United States Court of Appeals,

                                          Eleventh Circuit.

                                            No. 97-6643.

                         William O'Neal WHITT, Jr., Plaintiff-Appellant,

                                                  v.

                     SHERMAN INT'L CORP., et al., Defendants-Appellees.

                                            July 30, 1998.

Appeal from the United States District Court for the Northern District of Alabama. (No. CV-96-L-
1974-S), Seybourn H. Lynne, Judge.

Before CARNES and MARCUS, Circuit Judges, and MILLS*, Senior District Judge.

       MARCUS, Circuit Judge:

       This appeal raises issues involving the Employee Retirement Income Security Act of 1974

("ERISA"), 29 U.S.C. §§ 1001-1461, and state contract and tort law. Upon termination of his

employment with defendant-appellees Sherman International Corporation and Constar, Inc.

(collectively, "Sherman"), plaintiff-appellant William O'Neal Whitt, Jr. sought benefits in state court

for which he had allegedly contracted with Sherman. Sherman removed the case to federal court,

alleging that Whitt's state law claims were preempted by ERISA, and thus, federal question

jurisdiction existed. The district court agreed with Sherman. Consequently, it denied Whitt's motion

for remand to state court and entered summary judgment for Sherman. Because we conclude that

no ERISA "plan" existed at the time of Whitt's termination, we hold that Whitt's state causes of

action are not preempted by ERISA. Accordingly, we VACATE the district court's order granting




   *
     Honorable Richard Mills, Senior U.S. District Judge for the Central District of Illinois,
sitting by designation.
summary judgment and REMAND to the district court with instructions to REMAND this case to

state court.

                                                  I.

         A detailed recitation of the facts is necessary to understand our holding. Whitt served as a

Group Vice President and General Counsel to Sherman from February 1984 until November 2, 1995,

when Sherman involuntarily terminated his employment. Whitt also sat as a member of Sherman's

Board of Directors from 1978 until mid-1994. In May 1988 Sherman and Whitt entered into a

non-qualified stock option agreement and cash right agreement (collectively, "1988 Stock Option

Agreement"). At that time, Constar was a minority shareholder of Sherman. In 1991, in connection

with Constar's acquisition of a large portion of the stock of Sherman as a part of the financial

restructuring of Sherman, Whitt signed an agreement he drafted dated September 10, 1991 ("1991

Release Agreement"), in which Whitt released his rights under the 1988 Stock Option Agreement

in exchange for cash payments totaling $300,000 and a phantom stock plan or similar plan to be

developed in the future. Phantom stock is "[a] right ... to receive an award with a value equal to the

appreciation of a share of stock from the date the Phantom Stock is cashed out.... Phantom Stock

programs are designed to provide executives with cash payments equivalent to amounts they could

receive under an actual stock option or similar program.... Phantom programs are based on

"phantom' or "hypothetical' shares or units."          Coopers & Lybrand, Executive Summary of

Nonqualified Long-term Incentive Plans, CV01 ALI-ABA 619, 632 (1996). Specifically, paragraph

4 of the 1991 Release Agreement states, "Sherman agrees that it will establish a Phantom Stock

Plan, or similar plan, for the benefit of employees, said plan to be effective on or before January 1,

1992."


                                                  2
       Work began on a phantom stock plan in 1992 or 1993. Various individuals created several

draft proposals through July 22, 1994, but none garnered universal support. J. Thomas Holton,

Chief Executive Officer and Chairman of the Board of Sherman, testified in deposition that, at that

point, "[t]he whole issue just sort of, you know, went under study again, and just didn't surface. You

know, it just became sort of a nonissue at that point." Nov. 20, 1996, Holton Dep. at 40. He further

stated, "[I]t was in [Constar Chief Executive Officer O'Neill's] court to get it done." Meanwhile,

O'Neill stated that after July of 1993, the implementation of the plan, other than an equity

contribution issue, "was left to Mr. Holton." Around August 1995, Whitt directly asked O'Neill

when Sherman would finally establish the promised plan. According to Whitt, O'Neill told him "it

was not going to be done, that I had [a] plan and it was my job, that I ought to be happy about it, and

that we were just not going to do it."

       On November 2, 1995, Sherman terminated Whitt's employment by letter that same day.

Among other things, the letter provided, "Upon the close of the 1995 fiscal year and receipt of the

audited financial statements, payment, if any, due you under the "Sherman Long-Term Incentive

Plan for Senior Executives, Effective January 1, 1992' will be paid to you in accordance with the

provisions of that plan...." Holton testified that as of the time he fired Whitt in November 1995, he

did not know what the terms of the 1992 LTIP named in the termination letter would be. Frank

Anderson, President and Chief Executive Officer of Sherman and a party to the 1991 agreements,

agreed, stating that he only first learned that a plan had been adopted in approximately October

1996, that he did not become aware of the actual terms of the plan until the week of November 22,

1996, and that he did not know how many drafts existed or which of the various, competing drafts

would be adopted by Sherman prior to mid-November 1996. William Hamilton, Chief Financial


                                                  3
Officer of Sherman, also testified in deposition that he did not learn of the terms of the plan until

November 18, 1996. He further testified that he did not place the plan on Sherman's books before

this lawsuit was filed or this case removed because "you have to have a plan before you can book

a liability. I mean there was no plan, so you have no basis to book a liability."

       In early 1996, Sherman engaged KPMG Peat Marwick to perform the accounting work

necessary to calculate the benefits due Whitt under the plan. Holton testified that Whitt did not

receive his payment before filing this lawsuit because KPMG Peat Marwick had not completed the

accounting work.

       Subsequently, on September 17, 1996, Sherman's Board of Directors adopted the 1992 Long

Term Incentive Plan for Senior Executives of Sherman ("1992 LTIP"), making the effective date of

the plan January 1, 1992, in accordance with the terms of the 1991 Release Agreement. Whitt's

benefits accrued as of the effective date of the 1992 LTIP. After Sherman adopted the 1992 LTIP,

Sherman made a filing regarding the plan under 29 CFR § 2520.104-23 with the Department of

Labor. On September 26, 1996, Sherman issued and mailed to Whitt a check in the amount of

$9,412.16, which represented the amount due under the first of the ten annual installments called

for by the LTIP, plus interest calculated pursuant to the terms of the Plan. Whitt refused to accept

the check and returned it to Sherman.

       On June 25, 1996, Whitt instituted this lawsuit in the Circuit Court of Jefferson County,

Alabama. The complaint alleged causes of action for breach of contract, fraud, and interference.

On July 30, 1996, Sherman filed a notice of removal to the United States District Court for the

Northern District of Alabama, Southern Division, claiming ERISA super-preemption. Sherman then

moved to dismiss, arguing ERISA "defensive preemption." On August 29, 1996, Whitt moved to


                                                 4
remand the case to state court for lack of subject matter jurisdiction and improper removal, claiming

that his state claims were not preempted because Sherman neither established nor promised to

establish an ERISA plan. Thereafter, on October 7, 1996, the district court denied Whitt's motion

to remand. The same day, the district court granted Sherman's motion to dismiss, allowing Whitt

thirty days to amend the complaint to state a claim under ERISA. On November 4, 1996, Whitt filed

an amended complaint naming as defendants Sherman, Constar, 1988 ERISA Plan, 1991 ERISA

Plan, 1996 ERISA Plan, and Amalgamated ERISA Plan. The complaint expressly stated that in

filing the amended complaint, Whitt did not waive his "previously asserted claims that the suit was

not properly removed, does not arise under ERISA, or is properly in federal court."

       On March 3, 1997, following discovery, Whitt filed a motion to reinstate the dismissed state

law claims and to remand the case to the state court for lack of subject matter jurisdiction and

improper removal. The same day, Sherman filed a motion for summary judgment alleging that

Whitt's amended complaint failed to state a claim under ERISA. On May 23, 1996, the district court

denied the motion to remand but certified the order for interlocutory appeal pursuant to 28 U.S.C.

§ 1292(b). Thus, on June 9, 1997, Whitt petitioned this Court for permission to take an appeal under

28 U.S.C. § 1292(b), but the Court denied the petition on July 7, 1997. The district court then lifted

its stay of the proceedings and granted Sherman's motion for summary judgment. Whitt now appeals

the denial of his motion for remand and the entry of summary judgment.

                                                 II.

        We review questions of jurisdiction de novo. McKusick v. City of Melbourne, 

,

482 (11th Cir.1996) (citing Lucero v. Operation Rescue, 

, 627 (11th Cir.1992)). In

reviewing matters concerning removal and remand, our predecessor Court has noted that "it is


                                                  5
axiomatic that ambiguities are generally construed against removal."1 Butler v. Polk, 

,

1296 (5th Cir.1979).

        A defendant may remove a case to federal court only if the district court would have had

jurisdiction over the case had the case been brought there originally. 28 U.S.C. § 1441. Federal

district courts, of course, have original jurisdiction over diversity cases and matters arising under

federal law. 28 U.S.C. §§ 1331, 1332. Because, in this case, there is no contention that diversity

exists between the parties, federal jurisdiction must rest, if at all, on federal question jurisdiction.

Under the "well-pleaded complaint" rule, a case does not arise under federal law unless a federal

question is presented on the face of the plaintiff's complaint. Kemp v. Int'l Business Machines Corp.,

, 712 (11th Cir.1997) (citing Franchise Tax Bd. v. Const. Laborers Vacation Trust, 

, 11, 

, 

(1983)). Because the well-pleaded complaint rule

requires a federal question to appear on the face of the plaintiff's complaint, a defense presenting a

federal question—even a valid one—cannot create removal jurisdiction. 

Tax

, 

). In this case, Whitt brought only state law claims, and

Sherman removed the case to federal court on account of ERISA preemption, a federal law defense.

Under the general terms of the well-pleaded complaint rule, therefore, the removal of this case to

federal court was improper because the preemption defense was not presented on the face of the

complaint. See 

of "complete preemption" or "super preemption," however, qualifies the

general well-pleaded complaint rule. 

. Where Congress preempts an area of



   1
   Decisions issued by the old Fifth Circuit are binding as precedent on the Eleventh Circuit.
Bonner v. City of Prichard, 

, 1207 (11th Cir.1981).

                                                   6
law so completely that any complaint raising claims in that area is necessarily federal in character,

super preemption applies, and federal jurisdiction exists, even if the face of the complaint does not

plead federal claims. 

Life Ins. Co. v. Taylor, 

, 63-64, 

, 

(1987) (citing Avco Corp. v. Aero Lodge No. 735, Intern. Ass'n of Machinists

and Aerospace Workers, 

, 

, 

(1968))). Super preemption

converts state law claims into federal claims for purposes of the well-pleaded complaint rule,

allowing a defendant to remove the case to federal court. 

Court has recognized, the

Supreme Court has held that Congress created super preemption in ERISA, which provides the

exclusive cause of action for the recovery of benefits governed by an ERISA plan. 

, 

). State law claims that seek relief available

under ERISA are recharacterized as ERISA claims and therefore arise under federal law. 

, 

).

        Thus, this Court has found that the jurisdictional issue in cases such as the one at hand is

dependent upon whether the plaintiff is seeking relief that is available under 29 U.S.C. § 1132(a).

. If so, the Court must recharacterize the plaintiff's claim as an ERISA claim,

and removal jurisdiction exists. 

the plaintiff is not seeking relief that is available

under section 1132(a), no federal question jurisdiction exists. 

1132(a) provides, in relevant part, that a participant or beneficiary of a "plan" may

bring suit "to recover benefits due to him under the terms of his plan...." 29 U.S.C. § 1132(a)(1)(B).

As used in ERISA, the term "plan" means an "employee welfare benefit plan" or an "employee

pension benefit plan." See 29 U.S.C. § 1002(3). Thus, our central inquiry is to determine whether


                                                   7
the 1992 LTIP constituted an ERISA "plan" as of the time Whitt filed suit. This Court has adopted

a "flexible analysis" for determining whether an ERISA "plan" is established, Williams v. Wright,

, 1543 (11th Cir.1991), finding the existence of such plans where, "from the

surrounding circumstances a reasonable person can ascertain the intended benefits, a class of

beneficiaries, the source of financing, and procedures for receiving benefits." Donovan v.

Dillingham, 

, 1373 (11th Cir.1982) (en banc) (citation omitted).

       In Williams, for example, a retiring general manager brought an action against his employer,

alleging violations of ERISA. The employer had sent Williams, the employee, a letter that provided,

among other benefits, for Williams to receive $500 on the first of each month. After approximately

three years of providing Williams with these benefits, the employer ceased. This Court concluded

that the letter created a "plan" under ERISA, because it met the requirements outlined in Donovan.

Specifically, we found that the employer's general assets provided the required source of financing.

In so holding, we noted that, with some exceptions, the assets of employee benefit plans are required

to be held in trust. Nonetheless, we concluded that "[a]n employer ... should not be able to evade

the requirements of the statute merely by paying ... benefits out of general assets." 

Thus, we found that the payment of benefits out of an employer's general assets does not affect the

threshold question of ERISA coverage. Second, we determined that the plan had sufficiently

ascertainable procedures for receiving benefits: on the first of each month, the employer would send

Williams a check for $500. Although we noted that the procedure was "simple," we nonetheless

found it sufficient under the Donovan test. Third, although Donovan refers to an ascertainable "class

of beneficiaries," we stated, "[W]e do not interpret Donovan's use of the word "class' as an absolute

requirement of more than one beneficiary or that a plan tailored to the needs of a single employee


                                                 8
can not be within ERISA." 

. Thus, we concluded that an ascertainable

beneficiary existed.   The analysis assumed that the benefits were reasonably ascertainable.

Accordingly, we found that the letter constituted an ERISA "plan."

        Both parties claim that Williams mandates a decision by this Court in their favor. Sherman

argues that the instant case involves more documentation and a more readily ascertainable plan than

Williams. In support of this contention, Sherman claims that whereas in Williams, the Court found

a plan where only a letter existed, in this case, the Court can look to both the November 2, 1995

termination letter promising benefits under the 1992 LTIP and "a draft plan" of the LTIP to

determine the plan. Whitt argues, however, that unlike in Williams, at the time Whitt was fired,

neither the benefits intended nor the procedure for receiving those benefits could be determined from

the letter and the 1992 LTIP draft because no one knew which, if any, of the several LTIP drafts

containing various proposed benefits and procedures for delivering them would ultimately be

adopted. While Sherman suggests that it was understood which particular draft of the 1992 LTIP

governed at the time plaintiff-appellant's employment was terminated, Sherman cites nothing to

support this proposition. Moreover, the record reflects that even the president and other officers of

Sherman did not know at the time that Whitt was fired what, if any, plan would be adopted as the

1992 LTIP. Thus, under this Court's Donovan analysis, no ERISA "plan" existed at the time that

Whitt was fired. As this Court has stated, "[I]t is the reality of a plan, fund or program and not the

decision to extend certain benefits that is determinative." 

.

       This conclusion is bolstered by an additional point. Although we have previously noted that

"ERISA does not ... require a formal, written plan," 

, the Supreme Court

has recently stated,


                                                  9
       ... ERISA already has an elaborate scheme in place for enabling beneficiaries to learn their
       rights and obligations at any time, a scheme that is built around reliance on the face of
       written plan documents.

              The basis of that scheme is another of ERISA's core functional requirements, that
       "[e]very employee benefits plan shall be established and maintained pursuant to a written
       instrument."... In the words of the key congressional report, "[a] written plan is to be
       required in order that every employee may, on examining the plan documents, determine
       exactly what his rights and obligations are under the plan." ...

Curtiss-Wright Corp. v. Schoonejongen, 

, 82-83, 

, 

(1995)

(emphasis in original) (quoting 29 U.S.C. § 1102(a)(1) (emphasis added) & H.R.Rep. No. 93-1280,

p. 297 (1974), reprinted in U.S.Code Cong. & Admin. News ¶ . 4639, 5077, 5078 (emphasis

added)). The Supreme Court's emphasis in Schoonejongen on the importance of a written plan

presents yet another reason why on this record we are not prepared to find the existence of an

ERISA plan. Here, Sherman had either numerous conflicting draft plans or, at best, a single draft

plan that was still subject to change. Thus, upon examining the so-called "plan," an employee could

not hope to "determine exactly what his rights and obligations [were] under the plan,[ ]" as they were

subject to change upon adoption of the final version. Consequently, no ERISA "plan" existed at the

time of Whitt's removal. Finally, although not dispositive of the issue, we note that Sherman never

made an ERISA filing with the federal government in connection with the 1992 LTIP until after

Whitt was fired.

                                                 B.

        Sherman therefore argues alternatively that the 1992 LTIP had a retroactive effective date

of January 1, 1992. The gist of Sherman's argument in this regard is first, that the 1992 LTIP as it

currently stands no doubt constitutes an ERISA "plan," and second, that pursuant to the 1991

Agreement, which Whitt drafted, the parties agreed to give the plan ultimately adopted as the 1992


                                                 10
LTIP retroactive effect to January 1, 1992. Sherman further contends that retroactive ERISA plans

are permissible and effective in preempting state claims. In support of this contention, Sherman

cites to our decision in Dyce v. Salaried Employees' Pension Plan of Allied Corp., 

(11th

Cir.1994). We are not persuaded.

       In Dyce, Ignition Products, a wholly owned subsidiary of Allied-Signal Corporation,

maintained an ERISA pension plan for its employees which, among other benefits, provided that

employees who elected to take early retirement from Allied would be eligible for and receive certain

pension benefits. Before the group of plaintiff employees retired, the formerly Allied-owned

Ignition was merged into Unison Industries, and Allied transferred all of its shares in Ignition to

Unison. All of the plaintiffs continued their employment without interruption. As part of the deal,

the ERISA pension plan was amended eight months after the change in ownership and retroactive

to the date of change in ownership to provide that employees eligible to retire as of the date of the

merger, but who elected to continue employment with Unison, would be eligible for plan benefits

as of the date they terminated their employment with Unison, rather than the date they terminated

their employment with Ignition. The plaintiff group of employees, who had worked for Ignition

when it was owned by Allied and had continued to work for Unison after Unison purchased Ignition,

sought to receive early retirement benefits from Allied under the original ERISA plan, although they

were still employed by Ignition, now owned by Unison. Essentially, they contended that the merger

had resulted in the employees' departure from Allied, thus triggering benefits under the plan.

Pursuant to the amendment, the company rejected the plaintiffs' claims. The plaintiff employees

contended that the retroactive change to the ERISA plan was improper. Finding that Unison had

effectively stepped into the shoes of Allied, we upheld the retroactive change because the


                                                 11
regulations interpreting ERISA specifically provide that a modification or amendment of a pension

plan may be retroactively applied under certain applicable circumstances, and the employees had

not experienced a loss or change in benefits. Just as they were to be able to receive early retirement

benefits upon electing to leave Allied, they would receive the same benefits upon electing to leave

Unison. We further noted that the plaintiffs had not "elected" to leave Allied. Rather, Ignition had

been purchased by Unison, and the employees went with the company. Had the employees

exercised their rights to leave Allied before the transfer, Unison may have chosen not to rehire them.

       Sherman attempts to liken Dyce to this case, arguing that Whitt contends that prior to

Sherman's late 1996 adoption of the 1992 LTIP, Sherman had no ERISA plan. Thus, Sherman

suggests, whatever the 1992 LTIP provided had to have increased the benefits available to Whitt

before its retroactive enactment. Since there was no decrease in benefits from the prior situation (no

ERISA plan), Sherman reasons, under Dyce, retroactive application of the 1992 LTIP is permitted.

        Substantial problems with Sherman's analysis exist. First, the right to remove is generally

tested at the time of the filing for removal. See Charles Alan Wright, Arthur R. Miller, and Edward

H. Cooper, Federal Practice and Procedure: Jurisdiction 2d, § 3739. Sherman filed its notice of

removal on July 30, 1996, notably, some six weeks before it adopted the 1992 LTIP on September

17, 1996. Because the 1992 LTIP had not been enacted as of the time of removal, for purposes of

determining federal jurisdiction, no ERISA "plan" existed when Sherman removed the case, and,

consequently, no federal question jurisdiction existed, either. Second, we find the instant case to

be distinguishable in significant ways from Dyce. The retroactive Dyce amendment amounted to

nothing more than a technical change to a plan already in existence. None of the benefit terms

changed at all, so the employees could review the old plan and know what their benefits would be


                                                 12
under the new plan. Thus, the retroactive Dyce amendment did not conflict with ERISA's "elaborate

scheme in place for enabling beneficiaries to learn their rights and obligations at any time, a scheme

that is built around reliance on the face of written plan documents." 

-

83, 

(1995).

       Here, however, there was no previously existing plan to amend.              Rather, Sherman

subsequently adopted one of several new "plan" proposals from among a gaggle of drafts.

Consequently, during Whitt's employment with Sherman, it is undeniable that there was no plan to

examine, and Whitt had no way to " "determine exactly what his rights and obligations [were] under

the plan.' " 

-83, 

(1995) ( quoting H.R.Rep. No. 93-

1280, p. 297 (1974), reprinted in U.S.Code Cong. & Admin. News ¶ . 4639, 5077, 5078 (emphasis

added)). Our research has revealed no case where an entirely new plan, as opposed to an

amendment to an existing plan, has been retroactively applied, and, under the facts of this case, we

decline to adopt such an approach here.

       Nor, as Sherman suggests, does the legislative history demand a different result. Relying

on isolated Supreme Court statements referring to congressional intent behind ERISA, Sherman

argues that ERISA requires us to find preemption in this case. Not one of the cases Sherman cites,

however, so much as implies that preemption would be appropriate under the facts of this case.

       In Pilot Life Insurance Co. v. Dedeaux, 

, 

, 

(1987),

for example, Dedeaux was injured in an employment-related accident and filed a disability claim

with Pilot Life, the provider and partial administrator of Dedeaux's employer's long-term disability

employee benefit plan. When Dedeaux's ERISA plan disability benefits were terminated by Pilot

Life, Dedeaux instituted a diversity suit against the company and alleged tortious breach of contract,


                                                 13
breach of fiduciary duties, and fraud in the inducement. Pilot Life argued that Dedeaux's state law

claims were preempted by ERISA, and the Supreme Court agreed, finding that Dedeaux's common

law causes of action, "each based on alleged improper processing of a claim for benefits under an

employee benefit plan, undoubtedly meet the criteria for pre-emption...." Pilot 

,

. Unlike the case at hand, Pilot Life involved no question of whether an ERISA

"plan" existed and no retroactivity issue. Consequently, it is not instructive on the issue at hand.

       Similarly, in Ingersoll-Rand Co. v. McClendon, 

, 

, 

(1990), an employee brought a state law action against his employer and alleged that the

employer had wrongfully terminated him to avoid contributing to, or paying benefits under, the

employee's pension plan (ERISA plan). Again, the Supreme Court found that the employee's claim

was preempted under ERISA because "in order to prevail, [the] plaintiff must plead, and the court

must find, that an ERISA plan exists and the employer has a pension-defeating motive in terminating

the employment." 

. Once again, as in Pilot Life, neither the existence of

an ERISA "plan" nor the need to apply an ERISA "plan" retroactively were in issue. Thus, also like

Pilot Life, we do not find this case helpful in resolving the current situation.

       We do find relevant, however, the recent sea change in courts' willingness to apply the

preemption doctrine expansively. As we recently observed, in New York State Conference of Blue

Cross & Blue Shield Plans v. Travelers Ins. Co., 

, 

, 

(1995), the Supreme Court has begun "essentially [to] turn[ ] the tide on the expansion of the

preemption doctrine[.]" Morstein v. National Insurance Services, Inc., 

, 721 (11th

Cir.1996) (en banc). Particularly in view of this Court's preference for remand where federal

jurisdiction is not absolutely clear, Burns v. Windsor Ins. Co., 

, 1095 (11th Cir.1994),


                                                  14
we decline Sherman's invitation to set sail on the uncharted waters of retroactive application of

entirely new ERISA "plans."

                                                 III.

        Because we conclude that no ERISA plan existed at the time of removal, and further, that

retroactive application of the subsequently adopted ERISA plan would be inappropriate in this case,

the preemption doctrine does not apply, federal jurisdiction cannot be found, and the district court's

entry of summary judgment was a nullity. Accordingly, we VACATE the district court's order

granting summary judgment and REMAND to the district court with instructions to REMAND this

case to state court.




                                                 15