Fotta v. Trustees of United Mine Workers

• Decision Date: 11 February 2003
• Docket Number: No. 01-2097.,01-2097.
• Citation: 319 F.3d 612
• Parties: Abraham FOTTA, individually and on behalf of all other persons similarly situated, Appellant v. TRUSTEES OF THE UNITED MINE WORKERS OF AMERICA, Health and Retirement Fund of 1974; Michael Holland; Donald Pierce; Elliot Segal; Joseph Stahl, II
• Court: U.S. Court of Appeals — Third Circuit

319 F.3d 612

Abraham FOTTA, individually and on behalf of all other persons similarly situated, Appellant v. TRUSTEES OF THE UNITED MINE WORKERS OF AMERICA, Health and Retirement Fund of 1974; Michael Holland; Donald Pierce; Elliot Segal; Joseph Stahl, II

No. 01-2097.

United States Court of Appeals, Third Circuit.

Submitted Under Third Circuit LAR 34.1(a) January 14, 2002.

Filed February 11, 2003.

Before ALITO and ROTH, Circuit Judges, SCHWARZER,^* District Judge.

OPINION OF THE COURT

ROTH, Circuit Judge.

Appellant, Abraham Fotta, is a disabled miner who had to wait nine years to receive his disability payments. He has now received all the delayed payments but has sued his pension fund, claiming that § 502(a)(3)(B) of the Employee Retirement Income Security Act of 1974 (ERISA) entitles him to the interest that would have accumulated on his delayed payments. After a bench trial, the District Court held that Fotta was not entitled to interest because he failed to prove his disability payments were withheld wrongfully. Fotta raises three issues on appeal. First, did the District Court err by requiring Fotta to prove that the withholding of his disability payments was wrongful? Second, if so, did the District Court err when it found that his payments were not wrongfully withheld? Finally, did the District err in denying class certification to Fotta to represent a class of miners who have received delayed disability payments? After careful consideration, we believe that the District Court correctly answered each of these questions and we will affirm its judgment.

I. Factual and Procedural History

On July 23, 1984, Abraham Fotta, while on his job for the United States Steel Mining Company, Inc., stepped off a motor, twisting his ankle and, as has ultimately been determined, aggravating a pre-existing condition. On the day of the injury, Fotta worked through his shift. He told his foreman about the injury, but no accident report was filed. Fotta waited until the following day to visit his employer's physician, Dr. Eisley. Dr. Eisley found that Fotta had a synovial cyst (a type of tumor) in his ankle and referred him to Dr. Mitchell, an orthopedic surgeon. Dr. Mitchell operated to remove the tumor and at the same time treated Fotta for a fractured ankle.

Following the surgery, Fotta's 18 year litigation odyssey began. He first filed a claim for Workmen's Compensation benefits, which was denied on May 10, 1985. The Workmen's Compensation Referee found that Fotta had failed to prove that the mine accident caused his disability. Based on a report from Dr. Mitchell, the Referee concluded that Fotta's disability was caused by his pre-existing villonodular synovitis (recurring ankle cysts), not his accident. Fotta twice appealed this decision, and the Workmen's Compensation Appeals Board twice affirmed the Referee. Fotta then appealed to the Pennsylvania Supreme Court.

On July 15, 1985, when his second appeal to the Workmen's Compensation Appeal Board was pending, Fotta received some good news. The Social Security Administration had awarded him disability benefits on the basis of a malignant synovial tumor of the right ankle. Fotta was then able to embark on the next phase of his search for disability benefits. On February 7, 1986, he submitted an application for disability benefits to defendant, the United Mine Workers of America Health and Retirement Fund of 1974. The Fund provides disability payments when an applicant proves that (1) he was involved in a mine accident, (2) he received a Social Security Disability Insurance award, (3) he is an employee covered by the plan, and (4) the mine accident caused the disability. See Section 615.1.12 of the Fund's Pension Processing Manual. When the cause of the disability is not obvious, a mine accident that "substantially aggravates" a pre-existing condition can fulfill the fourth condition.

The Fund gathered information concerning Fotta's application. It received records from the Social Security Administration, from Fotta's employer, and from Drs. Mitchell and Eisley. The Fund also reviewed records of the Workmen's Compensation proceedings. After considering this information, the Fund informed Fotta, in a letter dated November 18, 1987, that his application had been denied because he did not "establish that [his] disability was caused by a mine accident." The letter also stated that Fotta could call if he had any questions and that, if he was not satisfied that the decision was correct, he could request a hearing within 90 days. Fotta did not take any action in response to this denial of benefits.

Fotta did, however, persist in his Workmen's Compensation appeals. After almost six years of litigation, the Pennsylvania Supreme Court rewarded Fotta's perseverance. On June 1, 1993, the court reversed the Workmen's Compensation Appeal Board and granted Fotta Workmen's Compensation benefits.

Buoyed by this success, Fotta returned to his claim for disability benefits from the Fund. On June 15, 1993, he sent the Fund a copy of the Pennsylvania Supreme Court's decision. The opinion mentioned a letter from Dr. Mitchell that the Fund had not previously seen. The letter stated that "the majority of [Fotta's] disability is due to the pigmented villonodular synovitis but the alleged traumatic ankle injury also is contributing to his incomplete recovery." Fotta v. Workmen's Compensation Appeal Board, 534 Pa. 191, 626 A.2d 1144, 1146 (1993). Despite Fotta's failure to appeal the November 18, 1987, denial of disability benefits, the Fund on November 1, 1993, decided in light of the new information that Fotta had established that a mine accident substantially aggravated his pre-existing ankle cysts and awarded disability benefits to Fotta. The Fund initially awarded him $18,835 in retroactive payments. After adjusting the starting date, the Fund paid him an additional $1,965.

Fotta, however, was not satisfied. He asked the Fund for interest on the retroactive payments. When the Fund declined to pay him interest, Fotta sued the Fund and the individual defendants in the United States District Court for the Western District of Pennsylvania. He alleged that by failing to pay him interest on his retroactive payments, the Fund violated ERISA requirements promulgated at 29 U.S.C. § 1001 et seq.

The District Court originally dismissed his law suit for failure to state a claim under ERISA. Fotta appealed. In Fotta v. Trustees of the United Mine Workers of America Health & Retirement Fund of 1974, 165 F.3d 209 (3rd Cir.1998) (Fotta I), we reversed and remanded the case to the District Court. We held that § 502(a)(3)(B), which empowers courts to award appropriate equitable relief to redress violations of ERISA or ERISA regulated plans, provides a cause of action for interest on delayed pension benefits even when the beneficiary acquired the delayed benefits without resorting to litigation.

On remand, the District Court held a bench trial and concluded that Fotta was not entitled to relief because he had failed to show that the delay in paying his disability was due to any wrongful conduct by the Fund. The District Court also denied Fotta's request for class certification because he had failed to demonstrate that the proposed class met the commonality requirement of Federal Rule of Civil Procedure 23(a). Fotta appealed.

II. Jurisdiction and Standard of Review

Because Fotta sued under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq, the District Court had federal question jurisdiction under 28 U.S.C. § 1331. We have appellate jurisdiction under 28 U.S.C. § 1291.

The decision to award pre-judgment interest is within the discretion of the District Court, see Fotta, 165 F.3d at 214, but we exercise plenary review over its interpretation and application of legal precedent. Holmes v. Pension Plan of Bethlehem Steel Corp., 213 F.3d 124 (3rd Cir.2000). We review the District Court's decision to deny class certification for an abuse of discretion. Id. at 136

III. Discussion

A. The Claim for Interest

Fotta contends that the District Court used the wrong standard to evaluate his claim for interest. He claims in addition that, even if the District Court had applied the correct standard, it erred in finding that he failed to satisfy it.

1. Must Fotta prove that the Fund acted wrongfully?

Fotta's primary claim is that the District Court misapplied § 502(a)(3)(B), using the wrong standard to evaluate his claim for interest. The District Court held that the Fund is liable for interest only if Fotta can show that the Fund "wrongfully delayed" his disability benefits. Fotta contends that he need not prove the Fund acted wrongfully. He asserts that § 502(a)(3)(B) makes the Fund presumptively liable for interest whenever ERISA benefits are delayed, regardless of the reason.

Section 502(a)(3)(B) allows a beneficiary of an ERISA plan to sue for "other appropriate equitable relief," which we have held includes interest on delayed payments. See, e.g., Anthuis v. Colt Industries Operating Corp., 971 F.2d 999, 1010 (3d Cir.1992); Fotta I, 165 F.3d at 209. Section 502(a)(3)(B) does not, however, allow a beneficiary to sue for equitable relief for any reason, but only "(i) to redress [violations of ERISA or the terms of an ERISA plan] or (ii) to enforce any provisions of this subchapter or the terms of the plan." 29 U.S.C. § 1132(a)(3)(B). As we emphasized in Fotta I, § 502(a)(3)(B) "does not ... authorize appropriate equitable relief at large, but only `appropriate equitable relief for the purpose of `redress[ing any] violations or enforc[ing] any provisions of ERISA or an ERISA plan.'" Fotta I, 165 F.3d at 213 (citing Mertens v. Hewitt Associates, 508 U.S. 248, 253, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993)). Accordingly, an ERISA beneficiary who seeks interest on delayed payments must first prove that those payments were withheld in violation of his ERISA plan or of ERISA itself....