I.A.M. Nat. Pension Fund, Ben. Plan A v. Wakefield Industries, Inc., Div. of Capehart Corp.

• Citation: 699 F.2d 1254
• Decision Date: 11 February 1983
• Docket Number: No. 81-1883,81-1883
• Parties: , 4 Employee Benefits Ca 1201 I.A.M. NATIONAL PENSION FUND, BENEFIT PLAN A, Eugene Glover and Lester F. Gettel, Jr., Appellants, v. WAKEFIELD INDUSTRIES, INCORPORATED, DIVISION OF CAPEHART CORPORATION, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 1254

699 F.2d 1254

226 U.S.App.D.C. 102, 4 Employee Benefits Ca 1201

I.A.M. NATIONAL PENSION FUND, BENEFIT PLAN A, Eugene Glover and Lester F. Gettel, Jr., Appellants, v. WAKEFIELD INDUSTRIES, INCORPORATED, DIVISION OF CAPEHART

CORPORATION, Appellee.

No. 81-1883.

United States Court of Appeals, District of Columbia Circuit.

Argued May 27, 1982.

Decided Feb. 11, 1983.

Appeal from the United States District Court for the District of Columbia (D.C. Civil Action No. 80-1626).

Robert T. Osgood, Washington, D.C., for appellants.

Joseph H. Sharlitt, Washington, D.C., with whom Harvey A. Levin, Washington, D.C., was on the brief, for appellee, Margolis.

Before WILKEY, Circuit Judge, and FAIRCHILD ^* and ROBB, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge FAIRCHILD.

Separate opinion concurring filed by Circuit Judge WILKEY.

Separate opinion concurring in part and dissenting in part filed by Senior Circuit Judge ROBB.

FAIRCHILD, Senior Circuit Judge.

Plaintiffs appeal the vacating of a civil contempt order issued against the president of defendant corporation for failure to comply with an injunction directed to defendant and its officers. The appeal raises the questions whether there was sufficient service of the summons on defendant and whether there was sufficient service of the civil contempt motion on the president.

Defendant Wakefield Industries, Incorporated is a Connecticut corporation. It is a wholly owned subsidiary of Norwich Electronics, Inc., which in turn is a wholly owned subsidiary of Capehart Corporation. Defendant was named in the summons and complaint as "Wakefield Industries, Incorporated, Division of Capehart Corporation." The president of defendant is Marvin Margolis; he is the sole appellee appearing here.

Plaintiffs are trustees of I.A.M. National Pension Fund, Benefit Plan A, an employee pension benefit plan administered in the District of Columbia under the provisions of Section 302 of the Labor-Management Relations Act, 29 U.S.C. Sec. 186 and, Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Secs. 1001-1461.

On July 1, 1980, plaintiffs brought suit against Wakefield Industries, Incorporated to compel compliance with defendant's obligations under a Trust Agreement, executed in 1977 pursuant to a collective bargaining agreement with an I.A.M. Local Lodge. Among other things, the Trust Agreement obligated defendant to file monthly reports and make monthly contributions to the Pension Fund on behalf of employees at its Norwich, Connecticut manufacturing plant. The complaint was filed in the United States District Court for the District of Columbia. Because the plan is administered in the District of Columbia, action in that district was authorized by 29 U.S.C. Sec. 1132(e)(2). The summons and complaint were served by a deputy marshal on Margolis at the office in New York of Capehart Corporation, of which he is also president.

Wakefield Industries did not answer the complaint and a default judgment was entered against it on August 20, 1980. The judgment directed Wakefield and its "officers, agents, successors, and assigns" to prepare reports of all debts owing to the Pension Fund and enjoined them from refusing to make reports and contributions to the Pension Fund as they came due. A copy of the judgment was mailed to Wakefield Industries at Margolis' New York office, and six months later was personally served on Margolis at the same address. Wakefield Industries still did not respond, and on February 10, 1981 the Pension Fund moved the district court to hold both Wakefield Industries and Margolis in civil contempt.

The contempt motion was mailed to Margolis on February 10, 1982 at the same New York address at which the complaint and default judgments were served. Sixteen days later, with no answer from Wakefield Industries or its president, the district court found Wakefield Industries and Margolis in civil contempt, imposed a fine of five hundred dollars ($500.00) to be paid to the Pension Fund, and directed the contemnors to comply with requirements of the Trust Agreement as well as pay the Pension Fund its costs of litigation within ten days of service of the contempt order or face a fine of twenty-five dollars a day.

The contempt order was personally served on Margolis at his home and at his Capehart office. Again, there was no response. On April 16, 1981 the Pension Fund moved the court for an order to commit Margolis for contempt. It was at this point that counsel for Margolis appeared before the district court with a motion to vacate the civil contempt order.

Counsel argued that (1) while Margolis should have responded sooner to the Pension Fund's complaint, he was unable to comply any further with the terms of the Trust Agreement because of the financial straits of Wakefield Industries and Capehart Corporation, and (2) Margolis was served with the contempt motion in New York City, well outside the territorial limits of a federal district court sitting in the District of Columbia. In vacating its civil contempt order, the district court was persuaded by this second argument. The court noted that Margolis was served with the contempt motion based on ERISA's extraterritorial service of process provision, Section 1132(e)(2). Because the court believed this provision only authorized service on defendants to the action, and because Margolis was not a named defendant, the court held that it lacked personal jurisdiction over him and vacated the contempt order. Plaintiff Pension Fund appeals.

I.

While the district court decided that it lacked personal jurisdiction over Margolis, on appeal Margolis argues, additionally, that the defendant corporation was never served; hence the district court had no jurisdiction to enter the injunction which Margolis is alleged to have violated.

There may well be doubt whether Margolis can properly challenge the district court's personal jurisdiction over the defendant corporation. Plaintiffs, however, have not claimed that the question was improperly raised, but have argued its merits.

The question of the district court's jurisdiction over Wakefield Industries arises under the special provisions of ERISA governing venue and service of process. Section 1132(e)(2) provides:

Where an action under this subchapter is brought in a district court of the United States, it may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found, and process may be served in any other district where a defendant resides or may be found.

29 U.S.C. Sec. 1132(e)(2) (1975). As noted, the action was brought in the district where the plan is administered. The question then is one of service: whether the defendant Wakefield Industries was "found" in the Southern District of New York within the meaning of Section 1132(e)(2).

The leading case interpreting Section 1132(e)(2) is Varsic v. United States District Court for the Central District of California, 607 F.2d 245 (1979). In that decision the Ninth Circuit was called upon to decide where an unincorporated association could be "found" for purposes of establishing venue. The Ninth Circuit held that Congress intended, by allowing venue wherever a defendant might be "found," to permit suit in any district where a defendant entity's contacts "are sufficient to satisfy the 'minimum contacts' test for personal jurisdiction" as defined by International Shoe Co. v. Washington, 326 U.S. 310, 318-19, 66 S.Ct. 154, 159, 90 L.Ed. 95 (1945). Id. 607 F.2d at 248-49. See also Bostic v. Ohio River Co. (Ohio Division) Basic Pension Plan, 517 F.Supp. 627, 633 (S.D.W.Va.1981) (following the Varsic interpretation of "may be found" under Section 1132(e)(2)).

International Shoe sets forth a test for sufficient presence within a state to permit the exercise of personal jurisdiction by the state's courts under the Due Process Clause of the Fourteenth Amendment. Under Section 1132(e)(2), however, the question is not one of constitutional due process but of congressional intent in prescribing a test for venue in federal district courts. In earlier cases it has been said that a corporation is "found" in a district when its officers and agents are present, carrying on the business of the corporation. See, e.g., People's Tobacco Co. v. Am. Tobacco Co., 246 U.S. 79, 84, 87, 38 S.Ct. 233, 234-35, 62 L.Ed. 587 (1918). In so deciding, however, the Court seems to have applied the content of the then controlling due process test for state judicial jurisdiction. See Commercial Mutual Accident Co. v. Davis, 213 U.S. 245, 255, 29 S.Ct. 445, 448, 53 L.Ed. 782 (1909). The Ninth Circuit's resort in Varsic to the current due process test for in personam jurisdiction of a corporation to determine the meaning of "found" as a venue requirement is, we think, sound. ¹

In this case, there is no dispute as to the propriety of venue in the District of Columbia. Our question is whether the defendant corporation was "found" in the Southern District of New York so that service there was authorized by Section 1132(e)(2). In those few decisions which have addressed the question of where a corporation is "found" under federal service of process statutes, the same definition developed when the word is a requirement for venue seems to have been applied. See, e.g., United States v. Scophony Corp., 333 U.S. 795, 68 S.Ct. 855, 92 L.Ed. 1091 (1948); United States v. Aluminum Co. of America, 20 F.Supp. 13 (S.D.N.Y.1937).

We have no doubt that Congress might have provided a standard for service of process different from the standard for venue. We conclude, however, that because Congress used the term "found" both in the provision for venue and the provision for service and because the history of judicial pronouncements on the meaning of that term for corporate presence in both venue and service of process provisions suggests no reason for according...