DENNY’S, INCORPORATED, in its fiduciary capacity as plan administrator v. CHUCK CAKE, in his capacity as Acting Director of the California Department of…

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 DENNY’S, INCORPORATED, in its
fiduciary capacity as plan
administrator; DENNY’S,
INCORPORATED VACATION PAY PLAN;
ANDREW F. GREEN, in his capacity
as trustee of the Denny’s
Incorporated Employee Benefits
Trust; DENNY’S INCORPORATED
EMPLOYEE BENEFITS TRUST,
Plaintiffs-Appellants,
v.
No. 03-1326 CHUCK CAKE, in his capacity as
Acting Director of the California
Department of Industrial Relations;
ARTHUR LUJAN, in his capacity as
the Labor Commissioner of the
State of California,
Defendants-Appellees.
AMERICAN ASSOCIATION OF RETIRED
PERSONS,
Amicus Supporting Appellee. 
Appeal from the United States District Court
for the District of South Carolina, at Spartanburg.
Henry M. Herlong, Jr., District Judge.
(CA-02-2968-7-20)
Argued: January 20, 2004
Decided: April 12, 2004

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Before WIDENER, WILLIAMS, and MOTZ, Circuit Judges.
Vacated and remanded by published opinion. Judge Motz wrote the
opinion, in which Judge Widener joined. Judge Williams wrote a con-
curring opinion.
COUNSEL
ARGUED: Barry Vaughn Frederick, LEHR, MIDDLEBROOKS,
PRICE & PROCTOR, P.C., Birmingham, Alabama, for Appellants.
Miles Eric Locker, Division of Labor Standards Enforcement,
DEPARTMENT OF INDUSTRIAL RELATIONS, San Francisco,
California, for Appellees. ON BRIEF: Perry D. Boulier, HOL-
COMBE, BOMAR, GUNN & BRADFORD, P.A., Spartanburg,
South Carolina, for Appellants. Anne Hipshman, Susan A. Dovi,
Division of Labor Standards Enforcement, DEPARTMENT OF
INDUSTRIAL RELATIONS, San Francisco, California, for Appel-
lees. Mary Ellen Signorille, AARP Foundation Litigation, Melvin R.
Radowitz, AARP, Washington, D.C., for Amicus Curiae.
OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
Upon notification from California officials that its vacation pay
practices violated state labor law, Denny’s, Inc. brought this action in
federal court in South Carolina. Denny’s asked the court to declare
that the Employee Retirement Income Security Act (ERISA) pre-
empted these state-law claims, and enjoin the California Labor Com-
missioner from applying the state law against Denny’s. Shortly
thereafter, the Commissioner sued Denny’s in state court in California
seeking to enforce the state law. Several months later, the district
court dismissed this action, finding it lacked personal jurisdiction over
the Commissioner. We believe that the court did have jurisdiction, but
conclude that the Anti-Injunction Act bars all of the relief that
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Denny’s seeks. Accordingly, we vacate the judgment of the district
court and remand for entry of an order dismissing the complaint for
failure to state a claim upon which relief can be granted.
I.
Denny’s, a restaurant chain with its principal place of business in
South Carolina, maintains the Denny’s, Inc. Vacation Plan ("the
Plan") and the Denny’s, Inc. Employee Benefits Trust ("the Trust")
for the stated purpose of providing vacation benefits to eligible
employees. The Plan provides that salaried and hourly employees
cannot use vacation benefit days and will not be paid any vacation
benefits upon termination of their employment until and unless they
have completed, respectively, six months or one year of continuous
employment with Denny’s.
On July 11, 2002, Denny’s received a letter from an attorney at the
California Department of Industrial Relations. The purpose of the let-
ter was "to come to a global resolution" of issues raised by claims of
former Denny’s employees filed with the California Labor Commis-
sioner. The attorney explained that Denny’s policy requiring forfei-
ture of vacation benefits when employees leave prior to six months
or one year of employment violated Cal. Lab. Code § 227.3. That stat-
ute provides that when "an employee is terminated without having
taken off his vested vacation time, all vested vacation shall be paid
to him as wages" and, further, "that an employment contract or
employer policy shall not provide for forfeiture of vested vacation
time upon termination." § 227.3.
The California attorney noted that the Department had concluded
that "Denny’s method of funding its vacation pay plan constituted a
payroll practice and the plan is not therefore an ERISA plan which
preempts state enforcement laws." The attorney recounted prior dis-
cussions and litigation between the parties on this issue, including a
state court’s refusal to grant summary judgment to Denny’s on its pre-
emption defense. Given the numerous claims filed with the Depart-
ment, the attorney proposed that Denny’s meet with the
Commissioner and discuss an "amicable resolution" to avoid "the
time and expense of litigation." Otherwise, the Department would
have "to file an action against Denny’s to finally resolve this issue."
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In response, on September 6, 2002, Denny’s1 filed this action for
declaratory and injunctive relief in federal court in South Carolina
against the Commissioner and the director of the Department of
Industrial Relations (collectively, "Commissioner"). Denny’s sought:
(1) a declaration that the Plan and Trust constitute an ERISA plan; (2)
a declaration that "ERISA preempts the California statutes, regula-
tions, and any action or decision" of the Commissioner "having the
effect of law that [the Commissioner] seek[s] to enforce against
[Denny’s] based upon California law"; and (3) "[p]reliminary and per-
manent injunctions barring [the Commissioner] from taking any
action to enforce California law against [Denny’s] with regard to the
Plan and the Trust."
Three weeks later, the Commissioner filed a complaint against
Denny’s in California state court, for damages and injunctive relief.
The Commissioner asked the state court to award it unpaid vacation
wages and waiting time penalties pursuant to Cal. Lab. Code § 203,
and to order Denny’s to "cease and desist from violating" all provi-
sions of the state labor code. In its answer to the Commissioner’s state
court lawsuit, Denny’s alleged ERISA preemption as an affirmative
defense.
The Commissioner then moved to dismiss the present action, con-
tending that a federal district court in South Carolina lacked personal
jurisdiction over the California officials, notwithstanding ERISA’s
nationwide service of process provision, 29 U.S.C. § 1132(e)(2)
(2000). Alternatively, the Commissioner contended that the Anti-
Injunction Act, 28 U.S.C. § 2283 (2000) and abstention based on
Younger v. Harris, 401 U.S. 37 (1971), compelled dismissal. On Feb-
ruary 27, 2003, the district court granted the Commissioner’s motion,
concluding that it had no personal jurisdiction over the Commis-
sioner. Denny’s, Inc. v. Cake, 247 F. Supp. 2d 813 (D.S.C. 2003).
1We refer within to all plaintiffs/appellants — Denny’s (in its fiduciary
capacity as Plan administrator), the Plan, the Trust, and Andrew F.
Green, in his capacity as trustee of the Trust — collectively as
"Denny’s."
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II.
We turn first to the question of whether the district court could
exercise personal jurisdiction over the Commissioner under 29 U.S.C.
§ 1132(e)(2). In the case at hand the answer to that question hinges
on the court’s subject matter jurisdiction under 29 U.S.C.
§ 1132(a)(3).
ERISA contains a nationwide service of process provision that per-
mits an ERISA enforcement action to be brought in federal court in
a district "where the plan is administered" and process to be "served
in any other district where a defendant resides or may be found."
§ 1132(e)(2). Accordingly, since the Plan is administered in Spartan-
burg, South Carolina, and the Commissioner has been served in Cali-
fornia, a district court sitting in South Carolina would have personal
jurisdiction over the Commissioner under § 1132(e)(2) if this is a
proper ERISA enforcement action — that is, if the court had subject
matter jurisdiction over the action under § 1132(a)(3).2 Section
1132(a)(3) provides that "a participant, beneficiary, or fiduciary" may
bring an ERISA enforcement action in federal court:
(A) to enjoin any act or practice which violates any provi-
sion of this subchapter or the terms of the plan, or (B) to
obtain other appropriate equitable relief (i) to redress such
violations or (ii) to enforce any provisions of this subchapter
or the terms of the plan[.]
2This, of course, assumes that the assertion of personal jurisdiction
over the Commissioner would satisfy Fifth Amendment due process
requirements. The Commissioner tentatively argues that it would not.
Brief of Appellee at 25 n.9. But the Commissioner has not demonstrated
that the district court’s assertion of personal jurisdiction over him would
result in "such extreme inconvenience or unfairness as would outweigh
the congressionally articulated policy" evidenced by a nationwide service
of process provision. ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617,
627 (4th Cir. 1997). Nor has the Commissioner suggested any persuasive
reason why the ESAB standard, formulated in the context of the RICO
nationwide service of process provision, does not apply here. Accord-
ingly, we reject this argument.
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29 U.S.C. § 1132(a)(3) (emphasis added).
Section 1132(a)(3)(B) thus permits an ERISA fiduciary to bring an
action to "enforce any provisions of this subchapter." Id. Indisputably,
"this subchapter" refers to subchapter I of Chapter 18 of the United
States Code, which codified Title I of ERISA and includes 29 U.S.C.
§§ 1001-1191. "[T]his subchapter" thus clearly contains ERISA’s pre-
emption provision, 29 U.S.C. § 1144. The plain language of
§ 1132(a)(3)(B) therefore appears to permit an ERISA fiduciary to
bring an action to "enforce" § 1144 — a "provision of this subchapter."3
Indeed, the Supreme Court has expressly stated that "[u]nder
§ 502(a)(3)(B) of ERISA [§ 1132(a)(3)(B)], 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 trust-
ees may comply with a state [law]." Franchise Tax Bd. v. Constr.
Laborers Vacation Trust, 463 U.S. 1, 26-27 (1983). The Court ulti-
mately rejected the view that a state action brought by the California
Franchise Tax Board against an ERISA fiduciary for a declaration
that the fiduciary must comply with state law arose under ERISA and
so could be removed to federal court — but only because the tax
board itself was not an ERISA "participant, beneficiary, or fiduciary,"
as required by § 1132(a)(3). Id. at 27. The Court assumed that the
3Contrary to Denny’s assertions, § 1132(a)(3)(B) does not permit it to
bring an action solely to seek a declaration that the Plan is an ERISA
plan. Although a holding as to whether ERISA preempts the Commis-
sioner’s application of California law would necessarily include a deter-
mination as to whether Denny’s plan is actually an ERISA plan, a suit
to seek only a declaration that the Plan is an ERISA plan could not stand
on its own. Absent the Commissioner’s threat to enforce California law
against the Plan and Denny’s contention that such enforcement would
violate ERISA, no enforcement or potential violation of ERISA or the
Plan would be at issue. Thus, as the district court noted, the "crux" of this
case is "the issue of preemption." Denny’s, 247 F. Supp. at 817 n.6.
Because an action seeking only a declaratory judgment that the Plan is
an ERISA plan would not enforce or remedy a violation of ERISA or the
Plan, it could not be brought under § 1132(a)(3); in fact, such an action
would raise no case or controversy. See U.S. Const. art. III, § 2, cl. 1; 28
U.S.C. § 2201 (2000) (authorizing federal courts to issue declaratory
judgments only "[i]n a case of actual controversy").
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ERISA fiduciary "could have sought an injunction under ERISA
against application to it of state regulations that require acts inconsis-
tent with ERISA," but held that the declaratory action by the State,
not an ERISA participant, beneficiary, or fiduciary, did not "‘arise
under’ federal law" and so could not be removed to federal court. Id.
at 20.
In short, both the plain language of § 1132(a)(3) and the Supreme
Court’s interpretation of it seem to compel the conclusion that an
ERISA fiduciary, like Denny’s,4 could bring the instant action to "en-
force" § 1144 by way of "an injunction . . . against application . . .
of state regulations that require acts inconsistent with ERISA." Fran-
chise Tax Bd., 463 U.S. at 20.
Yet, the district court held that Denny’s declaratory and injunctive
action based on ERISA’s preemption provision, § 1144, did not con-
stitute an action to "enforce" ERISA within the meaning of
§ 1132(a)(3)(B). Denny’s, 247 F. Supp. 2d at 820. The court appar-
ently concluded that because Denny’s § 1144 preemption defense in
the California case would not suffice to provide federal removal juris-
diction over it, the instant action, based on § 1144, could not be
brought under § 1132(a)(3). Id. at 820-821. But, as explained above,
neither Franchise Tax Board nor the plain language of § 1132(a)(3)
provide any basis for treating the present action precisely like one in
which a fiduciary seeks removal asserting § 1144 preemption.
We acknowledge that this result may at first seem odd because, just
4Like the district court, we presume Denny’s is an ERISA fiduciary for
purposes of jurisdiction. In doing so, we have not thereby drawn any
conclusion as to the merits of Denny’s allegation that the Plan is an
ERISA plan, which is central to the determination of whether ERISA
preempts the Commissioner’s application of state law in this case. See
supra note 3. To the extent that the question of subject matter jurisdiction
under § 1132(a)(3) "involves the merits of [this] dispute," we thus follow
"the proper course of action," i.e. upon "find[ing] that jurisdiction
exists," we leave any objections to be dealt with "as a direct attack on
the merits of the plaintiff’s case." United States v. North Carolina, 180
F.3d 574, 580 (4th Cir. 1999) (internal quotation marks and citation
omitted).
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as the present action depends on whether the plaintiff’s claim falls
within § 1132(a)(3), so too "complete preemption,"5 which provides
a basis for federal removal jurisdiction, depends in the ERISA context
upon whether the underlying state law claim falls within § 1132(a).
See, e.g., Sonoco Prods. Co. v. Physicians Health Plan, Inc., 338 F.3d
366, 370-71 (4th Cir. 2003). But a court determines "complete pre-
emption" by determining the plaintiff’s capacity to bring its state law
claims under § 1132(a), not the defendant’s. Id. at 371-72. Thus, the
fact that a state court defendant’s assertion of § 1144 preemption as
a defense does not create complete preemption says nothing about
whether that defendant could have brought an action to enforce
§ 1144 preemption as a plaintiff in federal court under § 1132(a). In
the present case, for instance, the Commissioner could not bring his
claims in federal court under § 1132(a) because, like the tax board in
Franchise Tax Board, he is not an ERISA participant, beneficiary, or
fiduciary; as a result, his state court suit is not completely preempted
by Denny’s assertion of a preemption defense under § 1144. Id. at
372-73. But Denny’s, as a fiduciary, does not face the same barrier
to bringing the instant § 1132(a)(3) action in federal court.
The district court based its contrary decision almost exclusively on
NGS American, Inc. v. Jefferson, 218 F.3d 519 (6th Cir. 2000). There
the Sixth Circuit held that an ERISA fiduciary’s federal suit — seek-
ing a declaration that ERISA preempted a beneficiary’s threat to initi-
ate private state court litigation against the fiduciary based on an
alleged violation of state law — could not be brought under
5"Complete preemption" differs from "ordinary" or "conflict" preemp-
tion. Conflict preemption arises when a defendant asserts the affirmative
defense that a plaintiff’s state law claim is preempted by federal law.
Sonoco Products Co. v. Physicians Health Plan, Inc., 338 F.3d 366, 370-
71 (4th Cir. 2003). Normally, conflict preemption "does not appear on
the face of a well-pleaded complaint, and, therefore, does not authorize
removal to federal court." Id. at 371 (internal quotation marks and cita-
tion omitted). By contrast, complete preemption exists when "Congress
so completely preempt[s] a particular area that any civil complaint rais-
ing this select group of claims is necessarily federal in character." Id.
(internal quotation marks and citation omitted). With complete preemp-
tion, removal to federal court is possible because "the plaintiff simply
has brought a mislabeled federal claim, which may be asserted under
some federal statute." Id. (internal quotation marks and citation omitted).
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§ 1132(a)(3); see also Gulf Life Ins. Co. v. Arnold, 809 F.2d 1520,
1523-24 (11th Cir. 1987) (holding that a fiduciary’s declaratory judg-
ment action seeking to determine its liability for benefits claimed by
a former employee could not be brought under § 1132(a)(3)).6 But
Jefferson involved a fiduciary suing for a declaration that ERISA pre-
empted the threat of a private suit by a beneficiary, while the case at
hand involves a very different situation: a fiduciary suing for a decla-
ration that ERISA preempts state authorities from enforcing state law
against an ERISA plan. The district court recognized that "the facts
of Jefferson are easily distinguishable from the facts at hand," but
nevertheless concluded that this "distinction does not affect the appli-
cation of the Jefferson Court’s reasoning." Denny’s, 247 F. Supp. 2d
at 821.
The Jefferson court itself, however, found this difference extremely
significant, taking pains to distinguish the case before it, in which the
plaintiff challenged "the permissibility of a private cause of action,"
from earlier Sixth Circuit precedent, Thiokol Corp. v. Dep’t of Trea-
sury, 987 F.2d 376 (6th Cir. 1993), in which the plaintiff challenged
"the enforceability of an existing state regulation." Jefferson, 218 F.3d
at 529. In Thiokol, as here, an ERISA fiduciary sought declaratory
and injunctive relief in federal court on the basis of § 1144 preemp-
tion. 987 F.2d at 380. The Thiokol fiduciary, like Denny’s in this case,
sought to prevent state authorities from enforcing state law provisions
against an asserted ERISA plan. Id. at 377-78. The Thiokol court
unequivocally held that, in these circumstances, the fiduciary could
6In Gulf Life, 809 F.2d at 1523, the fiduciary did not request an injunc-
tion and the court determined that the requested declaration was not "eq-
uitable in nature," and so could not be brought under § 1132(a)(3) for this
additional reason. Here, of course, Denny’s does seek an injunction and
so § 1132(a)(3)(B) relief cannot be denied on that basis. Moreover, the
"underlying controversy" here is "equitable" in nature: an effort to force
Denny’s, via an injunction, to comply with California law. See Trans-
america Occidental Life Ins. Co. v. DiGregorio, 811 F.2d 1249, 1251
(9th Cir. 1987) (noting that "a particular declaratory judgment draws its
equitable or legal substance from the nature of the underlying contro-
versy"). Thus, the declaratory relief sought in this case clearly also quali-
fies as "appropriate equitable relief" under § 1132(a)(3)(B).
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bring a § 1144 preemption claim in federal court under § 1132(a)(3).
Id. at 380.7
In determining whether a case falls within § 1132(a)(3), we agree
with the Sixth Circuit: an action based on ERISA preemption brought
by a fiduciary to enjoin a private suit critically differs from such an
action brought by a fiduciary to prevent the enforcement of a state law
against an ERISA plan. A party’s private suit, based on an arguably
preempted state law, brought against an ERISA plan, poses no threat
to violate § 1144 or any other provision of ERISA or the plan. See
Jefferson, 218 F.3d at 529-30. The only "harm" in denying injunctive
and declaratory relief to the plan’s fiduciary in such a case is to force
the fiduciary "to raise its preemption claim in state court, or to seek
removal to federal district court." Id. at 529. But a state suit to enforce
a state law against an ERISA plan may well violate ERISA and the
plan. In such a case, the plan’s fiduciary faces a Hobson’s choice:
obey the state law, and risk violating the provisions of the plan (and
hence ERISA, 29 U.S.C. § 1104(a)(1)(D)), or disobey the state law
and then raise "ERISA preemption as a defense in a state enforcement
action" and "risk[ ] breaking the law." Id. In addition to potentially
coercing a plan fiduciary into violating plan provisions and ERISA,
a state’s enforcement of an assertedly preempted state law against an
ERISA plan (unlike a private suit based on state law) is arguably itself
a "violation" of § 1144 — which provides that ERISA "shall super-
cede any and all State laws." See, e.g., HMI Mech. Sys., Inc. v.
McGowan, 266 F.3d 142, 149 (2d Cir. 2001) (noting that a state’s
approach to enforcing a law "violated ERISA preemption standards").
In sum, Denny’s declaratory and injunctive action to enforce
§ 1144 falls within § 1132(a)(3), and so the district court did have
7The Commissioner’s attempts to distinguish Thiokol do not persuade
us. True, Thiokol did not involve any question as to personal jurisdiction
under § 1132(e)(2), but it clearly did involve whether a federal court had
jurisdiction over a § 1144 preemption claim under § 1132(a)(3) — the
determinative question for personal jurisdiction here — and the Sixth
Circuit unequivocally held that it did. Thiokol, 987 F.2d at 380. More-
over, whether the Thiokol court properly decided another issue — the
applicability of the Tax Injunction Act, 28 U.S.C. § 1341 (2000) — does
not affect the correctness of the court’s § 1132(a)(3) ruling.
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personal jurisdiction over the Commissioner under § 1132(e)(2).
Therefore, we must vacate its judgment dismissing this action for lack
of personal jurisdiction.
III.
Because the district court found it lacked personal jurisdiction over
the Commissioner, it did not address the Commissioner’s alternative
Anti-Injunction Act (hereinafter "the Act") argument. The Commis-
sioner reiterates on appeal that the Act bars a federal court from grant-
ing the relief requested by Denny’s and so requires dismissal of the
case for failure to state a claim upon which relief can be granted. Fed.
R. Civ. P. 12(b)(6). The Act provides:
A court of the United States may not grant an injunction to
stay proceedings in a State court except as expressly autho-
rized by Act of Congress, or where necessary in aid of its
jurisdiction, or to protect or effectuate its judgments.
28 U.S.C. § 2283.8
8Although Denny’s does not specifically request an "injunction to stay
proceedings in State court," it does seek to enjoin state officials "from
taking any action to enforce California law against it." If granted, this
relief amounts to a "stay of proceedings in a State court." See, e.g. Atl.
Coast Line R.R. Co. v. Bhd. of Locomotive Eng’rs, 398 U.S. 281, 287
(1970) (finding that the Act "cannot be evaded" by framing an injunction
as a restraint on a party rather than directly on the state court). Moreover,
when the Act bars an injunction it "also bar[s] the issuance of a declara-
tory judgment that would have the same effect as an injunction." Texas
Employers’ Ins. Ass’n v. Jackson, 862 F.2d 491, 506 (5th Cir. 1988) (en
banc) (internal quotation marks and citation omitted). This is clearly the
case here: Denny’s request for a declaration that ERISA preempts the
enforcement of a California labor law against the Plan has "the same
effect" as its request for an injunction to prevent enforcement of that
state law against the Plan; both "result in precisely the same interference
with and disruption of state proceedings that the long-standing policy
limiting injunctions was designed to avoid." Samuels v. Mackell, 401
U.S. 66, 72 (1971). Thus, if the Act bars the injunction Denny’s has
sought, it also bars the declaratory relief it has sought. See, e.g., Employ-
ers Res. Mgmt. Co., Inc. v. Shannon, 65 F.3d 1126, 1129 (4th Cir. 1995)
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The Act serves as a "necessary concomitant of the Framers’ deci-
sion to authorize, and Congress’ decision to implement, a dual system
of federal and state courts" and "represents Congress’ considered
judgment as to how to balance the tensions inherent in such a sys-
tem." Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 146 (1988).
Accordingly, "[w]e take seriously the mandate in the Anti-Injunction
Act and recognize that for over two hundred years, the Act has helped
to define our nation’s system of federalism." Employers Res. Mgmt.
Co., Inc. v. Shannon, 65 F.3d 1126, 1130 (4th Cir. 1995).
The Act constitutes "an absolute prohibition against any injunction
of any state-court proceedings, unless the injunction falls within one
of the three specifically defined exceptions in the Act." Vendo Co. v.
Lektro-Vend Corp., 433 U.S. 623, 630 (1977) (plurality opinion).
These three exceptions are injunctions: (1) expressly authorized by
statute; (2) necessary to aid the court’s jurisdiction; or (3) required to
protect or effectuate the court’s judgments. Chick Kam Choo, 486
U.S. at 146; Atl. Coast Line R.R. Co. v. Bhd. of Locomotive Eng’rs,
398 U.S. 281, 287-88 (1970). None of these exceptions apply here.9
(holding the Act barred the ERISA fiduciary from injunctive and declar-
atory relief); see also 17 Charles Alan Wright, Arthur R. Miller &
Edward H. Cooper, Federal Practice and Procedure § 4222, at 503-04 &
n.11 (2d ed. 1988 & Supp. 1999) (collecting cases).
9Denny’s does not contend that the second or third exceptions apply.
It does offer a brief and unpersuasive suggestion that "§ 1132(a) of
ERISA" constitutes express statutory authorization for an injunction and
for this reason "operates as an exception" to the Act. Reply Brief at 10.
We explicitly held to the contrary in Employers’ Resource Management,
65 F.3d at 1130-34. Seizing on our statement there that we rejected "the
notion that ERISA operates as an automatic exception" to the Act, id. at
1132, Denny’s contends that we "did not hold that ERISA never operates
as an exception." Reply Brief at 10 (emphasis in original). Denny’s mis-
reads our opinion. Although recognizing a "circuit split" on the question
and factually distinguishing the cases taking the opposite view, we firmly
aligned ourselves with the "sounder position" of the Third and Fifth Cir-
cuits and refused "to broaden the three narrow exceptions" to the Act.
Employers’ Res. Mgmt., 65 F.3d at 1133-34; see also Total Plan Servs.,
Inc. v. Texas Retailers Ass’n, Inc., 925 F.2d 142, 144 (5th Cir. 1991);
United States Steel Corp. Plan for Employee Ins. Benefits v. Musiko, 885
F.2d 1170, 1177-78 (3rd Cir. 1989).
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Notwithstanding the inapplicability of the only exceptions to the
Act recognized by Congress, Denny’s contends that the Act does not
bar its suit because of a judicial exception created by one of our sister
circuits and followed by two others. Specifically, Denny’s contends
that the Act’s prohibition on enjoining "proceedings in state court"
does not apply because when it filed this action requesting injunctive
relief in early September 2002, "there were no pending state proceed-
ings, within the meaning of the [Act] or otherwise." Reply Brief at 7.
The Seventh Circuit so held in Barancik v. Investors Funding
Corp., 489 F.2d 933, 937 (7th Cir. 1973); see also Hyde Park Part-
ners, L.P. v. Connolly, 839 F.2d 837, 842 n.6 (1st Cir. 1988) (dicta);
Nat’l City Lines, Inc. v. LLC Corp., 687 F.2d 1122, 1127 (8th Cir.
1982). Other circuits, however, have rejected this judicial exception.
Royal Ins. Co. of Am. v. Quinn-L Capital Corp., 3 F.3d 877, 885 (5th
Cir. 1993) (holding that the Act does apply even if the request for fed-
eral injunctive relief is filed first); Roth v. Bank of the Common-
wealth, 583 F.2d 527, 533 (6th Cir. 1978), cert. dismissed, 442 U.S.
925 (1979) (same); see also Standard Microsystems Corp. v. Texas
Instruments, 916 F.2d 58, 61-62 (2d Cir. 1990) (criticizing the reason-
ing in Barancik and stating that the court had "considerable doubt
[about] whether the Barancik rule should be adopted in this circuit");
Nat’l City Lines, 687 F.2d at 1135 (Arnold, J., dissenting) (explaining
that "the mere filing of a motion in a federal court seeking to enjoin
state-court proceedings should [not] in and of itself deprive later filed
state-court action of the protection of § 2283").
As always, we turn first to the plain language of the statute to
determine its meaning. See Williams v. Taylor, 529 U.S. 420, 431
(2000). The plain language of the Act clearly and unequivocally pro-
hibits a federal court from granting "an injunction to stay proceedings
in a State court." 28 U.S.C. § 2283. Of course, in order for the Act’s
bar to apply, proceedings in state court must have begun. See Dom-
browski v. Pfister, 380 U.S. 479, 484 n.2 (1965) (the Act does "not
preclude injunctions against the institution of state court proceedings,
but only bar[s] stays of suits already instituted"). But nothing in the
Act confines its bar to situations in which the federal plaintiff requests
injunctive relief after the state suit has been filed. See Royal Ins. Co.,
3 F.3d at 885.
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Courts must "presume that a legislature says in a statute what it
means and means in a statute what it says there." Conn. Nat’l Bank
v. Germain, 503 U.S. 249, 253-54 (1992). A court may not disregard
the plain language of a statute unless a literal application of the statu-
tory language "would lead to absurd results . . . or would thwart the
obvious purpose of the statute." In re Trans Alaska Pipeline Rate
Cases, 436 U.S. 631, 643 (1978) (internal quotation marks and cita-
tion omitted). Here literal application of the Act’s language would
neither thwart its purpose nor produce an absurd result. Quite the con-
trary, abiding by the statutory language clearly furthers the Act’s pur-
pose of avoiding "unseemly conflict between the state and the federal
courts." N.L.R.B. v. Nash-Finch Co., 404 U.S. 138, 146 (1971).
Moreover, the Supreme Court has directed that the Act, in particu-
lar, "is not a statute conveying a broad general policy for appropriate
ad hoc application" but rather is "expressed in a clear-cut prohibition
qualified only by specifically defined exceptions." Amalgamated
Clothing Workers v. Richman Bros., 348 U.S. 511, 515-16 (1955).
Courts are not to "enlarge[ ]" these "exceptions . . . by loose statutory
construction." Atl. Coast Line, 398 U.S. at 287. Instead, "[a]ny doubts
as to the propriety of a federal injunction against state court proceed-
ings should be resolved in favor of permitting the state courts to pro-
ceed . . . to finally determine the controversy." Id. at 297.
The Barancik court acknowledged the Supreme Court directive that
the Act "imposes an absolute ban, circumscribing the federal court’s
power to act unless a case falls within one of the explicit exceptions
from its command." Barancik, 489 F.2d at 937. It also recognized that
"[t]he mere fact that the federal complaint was filed before the state
proceeding was commenced is not sufficient to avoid the statutory
bar." Id. at 936 (citing Kline v. Burke Construction Co., 260 U.S. 226,
232 (1922)). But see Nat’l City Lines, 687 F.2d at 1127 (stating that
the Act "is inapplicable when a federal court has first obtained juris-
diction of a matter in controversy by the institution of suit"). Never-
theless, the Barancik court concluded that "the mandatory prohibition
in § 2283 against injunctions staying state court proceedings does not
apply to state actions commenced after a motion for injunctive relief
is filed in the federal court." Barancik, 489 F.2d at 938.
The Barancik court advanced several policy concerns in support of
its holding. For example, it worried that "[u]nless the applicability of
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the statutory bar is determined by the state of the record at the time
the motion for an injunction is made, a litigant would have an abso-
lute right to defeat a well-founded motion by taking the very step the
federal court was being urged to enjoin." Id. at 937. But a federal
court can eliminate this problem by issuing a temporary restraining
order against the filing of a state court suit while considering a motion
for a preliminary injunction seeking such relief. See Royal, 3 F.3d at
884; see also Dombrowski, 380 U.S. at 484 n.2 (noting that the Act
does not prevent a federal court from restraining a party from institut-
ing state proceedings). The Barancik court feared that such reliance
on temporary restraining orders "might encourage the liberal granting
of the kind of protective orders the statute was intended to prevent."
Barancik, 489 F.2d at 938. However, the basic harm the statute was
intended to prevent was not the liberal granting of protective orders,
per se, but the "needless friction between state and federal courts."
Mitchum v. Foster, 407 U.S. 225, 233 (1972) (internal quotation
marks and citation omitted). Temporarily staying a potential state suit
before it is filed so that an anti-suit injunction can be considered
would seemingly create significantly less friction than allowing a
state suit to be commenced, only to enjoin it after it is filed.
The Barancik court also suggested that its ruling had "the salutary
advantage of discouraging the unseemly race to the state courthouse
. . . while the federal court had under consideration a motion for a sta-
tus quo order." Barancik, 489 F.2d at 935 n.5. But by hinging the
applicability of § 2283 on whether the state or federal suit is com-
menced first, the Barancik rule creates a race to the courthouse of its
own. See Roth, 583 F.2d at 533 (noting that the Barancik rule "merely
moves the finish line"). Even worse, following Barancik would per-
mit a federal court plaintiff who wins this race, to "unilaterally . . .
nullify the effectiveness of" the Act with the "mere application for
injunctive relief." Standard Microsystems, 916 F.2d at 62; see also
Diane P. Wood, Fine-tuning Judicial Federalism: A Proposal for
Reform of the Anti-Injunction Act, 1990 B.Y.U. L. Rev. 289, 312
(1990) (arguing that the Barancik court’s result does not seem "in line
with the statute" because the "Act would become too easy to evade
in many cases if the timing of the request for the injunction became
the dispositive factor").
Although we recognize the legitimacy of the concerns raised by the
Seventh Circuit in Barancik, the exception it created to meet these
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concerns poses its own problems. Moreover, even if application of the
Barancik holding would result in better policy in the eyes of some,
this is not the course Congress has chosen in the Act; views as to
good policy cannot overcome a clear statutory directive. See, e.g.,
Sigmon Coal Co., Inc. v. Apfel, 226 F.3d 291, 308 (4th Cir. 2000)
(noting that "our job is to determine the meaning of the statute passed
by Congress, not whether wisdom or logic suggests that Congress
could have done better"). Therefore, we hold that the Act’s prohibi-
tion on enjoining state court proceedings applies to any such proceed-
ing pending at the time the federal court acts on the request for
injunctive relief, regardless of when the state court action was filed.
Since the California proceeding was clearly pending at the time the
district court acted on Denny’s request for injunctive relief, the Act
bars the relief Denny’s requested.
Because the Act rendered the district court powerless to issue any
of the relief Denny’s requested, see supra n.8, its complaint should
have been dismissed for failure to state a claim upon which relief can
be granted. Fed. R. Civ. P. 12(b)(6). Accordingly, we vacate the judg-
ment of the district court dismissing for lack of personal jurisdiction
and remand with instructions to enter an order dismissing the case for
failure to state a claim upon which relief can be granted.10
IV.
For the foregoing reasons, the judgment of the district court is
VACATED AND REMANDED.
WILLIAMS, Circuit Judge, concurring in part and concurring in the
judgment in part:
At the outset, I concur completely in the majority’s jurisdictional
analysis. Having concluded that the district court had personal juris-
diction over the California state officials, this case requires our court
to weigh in on two separate issues related to the Anti-Injunction Act
10Given our holding, we need not address the Commissioner’s conten-
tion that Younger abstention also compels dismissal of Denny’s suit.
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that have divided the Courts of Appeals. I concur in the opinion of
the court that the plain language of the Anti-Injunction Act bars an
injunction in this case, unless one of its exceptions applies. In addi-
tion, because I believe that the judgment of the court is compelled by
our prior decision in Employers Resource Management Co. v. Shan-
non, 65 F.3d 1126 (4th Cir. 1995), I concur in the judgment that
ERISA does not authorize an injunction of state court proceedings in
this case. I write separately to highlight some of my concerns with
these latter two issues.
First, I address the application of the Anti-Injunction Act (AIA) to
state proceedings filed after federal proceedings are filed. The plain
language of the Anti-Injunction Act prohibits injunctions "to stay pro-
ceedings in a State court." 28 U.S.C.A. § 2283 (West 1994). Nothing
in this language limits the prohibition to state actions filed before the
federal action is filed. Moreover, interpreting a predecessor statute to
the AIA, the Supreme Court held in Kline v. Burke Construction Co.,
260 U.S. 226 (1922), that the predecessor statute barred the federal
court from enjoining a state court action that was filed after the com-
mencement of the federal court action. As my colleagues note, ante
at 14, we may not disregard the plain language of a statute unless a
literal application would lead to absurd results or would thwart the
statute’s obvious purpose. Although I agree with many of the con-
cerns expressed by then-Judge Stevens in Barancik v. Investors Fund-
ing Corp., 489 F.2d 933 (7th Cir. 1973), especially the fear that our
holding will pressure federal courts to grant temporary restraining
orders, see id. at 938, I do not believe that applying the AIA to later-
filed state court proceedings leads to absurd results or thwarts the
obvious purpose of the AIA. Accordingly, I agree with my colleagues
that we are bound by the plain language of the statute and that the
plain language of the AIA bars an injunction in this case, unless one
of its exceptions applies.*
*I note that the facts of this case suggest a particularly troubling sce-
nario. For example, even had Denny’s requested a temporary restraining
order against the filing of state court proceedings, the district court likely
would have denied it based on the erroneous belief that it lacked personal
jurisdiction. If so, the California state officials still would have been able
to file their state court action, which we now hold cannot be enjoined by
the federal court. In such a circumstance, the applicability of the AIA
hinges entirely on the fortuity of the district court’s erroneous procedural
ruling.
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Second, application of the AIA’s "expressly authorized by Act of
Congress" exception to this case also presents some very interesting
issues. We addressed a similar issue in Employers Resource Manage-
ment, and held that "§ 1132(a) of ERISA does not operate as an auto-
matic exception to the Anti-Injunction Act." Employers Res. Mgmt.,
65 F.3d at 1129. Because the Supreme Court in Mitchum v. Foster,
407 U.S. 225 (1972), held that 42 U.S.C.A. § 1983 was an expressly
authorized exception to the AIA, we compared ERISA to § 1983. Id.
at 1131. In making this comparison, we employed broad language that
addressed ERISA as a whole. For example, we concluded that ERISA
did not "create[ ] the type of ‘unique’ federal right or remedy that was
at issue in Mitchum’s consideration of 42 U.S.C. § 1983" and that "[a]
distrust of state courts did not play the same role in the development
of ERISA as it did in the formation of § 1983." Id. Thus, we con-
cluded that "[t]he ERISA statutory scheme is not sufficiently analo-
gous to the scheme developed under § 1983 for us to extend Mitchum
into the ERISA setting." Id.
Despite this broad language, other passages from our opinion
reflect a belief that ERISA might be an "expressly authorized" excep-
tion to the AIA, and for that reason I do not join footnote 9 of the
majority’s opinion. For example, we repeatedly mentioned that
ERISA is not an "automatic exception" to the AIA—the negative
inference being that ERISA could be an exception under certain cir-
cumstances. See id. at 1129, 1132, 1137. In addition, in distinguishing
a case from another circuit, we noted that "[e]ven § 1132 of ERISA,
which appears to create an exception to the Anti-Injunction Act, could
not be read as making the mere filing of a state court proceeding a
violation of ERISA." Id. at 1133 (emphases added). Although the
opinion is not entirely clear, one possible exception could exist where
a plan fiduciary could show that it would be unable to carry out its
responsibilities under ERISA if it were subjected to state laws. Cf. id.
at 1132 (noting that "ERM has never suggested that it will be unable
‘to carry out its responsibilities under ERISA’ if it is subjected to Vir-
ginia insurance law"). If ERISA was an "expressly authorized" excep-
tion to the AIA in such circumstances, then the AIA likely would not
apply to this case as Denny’s has argued emphatically that it will be
unable to carry out its responsibilities under ERISA if it is subjected
to California labor law.
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Were we writing on a clean slate, I might conclude that ERISA
should be an exception to the AIA in all cases where the plan fidu-
ciary seeks injunctive relief against state officials who are trying to
impose state law or regulations on an ERISA plan. That option, how-
ever, is not available to us after Employers Resource Management,
because in that case, Virginia was attempting to apply its insurance
laws to an ERISA plan. Thus, after Employers Resource Manage-
ment, we are left with binding circuit precedent holding that at least
one ERISA case is subject to the strictures of the AIA.
Because of the same conflicting passages that are quoted above,
however, I do not believe that Employers Resource Management
answers the question of whether its holding necessarily extends to all
ERISA cases (i.e., a categorical approach), or if instead we should
apply a case-by-case approach to determine if ERISA is an "expressly
authorized" exception under the circumstances of each particular case.
I note that the majority in footnote 9 implicitly has adopted a categori-
cal approach and extended Employers Resource Management to all
ERISA cases. See ante at 12 n.9; see also Total Plan Services, Inc.
v. Texas Retailers Assoc., Inc., 925 F.2d 142 (5th Cir. 1991) (holding
that § 1132(a)(3), which authorizes federal courts to "enjoin any act
. . . which violates" ERISA, is not an "expressly authorized" excep-
tion to the AIA because "the mere filing of a state court proceeding
[is not] a ‘violation’ of ERISA"). Some other circuits implicitly have
adopted a case-by-case approach. See General Motors v. Buha, 623
F.2d 455 (6th Cir. 1980) ("When a district court finds that an action
in state court will have the effect of making it impossible for a fidu-
ciary of a pension plan to carry out its responsibilities under ERISA,
the anti-injunction provisions of § 2283 do not prohibit it from enjoin-
ing the state court proceedings."); United States Steel Corp. Plan for
Employee Ins. Benefits v. Musisko, 885 F.2d 1170 (3d Cir. 1989) (dis-
tinguishing Buha on its facts based on the "important factual differ-
ences between that case and this one—particularly in the type of plan
and the nature of the relationship between the federal plaintiffs and
their insurer").
The Supreme Court has not spoken clearly as to whether the AIA
should be interpreted using a categorical or a case-by-case approach.
See Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623 (1977). In Vendo,
the Court held that § 16 of the Clayton Act did not carve out an
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exception to the AIA. In a plurality opinion, then-Justice Rehnquist,
joined by Justice Stewart and Justice Powell, focused solely on § 16
of the Clayton Act — its text and legislative history — to determine
that the "expressly authorized" exception did not apply. Id. at 631-41
(Rehnquist, J.). After recognizing that the plain language of § 16 of
the Clayton Act, like ERISA, authorized injunctions, but did not men-
tion state-court proceedings, Justice Rehnquist noted that
in Mitchum, absence of express language authorization for
enjoining state-court proceedings in § 1983 actions was
cured by the presence of relevant legislative history. In this
case, however, neither the respondents nor the courts below
have called to our attention any similar legislative history in
connection with the enactment of § 16 of the Clayton Act.
Id. at 634. Thus, he concluded, § 16 of the Clayton Act is never an
exception to the AIA. Id. at 641 (noting that to be an "expressly
authorized" exception to the AIA, "the Act countenancing the federal
injunction must necessarily interact with, or focus upon, a state judi-
cial proceeding. Section 16 of the Clayton Act . . . is clearly not such
an Act."). This "categorical" approach mirrors the approach taken by
the Court in Mitchum v. Foster, 407 U.S. 225, 238-43 (1972), when
it held that § 1983 fell within the "expressly authorized" exception.
In contrast, Justice Blackmun, joined by Chief Justice Burger, in
his concurrence in the result in Vendo, applied a case-by-case
approach. See Vendo, 433 U.S. at 643 (Blackmun, J., concurring in
the result) (noting that he "do[es] not agree that [it] is invariably the
case" that § 16 of the Clayton Act is not an "expressly authorized"
exception to the AIA). In Justice Blackmun’s view, § 16 of the Clay-
ton Act is an exception to the AIA if the "currently pending state-
court proceedings . . . are themselves part of a ‘pattern of baseless,
repetitive claims’ that are being used as an anticompetitive device, all
the traditional prerequisites for equitable relief are satisfied, and the
only way to give the antitrust laws their intended scope is by staying
the state proceedings." Id.
Justice Stevens, joined by Justice Brennan, Justice White, and Jus-
tice Marshall, dissented. Justice Stevens would have held that § 16 of
the Clayton Act "is an Act of Congress which expressly authorizes an
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injunction against a state-court proceeding which violates the antitrust
laws" even though there is no mention of state-court proceedings or
the AIA in § 16. Id. at 654 (Stevens, J., dissenting).
I note that the categorical approach employed by Justice Rehnquist
in Vendo has much to recommend it. A categorical approach seems
to be more consistent with the statutory language of the AIA, which
speaks of "Act[s] of Congress" rather than the circumstances of par-
ticular cases. Moreover, a case-by-case approach likely would be dif-
ficult to administer. For example, every plan fiduciary would
undoubtedly claim that it would be unable to carry out its responsibil-
ities under ERISA if the state court proceeding continued, thus, in
effect creating an exception for all ERISA fiduciary cases.
In any event, we need not resolve that issue here because under
either approach ERISA would not be an "expressly authorized"
exception to the AIA in the circumstances of this case. If we apply
a categorical approach, then we are hemmed in by our prior decision
in Employers Resource Management. If, instead, we apply a case-by-
case approach, the parties have not pointed us to anything in the text
or legislative history of ERISA indicating that Congress intended to
carve-out this type of case from the run-of-the-mill ERISA case.
Accordingly, I concur in the majority’s judgment that ERISA does
not authorize the requested relief in this case.
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