Stone v. Stone

EUGENE A. WRIGHT, Circuit Judge,

specially concurring;

I concur, but I do not believe that the district court’s jurisdiction rests solely on the fragile inference that ERISA authorizes this suit and grants this plaintiff a remedy. Even if the plaintiff’s remedy is provided by state law, the suit arises under an act of Congress regulating commerce and is removable on that basis. 28 U.S.C. §§ 1337 (a), 1441(a). 1

A suit arises under an act of Congress regulating commerce if the complaint seeks a remedy granted or implied by the act “or . [if] the suit hinges on the interpretation of such an act.” Garrett v. Time-D.C., Inc., 502 F.2d 627, 629 (9th Cir. 1974) (citations omitted), cert. denied, 421 U.S. 913 , 95 S.Ct. 1569 , 43 L.Ed.2d 778 (1975). See also Spokane County Legal Services, Inc. v. Legal Services Corp., 614 F.2d 662, 667 (9th Cir. 1980) (a suit arises under federal law when the complaint presents a substantial dispute over the construction or effect of federal law and the result turns on that dispute). 2

The plaintiff claims to be directly entitled to benefits as a “participant” or derivatively entitled by virtue of a valid transfer. 3 Both theories of entitlement depend on propositions of federal law. 4 If she could not show that she was a participant within the meaning of ERISA, she would have to show that the transfer of benefits to her was not an “assignment or alienation” prohibited by ERISA to demonstrate that she was the “owner” of the benefits allegedly “converted.” See ERISA § 206(d)(1), 29 U.S.C. § 1056 (d)(1) (plan may not permit assignment or alienation of benefits).

Propositions about ERISA do not enter the case merely to negate the existence of a right based entirely on state law. 5 Instead, *745 they are necessary ingredients of the plaintiff’s asserted entitlement and form “direct and essential elements] of the plaintiff’s cause of action.” See Spokane County Legal Services, 614 F.2d at 667 (quoting Smith v. Grimm, 534 F.2d 1346, 1350 (9th Cir.), cert. denied, 429 U.S. 980 , 97 S.Ct. 493 , 50 L.Ed.2d 589 (1976)).

The district court therefore had jurisdiction whether the plaintiff is a “participant” or the transferee of a participant’s rights. 6

. ERISA is an act of Congress regulating commerce within the meaning of § 1337. Leonardis v. Local 282 Pension Trust Fund, 391 F.Supp. 554, 556 (E.D.N.Y.1975).

. Spokane County Legal Services involved general federal question jurisdiction under 28 U.S.C. § 1331 , but judicial interpretations of “arising under” are equally applicable to §§ 1331 and 1337. Garrett v. Time-D.C., Inc., 502 F.2d 627, 629 (9th Cir. 1974), cert. denied, 421 U.S. 913 , 95 S.Ct. 1569 , 43 L.Ed.2d 778 (1975).

A suit may arise under federal law even though a federal remedy is not sought. See, e. g., Gully v. First National Bank, 299 U.S. 109, 112 , 57 S.Ct. 96, 97 , 81 L.Ed. 70 (1936) (dictum); Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 199 , 41 S.Ct. 243 , 65 L.Ed. 577 (1921). “[Fjederal law creates primary relationships that have dimensions and applications beyond those points at which express remedies are provided.” Note, The Outer Limits of “Arising Under,” 54 N.Y.U.L.Rev. 978, 1001 (1979). When the plaintiffs claim for a state remedy substantially relies on propositions about federally-governed relationships, and when the dispute over these propositions is likely to prove decisive, the suit arises under federal law. Id. at 979, 1004-06.

. The district court determined that the plaintiff’s claim had these elements: “(1) that the employee spouse had a right under the terms of the plan to receive benefits; and (2) that his right was validly transferred to his spouse by the divorce decree.” Stone v. Stone, 450 F.Supp. 919, 921 (N.D.Cal.1978).

. The first theory undoubtedly relies on federal law, and this reliance alone is probably sufficient to give rise to federal jurisdiction. See Bell v. Hood, 327 U.S. 678, 681-83 , 66 S.Ct. 773, 775 , 90 L.Ed. 939 (1946) (substantial federal claim supports jurisdiction even if claim does not prevail on merits); accord, Hagans v. Lavine, 415 U.S. 528, 542 , 94 S.Ct. 1372, 1381 , 39 L.Ed.2d 577 (1974). In any event, the second theory also relies on federal law. Federal law is essential to both aspects of the claim.

. Cf. Louisville & N.R.R. v. Mottley, 211 U.S. 149, 150, 152 , 29 S.Ct. 42, 43 , 53 L.Ed. 126 (1908) (plaintiffs asserted contractual right based solely on state law).

The district court apparently thought that, if the plaintiff was not deemed a “participant,” her claims would not arise under federal law because her “right to acquire an interest in her spouse’s benefits is created solely by state law, as are all spousal rights. . That ERISA permits states to create a cause of action for benefits does not mean that the cause of action arises under federal law.” Stone v. Stone, 450 F.Supp. 919, 922-23 (N.D.Cal.1978) (citing Gully v. First National Bank, 299 U.S. 109, 116 , 57 S.Ct. 96, 99 , 81 L.Ed. 70 (1936)).

The federal issues, however, include not merely whether ERISA permits the state to create a cause of action but whether the asserted entitlement was based on a valid transfer of benefits under ERISA. The claim of a valid transfer is an element of the cause of action.

. The plaintiff also had standing whether or not she is a “participant.”

Standing requires an adversary relationship between the parties. Davis v. Passman, 442 U.S. 228 , 239 n.18, 99 S.Ct. 2264 , 2274 n.18, 60 L.Ed.2d 846 (1979). It does not presuppose success on the merits. See id.

The plaintiff undoubtedly satisfied the article III requirement of “injury in fact.” See 13 C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure, § 3531 at 176 (1975) (although standing doctrine is ambiguous, the article III aspect “seems likely to extend only to the requirement that a litigant establish ‘injury in fact’ resulting from the challenged activity”).

She also satisfied the prudential requirement of “some connection between the asserted injury in fact and the protective purpose of the statutory or constitutional provision invoked.” Id. at 176 77.

Even if she is not a “participant,” she is the former spouse of one and transferee of his rights. She alleges an injury directly related to the interests protected by ERISA and arguably among those interests.