FIL ED U.S. COURT OF APPEAL S EL EVENTHCI RCUI T OCTOB ER 18, 2011 J OHN L EY CL ERK [PUBLIS H] IN THE UN ITED STATES COURT OF APPEALS FOR THE ELE VENTH CIRCUIT

__ __ __ __ __ __ __ __ __ __ __ __ No. 1 0- 13 96 8

__ __ __ __ __ __ __ __ __ __ __ __ D.C. Dock etNo. 2 :0 7- cv -0 06 66 -J ES-DNF EHLEN FLOOR COVERING, INC., a Fl or id a co rp or at io n, EDWARD EHLEN, anin di vi du al , THOMAS EHLEN, anin di vi du al , FRANCIS EHLEN , anin di vi du al , EHLEN FLOOR COVERINGS RETIREM ENT PLAN, ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll Pl ai nt iff s - C ou nt er Defe nd an ts ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll App el le es , DOLORES EHLEN, ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll Pl ai nt iff - Co un te r Defen da nt , vers us JEFF REY LAMB, in di vi du al ly, etal., ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll Defen da nt s, INNOVATIVE PENSION STRATE GIES, INC., a Cal ifo rn iaco rp or at io n, ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll Defen da nt- Co un te r Cl ai m an t ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll App el la nt .__ __ __ __ __ __ __ __ __ __ __ __ App eal fro m

th e Uni te d S ta te s Di st ric t Co urt forth e Mi dd le Dis tri ctof F lo rid a

__ __ __ __ __ __ __ __ __ __ __ __ (Oct ob er 1 8, 2 01 1) Befo re MAR CUS, WILSON an d HILL, Ci rcu itJu dg es . W ILSON, Cir cu itJu dg e: In no va ti ve Pen si on Str at eg ie s, In c. (“ IPS” ) ap pe al s the di st ric t co urt’s d en ia l of it s m ot io n t o c om

pe l arbi tra ti on an d s ta y

pl ai nt iff s’ cla im s ag ai ns t i t. Pl ai nt iff s cro ss -ap pe al , di sp ut in g the pre em pt io n o f th ei r cl ai m s u nd er the Em pl oym en t Ret ire m en t In co m e Sec ur ity Act (“ ERISA”) an d a ll eg in g alac k o f fed eral juri sd ic ti on . W e fi ndth atjuri sd ic ti on is pro pe r an d a ffi rm th e d is tri ctco urt’s de ni al of I PS’s m ot io n t o c om pe l arbi tra ti on . I. BACKG ROUND Tho m as , Fran ci s, Edward , andDol or es Ehl en (“ th e Ehl en s” ) are em pl oyees 1 of Ehl enFlo orCo ve rin g, In c. (“ Ehl enFlo or ”). In20 02 , Ehl enFlo orcrea te d a 41 2( I) em pl oyee be ne fitpe ns io n p la n, the Ehl enFlo orCo ve rin gs Ret ire m en t Pl an (“ th e Pl an ”), wit h t he he lp of a dv is or s an d a dm in is tra to rs . IPS, a co rp or at io n

Dolores Ehle n was dismissed without prejudice a s a plaintiff on Mar ch 15, 2010. 1 2sp eci al iz in g i n p en si on pl ande si gn an d a dm in is tra ti on for sm al l b us in es se s, t oo k ov er as th e Pl anadm in is tra to r atth e st artof 2 00 3. As p artof t he co m m en cem en t of IPS’s s erv ic es , EdwardEhl en , inhi s capa ci ty as pr es id en t o f Ehl enFlo or , si gn edanArbi tra ti onAdd en du m (“ AA”) atta ch edto anAdm in is tra ti ve Serv ic es Agr eem en t (“ th e Agr eem en t” ) be twee n IP S an d Eh le n F lo or . The AA cal le d fo r arb itrat io n o f “ an y

cla im ari si ng ou t o f th e ren di ti on or l ackof r en di ti onof se rv ic es un de r [the ] [A]greem en t.” Th e Agr eem en t p ro vi de d ali stof a va il ab le se rv ic es th atIPS co ul d p ro vi de , su chas p erfo rm in g a nn ua l re vi ews of t he Pla n, m ak in g am en dm en ts , andpre pa rin g a nn ua l re po rt f orm s. Th e Agr eem en t al so st at edth atEhl enFlo orwou ldin di cat e in Sect io n VI o f th e Agr eem en t wh ic h o f th e av ai labl e se rv ic es itde si redforIPS t o a ctua ll y pe rfo rm . There is no Sect io n VI inth e Agr eem en t, n oris th ere any tes ti m on y or e vi de nc e th atpl ai nt iff s ev er vi eweda Sect io n VI o f th e Agr eem en t. Sh ortl y aft er IPS st ep pe d i n a s ad m in is tra to r of th e Pl an , itbe cam e aware th atth e Pl anwas n otinco m pl ianc e wit h s ev eral Int ern al Rev enue Serv ic e (“ IRS” ) ru le s an d re gu la ti on s. IPS co nt en ds th atitdra fte d an am en dm en t t o c orrectth es e fla ws, b utth e am en dm en t was ne ve r of fic ia ll y ad op te d. In20 04 , th e IRS pr om ul ga te d n ew ru le s ex pl ai ni ng th atitwou ldco ns id er 4 12 (i) pl an s wi th

3be ne fic ia ry

pa y ou t l im it at io ns to be li st edtra ns act io ns , po ss ib ly sub ject t o s eri ou s 2 pe na lt ie s. Th e ru le requi redan y pl an s tha t co ul d b e co ns id eredli st edtra ns act io ns to fil e Fo rm

88 86 to av oi d p ot en ti al pe na lt ie s. IPS dra fte d a no th er am en dm en t t o th e Pl anaft er d et erm in in g t ha t the Pla n wo ul d l ik el y be cla ss ifi edas ali st ed tra ns act io n u nd er the ne w rul es . Ehle n F lo orwas n otin fo rm edab ou t the pre -ru le ta x p ro bl em s, the ex is te nc e o f th e n ew ru le , th e ad di ti on al fil in g re qu ire m en ts th at th e n ew ru le im

po se d, o r th e draft in g o f th e n ew am en dm en t. The IRS i ns ti ga te d anau di t o n M arch 6, 2 00 6, fo un d t he Pla n t o b e n on -co m pl ia nt , andul ti m at el y as se ss edsi gn ifi can t p en al ti es ag ai ns t Eh le n F lo or . InAug us t 2 00 7, p la in ti ffs fil eda co m pl ai ntinst at e co urt ag ai ns t a n um be r of pa rti es in vo lv edwith t he crea ti on an d i ni ti al adm in is tra ti on of t he Pla n, as se rti ng cla im s o f ne gl ig en ce, fraudul en t an d n eg li ge ntm is rep res en ta ti on , ne gl ig en t s up erv is io n, b reac he s o f fi du ci ary du ti es , andun fai r an d d ecep ti ve tra de pr act ic es . The ca se was re m ov edto fed eral co urt o n the ba si s o f pr eem pt io n u nd er ERISA. InMay 200 9, as reque st edby the co urt, p la in ti ffs reca stth ei r co m pl ai nt s as fed eral m atte rs inth ei r Sec on d Am en de d C om pl ai nt , bu t p la in ti ffs co nt es te d t he

A listed transac tion is a transac tion that is the same as, or substantially simil ar to, one 2 that the I RS has determined to be a tax avoidance tra

nsaction. The IRS i dentifies ty pes of listed transac tions and usually

promulg ates a dditional reportingrequire ments for pe rsons eng ag ed in such transa ctions. 4rem ov al an d a rg ue d a ga in stfed eral juri sd ic ti on . IPS was ad de d a s a d efen da ntin

th e Sec on d Am en de d C om pl ai nt . IPS th enm ov edto co m pe l arbi tra ti on of t he di sp ut e, cl ai m in g t ha t the term s o f th e AA go ve rnth e m at te r. The d is tri ctco urt de ni edth e m ot io n. IPS ap pe al s; pl ai nt iff s cr os s- ap pe al to ch al le ng e th e ex is te nc e of fed eral juri sd ic ti on . II . STANDARD OF REVIEW W e rev ie w qu es ti on s o f juri sd ic ti on de no vo . Se e McKu si ck v. Ci tyof Melbo urne , 96 F.3d47 8, 4 82 (11 th Cir . 19 96 ). The d en ia l o f a m ot io n t o c om pe l arb itrat io n i s re vi ewed de no vo . Se e Pal adin o v . Avne t Co mpu te r Te ch s., In c. , 13 4 F.3 d 1 05 4, 1 05 6– 57 (11 th Cir . 19 98 ). II I. DI SCUSSI ON A. Comp le te pr eemp ti on un de r ERIS A gran ts feder al

ju risdic ti on Que st io ns of ju ris di ct io n c anbe rai se d a t an y po in t i n t he li ti ga ti on , se e Co ch ra n v . U.S. Hea lth C ar e Fin . Admin
. , 29 1 F .3d77 5, 7 78 n.3 (11 th Cir . 20 02 ), an d m us t b e ad dr es se d fi rs t t o e ns ur e th atwe ha ve th e au th or it y to he ar the cas e. The ex is te nc e o f fed eral juri sd ic ti on is tes te d a s o f th e ti m e o f rem ov al . Adv en tu re Outdo or s, In c. v. Blo omb er

g, 55 2 F .3d12 90 , 12 94 –9 5 (1 1t h C ir. 2 00 8) . Ju ris di ct io n i s d et erm in edby loo ki ng to th e fac e o f th e p la in ti ffs ’ well -p le ad ed

5co m

pl ai nt , so we ex am in e th e p la in ti ffs ’ or ig in al co m pl ai nt s en te redat the ti m e o f rem ov al . Se e Kemp v. In t’l Bus . Mach . Cor

p. , 10 9 F .3d70 8, 7 12 (11 th Cir . 19 97 ). A fed eral di st ric t co urt h as ori gi na l juris di ct io n o ve r cas es ari si ng un de r fed eral law. 2 8 U.S.C. § 13 31 . Fed eral qu es ti on juri sd ic ti on ge ne ral ly exi st s o nl y whe n the pl ai nt iff

s’ well -p le ad edco m

pl ai ntpre se nt s i ss ue s o f fed eral law, b utth e co m pl et e p reem

pt io n d oc tri ne of ERI SA crea te s an ex cep ti on to th atrul e. Co nn . St at e Den ta l As s’ n v . Anthe m Heal th Pla ns , Inc
. , 59 1 F .3d13 37 , 13 44 (11 th Cir . 20 09 ). Reg ard le ss of i ts ch arac te riz at io n a s a s ta te law m at te r, a cl ai m wil l b e rech arac te riz edas f

ed eral inna tu re i f itsee ks rel ie f un de r ERISA. Kemp , 10 9 F .3d at71 2. Thi s co urt ac kn owl ed ge d i n Co nn . Stat e Den ta l th atth e te start ic ul at edby th e Supr em e Co urt i n Aetn a Hea lth In c. v. Dav ila , 54 2 U.S. 2 00 , 21 0, 1 24 S. Ct. 24 88 , 24 96 (20 04 ), sh ou ldgo ve rnou r in qu iry int o wh ethe r co m pl et e p reem

pt io n un de r ERISA ex is ts . 59 1 F .3dat 1 34 5. Th e Dav ila tes t as ks (1) whet he r th e pl ai nt iff s co ul d h av e ev er b ro ug htth ei r cl ai m un de r ERISA § 50 2( a) an d (2 ) whe th er n o o th er l eg al du ty sup po rts th e p la in ti ffs ’ cl ai m . Id . St ep on e o f Dav il a en ta il s two i nqui rie s: fir st , whet he r th e p la in ti ffs ’ cl ai m s fal l wi th inth e sc op e o f ERISA § 50 2( a), an d s eco nd , whet he r ERISA g ran ts th e pl ai nt iff s s ta nd in g t o b rin g s ui t. Co nn . Stat e Den ta l , 59 1 F .3dat 1 35 0. ERIS A § 650 2( a)(2 ) al lo ws a c iv il act io n t o b e b ro ug htby “ a p art ic ip an t, b en efi ci ary[,] or

fiduc ia ry forap pr op ria te rel ie f un de r [2 9 U.S.C. § 11 09 ]. ” 29 U.S.C. § 1 13 2( a)(2 ). Sect io n 1 10 9 a ll ows reco ve ry ag ai ns t, “ [a]ny pe rs on who is a fi du ci ary with res pe ctto a pl anwho bre ach es an y of t he res po ns ib il it ie s, o bl ig at io ns , or dut ie s im po se d upo n fi du ci ari es by thi s s ub ch ap te r.” 2 9 U.S.C. § 11 09 (a). Fi du ci ary du ti es im po se d b y ERISA in cl ud e “pr op er m an ag em en t, ad m in is tra ti on , and in ve st m en t o f fundass et s, the m ai nt en an ce o f pr op er re co rd s, the di sc lo su re o f sp eci fie d i nf

orm at io n, an d the av oi da nc e o f co nf li ct s o f in te res t.” Mas s Mu t. Li fe In s. Co . v. Rus se ll , 47 3 U.S. 1 34 , 14 2– 3, 1 05 S. Ct. 3 08 5, 3 09 0 (1 98 5) . Pl ai nt iff s ar gu e th atth ei r cl ai m s ag ai ns t IP S co nc ernth e d es ig n a ndrep ai r of th e Pl an , no t IP S’s ERISA-re gu la te d dut ie s s uc h a s m an ag em en t an d adm in is tra ti on of t he Pla n. Itis tru e th atso m e o f pl ai nt iff s’ ass ert io ns do no t fa ll un de r th e u m

br el laof ERI SA, bu t the ir a ll eg at io ns of b reac h o f fi du ci ary du ti es an d fa il ur e to m ak e requi reddi sc lo su res are cl earl y po te nt ia l cl ai m s u nd er 2 9 U.S.C. § 1 10 9( a), thu s fu lfi ll in g p ro ng on e. The s eco ndin qu iry is s at is fie d be cau se Ehl enFlo oran d the Ehl en s h av e st an di ng un de r ERISA § 50 2( a)(2 ) as fiduc ia ry an d P la n p art ic ip an ts , res pe ct iv el y . St ep two of Dav ila lo ok s t o wh ethe r th e p la in ti ffs ’ cl ai m s i m pl ic at e a dut y in de pe nd en t o f ERISA. In Dav ila , th e Supr em e Co urt fo un d tha t al th ou gh 7res po nd en ts ’ cl ai m ass ert eda br each of dut y un de r th e Tex as Heal th Care Liab il ity Act ( THCLA), th e “ in te rp ret at io n o f th e te rm s” of t he be ne fitpl an“ fo rm [ed ] an es se nt ia l p artof t he ir THCLA cl ai m ,” su chth atth ere was no in de pe nd en t cl ai m to de featpre em

pt io n. 5 42 U.S. at 2 13 , 12 4 S . Ct. at24 98 . Sim il arl y , in Bor re ro v. Uni te d Hea lthC

ar e o f N.Y ., Inc
. , app el lant s ar gu edth atth ei r co nt ractua l dut ie s were d efi ne d b y

st at e la w, bu t thi s co urt fo un d t ha t ev enth ou gh th e ap pe ll an ts ’ as se rti on was “ tru e inth e ab st ract ,” “ th e co nt en t o f th e cl ai m s n eces sa ril y requi re[d ] th e co urt t o i nqui re i nt o a sp ect s o f th e ERISA p la ns be cau se of t he in vo cat io n o f te rm s d efi ne d u nd er the pl an s.” 6 10 F.3d12 96 , 13 04 (11 th Cir . 20 10 ). Thi s co urt h el d tha t i f so m e o f a p arty ’s cla im s “ im pl ic at e le ga l dut ie s de pe nd en t o n t he in te rp ret at io n o f anERISA p la n,” th e cl ai m s ar e co m pl et el y pr eem pt ed . Id
. at 1 30 4– 5. Pla in ti ffs he re as se rt t ha t IP S fai le d t o d is cl os e in fo rm at io n re la te d t o t he Pl an— an ERISA v io la ti on— an d abr og at edit s fi du ci ary ob li ga ti on s, wh ic h a ris e fro m th e rel at io ns hi p e st ab li sh edby the Pla n a ndIPS’s dut ie s u nd er ERIS A. Like th e cl ai m s i n Bor re ro , th e “ le ga l dut y im pl ic at edis de pe nd en t upo n an ERI SA pl an .” Id
. at13 04 . Bec au se th ere i s fe de ral qu es ti onjuri sd ic ti onov er the se cl ai m s, s up pl em en ta l juris di ct io n p ro vi de s u s wi th subjec t m atte r juri sd ic ti on ov er th e rem ai ni ng cla im s. Se e id
. at13 04 –0 5. 8B. The Ar bi tr at io n Agre emen t d oes n ot go vern this dis

pu te Pl ai nt iff s an d IP S ag ree o n t he fol lo win g: Ehl enFlo orsi gn edth e AA at ta ch edto th e Adm in is tra ti ve Serv ic es Agre em en t; th e AA requi res arb it rat io n o f di sp ut es ari si ng ou t o f th e p ro vi si on of s erv ic es un de r th e Agr eem en t; th e Agr eem en t l is ts av ai labl e se rv ic es th atIPS i s capabl e o f pr ov id in g; th e Agr eem en t st at es th atth e “pa rti cu la r se rv ic es to be pe rfo rm edare i nd ic at edinSect io n VI, ‘E le ct io n o f Serv ic es ,’ ” withi n t he Agre em en t; an d S ect io n VI d oe s n otex is t. IPS arg ue s tha t the AA sh ou ldst il l g ov ernEhl enFlo or ’s cla im s an d t ha t the Ehl en s, no n- si gn at or ie s t o t he AA, sho ul d b e equi tabl y est op pe d fr om

av oi di ng arb it rat io n. W e d is ag ree. Altho ug h t he re i s a l ib eral fed eral po li cy fav or in g a rb it rat io n a gr eem en ts , se e Mo ses H. Co ne Mem’l Ho sp . v. Merc ur y Co ns tr . Cor

p. , 46 0 U.S. 1 , 24 , 10 3 S . Ct . 92 7, 9 41 (19 83 ), th is po li cy do es no t o ve rri de th e wis he s o f parti es who ha ve res tri ct edth e ci rcu m st an ces un de r whi chth ey ag ree t o a rb itrat e d is pu te s, se e Mas tr ob uo no v. Sh ea rs on Leh man Hut to n, In c. , 51 4 U.S. 5 2, 5 7, 1 15 S. Ct. 1 21 2, 12 16 (19 95 ). Here, Ehl enFlo oran d IP S in te nt io na ll y li m it edth e sc op e o f arb itrab le m at te rs by spe ci fy in g tha t n otall di sp ut es wou ldbe sen t t o arb itrat io n, on ly tho se di rect ly lin ke d t o the pro vi si on of s erv ic es un de r th e co nt ract . As we ex am in e th ei r co nt ractto de te rm in e wha t tho se servi ces are, the ab se nc e o f th e 9m

y st eri ou s Se ct io n VI c reat es a pr ob le m . W e se e a l au nd ry li stof a va il ab le se rv ic es bu t, u lt im at el y , no sel ect io n o f se rv ic es to be pro vi de d. Itis im po ss ib le fo r us to say tha t a d is pu te “ aro se ou t o f se rv ic es un de r th e Agr eem en t” when th e Agr eem en t d oe s n otst ip ul at e an y servi ces . IPS ar gu es th atanarb itrat orsh ou ldde ci de whet he r th e AA app li es , bu t thi s ig no res th e p art ie s’ in te ntto ha ve a th res ho ldli m it at io n o n t he types of c la im s tha t wil l b e se ntto arb itrat io n. Fu rth erm or e, ev enif we a ccep te d IP S’s arg um en t tha t al l d is pu te s ar is in g fr om

av ai labl e se rv ic es , rathe r th ansel ect edservi ces , sh ou ldbe arb itrat ed , itis no t cl ear t ha t p la in ti ffs ’ cl ai m s co nc ernth e av ai labl e se rv ic es . IPS rel ie s h eav il y

on Agre em en t l an gu ag e th aton e se rv ic e o ffer edwas t o draft am en dm en ts “ [a]s reque st edby [Ehle n F lo or ], or r equi redby min orch an ge s i n t ax la w, or as ne ed edto co nf orm to tes ti ng of d is cri m in at io n re qu ire m en ts .” The ch an ge intax law i n t hi s ca se was h ard ly min or , andth e am en dm en t was no t di sc lo se d t o p la in ti ffs , m

uc h l es s re qu es te d. IPS al so ass ert s tha t p rin ci pl es of e qu it ab le est op pe l b ar the cla im s o f th e Ehl en s, n on -s ig na to rie s t o t he AA. IPS con te nd s tha t the Ehl en s ca nn otass ert cl ai m s ar is in g d ep en de ntup onth e Agr eem en t wh il e es cap in g o th er cl au se s o f th e Agr eem en t. The Ehl en s d o n otsee k t o e nf or ce the Agre em en t, tho ug h, an d a s we

10ex pl ai ne d abo ve , th e cl ai m s ca nn otbe sai d t o aris e fro m servi ces un de r th e Agr eem en t b ecau se th e d oc um en t s pe ci fie d n o s erv ic es . W e th eref

or e aff irm th e d is tri ctco urt’s d en ia l o f IPS’s m ot io n t o c om pe l arb itrat io n a ndto st ay

pl ai nt iff s’ cla im s ag ai ns t i t. AFFIRMED.

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