Townes Telecommunications, Inc. v. National Telecommunications Cooperative Association
438 F.Supp.3d 646
E.D. Va.2020Background
- Seven small telecommunications employers participating in NTCA's multiple-employer pension Plan sought to withdraw; NTCA told them withdrawal would trigger about $10 million in withdrawal liability.
- The Plan permits voluntary withdrawal via (i) annuity purchase or (ii) spin-off, and computes withdrawal liability based on a withdrawing employer's "Allocable Assets," which depend on a PBGC plan-termination valuation of liabilities.
- Plaintiffs sued in Virginia state court seeking a declaratory judgment under Virginia common law that the Plan's imposition and calculation of withdrawal liability violate ERISA; defendants removed to federal court asserting federal-question jurisdiction.
- Defendants moved to dismiss: (i) both counts under Fed. R. Civ. P. 12(b)(6) as preempted by ERISA, and (ii) Count II under 12(b)(1) for lack of Article III standing.
- The district court held plaintiffs' state-law claims are preempted by ERISA, rejected plaintiffs' request to imply a federal common-law cause of action, found standing for Count II unnecessary to resolve because preemption disposes of the case, and dismissed the Complaint with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs' state-law declaratory claims are preempted by ERISA | Plaintiffs framed their suit as a Virginia common-law contract claim asserting the Plan's terms violate ERISA, so it is a state-law matter | The claims "relate to" an ERISA plan and thus are preempted; plaintiffs cannot recast ERISA challenges as state-law claims to avoid preemption | Preempted — ERISA §1144(a) bars these state-law claims; dismissal warranted |
| Whether a federal common-law cause of action exists to challenge withdrawal liability for employers in multiple-employer plans | Plaintiffs urge courts to imply a federal common-law remedy because ERISA is silent regarding multiple-employer plans' ability to impose withdrawal liability | Defendants argue ERISA's civil-enforcement framework excludes employers in multiple-employer plans, so implying a new federal cause would conflict with ERISA and override plan terms | No federal common-law cause recognized or implied; creating one would conflict with ERISA enforcement scheme and plan terms |
| Whether ERISA silence about multiple-employer plans justifies recognizing a federal remedy | Plaintiffs point to other statutes authorizing withdrawal liability in other contexts and argue Congress's silence is significant | Defendants say MPPAA and PBGC statutes do not mandate implying a federal cause; silence does not authorize judicially-created remedies that rewrite ERISA | Court: silence is not a basis to create a federal remedy; would impermissibly amend ERISA |
| Article III standing for Count II (challenge to calculation methodology) | Plaintiffs contend a future calculation using an unlawfully low interest rate will imminently injure them | Defendants contested standing for that claim | Court found injury "certainly impending" and redressable but did not need to resolve standing because preemption disposes of the case |
Key Cases Cited
- Gunn v. Minton, 568 U.S. 251 (federal-question "arising under" test)
- Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (state law "relates to" ERISA if connection or reference)
- Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (ERISA preemption is broad)
- Aetna Health Inc. v. Davila, 542 U.S. 200 (ERISA's civil enforcement remedies are exclusive; duplicative state-law claims preempted)
- Wilmington Shipping Co. v. New England Life Ins. Co., 496 F.3d 326 (4th Cir.) (cannot avoid ERISA preemption by recasting claims)
- Makar v. Health Care Corp. of Mid-Atlantic, 872 F.2d 80 (4th Cir.) (dismiss preempted state-law claims against benefit plans)
- Girl Scouts of Middle Tenn., Inc. v. Girl Scouts of the U.S.A., 770 F.3d 414 (6th Cir.) (declined to create federal common-law remedy for employer in multiple-employer plan)
- Provident Life & Acc. Ins. Co. v. Waller, 906 F.2d 985 (4th Cir.) (limited recognition of federal common-law unjust enrichment where it furthers contract/plan)
- Singer v. Black & Decker Corp., 964 F.2d 1449 (4th Cir.) (federal common law inappropriate when it would conflict with ERISA or override plan terms)