520 F.2d 1276 (2nd Cir. 1975), 987, Nolan v. Meyer

Docket Nº:987, Docket 75-7100.
Citation:520 F.2d 1276
Party Name:William H. NOLAN, on behalf of himself and all others similarly situated, Appellant, v. Richard B. MEYER et al., Appellees.
Case Date:July 29, 1975
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 1276

520 F.2d 1276 (2nd Cir. 1975)

William H. NOLAN, on behalf of himself and all others

similarly situated, Appellant,


Richard B. MEYER et al., Appellees.

No. 987, Docket 75-7100.

United States Court of Appeals, Second Circuit

July 29, 1975

Argued June 18, 1975.

Page 1277

Milton S. Zeiberg, New York City, for appellant.

Brown, Wood, Fuller, Caldwell & Ivey, New York City, for appellees; Thomas J. Mullaney and Roger J. Hawke, New York City, of counsel.

Before GIBBONS, [*] GURFEIN and MESKILL, Circuit Judges.

GIBBONS, Circuit Judge:

Plaintiff Nolan appeals from an order which granted a Rule 12(b)(1) motion, Fed.R.Civ.P., dismissing his class action complaint against the defendants as administrators and trustees of the Merrill Lynch, Pierce, Fenner & Smith, Incorporated, Profit Sharing Plan for lack of subject matter jurisdiction. We affirm.

Nolan, a former employee of Merrill Lynch, challenges the provision in the noncontributory profit-sharing plan which provides for forfeiture of benefits by a participant who engages in competitive employment. 1 The complaint alleges jurisdiction founded on diversity of citizenship and requisite amount in controversy. In support of their motion to dismiss, the defendants filed the affidavit of one of the plan's administrators which established that both he and the plaintiff were citizens of New Jersey. Nolan concedes that there is no diversity jurisdiction. The complaint also asserts as a basis for federal question jurisdiction, the claim that the forfeiture provision violates Section 1 of the Sherman Act, 15 U.S.C. § 1. Nolan concedes that the Sherman Act cause of action which he pleaded is barred by the statute of limitations. 15 U.S.C. § 15b. The complaint alleges a pendent state common law cause of action which may not be time barred, but Nolan concedes that

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there must be a not insubstantial federal question claim before the district court may proceed with the adjudication of the pendent state claim. He now relies solely upon the assertion of a federal common law cause of action to recover the forfeited benefits which, he says, is implied from the existence of the two federal statutes dealing with employee benefit plans.

If the complaint sets forth such a federal common law cause of action, then there is jurisdiction under 28 U.S.C. § 1331(a). Illinois v. City of Milwaukee, 406 U.S. 91, 92 S.Ct. 1385, 31 L.Ed.2d 712 (1972); Ivy Broadcasting Co., Inc. v. American Tel. & Tel. Co., 391 F.2d 486 (2d Cir. 1968). And where the complaint alleges the existence of such a federal common law cause of action, that allegation may suffice to avoid the granting of a Rule 12(b)(1) motion and may require that the court consider the claim on the merits pursuant to Rule 12(b)(6). Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939 (1946). Even a somewhat marginal federal question claim may suffice to support pendent jurisdiction. Hagans v. Lavine, 415 U.S. 528, 94 S.Ct. 1372, 39 L.Ed.2d 577 (1974). But there must be some minimum degree of substantiality or non-frivolity to the federal claim. If the claim is obviously without merit or wholly frivolous the federal court may dismiss for want of jurisdiction. Hagans v. Lavine, supra, at 537-38, 94 S.Ct. 1372. A strong indicator of the insubstantiality of the federal claim is the resolution of the claimed issue in a prior Supreme Court decision. Levering & Garrigues Co. v. Morrin, 289 U.S. 103, 53 S.Ct. 549, 77 L.Ed. 1062 (1933). With these rules in mind, then, we look to the four corners of plaintiff's complaint to determine whether it alleges a federal claim sufficient to confer jurisdiction. Phillips Petroleum v. Texaco, Inc., 415 U.S. 125, 127-28, 94 S.Ct. 1002, 39 L.Ed.2d 209 (1974).

The two statutes on which Nolan relies are Subchapter D of the Internal Revenue Code of 1954, 26 U.S.C. § 401 et seq., and the Welfare and Pension Disclosure Act of 1958, 29 U.S.C. § 301 et seq. 2 His argument is that Congress, by these two enactments, expressed such an overriding concern with the subject matter of profit sharing plans, that it would be proper to imply from them a federal common...

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