Groden v. N&D Transportation Co., Inc.
2017 U.S. App. LEXIS 14184
| 1st Cir. | 2017Background
- The New England Teamsters and Trucking Industry Pension Fund obtained a federal default judgment (≈ $1.2M) against D&N Transportation for unpaid ERISA withdrawal liability.
- Eighteen months later, the Fund sued the Duhamels (former D&N owners), N&D Transportation (a company owned by the Duhamels' children), and JED Realty, alleging alter-ego liability and fraudulent transfers to collect the prior judgment.
- The Fund alleged significant operational overlap between D&N and N&D (shared offices/phone, bank links, employees, insurance), and that the Duhamels transferred D&N assets to JED Realty and themselves.
- Defendants moved to dismiss for lack of federal subject-matter jurisdiction (invoking Peacock) and for failure to state a claim; the district court dismissed the alter-ego claims as factually inadequate and declined supplemental jurisdiction over state claims.
- The Fund moved under Rules 59(e)/60(b) to amend/relieve the judgment, proposing an amended complaint alleging N&D was D&N's alter ego at the time of the withdrawal liability; the district court denied relief as futile under Peacock/Futura.
- The First Circuit vacated the denial of post-judgment relief and remanded, holding the district court erred in concluding that an alter-ego claim alleging the alter ego was the "same employer" at the relevant time could not present an ERISA-based federal claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a follow-on suit against an alleged alter ego (N&D) of an ERISA judgment debtor can present federal-question jurisdiction | Fund: If N&D was D&N's alter ego at the time of the withdrawal, N&D is the same ERISA "employer" and the claim arises under ERISA | Defs: Peacock bars federal jurisdiction for follow-on veil-piercing suits; no ERISA provision authorizes imposing an extant ERISA judgment on a third party | Court: If plaintiff pleads that the defendant was effectively the same ERISA employer when the violation occurred, the claim can present a federal question and survive Peacock |
| Whether the alter-ego claim against JED Realty (alleged alter ego of N&D) invokes federal jurisdiction | Fund: JED Realty is liable as N&D's alter ego for the ERISA judgment | Defs: That claim is a veil-piercing follow-on suit lacking independent federal question | Court: Claim against JED Realty, as pleaded, does not allege JED was itself an ERISA employer at the relevant time and is governed by Peacock (no independent federal jurisdiction) |
| Whether the district court abused discretion in denying Rule 59(e)/60(b) relief to permit amendment to add the temporal alter-ego allegation | Fund: Denial was legal error; amendment would cure pleading defect and establish federal jurisdiction | Defs: Amendment would be futile because Peacock/Futura foreclose follow-on federal suits | Court: District court erred as to N&D claim; it should have allowed reconsideration/amendment as federal jurisdiction could exist if the alter-ego allegation ties the defendant to the ERISA violation |
| Whether the district court properly declined supplemental jurisdiction over state-law fraudulent-transfer/reach-and-apply claims | Fund: If federal jurisdiction exists over N&D, supplemental jurisdiction supports state claims | Defs: No independent federal jurisdiction; state claims belong in state court | Court: Remanded — supplemental-jurisdiction question depends on whether the N&D claim proceeds; district court should reconsider in first instance |
Key Cases Cited
- Peacock v. Thomas, 516 U.S. 349 (U.S. 1996) (follow-on veil-piercing suits generally lack federal-question or ancillary enforcement jurisdiction absent an independent ERISA violation)
- Futura Dev. of P.R., Inc. v. Estado Libre Asociado de P.R., 144 F.3d 7 (1st Cir. 1998) (applying Peacock to reject federal jurisdiction for a follow-on alter-ego claim)
- Massachusetts Carpenters Cent. Collection Agency v. Belmont Concrete Corp., 139 F.3d 304 (1st Cir. 1998) (alter-ego doctrine applies in ERISA context; multi-factor test for alter-ego)
- Ellis v. All Steel Constr., Inc., 389 F.3d 1031 (10th Cir. 2004) (follow-on ERISA suit has federal jurisdiction only if alter-ego defendant is directly alleged to have violated ERISA)
- Board of Trs., Sheet Metal Workers' Nat'l Pension Fund v. Elite Erectors, Inc., 212 F.3d 1031 (7th Cir. 2000) (distinguishing veil-piercing and alter-ego theories; when entities are "the same," the claim arises under federal law)
- Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744 (U.S. 2014) (appellate review may correct district court legal errors despite abuse-of-discretion standard)