80 F.3d 348 | 9th Cir. | 1996
OPINION
Inter-Modal Rail Employees Association and five of its members, plaintiffs below, appeal the dismissal of their complaint under the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Federal Employer’s Liability Act (“FELA”) for failure to state a claim on which relief could be granted. In a related appeal, plaintiffs challenge an award of attorneys fees based on the premature filing by plaintiffs of an earlier notice of appeal.
I.
Defendant Atchison, Topeka and Santa Fe Railway Company transferred certain cargo handling work from a wholly-owned subsidiary, defendant Santa Fe Terminal Services,
To establish the individualized damages sought in both the ERISA and FELA claims, each employee member would have to participate in the lawsuit. United Union of Roofers, Waterproofers & Allied Trades No. 40 v. Insurance Corp. of America, 919 F.2d 1398, 1400 (9th Cir.1990). The Association therefore lacks standing to bring suit on these claims on the members’ behalf. Id. However, plaintiffs requested that if the Association were found not to be a proper party to act on behalf of its members, the named individual members be certified as representatives of a class to proceed with the action on behalf of members of the Association.
II.
ERISA
As employees of Santa Fe Terminal Services, the individual plaintiffs were entitled to retirement benefits under the Railroad Retirement Act of 1974, and to pension, health and welfare benefits under collective bargaining agreements with the Teamsters Union. As a result of their discharge, plaintiffs lost their Railroad Retirement Act benefits and suffered a substantial reduction in Teamster benefits. Plaintiffs allege defendants “entered into a wrongful conspiracy” to transfer the work from Santa Fe Terminal Services to In-Terminal Services “for the express purpose of avoiding” payment of contributions to the Railroad Retirement Fund and minimizing payments for Teamster benefits.
A. Teamster Benefits
1. Teamster Pension Benefits
Plaintiffs clearly stated a claim under section 510 of ERISA, which “protects plan
2. Teamster Welfare Benefits
Plaintiffs’ claim of interference with their welfare benefits was properly dismissed. It is the law of this circuit that section 510 “does not prohibit an employer from altering the package of medical benefits that it provides its employees, but only from interfering with an employee’s use of the benefits provided.” DeVoll v. Burdick Painting, Inc., 35 F.3d 408, 411 (9th Cir.1994).
B. Railroad Retirement Act Benefits
Plaintiffs’ claim of interference with benefits due them under the Railroad Retirement Act of 1974 was also properly dismissed. Section 1003(b) of ERISA excludes from coverage any “governmental plan,” defined as including “any plan to which the Railroad Retirement Act of 1935 or 1937 applies.” See 29 U.S.C. § 1002(32). Plaintiffs argue that because Section 1002(32) does not refer to the Railroad Retirement Act of 1971, railroad retirement plans under the 1974 Act are not excluded from coverage by ERISA.
ERISA was adopted to meet a perceived need for minimum federal standards to govern private pension plans. See 29 U.S.C. § 1001(a); H.R.Rep. No. 807, 93rd Cong., 2nd Sess., reprinted in 1974 U.S.C.C.A.N. 4670, 4676-81; H.R.Rep. No. 533, 93rd Cong. 2nd Sess., reprinted in 1974 U.S.C.C.A.N. 4639, 4640-46. It is reasonable to assume plans under the 1935 and 1937 Railroad Retirement Acts were excluded from ERISA because such plans were already subject to independent federally administered statutory controls and were not plagued by the problems affecting private pension plans. This is equally true of plans adopted under the 1974 Railroad Retirement Act.
Failure to add a specific reference to the 1974 Railroad Retirement Act in section 1003 of ERISA was understandable. ERISA was enacted six weeks before the Railroad Retirement Act of 1974. See P.L. 93-406, 83 Stat. 832 (1974); P.L. 93-445, 88 Stat. 1305 (1974). Section 1002(32) of ERISA listed only the 1935 and 1937 Railroad Retirement Acts because they were the only Railroad Retirement Acts then in existence. Conversely, the 1974 Railroad Retirement Act was omitted not because of a deliberate decision that plans under the 1974 Act were not to be exempt from ERISA, but simply because the 1974 Railroad Retirement Act was not yet law.
Nor is it surprising that the need to anticipate passage of the 1974 Railroad Retirement Act and include a specific reference to that Act in ERISA would be overlooked. As Judge Dorsey pointed out in the only reported decision on the subject,
The statutoiy language does not explicitly bar a reading of section 1002(32) that excludes from ERISA retirement plans under the 1974 Railroad Retirement Act. In view of the continuing nature of the Railroad Retirement Act program, it is not unreasonable to emphasize the reference to “the Railroad Retirement Act” in section 1002(32), rather than the reference to particular revisions, especially in light of the additional reference to funding through contributions fixed by “that Act.” This reference to funding characterizes plans under all three Railroad Retirement Acts. Furthermore, in the legislative history dealing with exemption provisions in ERISA, Congress made no distinction between the various Railroad Retirement Acts, simply noting that plans under a Railroad Retirement Act were exempt from ERISA’s coverage. H.R.Rep. No. 533, 93rd Cong., 2nd Sess. reprinted in 1974 U.S.C.C.A.N. 4639, 4713; H.R. Conf. Rep. 1280, 93rd Cong., 2nd Sess, reprinted in 1974 U.S.C.C.A.N. 5038, 5043.
Although admittedly not inescapable, a construction of section 1003 that exempts all Railroad Retirement Act plans accords with the clear purpose of Congress and avoids anomalous results.
III.
FELA
The district court granted defendants’ Rule 12(b)(6) motion as to plaintiffs’ FELA claims against Santa Fe Railway Company and Santa Fe Terminal Services for damages for work-related illnesses and injuries, holding that there can be no class actions under
We know of no absolute legal bar to class certification of FELA claims.
IV.
Attorneys Fees
The district court awarded Santa Fe Railway Company and Santa Fe Terminal Services attorneys fees against plaintiffs’ attorneys under 28 U.S.C. § 1927 for filing a premature notice of appeal. Fee awards under section 1927 must be based upon a finding that the attorney acted recklessly or in bad faith. Estate of Bias v. Winkler, 792 F.2d 858, 860 (9th Cir.1986); Lone Ranger Television, Inc. v. Program Radio Corp., 740 F.2d 718, 720 (9th Cir.1984). The district court issued a tentative ruling denying fees on the ground that plaintiffs had acted mistakenly but neither recklessly nor in bad faith. The same day, at a hearing plaintiffs’ counsel was unable to attend, the court granted the award. The court gave no explanation for its change of position and made no finding of recklessness or bad faith. Remand for appropriate findings is therefore required. See Barnd v. City of Tacoma, 664 F.2d 1339, 1343 (9th Cir.1982). Cf. Kanarek v. Hatch, 827 F.2d 1389, 1390-91 (9th Cir.1987) (district court’s statements embodied implicit determination that motion had been submitted recklessly or in bad faith).
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Dismissal of the ERISA count is affirmed except as to the allegations with respect to Teamster pension benefits. Dismissal of the FELA claims is reversed and remanded for reconsideration of the propriety of class treatment. The award of attorneys fees is vacated and remanded for factual findings on the issue of recklessness or bad faith.
. Also named as a defendant is Santa Fe Pacific Corporation, alleged to have "exercised day-today management control over the affairs of its wholly-owned subsidiary, defendant [Santa Fe Railway Company].”
. 29 U.S.C. § 1140 provides:
It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary [of an ERISA plan] for exercising any right to which he is entitled ... or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan....
. 45 U.S.C. § 51 provides:
Every common carrier by railroad while engaging in commerce between any of the several States ... shall be liable in damages to any person suffering injury while he is employed by such carrier in such commerce ... for such injury ... resulting in whole or in part from the negligence of any of the officers, agents, or employees of such carrier....
. At oral argument, defendants raised for the first time a statute of limitations defense to plaintiffs' ERISA claims. We decline to consider the issue. Rothman v. Hospital Seivice of Southern California, 510 F.2d 956, 960 (9th Cir.1975) ("It is a well-established principle that in most instances an appellant may not present arguments in the Court of Appeals that it did not properly raise in the court below.”).
.We reject In-Terminal Services’s argument that section 510 does not support a cause of action against a non-employer for conspiring with an employer to interfere with ERISA-pro-tected benefits. We held in Tingey v. Pixley-Richards West, Inc., 953 F.2d 1124, 1132 n. 4 (9th Cir.1992), that section 510 provides a cause of action against an insurer who "coerces an employer to fire an employee.” We noted that section 510 imposes liability on "any person,” not just "any employer,” and rejected contentions that the statute's use of such terms as "discharge, fine, suspend, expel, discipline, [and] discriminate” suggests direct punitive action by one in a position to exercise control over the terms of employment. See id.; 29 U.S.C. § 1140. We see no basis for distinguishing a coercive insurer from a successor such as In-Terminal who conspires with an employer to interfere with ERISA-protected rights. But see Byrd v. MacPapers, Inc., 961 F.2d 157, 161 (11th Cir.1992).
. Other circuits have reached a contrary conclusion. See Seaman v. Arvida Realty Sales, 985 F.2d 543, 546 (11th Cir.1993) ("The validity of a § 510 claim does not hinge upon whether the benefits involved are vested but upon the purpose of the discharge.”); Tolle v. Carroll Touch, Inc., 977 F.2d 1129, 1134 (7th Cir.1992) ("[T]he emphasis of a Section 510 action is to prevent persons and entities from taking actions which might cut off or interfere with a participant’s ability to collect present or future benefits or which punish a participant for exercising his or her rights under an employee benefit plan.").
. Defendants also argue that a retirement plan under the Railroad Retirement Act is not an “employee benefit plan" within the meaning of § 1003(b). Because the definition of "governmental plan” in § 1003(b) explicitly includes "any plan to which the Railroad Retirement Act of 1935 or 1937” applies, § 1003(b) necessarily contemplates that Railroad Retirement Act plans are “employee benefit plan[s]” within the coverage of the exemption.
. The absence of litigation may help explain the failure of Congress to amend § 1002(32) of ERISA during the twenty years since it was adopted.
. McDonnell Douglas Corp. v. United States District Court, 523 F.2d 1083, 1085-87 (9th Cir.1975), merely held that certification was precluded under subdivisions (b)(1) and (b)(2) of Rule 23 for individual tort claimants seeking compensatory damages. As this court recognized in In re Northern Dist. of California, Dalkon Shield IUD Prods. Liab. Litig., 693 F.2d 847, 852-56 (9th Cir.1982), however, class treatment under subdivision (b)(3) may be proper for appropriately limited classes of tort plaintiffs.
