In the

United States Court of Appeals

For the Seventh Circuit

____________

Nos. 02-3879, 02-1124 & 02-1143

ADMINISTRATIVE COMMITTEE OF THE

WAL-MART STORES, INC. ASSOCIATES’

HEALTH AND WELFARE PLAN,

Plaintiff-Appellant/Cross-Appellee,

v.

CLARA VARCO,

Defendant-Appellee/Cross-Appellant.

____________

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 01 C 8277—Joan Humphrey Lefkow, Judge.

____________

ARGUED SEPTEMBER 10, 2002—DECIDED JULY 29, 2003

____________

Before FLAUM, Chief Judge, and BAUER and MANION,

Circuit Judges. 

MANION, Circuit Judge. 

I.

Clara Varco, a Wal-Mart employee, incurred medical

expenses due to a car accident, which were paid by WalMart’s health and welfare benefit plan. After Varco recovered damages for her injuries in a state court action, the

Wal-Mart Plan Committee sought restitution for the medical expenses it had paid from Varco and her attorney,
2 Nos. 02-3879, 02-1124 & 02-1143

Laurence Dunford. The district court granted a preliminary

injunction in favor of the Committee, preventing Varco and

her attorney from disbursing those funds or further adjudicating the matter in state court. Varco and Dunford appealed the preliminary injunction. The district court then

granted summary judgment in favor of the Committee,

ordering that the medical expenses be remitted to the

Committee, less its proportional share of Dunford’s attorney’s fees pursuant to Illinois’ common fund doctrine. The

Committee appealed the order diminishing its reimbursement due to the application of the common fund doctrine.

The cases were consolidated. We affirm in part and reverse

in part.

II.

On September 24, 2000, Clara Varco sustained injuries

in an automobile collision in Orland Park, Illinois. At that

time she was employed by Wal-Mart Stores, Inc. (“WalMart”), which provides its employees benefits through the

Wal-Mart Stores, Inc. Associates’ Health and Welfare Plan

(the “Plan”). The Plan is a self-funded employee welfare

benefit plan governed by the Employee Retirement Income

Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461 and

administrated by the Administrative Committee of the

Wal-Mart Stores, Inc. Associates’ Health and Welfare Plan

(the “Committee”). Pursuant to the terms of the Plan,

$18,865.72 in medical benefits was immediately paid on

behalf of Varco following the accident. 

Significantly, for the purposes of appeal, the Plan includes a provision stating that the Committee 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 dependents

to the extent of . . . [a]ny judgment, settlement or any

payment made or to be made, relating to the accident, including but not limited to other insurance.” The Plan
Nos. 02-3879, 02-1124 & 02-1143 3

1 In remanding the case, Judge Alesia presciently noted that

“there may be federal jurisdiction over the Wal-Mart Committee’s

independent action if the complaint states a claim under ERISA’s

civil enforcement provision, § 502(a)(3).” Lapsis, 172 F. Supp. 2d

at 991 n.7.

further provides that it “does not pay for nor is responsible

for the participant’s attorney’s fees. Attorney’s fees are to be

paid solely by the participant.” 

The procedural intricacies of this case began when Varco

retained Laurence J. Dunford to represent her against

Kristopher Lapsis, the other driver responsible for her

injuries, and to make a claim against All-State Insurance

Company, her insurer. She contracted with Dunford to pay

him a contingency fee of one-third of any recovery. Varco

then filed a tort action in Illinois state court against Lapsis.

In October 2001, in contemplation of settlement, Varco

sought adjudication of various liens on the lawsuit, including that of the Plan. In response, the Committee asked the

state court to postpone adjudication of its lien and filed a

notice for removal in federal court. The district court

promptly remanded the case back to state court finding no

subject matter jurisdiction. Varco v. Lapsis, 172 F. Supp. 2d

985, 988-92 (N.D. Ill. 2001).1

 Not content with this course of

events, the Committee filed a second action in federal court

on October 29, 2001, asserting claims under § 502(a)(3)(B),

29 U.S.C. § 1132(a)(3), for “appropriate equitable relief”

including an injunction, declaration of rights, specific

performance, imposition of a constructive trust and restitution against Varco and Dunford. The Committee also moved

to have related matters in state court stayed and Varco and

Dunford enjoined from proceeding with further state court

litigation.

While these suits were proceeding, Varco, through her

attorney, received settlement proceeds of $100,000. The

settlement proceeds were disbursed by Dunford to Varco,
4 Nos. 02-3879, 02-1124 & 02-1143

2 During the course of the litigation, the parties discovered that

Blue Cross/Blue Shield of Illinois, the Plan’s third-party administrator, was able to obtain discounts on Varco’s medical expenses.

As a result, the court granted Varco’s motion to amend the

preliminary injunction by reducing the amount subject to it to

$18,865.72.

himself, and other lienholders. In anticipation of litigation,

Varco established a reserve bank account in her name in

the amount of $34,034.55 (the initial amount the parties

believed to have been spent in medical bills under the Plan)

to pay the Committee when the courts resolved the question

of what amount was due and owing. Dunford, meanwhile,

took his full portion of attorney’s fees from the settlement

fund ($22,000) when he disbursed the monies, thereby

leaving all of the disputed monies in Varco’s possession.

Administrative Committee of Wal-Mart Stores, Inc. v. Varco,

No. 01 C 8277, 2002 WL 31189717 *2, n. 5 (N.D. Ill., Oct.

02, 2002) (“Varco III”). At the end of December 2001,

Dunford and Varco returned to state court and filed a

motion to adjudicate Wal-Mart’s lien. In response, the

Committee filed yet another motion in federal court pursuant to the Anti-Injunction Act, 28 U.S.C. § 2283, the All

Writs Act, 28 U.S.C. § 1651, and “the Princess Lida doctrine” to enjoin the state court from adjudicating the liens.

The Committee was successful in both of its motions

before the district court. On December 24, 2001, it obtained

a temporary restraining order from the district court and

a preliminary injunction preventing Varco and Dunford

from disbursing the $34,035.55 until “the rights of [the

Committee] have been determined by [the district

court].”Administrative Committee of Wal-Mart Stores, Inc.

Associates’ Health and Welfare Plan v. Varco, No.

1:01-CV-8277, 2001 WL 1772318, *3 (N.D. Ill., Dec 21,

2001) (“Varco I”).2

 On January 14, 2001, the court entered

an injunction barring Varco from proceeding with further
Nos. 02-3879, 02-1124 & 02-1143 5

adjudication of the Committee’s lien in state court. Administrative Committee v. Varco & Dunford, No. 01 C 8277,

2002 WL 47159, *3-4 (N.D. Ill. Jan. 14, 2002) (“Varco II”).

The court also dismissed all of the Committee’s claims for

equitable relief with the exception of its “claim for the

imposition of constructive trust on particular property

in the hands of the defendants and for the pendent state

law claims.” Id. at *4. After the district court stayed the

state court proceedings and enjoined Dunford and Varco

from proceeding in state court, the Committee removed for

the second time Varco’s personal injury action, as all of the

liens on the settlement, except for the Committee’s, had

been paid. The district court found that it properly had jurisdiction to adjudicate the Committee’s claim this time, for

reimbursement as “equitable relief” under § 502(a)(3)(B),

because the Committee was seeking a constructive trust

over Varco’s reserve account. Varco and Dunford then filed

a timely interlocutory appeal of the injunctions arguing, in

relevant part, that the district court lacked jurisdiction over

the claims because the Committee was seeking legal relief

based on the language of the Plan.

While the injunction was pending on appeal, the district

court proceeded to address the merits of the case. On

October 2, 2002 the district court granted the Committee’s

motion for summary judgment, holding that the Plan was

due reimbursement of the paid medical expenses. Varco III

at *4-6. The court also held that, pursuant to Illinois’

common fund doctrine, the Committee must bear its

proportional share of Dunford’s attorney fee. Based on this

doctrine, the court determined that the Committee was

entitled to restitution of the paid medical expenses,

$18,865.72, less its proportional share of Dunford’s legal

expenses for a total of $12,378.04. In rendering this decision, the district court issued an order noting that by

adjudicating the merits of the claim, the preliminary in-
6 Nos. 02-3879, 02-1124 & 02-1143

3 The first injunction, which required Varco to hold the disputed

funds, expired when “the trial court decided the rights of the

parties with reference to the funds claimed by the [Committee].”

Varco I at *4. The second injunction, which prevented further

litigation in state court, expired when all of the remaining actions

in the case were removed and then resolved by the district court.

4 The district court also noted that Wal-Mart’s claims against

Dunford were voluntarily dismissed pursuant to F.R.C.P. 41(a)(2).

The court then dismissed Dunford’s counterclaim against

Wal-Mart for attorney’s fees, and dismissed Dunford as a defendant in the case, as he had received full compensation for his

services and all of the disputed funds were in the possession of

Varco. Because the issues involving Dunford were mooted by the

district court’s order disbursing the attorney’s fees, he was not

included with Varco as an appellant by Wal-Mart. Dunford did not

file his own appeal from the court’s decision on the merits of the

action and thus he has nothing further left at stake in the present

appeal. We therefore order Dunford’s appeal (02-1143) dismissed

as moot. 

junctions entered in the case expired by their own terms.3

As Varco notes, the district court’s order on October 29,

2002, effectively mooted the cross-appeals filed by Varco

and Dunford insofar as the appeals contested the merits

underlying the preliminary injunctions.4

 However, Varco’s

challenge to the district court’s jurisdiction to hear the case

remains. The Committee then filed a timely appeal from the

district court’s order on the merits arguing that the common

fund doctrine is preempted by ERISA. We consolidated

these cases on appeal. Because of the district court’s grant

of summary judgment, and dismissal of Dunford as a

litigant, the only remaining issues that survive on appeal

are whether the district court had subject matter jurisdiction over the Committee’s claims and, if so, whether the

Committee must reimburse Varco for her payments to her

attorney pursuant to Illinois common fund doctrine.
Nos. 02-3879, 02-1124 & 02-1143 7

III

On appeal, Varco asserts that the district court erred in

finding subject matter jurisdiction to hear the case under 28

U.S.C. § 1331. Varco argues that the district court lacked

subject matter jurisdiction because the Committee’s claim

was for money due and owing under contract, which is

essentially a legal remedy, and ERISA creates jurisdiction

in federal court only for “other appropriate equitable relief”

under § 502(a)(3)(B). Varco argues that the creation of a

constructive trust over the disputed funds falls outside of

this jurisdictional grant.

A. Subject Matter Jurisdiction

Under 28 U.S.C. § 1331, federal courts have jurisdiction

over “all civil actions arising under the Constitution, laws,

or treaties of the United States.” A case arises under the

laws of the United States within the meaning of § 1331 only

when the claim for relief depends in some way on federal

law as stated in a well pleaded complaint, “unaided by anything alleged in anticipation or avoidance of defenses which

it is thought the defendant may interpose.” Taylor v.

Anderson, 234 U.S. 74, 75-76 (1914); Vorhees v. Naper Aero

Club, Inc., 272 F.3d 398, 401 (7th Cir. 2001). ERISA

§ 502(a)(3) authorizes a civil action “by a . . . fiduciary (A)

to enjoin any act or practice which violates . . . the terms of

the plan, or (B) to obtain other appropriate equitable relief

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

of . . . the terms of the plan.” 29 U.S.C. § 1132(a)(3). In this

case the district court held, relying on the Supreme Court’s

reasoning Great-West Life & Annuity Ins. Co. v. Knudson,

534 U.S. 204 (2002), that the Committee was seeking

equitable relief as required by ERISA in the form of a

constructive trust over the funds held in Varco’s reserve

account, and, therefore, it had jurisdiction to adjudicate the

merits of the Committee’s claim. Varco II, at *2-3.
8 Nos. 02-3879, 02-1124 & 02-1143

In Great-West Life, the Court considered a case with facts

similar to this case and therefore bears scrutiny. Janette

Knudson, a beneficiary of an ERISA-governed employee

welfare benefit plan, was injured in a car accident. GreatWest Life, 534 U.S. at 207. The employee benefit plan

included a reimbursement provision that provided the plan

with “the right to recover from the [beneficiary] any payment for benefits paid by the Plan that the beneficiary is

entitled to recover from a third party.” Id. In particular, the

Great-West plan had “ ‘a first lien upon any recovery,

whether by settlement, judgment or otherwise,’ that the

beneficiary receives from the third party, not to exceed ‘the

amount of benefits paid [by the Plan] . . . [or] the amount

received by the [beneficiary] for such medical treatment. . . .’ ” Id. According to this provision, the Great-West

plan covered $411,157.11 of Knudson’s medical expenses, of

which all except $75,000 was paid by Great-West. Id. GreatWest then sought to obtain restitution of the medical

expenses it had paid on Knudson’s behalf out of her damages recovery. Id. at 208. The Court looked at the substance

of plaintiff’s complaint to determine whether it fell into

“those categories of relief that were typically available in

equity.” Great-West Life, 534 U.S. at 210 (quoting Mertens

v. Hewitt Associates, 508 U.S. 248, 256 (1993)). Restitution,

the court noted, is “ ‘not an exclusively equitable remedy,’

and whether it is legal or equitable in a particular case (and

hence whether it is authorized by § 502(a)(3)(B)) remains

dependent on the nature of the relief sought.” Id. at 215

(citing Reich v. Continental Casualty Co., 33 F.3d 754, 756

(7th Cir. 1994)). The Court contrasted legal restitution,

which is not allowed under § 502(a)(3)(B), from equitable

restitution holding:

[A] plaintiff could seek restitution in equity, ordinarily

in the form of a constructive trust or an equitable lien,

where money or property identified as belonging in good

conscience to the plaintiff could clearly be traced to
Nos. 02-3879, 02-1124 & 02-1143 9

particular funds or property in the defendant’s possession. (citations omitted) A court of equity could then

order a defendant to transfer title (in the case of the

constructive trust) or to give a security interest (in the

case of the equitable lien) to a plaintiff who was, in the

eyes of equity, the true owner. But where “the property

[sought to be recovered] or its proceeds have been

dissipated so that no product remains, [the plaintiff’s]

claim is only that of a general creditor,” and the plaintiff “cannot enforce a constructive trust of or an equitable lien upon other property of the [defendant].” . . .

Thus, for restitution to lie in equity, the action generally must seek not to impose personal liability on the

defendant, but to restore to the plaintiff particular

funds or property in the defendant’s possession.

Id. at 213-14.(internal citations omitted)

In Great-West Life, the Court then noted that the proceeds

of the settlement to which Great-West maintained it was

entitled were not in the Knudson’s possession, but instead

were in a Special Needs Trust. Id. at 214. Therefore, under

the Mertens standard, the Court concluded that Great-West

was not seeking equitable relief under § 502(a)(3)(B), because it was not claiming “particular funds that, in good

conscience, belong to petitioners, but that petitioners are

contractually entitled to some funds for benefits that they

conferred.” Id. 

Against this backdrop, we proceed to the Committee’s

claim against Varco. The Committee, as a fiduciary, was

seeking to impose a constructive trust on the funds held in

Varco’s reserve bank account. Unlike the legal action

addressed in Great-West Life, the funds at issue here are

identifiable, have not been dissipated, and are still in the

control of a Plan participant due to the fact that Dunford

placed them in a reserve account in Varco’s name when

they were disbursed. Finally those funds, “in good con-
10 Nos. 02-3879, 02-1124 & 02-1143

science,” belong to the Committee. The Plan clearly states

that Varco’s rights to recover benefits may be subrogated

when there is a settlement and that “[t]he Plan has first

priority with respect to its right to reduction, reimbursement and subrogation.” Under similar facts, we have held

that a suit to impose a constructive trust “nestles comfortably” within ERISA’s concept of equity. Wal-Mart Stores,

Inc. Associates’ Health and Welfare Plan v. Wells, 213 F.3d

398, 401 (7th Cir. 2000); see also 1 Dan B. Dobbs, Dobbs on

the Law of Remedies: Damages-Equity-Restitution § 4.3 pp.

591 (2d ed. 1993) (“[The asset subject to a constructive

trust] may even be a fund of money like a bank account.”).

In response, Varco argues that this is essentially a legal

claim asserted by the Committee in order to enforce its

contract rights under the Plan because “a claim for money

due and owing under a contract is ‘quintessentially an

action at law.’ ” Wells, 213 F.3d at 401 (citing Atlas Roofing

Co. v. Occupational Safety & Health Review Comm’n, 430

U.S. 442, 459 (1977)). Varco would have a valid argument

under traditional principles of equity if an identifiable res

did not exist to which the Committee could claim a legally

recognized right. See generally Dobbs § 4.3(2) at 591.

Similarly, an argument would exist if the Committee could

not trace its property to a specific fund of money. Id. at 592.

Neither of those situations, however, is presented here.

Thus, under Great-West Life, the reimbursement action by

the Committee in this unique case is equitable because the

funds the Committee seeks to recover are identifiable, are

in the control of a defendant, and the Committee is rightfully entitled to the monies under the terms of the Plan.

Because those elements are met here, the Committee’s

claim is equitable under § 502(a)(3)(B) of ERISA, and the

district court properly exercised federal question subject

matter jurisdiction under 28 U.S.C. § 1331.
Nos. 02-3879, 02-1124 & 02-1143 11

5 ERISA provides two types of preemption: complete preemption

(continued...)

B. Common Fund Doctrine

We turn next to the question of whether the district court

properly applied Illinois’ common fund doctrine to the

settlement proceeds. Under the common fund doctrine, a

lawyer who recovers a sum of money (or “fund”) for the

benefit of others beyond his client is entitled to reasonable

attorney’s fees from the fund as a whole. See Country

Mutual Insurance Co. v. Birner, 688 N.E.2d 859, 861-62 (Ill.

1997). It is a common law “equitable exception” to the

general, or “American” rule, that each party to litigation

bears its own attorney’s fees, absent a fee-shifting statute.

See Scholtens v. Schneider, 671 N.E.2d 657, 662 (Ill. 1996).

To be entitled to fees under the common fund doctrine, an

attorney must show “(1) that the fund was created as a

result of legal services he performed; (2) that the subrogee

did not participate in creating the fund; and (3) that the

subrogee benefitted out of the fund.” Birner, 688 N.E.2d at

862. When these conditions are satisfied, fees and expenses

incurred in setting up the fund are typically apportioned

among those who benefitted from its creation. Id. And,

finally, “in Illinois, the attorney owns the claim for reimbursement for his services in creating a common fund.”

Primax v. Sevilla, 324 F.3d 544, 549 (7th. Cir. 2002) (citing

Bishop v. Burgard, 764 N.E.2d 24, 30-32 (Ill. 2002)).

The district court held that even though the Plan specifically provided that the plan participant was responsible for

all attorney’s fees, the common fund doctrine would still

apply, and that in this case the Committee was responsible

for one-third of Dunford’s fees. The court reasoned that the

Plan language would only apply if the Illinois doctrine

conflicted with and was preempted by § 514(a) of ERISA (29

U.S.C.§ 1141(a)).5 Varco II, at *4. The district court then
12 Nos. 02-3879, 02-1124 & 02-1143

5 (...continued)

under § 502(e) and conflict preemption under § 514. See Rice v.

Panchal, 65 F.3d 637, 640 (7th Cir. 1995). Section 502(e), by

providing a civil enforcement cause of action, completely preempts

any state cause of action seeking the same relief. Id. We have held

that the common fund doctrine is not preempted under § 502(e).

Speciale v. Seybold, 147 F.3d 612, 617 (7th Cir. 1998). See also

Primax 324 F.3d at 549 (stating that in the complete preemption

context “. . . we have held that ERISA does not preempt common

fund claims”). Section 514, in contrast, provides for ordinary

conflict preemption dependent on the relationship between the

law in question and the language of the plan. Section 514(a)

specifically provides that ERISA “shall supersede any and all

State laws insofar as they may now or hereafter relate to any

employee benefit plan . . . .” 29 U.S.C. § 1144(a).

6 The court put a special emphasis on the holding in Bishop

noting that, “[i]t would be anomalous, however, for this court in

this rare case in federal court to adhere to the view that the

common fund doctrine does not apply where the ‘run of the mine’

case of this sort will be decided in the Illinois courts and governed

by Bishop. If Bishop was wrongly decided, only the United States

Supreme Court or the legislature can overrule it.” Varco III at *6.

However, while this case may be the rare case that finds jurisdiction in federal court under this cause of action, that does not mean

we should defer to a state court determination of federal law

unless that determination is also correct.

held, and Varco argues here, that ERISA does not preempt

the common fund doctrine pursuant to the law as interpreted by the Illinois Supreme Court. Id. at *5 (citing

Bishop, 764 N.E.2d at 34). In Bishop, the Illinois Supreme

Court held that despite an ERISA plan’s contractual

language requiring 100% reimbursement, the common fund

doctrine requires the plan to bear its proportionate share of

the participant’s attorney’s fee.6

 The district court, and

Varco, also rely on Blackburn v. Sundstrand Corp., 115

F.3d 493, 497 (7th Cir. 1997). There we held that the

Illinois common fund doctrine was not preempted by ERISA
Nos. 02-3879, 02-1124 & 02-1143 13

to the extent that it allowed ERISA plan beneficiaries to

reduce their obligation to repay medical expenses by onethird pursuant to a subrogation provision based on beneficiaries’ payment of attorney’s fees. Id.; accord Primax at 549;

Wells, 213 F.3d at 403. The plan at issue in Blackburn did

not expressly require beneficiaries to pay their own attorney’s fees. In this case, the Plan specifically provides that

it “does not pay for nor is responsible for the participant’s

attorney’s fees. Attorney’s fees are to be paid solely by the

participant.”

 We have as yet not had the opportunity to rule, either as

a matter of state or federal common law, that the common

fund doctrine defeats the terms of an ERISA plan that

expressly requires participants to pay their own legal fees.

See Blackburn, 115 F.3d at 496. In Blackburn, we found

that although the common fund doctrine applied where the

plan did not specifically require the participant to bear her

own attorney’s fees, we commented that “a plan might have

a better argument if its governing documents expressly

required participants to pay their own legal fees . . . and to

remit the gross rather than the net proceeds from litigation.” We cautioned that such a provision would likely give

the injured person “every reason to disclaim any demand for

medical expenses in tort suits, throwing on plans the

burden and expense of collection,” if not someone else. Id.

at 496. Furthermore, we have stated that “[b]ecause ERISA

supersedes any and all state laws relating to covered

plans, . . . [the Illinois common fund] doctrine is not available to [the beneficiary] [where] the terms of the plan

require reimbursement of the entire amount without the

deduction of any attorney’s fees.” Land v. Chicago Truck

Drivers, Helpers and Warehouse Workers Union (Independent) Health and Welfare Fund, 25 F.3d 509, 510 (7th Cir.

1994). This dicta in Land did not settle the matter as

recognized in Blackburn, wherein we specifically noted that

“[t]he status of the state’s common fund doctrine is a

recurring question that should be clarified. . . .” Blackburn,
14 Nos. 02-3879, 02-1124 & 02-1143

115 F.3d at 495. This case presents the opportunity to

answer that question in determining whether the Illinois

common fund doctrine relates to and conflicts with the

terms of the Plan.

“[A] state law relates to an ERISA plan ‘if it has a

connection with or reference to such a plan.’ ” Egelhoff, 532

U.S. at 147 (quoting Shaw v. Delta Air Lines, Inc., 463 U.S.

85, 97 (1983)). The requisite connection exists under 514(a)

if a law mandates employee benefit structures or their

administration or provides alternative enforcement mechanisms to ERISA. New York Conf. of Blue Cross v. Travelers

Ins. Co., 514 U.S. 645, 658 (1995). In this analysis, a court

“look[s] both to the objectives of the ERISA statute as a

guide to the scope of the state law that Congress understood

would survive as well as to the nature of the effect of the

state law on ERISA plans.” California Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., 519 U.S.

316, 325 (1997) (internal citations and punctuation omitted). In Egelhoff, for example, the Court found conflict

preemption and noted that the “the statute at issue here

directly conflicts with ERISA’s requirements that plans

be administered, and benefits be paid, in accordance with

plan documents.” Egelhoff, 532 U.S. at 150. Justice Scalia,

in his concurrence, notes that while he remained unsure

“as to what else triggers the ‘relate to’ provision”, the

“pre-emptive provision of the Employee Retirement Income

Security Act of 1974 (ERISA) is assuredly triggered by a

state law that contradicts ERISA.” Id. at 152 (J. Scalia,

concurring).

In this case, much like Egelhoff, state law contradicts the

terms of the Plan and therefore contravenes ERISA’s

requirements that plans be administered, and benefits be

paid, in accordance with plan documents. See also Melton v.

Melton, 324 F.3d 941, 945 (7th Cir. 2003). Varco seeks to

invoke a state law doctrine to her advantage in determining

her recovery as a beneficiary under an ERISA-regulated
Nos. 02-3879, 02-1124 & 02-1143 15

employee benefits plan. If the Illinois common fund doctrine

were applied, the Committee would receive less than total

reimbursement of Varco’s medical benefits from her settlement through the deduction of her attorney’s fees in

contravention of the clear mandate of the Plan. Conflict

preemption, therefore, is appropriate in this case where

“Congress has made its preemption intention clear in the

language of the statute, the Supreme Court has affirmed

that intent, and we have applied the rule in similar cases.”

Melton, 324 F.3d at 945 (citing 29 U.S.C. § 1144(a) and

Egelhoff, 532 U.S. at 151). Because the Plan controls in this

case, the Committee is due the full amount of the medical

expenses paid on Varco’s behalf, or $18,865.72.

 Furthermore, it is not readily apparent that Varco has

standing to raise the claim for attorney’s fees under the

Illinois common fund doctrine. In Bishop, the Illinois

Supreme Court noted that the right of the common fund

doctrine is a “quasi-contractual right to payment of fees for

services rendered [and] belongs to the attorney who rendered the services and does not affect the contractual

relationship between the plan participant and the plan.”

Bishop at 31 (citing Scholtens v. Schneider, 671 N.E.2d 657

(1996)); Primax, 344 F.3d at 547. Common fund claims are

therefore considered “wholly independent of a benefit plan

under Illinois law, and [are] to be brought by a third party,

the attorney who represented the participant, to enforce the

attorney’s quasi-contractual right to payment for services

rendered in recovering [for the plan’s benefit].” Hillenbrand

v. Meyer Medical Group, S.C., 720 N.E.2d 287, 294 (1999).

For example, in Bishop, although the named parties to the

action were the plan and the plan participant, the court

viewed “the motion for adjudication . . . [as] an independent

action by the attorney, which is unrelated to the benefit

plan and does not alter the contractual relationship of the

parties thereto.” Id. at 34. Because of this characterization,

the court determined that the parties properly had standing

to maintain the cause of action and ruled that neither
16 Nos. 02-3879, 02-1124 & 02-1143

conflict preemption, under § 514(a), nor complete preemption, under § 502(e), applied to the claim due to the lack of

a relationship between the plan and the claimant. Id.

Pursuant to this characterization, Varco would only have

standing to bring this claim under Illinois law if this case

involves a dispute which can be fairly characterized as an

independent action by the attorney to enforce his right to

payment for services rendered. As we previously noted,

Varco’s attorney Dunford has been dismissed from this

action and all of the disputed funds remain in Varco’s sole

possession in a reserve account in her name. The Committee in this case is therefore seeking to assert its rights

under the Plan, through an equitable action, to monies held

in their entirety by Varco. Dunford has already been

completely compensated, and perhaps over-compensated,

with other funds derived from the settlement. What Varco

is really seeking is reimbursement from the Committee for

the fees that she has already paid to Dunford in anticipation of the application of the Illinois common fund doctrine.

However, as Illinois courts have held, the common fund

doctrine operates independently of a plan document. The

relationship between Varco and the Plan is controlled

completely by the terms of the Plan, see Egelhoff, 532 U.S.

at 147-48, and those terms dictate that the Plan is not

responsible for attorney’s fees. If Dunford had not compensated himself fully, and, as a result, still had a stake in the

action based on the outcome of this case, then the district

court could have properly categorized the action as one by

an attorney to enforce his rights and therefore appropriately brought by Varco under Illinois state law. But because

Dunford has no stake in the outcome of this case, this

action by Varco is not for appropriate equitable relief

pursuant to the Illinois common fund doctrine.

Our conclusion that the Illinois common fund doctrine

conflicts with, and therefore is preempted by, the terms of
Nos. 02-3879, 02-1124 & 02-1143 17

the Plan in this case does not completely foreclose the

possibility of Varco asserting a claim. As Varco argues, the

federal common fund doctrine, which is similar to, but not

identical in application to the Illinois doctrine, has existed

independently in the federal system since 1882. See Boeing

v. van Gemert, et al., 444 U.S. 472, 478 (1980). Although

primarily used only in situations involving class action law

suits, federal courts have interpreted the doctrine to apply

in single-party ERISA disputes despite the absence in the

suit of the affected attorney. See McIntosh v. Pacific

Holding Co., 120 F.3d 911, 912 (8th Cir. 1997); Waller v.

Hormel Foods Corp., 120 F.3d 138, 141 (8th Cir. 1996). But

see Harris v. Harvard Pilgrim Health Care, Inc., 208 F.3d

274, 278-79 (1st Cir. 2000).

 Courts that have applied the federal common fund

doctrine have done so pursuant to the rule that courts may

fashion federal common law when “necessary to effectuate

the purposes of ERISA.” Singer v. Black & Decker Corp.,

964 F.2d 1449, 1452 (4th Cir. 1992) (citations omitted).

However, in reviewing ERISA-related disputes, “[r]esort to

federal common law generally is inappropriate when its

application would conflict with the statutory provisions of

ERISA, discourage employers from implementing plans

governed by ERISA, or threaten to override the explicit

terms of an established ERISA benefit plan.” Id. (citations

omitted).

As we have often recognized, one of ERISA’s primary

purposes is to ensure the integrity of written plans. Duggan

v. Hobbs, 99 F.3d 307, 309-10 (9th Cir. 1996); see also Van

Orman v. American Ins. Co., 680 F.2d 301, 312 (3d Cir.

1982) (“The Supreme Court has emphasized the primacy of

plan provisions absent a conflict with the statutory policies

of ERISA.”); Pohl v. National Benefits Consultants, Inc., 956

F.2d 126, 128 (7th Cir. 1992). Thus, we have held that to

ensure the integrity of pension and welfare plans courts

should confine the benefits to the terms of the plans as
18 Nos. 02-3879, 02-1124 & 02-1143

written. Pohl, 956 F.2d at 128. Therefore, it is inappropriate

to fashion a common law rule that would override the

express terms of a private plan unless the overridden plan

provision conflicts with statutory provisions or other

policies underlying ERISA. Id.

In this case, applying federal common law to override the

Plan’s reimbursement provision would contravene, rather

than effectuate, the underlying purposes of ERISA because

the express terms of the Plan provide for the appropriate

distribution of attorney’s fees. See Coleman v. Nationwide

Life Ins. Co., 969 F.2d 54, 58 (7th Cir. 1992); Ryan by

Capria-Ryan v. Federal Express Corp., 78 F.3d 123, 127-28

(3d Cir. 1996) (holding that the federal common fund

doctrine may not be applied in contravention of a plan’s

terms). 

Those cases which have applied the federal common fund

doctrine in the favor of individual ERISA participants have

done so, correctly, only in the absence of controlling plan

language. See McIntosh at 917; Waller, at 141. Accordingly,

we conclude that the Plan in this case controls the relationship between Varco and the Committee, and because it does

not authorize the payment of her attorney’s fees, we do not

possess the authority to rewrite the Plan in her benefit.

Finally, Varco argues that by allowing the Committee to

recoup its medical payments even though it did not pay for

the legal prosecution of the action, we are essentially

awarding them unjust enrichment. However, the unambiguous language of the Plan obligates her to repay the benefits

paid in full without a pro rata deduction for her legal

expenses, and thus any so-called enrichment is not unjust.

See Ryan, 78 F.3d at 127 (“Enrichment is not ‘unjust’ where

it is allowed by the express terms of the . . . plan.”) (quoting

Cummings by Techmeier v. Briggs & Stratton Retirement

Plan, 797 F.2d 383, 390 (7th Cir. 1986)). This type of plan

provision, involving the relinquishment by a plan partici-
Nos. 02-3879, 02-1124 & 02-1143 19

pant of certain legal rights, has previously been upheld in

Cutting v. Jerome Foods, Inc., 993 F.2d 1293, 1297-98 (7th

Cir. 1993). In Cutting, we explained the trade-off whereby

most covered persons—if given an option—would readily

give up a “common fund-type” reduction in exchange for

having their medical expenses paid up-front in third-party

liability situations instead of refusing the benefits (and

therefore not having to reimburse the plan) and paying

their medical expenses out of their settlement. “Assignment, by shifting the insured’s tort rights to the insurance

company, reduces the price of insurance and thus enables

the insured to obtain more coverage, in effect trading an

uncertain bundle of tort rights for a larger certain right,

which is just the sort of trade that people seek through

insurance.” Id. at 1298. In this case, plan participants have

traded the possibility of having the Plan participate in

attorney’s fees for the guarantee that medical bills will be

paid immediately.

IV

In conclusion, the district court correctly accepted subject

matter jurisdiction under 502(a)(3)(B) because the Committee was seeking an equitable remedy to enforce the terms of

the Plan. However, the court improperly held that the

Illinois common fund doctrine applied in reducing the

amount owed to Committee from $18,865.72 to $12,378.04.

The federal common fund doctrine is inapplicable in this

case as its application would contravene the plain language

of the Plan. This case is AFFIRMED in part, REVERSED in

part, and REMANDED to the district court with instructions, to proceed in the manner provided.
20 Nos. 02-3879, 02-1124 & 02-1143

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—7-29-03