                             In the
 United States Court of Appeals
                 For the Seventh Circuit
                         ____________

No. 01-3861
THE MAY DEPARTMENT STORES COMPANY and THE MAY
 DEPARTMENT STORES COMPANY RETIREMENT PLAN,
                                             Plaintiffs-Appellants,
                                v.


FEDERAL INSURANCE COMPANY and NATIONAL UNION
  FIRE INSURANCE COMPANY OF PITTSBURGH, PA.,
                                            Defendants-Appellees.
                         ____________
            Appeal from the United States District Court
                for the Southern District of Illinois.
            No. 99-164—G. Patrick Murphy, Chief Judge.
                         ____________
    ARGUED MAY 24, 2002—DECIDED AUGUST 19, 2002
                    ____________


  Before POSNER, MANION, and DIANE P. WOOD, Circuit
Judges.
  POSNER, Circuit Judge. This diversity suit for breach of
a contract of liability insurance was brought by an ERISA
pension plan (the May plan, we’ll call it), and by the
company (May) that sponsored and administers the plan,
against two insurance companies, one of which however is
an excess insurer whose liability to the plaintiffs need not be
discussed separately. The insurance policy, which is called
2                                              No. 01-3861

an “Executive Protection Policy,” was issued to May but
names the plan as an additional insured. The district court
granted summary judgment for the defendants.
   A jurisdictional issue managed to elude notice by the
district judge and—despite the stakes in the case and
the sophistication of counsel—all four parties (well, three
really, so far as legal advice is concerned, because May
and the plan have the same counsel). The jurisdictional
statement in the appellants’ opening brief properly alleges
the citizenship of the corporate plaintiff and of the defen-
dants, but with regard to the pension plan states only
that it “is a defined benefit plan with its principal place
of business in Missouri.” The jurisdictional statements in
the appellees’ briefs state incorrectly that the appellants’
jurisdictional statement is complete and correct. It seems
that we shall have to keep repeating until we are blue
in the face that whenever a party to a diversity suit is
neither a business corporation nor a human being, the dis-
trict judge and the lawyers for the parties must do care-
ful legal research to determine the citizenship of the party
rather than content themselves with making a wild stab
in the dark, as the parties did in this case when they
chose the principal place of business to be the state of
citizenship of a pension plan, a choice for which there is
no basis in law. While we are about chastising the parties
for their insouciance regarding the existence of federal
jurisdiction, we note our displeasure at the conduct of
the appellants’ counsel, Covington & Burling, in having
without our authorization appended to its response to
our jurisdictional query what amounts to a second reply
brief, purporting to correct a factual error in its previous
briefs; and in having, in its opening brief, used ellipses
in quotations to create a misleading impression of the
meaning of the quoted passages. These tactics are especially
unworthy of so distinguished a law firm.
No. 01-3861                                                    3

  The May plan is a trust, and for diversity purposes a
trust is a citizen of whatever state the trustee is a citizen of.
Navarro Savings Ass’n v. Lee, 446 U.S. 458, 464-46 (1980);
Hemenway v. Peabody Coal Co., 159 F.3d 255, 257 (7th
Cir. 1998); E.R. Squibb & Sons, Inc. v. Accident & Casualty
Ins. Co., 160 F.3d 925, 931 (2d Cir. 1998). The trustee of
the May plan, the Bank of New York, happens to be a citi-
zen of the same state as one of the defendants, and so
the requirement of complete diversity is not satisfied.
Against this conclusion the defendants argue that since
the Bank of New York was merely a “directed” trustee,
meaning that its decisions regarding the investment of the
trust assets were dictated by the plan administrator, the
latter should be considered the “real” trustee for diversity
purposes. But it would be a mistake to complicate the
ascertainment of jurisdiction by making it turn on the
precise division of responsibilities between the plan trust-
ee and the plan administrator. We have in the past resisted
efforts to base determinations of citizenship on function-
al considerations, see Downey v. State Farm Fire & Casualty
Co., 266 F.3d 675, 680 (7th Cir. 2001); CCC Information
Services, Inc. v. American Salvage Pool Ass’n, 230 F.3d 342, 345-
46 (7th Cir. 2000); see also Saadeh v. Farouki, 107 F.3d
52, 57 (D.C. Cir. 1997); SHR Ltd. Partnership v. Braun, 888
F.2d 455, 458-59 (6th Cir. 1989), and we will continue to
do so.
   In response to our order that the parties address
the jurisdictional issue that we had identified, however,
all the parties agree that if indeed the presence of the plan
as a party to this litigation destroys complete diversity, as
it does, the plan should be dropped as a party, a method
of preserving diversity jurisdiction approved by the Su-
preme Court in Newman-Green, Inc. v. Alfonzo-Larrain, 490
U.S. 826, 837 (1989); see also Wild v. Subscription Plus, Inc.,
292 F.3d 526, 529 (7th Cir. 2002). In support of this sug-
4                                                 No. 01-3861

gestion the parties argue at length that the May plan is
not an indispensable party to this lawsuit, Fed. R. Civ. P. 19,
and so is indeed “droppable,” whereas if the plan were in-
dispensable the litigation could not proceed in its absence.
Fed. R. Civ. P. 19(b); 4 Moore’s Federal Practice §19.02[2][a],
p. 19-10, § 19.02[2][d], p. 19-17 (3d ed. 2002). No one is
arguing that the plan is indispensable, but even so there is
an independent judicial interest that occasionally blocks an
effort to keep a suit going by dropping a party whose
presence destroys jurisdiction. Suppose the May plan in-
tended to bring its own suit, necessarily (because of lack
of diversity) in state court. In that event, if we dropped it
from the present suit we would be creating two suits where
there had been only one. To avoid the extra burden on
the judiciary, we would be inclined in such a case to dis-
miss the present suit rather than to drop the plan as a par-
ty. See Sta-Rite Industries, Inc. v. Allstate Ins. Co., 96 F.3d
281, 287 (7th Cir. 1996). But the May plan has committed
itself in writing to abide by whatever judgment we issue,
so there is no danger of a second, identical suit.
  The Executive Protection Policy gave May $25 million
in insurance coverage for liability to May or the plan for
“any breach of the responsibilities, obligations or duties
imposed upon fiduciaries of the Sponsored Plan [the
May plan] by [ERISA], or by the common or statutory law
of the United States, or any state or other jurisdiction
anywhere in the world,” unless the breach is “willful”
or—critically—unless the loss for which liability is sought
to be fastened on the insureds “constitutes benefits due
or to become due under the terms of a Benefit Program,”
which in this case is the May plan. The policy was of course
drafted by the insurer, and ordinarily that would require
that ambiguities in it be resolved in favor of the insured.
Eagle Leasing Corp. v. Hartford Fire Ins. Co., 540 F.2d 1257,
1262 (5th Cir. 1976), however, interpreting Missouri law,
No. 01-3861                                                5

which is agreed to govern the substantive issues in this
case, held that this doctrine requiring that contracts be
construed against the drafter was inapplicable when the
insured is a sophisticated business rather than a hapless
individual. (To the same effect, see Koch Engineering Co. v.
Gibraltar Casualty Co., 878 F. Supp. 1286, 1288 (E.D. Mo.
1995), aff’d, 78 F.3d 1291 (8th Cir. 1996); and see generally
Beanstalk Group, Inc. v. AM General Corp., 283 F.3d 856, 858-
59 (7th Cir. 2002).) But in cases decided by the Missouri
courts in the years since Eagle, such as Peters v. Employers
Mutual Casualty Co., 853 S.W.2d 300, 302 (Mo. 1993), and
Robin v. Blue Cross Hospital Service, Inc., 637 S.W.2d 695,
697-98 (Mo. 1982), these courts have continued to invoke
the doctrine in cases involving commercially sophisti-
cated insureds, without referring to Eagle or engaging with
Judge Wisdom’s reasoning in that case. Is this deliberate
or inadvertent indifference? Who knows; but it is of no
consequence in this case, as we think there is no room
for reasonable doubt that the insurance company has the
better of the interpretive dispute with the insureds. The
doctrine is a tie-breaker, and there is no tie.
   Within the two-year period in which the Executive
Protection Policy (a claims-made policy, not an occur-
rence policy) was in effect, May and the May plan were
sued together in two class actions brought on behalf of
plan participants. Eventually both class actions were set-
tled for a total amount of money that, though oddly
enough the parties cannot agree on what it was, at any
rate exceeded $25 million. The insurers contend and
the district court agreed that the suits sought plan bene-
fits and so the amount for which May settled was excluded
from coverage under the policy.
  In one of the class actions the complaint was about the
interest rate that the plan had specified for converting
6                                               No. 01-3861

an annuity to a lump sum, alternatives between which the
plan allows participants to choose when they have vested
retirement benefits but leave May’s employ before reach-
ing retirement age. ERISA requires that, when such a
choice is given, the lump sum must be the actuarial equiv-
alent of the annuity. 29 U.S.C. § 1054(c)(3). The class
charged that the interest rate specified in the plan for
converting the annuity to which the members of the class
would otherwise have been entitled to the lump sum
that they chose did not produce an actuarial equivalent
and so violated ERISA. The suit sought the differ-
ence between that equivalent and the (smaller) lump
sum the class members actually received, plus interest. The
other class action complained about the plan’s failure, in
violation of a regulation issued under ERISA, 29 C.F.R.
§ 2530.203-3, to notify employees who continued work-
ing after retirement age that they would receive no retire-
ment benefits until they retired and, when they did final-
ly retire, no additional benefits to make up for what they
had lost by virtue of their delayed receipt of retire-
ment benefits that they had earned. If, properly notified,
they had continued working, this would have operated
as a lawful forfeiture. 29 C.F.R. § 2530.203-3(b)(4); Whisman
v. Robbins, 55 F.3d 1140, 1145-46 (6th Cir. 1995); Deak
v. Masters, Mates & Pilots Pension Plan, 821 F.2d 572,
575 n. 5 (11th Cir. 1987). But since they had not been noti-
fied, they were entitled to the actuarial equivalent of what
their retirement benefits would have been worth had they
retired earlier and had thus had the use of the benefits for
the intervening years.
  In both cases the legal basis of the claims against May was
not language in the plan but provisions of ERISA (or,
what amounts to the same thing, a regulation issued by
the Department of Labor under ERISA), and this means,
according to May, that the claims were not for benefits
No. 01-3861                                                      7

and so did not come within the exclusion. That is incor-
rect. Viacom Int’l, Inc. v. Federal Ins. Co., No. 95 Civ. 915, 1997
WL 154042, at *1-2, 5 (S.D.N.Y. Apr. 2, 1997); Sokolowski
v. Aetna Life & Casualty Co., 670 F. Supp. 1199, 1201-03, 1206-
07 (S.D.N.Y. 1987); cf. Morlan v. Universal Guaranty Life
Ins. Co., No. 01-3795, 2002 WL 1729527, at *3 (7th Cir. July
26, 2002). The benefits sought were plan benefits; the
question was how to compute them. The answer was giv-
en by ERISA, but that is just to say that, like many other
contracts, pension plans governed by ERISA contain
provisions implied by law. See, e.g., A.E.I. Music Net-
work, Inc. v. Business Computers, Inc., 290 F.3d 952, 955-56
(7th Cir. 2002). ERISA is not a government pension scheme,
like social security. It is not a source of pension benefits,
but a regulation of private pension plans. It is a paternalis-
tic regulation, intruding on the freedom of the contract-
ing parties, the plan and its participants, every step of
the way, so the position urged by May would if adopted
open an enormous gap in the liability insurance policy’s
exclusion of benefits claims.
  It would be passing strange for an insurance company
to insure a pension plan (and its sponsor) against an
underpayment of benefits, not only because of the enormous
and unpredictable liability to which a claim for benefits
on behalf of participants in or beneficiaries of a pension
plan of a major employer could give rise, but also be-
cause of the acute moral hazard problem that such cover-
age would create. (“Moral hazard” is the term used to
denote the incentive that insurance can give an insured to
increase the risky behavior covered by the insurance.)
Such insurance would give the plan and its sponsor an
incentive to adopt aggressive (just short of willful) inter-
pretations of ERISA designed to minimize the benefits
due, safe in the belief that if, as would be likely, the inter-
pretations were rejected by the courts, the insurance com-
8                                                 No. 01-3861

pany would pick up the tab. Heads I win, tails you lose.
May’s interpretations of ERISA that provoked the class
actions were indeed aggressive, consciously so in fact,
the record shows. The unlikelihood that a party to a con-
tract would agree to an interpretation had it been explicitly
proposed when the contract was negotiated is a reason,
not controlling in itself of course but relevant, for finding
that it did not agree. We note here the relevance to con-
tract interpretation, including insurance-contract inter-
pretation, of the amount of consideration. Hartford Fire
Ins. Co. v. St. Paul Surplus Lines Ins. Co., 280 F.3d 744, 747-
48 (7th Cir. 2002); PMC, Inc. v. Sherwin-Williams Co., 151
F.3d 610, 615 (7th Cir. 1998); Rhone-Poulenc Inc. v. Interna-
tional Ins. Co., 71 F.3d 1299, 1303 (7th Cir. 1995). The small-
er it is in relation to the performance claimed to be due
the promisee, the less plausible the claim. The premium
for the primary coverage of $25 million averaged only
$80,000 a year, a meager amount considering the risk to
which May’s interpretation of the benefits exclusion, if
accepted, would expose the insurer.
   Against these considerations May makes two argu-
ments. The first is that if the policy does not cover benefits
paid in response to a claim of a violation of ERISA, its
coverage is illusory, compare Buck v. American Family
Mutual Ins. Co., 921 S.W.2d 96, 98-99 (Mo. App. 1996);
Krombach v. Mayflower Ins. Co., 785 S.W.2d 728, 734 (Mo.
App. 1990); I/N Kote v. Hartford Steam Boiler Inspection &
Ins. Co., 115 F.3d 1312, 1320 (7th Cir. 1997), meaning that
May got nothing in exchange for its premiums. (So this
is the converse interpretive principle of that in the preced-
ing paragraph. Both are based on the assumption that
contracts generally are not completely one-sided.) Not so.
As the name “Executive Protection Policy” implies, the
policy is the equivalent of a D & O (directors’ and officers’)
policy, Northwest Airlines, Inc. v. Federal Ins. Co., 32 F.3d
No. 01-3861                                                  9

349, 351 (8th Cir. 1994); cf. American Casualty Co. v. Hotel &
Restaurant Employees & Bartenders Int’l Union Welfare Fund,
894 P.2d 371, 372-73 (Nev. 1995) (per curiam), which insures
corporations, along with the directors and officers them-
selves, against liability arising from directors’ and officers’
breaches of their fiduciary duties. See, e.g., Harbor Ins. Co.
v. Continental Bank Corp., 922 F.2d 357, 359 (7th Cir.
1990); FDIC v. American Casualty Co., 843 P.2d 1285, 1287-88,
1283-94 (Colo. 1992); Quinlan v. Liberty Bank & Trust Co.,
575 So. 2d 336, 338-39 (La. 1990). May, which, remember,
directs the investments of the plan’s assets, might during
the policy period have violated the prudent-man rule
or some other limitation on trust investments, depleting
the plan’s assets; the violation, unless willful, would be
covered by the policy. Such violations are not so uncom-
mon as to render coverage of them a negligible or illusory
benefit of the insurance policy.
   May’s second argument points us to the statutory dis-
tinction between a suit “to recover benefits due to [a plan
participant or beneficiary] under the terms of his plan,”
29 U.S.C. § 1132(a)(1)(B), and a suit “by a participant,
beneficiary, or fiduciary (A) to enjoin any act or prac-
tice which violates any provision of [ERISA] or the terms
of the plan, or (B) to obtain other appropriate equitable
relief (i) to redress such violations or (ii) to enforce any
provisions of [ERISA] or the terms of the plan.” 29 U.S.C.
§ 1132(a)(3). May claims that the class actions against it
were brought under the latter subsection. If we are cor-
rect that “terms of his plan” include terms implied by law,
it is irrelevant under which provision the class actions
were brought. What was being sought were benefits,
and characterizing an award of benefits as a form of equita-
ble relief would not bring it outside the exclusion in
the policy. But anyway such a characterization would be
improper in a case such as this in which a suit for benefits
10                                                 No. 01-3861

provides all the relief that the plaintiff is seeking. Conley
v. Pitney Bowes, 176 F.3d 1044, 1047 (8th Cir. 1999); see
also Smith v. Contini, 205 F.3d 597, 606 (3d Cir. 2000).
This conclusion is compelled by the fundamental principle
that equitable relief is available only when legal relief is
not, a condition not satisfied when a plaintiff can obtain
all he wants in a suit for benefits.
   This is not to say that money can never be recovered in
a suit in equity; quite apart from the equity clean-up
doctrine, which allows an equitable suitor to obtain inciden-
tal damages relief in his equity suit so as to spare him-
self, the defendant, and the judiciary the burden of two
suits on the same claim, Medtronic, Inc. v. Intermedics, Inc.,
725 F.2d 440, 442 (7th Cir. 1984); Mowbray v. Moseley,
Hallgarten, Estabrook & Weeden, Inc., 795 F.2d 1111,
1114 (1st Cir. 1986); Clark v. Teeven Holding Co., 625 A.2d
869, 881-82 (Del. Ch. 1992), wrongful withholding of bene-
fits due can entitle the beneficiary to impose a construc-
tive trust on interest on the withheld benefits, an equi-
table remedy that results in a money payment to the
plaintiff. Clair v. Harris Trust & Savings Bank, 190 F.3d 495,
498-99 (7th Cir. 1999); Dunnigan v. Metropolitan Life Ins. Co.,
277 F.3d 223, 229 (2d Cir. 2002). By withholding benefits,
a plan can obtain interest that would otherwise be ob-
tained by the beneficiary. That interest is not itself a benefit,
and so the beneficiary cannot bring a suit under (a)(1)(B)
to recover it. But he can sue to recover it under (a)(3),
because it is an amount by which the plan has unjustly
enriched itself, and unjust enrichment is a basis, indeed
the usual basis, for imposing a constructive trust on a sum
of money. Wsol v. Fiduciary Management Associates, Inc.,
266 F.3d 654, 656 (7th Cir. 2001); Clair v. Harris Trust &
Savings Bank, supra, 190 F.3d at 498; Fisher v. Trainor, 242
F.3d 24, 31 (1st Cir. 2001). The class action suits here,
however, were for plan benefits. They were suits at law,
No. 01-3861                                                 11

suits under (a)(1)(B). True, the class action concerning the
commutation of the annuity to a lump sum sought inter-
est as well as benefits, but interest on an amount claimed
as damages, the usual prejudgment or postjudgment
interest, is a legal, not an equitable, remedy, SEC v. Lipson,
278 F.3d 656, 663 (7th Cir. 2002), unless it is measured by the
amount wrongfully earned by the defendant, which would
make it a claim for unjust enrichment. Even so, that would
not convert the entire suit into a suit for equitable relief.
  There is another difficulty with May’s statutory argu-
ment. With (a)(1)(B) authorizing suits to recover plan
benefits and (a)(3) authorizing suits for injunctive relief,
what was the authority for the class action suits? They were
not injunctive in character, but sought benefits due, May
argues, not under the plan but under ERISA itself. The only
suits authorized by (a)(1)(B) are suits to recover “contractual
claims” for benefits. Harsch v. Eisenberg, 956 F.2d 651, 655
(7th Cir. 1992) (emphasis in original). The implication
of May’s argument is that there was no statutory basis
for the class actions, no remedy for its violations of ERISA.
That argument if accepted would create a huge hole in
the statute.
  We conclude that there was indeed no insurance cover-
age for the benefits May agreed to pay in settlement of
the class actions. The judgment for the defendants must
therefore be affirmed, but with the following modifica-
tion: the May plan is dismissed from the suit, with preju-
dice, but by agreement of the parties concurred in by this
court rather than on the merits.
                                   MODIFIED AND AFFIRMED.
12                                          No. 01-3861

A true Copy:
       Teste:

                      _____________________________
                      Clerk of the United States Court of
                        Appeals for the Seventh Circuit




                USCA-97-C-006—8-19-02
