Sellers v. O'Connell

• Citation: 701 F.2d 575
• Decision Date: 28 February 1983
• Docket Number: No. 81-5829,81-5829
• Parties: 112 L.R.R.M. (BNA) 3303, 96 Lab.Cas. P 14,110, 4 Employee Benefits Ca 1312 Pearl SELLERS, Administratrix of Estate of Clay D. Sellers, Deceased, Plaintiff-Appellant, v. John J. O'CONNELL, et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 575

701 F.2d 575

112 L.R.R.M. (BNA) 3303, 96 Lab.Cas. P 14,110,

4 Employee Benefits Ca 1312

Pearl SELLERS, Administratrix of Estate of Clay D. Sellers, Deceased, Plaintiff-Appellant, v. John J. O'CONNELL, et al., Defendants-Appellees.

No. 81-5829.

United States Court of Appeals, Sixth Circuit.

Argued Jan. 18, 1983.

Decided Feb. 28, 1983.

Howard A. Specter (lead counsel), Michael Buchwach (argued), Pittsburgh, Pa., Stanley E. Preiser, Preiser & Wilson, Charleston, W.Va., Peter Perlman, Lexington, Ky., for plaintiff-appellant.

William F. Hanrahan (lead counsel), United Mine Workers of America Health & Retirement Funds, E. Calvin Golumbic, Israel Goldowitz (argued), Washington, D.C., E.H. Rayson, Kramer, Johnson & Rayson, Knoxville, Tenn., Bruce A. Levy, Todd, Smith & Levy, Pikeville, Ky., for defendants-appellees.

Before KENNEDY, CONTIE and WELLFORD, Circuit Judges.

CONTIE, Circuit Judge.

Pearl Sellers appeals a district court order dismissing her suit for failure to state a claim upon which relief can be granted under 29 U.S.C. Sec. 186(e) and for lack of subject matter jurisdiction under 28 U.S.C. Sec. 1332. Mrs. Sellers replaced her husband as a party on August 30, 1976, after the latter's death. We affirm.

In November, 1965, Clay Sellers applied for pension benefits from the United Mine Workers of America Welfare and Retirement Fund ("Fund"). The Fund trustees denied the claim because Sellers had not met eligibility requirements. Believing that he had satisfied all requirements, Sellers supplied additional information several times in an attempt to receive benefits. On November 30, 1972, the trustees finally authorized the pension. Eligibility was retroactive, however, not to January 1966, as had been requested by Sellers, but only to June, 1972. The trustees limited the retroactive benefits pursuant to Resolution 72, a rule the trustees had previously adopted. Though Resolution 72 is not applicable to claims arising after December 6, 1974, the Fund wishes to apply it to Sellers' 1965 application for pension. Had the trustees not granted partial retroactive benefits, Sellers' claim would have been for $10,575 on the date suit was filed. After the trustees' decision, Sellers' claim was reduced to $9,875. Appellant still seeks benefits in the latter amount.

Sellers filed suit under 29 U.S.C. Sec. 185(c) on December 1, 1972 and received notice of the trustees' prior decision to authorize the pension on December 4, 1972. On January 14, 1973, Sellers amended the complaint to assert a class action. This court held in Miller v. Davis, 507 F.2d 308 (6th Cir.1974), that although Sec. 185(c) did not confer jurisdiction, Sellers should be granted leave to amend his class action complaint. He did so on December 11, 1974, alleging jurisdiction under 29 U.S.C. Sec. 186(e) and 28 U.S.C. Sec. 1332.

I.

The district court held that although Sec. 186(e) supplied jurisdiction, appellant had not stated a claim under that provision. The Fund has argued throughout this litigation that jurisdiction is not present under Sec. 186(e). We disagree. Section 186(e) grants the district court jurisdiction to restrain violations of the entire section. Section 186(c)(5) authorizes the creation of trust funds "for the sole and exclusive benefit of the employees" of an employer. The Supreme Court has held that federal courts have jurisdiction to remedy structural defects in pension funds permitted under Sec. 186(c)(5), Arroyo v. United States, 359 U.S. 419, 426-27, 79 S.Ct. 864, 868-869, 3 L.Ed.2d 915 (1959), because such defects render the trust plan not for the sole and exclusive benefit of the employees.

The courts of appeals have generally held that arbitrary and capricious eligibility rules are structural defects because such rules affect the entire operation of the trust. See, e.g., Knauss v. Gorman, 583 F.2d 82, 86 (3d Cir.1978); Johnson v. Botica, 537 F.2d 930, 933-34 (7th Cir.1976); Alvares v. Erickson, 514 F.2d 156, 165-67 (9th Cir.), cert. denied, 423 U.S. 874, 96 S.Ct. 143, 46 L.Ed.2d 106 (1975). Since Sellers has alleged that Resolution 72 is an arbitrary and capricious rule, Sec. 186(e) provides jurisdiction. See Local Union No. 5 v. Mahoning and Trumbull County Trades Welfare Fund, 541 F.2d 636, 638 n. 2 (6th Cir.1976).

We do not interpret United Mine Workers of America Health and Retirement Funds v. Robinson, 455 U.S. 562, 102 S.Ct. 1226, 71 L.Ed.2d 419 (1982), cited by the Fund, to require a different result. In that case, the Court refused to review for reasonableness certain pension eligibility rules negotiated into a collective bargaining agreement. Appellee contends that Robinson precludes this court from reviewing Resolution 72 for reasonableness, arbitrariness or capriciousness.

The present case is distinguishable, however, because Resolution 72 was created not by a collective bargaining agreement, but by the Fund's trustees. While the Supreme Court specifically refused in Robinson to apply cases which had allowed review of trustee-created eligibility rules, the Court did not overrule those cases. Absent a clearer indication that Robinson governs trust fund rules formulated by trustees as well as those included in collective bargaining agreements, we hold that Sec. 186(e) provides jurisdiction over the present claim.

Though the federal courts have jurisdiction, Sellers has failed to state a claim upon which relief can be granted under Sec. 186(e). That section permits the district court "to restrain violations" of its provisions. It therefore authorizes only injunctive relief. See, e.g., Souza v. Western Conference of Teamsters, 663 F.2d 942, 945 (9th Cir.1981); Snider v. All State Administrators, Inc., 481 F.2d 387, 390 (5th Cir.1973), cert. denied, 415 U.S. 957, 94 S.Ct. 1484, 39 L.Ed.2d 571 (1974). Since appellant has requested monetary rather than injunctive relief, the complaint fails to state a claim.

Secondly, this circuit has been unwilling to invalidate trust fund rules "where there is no intimation of bribery, extortion, or union misuse of funds that would strike at the purposes of section 186." Mahoning and Trumbull, supra at 639. Since appellant has not alleged any of these things, the district court properly dismissed the Sec. 186(e) claim.

II.

The district court dismissed appellant's 28 U.S.C. Sec. 1332 claim on jurisdictional grounds for failure to satisfy the amount in controversy requirement. Appellant makes three arguments: 1) the complaint alleged in good faith that more than $10,000 was in controversy, 2) the claim for punitive damages should have been included in determining whether the required amount was present and 3) the class action plaintiffs should have been permitted to aggregate their claims in order to establish the necessary amount. We consider each of these contentions in turn.

The procedural facts of this case are somewhat atypical because the original complaint filed on December 1, 1972 did not allege diversity jurisdiction. Miller v. Davis, supra at 311. Pursuant to the Miller court's instruction to amend, Sellers first alleged jurisdiction under Sec. 1332 on December 11, 1974. Nevertheless, the rule in this circuit is that "the amount in controversy for federal diversity jurisdiction purposes is determined as of the time the action is commenced." Worthams v. Atlanta Life Insurance Co., 533 F.2d 994, 997-98 (6th Cir.1976). See also King v. Morton, 520 F.2d 1140 (D.C.Cir.1975); 14 Wright & Miller Sec. 3702 at 379 (1976). Since an action is commenced by filing a complaint, Fed.R.Civ.P. 3, the amount in controversy must be determined as of December 1, 1972 rather than December 11, 1974 when the amended complaint was submitted.

The general rule is that the amount claimed in good faith by the plaintiff controls unless it appears to a legal certainty that the claim is for less than the jurisdictional amount or unless the amount claimed is merely colorable. See Saint Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 589-590, 82 L.Ed. 845 (1938); Worthams, supra at 997-98. When the existence of the jurisdictional amount is disputed, appellant bears the burden of proof. See McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936).

Although Sellers' pension had been granted on November 30, 1972, he remained unaware of the decision until receiving notice on December 4, 1972. The original complaint therefore alleged in good faith that more than $10,000 was in controversy on December 1, 1972. ¹ Nevertheless, we hold that as a legal certainty, appellant was only entitled to $9,875 in benefits at the time the complaint was filed.

Sellers acknowledges that after the trustees approved partial retroactive benefits, the Fund owed him only $9,875. Thus, after November 30, 1972, appellant was in fact never entitled to recover more than that amount. His claim for more than $10,000 was therefore merely colorable. See Saint Paul Mercury, supra 303 U.S. at 289, 58 S.Ct. at 590. This conclusion is buttressed by language in Wood v. Stark Tri-County Building Trades Council, 473 F.2d 272, 273 (6th Cir.1973), which involved malicious destruction of property. The court said The determination of the amount in controversy is fairly uncomplicated when the plaintiff seeks liquidated damages, the amount in controversy being the total of the liquidated damages.

Sellers' claim is liquidated because she seeks a specified amount of money per month from January, 1966 to May, 1972. Since the monthly payments are fixed, the total of $9,875 is also liquidated. According to Wood, that total is the amount in controversy.

The Worthams case, relied upon by appellant, is distinguishable. The opinion in that case held that once jurisdiction attaches, subsequent events such as discovery proceedings or the application of legal defenses do not divest the court of jurisdiction. In the present case, jurisdiction never attached; for...