Saramar Aluminum Co. v. Pension Plan for Employees of Aluminum Industry and Allied Industries of Youngstown Ohio Metropolitan Area
| Decision Date | 27 January 1986 |
| Docket Number | 84-3476 and 84-3478,Nos. 84-3455,s. 84-3455 |
| Citation | 782 F.2d 577 |
| Parties | 7 Employee Benefits Ca 1052 SARAMAR ALUMINUM COMPANY, Plaintiff-Appellee, v. PENSION PLAN FOR EMPLOYEES OF the ALUMINUM INDUSTRY AND ALLIED INDUSTRIES OF YOUNGSTOWN OHIO METROPOLITAN AREA, Defendant-Appellant (84-3455). Appeal of AEROLITE EXTRUSION CO.; F.A. Pilgrim Co.; Benada Aluminum Products Co.; Superior Industries; Oakwood Billets, Inc.; Hutch Manufacturing Co., Defendants- Appellants (84-3476). Appeal of GENERAL EXTRUSIONS, INC., Defendant-Appellant (84-3478). |
| Court | U.S. Court of Appeals — Sixth Circuit |
Christopher J. Newman, Henderson, Covington, Stein, Donchess & Messenger, C.A. Covington, Jr., Eldon S. Wright, argued, William E. Fowler, Jr., Youngstown, Ohio, for defendants-appellants.
William R. Hewitt, argued, Warren, Ohio, for plaintiff-appellee.
Gilbert V. Kelling, Jr., Billings, Mont., John T. Mulligan, Cleveland, Ohio, for General Extrusions, Inc.
Before CONTIE, WELLFORD and MILBURN, Circuit Judges.
This action commenced in state court as a declaratory judgment action filed by Saramar Aluminum Company ("Saramar") against a jointly sponsored employee benefit plan, the Pension Plan for Employees of the Aluminum Industry and Allied Industries of the Greater Youngstown Ohio Metropolitan Area (the "Plan"), and the Plan's administrators, challenging a substantial assessment made against Saramar by the Plan and its administrators. The original employer sponsors of the pension plan were also joined as defendants. The action was thereafter removed to federal court, jurisdiction allegedly arising out of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Secs. 1001-1461.
Removal was based on the contention of the defendants, including Plan administrators, that federal district courts "have original jurisdiction in that this action involves a controversy requiring application and interpretation" of ERISA. Once in federal court, defendant Plan counterclaimed seeking a court order that Saramar was liable for a $27,287.46 delinquency, plus interest. This amount was allegedly due following an internal audit made in an effort by the Plan to bring itself within the prescriptions of ERISA and it involved a total claim against Saramar of $588,545 in unfunded vested liability. The district court, however, found in favor of Saramar on the issues submitted. There was no opposition by any party to the removal.
On January 11, 1963, an agreement was entered into by Saramar, seven other manufacturing companies, and the United Steel Workers of America (the "Union") to create an employee pension plan. This agreement provided that the full liability of the companies would be a contribution to the pension fund of five cents ($0.05) per employee hour worked. Accordingly, a pension plan was drafted, which provided that each of the participating employers would contribute an amount agreed upon. Each employer then signed an independent collective bargaining agreement with the Union requiring a contribution equivalent to five cents ($0.05) for each employee hour worked. The bargaining agreement, however, was jointly negotiated between the participating employers and the Union.
Under the original terms of this pension plan agreement, the employers limited liability to the extent of their actual contributions to the Plan. Each employer assumed only its own similar responsibility, not another party's obligation of payment. The terms of the Plan were carried through to the 1966 collective bargaining agreements with no significant changes for their first two years of operation. In February 1968, however, it was agreed that the employers' contributions would be based on an actuarial determination.
As a part of this determination, the actuary examined the work force characteristics of each participating employer. At the outset and for more than ten years each employer continued paying the same rate as each other employer, but the original rate (five cents an hour per employee) would be subject to change and increase from time to time. A common contribution rate was therefore shared by the employers, including Saramar. This also was true of the Plan as it related to the various 1969 collective bargaining agreements, which represented the employers' last attempt at joint negotiation with the Union. In January 1973, each of the various employers negotiated separately its own collective bargaining agreement, but as was previously the case, each was required to pay an identical contribution rate into the Plan.
From the Plan's inception in 1963, various other industry employers in the area joined as contributors. Each new employer's contribution rate was unique, however, and was determined by an actuarial calculation following examination of its work force. Despite the varying rates of these contributors, the original eight employers' rates of contribution per employee hours worked remained identical. The original member employers were parties to this dispute joined by Saramar. Other employers who began to participate after the Plan's inception were also made defendants. 1
ERISA was enacted in 1974 and became applicable to the Plan on February 1, 1976. In an attempt to meet the requirements of ERISA, an actuarial valuation of the pension plan was conducted, at the behest of Plan administrators, by Edward H. Friend and Company. In preparing its report, this actuary assumed that each participating company was responsible for meeting the funding requirements of ERISA individually, based upon its conclusion that the employers originally intended to be protected from joint liability. A report was issued by Friend containing the following calculations:
TOTAL ASSETS UNFUNDED
VESTED AT BOOK VESTED
COMPANY LIABILITY VALUE LIABILITY
------------ ---------- ---------- ---------
1. Aerolite $ 173,217 $ 175,908 None
2. Billets 125,572 98,589 26,983
3. Benada 93,787 416,781 None
4. General 185,888 344,981 None
5. Hutch 143,528 133,480 10,048
6. Pilgrim 165,708 261,148 None
7. Saramar 970,465 381,920 588,545
8. Superior 381,566 358,731 22,835
---------- ----------
2,239,731 2,171,538
Each employer was consequently deemed liable for the respective difference between its "Total Vested Liability" (TVL) and its "Assets at Book Value" (ABV), which amount (identified above as "Unfunded Vested Liability" (UVL)) was to be paid over a designated period of time in increased contributions to meet ERISA requirements. As is plainly reflected in the above summary, Saramar was to pay the greatest rate, while four of the employers would be entitled to a downward adjustment.
A threshold problem exists in this case concerning removal jurisdiction. We must first determine whether the district court properly assumed jurisdiction of this case. Saramar based its action on contract principles in state court, although mention was made of ERISA; neither side challenged removal of the case to district court, and there was no specific discussion as to basis of jurisdiction. Saramar made reference to ERISA in the following fashion in the complaint filed in state court:
4. Because of enactment of a Federal Pension Plan Law defendants claim it is necessary to compute the annual cents-per-hour contribution of various members of the plan by a different formula, and starting on February 1, 1976, the cents-per-hour contribution necessary from the eight original members is no longer the same and Saramar Aluminum Company will be charged the greatest cents-per-hour contribution rate.
Saramar also made reference to adjustments "starting on February 1, 1976," the effective date of ERISA.
The Plan, after its petition for removal was granted, answered plaintiff and took the position that the changes it sought to be mandated were not only in accord with the agreements of the parties, but also were "in accordance with the requirements of ERISA." The counterclaim by the Plan, however, was asserted to arise under ERISA with jurisdiction lying specifically under Section 502, 29 U.S.C. Sec. 1132, which it claimed "provides for exclusive jurisdiction in the United States District Court over actions by fiduciaries under the Act."
Title 29 U.S.C. Sec. 1132(e)(1) provides for exclusive federal jurisdiction of actions brought by the Secretary or by a "participant, beneficiary, or fiduciary," except for actions under Sec. 1132(a)(1)(B). 2 None of the parties to this action are "participants," 29 U.S.C. Sec. 1002(7), or "beneficiaries," 29 U.S.C. Sec. 1002(8). This is also not an action under Sec. 1132(a)(1)(B), because no participant or beneficiary is seeking to "recover benefits" nor to obtain information from an administrator. Under Sec. 1132(a)(3) a "fiduciary" may bring an action "to enjoin" a violation of ERISA or "the terms of the plan," 29 U.S.C. Sec. 1132(a)(3)(A), or "to obtain other appropriate equitable relief (i) to redress such violations (ii) or to enforce" ERISA or plan provisions, 29 U.S.C. Sec. 1132(a)(3)(B). If the Plan, or its administrators acting on behalf of the Plan, may be deemed to be a "fiduciary" within the meaning of the Act, the type of action represented by the Plan's counterclaim may be brought in the district court under Sec. 1132(e)(1). This action was, in effect, commenced in the district court to attempt to enforce what the administrators of the Plan felt to be the requirements of ERISA and the agreement of the parties formulated in the Plan itself. "An employee benefit plan may sue or be sued under this subchapter as an entity." Sec. 1132(d)(1). 3
The Plan is administered generally by its "Administrative Board," comprised of the administrators who have full power and authority to carry out all its provisions. (S...
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