Crotty v. Cook, 96-15576
| Decision Date | 15 August 1997 |
| Docket Number | No. 96-15576,96-15576 |
| Parties | 21 Employee Benefits Cas. 1853, 97 Cal. Daily Op. Serv. 6489, 97 Daily Journal D.A.R. 10,613, Pens. Plan Guide (CCH) P 23936T John T. CROTTY and Suzanne S. Crotty, husband and wife, Plaintiffs-Appellants, v. J. Gordon COOK, as Trustee for the Pension and Profit Sharing Plans of Renaud, Cook, Videan, Geiger & Drury, P.A., an Arizona professional corporation and as a partner, shareholder, equity owner, director and/or officer, actual or de facto, of Renaud, Cook, Videan, Geiger & Drury, P.A.; Renaud, Cook, Videan, Geiger & Drury, P.A., an Arizona professional corporation; William W. Drury, Jr., as a partner, shareholder, equity owner, director and/or officer, actual or de facto, of Renaud, Cook, Videan, Geiger & Drury, P.A., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Stephen E. Silver, Burch & Cracchiolo, Phoenix, AZ, for plaintiffs-appellants.
Richard A. Segal, Gust Rosenfeld, Phoenix, AZ, for defendants-appellees.
Mark S. Flynn, United States Department of Justice, Washington, DC, for the Secretary of Labor, as amicus curiae.
Appeal from the United States District Court for the District of Arizona; Roslyn O. Silver, District Judge, Presiding. D.C. No. CV-93-00645-ROS.
Before: PREGERSON, JOHN T. NOONAN, Jr., and KLEINFELD, Circuit Judges.
Appellants John T. Crotty and his wife, Suzanne S. Crotty, appeal the district court's grant of summary judgment in favor of Appellees. John Crotty, an attorney, participated in the "profit sharing plan" and the "money purchase plan" (together the "Plans") at the law firm where he worked. He contends that the administrator of the Plans withheld his ERISA benefits and failed to provide certain requested information, including copies of summary plan descriptions, as required by ERISA. Crotty seeks to recover his ERISA benefits under 29 U.S.C. § 1132(a), and he seeks statutory damages under 29 U.S.C. § 1132(c) for the plan administrator's failure to provide certain requested information.
The district court granted summary judgment in favor of Appellees concluding that Crotty lacked ERISA standing because during the district court litigation he received all of his vested benefits under the Plans. The district court also ruled that Crotty was not entitled to damages under § 1132(c) for the plan administrator's failure to provide information because Crotty never requested the information in writing.
We conclude that even if Crotty did receive his vested benefits during the litigation, he has standing because he had not received those benefits when he filed his complaint. We also conclude that Crotty may be entitled to damages under § 1132(c) because he orally requested plan information that the plan administrator was required to give to him. Accordingly, we reverse the district court's grant of summary judgment in favor of Appellees.
Crotty was employed as an attorney at the law firm of Renaud, Cook, Videan, Geiger & Drury, P.A. (the "firm"), from August 1, 1989, to September 4, 1992. Crotty participated in the Plans that were offered by the firm. Appellee Cook was the administrator and trustee for the Plans during Crotty's employment with the firm.
In early 1991, Cook allegedly promised Crotty that Crotty's compensation would equal 37.5% of Crotty's collected billings. In November 1991, the firm informed Crotty that contributions to the Plans would be deducted from the 37.5% of his collected billings. In December 1991, Cook gave Crotty a statement showing that 37.5% of his collected billings for 1991 amounted to $80,102.63. According to this statement, Crotty was scheduled to earn $80,102.63 in the form of $55,800 in base salary, $9,817.32 in bonus, $4,272.22 in pension plan contributions, and $10,213.09 in profit sharing plan contributions. The Appellees claim that the $80,102.63 figure given in December 1991 was only an estimate.
Crotty alleges that in January 1992, he orally requested information about the Plans from Cook's assistant. Crotty never received any summary plan description or any written plan information from the time he became eligible for participation on August 1, 1991, until he left the firm in September 1992.
In October 1992, Crotty received a statement of his account balances in the Plans. These reported amounts were significantly lower than the account balances listed in Crotty's December 1991 statement. Also in October 1992, Crotty received copies of the Plans, but not the summary plan descriptions.
In November 1992, the Plans' attorney advised Crotty that his account balance in the Plans for the 1991 year was only $8,150. Crotty then filed suit against the Appellees in the United States District Court for the District of Arizona.
In the pretrial order, Crotty asserted two types of ERISA claims against the Appellees: (1) "claims for unfunded and unpaid Plan benefits for 1991 and 1992," and (2) "a claim for penalties based upon the Plan administrator's failure to provide information to which participants are entitled under ERISA." 1
The parties also stipulated that the Plans constituted "qualified retirement plans subject to the reporting and disclosure requirements of the Internal Revenue Code and Title I of ERISA during the period of August 1, 1989, through September 4, 1992."
The parties further stipulated that Appellees calculated Crotty's Plan benefits for 1991 and 1992 based on "Annual Compensation" of $63,463.60 and $34,788.10, respectively. 2 Crotty accepted the payment of vested benefits as calculated by the Appellees for the 1991 and 1992 fiscal years but explicitly stated in a letter sent to Cook that he reserved his rights to "additional compensation due and owing, or for additional sums to be contributed to said [P]lans based upon such additional compensation."
Appellees argue that the district court had no jurisdiction over the alleged unpaid benefits Crotty seeks because Appellees never contributed those unpaid benefits to the Plans. Appellees are incorrect. The failure to make a required contribution to an ERISA Plan is a "delinquent contribution" that violates 29 U.S.C. § 1145:
Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.
A violation of § 1145 is a claim that confers subject matter jurisdiction on the federal courts. See id. § 1132(e)(2) ().
Appellees cite Freeman v. Jacques Orthopaedic and Joint Implant Surgery Medical Group, Inc., 721 F.2d 654 (9th Cir.1983) to support their argument that federal courts do not have subject matter jurisdiction over an employer's failure to contribute required funds to an ERISA Plan. Appellees misconstrue this case. In Freeman, we merely held that a plaintiff employee who had never been a participant in an ERISA Plan did not have standing under ERISA. Id. at 656. We did not hold that a federal court lacks subject matter jurisdiction over a claim that an employer wrongfully failed to make required contributions to an ERISA Plan. Because Freeman does not limit § 1132(e)' § grant of jurisdiction, the district court had subject matter jurisdiction over Crotty's claim for benefits under the Plans.
To sue for damages under ERISA, Crotty must be an ERISA "participant" or "beneficiary" who may be entitled to benefits under the Plans. 3 This requirement is set forth at 29 U.S.C. § 1132(a):
A civil action may be brought--
(1) by a participant or beneficiary-
....
(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.
The term "participant" means "any employee or former employee of an employer ... who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer." 29 U.S.C. § 1002(7). "In order to establish that [a former employee] may become eligible for benefits, a claimant must have a colorable claim that (1) he or she will prevail in a suit for benefits, or that (2) eligibility requirements will be fulfilled in the future." Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 117-18, 109 S.Ct. 948, 958, 103 L.Ed.2d 80 (1989) (internal quotations omitted). 4
Crotty claims that the Appellees failed to pay him benefits as required by the plain terms of the Plans. The amount of annual benefits Appellees were required to pay Crotty under the Plans depends, in part, on how Crotty's "annual compensation" is defined. Because Crotty was a plan participant, he would have standing to assert an ERISA claim based on Appellees' delinquent contribution.
Appellees argue that Crotty lost his ERISA standing during the course of the district court litigation because they paid Crotty all his vested benefits after he filed suit. Thus, Appellees contend that Crotty ceased being a participant in the Plans and lost his ERISA standing. The district court agreed, concluding that the "determination of standing, based upon whether the ERISA benefits have been paid to the participant, is not decided merely at the time the suit is filed but at any time during the pendency of the lawsuit."
This conclusion contradicts our decision in Nishimoto v. Federman-Bachrach & Assoc., 903 F.2d 709 (9th Cir.1990). In Nishimoto, an ERISA plaintiff filed an action in state court that was later removed by the defendants to federal court. The plaintiff filed a motion for remand that ...
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