Franchise Tax Bd. v. Construction Laborers
463 U.S. 1 (1983)

Annotate this Case

U.S. Supreme Court

Franchise Tax Bd. v. Construction Laborers, 463 U.S. 1 (1983)

Franchise Tax Bd. v. Construction Laborers

Vacation Trust for Southern California

No. 82-695.

Argued April 19, 1983

Decided June 24, 1983

463 U.S. 1

APPEAL FROM THE UNITED STATES COURT OF APPEALS FOR

THE NINTH CIRCUIT

Syllabus

Appellee Construction Laborers Vacation Trust for Southern California (CLVT) was established by an agreement between construction industry employer associations and a labor union to provide a mechanism for administering the provisions of a collective bargaining agreement granting construction workers a yearly paid vacation. The trust qualifies as a "welfare benefit plan" within the meaning of § 3 of the Employee Retirement Income Security Act of 1974 (ERISA), and hence is subject to regulation under ERISA. Appellant California Franchise Tax Board filed a complaint in California state court against CLVT and its trustees, alleging two causes of action: (1) that CLVT had failed to comply with certain tax levies issued under a California statute, thereby becoming liable for damages for such failure, and (2) that, in view of the defendants' contention that ERISA preempted state law and that the trustees lacked power to honor the levies, a judgment be issued declaring the parties' respective rights. CLVT removed the case to Federal District Court, which, after denying appellant's motion for remand to the state court, held that ERISA did not preempt the State's power to levy on the funds held in trust by CLVT. The Court of Appeals reversed.

Held: The case is not within the removal jurisdiction conferred by 28 U.S.C.§ 1441. Pp. 465 U. S. 7-28.

Page 463 U. S. 2

(a) Where there is no diversity of citizenship between the parties, as in this case, the propriety of removal turns on whether the case falls within the original "federal question" jurisdiction of United States district courts under 28 U.S.C. § 1331 (1976 ed., Supp. V). Under the "well-pleaded complaint" rule, a defendant may not remove such a case to federal court unless the plaintiff's complaint establishes that the case "arises under" federal law within the meaning of § 1331, and it may not be removed on the basis of a federal defense, including the defense of preemption, even if the defense is anticipated in the complaint and both parties admit that the defense is the only question truly at issue. Pp. 463 U. S. 7-12.

(b) For appellant's first cause of action, a straightforward application of the well-pleaded complaint rule precludes original federal court jurisdiction, and thus the cause of action was not removable. California law establishes a set of conditions, without reference to federal law, under which a tax levy may be enforced; federal law becomes relevant only by way of a defense to an obligation created entirely by state law, and then only if appellant has made out a valid claim for relief under state law. Pp. 463 U. S. 13-14.

(c) Nor is appellant's second cause of action removable to federal court. Under the federal jurisdictional statutes, federal courts do not have original jurisdiction, nor do they acquire jurisdiction on removal, when a federal question is presented by a complaint for a state declaratory judgment, and where, if the plaintiff had sought a federal declaratory judgment, federal jurisdiction would be barred by Skelly Oil Co. v. Phillips Petroleum Co.,339 U. S. 667, under which federal jurisdiction is lacking if, but for the availability of the federal declaratory judgment procedure, a federal claim would arise only as a defense to a state-created action. The situation presented by a State's suit for a declaration of the validity of state law is sufficiently removed from the spirit of necessity and careful limitation of federal district court jurisdiction that informed this Court's statutory interpretation in Skelly Oil and Gully v. First National Bank in Meridian,299 U. S. 109, to convince the Court that, until Congress informs it otherwise, such a suit is not within the district courts' original jurisdiction. Accordingly, the same suit brought originally in state court is not removable. Pp. 463 U. S. 14-22.

(d) A suit by state tax authorities under a statute like the California tax levy statute involved here does not "arise" under ERISA. The State's right to enforce its tax levies is not of central concern to the federal statute. Avco Corp. v. Machinists,390 U. S. 557, distinguished. Even though ERISA may preclude enforcement of the State's levy in the circumstances of this case, an action to enforce the levy is not itself preempted by ERISA. On the face of a well-pleaded complaint there are

Page 463 U. S. 3

many reasons completely unrelated to ERISA's provisions and purposes why the State may or may not be entitled to the relief it seeks. Moreover, ERISA does not provide an alternative cause of action in the State's favor to enforce its rights. Nor does appellant's second cause of action arise under ERISA. ERISA enumerates the parties entitled to seek a declaratory judgment under § 502 of that Act; it does not provide anyone other than participants, beneficiaries, or fiduciaries of an ERISA-covered plan with an express cause of action for a declaratory judgment on the issues of this case. A suit for similar relief by some other party does not "arise under" that provision. Pp. 463 U. S. 22-27.

679 F.2d 1307, vacated and remanded.

BRENNAN, J., delivered the opinion for a unanimous Court.

JUSTICE BRENNAN delivered the opinion of the Court.

The principal question in dispute between the parties is whether the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U.S.C. § 1001 et seq. (1976 ed. and Supp. V), permits state tax authorities

Page 463 U. S. 4

to collect unpaid state income taxes by levying on funds held in trust for the taxpayers under an ERISA-covered vacation benefit plan. The issue is an important one, which affects thousands of federally regulated trusts and all nonfederal tax collection systems, and it must eventually receive a definitive, uniform resolution. Nevertheless, for reasons involving perhaps more history than logic, we hold that the lower federal courts had no jurisdiction to decide the question in the case before us, and we vacate the judgment and remand the case with instructions to remand it to the state court from which it was removed.

I

None of the relevant facts is in dispute. Appellee Construction Laborers Vacation Trust for Southern California (CLVT) [Footnote 1] is a trust established by an agreement between four associations of employers active in the construction industry in southern California and the Southern California District Council of Laborers, an arm of the District Council and affiliated locals of the Laborers' International Union of North America. The purpose of the agreement and trust was to establish a mechanism for administering the provisions of a collective bargaining agreement that grants construction workers a yearly paid vacation. [Footnote 2] The trust agreement expressly proscribes any assignment, pledge, or encumbrance of

Page 463 U. S. 5

funds held in trust by CLVT. [Footnote 3] The Plan that CLVT administers is unquestionably an "employee welfare benefit plan" within the meaning of § 3 of ERISA, 29 U.S.C. § 1002(1), and CLVT and its individual trustees are thereby subject to extensive regulation under Titles I and III of ERISA.

Appellant Franchise Tax Board is a California agency charged with enforcement of that State's personal income tax law. California law authorizes appellant to require any person in possession of "credits or other personal property or other things of value, belonging to a taxpayer"

"to withhold . . . the amount of any tax, interest, or penalties due from the taxpayer . . . and to transmit the amount withheld to the Franchise Tax Board."

Cal.Rev. & Tax. Code Ann. § 18817 (West Supp.1983). Any person who, upon notice by the Franchise Tax Board, fails to comply with its request to withhold and to transmit funds becomes personally liable for the amounts identified in the notice. § 18818.

In June, 1980, the Franchise Tax Board filed a complaint in state court against CLVT and its trustees. Under the heading "First Cause of Action," appellant alleged that CLVT had failed to comply with three levies issued under § 18817, [Footnote 4] concluding

Page 463 U. S. 6

with the allegation that it had been "damaged in a sum . . . not to exceed $380.56 plus interest from June 1, 1980." App. 3-8. Under the heading "Second Cause of Action," appellant incorporated its previous allegations and added:

"There was at the time of the levies alleged above and continues to be an actual controversy between the parties concerning their respective legal rights and duties. The Board [appellant] contends that defendants [CLVT] are obligated and required by law to pay over to the Board all amounts held . . . in favor of the Board's delinquent taxpayers. On the other hand, defendants contend that section 514 of ERISA preempts state law and that the trustees lack the power to honor the levies made upon them by the State of California. "

Page 463 U. S. 7

"[D]efendants will continue to refuse to honor the Board's levies in this regard. Accordingly, a declaration by this court of the parties' respective rights is required to fully and finally resolve this controversy."

Id. at 8-9. In a prayer for relief, appellant requested damages for defendants' failure to honor the levies and a declaration that defendants are "legally obligated to honor all future levies by the Board." Id. at 9. [Footnote 5]

CLVT removed the case to the United States District Court for the Central District of California, and the court denied the Franchise Tax Board's motion for remand to the state court. On the merits, the District Court ruled that ERISA did not preempt the State's power to levy on funds held in trust by CLVT. CLVT appealed, and the Court of Appeals reversed. 679 F.2d 1307 (CA9 1982). On petition for rehearing, the Franchise Tax Board renewed its argument that the District Court lacked jurisdiction over the complaint in this case. The petition for rehearing was denied, and an appeal was taken to this Court. We postponed consideration of our jurisdiction pending argument on the merits. 459 U.S. 1085 (1982). We now hold that this case was not within the removal jurisdiction conferred by 28 U.S.C. § 1441, and therefore we do not reach the merits of the preemption question. [Footnote 6]

II

The jurisdictional structure at issue in this case has remained basically unchanged for the past century. With exceptions not relevant here,

"any civil action brought in a

Page 463 U. S. 8

State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending."

Ibid. If it appears before final judgment that a case was not properly removed, because it was not within the original jurisdiction of the United States district courts, the district court must remand it to the state court from which it was removed. See 28 U.S.C. § 1447(c). For this case -- as for many cases where there is no diversity of citizenship between the parties -- the propriety of removal turns on whether the case falls within the original "federal question" jurisdiction of the United States district courts: "The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331 (1976 ed., Supp. V). [Footnote 7] Since the first version of § 1331 was enacted, Act of Mar. 3, 1875, ch. 137, § 1, 18 Stat. 470, the statutory phrase "arising under the Constitution, laws, or treaties of the United States" has resisted all attempts to frame a single, precise definition for determining which cases fall within, and which cases fall outside, the original jurisdiction of the district courts. Especially when considered in light of § 1441's removal jurisdiction, the phrase "arising under" masks a welter of issues regarding the interrelation of federal and state authority and the proper management of the federal judicial system. [Footnote 8]

The most familiar definition of the statutory "arising under" limitation is Justice Holmes' statement, "A suit arises

Page 463 U. S. 9

under the law that creates the cause of action." American Well Works Co. v. Layne & Bowler Co.,241 U. S. 257, 241 U. S. 260 (1916). However, it is well settled that Justice Holmes' test is more useful for describing the vast majority of cases that come within the district courts' original jurisdiction than it is for describing which cases are beyond district court jurisdiction. We have often held that a case "arose under" federal law where the vindication of a right under state law necessarily turned on some construction of federal law, see, e.g., Smith v. Kansas City Title & Trust Co.,255 U. S. 180 (1921); Hopkins v. Walker,244 U. S. 486 (1917), and even the most ardent proponent of the Holmes test has admitted that it has been rejected as an exclusionary principle, see Flournoy v. Wiener,321 U. S. 253, 321 U. S. 270-272 (1944) (Frankfurter, J., dissenting). See also T. B. Harms Co. v. Eliscu, 339 F.2d 823, 827 (CA2 1964) (Friendly, J.). Leading commentators have suggested that for purposes of § 1331 an action "arises under" federal law

"if in order for the plaintiff to secure the relief sought he will be obliged to establish both the correctness and the applicability to his case of a proposition of federal law."

P. Bator, P. Mishkin, D. Shapiro, & H. Wechsler, Hart and Wechsler's The Federal Courts and the Federal System 889 (2d ed.1973) (hereinafter Hart & Wechsler); cf. T. B. Harms Co., supra, at 827 ("a case may arise under' a law of the United States if the complaint discloses a need for determining the meaning or application of such a law").

One powerful doctrine has emerged, however -- the "well-pleaded complaint" rule -- which, as a practical matter, severely limits the number of cases in which state law "creates the cause of action" that may be initiated in or removed to

Page 463 U. S. 10

federal district court, thereby avoiding more or less automatically a number of potentially serious federal-state conflicts.

"[W]hether a case is one arising under the Constitution or a law or treaty of the United States, in the sense of the jurisdictional statute, . . . must be determined from what necessarily appears in the plaintiff's statement of his own claim in the bill or declaration, unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant may interpose."

Taylor v. Anderson,234 U. S. 74, 234 U. S. 75-76 (1914). Thus, a federal court does not have original jurisdiction over a case in which the complaint presents a state law cause of action, but also asserts that federal law deprives the defendant of a defense he may raise, Taylor v. Anderson, supra; Louisville & Nashville R. Co. v. Mottley,211 U. S. 14 (1908), or that a federal defense the defendant may raise is not sufficient to defeat the claim, Tennessee v. Union & Planters' Bank,152 U. S. 454 (1894).

"Although such allegations show that very likely, in the course of the litigation, a question under the Constitution would arise, they do not show that the suit, that is, the plaintiff's original cause of action, arises under the Constitution."

Louisville & Nashville R. Co. v. Mottley, supra, at 211 U. S. 152. For better or worse, under the present statutory scheme as it has existed since 1887, a defendant may not remove a case to federal court unless the plaintiff's complaint establishes that the case "arises under" federal law. [Footnote 9]

"[A] right or immunity created by the

Page 463 U. S. 11

Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action."

Gully v. First National Bank in Meridian,299 U. S. 109, 299 U. S. 112 (1936).

For many cases in which federal law becomes relevant only insofar as it sets bounds for the operation of state authority, the well-pleaded complaint rule makes sense as a quick rule of thumb. Describing the case before the Court in Gully, [Footnote 10] Justice Cardozo wrote:

"Petitioner will have to prove that the state law has been obeyed before the question will be reached whether anything in its provisions or in administrative conduct under it is inconsistent with the federal rule. If what was done by the taxing officers in levying the tax in suit did not amount in substance under the law of Mississippi to an assessment of the shareholders, but in substance as

Page 463 U. S. 12

well as in form was an assessment of the bank alone, the conclusion will be inescapable that there was neither tax nor debt, apart from any barriers Congress may have built. On the other hand, a finding upon evidence that the Mississippi law has been obeyed may compose the controversy altogether, leaving no room for a contention that the federal law has been infringed. The most that one can say is that a question of federal law is lurking in the background, just as farther in the background there lurks a question of constitutional law, the question of state power in our federal form of government. A dispute so doubtful and conjectural, so far removed from plain necessity, is unavailing to extinguish the jurisdiction of the states."

Id. at 299 U. S. 117.

The rule, however, may produce awkward results, especially in cases in which neither the obligation created by state law nor the defendant's factual failure to comply are in dispute, and both parties admit that the only question for decision is raised by a federal preemption defense. Nevertheless, it has been correctly understood to apply in such situations. [Footnote 11] As we said in Gully:

"By unimpeachable authority, a suit brought upon a state statute does not arise under an act of Congress or the Constitution of the United States because prohibited thereby."

Id. at 299 U. S. 116. [Footnote 12]

Page 463 U. S. 13

III

Simply to state these principles is not to apply them to the case at hand. Appellant's complaint sets forth two "causes of action," one of which expressly refers to ERISA; if either comes within the original jurisdiction of the federal courts, removal was proper as to the whole case. See 28 U.S.C. § 1441(c). Although appellant's complaint does not specifically assert any particular statutory entitlement for the relief it seeks, the language of the complaint suggests (and the parties do not dispute) that appellant's "first cause of action" states a claim under Cal.Rev. & Tax. Code Ann. § 18818 (West Supp.1983), see supra at 463 U. S. 5-6, and its "second cause of action" states a claim under California's Declaratory Judgment Act, Cal.Civ.Proc.Code Ann. § 1060 (West 1980). As an initial proposition, then, the "law that creates the cause of action" is state law, and original federal jurisdiction is unavailable unless it appears that some substantial, disputed question of federal law is a necessary element of one of the well-pleaded state claims, or that one or the other claim is "really" one of federal law.

A

Even though state law creates appellant's causes of action, its case might still "arise under" the laws of the United States if a well-pleaded complaint established that its right to relief under state law requires resolution of a substantial question of federal law in dispute between the parties. For appellant's first cause of action -- to enforce its levy, under § 18818 -- a straightforward application of the well-pleaded complaint rule precludes original federal court jurisdiction. California law establishes a set of conditions, without reference to federal law, under which a tax levy may be enforced; federal law becomes relevant only by way of a defense to an obligation created entirely by state law, and then only if appellant has made out a valid claim for relief under state law. See supra at 463 U. S. 11-12. The well-pleaded complaint rule was framed to deal with precisely such a situation. As we discuss

Page 463 U. S. 14

above, since 1887, it has been settled law that a case may not be removed to federal court on the basis of a federal defense, including the defense of preemption, even if the defense is anticipated in the plaintiff's complaint, and even if both parties admit that the defense is the only question truly at issue in the case.

Appellant's declaratory judgment action poses a more difficult problem. Whereas the question of federal preemption is relevant to appellant's first cause of action only as a potential defense, it is a necessary element of the declaratory judgment claim. Under Cal.Civ.Proc.Code Ann. § 1060 (West 1980), a party with an interest in property may bring an action for a declaration of another party's legal rights and duties with respect to that property upon showing that there is an "actual controversy relating to the legal rights and duties" of the parties. The only questions in dispute between the parties in this case concern the rights and duties of CLVT and its trustees under ERISA. Not only does appellant's request for a declaratory judgment under California law clearly encompass questions governed by ERISA, but appellant's complaint identifies no other questions as a subject of controversy between the parties. Such questions must be raised in a well-pleaded complaint for a declaratory judgment. [Footnote 13] Therefore, it is clear on the face of its well-pleaded complaint that appellant may not obtain the relief it seeks in its second cause of action ("[t]hat the court declare defendants legally obligated to honor all future levies by the Board upon [CLVT]," App. 9) without a construction of ERISA and/or an adjudication of its preemptive effect and constitutionality -- all questions of federal law.

Page 463 U. S. 15

Appellant argues that original federal court jurisdiction over such a complaint is foreclosed by our decision in Skelly Oil Co. v. Phillips Petroleum Co.,339 U. S. 667 (1950). As we shall see, however, Skelly Oil is not directly controlling.

In Skelly Oil, Skelly Oil and Phillips had a contract, for the sale of natural gas, that entitled the seller -- Skelly Oil -- to terminate the contract at any time after December 1, 1946, if the Federal Power Commission had not yet issued a certificate of convenience and necessity to a third party, a pipeline company to whom Phillips intended to resell the gas purchased from Skelly Oil. Their dispute began when the Federal Power Commission informed the pipeline company on November 30 that it would issue a conditional certificate, but did not make its order public until December 2. By this time, Skelly Oil had notified Phillips of its decision to terminate their contract. Phillips brought an action in United States District Court under the federal Declaratory Judgment Act, 28 U.S.C. § 2201, seeking a declaration that the contract was still in effect. 339 U.S. at 339 U. S. 669-671.

There was no diversity between the parties, and we held that Phillips' claim was not within the federal question jurisdiction conferred by § 1331. We reasoned:

"'[T]he operation of the Declaratory Judgment Act is procedural only.' Aetna Life In. Co. v. Haworth,300 U. S. 227, 300 U. S. 240. Congress enlarged the range of remedies available in the federal courts, but did not extend their jurisdiction. When concerned as we are with the power of the inferior federal courts to entertain litigation within the restricted area to which the Constitution and Acts of Congress confine them, 'jurisdiction' means the kinds of issues which give right of entrance to federal courts. Jurisdiction in this sense was not altered by the Declaratory Judgment Act. Prior to that Act, a federal court would entertain a suit on a contract only if the plaintiff asked for an immediately enforceable remedy

Page 463 U. S. 16

like money damages or an injunction, but such relief could only be given if the requisites of jurisdiction, in the sense of a federal right or diversity, provided foundation for resort to the federal courts. The Declaratory Judgment Act allowed relief to be given by way of recognizing the plaintiff's right even though no immediate enforcement of it was asked. But the requirements of jurisdiction -- the limited subject matters which alone Congress had authorized the District Courts to adjudicate -- were not impliedly repealed or modified."

339 U.S. at 339 U. S. 671-672. We then observed that, under the well-pleaded complaint rule, an action by Phillips to enforce its contract would not present a federal question. Id. at 339 U. S. 672. Skelly Oil has come to stand for the proposition that,

"if, but for the availability of the declaratory judgment procedure, the federal claim would arise only as a defense to a state created action, jurisdiction is lacking."

10A C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure § 2767, pp. 744-745 (2d ed.1983). Cf. Public Service Comm'n of Utah v. Wycoff Co.,344 U. S. 237, 344 U. S. 248 (1952) (dictum). [Footnote 14]

Page 463 U. S. 17

1. As an initial matter, we must decide whether the doctrine of Skelly Oil limits original federal court jurisdiction under § 1331 -- and by extension removal jurisdiction under § 1441 -- when a question of federal law appears on the face of a well-pleaded complaint for a state law declaratory judgment. Apparently, it is a question of first impression. [Footnote 15] As the passage quoted above makes clear, Skelly Oil relied significantly on the precise contours of the federal Declaratory Judgment Act, as well as of § 1331. Cf. 339 U.S. at 339 U. S. 674 (stressing the need to respect "the limited procedural purpose of the Declaratory Judgment Act"). The Court's emphasis that the Declaratory Judgment Act was intended to affect only the remedies available in a federal district court, not the court's jurisdiction, was critical to the Court's reasoning. Our interpretation of the federal Declaratory Judgment Act in Skelly Oil does not apply of its own force to state declaratory judgment statutes, many of which antedate the federal statute, see Developments in the Law -- Declaratory Judgments -- 1941-1949, 62 Harv.L.Rev. 787, 790-791 (1949). [Footnote 16] Cf. 288 U. S. C. & St. L. R. Co. v. Wallace, 288

Page 463 U. S. 18

U.S. 249, 288 U. S. 264-265 (1933) (Supreme Court appellate jurisdiction over federal questions in a state declaratory judgment). Yet while Skelly Oil itself is limited to the federal Declaratory Judgment Act, fidelity to its spirit leads us to extend it to state declaratory judgment actions as well. If federal district courts could take jurisdiction, either originally or by removal, of state declaratory judgment claims raising questions of federal law, without regard to the doctrine of Skelly Oil, the federal Declaratory Judgment Act -- with the limitations Skelly Oil read into it -- would become a dead letter. For any case in which a state declaratory judgment action was available, litigants could get into federal court for a declaratory judgment, despite our interpretation of § 2201, simply by pleading an adequate state claim for a declaration of federal law. Having interpreted the Declaratory Judgment Act of 1934 to include certain limitations on the jurisdiction of federal district courts to entertain declaratory judgment suits, we should be extremely hesitant to interpret the Judiciary Act of 1875 and its 1887 amendments in a way that renders the limitations in the later statute nugatory. Therefore, we hold that, under the jurisdictional statutes as they now stand, [Footnote 17]

Page 463 U. S. 19

federal courts do not have original jurisdiction, nor do they acquire jurisdiction on removal, when a federal question is presented by a complaint for a state declaratory judgment, but Skelly Oil would bar jurisdiction if the plaintiff had sought a federal declaratory judgment.

2. The question, then, is whether a federal district court could take jurisdiction of appellant's declaratory judgment claim had it been brought under 28 U.S.C. § 2201. [Footnote 18] The application of Skelly Oil to such a suit is somewhat unclear. Federal courts have regularly taken original jurisdiction over declaratory judgment suits in which, if the declaratory judgment defendant brought a coercive action to enforce its rights, that suit would necessarily present a federal question. [Footnote 19] Section 502(a)(3) of ERISA specifically grants trustees of ERISA-covered plans like CLVT a cause of action for

Page 463 U. S. 20

injunctive relief when their rights and duties under ERISA are at issue, and that action is exclusively governed by federal law. [Footnote 20] If CLVT could have sought an injunction under ERISA against application to it of state regulations that require acts inconsistent with ERISA, [Footnote 21] does a declaratory judgment suit by the State "arise under" federal law?

We think not. We have always interpreted what Skelly Oil called "the current of jurisdictional legislation since the Act of March 3, 1875," 339 U.S. at 673, with an eye to practicality and necessity.

"What is needed is something of that common-sense accommodation of judgment to kaleidoscopic situations which characterizes the law in its treatment of problems of causation . . . a selective process which picks the substantial causes out of the web and lays the other ones

Page 463 U. S. 21

aside."

"Gully v. First National Bank in Meridian, 299 U.S. at 299 U. S. 117-118. There are good reasons why the federal courts should not entertain suits by the States to declare the validity of their regulations despite possibly conflicting federal law. States are not significantly prejudiced by an inability to come to federal court for a declaratory judgment in advance of a possible injunctive suit by a person subject to federal regulation. They have a variety of means by which they can enforce their own laws in their own courts, and they do not suffer if the preemption questions such enforcement may raise are tested there. [Footnote 22] The express grant of federal jurisdiction in ERISA is limited to suits brought by certain parties, see infra at 463 U. S. 25, as to whom Congress presumably determined that a right to enter federal court was necessary to further the statute's purposes. [Footnote 23] It did not go so far as to provide that any suit against such parties must also be brought in federal court when they themselves did not choose to sue. The situation presented by a State's suit for a declaration of the validity of state law is sufficiently removed from the spirit of necessity and careful limitation of district court jurisdiction

Page 463 U. S. 22

that informed our statutory interpretation in Skelly Oil and Gully to convince us that, until Congress informs us otherwise, such a suit is not within the original jurisdiction of the United States district courts. Accordingly, the same suit brought originally in state court is not removable either. [Footnote 24]"

B

CLVT also argues that appellant's "causes of action" are, in substance, federal claims. Although we have often repeated that "the party who brings a suit is master to decide what law he will rely upon," The Fair v. Kohler Die & Specialty Co.,228 U. S. 22, 228 U. S. 25 (1913), it is an independent corollary of the well-pleaded complaint rule that a plaintiff may not defeat removal by omitting to plead necessary federal questions in a complaint, see Avco Corp. v. Aero Lodge No. 75, Int'l Assn. of Machinists, 376 F.2d 337, 339-340 (CA6 1967), aff'd, 390 U.S. 390 U. S. 557 (1968).

CLVT's best argument stems from our decision in Avco Corp. v. Aero Lodge No. 75. In that case, the petitioner filed suit in state court alleging simply that it had a valid contract with the respondent, a union, under which the respondent had agreed to submit all grievances to binding arbitration and not to cause or sanction any "work stoppages, strikes, or slowdowns." The petitioner further alleged that the respondent and its officials had violated the agreement by

Page 463 U. S. 23

participating in and sanctioning work stoppages, and it sought temporary and permanent injunctions against further breaches. App. O.T. 1967, No. 445, pp. 2-9. It was clear that, had petitioner invoked it, there would have been a federal cause of action under § 301 of the Labor Management Relations Act, 1947 (LMRA), 29 U.S.C. § 185, see Textile Workers v. Lincoln Mills,353 U. S. 448 (1957), and that, even in state court, any action to enforce an agreement within the scope of § 301 would be controlled by federal law, see Teamsters v. Lucas Flour Co.,369 U. S. 95, 369 U. S. 103-104 (1962). It was also clear, however, under the law in effect at the time, that independent limits on federal jurisdiction made it impossible for a federal court to grant the injunctive relief petitioner sought. See Sinclair Refining Co. v. Atkinson,370 U. S. 195 (1962) (later overruled in Boys Markets, Inc. v. Retail Clerks,398 U. S. 235 (1970)).

The Court of Appeals held, 376 F.2d at 340, and we affirmed, 390 U.S. at 390 U. S. 560, that the petitioner's action "arose under" § 301, and thus could be removed to federal court, although the petitioner had undoubtedly pleaded an adequate claim for relief under the state law of contracts and had sought a remedy available only under state law. The necessary ground of decision was that the preemptive force of § 301 is so powerful as to displace entirely any state cause of action "for violation of contracts between an employer and a labor organization." [Footnote 25] Any such suit is purely a creature of federal law, notwithstanding the fact that state law would provide a cause of action in the absence of § 301. Avco

Page 463 U. S. 24

stands for the proposition that, if a federal cause of action completely preempts a state cause of action any complaint that comes within the scope of the federal cause of action necessarily "arises under" federal law.

CLVT argues by analogy that ERISA, like § 301, was meant to create a body of federal common law, and that

"any state court action which would require the interpretation or application of ERISA to a plan document 'arises under' the laws of the United States."

Brief for Appellees 20-21. ERISA contains provisions creating a series of express causes of action in favor of participants, beneficiaries, and fiduciaries of ERISA-covered plans, as well as the Secretary of Labor. § 502(a), 29 U.S.C. § 1132(a). [Footnote 26] It may be that, as with § 301 as interpreted in Avco, any state action coming within the scope of § 502(a) of ERISA would be removable to federal district court, even if an otherwise adequate state cause of action were pleaded without reference to federal law. [Footnote 27] It does not follow, however, that either of appellant's

Page 463 U. S. 25

claims in this case comes within the scope of one of ERISA's causes of action.

The phrasing of § 502(a) is instructive. Section 502(a) specifies which persons -- participants, beneficiaries, fiduciaries, or the Secretary of Labor -- may bring actions for particular kinds of relief. It neither creates nor expressly denies any cause of action in favor of state governments, to enforce tax levies or for any other purpose. It does not purport to reach every question relating to plans covered by ERISA. [Footnote 28] Furthermore, § 514(b)(2)(A) of ERISA, 29 U.S.C. § 1144(b)(2)(A), makes clear that Congress did not intend to preempt entirely every state cause of action relating to such plans. With important, but express, limitations, it states that

"nothing in this subchapter shall be construed to exempt or relieve any person from any law of any State which regulates insurance, banking, or securities."

Against this background, it is clear that a suit by state tax authorities under a statute like § 18818 does not "arise under" ERISA. Unlike the contract rights at issue in Avco, the State's right to enforce its tax levies is not of central concern

Page 463 U. S. 26

to the federal statute. For that reason, as in Gully, see supra at 463 U. S. 11-12, on the face of a well-pleaded complaint there are many reasons completely unrelated to the provisions and purposes of ERISA why the State may or may not be entitled to the relief it seeks. [Footnote 29] Furthermore, ERISA does not provide an alternative cause of action in favor of the State to enforce its rights, while § 301 expressly supplied the plaintiff in Avco with a federal cause of action to replace its preempted state contract claim. Therefore, even though the Court of Appeals may well be correct that ERISA precludes enforcement of the State's levy in the circumstances of this case, an action to enforce the levy is not itself preempted by ERISA. Once again, appellant's declaratory judgment cause of action presents a somewhat more difficult issue. The question on which a declaration is sought -- that of the CLVT trustees' "power to honor the levies made upon them by the State of California," see supra at 463 U. S. 6 -- is undoubtedly a matter of concern under ERISA. It involves the meaning and enforceability of provisions in CLVT's trust agreement forbidding the trustees to assign or otherwise to alienate funds held in trust, see supra at 463 U. S. 4-5, and n. 3, and thus comes within the class of questions for which Congress intended that federal courts create federal common law. [Footnote 30] Under § 502(a)(3)(B) of

Page 463 U. S. 27

ERISA, a participant, beneficiary, or fiduciary of a plan covered by ERISA may bring a declaratory judgment action in federal court to determine whether the plan's trustees may comply with a state levy on funds held in trust. [Footnote 31] Nevertheless, CLVT's argument that appellant's second cause of action arises under ERISA fails for the second reason given above. ERISA carefully enumerates the parties entitled to seek relief under § 502; it does not provide anyone other than participants, beneficiaries, or fiduciaries with an express cause of action for a declaratory judgment on the issues in this case. A suit for similar relief by some other party does not "arise under" that provision. [Footnote 32]

IV

Our concern in this case is consistent application of a system of statutes conferring original federal court jurisdiction, as they have been interpreted by this Court over many years. Under our interpretations, Congress has given the lower federal courts jurisdiction to hear, originally or by removal from a state court, only those cases in which a well-pleaded complaint establishes either that federal law creates

Page 463 U. S. 28

the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law. We hold that a suit by state tax authorities both to enforce its levies against funds held in trust pursuant to an ERISA-covered employee benefit plan and to declare the validity of the levies notwithstanding ERISA is neither a creature of ERISA itself nor a suit of which the federal courts will take jurisdiction because it turns on a question of federal law. Accordingly, we vacate the judgment of the Court of Appeals and remand so that this case may be remanded to the Superior Court of the State of California for the County of Los Angeles.

It is so ordered.

[Footnote 1]

Along with CLVT itself, CLVT's individual trustees are also appellees. At various points throughout this opinion, the trust and its trustees are referred to collectively as "CLVT."

[Footnote 2]

As part of the hourly compensation due bargaining unit members, employers pay a certain amount to CLVT, which places the money in an account for each employee. Once a year, CLVT distributes the money in each account to the employee for whom it is kept, provided the employee complies with CLVT's application procedures. Any funds held for employees who fail to make a timely application are used to defray CLVT's administrative expenses. See generally Trust Agreement, Art. IX, App. 45-51 ("The Plan"). This system was set up in large part because union members typically work for several employers during the course of a year.

[Footnote 3]

Article IX,

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