Award Service, Inc. v. Northern California Retail Clerks Unions and Food Employers Joint Pension Trust Fund

• Decision Date: 19 June 1985
• Docket Number: No. 83-2625,83-2625
• Citation: 763 F.2d 1066
• Parties: 118 L.R.R.M. (BNA) 2230, 119 L.R.R.M. (BNA) 3026, 54 USLW 2032, 102 Lab.Cas. P 11,317, 103 Lab.Cas. P 11,547, 6 Employee Benefits Ca 1843 AWARD SERVICE, INC., Plaintiff/Appellant, v. NORTHERN CALIFORNIA RETAIL CLERKS UNIONS AND FOOD EMPLOYERS JOINT PENSION TRUST FUND, a trust fund, Defendant/Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1066

763 F.2d 1066

118 L.R.R.M. (BNA) 2230, 119 L.R.R.M. (BNA)

3026, 54 USLW 2032,

102 Lab.Cas. P 11,317, 103 Lab.Cas. P 11,547,

6 Employee Benefits Ca 1843

AWARD SERVICE, INC., Plaintiff/Appellant, v. NORTHERN CALIFORNIA RETAIL CLERKS UNIONS AND FOOD EMPLOYERS JOINT PENSION TRUST FUND, a trust fund, Defendant/Appellee.

No. 83-2625.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Aug. 10, 1984.

Decided June 19, 1985.

Spencer H. Hipp, Michael J. Hogan, Littler, Mendelson, Fastiff & Tichy, Fresno, Cal., for plaintiff/appellant.

Richard G. McCracken, Davis, Cowell & Bowe, San Francisco, Cal., for defendant/appellee.

Appeal from the United States District Court for the Northern District of California.

Before TANG, CANBY and BEEZER, Circuit Judges.

CANBY, Circuit Judge.

This action arises under section 302(e) of the Labor-Management Relations Act (LMRA), 29 U.S.C. Sec. 186(e), and sections 403(c) and 502(e) of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Secs. 1103(c) and 1132(e). It was brought by Award Service, an "employer" as defined in 29 U.S.C. Sec. 1002(5), against the Northern California Retail Clerks Unions and Food Employers Joint Pension Trust (Pension Trust), a multiemployer pension fund, for recovery of contributions allegedly made to the Pension Trust in violation of section 302(c) of the LMRA.

Award Service alleges that it made contributions to Pension Trust from September 1970 to March 1981 even though it was not a party to a collective bargaining agreement. On June 3, 1982, Award Service demanded a refund of these contributions on the ground that their payment had violated section 302(c)(5)(B) of the LMRA and that it was consequently illegal for Pension Trust to retain them. Pension Trust, however, refused to refund the allegedly illegal contributions, and this suit was commenced approximately one year later to recover them.

In the district court, Award Service asserted two grounds for restitution of the allegedly illegal contributions. First, it contended that restitution of illegally paid contributions may be ordered under section 302(e) of the LMRA, which grants the federal courts jurisdiction to restrain violations of section 302. Second, it argued that section 403(c)(2)(A) of ERISA confers on employers a right to the refund of contributions made as a result of a mistake of law or fact.

The district court rejected both of these arguments. As to the claim that section 302 confers jurisdiction on the district courts to order restitution of illegally made contributions, the district court read that section as only authorizing a court to restrain future violations of section 302. It therefore concluded that Award Service's section 302 claim for restitution of illegally paid contributions failed to state a claim upon which relief could be granted. As to Award Service's claim that section 403(c)(2)(A) of ERISA created a right to a refund of mistakenly paid contributions, the court found no jurisdictional basis within ERISA for such an action. It therefore dismissed the section 403 claim for lack of subject-matter jurisdiction.

We start with the dismissal of the section 403 claim. The district court correctly observed that section 502 of ERISA does not explicitly authorize a civil action by an employer to enforce the provisions of ERISA. See 29 U.S.C. Sec. 1132(a). Nevertheless, we have held that an employer may bring an action under ERISA to enforce its terms where the employer alleges specific and personal injury. Fentron Industries, Inc. v. National Shopmen Pension Fund, 674 F.2d 1300, 1304-05 (9th Cir.1982). The requirement of a specific and personal injury is clearly met here where the employer alleges that it has mistakenly paid more than $167,000 in contributions which it was not obligated to make. The district court therefore had jurisdiction to entertain the section 403 claim under 29 U.S.C. Sec. 1132(e). ¹

Even if there had been no statutory grant of jurisdiction in ERISA, the district court had jurisdiction under 28 U.S.C. Sec. 1331 ² for the purpose of determining whether an implied cause of action existed under section 403(c)(2)(A) for return of mistakenly paid contributions. See R.J. Williams Co. v. Fort Belknap Housing Authority, 719 F.2d 979, 981 (9th Cir.1983); Crown Cork & Seal Co. v. Teamsters Pension Fund, 549 F.Supp. 307, 310 (E.D.Pa.1982), aff'd mem., 720 F.2d 661 (3d Cir.1983).

Having concluded that there is jurisdiction under either 29 U.S.C. Sec. 1132(e) or 28 U.S.C. Sec. 1331, we must next decide whether a right of action exists under section 403(c)(2)(A) of ERISA in favor of an employer for the return of contributions mistakenly paid to Pension Trust. Section 403 confers no such right expressly; it merely permits the return of contributions mistakenly paid. We conclude, however, that a right of action is properly implied by section 403 under the standards of Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2088, 45 L.Ed.2d 26 (1975). First, the 1980 amendment to section 403(c)(2)(A), which added subparagraph (ii) concerning payments made by an employer by mistake of fact or law, was clearly designed for the benefit of employers. Multi-Employer Pension Plan Amendments Act of 1980, Pub.L. No. 96-364, Sec. 310, 94 Stat. 1208, 1296 (1980). Second, a congressional intent to create a private remedy in favor of the employer is implicit in Section 403(c)(2)(A)(ii). Without such a remedy, the decision to return contributions mistakenly paid would be left solely to the interested trustee. Third, implying a private right of action furthers the congressional scheme of permitting restitution of contributions paid by mistake when equitable factors militate in favor of such restitution. Finally, no principle of federal-state comity renders a federal cause of action inappropriate; Congress preempted all state law regarding employee pension benefits effective with contributions made after January 1, 1975. 29 U.S.C. Sec. 1144(a); Martin v. Hamil, 608 F.2d 725, 729 (7th Cir.1979).

Our conclusion that section 403 implies a right of action in favor of the employer draws support from Chase v. Trustees of Western Conference of Teamsters Pension Trust Fund, 753 F.2d 744 (9th Cir.1985), decided by this court after this appeal was submitted for decision. Chase is distinguishable because it involved a claim for restitution on the part of owner-drivers of taxicabs who were not the "employer" that made the contributions to the pension fund. Our opinion in Chase partially relied, however, upon a body of case law authorizing private actions for restitution of mistaken contributions when the equities favor it. E.g., Peckham v. Board of Trustees, 719 F.2d 1063, modified and reaff'd, 724 F.2d 100 (10th Cir.1983) (recovery permitted for funds mistakenly paid by participants for their own account; question whether employers qua employers have similar right left open); Teamsters Local 639--Employers Health Trust v. Cassidy Trucking, Inc., 646 F.2d 865, 868 (4th Cir.1981) (district court should determine whether employer is entitled to refund under equitable principles); E.M. Trucks, Inc. v. Central States, Southeast and Southwest Areas Pension Plan, 517 F.Supp. 1122 (D.Minn.1981) (employer should be refunded mistaken contributions if equity requires it); see also Central States, Southeast and Southwest Areas Pension Plan v. Wholesale Produce Supply Co., 478 F.Supp. 884 (D.Minn.), aff'd, 611 F.2d 694 (8th Cir.1979), and Service Employees International Union Local 82 Labor-Management Trust Fund v. Baucom Janitorial Service, Inc., 504 F.Supp. 197 (D.D.C.1980) (offset allowed to employer for overpaid contributions without consideration of permissive phraseology of section 403(c)(2)(A) ); but see Crown Cork and Seal Co. v. Teamsters Pension Fund of Philadelphia, 549 F.Supp. 307, 312 (E.D.Pa.1982), aff'd mem. 720 F.2d 661 (3d Cir.1983) (section 403(c)(2)(A) permissive only; no implied right for employer; restitution would threaten integrity of funds). Our conclusion that the employer may sue here is strongly supported by all of these cases except Crown Cork and Seal; with it we respectfully disagree.

Finally, as we have already said, our decision in Fentron, 674 F.2d 1300, held that an employer injured by interruption of benefits to his employees had standing to enforce the provisions of ERISA. Id. at 1305. Similarly, Award Service has standing here to pursue the right to restitution of mistakenly paid contributions under section 403(c)(2)(A). ³ As in Chase, however, Award Service will have to establish that the equities favor restitution in order to succeed on the merits. A principal equitable consideration is whether restitution would undermine the financial stability of the plan. See Chase, 753 F.2d at 753.

There remains the question whether a similar but perhaps broader cause of action is also recognized by section 302 of the LMRA. We do not find Chase controlling on this issue because in Chase the section 302 issue was not raised as such. Chase merely decided that nothing in the LMRA precluded us from recognizing a right to the return of mistakenly paid contributions under ERISA. We were not confronted with a claim, as we are here, that section 302 of the LMRA creates a separate and independent cause of action for the return of contributions that violate that section. For the reasons that follow we conclude that section 302 creates no such cause of action.

The jurisdiction of the federal courts to enforce section 302 is set forth in section 302(e). 29 U.S.C. Sec. 186(e). That section empowers "[t]he district courts of the United States ... to restrain violations of this section, without regard to the provisions of section 17 of Title 15 and section 52 of this title, and the provisions of chapter 6 of this title." One possible reading of that statute is that it merely removes the barrier to injunctive relief that had existed under the Clayton and...