D&F CORP. v. Bd. of Trustees

CourtUnited States District Courts. 6th Circuit. United States District Court (Western District Michigan)
Citation795 F. Supp. 825
Docket NumberCiv. A. No. 91-CV-72624-DT.
PartiesD & F CORPORATION, a Michigan corporation; Jay/Enn Corporation, a Michigan corporation; Models & Tools, Inc., a Michigan corporation; Troy Pattern & Model, Inc., a Michigan corporation; Aero Detroit, Inc., a Michigan corporation; Eifel Pattern & Model Co., a Michigan corporation; Pattern Guild & Products, Inc., a Michigan corporation; Stempin Prototype, Inc., a Michigan corporation; and Astro-Netics, Inc., a Michigan corporation, Plaintiffs, v. The BOARD OF TRUSTEES of the PATTERN & MODEL MAKERS ASSOCIATION of WARREN & VICINITY DEFINED BENEFIT PENSION PLAN, Defendant.
Decision Date29 April 1992

Paul Townsend, Jr. and Dykema Gossett, Detroit, Mich., for plaintiffs.

H. David Kelly, Jr., Novara, Tesija & Nouhan, P.C., Southfield, Mich., for defendant.


ROSEN, District Judge.


This ERISA declaratory judgment action is presently before the Court on the Objections of the Plaintiffs to U.S. Magistrate Judge Virginia M. Morgan's Report and Recommendation recommending that the Court grant the Motion of Defendant Board of Trustees of the Pattern & Model Makers Association of Warren and Vicinity Defined Benefit Pension Plan to Dismiss Plaintiff's Complaint in its entirety. Having reviewed Defendant's Motion and supporting Brief, Plaintiffs' Response Brief, the Magistrate Judge's Report and Recommendation, Plaintiff's Objections to the Report and Recommendation, Defendant's Response to Plaintiff's Objections, and the entire court file of this matter, and having heard the oral arguments of the parties' attorneys at the March 23, 1992 hearing, the Court is now prepared to rule on this matter. This Opinion and Order sets forth that ruling.


As the Magistrate Judge observed, the essential facts pertaining to this matter are not in dispute.

Plaintiffs are corporate employers who, as a result of collective bargaining agreements with the Pattern and Model Makers Association of Warren and Vicinity, AFL-CIO (the "Union"), and pursuant to the terms of the Employee Retirement Income Security Act of 1974, ("ERISA"), 29 U.S.C. § 1001, et seq., established and contributed to a multi-employer "Defined Benefit Pension Plan". The Defendant Board of Trustees is the administrator of that Plan. The Plan was established in 1967.

Until 1985, the collective bargaining agreements did not specify the amount of the pension benefits under the Plan. Rather, the agreements only specified the amount which each employer was obligated to contribute to the Plan, and the Trustees were granted the power to determine the level of the benefits.

In December 1984, however, the Union and the employers entered into a supplemental collectively-bargained agreement (the "Supplemental Agreement"), which became effective February 1, 1985, pursuant to which employee benefits under the Defined Benefit Plan would be increased. The Supplemental Agreement provided that to fund the increased benefits under the Defined Benefit Plan, the Trustees would purchase a "dedicated portfolio" of bonds with the Plan's assets, and then would "freeze" the Plan with no further accrual of benefits and no further employer contributions. The Union and the employers further agreed to establish a new plan — a "defined contribution plan" — to which the employers would contribute instead of making further contributions to the Defined Benefit Plan. The employers' initial contribution to the new defined contribution plan was 80 cents per hour for each covered individual. This amount was increased to 90 cents per hour effective March 6, 1985. The amount of the employers' contributions to the defined contribution plan was subsequently further increased through contract negotiations from 90 cents per hour as of March 1985, to $1.55 per hour by April 1991.

The February 1985 Supplemental Agreement further provided:

The Employer shall be responsible for all net charges to the plan's Funding Standard account.... If it becomes necessary, in the opinion of the plan's actuary, for the Employer to resume contributions to the defined benefit plan, the amount of the Employer's contribution to the defined contribution plan ... shall be correspondingly reduced by the amount of such contribution.

Supplemental Agreement, para. 1. Plaintiff's Complaint, Ex. C.

From February 1985 until May 1991, the employers made no contributions to the frozen Defined Benefit Plan. Instead, as agreed in the Supplemental Agreement, they made contributions to the new defined contribution plan. However, in May 1991, the Plan Trustees informed the employers that they would have to contribute to the frozen Defined Benefit Plan 25 cents per hour of the $1.55 per hour amount they were to contribute to the defined contribution plan because of a deficit in the frozen Plan's Funding Standard account.

The employers made the contributions as directed, but brought this lawsuit, seeking a declaratory judgment that they are not obligated to make the contributions to the frozen Defined Benefit Plan claiming that any deficit which may exist in the Plan's Funding Standard account was caused by the Trustees' maladministration of the Plan.


The Trustees moved to dismiss the employers' Complaint pursuant to Fed.R.Civ. Pro. 12(b)(1) (lack of subject matter jurisdiction) and 12(b)(6) (failure to state a claim upon which relief can be granted) arguing that, because "employers" are not among the list of persons empowered to bring a civil action under ERISA enumerated in the pertinent provisions of 29 U.S.C. § 1132(a), Plaintiffs here have no standing to bring the instant lawsuit and therefore have failed to state a claim upon which relief can be granted. Defendant further argued that because the ERISA's explicit jurisdictional provision, 29 U.S.C. § 1132(e)(1), only confers this Court with subject matter jurisdiction over suits brought by specific parties, and because "employers" are not among those specifically listed parties, this Court lacks subject matter jurisdiction over the instant action. Plaintiffs concede that they have no standing to sue the Plan Trustees under ERISA for breach of their fiduciary duties. However, they argue that because the Court would have jurisdiction under ERISA over an action brought by the Defendant Board of Trustees, as plan fiduciaries, to enforce Plaintiffs' contribution obligations, and because, according to Plaintiffs, such a "threatened" action by the Plan Trustees is what underlies Plaintiffs' declaratory judgment Complaint, they contend that this Court has jurisdiction over this matter under the Declaratory Judgment Act, 28 U.S.C. § 2201.


Magistrate Judge Morgan agreed with Plaintiffs and determined that the declaratory defendants' (i.e., the Defendant Trustees') right to sue to enforce the Plan's entitlement to employer contributions under ERISA provides this Court with jurisdiction over this declaratory judgment action:

A trustee's action to enforce the provisions of ERISA would be exclusively governed by federal law, i.e., it would "arise under" federal law ERISA and the court would have federal question jurisdiction.
Thus, since the court would have federal question jurisdiction over the threatened action underlying Plaintiffs' complaint for declaratory judgment, that is, over a suit against the employers to enforce the employers' obligations to contribute pursuant to ERISA, the court has jurisdiction over the declaratory judgment action.
Defendant Trustees urge, however, that the action must be dismissed because the employers are not persons who may bring a civil action under ERISA, although admittedly any of them could be sued for failure to make contributions. However, under the Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) analysis, it is the nature of the threatened action that determines whether there is jurisdiction over the declaratory judgment action. Since the employers could be sued by the Trustees in federal court for failure to contribute, then it follows that they have the converse right to bring a declaratory judgment action to determine their liability in a matter presenting an actual controversy.

R & R, pp. 837-38.

However, Magistrate Judge Morgan went on to explain that, like all declaratory judgment actions, a declaratory judgment suit arising under ERISA is limited by the actual "case or controversy" requirement of Article III of the U.S. Constitution. She determined that no actual case or controversy exists in this case because she found that

Neither the complaint nor the amended complaints state, with the required specificity, that the employers have been harmed or threatened with harm. They are currently not paying any more money than they were before. They have not alleged any facts to support their legal conclusion that an actual controversy exists. Thus, they have not presented an actual controversy in which this court should choose to exercise its discretion to enter a declaratory judgment, when plaintiffs have not alleged an injury, real or threatened.

R & R, pp. 839-40.

Based upon her determination that no "actual case or controversy" exists, the Magistrate Judge concluded that Plaintiffs lack standing to bring this action and recommended that the case be dismissed.


The Plaintiffs' objected only to the above-quoted portion of pp. 839-40 of the Magistrate Judge Morgan's Report and Recommendation in which the Magistrate Judge concluded that no actual case or controversy has been presented. Plaintiffs concede that the Magistrate Judge correctly determined that they are not contributing any more money now to the...

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    ...or immediately threatened with harm, by the challenged action."' D & F Corp. v. Board ofTrs. of Pattern & Model Makers Ass'n of Warren & Vicinity Defined Benefit Pension Plan, 795 F. Supp. 825, 839 (E.D. Mich. 1992) (quoting Poe v. Ullman, 367 U.S. 497, 504 (1961)). In the absence of a prop......

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