and therefore this claim was removable as a separate and independent claim
under 28 U.S.C. § 1441(c), which does not require all defendants to join in the notice of removal.
Id. However, as explained earlier, removal of this case under § 1441(c) is improper because
Varco’s motion to adjudicate liens is not sufficiently “separate and independent” from the
original claim as required for removal under Section 1441(c). Therefore, § 1441(c) is
inapplicable and the Wal-Mart Committee needed the consent of all defendants to remove this
case. As the Seventh Circuit articulated in Speciale,

Wal-mart, although not a ‘defendant’ per se, but if viewed as a type of

‘intervening defendant,’ failed to comply with procedural requirements. Wal-

Mart was one of [several] lienholders named in the plaintiffs motion to

adjudicate. However, Wal-Mart filed the removal notice independently, without

the consent or cooperation of the remaining ... lienholders. Removal, therefore,

was not procedurally appropriate.
Speciale, 147 F.3d at 616 n.4.


Minute Order Form (06/97)

Gow

United States District Court, Northern District of Hlinois

Nafne of Assigned Judge i Sitting Judge if Other
or Magistrate Judge James H. Alesia than Assigned Judge
CASE NUMBER 01 C 7695 DATE November 15, 2001
CASE Clara Varco and Kimberly Soria vs. Kristopher Lapsis
TITLE
[in the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
q) a Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
(3) Qa Answer brief to motion due. . Reply to answer brief due
(4) Oo Ruling/Hearing on set for at
(5) a Status hearing[held/continued to] [set for/re-set for] on set for at
(6) im} Pretrial conference[held/continued to] [set for/re-set for] on set for at :
(7) o Trial[set for/re-set for] on at
(8) Oo [Bench/Jury trial] [Hearing] held/continued to at
(9) im This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
COFRCP4(m) O General Rule21 CO FRCP41(a)(1) [I FRCP41(a)(2).
ao) [Other docket entry} Enter Memorandum Opinion and Order. The court grants Varco’s motion
to remand [6-1]. The court remands this action to the Circuit Court of Cook County, Illinois, Law
Division, for lack of subject matter jurisdiction.
(1) | [For further detail see order attached to the original minute order.]
No notices required, advised in open court,
No notices required. uber of notices
Notices mailed by judge’s staff. 4
o | Notified counsel by telephone, NOV al 6 200
¥ | Docketing to mail notices. a
Mail AO 450 form. ‘ a docketing deputy initials
S| Copy to Judge Lefkow
date mailed notice
courtroom
cw deputy’s
initials
Date/time received in
central Clerk's Office sailing deputy initials



In sum, this case was improperly removed to federal court, and the court grants Varco’s
motion to remand this case to the Circuit Court of Cook County.®
CONCLUSION

For the foregoing reasons, the court grants Varco’s motion to remand this case to the

Circuit Court of Cook County, Law Division.
e NOV 15 2001 chuck ode.

Sames H. Alegia
United States District Judge

1...continued)
action if the complaint states a claim under ERISA’s civil enforcement provision, § 502(a)(3).
See Gauf, 188 F.3d at 771.

®In its response in opposition to Varco’s motion to remand, the Wal-Mart Committee cites
as support this court’s own case, Hartenblower v. Carline Dent, Elec. Specialities Co. Health
Benefit Plan, 963 F. Supp. 712 (N.D. Ill. 1997). In Hartenblower, which was decided before
the Seventh Circuit decisions Blackburn and Speciale, this court ruled that a motion to adjudicate
liens fell within the scope of ERISA § 502(a) and was therefore preempted by ERISA and
belonged in federal court. However, as the Wal-Mart Committee surely realizes, in
Hartenblower, this court relied upon the district court cases, Speciale v. Seybold, 951 F. Supp.
740 (N.D. Ill. 1996), Musinski v. Staudacher, 928 F. Supp. 739 (N.D. Ill. 1996), and Fravel v.
Stankus, 936 F. Supp. 474 (N.D. Ill. 1996). The Seventh Circuit reversed the Speciale district
court case on precisely the point at issue here. Further, in reversing the district court decision
in Speciale, the Seventh Circuit noted that Muskinski and Fravel were implicitly superceded by
its later decision in Blackburn. See Speciale, 147 F.3d at 617 (noting that Muskinski and Fravel
were decided without the benefit of the Blackburn decision). The court expresses its
disappointment with counsel for citing to Hartenblower as current law and reminds the attorneys
of their obligations under Local Rule 83.53.3 to avoid making material misstatements of fact or
law to the court.

10


Speciale, in Blackburn, two beneficiaries of an ERISA plan were injured in an automobile
accident. Speciale, 147 F.3d at 616 (citing Blackburn, 115 F.3d at 494). They filed suit in an
Illinois court against the driver of the other car and accepted a settlement. Jd. Two parties had
claims against the settlement fund, the Blackburns’ attorney and their ERISA welfare benefit
plan. /d. The Blackburns filed a petition in state court to apportion the fund. Jd. The fund
administrator removed the case to federal court under 28 U.S.C. § 1441(b). Jd. The Seventh
Circuit “stated most emphatically that removal under ERISA preemption was improper based
upon the well-pleaded complaint rule and the determination that ‘not even the most expansive
reading of ERISA covers motor vehicle collisions, just because part of the recovery may inure
to the benefit of a plan.” Speciale, 147 F.3d at 616 (quoting Blackburn, 115 F.3d at 494).
Here, as in Speciale and Blackburn, the element of §1331 “federal question” jurisdiction
arose for the first time in non-defendant Wal-Mart Committee’s notice ofremoval. Speciale, 147
F.3d at 616. Asin both those cases, the Wal-Mart Committee removed the motion to adjudicate
under 28 U.S.C. §1441(b), which allows removal from state court to federal court for “[a]ny civil

action of which the district courts have original jurisdiction founded on a claim or right arising

*(...continued)

be removable if sued upon alone, is joined with one or more otherwise nonremovable claims or
causes of action[.]” The Seventh Circuit has stated that “claims are not ‘separate and
independent’ ifthe wrongs arise from an interlocked series of transactions, i.e., they substantially
derive from the same facts,” even if more than one wrong is involved. Lewis v. Louisville &
Nashville R.R. Co., 758 F.2d 219, 221 (7th Cir. 1985). Here, the court finds that Varco’s motion
to adjudicate liens is not sufficiently “separate and independent” from the original claim as
required for removal under Section 1441(c). Therefore, removal under § 1441(c) is improper
in this case, and the Wal-Mart Committee cannot distinguish Blackburn and Speciale on this
basis. In addition, removal under diversity jurisdiction and §1441(a) would have been
impossible here because the amount in controversy is far below the $75,000 required for
diversity jurisdiction. See Speciale, 147 F.3d at 616 n.5.

7


Il. DISCUSSION

Speciale v. Seybold, 147 F.3d 612 (7th Cir. 1998), a nearly identical scenario to the
immediate case, is directly controlling. In that case, the Seventh Circuit stated, “[t]he
determination of jurisdiction on removal involving an ERISA issue is based upon the well-
pleaded complaint rule, the ERISA ‘complete preemption’ exception to that rule and the defense
of ‘conflict preemption’ under ERISA.” Speciale, 147 F.3d at 614 (citations omitted). Under
28 U.S.C. § 1441, “any civil action brought in a State court of which the district courts of the
United States have original jurisdiction, may be removed by the defendant ... to the district court
of the United States for the district and division embracing the place where such action is
pending.” 28 U.S.C. § 1441(a). District courts have original jurisdiction over cases concerning
a “federal question,” that is, cases “arising under the Constitution, laws, or treaties of the United
States.” 28 U.S.C. § 1331.

In determining federal jurisdiction, the court generally first reviews the plaintiff's
complaint, because “[i]t is a long settled law that a cause of action arises under federal law only
when the plaintiffs well-pleaded complaint raises issues of federal law.” Speciale, 147 F.3d at
614 (quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987)). The issues raised in the
plaintiff's complaint, not those added in the defendant’s response, control the litigation. Jd.
(citing Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1482 (7th Cir. 1996)). The
Supreme Court has emphasized that “[t]he paramount policies embodied in the well-pleaded
complaint rule [are] that the plaintiff is master of the complaint ... and that the plaintiff may, by
eschewing claims based on federal law, choose to have the cause heard in state court.”

Caterpillar, Inc. v. Williams, 482 U.S. 386, 398-99 (1987). This prevents the defendant from


Varco was an employee of Wal-Mart and a participant in the Plan. On September 24,
2000, Varco and Kimberly Soria suffered injuries as a result of an automobile accident with
Kristopher Lapsis (“Lapsis”). The Plan paid medical benefits on behalf of Varco in the amount
of $34,034.55,

Varco filed a personal injury action against Lapsis in Illinois state court. In order to
determine whether or not to accept a $20,000.00 settlement offer, Varco filed a motion to
adjudicate liens in the state court. In her motion, Varco listed three providers, including “Blue
Cross and Shield,” who were claiming liens. On October 1, 2001, the Illinois state court judge
entered an order determining the rights of some lienholders and continuing the matter as to Blue
Cross/Blue Shield to October 12, 2001.

On October 4, 2001, the Wal-Mart Committee, ' acting independently, removed the action
to the federal district court under 28 U.S.C. §§ 1441(a), (b), and (c), maintaining that because
the Plan was governed by ERISA, Varco’s motion to adjudicate was completely preempted
under § 502(a) of ERISA, 29 U.S.C. § 1132(a). Varco now moves to remand the action to the
Circuit Court of Cook County, pursuant to 28 U.S.C. § 1447, asserting that this court does not

have subject matter jurisdiction. The court agrees with Varco.

'In its notice of removal, movant refers to itself as “Defendant, Blue Cross Blue Shield
of Illinois.” However, in its response in opposition to plaintiff's motion to remand, it refers to
itself as “Defendant, Administrative Committee of the Wal-Mart Stores, Inc. Associates’ Health
and Welfare Plan” and claims it was misnamed as Blue Cross in the motion to adjudicate liens.
The court will refer to movant as “the Wal-Mart Committee.”

2


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS Nov 16 2001
EASTERN DIVISION :

CLARA VARCO and KIMBERLY SORIA, _ )
Plaintiffs, }
v. } Case No. 01 C 7695
KRISTOPHER LAPSIS, ; Judge James H. Alesia
Defendant. }

MEMORANDUM OPINION AND ORDER

Before the court is plaintiff Clara Varco’s (“Varco”) motion to remand this action to the
Circuit Court of Cook County, Law Division, for lack of subject matter jurisdiction. For the
following reasons, the court grants Varco’s motion to remand.

I. BACKGROUND

Wal-Mart Stores, Inc. (“Wal-Mart”) provides its employees benefits through The Wal-
Mart Stores, Inc. Associates’ Health and Welfare Plan (the “Plan”), a self-funded employee
welfare benefit plan governed by the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. §§ 1001-1461. The administrator of this Plan is the Administrative
Committee of the Wal-Mart Stores, Inc. Associates’ Health and Welfare Plan. The Plan includes
a provision stating that the Plan has a right to “recover or subrogate 100 percent of the benefits
paid or to be paid by the Plan on your behalf and/or your dependants to the extent of ... [aJny
judgment, settlement or any payment made or to be made, relating to the accident, including but

not limited to other insurance.”