Trustees of the Carpenters' Health & Welfare Trust Fund v. Darr

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 10-1682, 10-1793 & 10-2579
T RUSTEES OF THE C ARPENTERS’ H EALTH AND
W ELFARE T RUST F UND OF S T. L OUIS,
Plaintiff-Appellee,
Cross-Appellant,
v.
L ANNY H OWARD D ARR, II, et al.,
Defendants-Appellants,
Cross-Appellees.
Appeals from the United States District Court
for the Southern District of Illinois.
No. 3:10-cv-00130-DRH-CJP—David R. Herndon, Chief Judge.
A RGUED N OVEMBER 30, 2010—D ECIDED A UGUST 21, 2012
Before K ANNE, W ILLIAMS, and T INDER, Circuit Judges.
T INDER, Circuit Judge. A federal court may not enjoin
“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. This law, known as Anti-Injunction
2 Nos. 10-1682, 10-1793 & 10-2579
Act, represents “a necessary concomitant of the Framers’
decision to authorize, and Congress’ decision to imple-
ment, a dual system of federal and state courts.” Smith
v. Bayer Corp., 131 S. Ct. 2368, 2375 (2011) (quoting Chick
Kam Choo v. Exxon Corp., 486 U.S. 140, 146 (1988)). Under
the Act’s broad command that state tribunals “shall
remain free from interference by federal courts,” id.(quoting Atl. Coast Line R.R. v. Locomotive Eng’rs, 398
U.S. 281, 282 (1970)), “the Act’s core message is one of
respect for state courts,” id. Any doubts about the Act’s
“three specifically defined exceptions,” id. (quoting Atl.
Coast Line, 398 U.S. at 286), ought to “be resolved
in favor of permitting the state courts to proceed,” id.(quoting Atl. Coast Line, 398 U.S. at 297).
The district court enjoined an attorney and his clients
from pursuing an Illinois state court claim against an
employee health and welfare benefit plan governed by
the 1974 Employee Retirement Income Security Act
(ERISA). Because the injunction against this state court
lawsuit does not qualify under an exception to the Anti-
Injunction Act, we order the injunction vacated.
I. Background
James Miller, a beneficiary of the Carpenters’ Health and
Welfare Trust Fund of St. Louis (the “Fund”), fell from
a ladder resting on a pickup truck bed and injured his
back. He secured the services of Illinois attorney Lanny
Darr to represent him and his wife Kim Miller in a
lawsuit seeking recovery from a third party (namely, the
Nos. 10-1682, 10-1793 & 10-2579 3
person who was supposed to hold the ladder steady)
allegedly responsible for the accident. The Millers’ agree-
ment with Darr provided a contingent fee of one-third
of any recovery before deducting medical expenses. The
Fund advanced the Millers $86,709.73 in medical and
disability benefits in connection with this injury on the
condition that the Millers repay this advance from any
recovery without deducting for attorneys’ fees. In fact,
James, along with Darr, signed a subrogation agree-
ment allowing the Fund to pay his medical expenses in
exchange for an assignment of any third-party recovery
up to the amount advanced and undiminished by
any deduction per the Fund’s governing document (the
“Plan”). The Millers’ lawsuit ended up settling for
$500,000, but this case isn’t about James Miller’s injury;
this case is about attorneys’ fees.
The Millers and Darr distributed the settlement
proceeds by deducting Darr’s fee based on only $413,290.27
instead of the full $500,000, a difference equal to what
the Millers owed the Fund. Darr submitted $57,806.48
to the Fund from the Millers’ settlement, told the
Fund that he was withholding the remaining one-third
($28,903.25 as a fee), and noted that he was willing to
tender the remainder to avoid jeopardizing the Millers’
benefits. Yet Darr maintained that such payment would
not resolve the dispute between his firm and the Fund.
Darr later tendered the $28,903.25 amount to the Fund
and wrote that the Millers “requested I send you full
payment on his behalf so his future benefits are not
in jeopardy.” Darr also asserted in that letter that his
law firm held a $28,903.25 claim against the Fund. The
4 Nos. 10-1682, 10-1793 & 10-2579
Fund responded that if Darr pursued his claim they
would consider Darr and the Millers in breach of Plan
terms and in repudiation of their promise in the
subrogation agreement to abide by Plan terms and that
the Fund would consider terminating the Millers’
coverage and seeking relief in federal court under ERISA.
Darr’s law firm proceeded to sue the Fund in Illinois
state court to recover the $28,903.25 under the common
fund doctrine, which permits a party (Darr’s firm) who
creates a fund (the $500,000 settlement) in which others
(the Fund) have an interest (the Fund’s reimbursement)
to obtain reimbursement from the fund for litigation
expenses (Darr’s fee) incurred in creating that fund
(Darr’s representation on the Millers’ behalf). E.g., Scholtens
v. Schneider, 671 N.E.2d 657, 662 (Ill. 1996). In response,
the Fund’s Trustees sued Darr and the Millers in federal
court to enjoin Darr from pursuing his state claim. The
Trustees sought in alternative counts a construction
and declaration under express trusts that Darr and the
Millers owed the Fund an amount equal to any judg-
ment Darr obtained in state court along with the Trust-
ees’ attorneys’ fees. The district court issued a temporary
restraining order against Darr’s suit, held a hearing,
entered a permanent injunction against Darr’s lawsuit, and
dismissed with prejudice the alternative counts. Trs. of
Carpenters’ Health & Welfare Trust Fund v. Darr, No. 10-0130-
DRH, 2010 WL 850171, at *3-4 (S.D. Ill. Mar. 5, 2010). The
court later awarded the Trustees their fees and costs in the
federal court case but not in the state court case. Trs. of
Carpenters’ Health & Welfare Trust Fund v. Darr, No. 10-0130,
2010 WL 2607392, at *3 (S.D. Ill. June 24, 2010). Darr
Nos. 10-1682, 10-1793 & 10-2579 5
appeals the injunction and the fees and costs award and
the Fund conditionally cross-appeals the alternative
counts’ dismissal.
II. Analysis
District courts “have original jurisdiction of all civil
actions arising under the Constitution, laws, or treaties
of the United States.” 28 U.S.C. § 1331. A case arises
under federal law if “’a well-pleaded complaint estab-
lishes either that federal law creates the cause of action
or that the plaintiff’s right to relief necessarily de-
pends on resolution of a substantial question of federal
law.’ ” Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S.
677, 689-90 (2006) (quoting Franchise Tax Bd. of Cal. v.
Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 27-28
(1983)); see also Mims v. Arrow Fin. Servs., LLC, 132 S. Ct.
740, 744, (2012) (long recognized that a “suit arises under
the law that creates the cause of action” (quoting Am. Well
Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260 (1916)));
Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg.,
545 U.S. 308, 312 (2005) (§ 1331 satisfied by pleading
“a cause of action created by federal law”).
Darr challenges the district court’s jurisdiction on a
variety of grounds, e.g., Miller v. Herman, 600 F.3d 726,
731 (7th Cir. 2010) (noting common conflation of “jurisdic-
tional and non-jurisdictional” limits), but his only real
jurisdictional argument is that federal courts lack juris-
diction when a state court defendant raises ERISA preemp-
tion as a basis for federal jurisdiction under the well-
6 Nos. 10-1682, 10-1793 & 10-2579
pleaded complaint rule. See Primax Recoveries, Inc. v.
Sevilla, 324 F.3d 544, 548 (7th Cir. 2003); Speciale v. Seybold,
147 F.3d 612, 616-17 (7th Cir. 1998); Blackburn v.
Sundstrand Corp., 115 F.3d 493, 495 (7th Cir. 1997). Darr
misses the jurisdictional basis of the Trustees’ claim;
it arises not as a defense to his state claim but under a
federal law, § 502(a)(3), that created a federal remedy
the Trustees seek to employ in a federal court. ERISA
fiduciaries may bring claims under § 502(a)(3)(A) 1 of
ERISA “to enjoin any act or practice which violates
any provision of this subchapter or the terms of the
plan.” 29 U.S.C. § 1132(a)(3). The Trustees, as ERISA
fiduciaries, seek to do just that—enjoin an act they
claim violates Plan terms. See Sereboff v. Mid Atl. Med.
Servs., Inc., 547 U.S. 356, 363 (2006) (fiduciaries may bring
§ 502(a)(3) claims “to enforce plan terms”). Thus, the
district court’s jurisdiction is secure. See Shaw v. Delta Air
Lines, Inc., 463 U.S. 85, 96 n.14 (1983) (federal courts have
§ 1331 jurisdiction to grant “injunctive relief from
state regulation, on the ground that such regulation is
pre-empted by a federal statute”); Stone & Webster Eng’g
Corp. v. Ilsley, 690 F.2d 323, 327-28 (2d Cir. 1982) (claim
for an injunction on grounds that ERISA preempted a
state law was “not merely a defense,” but a suit for
“affirmative and coercive relief” enjoining state law’s
enforcement), aff’d sub nom. Arcudi v. Stone & Webster Eng’g
1
We use the “§ 502(a)(3)” citation from the Statutes at Large
but the citation to the United States Code is 29 U.S.C.
§ 1132(a)(1)(B), although Congress has yet to enact title 29
into positive law. See 1 U.S.C. § 204 note.
Nos. 10-1682, 10-1793 & 10-2579 7
Corp., 463 U.S. 1220 (1983). We proceed then to the next
barrier Darr raises to the district court’s judgment, the
Anti-Injunction Act.2
We review de novo the scope of the Anti-Injunction
Act’s exceptions. Zurich Am. Ins. Co. v. Superior Court
for State of Cal., 326 F.3d 816, 824 (7th Cir. 2003). The law
states 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 Con-
gress, or where necessary in aid of its jurisdiction,
or to protect or effectuate its judgments.
28 U.S.C. § 2283. The Anti-Injunction Act, in existence
in some form since 1793, see Chick Kam Choo, 486 U.S. at146 (citing Act of Mar. 2, 1793, ch. 22, § 5, 1 Stat. 335),
ensures “the fundamental constitutional independence
of the States, . . . under which state proceedings
‘should normally be allowed to continue unimpaired by
intervention of the lower federal courts,’ ” id. (quoting Atl.
Coast Line, 398 U.S. at 287). As such, we interpret the Anti-
Injunction Act’s exceptions narrowly. Id.The first exception addresses injunctions “expressly
authorized by Act of Congress.” ERISA § 502(a)(3)(A) does
2
The Anti-Injunction Act is not jurisdictional; rather, it re-
stricts a district court’s remedial authority. See Ark. Blue Cross
& Blue Shield v. Little Rock Cardiology Clinic, P.A., 551 F.3d
812, 818 (8th Cir. 2009); see also Smith v. Apple, 264 U.S. 274, 278-
79 (1924).
8 Nos. 10-1682, 10-1793 & 10-2579
not “expressly” say anything about enjoining state court
suits. Although we won’t rule out that § 502(a)(3) may
operate as an express authorization in certain circum-
stances, see Gilbert v. Burlington Indus., Inc., 765 F.2d 320,
329 (2d Cir. 1985) (enjoining state lawsuit over benefits
expressly authorized); Gen. Motors Corp. v. Buha, 623 F.2d
455, 459 (6th Cir. 1980) (ERISA expressly authorized
injunction against state suit over payment of benefits
because “action in a state court will have the effect of
making it impossible for a fiduciary of a pension plan
to carry out its responsibilities under ERISA”); Marshall
v. Chase Manhattan Bank, 558 F.2d 680, 683 (2d Cir.
1977) (Anti-Injunction Act not intended to hamstring use
“of federal courts to protect federal rights”), we agree
with the Fourth Circuit that § 502(a)(3)(A) does not ex-
pressly authorize injunctions against state courts
unless the state court suit “will have the effect of making it
impossible for a fiduciary of a pension plan to carry out its
responsibilities under ERISA.” Emp’rs Res. Mgmt. Co. v.
Shannon, 65 F.3d 1126, 1132 (4th Cir. 1995) (quoting Buha,
623 F.2d at 459); Denny’s, Inc. v. Cake, 364 F.3d 521, 529 n.9
(4th Cir. 2004) (clarifying Shannon as holding that excep-
tions to the Anti-Injunction Act are narrow). Although
the district court here found that Darr’s state court
lawsuit would force the Trustees to pay a portion of
Darr’s fee in violation of Plan terms, Trustees, 2010 WL
850171, at *3, this hardly makes it impossible for the
Trustees to carry out their ERISA responsibilities. Congress
gave ERISA trustees multiple tools to carry out their
ERISA duties, see, e.g., 29 U.S.C. § 1132(a)(3), and al-
though an injunction against plan violations is certainly
Nos. 10-1682, 10-1793 & 10-2579 9
one of them, id. § 1132(a)(3)(A), not every violation of
plan documents is sufficient to override the basic rule,
embodied in the Anti-Injunction Act and the cases in-
terpreting it, that it is seldom appropriate for federal
courts to enjoin state court proceedings.
Darr’s state court common fund claim for attorneys’
fees is too removed from the core federal interests repre-
sented by ERISA. Compare Gilbert, 765 F.2d at 329(enjoining state lawsuit over employee benefits expressly
authorized), Buha, 623 F.2d at 459 (finding it central to
ERISA’s statutory scheme that it “not be subject to
state and local laws which might frustrate its goals” of
providing “a uniform and systematic framework for
regulation of employee benefit plans”), and Marshall,
558 F.2d at 683 (ERISA’s superior federal interest vindi-
cated by injunction against state court proceedings to
terminate a pension benefit plan), with 1975 Salaried
Ret. Plan for Eligible Emp. of Crucible, Inc. v. Nobers, 968
F.2d 401, 410 (3d Cir. 1992) (injunction against state
court contract suit not expressly authorized because
the state claim would not “force the plans to violate
substantive ERISA law,” transfer plan assets, or prevent
ERISA compliance), and Total Plan Servs., Inc. v. Texas
Retailers Ass’n, Inc., 925 F.2d 142, 145-46 (5th Cir. 1991)
(injunction against state court pension and fiduciary
claims not expressly authorized simply because state
court may lack jurisdiction under ERISA). As noted in a
related context, run-of-the-mill state court lawsuits,
“although obviously affecting and involving ERISA
plans and their trustees, are not pre-empted by ERISA”
when they involve unpaid rent, a failure to pay creditors,
10 Nos. 10-1682, 10-1793 & 10-2579
or even commonplace torts. Mackey v. Lanier Collection
Agency & Serv., Inc., 486 U.S. 825, 833 (1988). Darr’s com-
mon fund suit, although certainly involving the Fund’s
finances, does not directly involve the recovery of
benefits. See id. at 832.
Although the Supreme Court has yet to address
whether and when ERISA § 502(a)(3)(A) expressly autho-
rizes injunctions against state court proceedings, we
find support from its two cases directly addressing
the “expressly authorized” exception. In Mitchum v.
Foster, the Supreme Court noted that a law “need not
contain an express reference” to the Anti-Injunction Act.
407 U.S. 225, 237 (1972). Instead, the law “must have
created a specific and uniquely federal right or remedy,
enforceable in a federal court of equity, that could be
frustrated if the federal court were not empowered to
enjoin a state court proceeding.” Id. at 237. The Court
stated that the test for determining whether a law ex-
pressly authorized an injunction was whether the con-
gressionally created federal right or remedy “could be
given its intended scope only by the stay of a state
court proceeding.” Id. at 238. The Court then found that
42 U.S.C. § 1983, authorizing suits “in equity to redress
the deprivation under color of state law ‘of any
rights, privileges, or immunities secured by the Con-
stitution . . .,’ ” qualified as “expressly authorized.” Id. at
243. Although we have interpreted Mitchum’s holding
as “limited to violations of the Constitution for which
§ 1983 supplies a remedy, and then only when the
state litigation is itself the violation of the Constitution,”
Hickey v. Duffy, 827 F.2d 234, 240 (7th Cir. 1987), we note
Nos. 10-1682, 10-1793 & 10-2579 11
that Mitchum’s test—whether the federal law “could
be given its intended scope only by the stay of a
state court proceeding,” 407 U.S. at 238—supports our
holding here. See 1975 Salaried Retirement Plan, 968 F.2d
at 410 (“ERISA can be given its intended scope without
enjoining” a state contract suit).
In the Court’s only other case addressing the Anti-
Injunction Act’s “expressly authorized” exception, Vendo
Co. v. Lektro-Vend Corp. held that antitrust laws ex-
pressly authorize injunctions against state court lawsuits
if, and only if, the state court suit itself violates the anti-
trust law. 433 U.S. 623, 643-44 (1977) (Blackmun, J., con-
curring in the result). A plurality in Vendo found that § 16
of the Clayton Act could not expressly authorize
an injunction because it was “not an ‘Act of Congress . . .
(which) could be given its intended scope only by the
stay of a state court proceeding.’ ” Id. at 632 (quoting
Mitchum, 407 U.S. at 238). But Justice Blackmun with
Chief Justice Burger, authored the controlling opinion
and held that § 16 could expressly authorize an injunc-
tion against a state court lawsuit when the proceeding
was “part of a ‘pattern of baseless, repetitive claims’
that are being used as an anticompetitive device,” the
traditional prerequisites for equitable relief were
satisfied, and staying the state court lawsuit was the
“only way to give the antitrust laws their intended
scope.” Id. at 644 (quoting in part Cal. Motor Transp. Co. v.
Trucking Unlimited, 404 U.S. 508, 513 (1972)). The con-
currence controls because it took the narrowest ground
to decide the case. Village of Bolingbrook v. Citizens
Utilities Co., 864 F.2d 481, 483 (7th Cir. 1988); see also
12 Nos. 10-1682, 10-1793 & 10-2579
United States v. Dixon, No. 11-3802, ___ F.3d ___, 2012 WL
2913732, at *3 (7th Cir. July 18, 2012) (the reasoning that
provides “the narrowest, most case-specific basis for
deciding” a case “states the controlling law”). Thus, the
costs of raising antitrust defenses in state court aren’t
enough to justify an injunction; except when the cost
itself creates an antitrust violation. See Village of
Bolingbrook, 864 F.2d at 483-84. When a federal plaintiff
can present its federal defenses in state court, and
could recoup its damages either through the state court
litigation or a separate federal suit, federal policies
aren’t thwarted. Id.Here, in the ERISA context, Darr’s state suit does not
prevent the Trustees from fulfilling their duties under
ERISA. The findings in support of the injunction rested
on ERISA’s mandate that the Plan creates contractual
rights and obligations and that the Fund must be ad-
ministered according to the Plan’s terms not-
withstanding contrary state law or federal common
law. Trustees, 2010 WL 850171, at *2 (citing 29 U.S.C.
§ 1104(a); Kennedy v. Plan Adm’r for DuPont Sav. & Inv.
Plan, 555 U.S. 285 (2009)). The district court found that
Darr’s state suit would, if successful, require the Fund’s
administrator to violate Plan terms shifting attorneys’
fees to beneficiaries. Id. at *3. That the Millers fully re-
imbursed the Fund, leaving Darr with a common fund
claim, was “a distinction without a difference” because
in the end, the Fund would still pay his fee (“now rather
than earlier”). Id. These findings, showing Darr as essen-
tially attempting to collaterally attack the Plan’s terms,
do not support a finding that Darr’s suit prevents the
Nos. 10-1682, 10-1793 & 10-2579 13
Trustees from fulfilling their core ERISA duties. The
Trustees are not precluded from presenting their
federal defense in the state court suit and they may
seek damages for whatever injury caused by Darr’s suit
if the state court rejects their defenses. Village of
Bolingbrook, 864 F.2d at 484 (“When the opportunity to
present the federal defense to state court, coupled with
the opportunity to receive damages, carries out all
federal policies, then § 2283 forbids injunctive remedies.”).
We recognize that Darr’s state court claim seeks to
circumvent both the Fund’s attempt to use Plan’s terms
to shift the costs of recovering from third parties onto
beneficiaries and the Trustees’ statutory duty to ad-
minister ERISA plans “in conformity with the plan docu-
ments.” Kennedy, 555 U.S. at 299-300. And we also recog-
nize that, obviously, federal law may displace con-
flicting state priorities, cf. Marmet Health Care Ctr., Inc., v.
Brown, 132 S. Ct. 1201, 1203 (2012) (per curiam)
(Federal Arbitration Act), but that does not mean an
injunction should issue in this case where the federal
interest can be vindicated without it. See Village of
Bolingbrook, 864 F.2d at 483. An ERISA plan may try to
shift the costs of third-party recoveries, compare Admin.
Comm. of Wal-Mart Stores, Inc. Associates’ Health & Welfare
Plan v. Varco, 338 F.3d 680, 690 (7th Cir. 2003) (plan
terms requiring reimbursement without attorneys’ fees
deduction trump Illinois’s common fund doctrine), with
Primax, 324 F.3d at 548-49 (lawyers entitled to get paid
for their work even if plan rejected the common fund
doctrine); Wal-Mart Stores, Inc. Associates’ Health &
Welfare Plan v. Wells, 213 F.3d 398, 402 (7th Cir. 2000) (plan
14 Nos. 10-1682, 10-1793 & 10-2579
terms contrary to common fund concept allow for “the
plan to free ride on the efforts of the plan participant’s
attorney”); Blackburn, 115 F.3d at 496 (common fund
doctrine “may even increase the plan’s recoveries in
the long run”), but plan terms about a matter tangential
to core federal interests are not a sufficient basis for
an injunction against a state law claim simply because
the state law claim may trigger a liability the plan
intended to place on beneficiaries.
We note that in other contexts, courts have found
injunctions “expressly authorized” when Congress pro-
vided a federal remedy for attacks on federal preroga-
tives that are absent in Darr’s state suit over attorneys’
fees. Compare In re BankAmerica Corp. Secs. Litig., 263
F.3d 795, 803 (8th Cir. 2001) (injunction against state
claim “only means available to” give the rights in the
Private Securities Litigation Reform Act’s “their intended
scope” when “state-court plaintiff” wins race to court-
house), Stockslager v. Carroll Elec. Co-op. Corp., 528 F.2d
949, 952 (8th Cir. 1976) (injunction against state court
proceedings in derogation of federal requirement “to
carry out the national environmental policy” expressly
authorized by National Environmental Policy Act
because the law authorized “all practicable means” (quot-
ing 42 U.S.C. § 4331(a)), Tampa Phosphate R.R. v. Seaboard
Coast Line R.R., 418 F.2d 387, 394 (5th Cir. 1969) (Interstate
Commerce Act authorized injunction against state con-
demnation proceedings that went against “paramount
federal interests”), and Studebaker Corp. v. Gittlin, 360
F.2d 692, 697-98 (2d Cir. 1966) (§ 21(e) of the Securities
Exchange Act (SEA) expressly authorized injunctions
Nos. 10-1682, 10-1793 & 10-2579 15
because the state claim furthered SEA violation), with Casa
Marie, Inc. v. Superior Court of P.R. for Dist. of Arecibo,
988 F.2d 252, 261-62 (1st Cir. 1993) (vesting concurrent
jurisdiction over Title VIII claims “a vote of confidence”
in state courts), Jennings v. Boenning & Co., 482 F.2d
1128, 1131 (3d Cir. 1973) (§ 21(e) of SEA not an express
authorization because the state claim “did not constitute
an impediment to the assertion of ‘the federal right or
remedy’ ” and did not further “an ongoing violation”), and
Clean Air Coordinating Comm. v. Roth-Adam Fuel Co., 465
F.2d 323, 326 (7th Cir. 1972) (Clean Air Act not an
express authorization because the “federal domain is
not exclusive” when states maintain primary responsi-
bility for air quality). Given the Anti-Injunction Act’s
requirement that a federal law “expressly” authorize
an injunction against a state court suit and its founda-
tion in the “fundamental constitutional independence
of the States,” Chick Kam Choo, 486 U.S. at 146, we find
an injunction against Darr’s state court common fund
claim outside the expressly authorized exception.
The Trustees argue in the alternative that enjoining
Darr’s state court claim fits the exception for injunc-
tions “where necessary in aid of” the district court’s
jurisdiction. 28 U.S.C. § 2283. This exception applies
when a federal court acquires jurisdiction, prior in
time to the state-court action, over a case involving the
disposition of a res. See Vendo, 433 U.S. at 641-42. The
Trustees maintain that because the Fund’s money is held
in a trust, and the alternative counts of their complaint
ask for the district court to determine and declare
the Trustees’ and the Millers’ rights and obligations
16 Nos. 10-1682, 10-1793 & 10-2579
under the trust, the district court acquired in rem juris-
diction over the trust’s res. Setting aside the Trustees’
alternative counts, Darr’s state suit preceded the Trust-
ees’ federal suit precluding this exception’s application to
Darr’s state court claim.
The Trustees don’t argue that the injunction fits the Anti-
Injunction Act’s third exception for protecting or effectu-
ating the district court’s judgments but they do ask us to
find that the Anti-Injunction Act doesn’t apply to them
because they are strangers to Darr’s state court suit
against the Fund. See Hale v. Bimco Trading, 306 U.S. 375,
377-78 (1939) (predecessor to Anti-Injunction Act did
not bar injunction because enforcement was against
strangers to state court suit who were not bound “as
though he were a party to the” state court litigation);
Imperial Cnty., Cal. v. Munoz, 449 U.S. 54, 59-60 (1980)
(requiring application of Hale’s strangers doctrine). Yet
in Illinois, trustees in their representative capacity are
the same entity as the trust. See Sullivan v. Kodsi, 836
N.E.2d 125, 131 (Ill. App. Ct. 2005) (finding state court
jurisdiction over trustee because trust “can sue or be
sued through its trustee in a representative capacity on
behalf of the trust”). Finding the Trustees strangers to
the state suit would also ignore reality. The Trustees
told the district court that they knew that Darr’s state
court proceeding would “be enforced against us,” Doc. 63
at 13, and acknowledge on appeal that even though
Darr sued the Fund, it was “virtually certain” they would
soon be made parties to the case. Br. of Appellee at 12.
***
Nos. 10-1682, 10-1793 & 10-2579 17
We V ACATE the district court’s judgments enjoining
Darr’s state court lawsuit and ordering him pay the Trust-
ees’ fees and costs, G RANT the Trustees’ cross-appeal
seeking reinstatement of their alternative counts, and
R EMAND for the district court’s consideration in the
first instance.
8-21-12