Franchise Tax Board of the State of California v. Construction Laborers Vacation Trust of Southern California

1983

Venue: SCOTUS

Facts: The trust is an ERISA-covered vacation benefit plan, and workers put money into it. The state tax authority wants to go after its assets in order to get back taxes.

Posture: Suit in state court. The trust removes, and the district court denies the tax board's request for remand. Judgment for the plaintiffs (i.e., ERISA does not pre-empt their power to levy on those funds). Reversed on appeal. Appeal.

Issue: Does ERISA permit the state tax board to collect unpaid taxes by levying against this ERISA-covered fund?

Holding: We're not saying, because we're not reaching the merits. No jurisdiction. Vacated and remanded with instructions to ship this back to the state court whence it came.

Rule: A plaintiff can't avoid removal by simply omitting to plead an essential federal issue. However, if but for the availability of declaratory judgment, the federal claim would arise only as a defense to a state-created action, there's no jurisdiction.

Reasoning: This suit is neither a creature of ERISA nor one which turns on a question of federal law. The court of appeals may be correct that ERISA precludes enforcement of the state's levy, but an action to enforce the levy is not pre-empted by ERISA, and that's what this is about.

Dicta: