NEWPAGE WISCONSIN SYSTEM, INC. v. UNITED STEEL, PAPER & FORESTRY, RUBBER, MANUFACTURING, ENERGY ALLIED INDUSTRIAL AND SERVICE WORKERS INTERNATIONAL UNION (July 12, 2011)

NewPage Wisconsin System recently closed several paper mills that it operates in Wisconsin in order to save money. It also stopped subsidizing medical care for retirees over 65. The Union claimed the subsidy elimination violated both the Retiree Health Plan and the Collective Bargaining Agreement. It brought suit under § 301 of the Labor Management Relations Act and ERISA § 502 in the Southern District of Ohio. Several weeks later, NewPage filed a declaratory judgment action in the Western District of Wisconsin raising the same issues. Judge Crabb (W.D. Wis.) dismissed the suit. She concluded that the court did not have subject matter jurisdiction over the ERISA claim. The court did have jurisdiction over the LMRA claim but dismissed in deference to the Ohio suit. NewPage appeals.

In their opinion, Chief Judge Easterbrook, Circuit Judge Bauer, and District Judge Young vacated and remanded. The Court noted that § 2201 authorizes declaratory judgment actions but does not itself grant subject matter jurisdiction. Jurisdiction must arise from the substantive claims. The Court agreed with the district court that ERISA § 502(a)(3) only grants jurisdiction for a request for appropriate equitable relief. There is no such request here. Nevertheless, the Court found two other bases for jurisdiction. First, ERISA § 502(e) grants jurisdiction for actions arising under its subchapter. NewPage's claim does arise under that subchapter. In order to determine jurisdiction for a declaratory judgment action, a court must determine whether a complaint filed by the defendant would meet jurisdictional requirements. The Court looked to the actual complaint filed by the defendants in Ohio to conclude that it, and therefore the declaratory judgment action, came within § 502(e) jurisdiction. Second, the Court looked to § 1331’s general federal question jurisdiction grant. ERISA claims are always federal in nature. In concluding that the district court had jurisdiction of both the ERISA claim in the LMRA claim, the Court had to overrule part of its 2008 decision in Newell Operating Co. (another part of the decision was overruled in 2010). The Court next addressed whether the district court abused its discretion in dismissing the case in deference to the Ohio litigation. Since the district court decision, that case has stalled on procedural matters and is on appeal in the Sixth Circuit. Wisconsin now seems to be the better forum for litigating the issues on the merits. The Court remanded to the district court, however, to make that decision.