Lead Opinion
Judge CALABRESI concurs in part and dissents in part in a separate opinion.
Under collective bargaining agreements (“CBAs”) entered into by multiple employers with Teamsters Local Union No. 210 (the “Union”), the employers promised to contribute to the Teamsters Local 210 Affiliated Health and Insurance Fund (“210 Fund”), and the 210 Fund would, in turn, “unconditionally and irrevocably” transfer approximately 14 percent of the payments to another fund, the Union Mutual Medical Fund (“UMM Fund”), which provided medical benefits primarily to retired union members. Both the 210 Fund and the UMM Fund are group health plans governed by the Employee Retirement Income Security Act of 1974 (“ERISA”).
The UMM Fund’s Amended Complaint asserts three claims against the 210 Fund. The first two claims, which plead entitlement to money, an accounting and payment, do not indicate whether the one or both claims arise under state contract law, under a federal or state statute, or under some combination of these. The third claim asserts a violation of ERISA.
The district court construed all three claims as pleading causes of action under section 502 of ERISA, which provides a federal civil cause of action to an ERISA plan fiduciary to obtain equitable relief for harms resulting from violations of (i) “the terms of’ an ERISA “plan,” and (ii) ERISA. ERISA § 502(a)(3)(B), 29 U.S.C. § 1132(a)(3)(B). The district court construed the first two claims to allege that, by failing to remit the amounts owed to the UMM Fund under each CBA, the 210 Fund violated “the terms of’ an ERISA “plan,” and proceeded to identify the CBA as constituting the terms of an ERISA plan. The court construed the third claim as asserting a violation of ERISA, but not violation of an ERISA plan term: ie., that the 210 Fund’s reduced payments to the UMM Fund violated section 515 of ERISA, which requires an employer, or an entity acting in the interest of an employer, to fulfill its CBA plan contribution obligations (the “Section 515 claim”).
The district court dismissed the Section 515 claim on the ground that the 210 Fund was neither an “employer” nor an entity acting “in the interest of an employer.” Fishbein v. Miranda,
The Section 515 claim was properly dismissed because, as the district court explained, the 210 Fund is not an employer, and the 210 Fund’s payments to the UMM Fund were not made in the interest of an employer. See Miranda I,
However, the district court erred in granting summary judgment in favor of the UMM Fund on its first two claims, because the terms of each CBA were not terms of an ERISA plan. The terms of an ERISA plan, and the benefits it agrees to
Although the UMM Fund has failed to state a claim under ERISA, the first two claims in the Amended Complaint can be construed as state law breach-of-contract claims. We therefore (i) affirm the dismissal of the Section 515 claim; and (ii) vacate the grant of summary judgment in favor of the UMM Fund on the first two claims, and remand for the district court to decide in the first instance whether to exercise supplemental jurisdiction over them.
BACKGROUND
Plaintiff UMM Fund is an employee health plan established in 1978 to obtain and provide medical and insurance benefits to its participants and beneficiaries, primarily retired Union members and their spouses. The purposes and obligations of the UMM Fund are enumerated in a September 6, 1978 Trust Indenture (“UMM Fund Trust Indenture”) entered into between the predecessor to the Union and a corporation that represents the interests of the retirees. The UMM Fund is an employee welfare benefit plan governed by ERISA. See 29 U.S.C. § 1002. The named plaintiffs are trustees of the UMM Fund.
Defendant 210 Fund is likewise an employee welfare benefit plan under ERISA. It was established to provide health insurance for Union members and their spouses, and is funded by contributions from employers who are party to CBAs with the Union. In April 2006, the 210 Fund assumed all the liabilities (and 80 percent of the assets) of another ERISA plan, the Allied Welfare Fund (“Allied Fund”), and began to receive contributions pursuant to a number of CBAs under which employers had previously been contributing to the Allied Fund.
The UMM Fund receives the bulk of its funding from employer contributions pursuant to CBAs with the Union. But employers pay nothing to the UMM Fund directly. The CBAs (in nearly identical language) direct the employers to contribute funds to the Allied Fund — now the 210 Fund — and then, in turn, direct the 210 Fund to pass a portion of the contribution along to the UMM Fund:
It is hereby agreed ... the Employer shall pay to the Allied Welfare Fund the sum of Fifty-Nine ($59.00) Dollars, each and every week for each employee who is employed within the bargaining unit[.]
From and out of the contributions made to the Allied Welfare Fund as specified above, Eight Dollars per employee per week shall be unconditionally and irrevocably allocated and paid to the Union Mutual Medical Fund ... for the benefit of retired employees of the Employer and retired employees of all other employers similarly situated and their families.
In January 2006, the Allied Fund and the Union began persuading employers to amend their CBAs and reduce the amount remitted to UMM Fund. The motive for the Union’s initiative is in dispute: The UMM Fund alleges that it was retaliation for a failed merger between the UMM Fund and the Allied Fund, whereas the 210 Fund cites the Union’s unhappiness
In the first quarter of 2006, the UMM Fund received between $59,000 and $74,000 pursuant to the CBAs. After the CBA amendments became effective in April, the UMM Fund’s receipts dwindled to a few hundred dollars per month.
At the same time the Allied Fund and the Union were persuading employers to amend their CBAs, the trustees of the Allied Fund were in settlement negotiations with Duane Reade, an employer that had allegedly failed to make required CBA payments years earlier. The parties settled their dispute in March 2006 for $825,000. The 210 Fund concedes that these funds were received by the Allied Fund in satisfaction of Duane Reade’s obligation to pay contributions to the Allied Fund under its CBA, and that the UMM Fund got nothing from the settlement, but denies that the 210 Fund received all the settlement proceeds when it became successor in interest to the Allied Fund one month later. Miranda II,
The UMM Fund filed suit in November 2006, and filed an Amended Complaint in June 2008 asserting three claims against the 210 Fund.
The second claim alleged that payments to the UMM Fund “dropped precipitously since the end of March 2006,” and sought an accounting of all monies received by the Allied Fund and the 210 Fund “for the period January 1, 2005, to the date of judgment.” Id. at ¶¶ 48-50. A prospective order was sought, requiring the Local 210 Trustees “to remit to the [UMM Fund] Trustees, within five (5) days of receipt ..., that portion properly payable to the [UMM Fund] out of all monies received by way of contributions by employers pursuant to [CBAs].” Id. at ¶ 50.
The UMM Fund’s third claim, the Section 515 claim, asserted that “failure by the [Allied Fund] and the [210 Fund] to remit contributions constitutes a violation of section 515 of ERISA, 29 U.S.C. § 1145.” Id. at ¶ 53. The UMM Fund asked the court to “[o]rder[] the [Allied Fund] and the [210 Fund] to remit to the [UMM Fund] all employer contributions received by them which were properly payable to the [UMM Fund] pursuant to the terms of the collective bargaining agreement.” Id. The Section 515 claim also asks for liquidated damages available for a section 515 violation, see 29 U.S.C. 1132(g), plus interest and attorney’s fees.
Absent from the first two claims in the Amended Complaint is mention of their legal basis. The pleading is unclear as to whether the duty of the 210 Fund to remit funds and provide an accounting was premised on state contract law, a federal
The 210 Fund (jointly with the other defendants) filed a motion to dismiss all three claims for lack of jurisdiction and failure to state a claim under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). On November 16, 2009, the district court dismissed the Section 515 claim with prejudice, holding that the Allied Fund and the 210 Fund were not “employers” and were not acting in the interest of any employers. The court held that, within the meaning of ERISA, an entity can act “in the interest of’ an employer only if it is empowered to negotiate benefits on behalf of the employer. Miranda I,
The district court, however, preserved the first two claims in the Amended Complaint. The court began by considering the legal basis for the claims, omitting that the complaint itself failed to offer one:
I. Claims for “Appropriate Equitable Relief’ Under ERISA § 502(a)(3)(B)
Under ERISA § 502(a)(3)(B), 29 U.S.C. § 1132(a)(3)(B), a “participant, beneficiary, or fiduciary” of an employee benefit plan may bring a civil suit “to obtain other appropriate equitable relief (i) to
redress ... violations or (ii) to enforce ... the terms of the plan.” Plaintiffs make claims for equitable relief under this section, demanding an accounting of all monies received from Duane Reade pursuant to the Duane Reade Settlement and a judgment ordering Defendants [Allied Fund] and Local 210 Fund to remit to Plaintiff [UMM Fund] the same percentage of the Duane Reade Settlement monies as would be owed to Plaintiff [UMM Fund] under the Duane Reade CBA. Plaintiff further demands an accounting of all monies received by Defendants [Allied Fund] and Local 210 Fund since January 1, 2005 pursuant to all CBAs in which Plaintiff is named and a judgment ordering Defendants to relinquish all monies owing to Plaintiff [UMM Fund] under these CBAs.
Id. at 271. The district court thus interpreted the claims as alleging that the failure to pay the UMM Fund under the terms of the CBA was a “violation” of “the terms of the plan” and was therefore actionable under section 502(a)(3)(B) of ERISA. But the opinion did not consider how the terms of a CBA, which is not an UMM Fund plan document, could constitute terms of an ERISA plan. The district court went on to deny the Defendants’ motion to dismiss, concluding that the UMM Fund had standing to sue as a third-party beneficiary of the CBA, and that the CBA could be “enforced against” the 210 Fund, a non-signatory, because the 210 Fund “accepted the written agreement and ... acted upon it.” Id. at 272.
After discovery, the UMM Fund moved for summary judgment. In opposition, the 210 Fund argued that the district court lacked subject matter jurisdiction over the two claims, because: Section 502(a) permits an ERISA plan fiduciary to sue for equitable relief only if (i) a party has violated an ERISA provision or (ii) a party
The district court held that it had jurisdiction on the following analysis. Under ERISA, a “plan” includes “any ... plan, fund, or program ... established or ... maintained for the purpose of providing for its participants or their beneficiaries ... medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits.” 29 U.S.C. § 1002(1). Because each CBA earmarks the funds contributed to the Allied Fund (and the UMM Fund) for “insurance, welfare, Major Medical insurance and similar benefits” of union members, the district court concluded that the CBA itself “established” an ERISA plan, and therefore its terms constituted terms of “a plan.” Miranda II,
Turning to the merits of the two remaining claims, the district court granted summary judgment in favor of the UMM Fund, and directed the 210 Fund to provide the UMM Fund with an accounting of (1) all monies received from the Duane Reade settlement; and (2) all monies received pursuant to the CBAs from January 1, 2005, to the date of the order. Id. at 375. After the accounting was complete, the district court entered judgment in favor of the UMM Fund in the amount of $2,460,777.33, plus pre- and post-judgment interest. Silverman v. Miranda,
Both parties appeal. The 210 Fund appeals the award to the UMM Fund. The UMM Fund cross-appeals, challenging (i) the dismissal of its Section 515 claim, (ii) the method used to calculate interest on the award, and (iii) the denial of attorney’s fees.
DISCUSSION
We review the district court’s dismissal of the Section 515 claim pursuant to Rule 12(b)(6) de novo. See, e.g., Legnani v. Alitalia Linee Aeree Italiane, S.P.A
I
Subject matter jurisdiction over ERISA claims is conferred by section 502(f), which allows the federal district court to grant relief “provided for in subsection (a) of this section.” ERISA § 502(f), 29 U.S.C. § 1132(f). The referenced subsection enumerates the following ERISA causes of action:
(a) A civil action may be brought ...
(3) by a participant, beneficiary, or fiduciary
(A) to enjoin any act or practice which violates any provision of this subchapter 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 this subchapter or the terms of the plan.
ERISA § 502(a), 29 U.S.C. § 1132(a). The provision specifies the parties who
The trustees of the UMM Fund assert standing as fiduciaries. Their third claim sought relief for an ERISA violation; specifically, a failure to comply with section 515 of ERISA, which provides that
[ejvery employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.
ERISA § 515, 29 U.S.C. § 1145. An ERISA “employer” is defined as “any person acting directly as an employer, or indirectly in the interest of an employer in relation to an employee benefit plan.” 29 U.S.C. § 1002(5); see also Greenblatt v. Delta Plumbing & Heating Corp.,
A person who acts in an employer’s interest is one who controls an employer (e.g., a parent corporation) or explicitly assumes the employer’s obligations. Thus, in Cement & Concrete Workers District Council Welfare Fund v. Lotto, a corporate president who personally assumed the corporation’s section 515.
Citing Lotto, the UMM Fund argues that the 210 Fund actually assumed the employer’s contribution obligation under the terms of each CBA. The argument does not withstand scrutiny of the CBA wording in Lotto. There, the president of a family-owned business signed the CBA
in a dual capacity both on behalf of himself and on behalf of the Employer and represents by his signature his authority to bind himself, the Employer or Firm, and the principals and members thereof. The person signing on behalf of the Employer also agrees to be personally bound by and to assume all the obligations of the Employer provided for in this Agreement.
Cement & Concrete Workers Dist. Council Welfare Fund, Pension Fund, Legal Servs. Fund and Annuity Fund v. Lotto, No. 89 cv 3784,
II
The other two claims against the 210 Fund were understood by the district court to be included within the category of civil ERISA claims that permit a plan fiduciary to seek “appropriate equitable relief ... to enforce any provisions of ... the terms of the plan.” 29 U.S.C. § 1132(a) (emphasis added). The UMM Fund argued that by failing to comply with a term of the CBA, the 210 Fund violated the terms of an ERISA plan.
ERISA defines an “employee benefit welfare plan” as
any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise,
(A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or
(B) any benefit described in section 186(c) of this title (other than pensions on retirement or death, and insurance to provide such pensions).
ERISA § 8(1), 29 U.S.C. § 1002(1). The parties agree that the UMM Fund is an employee benefit welfare plan under this definition.
ERISA itself does not make plain where one looks to find the “terms” of an ERISA plan, other than to mandate that “[ejvery employee benefit plan shall be established and maintained pursuant to a written instrument.” ERISA § 402(a), 29 U.S.C. § 1102(a)(1); see Smith v. Dunham-Bush, Inc.,
If a plan’s trust agreement explicitly provides that employers must fulfill their CBA contribution obligations (or comply with other plan terms), such a provision can subject a delinquent employer to suit under section 502(a) for violating a plan term. However, the Supreme Court has only recognized such a cause of action when the employer violated a plan term that the CBA expressly bound the employer to perform. Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp., Inc., 4:12 U.S. 559,
Here, however, no term of the UMM Fund Trust Indenture obligates employers to make prompt payments under their CBAs. See UMM Fund Trust Indenture, Silverman v. Miranda, No. 06-cv-13222 (S.D.N.Y. June 5, 2010), ECF #125-2. And in any event, the CBAs do not require that the employers bind themselves to the UMM Fund Trust Indenture. Although the CBAs provide that the Allied Fund and the UMM Fund must handle the contributions received in accordance with the terms of their respective trust indentures, that is not an obligation that the employers perform (or could perform).
The district court opinion granting summary judgment in favor of the UMM Fund held that the CBA “established” an ERISA plan:
Here, pursuant to the terms of each CBA, nearly all of which contain identical operative language, “an employer” (i.e., each contributing employer) and “an employee organization” (i.e., the unions) “established” a plan to provide “in*288 surance, welfare, Major Medical insurance and similar benefits for” retired employees of the unions.... Although not every CBA qualifies as a “plan” under ERISA § 502(a)(3)(B), in view of the plain language of the CBAs at issue here and the [UMM Fund] indenture, Plaintiffs’ action to enforce the CBAs is an action to enforce “the terms of [a] plan.” 29 U.S.C. § 1132(a)(3)(B).
Miranda II,
Ill
The first two claims in the Amended Complaint, which the district court decided in favor of the UMM Fund, identified no legal basis for relief. Though we conclude that these allegations fail to state a claim under ERISA-because the payment terms of the CBAs were not UMM Fund plan terms-these claims do meet the pleading requirements for state law breach-of-contract claims. And because a breach of contract claim was pleaded against a defendant who was later voluntarily dismissed, the Amended Complaint recites supplemental jurisdiction as a proper basis for subject matter jurisdiction. Am. Compl. ¶ 11.
Therefore, rather than reverse and direct dismissal of all the UMM Fund’s claims, we vacate the award to the UMM Fund and remand for the district court to consider whether to exercise supplemental jurisdiction over the first two claims, construed as alleging state law breach of contract. The district court had discretion to retain supplemental jurisdiction over such claims after it (properly) dismissed the Section 515 claim. See Klein & Co. Futures, Inc. v. Bd. of Trade of City of New York,
Federal courts will normally decline to retain jurisdiction in such circumstances. See id. However, in this case, it may be that discretion will be exercised in favor of retaining jurisdiction, given that most of the relevant contract law issues have already been briefed by the parties and decided in a trio of opinions.
We take no position on whether those issues were correctly decided; and we have no occasion to consider the calculation of the award, or the denial of attorney’s fees.
For the foregoing reasons, we vacate the judgment in favor of the UMM Fund, and remand to the district court for further proceedings consistent with this opinion.
Notes
. The Allied Fund was initially a named defendant in this case but was voluntarily dismissed. The administrator and manager of the 210 Fund, Crossroads Healthcare Management, LLC ("Crossroads”), was also initially named as a defendant but was voluntarily dismissed.
. The Amended Complaint also asserted three causes of action against Crossroads, which were all voluntarily dismissed and are not at issue in this appeal.
. ERISA establishes a general requirement that plan assets be held in trust, 29 U.S.C. § 1103(a), (b). The trust agreement is sometimes signed by the union and its employers, see, e.g., Chao v. Merino,
. Treating the remaining claims as contract claims rather than ERISA claims is no mere formality. The 210 Fund may enjoy additional defenses to state law claims for breach of contract, including ERISA preemption. We express no view on the merits of such a defense.
Concurrence in Part
concurring in part and dissenting in part:
I concur with Part I of the majority’s opinion, in which we affirm dismissal of UMMF’s ERISA § 515 claim. I write separately to dissent from Part II of the majority opinion, which concludes that the district court lacked subject matter jurisdiction over UMMF’s other claims because the CBAs in question did not constitute an ERISA “plan” under § 502(a)(3)(B).
I dissent for the simple reason that the district court expressly found, as a factual matter, that the language and circumstances of these particular CBAs made them an ERISA “plan” under § 502, and this factual finding was not appealed. The district court wrote: “Although not every CBA qualifies as a ‘plan’ under ERISA § 502(a)(3)(B), in view of the plain language of the CBAs at issue here and the UMMF indenture, Plaintiffs’ action to enforce the CBAs is an action to enforce ‘the terms of [a] plan.’” Miranda II,
Were I to decide this issue in the first instance, I might well agree with the majority that these CBAs do not meet § 502(a)’s definition of an ERISA “plan.” But I am not prepared to say that there are no circumstances in which a CBA could ever be an ERISA “plan,” and therefore am not prepared to vacate the district court’s decision that, in this instance, it was.
I join the majority in remanding this case to the district court, which, I hope, will decide the remaining claims under state law. I note that if the district court were to find a state law contract breach for the same reasons that it found a violation of ERISA, then the district court would likely reach the same result as before. That is because the district court denied attorney’s fees, which, had they been granted, would have been the principal difference between a victory by UMMF on state law grounds and a victory under ERISA.
For these reasons, I concur in Part I of the majority’s opinion, respectfully dissent from Part II, and join the majority in remanding the case to the district court for reconsideration of UMMF’s remaining claims.