Dakota, Minnesota & Eastern Railroad v. Schieffer, 857 F. Supp. 2d 886

DM&E terminated Schieffer and paid lump-sum severance under the Employment Agreement (2004); the agreement includes a three-year employee-benefits provision if severance is paid, and a pre-Change of Control option.
DM&E sought federal injunctive relief to bar arbitration, asserting ERISA preemption due to an ERISA-governed plan underpinning the Employment Agreement.
The district court previously held no federal subject-matter jurisdiction; the Eighth Circuit partly agreed but remanded to consider a new jurisdiction theory not raised by the parties.
On remand, the court distinguishes complete preemption under ERISA §502(a) from express preemption under ERISA §514(a) and analyzes whether jurisdiction exists under §502(a).
The court finds Schieffer’s arbitration demands are based on a freestanding contract, not solely on ERISA plan benefits, and that Davila’s two-prong test for complete preemption is not satisfied; consequently, the court lacks federal jurisdiction and grants dismissal.
The opinion reiterates that ERISA express preemption does not create jurisdiction and that a contract-based claim tied to ERISA plans may not arise under ERISA unless within §502(a)’s enforcement scheme.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Schieffer’s claims are completely preempted under ERISA §502(a).	DM&E contends the arbitration demands relate to ERISA benefits, triggering complete preemption.	Schieffer argues the claims arise from a freestanding contract, not from ERISA plan benefits.	No; Davila prongs not satisfied, so no complete preemption.
Whether Davila Prong One is satisfied for federal jurisdiction.	DM&E asserts Schieffer could have brought his claims under §502(a)(1)(B).	Schieffer cannot be a participant/beneficiary post-termination; claims lack ERISA plan basis.	Prong One not satisfied.
Whether Davila Prong Two is satisfied (independent legal duty apart from ERISA).	DM&E claims arise under the Employment Agreement, tied to ERISA plans.	Arbitration claims arise from a freestanding contract independent of ERISA plans.	Prong Two not satisfied; claims are not preempted under §502(a) and court lacks jurisdiction.

Prudential Ins. Co. v. Nat’l Park Med. Ctr., 413 F.3d 897 (8th Cir. 2005) (complete preemption under §502(a) provides federal jurisdiction; express preemption does not)
Davila v. Aetna Health, Inc., 542 U.S. 200 (S. Ct. 2004) (two-prong test for complete preemption; both prongs must be satisfied)
Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941 (9th Cir. 2009) (express preemption does not create jurisdiction; complete preemption controlled by §502(a))
Johnson v. U.S. Bancorp, 387 F.3d 939 (8th Cir. 2004) (freestanding contract vs. ERISA plan; distinctions under preemption analysis)
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (Sup. Ct. 1987) (broad interpretation of ERISA 'relate to' but not jurisdictional by itself)