The appellant, Gloria Sladek, filed the instant action in district court under the Employee Retirement Income Security Act (“ERISA” or “the Act”), 29 U.S.C. §§ 1001-1461, to set aside her husband’s pension election as voidable due to incompetency. Mr. Sladek, a qualified participant in an employee benefit plan governed by the Act, elected to forego the survivor annuity option offered by the defendant-plan, the Bell System Management Pension Plan (“the Plan”), in order to receive full pension benefits during his lifetime. The appellant brought this suit as a potential beneficiary pursuant to 29 U.S.C. § 1132(a)(1)(B), alleging that Mr. Sladek suffered from Alzheimer’s Disease at the time he declined the survivor annuity and was incompetent to make a valid election as a result of his condition. Inasmuch as the Plan presumes that the survivor annuity is selected unless expressly declined, the appellant argues that she is entitled to an annuity by reason of the voidable election. The district court dismissed the appellant’s second amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) on the ground that the appellant was not a beneficiary under the Act and therefore lacked standing to challenge the validity of the election. We reverse and remand to the district court, with instructions to order Mr. Sladek joined to the action pursuant to Fed.R.Civ.P. 19.
Henry Robert Sladek retired from the Western Electric Company on May 1, 1981 as a full service participant in the Bell System Management Pension Plan. As an employee benefit plan controlled by ERISA, the Plan grants participants a survivor annuity in the absence of an express election to receive full benefits. See 29 U.S.C. § 1055(a). If no election is made, the participant’s monthly benefits are reduced by ten percent (10%) and the annuity is granted to a designated beneficiary. If the participant fails to name a beneficiary, the designation is made according to the terms of the Plan. Under the Plan, the surviving spouse is typically granted an annuity.
Prior to his retirement, Mr. Sladek elected to receive full benefits in lieu of the survivor annuity. Approximately four years later, the appellant challenged the validity of the election. After having exhausted her remedies under the internal system of review established by the Plan, the appellant filed this action in district court. The defendant moved to dismiss the second amended complaint on the grounds that: (i) the plaintiff-appellant was not a beneficiary under § 1002(8) and therefore lacked standing to prosecute the action; and (ii) Mr. Sladek was an indispensable party whose joinder was necessary under Fed.R.Civ.P. 19.
The district court ruled that the appellant was not a beneficiary as defined by § 1002(8)
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and dismissed the second amended complaint with prejudice pursuant to Rule 12(b)(1).
Sladek v. Bell Sys. Management Pension Plan,
No. 87 C 6468, slip op. at 4-5,
II.
Two issues have been raised throughout the course of this litigation: (i) whether the appellant has standing to challenge the validity of the election made by her husband; and (ii) whether Mr. Sladek is an indispensable party under Rule 19. We will address each of these issues in turn.
The question of whether the spouse of a plan participant, who would normally have standing but for the disputed election by the participant, continues to have standing to challenge an election is one of first impression in this Circuit. In fact, neither the briefs of the parties nor our own independent research have been able to identify a case that is precisely on point. Given the pristine nature of our field of inquiry, we are mindful of the need for deliberate and exacting analysis, careful not to overlook subtle, though often critical, distinctions.
As the district court recognized, it is axiomatic that a “court must accept all well-pleaded factual allegations of [sic] a
In support of its conclusion, the district court cites our decision in
Republic Steel Corp. v. Pennsylvania Eng’g Corp.,
Our decisions have consistently held that the allegations in the complaint must be taken as true when ruling upon a motion to dismiss.
See Morgan v. Bank of Waukegan,
In
Ed Miniat, Inc. v. Globe Life Ins. Group, Inc.,
Given the specificity of the allegations in the second amended complaint, the district court’s characterization of the allegations as “conclusory” is misplaced. Like the Ed Miniat Court, we believe that the appellant “may well be able to prove” that Mr. Sladek was incompetent at the time he made his election and that the appellant has standing as a beneficiary by reason of the voidable election. 2 Id.
Such an approach is consistent with both the language and the legislative history of the Act. This Court has only recently pointed out that “[t]he purposes of ERISA are twofold, to protect interstate commerce and the participants and beneficiaries of such plans.”
Smart v. State Farm Ins. Co.,
It is ... to be the policy of this Act to protect ... the interests of participants in employee benefit plans and their beneficiaries ... by providing ... ready access to the Federal courts.
29 U.S.C. § 1001(b).
We believe that the district court narrowed the standing provisions in ERISA unnecessarily. Although ERISA is a “comprehensive and reticulated statute,”
Nachman Corp. v. Pension Benefit Guar. Corp.,
In
Vilas v. Lyons,
The Third Circuit has taken an even more expansive reading of the standing provisions in ERISA, citing the language of the Ninth Circuit to the effect that “a party has standing to sue ... if his alleged injury ‘fall[s] arguably within the zone of interests protected by the statute allegedly violated,’ so long as ‘the statute itself does not preclude the suit.’”
Northeast Dept. ILG-WU Health & Welfare Fund v. Teamsters Local Union No. 229 Welfare Fund,
In searching for the appropriate method of analysis, we look to the Ninth Circuit decision in
Allen v. Western Conference of Teamsters Pension Trust Fund,
What is crucial for our purposes is the fact that, on its face, the complaint in Allen appeared to be a routine claim for benefits by the surviving spouse in her capacity as beneficiary. Id. at 649. The Ninth Circuit was willing to pierce the surface of the complaint, however, and examine the validity of the underlying agreement (the marriage) which gave rise to the plaintiff’s status as a beneficiary. The Allen Court held, of course, that the agreement, i.e., the marriage, was void and that the plaintiff lacked standing. Id. at 650. In the instant case, the district court terminated its analysis upon a superficial reading of the complaint. The plaintiff was not “designated ... as a beneficiary” by her husband and therefore lacked standing. Sladek, slip op. at 3. If the district court had followed the approach taken in Allen, it would have examined the validity of the underlying agreement (in this case, the election by Mr. Sladek) which deprived the appellant of standing. If the agreement, i.e., the election, is voidable, the appellant might well have standing as a beneficiary under the Act.
We believe
Allen
to be on the side of the angels in this instance. It seems strange to argue that the reference to “beneficiaries” in § 1002(8) is limited to
designated
beneficiaries — apparently even if the very designation denying one status as a beneficiary is voidable. First, we would simply note that Congress is no less able to
The very meaning of declaring an act or instrument voidable is to say that the act or instrument “may be avoided, or declared void,” although “not absolutely void, or void in itself.” Black’s Law Dictionary 1411 (5th ed. 1979). Insofar as no evidence has been adduced to prove that Mr. Sladek was incompetent at the time he made his election, no one — not the defendant, the district court, nor the members of this Court — can form a judgment as to whether he was legally competent when he elected to forego the survivor annuity option upon his retirement. The appellant’s right to enter federal court stands or falls upon her assertion that her husband was incompetent at the time he made his election and the election is voidable as a result. To deny her the opportunity to even appear in court is patently unjust and contrary to our decision in
Ed Miniat,
The cases cited by the district court, while appearing to call for dismissal, are, in fact, easily distinguished on the facts. In
Lerra v. Monsanto Co.,
In
Francis v. United Technologies Corp.,
The case most heavily relied upon by both the defendant and the district court is that of
Freeman v. Jacques Orthopaedic & Joint Implant Surgery Medical Group, Inc.,
We are sensitive to the concerns of the district courts, which are our concerns as well, that the ERISA standing provisions not be interpreted too broadly. We are equally concerned, however, that standing not be restricted unnecessarily solely to make the workload of the federal courts more manageable. The Supreme Court has recently observed that “[t]o say a ‘participant’ is any person who claims to be one begs the question of who is a ‘participant’ and renders the definition set forth in § 1002(7) superfluous.”
Firestone Tire & Rubber Co. v. Bruch,
— U.S. at -,
We are, at bottom, compelled to conclude that the district court assumed the very matter at issue,
i.e.,
the validity of the election by Mr. Sladek. Under the guise of neutrality, the rule adopted by the district court in fact betrays an implicit finding that the election was valid. As one district court has noted, “[fjirst, they [the designated beneficiaries] contend that she [the plaintiff-spouse] is not a beneficiary and therefore lacks standing to bring an action under ... ERISA. This reasoning begs the question: If [the plaintiff] is a beneficiary, as she asserts, then she does have standing.”
Art Builders Profit Sharing Plan v. Bosely,
Inasmuch as we may affirm on any grounds that are supported by the record,
see, e.g., Bennett v. Tucker,
(a) Persons to be Joined if Feasible. A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in the person’s absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject matter of the action and is so situated that the disposition of the action in the person’s absence may (i) as a practical matter impair or impede the person’s ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple or otherwise inconsistent obligations by reason of the claimed interest. If the person has not been joined, the court shall order that the person be made a party.
Fed.R.Civ.P. 19(a).
Mr. Sladek is clearly subject to service of process and, since subject matter jurisdiction is predicated upon a federal statute, 29 U.S.C. § 1132(e)(1),
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his joinder will not deprive the district court of jurisdiction over the action. Furthermore, the appellant concedes that a judgment in her favor would require a 10% reduction in Mr. Sla-dek’s current and future pension benefits, as well as restitutionary payments in an amount equal to 10% of all previously-received pension monies. Given the significant impact a judgment in favor of the appellant would have on Mr. Sladek, it is clear that he has “an interest relating to the subject matter of the action and is so situated that the disposition of the action in [his] absence may ... impair or impede [his] ability to protect that interest.” Fed.R.Civ.P. 19(a)(2)(i). When confronted with a similar situation in
Francis,
the district court concluded that “[t]he husband was not joined as a defendant in this action, but, it is his plan and part of the intent behind ERISA was to insure that his assets would remain intact. He therefore has an interest in this action.”
Francis,
Our determination that Mr. Sladek is an indispensable party does not complete our inquiry, however, for we must further decide whether the failure to join Mr. Sladek requires that the appellant’s second amended complaint be dismissed with prejudice. Although we are convinced that a sound litigation strategy would have included the joining of Mr. Sladek to the action, there are a number of factors militating against an affirmance of the district court decision. First, the district court expressly refrained from ruling on the Rule 12(b)(7) motion.
Sladek,
slip op. at 2 n. 1 (“the court will not address the merits of the Rule 12(b)(7) motion”). Respect for the district courts suggests that, in the ordinary course, we should permit them to decide an issue before we enter the fray. Second, and more importantly, the district court never ordered the appellant to join Mr. Sladek as required by Fed.R.Civ.P. 19(a). Rule 19(a) declares: “If the [indispensable] person has not been so joined, the court
shall
order the person to be made a party.” Fed.R.Civ.P. 19(a) (emphasis added). The dismissal of a complaint for failure to join an indispensable party is entirely appropriate under Rule 12(b)(7), but dismissal
with prejudice
should ordinarily result only after the court has ordered the party joined and the plaintiff has failed to do so. For a plaintiff to be denied access to our courts simply because he arrived at a different conclusion than the court, even this Court, is an unfair burden that might well result in unnecessary parties being named simply as a precaution. We need not elaborate here on the undesirable effects of such a practice. Had the district court based its ruling on Rule 19 rather than Rule 12(b)(1), the appellant would have had the opportunity to join Mr. Sladek to the action. The appellant ought not to have less of an opportunity merely
Mr. Schaffner: [0]ne of the primary things we wanted to do, your Honor, is bring in the husband, since he obviously has an interest in the proceedings. I think he should at least have notice of what is going on.
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Mr. Kaplan: Your Honor, the defendant’s position is, obviously, that their positions are adverse. She is seeking to reduce his current pension in order to augment her annuity upon his death.
The Court: No, they are not adverse.
******
The Court: There are no adverse interests in this case. None.
It is certainly possible that the appellant interpreted the statements of the district court to mean that Mr. Sladek need not be named as a party to the action. In the absence of a clear signal from the district court, the appellant should not be barred from federal court simply for deciding against such a move. We are unwilling to punish the appellant for not anticipating what this Court might decide. Accordingly, we hereby Reverse and Remand the case to the district court for further proceedings not inconsistent with this decision.
Notes
. 29 U.S.C. § 1002(8) defines a beneficiary as “a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder."
. By ruling that the appellant has standing to prosecute the instant action, this Court is not suggesting that Mr. Sladek was incompetent at the time he made his election or that the appellant is entitled to a survivor annuity under the Plan. Indeed, this Court is expressly refraining from offering its judgment on the merits of this action.
. Section 1132(a) provides, in pertinent part:
A civil action may be brought
(1) by a participant or beneficiary
(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.
29 U.S.C. § 1132(a)(1)(B) (emphasis added).
. One need only consider less extreme situations, in which the plaintiff claims that undue influence, fraud, or, as in the instant case, simple incompetency made the election void or voidable, to understand that the principle embraced by the district court is defective. It is by way of the more outrageous scenario, however, that the implications of such a principle are fully understood.
. Section 1132(e) grants the district courts of the United States jurisdiction over civil actions brought pursuant to § 1132(a).