Chase v. Trustees of Western Conference of Teamsters Pension Trust Fund

• Citation: 753 F.2d 744
• Decision Date: 31 January 1985
• Docket Number: No. 83-3769,83-3769
• Parties: 102 Lab.Cas. P 11,292, 102 Lab.Cas. P 11,340, 6 Employee Benefits Ca 1007 Robert S. CHASE and Ernest C. Rank, Plaintiffs-Appellants, v. The TRUSTEES OF the WESTERN CONFERENCE OF TEAMSTERS PENSION TRUST FUND, Defendants-Appellees. Donald R. ALLEN, et al., Plaintiffs-Appellants, v. WESTERN CONFERENCE OF TEAMSTERS PENSION TRUST FUND, et al., Defendants-Appellees. CA
• Court: U.S. Court of Appeals — Ninth Circuit

Page 744

753 F.2d 744

102 Lab.Cas. P 11,292, 102 Lab.Cas. P 11,340,

6 Employee Benefits Ca 1007

Robert S. CHASE and Ernest C. Rank, Plaintiffs-Appellants, v. The TRUSTEES OF the WESTERN CONFERENCE OF TEAMSTERS PENSION

TRUST FUND, Defendants-Appellees.

Donald R. ALLEN, et al., Plaintiffs-Appellants, v. WESTERN CONFERENCE OF TEAMSTERS PENSION TRUST FUND, et al.,

Defendants-Appellees.

CA No. 83-3769.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 5, 1984.

Decided Jan. 31, 1985.

Roger Tilbury, Portland, Or., Lon N. Bryant, Wilsonville, Or., for plaintiffs-appellants.

Robert Westberg, Dennis K. Bromley, Pillsbury, Madison & Sutro, San Francisco, Cal., for defendants-appellees.

Appeal from the United States District Court for the District of Oregon.

Before SCHROEDER, FARRIS, and REINHARDT, Circuit Judges.

FARRIS, Circuit Judge:

Taxicab drivers from the Broadway Cab Cooperative, Inc. appeal from the district court's denial of their claim for a refund of contributions made to a pension fund. We reverse and remand to the district court to determine first, whether plaintiffs may pursue this action under ERISA, and then, if it decides they may, whether the equities favor restitution, and finally if so, the amount of contributions to which the drivers are entitled.

I. FACTS

Broadway Cab is owned exclusively by taxicab owners, who are referred to in the labor contract as "owner-drivers." The owner-drivers' testimony regarding the operation of Broadway Cab was undisputed. They choose their own hours and routes, own their own vehicles, buy their own licenses, carry their own health insurance, and are free to sell their own cabs. They keep all of their fares, and pay Broadway Cab a flat fee each month. Broadway Cab has an office, offers a dispatch service which the owner-drivers may use or ignore, and provides fleet liability coverage for all of the cabs. The owner-drivers elect the board of directors of Broadway Cab at the semiannual membership meetings.

In 1966 the Trustees of the Western Conference of Teamsters Pension Trust Fund determined, on advice of counsel, that the owner-drivers were common law employees and thus eligible to participate in the pension trust fund. During 1966-1979, Broadway Cab contributed to the trust fund on behalf of the owner-drivers and pursuant to a collective bargaining agreement with the local union representing them. The trust fund is an employee benefit trust established pursuant to Sec. 302(c)(5) of the Labor Management Relations Act, 29 U.S.C. Sec. 186(c)(5), and a multiemployer pension plan as defined by Sec. 3(2), (37)(A) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. Sec. 1002(2), (37)(A).

In January, 1979, the administrative manager of the trust fund wrote Broadway Cab recommending that the owner-drivers cease participating in the pension plan. The manager cited 1974 and 1975 cases in which taxicab owner-drivers were considered independent contractors. The February, 1979 collective bargaining agreement discontinued the owner-drivers' participation in the plan. Owner-drivers whose benefits had not vested requested a refund of their contributions. The trustees refused to refund the contributions, and then suspended payment of benefits to those owner-drivers whose entitlements had vested.

Two law suits were consolidated for trial: (1) the claims of the owner-drivers who are the appellants in this case (approximately 100), most of whom do not have vested pension rights, and who sought the refund of contributions made; and (2) the claims of a second subclass of four owner-drivers whose pensions had vested and who sought pension benefits. After a bench trial the district court denied appellants' claim for a refund of benefits paid, and held that the second subclass was entitled to benefits in accordance with the terms of the trust plan.

The district court denied the refund claim on the grounds that ERISA preempts any state law which might allow restitution, and that ERISA and the LMRA both prohibit the restitution of the pension fund contributions to the owner-drivers. These are interpretations of law subject to de novo review. United States v. McConney, 728 F.2d 1195 (9th Cir.), cert. denied --- U.S. ----, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984).

II. PREEMPTION

ERISA preempts any state claim for the restitution of contributions made after January 1, 1975. 29 U.S.C. Sec. 1144(a). See Martin v. Hamil, 608 F.2d 725, 729-30 (7th Cir.1979). The more difficult question is whether ERISA preempts state law governing the reimbursement of the contributions made from 1969 through 1974.

The broad preemptive provision of ERISA, 29 U.S.C. Sec. 1144(a), does "not apply with respect to any cause of action which arose, or any act or omission which occurred, before January 1, 1975." Sec. 514(b) of ERISA, 29 U.S.C. Sec. 1144(b). This cause of action "arose after January 1, 1975." ¹ In determining whether the payment of contributions from 1969 to 1974 constitutes "an[y] act or omission ... [which] occurred before January 1, 1975" we look to the events "substantially related" to the cause of action. Lafferty v. Solar Turbines International, 666 F.2d 408, 410 (9th Cir.1982).

In Lafferty, we rejected plaintiffs' argument that the payment of pre-1975 contributions constituted an act or omission occurring prior to January 1, 1975 for preemption purposes. We held that the only act "substantially related" to the breach of contract claim that a 1976 amendment to the plan unfairly discriminated between co-workers, was the 1976 amendment. 666 F.2d at 410.

Analogously we find that ERISA preempts state law here. The critical act which precipitated this action was the trust fund's 1979 decision that the owner-drivers' participation in the plan should be terminated. The discovery of the mistake, ² our decision in Sida of Hawaii, Inc. v. NLRB, 512 F.2d 354 (9th Cir.1975)--which led to the discovery of the mistake--the owner-drivers' demand for a refund, and the trustees' refusal to refund the contributions are all post-January 1, 1975 acts which are substantially related to the cause of action. The trustees' discovery of the error and their refusal to refund the contributions are not mere formalities--Lafferty, 666 F.2d at 410--or the "inexorable consequences" of pre-ERISA acts. Quinn v. Country Club Soda Co., 639 F.2d 838, 841 (1st Cir.1981).

III. FEDERAL JURISDICTION AND STANDING

Since ERISA preempts the state law claims, the jurisdictional question before us is whether the district court may consider the plaintiffs' claims under ERISA. The jurisdictional provision of ERISA, 29 U.S.C. Sec. 1132(e)(1), provides:

Except for actions under subsection (a)(1)(B) of this section, the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by the Secretary or by a participant, beneficiary, or fiduciary. State courts of competent jurisdiction and district courts of the United States shall have concurrent jurisdiction of actions under subsection (a)(1)(B) of this section.

29 U.S.C. Sec. 1132(e)(1).

ERISA further empowers certain persons to bring certain types of civil actions. More specifically, section 1132(a)(3) provides:

A civil action may be brought--

* * * (3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan;

29 U.S.C. Sec. 1132(a)(3).

In a decision subsequent to the district court's decision in this case, the Tenth Circuit held that the district court had jurisdiction to consider claims similar to the owner-drivers' in this case because the plaintiffs were trust "participants." Peckham v. Board of Trustees, 724 F.2d 100 (10th Cir.1983). Participants are defined under the statute as:

any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit.

29 U.S.C. Sec. 1002(7).

The contributions which the owner-drivers seek to recover in this case were similarly made while they were thought to be "participants." This suit is one for equitable relief to redress what is now seen to have been a violation of the plan.

Although the parties argued the Peckham decision on appeal, the district court did not have an opportunity to consider it. The result in Peckham is sound. There may, however, be considerations not fully apparent in this record which could lead the district court to a different result. We therefore remand for the district court to consider in the first instance whether these plaintiffs are entitled to pursue their claims as "participants."

In suggesting that the district court examine whether the plaintiffs can be considered "participants," we do not ignore our holding in Fentron Indus. v. National Shopmen Pension Fund, 674 F.2d 1300, 1305 (9th Cir.1982). In Fentron, we held that ERISA authorized an employer to sue to recover contributions it had made to its employee pension fund. Although "employers" are not one of the four classes of persons specifically authorized by the statute to enforce ERISA, see 29 U.S.C. Sec. 1132, we held that section 1132 was not meant to be an exhaustive list of the persons eligible to sue, and that "[i]n view of the intent of Congress to protect employer-employee relations ... the statute does not prohibit employers from suing to enforce its provisions." 674 F.2d at 1305.

Fentron in no way suggests, however, that the owner-drivers here should be considered "employers," eligible as such to sue under ERISA. While the plaintiff in...