Cataldo v. United States Steel Corp.

• Decision Date: 13 April 2012
• Docket Number: No. 10–3583.,10–3583.
• Citation: Cataldo v. United States Steel Corp., 676 F.3d 542, 52 Employee Benefits Cas. 2815 (6th Cir. 2012)
• Parties: Dominic CATALDO, et al., Plaintiffs–Appellants, v. UNITED STATES STEEL CORPORATION; United States Steel and Carnegie Pension Fund; United Steelworkers of America, a.k.a. United Steelworkers; and USX Corporation, et al., Defendants–Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

52 Employee Benefits Cas. 2815

676 F.3d 542

Dominic CATALDO, et al., Plaintiffs–Appellants,

v.UNITED STATES STEEL CORPORATION; United States Steel and Carnegie Pension Fund; United Steelworkers of America, a.k.a. United Steelworkers; and USX Corporation, et al., Defendants–Appellees.

No. 10–3583.

United States Court of Appeals, Sixth Circuit.

Argued: Oct. 6, 2011.Decided and Filed: April 13, 2012.

ARGUED: Mark W. Biggerman, Pepper Pike, Ohio, for Appellants. Rodney M. Torbic, United States Steel Corporation, Pittsburgh, Pennsylvania, David M. Fusco, Schwarzwald, McNair & Fusco, Cleveland, Ohio, for Appellees. ON BRIEF: Mark W. Biggerman, Pepper Pike, Ohio, William A. Carlin, Carlin & Carlin, Pepper Pike, Ohio, for Appellants. Rodney M. Torbic, United States Steel Corporation, Pittsburgh, Pennsylvania, David M. Fusco, Schwarzwald, McNair & Fusco, Cleveland, Ohio, Stanley Weiner, Johanna Fabrizio Parker, Michael M. Michetti, Jones Day, Cleveland, Ohio, Sasha Shapiro, United Steelworkers International Union, Pittsburgh, Pennsylvania, for Appellees.Before: MARTIN and GRIFFIN, Circuit Judges; ANDERSON, District Judge.^*

OPINION

GRIFFIN, Circuit Judge.

Plaintiffs are 225 individuals currently or formerly employed at steel mills located in Lorain, Ohio. They claim that their union, employer, and plan administrator violated provisions of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001–1461, and Ohio's common law by intentionally misleading them regarding how pension benefits would be calculated, inducing some to retire early. The district court dismissed the claims, concluding that certain of the ERISA claims were time-barred, that the others failed to state a claim for relief, and that the common-law claims were preempted by federal law. We affirm.

I.

The following facts are accepted as true for purposes of this appeal. See Bennett v. MIS Corp., 607 F.3d 1076, 1091 (6th Cir.2010).

Plaintiffs work or used to work at steel mills located in Lorain, Ohio (the “mills” or the “Lorain Works”). At all times relevant here, they were represented in their collective bargaining efforts by the United Steelworkers of America (“USW”). They are eligible participants in an employer-sponsored pension plan governed by ERISA.

The mills have changed ownership many times in the last two decades. Before 1989, defendant U.S. Steel Corporation (“U.S. Steel”) owned them, and plaintiffs' pension plan was administered by defendant United States Steel & Carnegie Pension Fund (the “Fund”). U.S. Steel sold the mills in 1989 to Kobe Steel, Ltd., at which time Kobe Pension Fund began administering the plan. The mills were sold again in 1999, this time to Lorain Tubular Company, LLC, and the Fund resumed administration of plaintiffs' pension plan.

While U.S. Steel and (later) Kobe Steel owned the mills, plaintiffs' pension benefits were determined in the same way benefits were determined for employees working at other U.S. Steel-owned mills. Specifically, benefits were calculated based in part on a percentage of total wages earned during the five years in which the plan participant earned the highest annual income, without regard to whether the years were consecutive to one another (the “best five years method”). In 1999, however, when Lorain Tubular bought the mills and the Fund became the plan's administrator again, a cut-off date was established so that the best five years could include only those years up to and including 1999. Thus, income earned in 2000 and beyond—which for many employees was higher than in past years—could not be considered in the benefit calculations.

In 2001, Lorain Tubular merged into U.S. Steel, and plaintiffs once again became employees of U.S. Steel. Based upon promises made in 2003 by persons or entities plaintiffs do not specifically identify in the complaint, plaintiffs became “hopeful” that, as employees again of U.S. Steel, they would be treated like all other U.S. Steel employees with respect to their pension benefits, meaning that their “best five years” would no longer be limited to the years before 2000. Plaintiffs were later told, however, that the current formula for calculating pension benefits would remain in place. At no time was the pension plan amended to reflect the alleged promises.

Around this time, U.S. Steel offered its employees the opportunity for early retirement through its “USS Transition Assistance Program for [USW] Represented Employees,” or “TAP.” Employees who chose to participate in TAP would receive a lump sum payment and “a significantly more favorable pension calculation” than under the then-current regime. Plaintiffs sought assurances from U.S. Steel, the Fund, and USW that Lorain Works employees who chose to participate would receive the same TAP benefits as U.S. Steel employees in other mills who retired under TAP. “[O]ne or more” defendants promised they would.

In reliance on defendants' assurances, some of the plaintiffs chose to retire under TAP. But after doing so, they immediately began to receive significantly less than they expected and less than TAP retirees from other steel mills were receiving. Meanwhile, plaintiffs who retired after 2003 (not under TAP) have continued to receive pension benefits calculated using only years before 2000.

Plaintiffs who are still employed at the Lorain Works have inquired with defendants regarding the benefits they are to receive upon retirement and have asked for assurances that there is adequate capital in the plan to “ensure proper benefits upon retirement.” “Yet, they consistently receive incorrect benefit determinations and vague and inadequate responses.”

Plaintiffs filed the instant action on June 1, 2009, and asserted the following claims: (1) breach of ERISA fiduciary duty; (2) ERISA equitable accounting, restitution, and other equitable relief; (3) equitable estoppel; (4) failure to furnish requested plan documents; (5) common-law fraud; (6) common-law negligence; (7) common-law breach of fiduciary duty; and (8) common-law promissory estoppel. Defendants moved to dismiss plaintiffs' claims for failure to state a claim. See Fed.R.Civ.P. 12(b)(6). The district court granted the motions and dismissed all of plaintiffs' claims. Plaintiffs timely appealed.

II.

“We give fresh review to a district court's order to dismiss a claim under Civil Rule 12(b)(6). In doing so, we accept all allegations in the complaint as true and determine whether the allegations plausibly state a claim for relief.” Roberts ex rel. Wipfel v. Hamer, 655 F.3d 578, 581 (6th Cir.2011) (internal citation and quotation marks omitted).

III.

The district court concluded that plaintiffs' claims against U.S. Steel and the Fund for breach of ERISA fiduciary duty were time-barred. We review that conclusion de novo. Friends of Tims Ford v. Tenn. Valley Auth., 585 F.3d 955, 964 (6th Cir.2009).

The statute of limitations is an affirmative defense, see Fed.R.Civ.P. 8(c), and a plaintiff generally need not plead the lack of affirmative defenses to state a valid claim, see Fed.R.Civ.P. 8(a) (requiring “a short and plain statement of the claim ” (emphasis added)); Jones v. Bock, 549 U.S. 199, 216, 127 S.Ct. 910, 166 L.Ed.2d 798 (2007). For this reason, a motion under Rule 12(b)(6), which considers only the allegations in the complaint, is generally an inappropriate vehicle for dismissing a claim based upon the statute of limitations. But, sometimes the allegations in the complaint affirmatively show that the claim is time-barred. When that is the case, as it is here, dismissing the claim under Rule 12(b)(6) is appropriate. See Jones, 549 U.S. at 215, 127 S.Ct. 910 (“If the allegations ... show that relief is barred by the applicable statute of limitations, the complaint is subject to dismissal for failure to state a claim[.]”).

ERISA contains a statute of limitations that governs “action [s] ... with respect to a fiduciary's breach of any responsibility, duty, or obligation under this part [29 U.S.C. §§ 1101–1114], or with respect to a violation of this part[.]” 29 U.S.C. § 1113.¹ The parties agree that this provision applies to plaintiffs' fiduciary-duty claims. ² Simplified somewhat, the statute requires that a claim be brought within three years of the date the plaintiff first obtained “actual knowledge” of the breach or violation forming the basis for the claim, but in no event later than six years after the breach or violation. Id. “Actual knowledge” means “knowledge of the underlying conduct giving rise to the alleged violation,” rather than “knowledge that the underlying conduct violates ERISA.” Wright v. Heyne, 349 F.3d 321, 331 (6th Cir.2003). Pointing to plaintiffs' allegation that they learned in 2003 that they would not receive the benefits they were allegedly promised, the district court concluded that plaintiffs had to file within three years of that time, or in 2006. Because they filed in 2009, three years after the limitations period expired, the district court found the claims time-barred and dismissed them for failure to state a claim.

Plaintiffs contend that the district court applied the wrong limitations period—that it should have applied a six-year period instead of a three-year period because they assert fraud in count one. The final clause of the statute of limitations provides: “except that in the case of fraud or concealment, such action may be commenced not later than six years after the date of discovery of such breach or violation.” 29 U.S.C. § 1113. If plaintiffs' fiduciary-duty claims fall within this clause, they were permitted to file no later than “six years after the date of discovery of [the] breach or violation.” Id. There is no serious dispute that plaintiffs' claims are timely if a six-year limitations period is used.³ The question, then, is whether this is a “case of fraud or concealment.”

The parties' disagreement concerns a question of statutory interpretation. U.S. Steel and the Fund contend...