516 U.S. 349 (1996), 94-1453, Peacock v. Thomas

Docket Nº:Case No. 94-1453
Citation:516 U.S. 349, 116 S.Ct. 862, 133 L.Ed.2d 817, 64 U.S.L.W. 3561, 64 U.S.L.W. 4095
Party Name:PEACOCK v. THOMAS
Case Date:February 21, 1996
Court:United States Supreme Court
 
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516 U.S. 349 (1996)

116 S.Ct. 862, 133 L.Ed.2d 817, 64 U.S.L.W. 3561, 64 U.S.L.W. 4095

PEACOCK

v.

THOMAS

Case No. 94-1453

United States Supreme Court

February 21, 1996

Argued November 6, 1995

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Syllabus

Respondent Thomas filed an Employee Retirement Income Security Act of 1974 (ERISA) class action against his former employer, Tru-Tech, Inc., and petitioner Peacock, a Tru-Tech officer and shareholder, alleging that they had breached their fiduciary duties to the class in administering Tru-Tech's pension benefits plan, and seeking benefits due under the plan. The District Court entered a money judgment against Tru-Tech upon finding that it had breached its fiduciary duties, but ruled that Peacock was not a fiduciary. Thomas did not execute the judgment while the case was on appeal and, during that time, Peacock settled many of Tru-Tech's accounts with favored creditors, including himself. After the Court of Appeals affirmed the judgment and attempts to collect it from Tru-Tech proved unsuccessful, Thomas sued Peacock in federal court, asserting, inter alia, a claim for "Piercing the Corporate Veil Under ERISA and Applicable Federal Law." The District Court ultimately agreed to pierce the corporate veil and entered judgment against Peacock in the amount of the judgment against Tru-Tech. The Court of Appeals affirmed, holding that the District Court properly exercised ancillary jurisdiction over Thomas' suit.

Held:

The District Court lacked jurisdiction over Thomas' subsequent suit. Pp. 352-360.

(a) Neither ERISA's jurisdictional provision, 29 U.S.C. § 1132(e)(1), nor 28 U.S.C. § 1331 supplied the District Court with subject-matter jurisdiction over this suit. The Court rejects Thomas' suggestion that the suit arose under 29 U.S.C. § 1132(a)(3), which authorizes civil actions for "appropriate equitable relief . . . to redress [any] violations . . . of [ERISA] or the terms of [an ERISA] plan." Because Thomas' complaint in this lawsuit alleged no such violations, he failed to allege a claim for equitable relief. Even if ERISA permits a plaintiff to pierce the corporate veil, such piercing is not itself an independent ERISA cause of action and cannot independently support federal jurisdiction. The District Court erred in finding that he had properly stated such a claim, since ERISA does not provide for imposing liability for an extant ERISA judgment against a third party. Pp. 352-354.

(b) Federal courts do not possess ancillary jurisdiction over new actions in which a federal judgment creditor seeks to impose liability for

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a money judgment on a person not otherwise liable for the judgment. Although ancillary jurisdiction may be exercised (1) to permit disposition by a single court of factually interdependent claims, and (2) to enable a court to function successfully by effectuating its decrees, Thomas has not carried his burden of demonstrating that this suit falls within either category. First, because a federal court sitting in a subsequent lawsuit involving claims with no independent basis for jurisdiction lacks the threshold jurisdictional power that exists when ancillary claims are asserted in the same proceeding as the claims conferring federal jurisdiction, claims alleged to be factually interdependent with and, hence, ancillary to claims brought in the earlier suit will not support federal jurisdiction over the subsequent suit. In any event, there is insufficient factual or logical interdependence between the claims raised in Thomas' first and second suits. Second, cases in which this Court has approved the exercise of ancillary enforcement jurisdiction over attachment, garnishment, and other supplementary proceedings involving third parties are inapposite. This case is governed by H. C. Cook Co. v. Beecher, 217 U.S. 497, in which the Court refused to authorize the exercise of ancillary jurisdiction in a subsequent lawsuit to impose an obligation to pay an existing federal judgment on a person not already liable for that judgment. As long as the Federal Rules of Civil Procedure sufficiently protect a judgment creditor's ability to execute on a judgment, ancillary jurisdiction should not be exercised over proceedings, such as the present, that are new actions based on different theories of relief than the prior decree. Pp. 354-359.

39 F.3d 493, reversed.

Thomas, J., delivered the opinion of the Court, in which Rehnquist, C. J., and O' Connor, Scalia, Kennedy, Souter, Ginsburg, and Breyer, JJ., joined. Stevens, J., filed a dissenting opinion, post, p. 360.

David L. Freeman argued the cause for petitioner. With him on the briefs were J. Theodore Gentry, Carter G. Phillips, and Richard D. Bernstein.

J. Kendall Few argued the cause for respondent. With him on the brief were John C. Few, Margaret A. Chamberlain, and James R. Gilreath.

Richard P. Bress argued the cause for the United States as Amicus Curiae in support of respondent. With him on the brief were Solicitor General Days, Deputy Solicitor

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General Kneedler, Thomas S. Williamson, Jr., Allen H. Feldman, Nathaniel I. Spiller, and Edward D. Sieger. [*]

Justice Thomas delivered the opinion of the Court.

This case presents the issue whether federal courts possess ancillary jurisdiction over new actions in which a federal judgment creditor seeks to impose liability for a money judgment on a person not otherwise liable for the judgment. We hold that they do not.

I

Respondent Jack L. Thomas is a former employee of Tru-Tech, Inc. In 1987, Thomas filed an ERISA class action in federal court against Tru-Tech and petitioner D. Grant Peacock, an officer and shareholder of Tru-Tech, for benefits due under the corporation's pension benefits plan. Thomas alleged primarily that Tru-Tech and Peacock breached their fiduciary duties to the class in administering the plan. The District Court found that Tru-Tech had breached its fiduciary duties, but ruled that Peacock was not a fiduciary. On November 28, 1988, the District Court entered judgment in the amount of $187,628.93 against Tru-Tech only. Thomas v. Tru-Tech, Inc., No. 87-2243-3 (D. S. C.). On April 3, 1990, the Court of Appeals for the Fourth Circuit affirmed. Judgt. order reported at 900 F.2d 256. Thomas did not execute

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the judgment while the case was on appeal and, during that time, Peacock settled many of Tru-Tech's accounts with favored creditors, including himself.

After the Court of Appeals affirmed the judgment, Thomas unsuccessfully attempted to collect the judgment from Tru-Tech. Thomas then sued Peacock in federal court, claiming that Peacock had entered into a civil conspiracy to siphon assets from Tru-Tech to prevent satisfaction of the ERISA judgment.[1] Thomas also claimed that Peacock fraudulently conveyed Tru-Tech's assets in violation of South Carolina and Pennsylvania law. Thomas later amended his complaint to assert a claim for "Piercing the Corporate Veil Under ERISA and Applicable Federal Law." App. 49. The District Court ultimately agreed to pierce the corporate veil and entered judgment against Peacock in the amount of $187,628.93—the precise amount of the judgment against Tru-Tech—plus interest and fees, notwithstanding the fact that Peacock's alleged fraudulent transfers totaled no more than $80,000. The Court of Appeals affirmed, holding that the District Court properly exercised ancillary jurisdiction over Thomas' suit. 39 F.3d 493 (CA4 1994). We granted certiorari to determine whether the District Court had subject-matter jurisdiction and to resolve a conflict among the Courts of Appeals.[2] 514 U.S. 1126 (1995). We now reverse.

II

Thomas relies on the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 832, as amended, 29

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U.S.C. § 1001 et seq., as the source of federal jurisdiction for this suit. The District Court did not expressly rule on subject-matter jurisdiction, but found that Thomas had properly stated a claim under ERISA for piercing the corporate veil. We disagree. We are not aware of, and Thomas does not point to, any provision of ERISA that provides for imposing liability for an extant ERISA judgment against a third party. See Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 833 (1988) ("ERISA does not provide an enforcement mechanism for collecting judgments . . . ").

We reject Thomas' suggestion, not made in the District Court, that this subsequent suit arose under § 502(a)(3) of ERISA, which authorizes civil actions for "appropriate equitable relief" to redress violations of ERISA or the terms of an ERISA plan. 29 U.S.C. § 1132(a)(3). Thomas' complaint in this lawsuit alleged no violation of ERISA or of the plan. The wrongdoing alleged in the complaint occurred in 1989 and 1990, some four to five years after Tru-Tech's ERISA plan was terminated, and Thomas did not—indeed, could not—allege that Peacock was a fiduciary to the terminated plan.[3] Thomas further concedes that Peacock's alleged wrongdoing "did not occur with respect to the administration or operation of the plan." Brief for Respondent 11. Under the circumstances, we think Thomas failed to allege a claim under § 502(a)(3) for equitable relief. Section 502(a)(3) "does not, after all, authorize 'appropriate equitable relief' at large, but only 'appropriate equitable relief' for the purpose of 'redress[ing any] violations or . . . enforc[ing] any provisions' of ERISA or an ERISA plan." Mertens v. Hewitt Associates, 508 U.S. 248, 253 (1993) (emphasis and modifications in original).

Moreover, Thomas' veil-piercing claim does not state a cause of action under ERISA and cannot independently support

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federal jurisdiction. Even if ERISA permits a plaintiff to pierce the corporate veil to reach a defendant not otherwise subject to suit under ERISA, Thomas could invoke...

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