Adamson v. Armco, Inc., 93-3860

• Citation: 44 F.3d 650
• Decision Date: 24 March 1995
• Docket Number: No. 93-3860,93-3860
• Parties: 18 Employee Benefits Cas. 2861, Pens. Plan Guide P 23907M Harold E. ADAMSON, et al., Plaintiffs-Appellants, v. ARMCO, INC., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 650

44 F.3d 650

18 Employee Benefits Cas. 2861, Pens. Plan Guide P 23907M

Harold E. ADAMSON, et al., Plaintiffs-Appellants, v. ARMCO, INC., Defendant-Appellee.

No. 93-3860.

United States Court of Appeals Eighth Circuit.

Submitted June 13, 1994.

Decided Jan. 5, 1995.

Rehearing and Suggestion for Rehearing En Banc Denied March

24, 1995.

Mark Wentworth Bay, Minneapolis, MN, argued (John G. Engberg, on the brief), for appellants.

David A. Ranheim, Minneapolis, MN, argued (David A. Ranheim, John D. Levine and Paul R. Dieseth, on the brief), for appellee.

Before BOWMAN, Circuit Judge, WEIS, ^* Senior Circuit Judge, and LOKEN, Circuit Judge.

LOKEN, Circuit Judge.

For many years, Reserve Mining Company ("Reserve") mined and processed taconite iron ore deposits in northern Minnesota and shipped the processed taconite to steel mills operated by Reserve's parent companies, Republic Steel Corporation and appellee Armco, Inc. Republic and Armco operated Reserve as a "cost company," paying Reserve's operating expenses as incurred and causing Reserve to have no net earnings. In mid-1986, beset by environmental and economic adversities, Reserve ceased operations and filed a petition for relief under Chapter 11 of the Bankruptcy Code.

Reserve's bankruptcy terminated its unfunded welfare benefit plans. Appellants are 487 former salaried employees and retirees of Reserve who had participated in those plans. They commenced this action in 1992 against Armco, asserting thirty-seven claims under the Employee Retirement Income Security Act of 1974, 29 U.S.C. Secs. 1001 et seq. ("ERISA"). The district court ¹ dismissed all these claims. This appeal concerns its dismissal of claims for benefits due under the terminated plans as time-barred, and its dismissal of claims for breach of fiduciary duty because appellants as former plan participants lack standing to assert those claims under Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). We conclude that the district court correctly construed ERISA and the relevant case law and therefore affirm.

I. Claims for Benefits Due

Appellants allege that Armco is an "employer" liable for benefits due under the terms of the unfunded, terminated plans. ERISA expressly provides that "[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." Sec. 502(a)(1)(B), 29 U.S.C. Sec. 1132(a)(1)(B). The plans stopped paying benefits in 1986. These claims were first asserted in 1992. The district court held the claims time-barred under Minnesota's two-year statute of limitations governing claims for the recovery of wages and other compensation. Minn.Stat. Sec. 541.07(5). We agree.

ERISA contains no statute of limitations for actions to recover plan benefits. Therefore, as a matter of federal law we must look to Minnesota law for the most analogous state statute of limitations. At least in this circuit, it is settled that a claim for ERISA benefits is characterized as a contract action for statute of limitations purposes. In a State such as Minnesota that has more than one statute of limitations for contract actions, the federal court must decide which statute governs claims that are "most analogous" to the ERISA benefit claims at issue. See Johnson v. State Mut. Life Assur. Co. of America, 942 F.2d 1260, 1261-63 (8th Cir.1991) (en banc).

Appellants argue that Minnesota's six-year statute of limitations for contracts not falling within a more specific statute should govern. See Minn.Stat. Sec. 541.05(1). The district court instead applied Sec. 541.07(5), the two-year statute of limitations for wage claims, which provides in relevant part:

[T]he following actions shall be commenced within two years:

* * * * * *

(5) For the recovery of wages or overtime or damages, fees or penalties accruing under any federal or state law respecting the payment of wages or overtime or damages, fees or penalties.... (The term "wages" means all remuneration for services or employment, including commissions and bonuses and the cash value of all remuneration in any medium other than cash, where the relationship of master and servant exists and the term "damages" means single, double, or treble damages, accorded by any statutory cause of action whatsoever and whether or not the relationship of master and servant exists).

Minnesota courts have applied this statute broadly: "all damages arising out of the employment relationship are subject to the two-year statute of limitations set forth in Minn.Stat. Sec. 541.07(5)." Stowman v. Carlson Cos., 430 N.W.2d 490, 493 (Minn.App.1988), applying Portlance v. Golden Valley State Bank, 405 N.W.2d 240, 242 (Minn.1987). Because ERISA preempts all state law claims, Minnesota courts have not had occasion to determine whether claims for employee benefits under an ERISA plan are wage claims governed by Sec. 571.07(5). See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 52-57, 107 S.Ct. 1549, 1555-58, 95 L.Ed.2d 39 (1987). But the issue is hardly in doubt. For example, in a pre-ERISA case, Sec. 541.07(5) was applied to terminated employees' claims for unpaid vacation benefits. Kohout v. Shakopee Foundry Co., 162 N.W.2d 237 (Minn.1968). And in Kletschka v. Abbott-Northwestern Hosp., Inc., 417 N.W.2d 752, 755 (Minn.App.1988), the court applied Sec. 541.07(5) to a claim for salary increases and "adjustment of all fringe benefits." The district court's decision is consistent with these cases, with the plain meaning of Sec. 541.07(5), and with the principle of Minnesota law that the more specific of two conflicting statutes of limitations should govern. See Fagerlie v. City of Willmar, 435 N.W.2d 641, 645 (Minn.App.1989); Minn.Stat. Sec. 645.26.

For these reasons, we agree with the district court that Sec. 541.07(5) is the most analogous Minnesota statute of limitations for appellants' claims under Sec. 502(a)(1)(B). ² Appellants argue that Robbins v. Iowa Road Builders Co., 828 F.2d 1348 (8th Cir.1987), cert. denied, 487 U.S. 1234, 108 S.Ct. 2899, 101 L.Ed.2d 933 (1988), is to the contrary because we selected the general contract rather than the wage collection statute of limitations. Robbins involved an ERISA trustee's suit to collect delinquent plan contributions. A trustee's suit for unfunded contributions is not analogous to an employee's claim for benefits that are part of his or her total compensation. As we noted in Robbins, a trustee may lack relevant contribution information, but "[i]n general, a dissatisfied employee will realize when the employer has failed to afford him or her a particular employment benefit and can then promptly initiate an action against the employer." 828 F.2d at 1354.

Appellants next argue that we should reject the most analogous Minnesota statute of limitations because two years is too short a period for Sec. 502(a)(1)(B) claims. Appellants cite no case in which a closely analogous state statute of limitations has been rejected simply because it was too short. "In borrowing a state period of limitation for application to a federal cause of action, a federal court is relying on the State's wisdom in setting a limit, and exceptions thereto, on a closely analogous claim." Johnson v. Railway Express Agency, Inc., 421 U.S. 454, 464, 95 S.Ct. 1716, 1722, 44 L.Ed.2d 295 (1975). Thus, in the absence of a conflict with federal policy, "suits to recover ERISA benefits should be governed by the norm, the most analogous state statute of limitations." Johnson, 942 F.2d at 1262. Here, the Minnesota statute expressly applies to state as well as federal claims, so there is no basis to infer that it "discriminates or expresses hostility against a federal cause of action." Wyoming Laborers Health & Welfare Plan v. Morgen & Oswood Constr. Co., 850 F.2d 613, 619 (10th Cir.1988).

Appellants also have no support for their assertion that a two-year limitations period does not afford a realistic opportunity to assert ERISA benefit claims. A far shorter limitations period governs many employee claims under the federal labor laws. See DelCostello v. International Bhd. of Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983) (adopting six-month federal limitations period for employee suits against employers and unions for relief under collective bargaining agreements). Of course, different policy considerations underlie the limitations issue under various federal labor laws. But the Court's analysis in DelCostello--noting the need to balance substantive federal policy interests and the policies of finality and repose underlying statutes of limitations--persuades us that a two-year statute of limitations for Sec. 502(a)(1)(B) benefit claims is not fundamentally unfair or at odds with federal policy. That is the end of the inquiry--"there is no reason to reject the characterization that state law would impose unless that characterization is unreasonable or otherwise inconsistent with national ... policy." United Auto Workers v. Hoosier Cardinal Corp., 383 U.S. 696, 706, 86 S.Ct. 1107, 1113, 16 L.Ed.2d 192 (1966).

Finally, appellants argue that their claims are timely under the two-year statute of limitations because Armco's refusal to pay benefits is a continuing breach of the plans. We disagree. These causes of action accrued when the plans were terminated and ceased paying benefits in 1986. See Mason v. Aetna Life Ins. Co., 901 F.2d 662 (8th Cir.1990). Appellants did not file suit within two years of that time. Their Sec. 502(a)(1)(B) claims are time-barred.

II. Breach of Fiduciary Duty Claims

Appellants allege that Armco breached its fiduciary duties under Secs. 404(a) and 405 of ERISA, 29 U.S.C. Secs. 1104(a), 1105, by (1) failing to pay benefits according to the terms of the plans; (2) failing to fund or cause Reserve to fund the plans; (3) failing to inform participants that the plans were unfunded; (4) implying that health insurance premiums...