Sharp Electronics v. Metropolitan Life Insurance Co ( 2009 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 08-2959
S HARP E LECTRONICS C ORPORATION,
Plaintiff-Appellant,
v.
M ETROPOLITAN L IFE INSURANCE C OMPANY,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 05 C 0474—Arlander Keys, Magistrate Judge.
A RGUED A PRIL 14, 2009—D ECIDED A UGUST 18, 2009
Before K ANNE, R OVNER, and W OOD , Circuit Judges.
W OOD , Circuit Judge. From 1997 until April 2, 2002,
Sandra Rudzinski worked for Sharp Electronics Corpora-
tion. As a full-time employee, she was entitled to partici-
pate in a long-term group disability plan (the “Plan”),
which was underwritten by Metropolitan Life Insurance
Company (“MetLife”). The present controversy arose
out of a lawsuit between Rudzinski and MetLife.
Briefly, after Rudzinski stopped working for Sharp, she
2 No. 08-2959
applied for a conversion policy with MetLife to preserve
her long-term disability coverage. MetLife denied her
application. Rudzinski responded with a suit in federal
court asserting that MetLife had wrongfully denied her
benefits. Initially, MetLife was the sole defendant. During
a settlement conference, however, MetLife represented
to Rudzinski that one reason it had refused to pay her
any long-term benefits was that Sharp had failed to
make required payments to it on her behalf.
Based on this statement, Rudzinski filed an amended
complaint adding Sharp as an additional defendant; she
asserted that Sharp had breached its fiduciary duty to
her and had interfered with her benefits. On July 19, 2006,
following an unsuccessful motion to dismiss, Sharp filed
a cross-claim against MetLife asserting that MetLife
had breached a fiduciary duty it allegedly owed to
Sharp under the Employment Retirement Income
Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132, that
MetLife was obliged to indemnify Sharp for certain
expenses, and that MetLife was estopped from denying
these obligations.
Although Rudzinski and Sharp reached a settlement and
the district court entered judgment in favor of Rudzinski
in her action against MetLife, Sharp’s claim against
MetLife remained pending. After Sharp filed an amended
cross-claim, MetLife moved to dismiss for failure to state
a claim. See F ED. R. C IV. P. 12(b)(6). The district court
granted that motion on July 9, 2008, and Sharp has now
appealed from the judgment against it. We affirm.
No. 08-2959 3
I
Sharp adopted the MetLife long-term disability plan
in 1997 as part of the welfare benefits package it fur-
nished for its employees; the Plan was qualified under
ERISA. Sharp was, at all relevant times, the Plan adminis-
trator and MetLife the Plan fiduciary. Pursuant to the
Plan, Sharp was required to pay short-term disability
benefits to eligible employees during a 180-day policy
benefits elimination period. Thereafter, MetLife was
required to pay long-term disability benefits to em-
ployees who met criteria specified in the Plan. Sharp
was required under the Plan to pay premiums to MetLife
for the benefit of its employees, but it had no responsi-
bility to pay premiums for a person whose employment
with Sharp had been terminated, unless the person was
disabled and was within an elimination period at the
time her employment ended.
On April 2, 2002, as a result of chronic fatigue, joint
pain, and headaches, Rudzinski ceased active employ-
ment with Sharp. (Later, she was diagnosed with
fibromyalgia.) As a participating member in the Plan,
Rudzinski was eligible for both short-term and long-term
disability benefits. Accordingly, following the cessation
of her employment, she began receiving short-term dis-
ability benefits from Sharp and the 180-day elimination
period began to run. Rudzinski also filed a claim with
MetLife in which she requested long-term disability
insurance benefits, to commence immediately upon the
completion of the 180-day period.
On July 9, 2002, Sharp notified Rudzinski that if she did
not return to active employment by July 31, 2002, she
4 No. 08-2959
would lose her job and Sharp would cease making pay-
ments on her behalf to MetLife for long-term disability
benefits. Rudzinski did not return to work at Sharp, and, as
promised, Sharp ended her employment effective July 31,
2002. Sometime prior to the deadline, Sharp informed
Rudzinski that, if she did not return to work, she could
preserve her long-term disability coverage with MetLife
by obtaining a “conversion policy” and paying premiums
on her own behalf as a non-employee. Rudzinski took the
advice, applied to MetLife for a conversion policy, and
paid the requisite premiums. After some time had passed,
however, MetLife denied Rudzinski long-term disability
benefits on the ground that she had a pre-existing disabil-
ity at the time she applied for the conversion policy.
Rudzinski then made a formal demand on MetLife for
long-term disability benefits pursuant to the Plan.
MetLife considered her demand and denied it, this time
on the ground that she had not fulfilled the 180-day
period that was supposed to precede long-term benefits.
Rudzinski then filed a claim in the district court pursu-
ant to 29 U.S.C. § 1132(a)(1)(B), alleging that MetLife
wrongfully denied her benefits. Approximately two
years after Rudzinski filed her lawsuit, and more than
two years after MetLife initially denied her claim for
benefits, MetLife’s lawyer let slip in a settlement con-
ference that an additional reason why she did not qualify
for benefits was that Sharp had discontinued payment of
her long-term disability premiums following the termina-
tion of her employment. The Plan does not obligate
Sharp to make premium payments for any employee once
the person is no longer working for it. Based on this
No. 08-2959 5
representation from MetLife, Rudzinski amended her
complaint to add Sharp as a defendant, alleging that
Sharp violated 29 U.S.C. § 1140 by wrongfully interfering
with her disability benefit rights under the Plan; violated
its fiduciary duties to her; and misled her into believing
that by obtaining a conversion policy and paying the
necessary premiums, she could protect her rights to long-
term disability benefits.
Sharp responded to Rudzinski’s claim in two ways. First,
it filed a Rule 12(b)(6) motion to dismiss for failure to
state a claim; the district court denied that motion on
April 27, 2006. Second, Sharp filed a cross-complaint
against MetLife, alleging that (1) MetLife breached its
fiduciary duties to Sharp under 29 U.S.C. §§ 1132(a)(2),
1132(a)(3), and 1109(a), when it stated in Rudzinski’s
presence that Sharp’s nonpayment of premiums influ-
enced its decision about her benefits; (2) MetLife was
equitably estopped from relying on Sharp’s alleged
nonpayment as a reason for denying Rudzinski’s benefits;
and (3) if Sharp were found liable to Rudzinski on any of
her claims, MetLife had to indemnify Sharp.
On January 16, 2007, Rudzinski voluntarily dismissed
her claims against Sharp. This action left two claims
pending in the district court: Rudzinski’s claim against
MetLife, and Sharp’s cross-claim against MetLife. MetLife
moved to dismiss Sharp’s cross-claim. It argued with
respect to Sharp’s assertion that MetLife had breached
a fiduciary duty that it owed to Sharp that it owed no
such duty. MetLife also asserted that Sharp’s indemnifica-
tion claim was preempted by ERISA. On January 25, 2007,
6 No. 08-2959
the district court denied MetLife’s motion to dismiss,
holding that the question whether MetLife owed any
fiduciary duty to Sharp was one of fact, and that Sharp
had stated a cognizable claim for indemnification that
was not necessarily preempted by ERISA. MetLife then
filed an answer to the cross-claim, and in the meantime,
the district court entered judgment in favor of Rudzinski
on her claim against MetLife, finding that MetLife wrong-
fully denied her benefits.
That left Sharp’s cross-claim against MetLife as the
only remaining claim before the district court. At that
stage, the parties consented to the resolution of the claim
before a magistrate judge. See 28 U.S.C. § 636(c). The next
event of any consequence occurred on April 4, 2008, when
Sharp filed an amended cross-complaint raising seven
different theories of recovery against MetLife: breach of
fiduciary duty under ERISA, 29 U.S.C. §§ 1132(a)(2),
1132(a)(3), and 1109(a); indemnification; negligence;
negligent inducement; negligent misrepresentation;
abuse of process; and common law breach of fiduciary
duty.
MetLife responded on April 25, 2008, with a motion to
dismiss the entire cross-complaint under Rule 12(b)(6).
MetLife asserted that all of the theories outlined in Sharp’s
amended pleading were based upon statements made
during the course of litigation. Those statements, it main-
tained, were absolutely privileged and could not form
the basis of any liability. MetLife also argued that Sharp
lacked standing to pursue the claims, that the relief sought
was not available to Sharp, that the claims were preempted
No. 08-2959 7
by ERISA, and that because Sharp had previously been
dismissed from the case it could not recover damages,
fees, or costs incurred in defending Rudzinski against
MetLife. Sharp resisted these arguments on their merits
and also contended that MetLife’s motion was barred by
the law of the case because the district court earlier had
denied MetLife’s motion to dismiss the cross-claims.
On July 9, 2008, the district court granted MetLife’s
motion, holding that the law of the case doctrine was
inapplicable because the determination of MetLife’s
earlier motion to dismiss did not involve the claims as
Sharp presented them in its amended cross-complaint.
The court then held that, although the statement made
by MetLife during the settlement conference was not
privileged, MetLife’s motion should be granted because
MetLife had not breached any fiduciary duty to Sharp. The
district court finally held that Sharp’s remaining state-
law claims are preempted by ERISA because, it thought,
it would be impossible to resolve them without
referring back to the Plan to determine the parties’ ob-
ligations.
II
On appeal, Sharp argues that the district court erred by
failing to apply the law of the case doctrine and in
granting MetLife’s motion to dismiss. Sharp also argues
that the district court erred when it determined that
Sharp’s state law claims were preempted by ERISA. We
review a district court’s dismissal of a complaint for
failure to state a claim under F ED. R. C IV. P. 12(b)(6) de novo,
8 No. 08-2959
accepting as true all of the factual allegations contained
in the complaint. Segal v. Geisha NYC LLC, 517 F.3d 501,
504 (7th Cir. 2008). Dismissal is required if, taking the
properly pleaded facts in that light, the complaint fails
to describe a claim that is plausible on its face. Ashcroft
v. Iqbal, 129 S. Ct. 1937, 1949 (2009).
A
We begin with a brief word about Sharp’s assertion that
the district court acted inconsistently with the law of the
case when it granted MetLife’s motion to dismiss the
amended cross-complaint. There are two reasons why
this point is not well taken. First, the law of the case
doctrine has little force when a higher court is reviewing
decisions of a lower court. The doctrine reflects the idea
that a single court should not revisit its earlier rulings
unless there is a compelling reason to do so. It is designed
to further consistency, to avoid constantly revisiting
rulings, and to conserve judicial resources. Minch v. City
of Chicago, 486 F.3d 294, 301 (7th Cir. 2007). From the
point of view of this court, the district court’s first ruling
is no more binding than any reconsideration of that
ruling would be. Second, the case changed in any event
between the two rulings, and the district court was free
to take a new look at it. When the court initially denied
MetLife’s motion to dismiss, it was faced only with
Sharp’s fiduciary breach claims and its indemnification
claim. The picture changed with Sharp’s amended cross-
complaint. There, Sharp repleaded its breach of fiduciary
duty and indemnification claims. But it went on to drop
No. 08-2959 9
the equitable estoppel claim that was present in the
original cross-complaint and to add five state law
claims: negligence, negligent inducement, negligent
misrepresentation, abuse of process, and common law
breach of fiduciary duty. While it might have been useful
for the judge to explain more fully why he was taking a
fresh look at the case, we see no reason to belabor this
point. Our review in any event is de novo, and so we
think it best simply to proceed to decide whether
Sharp’s amended cross-complaint includes any claim on
which relief can be granted. Minch, 486 F.3d at 302.
B
Sharp’s theory of the case is inventive, if nothing else.
It asserts broadly that MetLife had a fiduciary duty to
it, and in particular a duty “not to mislead plan partici-
pants or misrepresent the terms or administration of the
Plan.” In Sharp’s view, MetLife was obliged under the
Plan to “inform Sharp and Rudzinski of each and every
basis for its denial of Rudzinski’s claim during the
claims process, . . . to render its decisions of claims
brought under the Plan in a manner consistent with the
terms and requirements of the Plan and Policy, and . . . to
advise Sharp if any required premiums were owed.”
Sharp reasons that when MetLife told Rudzinski that she
was not entitled to benefits because Sharp had ceased
paying premiums, this amounted to a breach of fiduciary
duty to Sharp. MetLife’s careless statement, Sharp asserts,
caused it to suffer damage, because it “has been forced to
expend sums of money on attorneys’ fees and related costs
10 No. 08-2959
in defending itself against Rudzinski’s lawsuit and in
bringing this cross-claim, and has been required to
expend extensive amounts of employee time and
resources into the investigation and defense of Rudzin-
ski’s claims.” Sharp wants a court order finding that
MetLife breached its fiduciary duty to Sharp and an order
“requiring MetLife to reimburse to the Plan its losses
resulting from MetLife’s breach of fiduciary duty.” It
argues that it is entitled to this relief under ERISA, 29
U.S.C. §§ 1132(a)(2), 1132(a)(3), and 1109(a).
The district court rejected this theory lock, stock, and
barrel. The court ruled that ERISA does not impose the
fiduciary duties that Sharp alleged, nor does it authorize
the kind of relief Sharp sought. As the court noted, Sharp
“didn’t sue to recover anything on behalf of the Plan;
rather, it is suing to recover attorney’s fees and costs that
it paid ([and] there is no allegation that the Plan paid
these fees and costs; nor is there any allegation that the
Plan lost anything as a result of the alleged breach).” The
court ultimately concluded that 29 U.S.C. § 1109(a)
imposes liability for Plan losses only, and therefore
Sharp’s claim “simply does not fit within the parameters
of that statute.” We agree with the district court’s assess-
ment. This analysis applies with equal force to two addi-
tional theories that Sharp advanced: that it is entitled
under 29 U.S.C. § 1132(a) to bring a civil action for
relief under 29 U.S.C. § 1109(a); and that it has a direct
right to recover under 29 U.S.C. § 1132(a)(3). Sharp com-
plains on appeal that the district court erred by failing to
address its claim for breach of fiduciary duties under
29 U.S.C. § 1132(a)(3). There was no need for the district
No. 08-2959 11
court to do so, however, given the fundamental con-
clusion that there was no fiduciary duty to begin with.
Sharp urges this court to find that ERISA does not limit
breach of fiduciary duty claims to persons who are fiducia-
ries with respect to a plan. It bases its argument on the
language of § 1109(a). Section 1109(a) reads:
Any person who is a fiduciary with respect to a
plan who breaches any of the responsibilities, obliga-
tions, or duties imposed upon fiduciaries by this
subchapter shall be personally liable to make good to
such plan any losses to the plan resulting from each
such breach, and to restore to such plan any profits of
such fiduciary which have been made through use
of assets of the plan by the fiduciary, and shall be
subject to other equitable or remedial relief as the court may
deem appropriate, including removal of such fiduciary.
29 U.S.C. § 1109(a) (emphasis added).
Sharp contends that the emphasized text is a “second
clause” that “sets forth no requirement that the fiduciary’s
breach of fiduciary duty claim must be based on plan
losses.” Unfortunately for Sharp, however, the Supreme
Court expressly rejected this reading in its 1985 decision
in Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134,
141-42 (1985). There the Court held that “[t]o read
directly from the opening clause of [§ 1109(a)], which
identifies the proscribed acts, to the ‘catchall’ remedy
phrase at the end—skipping over the intervening language
establishing remedies benefitting, in the first instance,
solely the plan—would divorce the phrase being construed
from its context and construct an entirely new class of
12 No. 08-2959
relief available to entities other than the plan.” Id. The
Court concluded that “[a] fair contextual reading of the
statute makes it abundantly clear that its draftsmen were
primarily concerned with the possible misuse of
plan assets, and with remedies that would protect the
entire plan, rather than with the rights of an individual.”
Id. at 142.
We can assume that MetLife was a fiduciary with
respect to the Plan, and we can also assume that Sharp
was a fiduciary with respect to the Plan. But this does not
mean that either one was a fiduciary with respect to the
other. Their relationship was purely contractual: MetLife
agreed to perform certain services for Sharp, with respect
to this benefits plan. See 29 U.S.C. § 1002(21)(A) (defining
circumstances in which “a person is a fiduciary with
respect to a plan” without any mention of fiduciary
relationships arising between parties who contract for
plan-related services); cf. Johnson v. Georgia-Pacific Corp., 19
F.3d 1184, 1188 (7th Cir. 1994) (“This definition [in
§ 1002(21)(A)] does not make a person who is a fiduciary
for one purpose a fiduciary for every purpose. A person
is a fiduciary to the extent that he performs one of the
described duties; people may be fiduciaries when they
do certain things but be entitled to act in their own in-
terests when they do others.”). Put a little differently,
Sharp is not the kind of entity that Congress had in mind
for the protections it created in ERISA. Sharp’s argument
based on a direct fiduciary duty therefore must be rejected.
Sharp next argues that even if it could assert a claim to
relief only on behalf of the Plan, it met that standard (at
No. 08-2959 13
least as a matter of pleading). Sharp refers us to the ad
damnum clause of its amended cross-complaint, in which
it requests the court to “[e]nter an order requiring
MetLife to reimburse the Plan its losses resulting from
MetLife’s breach of fiduciary duty.” Sharp contends that,
under the liberal pleading standard in the federal court,
this request is sufficient to demonstrate that it was
seeking relief on behalf of the Plan. We do not read
the cross-complaint that way.
Under F ED. R. C IV. P. 8(a)(2), a complaint (or cross-
complaint) must contain “a short and plain statement of
the claim showing that the pleader is entitled to relief.”
While Rule 8(a)(2) does not require detailed factual allega-
tions, the Supreme Court now requires it to include
“more than an unadorned, the-defendant-unlawfully-
harmed-me accusation.” Iqbal, 129 S. Ct. at 1949 (dis-
cussing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007)). To survive MetLife’s motion to dismiss, Sharp had
to include allegations that supported (1) its right of action
under ERISA (that is, that Sharp was acting either as a
plan fiduciary, beneficiary, or participant); (2) MetLife’s
status as a plan fiduciary; (3) MetLife’s breach of its
fiduciary duties; and (4) a cognizable loss to the plan
flowing from that breach. See Pegram v. Herdrich, 530
U.S. 211, 223-26 (2000); Jenkins v. Yager, 444 F.3d 916, 924
(7th Cir. 2006). Sharp’s complaint falls short. Its amended
cross-complaint offers only the conclusory statements
that MetLife is a fiduciary, that Sharp is a plan fiduciary,
that MetLife breached its fiduciary duties to Sharp, that
Sharp has suffered damage from that breach, and that
MetLife must reimburse the Plan for its losses. At no point
14 No. 08-2959
does Sharp explain how the alleged breach of fiduciary
duty imposed (or could have imposed) a loss on the
Plan. See Wsol v. Fiduciary Mgmt. Assocs., Inc., 266 F.3d 654,
656 (7th Cir. 2001). Nothing Sharp has said tells the reader
how the expenditures it made in the Rudzinski case—
enhanced as they might have been because of MetLife’s
comment—relate to any duty under ERISA.
Finally, Sharp contends that even if its cross-complaint
lacked critical details, the district court erred by not
permitting it to replead. We see no reversible error in
that respect. It is unclear from the record whether Sharp
ever moved the district court for leave to amend its
amended cross-complaint. See F ED. R. C IV. P. 15(a). If not,
then Sharp has forfeited the point. And even if it did
preserve it, in our view any amendment would have
been futile.
Sharp cannot avoid the fact that any recovery it may
hope to achieve must be related to the fiduciary duties
that it alleges MetLife owes to it, that MetLife must have
been performing a fiduciary function when it made the
comment during the settlement discussions, and that it
must be seeking to recover losses to the Plan. See Coyne &
Delany Co. v. Blue Cross & Blue Shield of Virginia, 102 F.3d
712, 714-15 (4th Cir. 1996). Sharp’s claim does not meet
this requirement. Sharp claims that the “damage” caused
by MetLife’s comment can be measured by the monies
Sharp expended on “attorneys’ fees and related costs in
defending itself against Rudzinski’s lawsuit and in bring-
ing [the] cross-claim,” as well as the “extensive amounts
of employee time and resources” poured into the investi-
No. 08-2959 15
gation and defense of Rudzinski’s claims. But these are
plainly damages and expenses to Sharp, as a company,
not to the Plan. They are therefore not appropriate items
of damage under either § 1109(a) or § 1132(a)(3).
The only reasonable understanding of Sharp’s cross-
complaint is that it is seeking a monetary award for
itself, individually, as reimbursement for the cost of its
legal expenses. ERISA does not provide remedies other
than those expressly set forth by Congress, and §§ 1109(a)
and 1132(a)(3) provide relief only for damage to the
Plan. In the final analysis, what really frustrates Sharp
is that under the American Rule it must bear its own
legal costs, including those attributable to Rudzinski’s
decision to add it as a defendant to her lawsuit. Nothing
in ERISA upsets that general rule, as it applies to Sharp.
C
Sharp also asserts that the district court erred when it
dismissed its claim for indemnification. Its cross-
complaint does not identify whether this alleged right to
indemnification is based on ERISA or state law (though its
brief suggests that the indemnification claim is federal).
We find no such indemnification right on Sharp’s behalf
in ERISA. Like claims under §§ 1109(a) and 1132(a)(3),
indemnification claims under ERISA may go forward
only if the plan has suffered a loss. 29 U.S.C. § 1105(a);
Alton Memorial Hosp. v. Metropolitan Life Ins. Co., 656
F.2d 245, 249-50 (7th Cir. 1981). As with Sharp’s fiduciary
breach claims, Sharp has entirely failed to plead any loss
to the Plan resulting from MetLife’s clumsy effort to
16 No. 08-2959
blame Sharp for its benefits decision. As with the
fiduciary breach claims, this is fatal to the indemnifica-
tion claim.
D
Finally, Sharp argues that the district court erred when
it held that its state-law claims are preempted by ERISA.
As the Supreme Court observed in Aetna Health, Inc. v.
Davila:
Congress enacted ERISA to “protect . . . the interests of
participants in employee benefit plans and their
beneficiaries” by setting out substantive regulatory
requirements for employee benefit plans and to
“provid[e] for appropriate remedies, sanctions, and
ready access to the Federal courts.” 29 U.S.C. § 1001(b).
The purpose of ERISA is to provide a uniform reg-
ulatory regime over employee benefit plans. To this
end, ERISA includes expansive pre-emption provi-
sions, see ERISA § 514, 29 U.S.C. § 1144, which are
intended to ensure that employee benefit plan regula-
tion would be “exclusively a federal concern.” Alessi
v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523 (1981).
542 U.S. 200, 208 (2004). Section 1144 expresses that policy
by saying 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). Congress
chose this aggressive form of preemption in order to
“knock out any effort to use state law, including state
common law, to obtain benefits under such a plan.” Pohl v.
No. 08-2959 17
National Benefits Consultants, Inc., 956 F.2d 126, 127 (7th
Cir. 1992). The idea is to “protect the financial integrity of
pension and welfare plans by confining benefits to the
terms of the plan as written . . . .” Id. at 128. Nonetheless,
while ERISA’s preemption provision is broad, it does not
sweep all state law off the table. See Pegram v. Herdrich,
530 U.S. 211, 236-37 (2000) (holding that challenges to
mixed eligibility and treatment decisions made by an
HMO are not preempted by ERISA). If the connection
between a state law claim and the benefit plan is too
tenuous, remote, or peripheral, ERISA’s preemption
provision may not apply. Id.; Jass v. Prudential Health Care
Plan, Inc., 88 F.3d 1482, 1494-95 (7th Cir. 1996).
The district court thought that Sharp’s state-law claims
could not be resolved “without referring back to the
Plan to determine Sharp’s and MetLife’s respective ob-
ligations.” We do not understand Sharp’s claims in that
way. As we have said throughout this opinion, Sharp’s
claims arise under the contract it had with MetLife; the
ERISA Plan was the subject of that contract, but nothing
in the contract depended on the particular content of the
Plan. We conclude that the transaction costs Sharp
incurred are not sufficiently related to ERISA to bring
them within the scope of ERISA’s preemptive field.
This conclusion does not mean, however, that Sharp is
necessarily entitled to continue to litigate in federal
court. Anticipating the possibility of our ruling on the
merits, the district court alternatively held that even if
Sharp could amend its state-law counts in such a way as
to avoid preemption, the court would decline to exercise
18 No. 08-2959
supplemental jurisdiction over those claims and dismiss
them pursuant to 28 U.S.C. § 1367(c)(3), in light of its
dismissal of all claims over which it had original juris-
diction. A district court’s decision to decline to exercise
supplemental jurisdiction over a state-law claim for this
reason is reviewed for an abuse of discretion. Carlsbad
Technology, Inc. v. HIF Bio, Inc., 129 S. Ct. 1862, 1866-67
(2009); Williams Elecs. Games, Inc. v. Garrity, 479 F.3d 904,
906 (7th Cir. 2007).
Normally, when “all federal claims are dismissed
before trial, the district court should relinquish juris-
diction over pendent state-law claims rather than
resolving them on the merits.” Wright v. Associated Ins. Cos.,
Inc., 29 F.3d 1244, 1251 (7th Cir. 1994). There are three
acknowledged exceptions to this rule: when (1) “the
statute of limitations has run on the pendent claim, pre-
cluding the filing of a separate suit in state court”;
(2) “substantial judicial resources have already been
committed, so that sending the case to another court will
cause a substantial duplication of effort”; or (3) “when it
is absolutely clear how the pendent claims can be de-
cided.” Id. (internal quotation marks omitted).
We see no abuse of the district court’s discretion here.
While it is likely that the statute of limitations has techni-
cally run on some, if not all, of Sharp’s state-law claims,
there is an Illinois statute that authorizes tolling in
these circumstances. 735 ILCS 5/13-217. If it applies, then
Sharp’s claims would not be time-barred if it pursues
them in state court. In addition, the district court disposed
of the federal claims on a motion to dismiss, and so it is
No. 08-2959 19
difficult to see how “substantial judicial resources” have
been committed to this case. See Davis v. Cook County, 534
F.3d 650, 654 (7th Cir. 2008). Finally, we are not prepared
to say that the proper resolution of the state-law claims
is absolutely clear. We conclude, therefore, that the
district court did not abuse its discretion in declining to
exercise supplemental jurisdiction over Sharp’s state
law claims.
* * *
We A FFIRM the judgment of the district court in favor
of MetLife on Sharp’s ERISA claims and V ACATE the
district court’s decision on the merits of the state-law
claims. Sharp’s state-law claims instead are D ISMISSED
without prejudice pursuant to 28 U.S.C. § 1367(c) in
accordance with the district court’s alternative ruling.
Costs on appeal are to be taxed against Sharp.
8-18-09