INCOME SECURITY CORPORATION, INC., ET AL., PETITIONERS V. LOUISIANA
OILFIELD CONTRACTORS ASSOCIATION, INC., ET AL.

   No. 88-2117

   In The Supreme Court Of The United States

   October Term, 1989

   On Petition For A Writ Of Certiorari To The United States Court Of
Appeals For The Fifth Circuit

   Brief For The United States As Amicus Curiae

   This brief is submitted in response to the Court's invitation to
the Solicitor General to express the views of the United States.

            TABLE OF CONTENTS
   Question Presented
   Statement
   Discussion
   Conclusion

                          QUESTION PRESENTED

   The district court enjoined a state court action against two
alleged fiduciaries of an employee benefit plan subject to the
Employee Retirement Income Security Act of 1974 (ERISA), and the court
of appeals reversed on the ground that the injunction was prohibited
by the Anti-Injunction Act, 28 U.S.C. 2283.  The question presented is
whether the entry of the injunction was contrary to that Act, or
whether it fell within the exception for injunctions "expressly
authorized by Act of Congress."

                               STATEMENT

   Respondent Louisiana Oilfield Contractors Association established a
group health plan in 1981.  Under the Plan, participating employees of
companies that belonged to the Association and contributed to the
Plan's trust fund obtained reimbursement for medical expenditures.
Petitioner Income Security Corporation, Inc., whose president is
petitioner Gary Felton, contracted to perform administrative services
for the Plan.  Among their duties, petitioners were to estimate the
cost of claims that would be filed in the Plan's first year and obtain
adequate stop-loss insurance to reimburse the Plan after it paid
claims beyond a certain dollar amount (the "aggregate attachment
point").  The amount the Plan charged participating employers and
employees was determined by adding the anticipated claims that the
Plan itself would pay, the cost of stop-loss insurance, and
anticipated administrative costs.  Pet. App. 7a-10a.

   In 1982 and 1983, the Plan experienced a mounting deficit due to
its failure to charge and receive a sufficient amount of money from
participating employers and employees.  The Plan's trustees blamed
petitioners for the underfunding, and in 1984 commenced a civil action
against them in state court.  /1/ The Plan alleged that, because of
the underfunding, it had been unable to pay all claims.  In addition,
the Plan claimed that it had been unable to pay enough claims to reach
the aggregate attachment point, and therefore the stop-loss insurance
had not taken effect.  The Plan's complaint alleged various contract
and tort claims under state law.  In early 1986, the Plan amended its
complaint to add an allegation that petitioners had incurred liability
as fiduciaries under the Employee Retirement Income Security Act of
1974 (ERISA).  Pet. App. 10a-11a, 14a-15a.

   In July 1986, petitioners brought this suit in federal district
court against the Plan and its trustees.  They asked the court to
declare all the rights, duties, and obligations of the parties, and to
stay all further state court proceedings on the ground that the state
court lacked jurisdiction.  Pet. App. 15a.  /2/ More specifically,
petitioners contended that the Plan's state law claims were preempted
by 29 U.S.C. 1144(a), which states that ERISA "supersede(s) any and
all State laws insofar as they may now or hereafter relate to any
employee benefit plan." With respect to the Plan's ERISA claim,
petitioners noted that 29 U.S.C. 1132(e) provides that the federal
courts have exclusive jurisdiction over claims alleging breaches of
fiduciary duties.  /3/

   The district court held in favor of petitioners.  Pet. App. 4a-42a.
 /4/ It concluded (id. at 38a) that "(t)he restated petitions filed in
state court * * * essentially allege breaches of fiduciary duty owed
to an ERISA-governed employee benefit plan by entities engaged to
perform contractual services for that plan.  To the extent based on
state law, these claims are clearly preempted.  To the extent they are
based on federal law, the federal courts have exclusive jurisdiction
over the matter." The court issued a declaration to that effect (id.
at 39a-40a) and, without consideration of the Anti-Injunction Act, 28
U.S.C. 2283, enjoined continuation of the state court proceedings
(Pet. App. 41a).  /5/

   The court of appeals, in an unpublished decision, vacated and
remanded.  Pet. App. 1a-3a.  It concluded that "the district court
correctly held that subject-matter jurisdiction was vested in that
court to the exclusion of any state court." Id. at 2a.  However, the
court found that the district court had erred by enjoining the state
court proceeding.  The court of appeals based its decision on Texas
Employers' Ins. Ass'n v. Jackson, 862 F.2d 491 (5th Cir. 1988) (en
banc), cert. denied, 109 S. Ct. 1932 (1989), which held, in the
context of the Longshore and Harbor Workers' Compensation Act, that
"the Anti-Injunction Act * * * bars a federal district court from
enjoining a pending state court action even where, as here, 'federal
preemption or interference with a federally protected right * * * is
unmistakably clear.'" Pet. App. 2a (quoting 862 F.2d at 504).
Furthermore, again relying on Texas Employers' Ins. Ass'n, the court
ruled that declaratory relief was inappropriate because it had the
same effect as an injunction on the state court proceedings.  Pet.
App. 2a-3a.

                              DISCUSSION

   1. The court of appeals correctly held that the district court
erred by enjoining the state court action.  The Anti-Injunction Act,
28 U.S.C. 2283, provides that "(a) court of the United States may not
grant an injunction to stay proceedings in a State court except as
expressly authorized by Act of Congress, or where necessary in aid of
its jurisdiction, or to protect or effectuate its judgments." The Act,
/6/ which dates in some form to 1793, is "a necessary concomitant of *
* * a dual system of federal and state courts," and represents "a
general policy under which state proceedings 'should normally be
allowed to continue unimpaired by intervention of the lower federal
courts, with relief from error, if any, through the state appellate
courts and ultimately (the Supreme) Court.'" Chick Kam Choo v. Exxon
Corp., 108 S. Ct. 1684, 1689 (1988) (quoting Atlantic Coast Line R.R.
v. Locomotive Engineers, 398 U.S. 281, 287 (1970)).  "By generally
barring such intervention, the Act forestalls 'the inevitable friction
between the state and federal courts that ensues from the injunction
of state judicial proceedings by a federal court.'" Chick Kam Choo,
108 S. Ct. at 1689 (quoting Vendo Co. v. Lektro-Vend Corp., 433 U.S.
623, 630-631 (1977) (plurality opinion)).

   The Act thus expresses "a clear-cut prohibition qualified only by
specifically defined exceptions." Amalgamated Clothing Workers v.
Richman Bros., 348 U.S. 511, 516 (1955).  Moreover, "the exceptions
are narrow and are 'not (to) be enlarged by loose statutory
construction.'" Chick Kam Choo, 108 S. Ct. at 1689 (quoting
Amalgamated Clothing Workers, 348 U.S. at 514).  "Any doubts as to the
propriety of a federal injunction against state court proceedings
should be resolved in favor of permitting the state courts to proceed
in an orderly fashion to finally determine the controversy." Atlantic
Coast Line R.R., 398 U.S. at 297;  see also Amalgamated Clothing
Workers, 348 U.S. at 514 ("Congress made clear beyond cavil that the
prohibition is not to be whittled away by judicial improvisation.").

   Petitioners contend that the stay issued by the district court in
this case falls into the exception to the Act for injunctions
"expressly authorized" by "Act of Congress." They rely on Mitchum v.
Foster, 407 U.S. 225, 237 (1972), where the Court noted that the
exception requires neither specific reference to the Anti-Injunction
Act nor express authorization of an injunction of state court
proceedings.  Rather, the Court said, "(t)he test * * * is whether an
Act of Congress, clearly creating a federal right or remedy
enforceable in a federal court of equity could be given its intended
scope only by the stay of a state court proceeding." Id. at 238.

   As an initial matter, it is clear that the exception for
injunctions "expressly authorized" by "Act of Congress" does not apply
merely because the Plan's state law claims are preempted and the
federal courts have exclusive jurisdiction over its ERISA claim.  This
Court assumed that the state court lacked jurisdiction in Amalgamated
Clothing Workers (348 U.S. at 514), but nevertheless held that the
Anti-Injunction Act barred an effort to stay the state proceedings.
In such a case, the Court stated, the proper remedy is for the
defendant to argue to the state court that it lacks jurisdiction.  Id.
at 518.  Likewise, in Atlantic Coast Line R.R. the Court reiterated
that the Anti-Injunction Act cannot be evaded "merely because (the
state) proceedings interfere with a protected federal right or invade
an area pre-empted by federal law, even when the interference is
unmistakably clear." 398 U.S. at 294.  Again, it explained that the
proper course is to seek vindication of the federal rights in the
state courts, subject to ultimate review by this Court.  Id. at 296;
accord Chick Kam Choo, 108 S. Ct. at 1691 ("when a state proceeding
presents a federal issue, even a pre-emption issue, the proper course
is to seek resolution of that issue by the state court").  Thus, even
a broadly preemptiver statute such as ERISA can "be given its intended
scope" other than "by the stay of a state court proceeding" (Mitchum,
407 U.S. at 238) since the state courts can decide that they lack
jurisdiction.  /7/

   ERISA is therefore not analogous to 42 U.S.C. 1983, the statute at
issue in Mitchum.  In that case, the owner of a bookstore, relying on
Section 1983, sought to enjoin state court proceedings seeking to
close down his store as a nuisance.  The Court held that injunctions
against state court actions are permissible under Section 1983,
despite the Anti-Injunction Act, since Section 1983 had been enacted
specifically because Congress doubted the willingness and ability of
state courts to protect federal rights.  The Court stressed that
"(p)roponents of the legislation noted that state courts were being
used to harass and injure individuals, either because (they) were
powerless to stop deprivations or were in league with those who were
bent upon abrogation of federally protected rights." 407 U.S. at 240.
/8/ The legislative history of ERISA demonstrates no comparable
doubts.  Indeed, Congress gave concurrent jurisdiction over benefit
claims to the state courts.  It reserved cases involving breaches of
fiduciary duty to the federal courts only because it concluded that,
on account of "the interstate character of employee benefit plans," it
was "essential to provide for a uniform source of law" to govern
fiduciaries.  S. Rep. No. 127, 93d Cong., 1st Sess. 35 (1973);  H.R.
Rep. No. 533, 93d Cong., 1st Sess. 17 (1973).

   Furthermore, contrary to petitioners' suggestion (Pet. 15),
authority to enjoin state court proceedings is not conferred by 29
U.S.C. 1132(a)(2) or (a)(3).  Section 1132(a)(3) expressly authorizes
fiduciaries of employee benefit plans to seek "to enjoin any act or
practice which violates any provision of this subchapter or the terms
of the plan." Thus, Section 1132(a)(3) is intended, for example, to
allow a fiduciary to obtain an injunction ordering an employer to make
payments in accordance with the terms of the governing plan.
Petitioners did not seek such an injunction.  Rather than seeking to
remedy a violation of the statute or a term of a plan, they seek to
enjoin a state court action against them.  "Conspicuously absent from
the language of this ERISA injunction provision is any suggestion of
its use by federal courts against state tribunals." United States
Steel Corp. Plan for Employee Ins. Benefits v. Musisko, 885 F.2d 1170,
1177 (3d Cir. 1989).

   Moreover, in Vendo Co. v. Lektro-Vend, supra, the Court rejected
the suggestion that Section 16 of the Clayton Act, 15 U.S.C. 26, which
authorizes injunctive relief for violations of the antitrust laws,
overrides the Anti-Injunction Act, even though the plaintiff there
alleged that the state court action was brought as part of an
anticompetitive conspiracy.  The plurality explained that if Section
16 were construed to authorize injunctions of state court actions,
then the Anti-Injunction Act "would be completely eviscerated since
the ultimate logic of this position can mean no less than that
virtually all federal statutes authorizing injunctive relief are
exceptions to Section 2283." 433 U.S. at 636 (plurality opinion).  /9/
In this case, in contrast to Vendo, petitioners' primary complaint is
not that the Plan's state court action was itself part of a scheme to
violate ERISA;  petitioners stress their contention that the Plan's
state law claims are preempted and that the state court lacks
jurisdiction over the Plan's ERISA claim.  Petitioners' claim that
Section 1132(a)(3) overrides the Anti-Injunction Act is therefore
weaker than the claim that was rejected in Vendo, and Vendo's holding
is fully applicable here.

   Section 1132(a)(2), the provision on which the district court based
its jurisdiction to grant declaratory relief (Pet. App. 36a),
authorizes district courts to grant "appropriate relief" to remedy
breaches of fiduciary duty.  Petitioners do not seek to remedy such a
breach;  to the contrary, they seek to defend against an alleged
breach of their duties by obtaining a declaration that the state court
lacks jurisdiction.  Accordingly, there is no basis for concluding
that Section 1132(a)(2) authorizes declaratory relief in this case.
That is particularly so since the declaratory relief they seek would
have the effect of an injunction.  In California v. Grace Brethern
Church, 457 U.S. 393, 408 (1982), the Court stated, with respect to
the Tax Injunction Act, 28 U.S.C. 1341, that "because there is little
practical difference between injunctive and declaratory relief, we
would be hard pressed to conclude that Congress intended to prohibit
taxpayers from seeking one form of anticipatory relief against state
tax officials in federal court, while permitting them to seek
another." As the court of appeals concluded in Texas Employers' Ins.
Ass'n, that logic applies in full to the Anti-Injunction Act.  862
F.2d at 507.  The court of appeals therefore correctly concluded (Pet.
App. 2a-3a) that declaratory relief should not be granted in this
case.  /10/

   Petitioners also complain (Pet. 15-19) that although ERISA
authorizes "ready access to the Federal Courts" (29 U.S.C. 1001(b)),
that access has been denied to them.  But in the future, persons like
petitioners will have no difficulty removing cases such as this to
federal court.  In Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58,
67 (1987), the Court held that a claim for ERISA benefits was
removable even though the complaint purported to raise only state law
claims.  In reaching that conclusion, the Court emphasized a statement
in the Conference Report that actions seeking benefits "'are to be
regarded as arising under the laws of the United States.'" 481 U.S. at
65 (quoting H.R. Conf. Rep. No. 1280, 93d Cong., 2d Sess. 327 (1974)).
 Since Congress also believed that it was "essential to provide for a
uniform source of law" with respect to matters affecting fiduciary
responsibility (H.R. Rep. No. 533 at 17), it is clear that actions
alleging breaches of fiduciary duties are also removable, whether or
not the complaint alleges a violation of ERISA.  /11/ Thus, a
fiduciary who is sued in state court on account of an alleged breach
of his duties may now remove that action to federal court.  /12/

   2. Although there is some disagreement in the lower courts, review
by this Court is not warranted at this time.  As an initial matter,
contrary to petitioners' claim (Pet. 19-20), there is no conflict
between the decision below and the decision in Marshall v. Chase
Manhattan Bank, 558 F.2d 680 (2d Cir. 1977).  The injunction in that
case was sought by the Secretary of Labor, not by a private party, and
the court, relying on this Court's holding in NLRB v. Nash-Finch Co.,
404 U.S. 138, 146 (1971), said that "the general language of Section
2283 (is) not intended to hamstring federal agencies in the
utilization of federal courts to protect federal rights." 558 F.2d at
683.  The Marshall decision is correct:  the Anti-Injunction Act does
not bar "a federal injunction of state court proceedings when the
plaintiff in the federal court is the United States itself, or a
federal agency asserting 'superior federal interests.'" Mitchum, 407
U.S. at 235-236;  Nash-Finch Co., 404 U.S. at 146;  see also Leiter
Minerals, Inc. v. United States, 352 U.S. 220, 225-226 (1957).

   There is some tension between the decision below and the decision
in General Motors Corp. v. Buha, 623 F.2d 455, 458-459 (6th Cir.
1980), where the court held that the Anti-Injunction Act did not
prevent a fiduciary of a pension plan from seeking to enjoin state
court proceedings in which a judgment creditor sought to garnish the
pension account of a participant in the plan.  However, that case is
not directly in conflict with the decision here.  As the Third Circuit
explained in United States Steel Corp. Plan for Employee Ins. Benefits
v. Musisko, 885 F.2d 1170, 1178 (1989), it appears that the fiduciary
in Buha was not a party to the state court garnishment action, which
was brought against the bank that held the pension fund, and therefore
could not raise its objection to garnishment in the state court.  In
that circumstance, it may be that ERISA's anti-alienation provision,
29 U.S.C. 1056(d)(1) -- which prohibits the garnishment of pension
accounts (see also 26 C.F.R. 1.401(a)-13) -- "could be given its
intended scope only by the stay of a state court proceeding." Mitchum,
407 U.S. at 238.  /13/ In any event, the facts of Buha are unlikely to
recur.  While it should have been clear to the judgment creditor even
before the decision in Buha that it could not garnish a pension
account, after that decision (which correctly held that the
anti-alienation provision bars garnishment actions (623 F.2d at
460-463)), few creditors are likely to seek to invade such accounts.
/14/

   In Gilbert v. Burlington Indus., Inc., 765 F.2d 320, 329 (2d Cir.
1985), aff'd, 477 U.S. 901 (1986), the court first "assum(ed) that the
Anti-Injunction Act applies to administrative proceedings." It held
that because common law causes of action are preempted by ERISA, a
district court could nevertheless stay such a proceeding where the
plaintiffs were seeking severance benefits from a plan subject to
ERISA.  765 F.2d at 329.  The court did not explain the basis for its
ruling on the availability of an injunction, a ruling that is contrary
to the decision below.  However, as with Buha, we believe that the
problem presented in Gilbert is unlikely to arise in the future.  On
appeal to this Court -- in which the question presented was limited to
the issue whether the court of appeals correctly held that ERISA
preempts state law claims for employee benefits -- the judgment of the
court of appeals was affirmed.  That affirmance, along with the more
recent decision in Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54
(1987) ("ERISA's civil enforcement remedies were intended to be
exclusive"), makes entirely clear that the only remedies available in
cases involving employee benefits are those provided in ERISA itself.
Accordingly, plaintiffs should not seek to bring state law claims in
cases involving employee benefit plans subject to ERISA and, if they
do, the state courts can be trusted to hold them preempted.  Moreover,
under Metropolitan Life Ins. Co. v. Taylor, supra, a defendant could
choose to remove such a case from state court.

   The Third Circuit's recent decision in Musisko also counsels
against review by this Court.  Musisko was the first decision by a
court of appeals that considered in detail the question presented here
-- the court in Gilbert devoted only one paragraph to the issue, and
the court in Buha failed to consider this Court's decisions in
Amalgamated Clothing Workers and Atlantic Coast Line R.R. and did not
have the benefit of the decision in Chick Kam Choo.  The Third Circuit
correctly held that a district court may not enjoin a state court
proceeding on the ground that the plaintiffs' claims are preempted by
ERISA.  885 F.2d at 1175-1178.  In the unlikely event that questions
such as the one presented here arise in the future, we think the lower
courts will be guided by the analysis in Musisko.

                              CONCLUSION

   The petition for a writ of certiorari should be denied.

   Respectfully submitted.

   KENNETH W. STARR

      Solicitor General

   DAVID L. SHAPIRO

      Deputy Solicitor General

   CHRISTOPHER J. WRIGHT

      Assistant to the Solicitor General

   ROBERT P. DAVIS

      Solicitor of Labor

   ALLEN H. FELDMAN

      Associate Solicitor

   CHARLES I. HADDEN

      Deputy Associate Solicitor

   NATHANIEL I. SPILLER

      Senior Appellate Attorney Department of Labor

   DECEMBER 1989

   /1/ Initially, there were two civil actions:  one by the Plan and
affiliated parties and another by Dwight W. Andrus Insurance, Inc.,
which had helped formulate the Plan and had engaged petitioners to
assist in that process.  The state court defendants included
petitioners, Harbor Insurance Co. (the reinsurance agent), and U.S.
Benefits, Inc. (the underwriting manager and intermediary for Harbor
in connection with the reinsurance agreement).  The state court
consolidated the two actions.  Pet. App. 11a.

   /2/ After the federal court action commenced but before the
district court ruled, the Plan again amended its state court complaint
to delete all references to ERISA.  Pet. App. 15a.

   /3/ State and federal courts have concurrent jurisdiction over
claims for employee benefits, but the federal courts have exclusive
jurisdiction over other claims arising under ERISA. 29 U.S.C. 1132(e).

   /4/ The district court based its jurisdiction primarily on 29
U.S.C. 1132(a)(2), which provides that parties may seek "appropriate
relief under section 1109" (which governs "liability for breach of
fiduciary duty").

   /5/ In a subsequent decision (Pet. App. 43a-54a), the court further
declared the rights and liabilities of the parties.  It held that the
claim against petitioners for breach of their fiduciary duties under
ERISA was barred by the three-year statute of limitations in 29 U.S.C.
1113(a)(2).  Pet. App. 53a.  Specifically, the court determined that
the trustees had actual knowledge of petitioners' alleged breach of
their fiduciary duties at least by May 1983, when the trustees met to
discuss the Plan accountant's finding of serious underfunding, since
the trustees placed the blame for the underfunding on petitioners at
that time.  Pet. App. 48a-50a.  The court further determined that the
filing of the state court actions did not toll the running of the
limitations period, and that the trustees could not invoke the
principle of equitable tolling because petitioners had not induced
them to sleep on their federal rights.  Id. at 50a-53a.

   /6/ Congress adopted the present wording of the Act when it enacted
Title 28 of the United States Code in 1948.  See Amalgamated Clothing
Workers v. Richman Bros., 348 U.S. 511, 514-515 (1955).

   /7/ This Court did hold, in Bowles v. Willingham, 321 U.S. 503,
510-511 (1944), that a wartime grant of exclusive jurisdiction to a
particular federal court, coupled with statutory authority to grant
injunctive relief, constituted an exception to the prohibition of the
Anti-Injunction Act.  We do not believe that the Willingham decision
is controlling here, however;  that case was decided before
Amalgamated Clothing Workers, Atlantic Coast Line, and Vendo Co., and
the state court action in that case -- to enjoin the issuance of a
rent order under the Emergency Price Control Act -- was a far more
direct challenge to authority conferred only on a federal court than
the state court action here.

   /8/ The Court quoted a Senator who had stated that "'(i)f the State
courts had proven themselves competent to suppress the local
disorders, or to maintain law and order, we should not have been
called upon to legislate,'" and a Representative who had supported
Section 1983 because "'(a)mong the most dangerous things an injured
party can do is to appeal to justice.'" 407 U.S. at 240-241 (quoting
Cong. Globe, 42d Cong., 1st Sess. 653 (1871) (statement of Sen.
Osborn) and id. at App. 78 (statement of Rep. Perry)).

   /9/ The concurring Justices in Vendo thought that a state court
proceeding might be enjoined under Section 16 if the state court
action itself was part of a "'pattern of baseless, repetitive claims'
that are themselves being used as an anticompetitive device." 433 U.S.
at 644.  The dissenters stressed the district court's finding that the
Vendo Company had used "litigation as a method of harassing and
eliminating competition." Id. at 654.

   /10/ The question whether Section 2283 applies to actions for
declaratory relief is not discussed in the petition.

   /11/ At the time the Plan's state court action was filed,
petitioners could not have removed it because the state court lacked
jurisdiction and, under the derivative jurisdiction rule, removal was
not allowed.  Congress has subsequently amended 28 U.S.C. 1441 to
permit removal to a federal court of an action that is within
exclusive federal jurisdiction.  See Judicial Improvements Act of
1985, Pub. L. No. 99-336, Section 3(a), 100 Stat. 637, adding 28
U.S.C. 1441(e) (Supp. V 1987).

   /12/ Although petitioners could not have removed the Plan's action
because it was filed before Congress revised the removal statute, they
were not without a remedy -- they could have moved for summary
judgment on the ground that the state court lacked jurisdiction.  That
is the course that this Court has repeatedly directed parties such as
petitioners to take.  Amalgamated Clothing Workers, 348 U.S. at 518;
Atlantic Coast Line R.R., 398 U.S. at 294;  Chick Kam Choo, 108 S. Ct.
at 1691.

   /13/ See County of Imperial v. Munoz, 449 U.S. 54, 59-60 (1980);
Hale v. Bimco Trading, Inc., 306 U.S. 375, 377-378 (1939) (exclusion
from Anti-Injunction Act of "strangers to the state court
proceedings").

   /14/ In Guidry v. Sheet Metal Workers National Pension Fund, No.
88-1105 (argued Nov. 29, 1989), the question presented is whether an
exception to the anti-alienation provision should be inferred where a
union treasurer embezzled from the union.  It is undisputed in that
case that the union could not garnish the petitioner's pension account
merely because it is a judgment creditor;  the respondent argues only
that an exception is warranted in cases involving theft by union
officers.