JAMES M C DONALD and KAREN M C DONALD v. HOUSEHOLD INTERNATIONAL , INC ., d/b/a HOUSEHOLD FINANCE CORP .

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 04-3259
J AMES M C D ONALD and K AREN M C D ONALD ,
Plaintiffs-Appellants,
v.
H OUSEHOLD I NTERNATIONAL , I NC ., d/b/a
H OUSEHOLD F INANCE C ORP ., and U NITED
H EALTH C ARE C ORP ., d/b/a U NITED
H EALTHCARE I NSURANCE C O .,
Defendants-Appellees.
____________
Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. 1:03-cv-01698 RLY-TAB—Richard L. Young, Judge.
____________
A RGUED F EBRUARY 16, 2005—D ECIDED S EPTEMBER 29, 2005
____________
Before E ASTERBROOK , W OOD , and S YKES , Circuit Judges.
W OOD , Circuit Judge. At the time he began working
for Household International, Inc. (Household), James
McDonald expected that he would receive health insurance
that included prescription drug coverage under the group
insurance policy that the company maintained with United
HealthCare Corporation (United). McDonald needed
prescription drugs to control his blood pressure. For reasons
that are unclear, his insurance was not activated promptly.
Two months after he started work, he suffered a cata-

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2 No. 04-3259
strophic intercerebral hemorrhagic stroke. In this lawsuit,
McDonald and his wife, Karen McDonald, have raised a
variety of state-law claims that turn on the fact that
McDonald did not receive the promised insurance coverage
in time. The district court found that the federal Employee
Retirement Income Security Act, commonly called ERISA,
preempted the state law theories and on that basis dis-
missed the complaint. We conclude that although the
district court was correct about ERISA preemption, the
dismissal was premature. Parties do not need to plead legal
theories in their complaints in federal court, and thus the
McDonalds are entitled to go forward and litigate their
claim under ERISA.
I
Our account of the facts accepts all well-pleaded allega-
tions in the complaint as true and draws all reasonable
inferences in favor of the McDonalds, as this case comes
to us from a dismissal under Rule 12(b)(6). See, e.g.,
Marshall-Mosby v. Corporate Receivables, Inc., 205 F.3d
323, 326 (7th Cir. 2000). James McDonald began working
for Household on November 19, 2001. A few days before
that, on November 16, he received an employment confir-
mation letter from Household stating “[y]our health and life
insurance will be effective 30 days from your start date.”
That meant that as of December 19, 2001, his insurance
should have been in place. Unfortunately, it was not. After
December 19, McDonald repeatedly tried to get his prescrip-
tion for Vasotec blood pressure medication filled, but he was
told each time that the paperwork had not come through
and he did not yet have any benefits. Unable to pay for the
drugs himself, McDonald simply went without his medica-
tion from December 19 until January 15, 2002. During that
time, he made numerous requests to Household and United
pleading with them to activate his insurance benefit

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No. 04-3259 3
coverage. Nothing happened. Instead, on January 15, he
had a catastrophic stroke.
McDonald and his wife filed this lawsuit on November 13,
2003, invoking the diversity jurisdiction of the dis-
trict court. The amount in controversy exceeds $75,000, and
the McDonalds properly alleged that they were both citizens
of Indiana. Their allegations about the corporate defendants
were less complete than they should have been, but they
correctly asserted that Household International, Inc., and
Household Finance Corporation (which, contrary to the
implication of the complaint, are two separate entities) are
both incorporated in Delaware and both have their principal
places of business in Illinois. United HealthCare Corpora-
tion actually merged with United Health Group, which is a
Minnesota corporation with its principal place of business
in Minnesota. The complaint referred to United HealthCare
“d/b/a United Health Insurance Company,” but the latter is
also a separate corporation that is a wholly owned subsid-
iary of United Health Group. United Health Insurance is a
Connecticut corporation, according to public records, and its
offices are in Connecticut. If this case depended entirely on
diversity jurisdiction, we would probably be inclined to
remand for the limited purpose of clarifying the fact that
these facts accurately represent United Health Insurance’s
citizenship. Given our conclusion about ERISA preemption,
however, the case is securely within the federal question
jurisdiction, and we have no need to take this step. For
convenience, in the remainder of this opinion, we refer to
the Household entities as “Household,” and to the United
HealthCare entities as “United.”
The complaint was divided into six counts, five of which
raised different theories supporting McDonald’s claim, and
the sixth of which was for loss of spousal services and
consortium for Mrs. McDonald. Briefly, Count I asserted
that Household had been negligent in failing to procure
insurance for McDonald; Count II claimed that United

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4 No. 04-3259
negligently failed to process McDonald’s insurance applica-
tion and to secure insurance for him, in particular pharma-
ceutical coverage; Count III raised a breach of contract
claim against Household, which had promised in the
November 16 letter to give McDonald health insurance
under its policy, which included prescription drug benefits;
Count IV was a similar breach of contract claim against
United, alleging that United had received premiums from
McDonald in exchange for the health policy; and Count V
asserted that both Household and United had committed
acts of gross negligence, willful or wanton misconduct, or
intentional wrongs that led to McDonald’s lack of health
coverage and ultimately to the stroke.
Both Household and United filed a motion to dismiss
under F ED . R. C IV . P. 12(b)(6), claiming that the McDonalds
had failed to state any claims upon which relief could be
granted because, any way one looked at the case, it was
really one for benefits under an ERISA plan and thus the
state-law theories were preempted by ERISA. The district
court found this argument persuasive and entered an order
dismissing the complaint. In that order, the court said that
the plaintiffs could “refile their complaint requesting
appropriate relief pursuant to ERISA within 30 days” of the
date of the order, August 3, 2004. The McDonalds did not
accept that invitation. Instead, on August 30, 2004, three
days before the time to amend expired, they filed their
notice of appeal.
II
Concerned that the district court’s order of dismissal
did not qualify as a final judgment, we ordered the par-
ties to file jurisdictional memoranda addressing the subject
of appellate jurisdiction. Relying principally on Tifft v.
Commonwealth Edison Co., 366 F.3d 513 (7th Cir. 2004), all
parties argue that this case became final as a practical

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No. 04-3259 5
matter no later than September 2, 2004, which was the last
day when plaintiffs could have filed an amended complaint.
See id. at 516 n.3. A notice of appeal that is filed too early
is treated as if it was filed on the date when judgment was
entered. See F ED . R. A PP . P. 4(a)(2). As in Tifft, this case is
finished as far as the district court is concerned, and the
dismissal for all practical purposes is now one with preju-
dice, whatever the judge might have said about the time
period between August 3, 2004, and September 2, 2004. We
are thus satisfied that the judgment of the district court
dismissing the complaint has now become a final one, and
that the appeal can proceed. We add, however, that these
procedural shortcuts are undesirable, both because they can
lead to wasteful premature efforts to appeal and because
they leave all parties concerned unsure about the status of
their rights. Moreover, we expressly decline to rely on the
plaintiffs’ alternate theory to support appellate jurisdiction,
which is that there was no amendment that they could offer
that would save the complaint. Our reasons for doing so will
become clear in the remainder of this opinion.
The central issue here is whether the McDonalds’ com-
plaint failed to state a claim upon which relief could
be granted, as the district court concluded. Before ad-
dressing that, we must review the standards for evaluating
a motion under Rule 12(b)(6). That rule does not stand
in isolation from the remainder of the Federal Rules of Civil
Procedure. Instead, it must be read in conjunction with the
other rules governing pleadings, principally Rule 8(a). Rule
8(a) requires only “(1) a short and plain statement of the
grounds upon which the court’s jurisdiction depends, . . . (2)
a short and plain statement of the claim showing that the
pleader is entitled to relief, and (3) a demand for judgment
for the relief the pleader seeks.” This is a notice pleading
standard, not a fact pleading standard, as the Appendix of
Forms following the Civil Rules illustrates. This court has
repeatedly held that pleaders in a notice system do not have

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6 No. 04-3259
any obligation to plead legal theories. See, e.g., Williams v.
Seniff, 342 F.3d 774, 792 (7th Cir. 2003); DeWalt v. Carter,
224 F.3d 607, 612 (7th Cir. 2000); La Porte County Republi-
can Cent. Comm. v. Bd. of Comm’rs of County of La Porte,
43 F.3d 1126, 1129 (7th Cir. 1994).
In a case very much like this one, where an employee
sued his employer for an alleged wrongful failure to pay
certain severance and pension benefits under a contract, the
employee urged that he was relying solely on state
law, while the employer took the position that the case
fell within ERISA’s broad ambit. See Bartholet v. Reishauer
A.G. (Zürich), 953 F.2d 1073 (7th Cir. 1992). In Bartholet,
this issue governed whether the case was removable from
state court to federal court: if the complaint alleged state-
law theories, then it appeared that it had to stay in state
court (or at least our opinion reveals no alternative basis for
federal jurisdiction); if the complaint was an ERISA claim
in state-law disguise, the action was removable to federal
court under 28 U.S.C. § 1441(b). After concluding that the
suit arose under ERISA or nothing at all, see 953 F.2d at
1077, we had this to say about the decision of the district
court to dismiss the suit under Rule 12(b)(6):
It does not follow, however, that Bartholet’s suit
should have been dismissed under Rule 12(b)(6). The
district judge believed that until Bartholet amended his
pleadings to invoke ERISA, all he had was a
claim arising under state common law, and as state law
is preempted the complaint failed. The assumption
implicit in this approach is that a complaint must plead
law as well as fact. Why? . . .
Common law pleading required the advocate to match
facts to a legal theory, the “form of action.” Code
pleading ended up in much the same place, as courts
read the code formula “facts constituting a cause of
action” to require the pleader to state a legal theory. . . .
“Cause of action” does not appear in the Rules of Civil

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No. 04-3259 7
Procedure, which uses “claim for relief” to denote a
rejection of both common law and code approaches and
a new, latitudinarian approach. . . . A complaint under
Rule 8 limns the claim; details of both fact and law
come later, in other documents. Instead of asking
whether the complaint points to the appropriate stat-
ute, a court should ask whether relief is possible under
any set of facts that could be established consistent
with the allegations. . . . A drafter who lacks a legal
theory is likely to bungle the complaint (and the trial);
you need a theory to decide which facts to allege and
prove. But the complaint need not identify a legal
theory, and specifying an incorrect theory is not fatal.
953 F.2d at 1078-79.
We have quoted at length from Bartholet because, as
should be apparent, the present case is so similar. The
district court thought that the consequence of a decision
that the McDonalds were bringing a suit that fell within the
territory covered by ERISA had to be either dismissal under
Rule 12(b)(6) or an amendment of the complaint. This was
error. The real question was whether relief was possible
based on any legal theory—ERISA included— under any set
of facts that could be established consistent with the
allegations. We therefore turn to that question.
Our account of the complaint shows that it relied on
conventional common law theories: torts, either based
on negligent actions or intentional actions, contracts, and
loss of consortium. The complaint makes it equally clear
that the central fact underlying each of the legal theories
presented is the fact that James McDonald did not re-
ceive the medical insurance benefit (in particular the
prescription drug benefit) that he was promised. The
question is whether ERISA, which “comprehensively reg-
ulates, among other things, employee welfare benefit
plans that, through the purchase of insurance or otherwise,

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8 No. 04-3259
provide medical . . . care,” Pilot Life Ins. Co. v. Dedeaux, 481
U.S. 41, 44 (1987), preempts any or all of those state laws.
The statute provides the starting point for our analysis.
Section 514(a) says that ERISA “shall supersede any and all
State laws insofar as they may now or hereafter relate to
any employee benefit plan.” 29 U.S.C. § 1144(a). The trick,
as the Court explained in New York State Conference of
Blue Cross & Blue Shield Plans v. Travelers Insurance Co.,
514 U.S. 645 (1995), is to determine how close a relation the
state law must have to the plan. In Shaw v. Delta Air Lines,
Inc., 463 U.S. 85 (1983), the Court held that “[a] law ‘relates
to’ an employee benefit plan, in the normal sense of the
phrase, if it has a connection with or reference to such a
plan.” Id. at 96-97. It went on to stress that ERISA does not
preempt “only state laws specifically designed to affect
employee benefit plans,” id. at 98, or “only state laws
dealing with the subject matters covered by ERISA,” id.
Instead, as the Court reiterated later in Aetna Health Inc.
v. Davila, 124 S.Ct. 2488 (2004), “ERISA includes expansive
pre-emption provisions, which are intended to ensure that
employee benefit plans regulation would be exclusively a
federal concern.” Id. at 2495 (internal citations and quota-
tions omitted).
McDonald acknowledges this, but he argues that his
case is more like Travelers, in which the Court declined
to find that state law claims were preempted by ERISA.
It is true that the Court came to that conclusion in Travel-
ers, but we find that case distinguishable from his. In
Travelers, the Court noted that the general New York
statute required hospitals to collect a surcharge from
patients covered by any kind of commercial insurer—an
ERISA plan, private purchase, or otherwise. The sur-
charge statute did not mandate any change in the bene-
fits provided under any particular plan. Under those cir-
cumstances, the Court found that ERISA did not preempt
the state law.

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No. 04-3259 9
McDonald’s claim looks much more like the one the Court
considered in Davila, supra, where two individuals sued
their respective HMOs for alleged failures to exercise
ordinary care in the handling of coverage decisions. But it
turned out that the HMOs were merely implementing
coverage restrictions that appeared in the ERISA-regulated
plans that the HMOs were administering. See 124 S.Ct. at
2497-98. The proximate cause of any injury the plan
participant and beneficiary suffered was therefore the
failure of the plan to cover the requested treatment, not any
independent decision of the HMO. The Court thus found
that the claims in Davila were preempted by ERISA. In so
doing, it rejected a number of arguments that had per-
suaded the court of appeals. The fact that the respondents
were trying to assert a tort claim, and that they were not
seeking reimbursement for benefits denied to them, was not
significant; otherwise, preemption would depend on the
label attached to a particular theory. Id. at 2498. Further-
more, the fact that state law provided remedies beyond
those authorized by ERISA § 502(a), 29 U.S.C. § 1132(a),
was of no importance. Id. at 2499. What was material was
the wording of the plans themselves, which ultimately
determined the coverage decisions. Id.
Returning to McDonald’s complaint, we can see that it
focuses on the defendants’ failure to give McDonald the
benefits under the medical plan that he had been promised.
This is precisely the kind of claim that ERISA § 502(a)
allows plan participants to bring. That section reads as
follows, in pertinent part:
A civil action may be brought (1) by a participant or
beneficiary . . . (B) to recover benefits due to him under
the terms of his plan, to enforce his rights under the
terms of the plan, or to clarify his rights to future
benefits under the terms of the plan.
McDonald was an employee of Household from November
19, 2001, at least until the time of his stroke. ERISA defines

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10 No. 04-3259
the term “participant” to mean “any employee or former
employee of an employer . . . who is or may become eligible
to receive a benefit of any type from an employee benefit
plan which covers employees of such employer . . . .” ERISA
§ 3(7), 29 U.S.C. § 1002(7). McDonald’s argument that he
was not a participant, because no one in the outside world
recognized him as such when he tried to fill his prescrip-
tions, confuses the lay definition of that term with the
statutory definition. Under the statute, he was a participant
and could have sued to compel the provision of benefits due
to him under § 502(a). See also Firestone Tire & Rubber Co.
v. Bruch, 489 U.S. 101, 117 (1989).
We conclude, therefore, that McDonald’s state law claims
were preempted by ERISA, as the district court held. The
question remains whether the facts he has alleged could,
under the favorable standard that applied to Rule 12(b)(6)
motions, support any kind of relief. We do not disagree with
McDonald’s implicit concession that he cannot re-
cover consequential damages in an ERISA action, at least
as matters stand at present. See Massachusetts Mut. Life
Ins. Co. v. Russell, 473 U.S. 134, 148 (1985); see also Davila,
124 S.Ct. at 2503 (Ginsburg, J., concurring). This fact may
knock out a large portion of what he and Mrs. McDonald
were hoping to recover in this action. On the other hand, as
a plan participant at the time of his stroke whose benefits
were allegedly wrongfully being denied, depending on the
terms of the plan, he may have a claim for reimbursement
of the medical expenses he incurred and continues to incur.
We cannot say anything more specific at this juncture; it is
enough that his pleadings entitle him to explore these
possibilities further.
III
It will be up to the McDonalds on remand to decide
whether they wish to proceed with their case or to aban-
don it. In that connection, they may wish to take note

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No. 04-3259 11
of Justice Ginsburg’s comment in her concurring opinion in
Davila, in which she drew attention to the Government’s
suggestion that ERISA “as currently written and inter-
preted, may allo[w] at least some forms of ‘make-whole’
relief against a breaching fiduciary in light of the general
availability of such relief in equity at the time of the divided
bench.” Id. at 2504 (internal quotations omitted). (We note
that in Davila, as here, the respondents had declined the
opportunity to amend their state-law complaints to add
ERISA claims, id. at 2502-03 n.7, but it appears that no one
argued to the Court that this step was unnecessary, and it
thus had no occasion to reach the point we have discussed
in this opinion.)
The judgment of the district court is REVERSED and the
case is R EMANDED for further proceedings consistent
with this opinion.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—9-29-05

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