U.S. STEEL MINING CO., INC., a corporation; United States Steel and Carnegie Pension Fund, as Administrator of the Employee Welfare Benefit Plan Maintained by U.S. Steel Mining, Inc., Plaintiffs-Appellants, v. DISTRICT 17, UNITED MINE WORKERS OF AMERICA; O.J. Tolbert; Gene E. Dunn; Emil Charles; David R. Basham; Darrell Coleman; Theo Tucker; Gary Thomas; Riсhard Carrow; Eugene R. Goad; Paul Bias; Eddie Parker; Kenneth Ellison, on behalf of themselves and others similarly situated; A. Andrew MacQueen, in his official capacity as Judge of the Thirteenth Judicial Circuit, Kanawha County, West Virginia, Defendants-Appellees.
No. 89-2921
United States Court of Appeals, Fourth Circuit
Argued Nov. 2, 1989. Decided March 2, 1990.
897 F.2d 149 | 58 USLW 2534 | 12 Employee Benefits Ca 1107
Webster J. Arceneaux, III, Charleston, W.Va., for defendants-appellees; James M. Haviland, McIntyre, Haviland & Jordan, Charles F. Donnelly, Charleston, W.Va., on brief.
Before ERVIN, Chief Judge, BUTZNER, Senior Circuit Judge, and WARD, Senior United States District Judge for the Middle District of North Carolina, sitting by designation.
BUTZNER, Senior Circuit Judge:
United States Steel Mining Co. (the company) and the United States Steel and Carnegie Pension Fund (the fund) appeal from the district court‘s denial of their motion to recover restitution for monies paid pursuant to a state court injunction and attorney‘s fees. The district court found that the company had no standing and the court had no jurisdiction to grant the requested relief. We affirm on a different ground. We find that section 502(a)(3) of the Employee Retirement Inсome Security Act of 1974 (ERISA),
I
In February 1983, the United Mine Workers (the union) and individual union members filed an action in the Circuit Court of Kanawha County, West Virginia, against United States Steel Mining Co., U.S. Steel Corp., and ARMCO, Inc. The union sought a declaratory judgment that a West Virginia statute,
The state court granted a preliminary injunction on March 1, 1983, requiring the defendant corporations to comply with the state statute. The court set the injunction bond at $5,000.
In June of 1983, the company moved to dismiss the action on the ground that the Employee Retirement Income Security Act of 1974 (ERISA),
In June 1986, a federal district court held in Fixx v. United Mine Workers of America, 645 F.Supp. 352 (S.D.W.Va.1986), that
In December 1986, the company and the fund filed suit in federal court against the union, individual union members on behalf of themselves and others similarly situated, and the state trial judge. They sought a declaration that Fixx is determinative of the preemption issue raised in the state court, an injunction, and appropriate equitable relief.
The district court issued a preliminary injunction on January 15, 1987. On May 19, 1987, the court entered a permanent injunction granting the company and the fund the declarative and injunctive relief they sought.
A year later, the company and the fund filed a motion in district court as part of the same action to recover damages and attorney‘s fees bеcause of the state court injunction. The court denied the motion on the grounds that the company lacked standing as an employer to bring a complaint under
The company and the fund first argue that they have standing to bring the action under
Section 502(a)(3) of ERISA,
(a) Persons empowered to bring a civil action
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.
Under the definition section of ERISA, “a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, ... or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan.”
As the plan administrator, the fund is clearly a fiduciary.
III
The company and the fund also contend that the district court had subject matter jurisdiction. In its order granting the preliminary injunction, the district court explicitly found that it had jurisdiction.
Title
(e) Jurisdiction
(1) Except for actions under subsection (a)(1)(B) of this section, the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by the Secretary or by a participant, beneficiary, or fiduciary. Statе courts of competent jurisdiction and district courts of the United States shall have concurrent jurisdiction of actions under subsection (a)(1)(B) of this section.
Following the analysis of Part II above, the evidence supports a finding that the fund was a fiduciary and the company assumed the role of a fiduciary. The action was brought under subsection (a)(3) of subchapter I of ERISA,
We now consider whether ERISA provides a remedy for recovering monies paid by a benefit plan рursuant to a state injunction issued in obedience of a state statute that was subsequently declared to be preempted by ERISA.
The motion seeks damages. Section 502(a)(3)(B), however, provides only equitable relief. The limitation is not inadvertеnt. In Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 146, 105 S.Ct. 3085, 3092, 87 L.Ed.2d 96 (1985), the Court points out that a proposal to include “legal” relief was deleted in the bill passed by the House and adopted by the Conference Committee. The company and the fund explain that in reality they want equitable relief in the form of restitution for recovery of the cost of benefits that unjustly enriched their employees. We accept this explanation as an apt description of the relief the motion seeks. Cf. Arkadelphia Milling Co. v. St. Louis S.W. Ry. Co., 249 U.S. 134, 145-46, 39 S.Ct. 237, 241-42, 63 L.Ed. 517 (1919); Middlewest Motor Freight Bureau v. United States, 433 F.2d 212, 225-29 (8th Cir.1970).
Section 502(a)(3) of ERISA authorizes a civil аction to obtain “appropriate equitable relief.” The issue is whether the award of restitution and attorney‘s fees constitutes “appropriate equitable relief” under this section.
According to the legislative history, the drafters оf ERISA authorized courts to develop federal common law to grant “appropriate equitable relief” under section 502(a)(3). See 120 Cong.Rec. 29942 (1974) (statement of Senator Javits) (“It is also intended that a body of federal substantive law will be developed by the courts to deal with issues involving rights and obligations under private welfare and pension plans.“); see also Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 156 (1985) (Brennan, J., concurring).
Russell is helpful in determining standards for deciding if a particular remedy is authorized by ERISA. There, the Supreme Court held that section 409(a) of ERISA,
The Court explicitly did not interpret section 502(a)(3), which is at issue here. 473 U.S. at 139 n. 5. Russell is helpful nevertheless because it underscores the necessity to read the rеmedial language of ERISA in the broader context of the statute and not in isolation. 473 U.S. at 139-44. Though courts have the power to create federal common law under the broad language of 502(a)(3), we are constrained to fashion only those remedies that are appropriate and necessary to effectuate the purposes of ERISA.
Russell drew a distinction between contractual and extracontractual damages. See 473 U.S. at 144. It held that a beneficiary can bring an action under section 409(a) against a fiduciary for contractual but not for extracontractual damages. See 473 U.S. at 145-48. The distinction can be applied to this case. The damages the company and the fund allege are extrаcontractual. The harm about which they complain arose from the injunction issued by the West Virginia judge. The judge did not construe the plan. He simply enforced a provision of the West Virginia Workers’ Compensation Act. He did not require the company or the fund to expend the assets of the plan to comply with the Act. Nor did he prescribe that compliance should be financed out of the company‘s operating funds. How compliance was to be funded was left to the discretion of the company. It was the West Virginia Workers’ Compensation Act, not any provision of the plan, that was the source of the extracontractual damage that is at the core of this case. ERISA contains no provision for recovery of this type of extracontractual damages, and we are not persuaded that we should engraft a remedy on the statute under the guise of federal common law.
Federal common law implementing ERISA must develop incrementally. We hold only that under the facts of this case, it would be inappropriate for a federal court to determine the issues of restitution and attorney‘s fees claimed because of an improvidently issued state court injunction that was based on the state Workers’ Compensation Act and not on any provision of the pension plan. Section 502(a)(3) of ERISA provides no remedy for the company and the fund for these extracontractual damages.
The judgment of the district court dismissing this action without prejudice is affirmed.