Appeal from the United States District Court for the Western District of Pennsylvania, D.C. Civil No. 87-02364.
Stapleton, Scirica, and Weis, Circuit Judges.
This appeal challenges a United States District Court's entry of an injunction and declaratory judgment directing a state court to apply federal law in a pending lawsuit. The state court action is a claim for benefits due under a welfare plan assertedly within the ambit of the Federal Employee Retirement Income Security Act (ERISA). We conclude that in the circumstances here the district court's orders are barred by the Anti-Injunction Act. Accordingly, we will reverse.
This complicated litigation began in the summer of 1982 when Glenn Musisko, injured in a non-work related automobile accident, filed a simple claim for sickness and accident benefits. As an employee of USX Corporation, Musisko was a participant in the company's Program of Insurance Benefits, negotiated as part of a collective bargaining agreement. Included in the program was a group policy providing for weekly disability payments.
Soon after his accident, Musisko applied for benefits under the policy, but the Equitable Life Assurance Society -- the Plan's insurer -- notified him that it denied his claim. The insurer explained that the Plan benefits were offset by payments Musisko had received under his no-fault automobile insurance policy. The letter of denial, written on Equitable stationery, advised that no payments would be made "since the benefit paid for wage loss through your auto carrier exceeds the benefit that you would be entitled to receive under" the USX program. Equitable's policy with the United States Steel Company trust fund was a "stop-loss" agreement -- essentially a "deductible" arrangement under which the insurer paid claims on the employer's behalf and provided a defense to suits brought by a beneficiary.
A month later, in October 1982, Musisko filed suit in the Court of Common Pleas of Allegheny County, Pennsylvania, to challenge this denial. Musisko named Equitable as the sole defendant. He later amended his complaint to assert a class action, but certification was held in abeyance.
The Common Pleas Court entered summary judgment against Musisko, and he appealed to the Pennsylvania Superior Court. The appellate court reversed, directing that judgment be entered against Equitable. Musisko v. Equitable Life Assurance Soc'y, 344 Pa. Super. 101, 496 A.2d 28 (1985). In its opinion, the Superior Court applied the common law rule of contract construction that an ambiguous term be interpreted against the drafter. That principle led the court to hold that the offset proviso did not clearly exclude coverage for wage losses in excess of that recovered under the automobile insurance policy. The Pennsylvania Supreme Court denied allocatur.
On remand, the Court of Common Pleas certified the case as a class action in January 1987, and 225 USX employees opted into the class. The federal plaintiffs assert that only at this point did they become aware of the Musisko state court litigation. In a letter dated August 24, 1987, Equitable's lawyer wrote to USX counsel advising of the insurer's intention to amend the answer and raise the defense of preemption under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461. The Common Pleas docket, however, records Equitable's withdrawal of its motion to amend its answer on October 23, 1987.
In November 1987, the case now before us began in the district court, with plaintiffs seeking to void the state judgment and to compel ERISA's application to the state lawsuit. The four federal plaintiffs are the United States Steel Corporation Plan for Insurance Benefits; the Plan's sponsor, USX Corporation (formerly United States Steel Corporation); the Plan's administrator, United States Steel and Carnegie Pension Fund; and United States Steel Insurance Benefit Trust, the source of benefit payments. Plaintiffs sought injunctive and declaratory relief against Musisko, the class claimants, and the state trial judge.
The federal complaint asserts that the Pennsylvania courts violated ERISA by failing to give effect to the statute's preemption provision. See 29 U.S.C. § 1144(a). In the district court, plaintiffs contended that the state courts ignored ERISA preemption by permitting Musisko to maintain his cause of action after he neglected to pursue the grievance procedure set out in the Plan and the collective bargaining agreement.*fn1 Accordingly, plaintiffs argued that ERISA required that the state judgment be set aside.
Plaintiffs also contended that the state courts erred in applying common law rules of construction to the ERISA dispute. They maintained that the theory applied by the Pennsylvania Superior Court -- interpreting a contract against the drafter -- was a state law principle preempted by ERISA.
The district court agreed that ERISA preempted state law, and issued a declaration to that effect. The court also enjoined Musisko, the class, and the state trial judge "from proceeding on the matter filed at No. 7797 of 1982, in the Court of Common Pleas of Allegheny County, Pennsylvania, under any law other than ERISA."
In this appeal, Musisko and the state trial judge have collectively asserted numerous theories in support of reversal.*fn2 We find it necessary to discuss only one, the Anti-Injunction Act, because we consider it dispositive of this appeal.
THE HISTORICAL BACKGROUND OF THE ACT
The Anti-Injunction Act reads: "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." 28 U.S.C. § 2283. This statute, with a venerable lineage that postdates the Bill of Rights by a mere two years, is designed to avert needless and unseemly friction between state and federal courts. Mitchum v. Foster, 407 U.S. 225, 232-33, 32 L. Ed. 2d 705, 92 S. Ct. 2151 (1972); NLRB v. Nash-Finch Co., 404 U.S. 138, 146, 30 L. Ed. 2d 328, 92 S. Ct. 373 (1971); Leiter Minerals, Inc. v. United States, 352 U.S. 220, 225, 1 L. Ed. 2d 267, 77 S. Ct. 287 (1957); Toucey v. New York Life Ins. Co., 314 U.S. 118, 129, 86 L. Ed. 100, 62 S. Ct. 139 (1941). Because the district court's order in this case raises the spectre of just such abrasiveness between the two judicial systems, we turn to this statute and its historical development.
According to James Madison's notes, the delegates to the Constitutional Convention evidently had little hesitancy in approving the concept of a federal judiciary. "[On] motion to agree to the first clause namely 'Resolved that a National Judiciary be established' It passed in the affirmative nem. con. [none opposed]" 2 ...