Fentron Industries, Inc. v. National Shopmen Pension Fund

• Decision Date: 21 April 1982
• Docket Number: Nos. 81-3110,81-3330,s. 81-3110
• Citation: 674 F.2d 1300
• Parties: 94 Lab.Cas. P 13,559, 3 Employee Benefits Ca 1323 FENTRON INDUSTRIES, INC., et al., Plaintiffs-Appellees, v. The NATIONAL SHOPMEN PENSION FUND, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1300

674 F.2d 1300

94 Lab.Cas. P 13,559, 3 Employee Benefits Ca 1323

FENTRON INDUSTRIES, INC., et al., Plaintiffs-Appellees, v. The NATIONAL SHOPMEN PENSION FUND, et al., Defendants-Appellants.

Nos. 81-3110, 81-3330.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Jan. 7, 1982.

Decided April 21, 1982.

Richard H. Robblee, Hafer, Cassidy & Price, Michael A. Patterson, Lee, Smart, Cook, Biehl & Martin, Seattle, Wash., for defendants-appellants.

Gerald M. Feder, Gerald M. Feder Law Offices, Washington, D. C., for amicus curiae.

Alan S. Levins, Littler, Mendelson, Fasitff & Tichy, San Francisco, Cal., John E. Iverson, Seattle, Wash., argued, for plaintiffs-appellees; George J. Tichy, II, San Francisco, Cal., on brief.

Appeal from the United States District Court for the Western District of Washington.

Before ANDERSON and ALARCON, Circuit Judges, and CRAIG, District Judge. ^*

J. BLAINE ANDERSON, Circuit Judge:

The National Shopmen Pension Fund (Fund) and its trustees appeal from summary judgment in favor of Fentron Industries, Inc. (Fentron) and a class of its employees. The district court found that the actions of the Fund and its trustees, cancelling certain pension credits of the employees, violated various provisions of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1381. We affirm in part, reverse in part, and remand for further proceedings.

I. BACKGROUND

Fentron and Shopmen's Local Union No. 506 (Union) entered into three successive collective bargaining agreements effective from April 1, 1968 through April 1, 1977. Pursuant to the second and third agreements, Fentron contributed to the Fund on behalf of its employees from April 1, 1971 until April 1, 1977. Thereafter, the Fund refused to accept Fentron's contributions because Fentron was no longer party to a collective bargaining agreement.

At the time Fentron began contributing to the Fund, the Fund Plan (1969 Plan) provided that an employee's pension benefits become nonforfeitable (vested) upon the employee reaching age 50 and accumulating at least ten years of "Pension Credit," at least five of which are "Future Service Credits." ¹ Pension Credits earned for employment while the employer contributed to the fund were denominated "Future Service Credits," and those earned for employment before the employer began contributing were denominated "Past Service Credits." ²

In September 1976, after Congress enacted ERISA, the trustees amended the 1969 Plan. This amendment (1976 Plan) included new section 2.09 of Article II. Section 2.09 empowered the trustees to cancel certain In September 1978, more than a year after the expiration of Fentron's last collective bargaining agreement, the trustees cancelled the Past Service Credits of all Fentron Employees. ⁴ No notice was given to Fentron or to its employees of the amendment or of the cancellation until October 1978.

obligations of the Fund to employees whose employer withdrew from the plan. ³

In January 1979 Fentron filed a claim against the Fund and its trustees for injunctive and declaratory relief, alleging violations of ERISA and the Labor Management Relations Act, 29 U.S.C. §§ 185-186. Subsequently, a class of Fentron employees also sued, making the same allegations as Fentron and also seeking reimbursement of improperly withheld pension benefits.

The class consists of all Fentron employees who have applied for pension benefits or who have been employed by Fentron for at least ten years, five of which were during the period Fentron contributed to the Plan. It is undisputed that all members of the class were vested under the 1969 Plan. The district court certified the class and the actions were consolidated.

The district court entered partial summary judgment for the plaintiffs on January 22, 1981. The court permanently enjoined the trustees from administering the fund unlawfully, restored improperly withheld pension credits, held the trustees personally liable, and awarded attorney's fees. The court did not, however, decide the claims of two Fentron employees, the amount of the monetary award (restored benefits), or the amount of attorney's fees. The Fund alone filed a notice of appeal from this judgment on February 18, 1981 (No. 81-3110).

Two days before the Fund filed its notice of appeal in 81-3110, the trustees timely moved for reconsideration under Fed.R.Civ.P. 59. They contested Fentron's standing to sue and their own personal liability. The district court denied the motion and granted summary judgment for the two remaining employees on May 22, 1981. No determination of the amount of the monetary award or of the attorney's fees was made. The Plan and the trustees filed a timely notice of appeal (No. 81-3330).

II. ISSUES ON APPEAL

We address the following issues on this appeal:

(1) whether we have jurisdiction to decide these cases;

(2) whether Fentron has standing to sue the Fund for violations of ERISA;

(3) whether the employee class was properly certified;

(4) whether the Fund's cancellation of Past Service Credits improperly amended the Plan's vesting schedule under ERISA § 203(c)(1)(B), 29 U.S.C. § 1053(c)(1) (B); and

(5) whether ERISA § 404, 29 U.S.C. § 1104(a)(1)(D) imposes per se personal fiduciary liability on trustees for violations of ERISA.

III. DISCUSSION

A. Jurisdiction

The district court entered two judgments, one in January and one in June. The trustees' February motion for reconsideration, however, suspended the time for filing a notice of appeal for all parties until The district court's January order included an injunction against the Fund and the trustees. This injunction is an appealable interlocutory order under 28 U.S.C. § 1292(a)(1).

after that motion was denied in the June judgment. Fed.R.App.P. 4(a)(4). The June notice was therefore timely as to both the January and June orders.

In addition to the injunction, all of the substantive ERISA claims raised by these appeals are properly before us. 28 U.S.C. § 1292(a)(1) extends jurisdiction not only to the injunction itself, but to all the issues that underlie the order. 9 J. Moore, Federal Practice P 110.25(1), at 270-71 (2d ed. 1980); Long v. Bureau of Economic Analysis, 646 F.2d 1310, 1317 (9th Cir. 1981).

The district court's injunction orders the trustees to "properly process all pension claims of Fentron employees affected by this decree;" and enjoins the trustees from "administering the National Shopmen's Pension Fund in a manner inconsistent with this decree, ERISA, and the terms of the Plan." The order also declares section 2.09 invalid under ERISA, orders a reimbursement of pension benefits and holds the trustees personally liable.

The substantive ERISA issues implicated by the district court's rulings on section 2.09, reimbursement and personal trustee liability, underlie its decision to enjoin. Review of the injunction, therefore, necessarily involves deciding the ERISA claims, and we have jurisdiction to do so.

We also exercise our discretion to review the class certification and standing issues. See Yamamoto v. Omiya. 564 F.2d 1319, 1325 n.11 (9th Cir. 1977). Inasmuch as we consider matters related to these issues in reviewing the injunction, the interests of judicial economy are best served by broaching them now.

We decline, however, to review the district court's attorney's fees award. The district court has not yet determined the amount of the fees. Moreover, the challenge to the award centers on the failure of the district court to provide reasons for its decision. See Hummell v. S. E. Rycoff & Co., 634 F.2d 446, 452 (9th Cir. 1980). By declining to reach this issue until the amount of the award is determined, we give the district court an opportunity to explain its ruling.

B. Fentron's Standing

The district court held that Fentron had alleged sufficient injury to sue under ERISA. Specifically, the court found that the alleged interference with Fentron's collective bargaining agreement and disruption of employer-employee relations posed by the trustees action was adequate to pass constitutional muster. The court also found that Fentron's injuries fell within the "zone of interests" protected by ERISA under the test of Data Processing Service Organization v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970). We agree.

In order to have standing to sue for violations of a federal statute, a plaintiff must: (1) suffer an injury in fact; (2) fall arguably within the zone of interests protected by the statute allegedly violated; and (3) show that the statute itself does not preclude the suit. Data Processing, 397 U.S. at 153, 90 S.Ct. at 829; Barlow v. Collins, 397 U.S. 159, 90 S.Ct. 832, 25 L.Ed.2d 192 (1970); Hood River County v. United States Department of Labor, 532 F.2d 1236, 1238 (9th Cir. 1976).

Fentron's alleged injuries are specific and personal. The failure of the Fund to pay pension benefits will impair Fentron's relationship with the Union. Moreover, the trustees offered to restore cancelled Past Service Credits to employees who would quit Fentron and work at least one year for a contributing employer. This provision threatens direct injury to Fentron. These are neither the general allegations of adverse impact condemned in Natural Resources Defense Council Inc. v. EPA, 507 F.2d 905, 908-11 (9th Cir. 1974), nor the assertion of third party rights condemned in Fisher v. Tucson School District, 625 F.2d 834, 837 (9th Cir. 1980).

Fentron's alleged injuries also fall within the zone of interests that Congress intended to protect when it enacted ERISA. Section 2(a) of ERISA, 29 U.S.C. § 1001(a), recognizes that pension plans "have become an important factor affecting the stability of employment and the successful development of industrial relations," and that therefore it was desirable to enact ERISA. The threat to Fentron's relationship with the Union, and to the continued employment by Fentron of its employees, falls...