738 F.2d 1496 (9th Cir. 1984), 82-6084, Menhorn v. Firestone Tire & Rubber Co.
|Citation:||738 F.2d 1496|
|Party Name:||Thomas MENHORN, Plaintiff-Appellant, v. FIRESTONE TIRE & RUBBER CO., Defendant-Appellee.|
|Case Date:||August 03, 1984|
|Court:||United States Courts of Appeals, Court of Appeals for the Ninth Circuit|
Argued and Submitted July 5, 1983.
Richard J. Cantrell, Cantrell, Green & Pekich, Long Beach, Cal., for plaintiff-appellant.
Sheila S. Kato, Grossman & Kato, Los Angeles, Cal., for defendant-appellee.
Appeal from the United States District Court for the Central District of California.
Before FERGUSON and BOOCHEVER, Circuit Judges, and SCHWARZER, [*] District Judge.
SCHWARZER, District Judge.
Thomas Menhorn appeals from a judgment upholding Firestone Tire & Rubber Company's denial of Menhorn's application for benefits under Firestone's employee retirement plan. Menhorn was employed by Firestone at its Akron, Ohio, plant from October 26, 1953, until he resigned on August 11, 1967, to move to California. Although Menhorn alleged otherwise in his complaint, uncontradicted declarations filed in support of Firestone's motions below establish that Menhorn was informed before his resignation that he would not receive credit for his years of service in Akron should Firestone reemploy him in California. Menhorn was in fact rehired at Firestone's Los Angeles plant on August 16, 1967, where he worked until he was laid off on June 13, 1980.
Under the terms of Firestone's employee benefit plan then in effect, retirement credits accumulated by an employee vested after fifteen years of service; termination of service prior to vesting resulted in a loss of those credits. Thus when Menhorn applied for benefits under the plan after being laid off in 1980, Firestone denied the application. While Menhorn claimed credit for the full twenty-seven years he had worked for Firestone, Firestone under the plan treated him as having worked for two periods of about thirteen and a half and twelve and three quarters years respectively, neither amounting to the fifteen years' continuous service required for the credits to vest.
In June 1981, Menhorn filed an action in state court against Firestone for breach of an oral contract, but voluntarily dismissed it in July 1982. He then filed this action in the court below, alleging violation of fiduciary duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Secs. 1001 et seq., breach of contract, and estoppel. Firestone moved to dismiss under Fed.R.Civ.P. 12(b)(1) and 12(b)(6), or alternatively for summary judgment. It contended, among other things, that the district court lacked subject matter jurisdiction because Menhorn's claim did not arise under ERISA. It also argued that Menhorn had failed to state a claim because he had failed to exhaust his internal remedies under the plan. Firestone's motion for
summary judgment was supported by declarations which Menhorn did not contradict.
The district court granted Firestone's motion for summary judgment on the merits, holding that Firestone, as the administrator of the plan, had not acted arbitrarily or capriciously in refusing to credit Menhorn with his full length of service, and that Menhorn was therefore not entitled to recover. The court did not address the question of subject matter jurisdiction.
On this appeal, the legal positions of the parties are reversed. Menhorn now contends that the district court lacked jurisdiction and that, even if it had jurisdiction, it abused its discretion in failing to dismiss for failure to exhaust internal remedies.
This appeal raises a question concerning the scope of district court jurisdiction over claims asserted under ERISA. Menhorn's action is brought under 29 U.S.C. Sec. 1132(e)(1), which vests jurisdiction in the district courts over actions by participants in employee benefit plans to obtain equitable relief to redress violations of the Act. He seeks relief based on allegations that Firestone violated its fiduciary duties by denying him benefits after assuring him it would not do so.
Menhorn's cause of action accrued in 1980, when his claim for benefits was formally denied. But all the operative acts and omissions forming the basis for Menhorn's claim and Firestone's denial occurred before January 1, 1975, ERISA's effective date. The narrow issue this appeal raises, then, is whether the accrual of Menhorn's cause of action subsequent to ERISA's January 1, 1975, effective date is sufficient to give the district court jurisdiction over the action when that action is based wholly on events occurring before the effective date. We hold that it is not. 1
The statutory scheme
In determining whether Congress conferred jurisdiction over such actions on the district courts, we consider first the purpose and policies underlying ERISA. That statute established a comprehensive and nationally uniform system of rules and standards governing, among other things, the conduct of fiduciaries in the administration of employee benefit plans. The Conference Committee Report notes:
Under the conference agreement, civil actions may be brought by a participant or beneficiary to recover benefits due under the plan, to clarify rights to receive future benefits under the plan, and for relief from breach of fiduciary responsibility. The U.S. district courts are to have exclusive jurisdiction with respect to actions involving breach of fiduciary responsibility as well as exclusive jurisdiction over other actions to enforce or clarify benefit rights provided under title I [the remedial provisions described below, now codified at 29 U.S.C. Secs. 1021-1114]. However, with respect to suits to enforce benefit rights under the plan or to recover benefits under the plan which do not involve application of the title I provisions, they may be brought not only in U.S. district courts but also in State courts of competent jurisdiction. All such actions in Federal or State courts are to be regarded as arising under the laws of the United States in similar fashion to those brought under section 301 of the Labor-Management Relations Act of 1947.
H.R.Conf.Rep. No. 1280, 93d Cong., 2d Sess. (1974), reprinted in 1974 U.S.Code Cong. & Ad.News 5038, 5109. See also 120 Cong.Rec. S 15737, reprinted in 1974 U.S.Code Cong. & Ad.News 5177, 5188 (statement of Sen. Williams).
In ERISA, Congress adopted numerous statutory provisions specifying, for example, requirements for disclosure and reporting,
29 U.S.C. Secs. 1021-1031; minimum standards for participation, vesting, and funding, id. Secs. 1051-1086; and rules governing fiduciary conduct and liability, id. Secs. 1101-1114. Included among the fiduciary rules relevant to this action are provisions governing, for example, the form and documentation of employee benefit plans, id. Secs. 1102-1103; qualifications and bonding requirements for fiduciaries, id. Secs. 1111-1112; prohibitions on certain transactions by plan fiduciaries, id. Secs. 1106-1108; and fiduciary liability, id. Secs. 1104, 1109-1110.
But Congress realized that the bare terms, however detailed, of these statutory provisions would not be sufficient to establish a comprehensive regulatory scheme. It accordingly empowered the courts to develop, in the light of reason and experience, a body of federal common law governing employee benefit plans. That federal common law serves three related ends. First, it supplements the statutory scheme interstitially. See Mishkin, The Variousness of "Federal Law": Competence and Discretion in the Choice of National and State Rules for Decision, 105 U.Pa.L.Rev. 797, 799-800 (1957). Second and more generally, it serves to ramify and develop the standards that the statute sets out in only general terms. For example, ERISA provides that a fiduciary is to discharge his duties
with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims....
29 U.S.C. Sec. 1104(a)(1)(B). The detailed construction and application of this standard Congress put in the hands of the federal courts by authorizing in general terms, and granting exclusive federal jurisdiction over, civil actions by plan participants to obtain relief for violations of the terms of the plan or of ERISA. Id. Secs. 1132(a)(3); 1132(e)(1). Third, Congress viewed ERISA as a grant of authority to the courts to develop principles governing areas of the law regulating employee benefit plans that had previously been the exclusive province of state law. For example, no provision of ERISA mentions the circumstances under which a plan participant or beneficiary is entitled to recover disputed benefits from a plan, but Sec. 1132(a)(1)(B) authorizes such a person to bring a civil action to recover benefits or to enforce or clarify rights to past or future benefits under the terms of a benefit plan. A Senate conferee noted Congress's "inten[t] that a body of Federal substantive law will be developed by the courts to deal with issues involving rights and obligations under private welfare and pension plans." 120 Cong.Rec. S 29942 (Aug. 22, 1974) (statement of Sen. Javits).
In this context, the meaning of the congressional reference to Sec. 301 of the Labor-Management Relations Act in ERISA's legislative history, quoted above, becomes clear. Section 301 has been treated as a congressional authorization for the federal courts to develop a federal common law concerning the construction and enforcement of collective bargaining agreements:
The Labor Management Relations Act expressly furnishes some substantive law. It points out what the parties may or may not do in certain situations. Other problems will lie in...
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