GCIU-Emp. Ret. Fund v. Coleridge Fine Arts

• Decision Date: 06 April 2020
• Docket Number: No. 19-3161,19-3161
• Parties: GCIU-EMPLOYER RETIREMENT FUND; BOARD OF TRUSTEES OF THE GCUI-EMPLOYER RETIREMENT FUND, Plaintiffs - Appellants, v. COLERIDGE FINE ARTS; JELNIKI LIMITED, Defendants - Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

GCIU-EMPLOYER RETIREMENT FUND; BOARD OF TRUSTEESOF THE GCUI-EMPLOYER RETIREMENT FUND, Plaintiffs - Appellants, v. COLERIDGE FINE ARTS; JELNIKI LIMITED, Defendants - Appellees.

No. 19-3161

UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

April 6, 2020

(D.C. No. 2:14-CV-02303-EFM-KGG)

(D. Kan.)

ORDER AND JUDGMENT^*

Before BRISCOE, LUCERO, and McHUGH, Circuit Judges.

This is the second time this case has been before this court. In each instance, a dismissal for lack of personal jurisdiction was at issue. In this appeal, Plaintiffs GCIU-Employer Retirement Fund and the Board of Trustees of the GCIU-Employer Retirement Fund (collectively the "Fund") appeal from a second order dismissing their action against Defendants Coleridge Fine Arts ("Coleridge") and Jelniki Limited ("Jelniki"). The Fund alleges that Coleridge and Jelniki are jointly andseverally liable for certain pension payments under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., as amended by the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"). Id. §§ 1381-1461. Before reaching any issue of potential liability, the district court first had to determine whether Coleridge and Jelniki - both foreign corporations with controlling interests in an American company called Greystone Graphics, Inc. ("Greystone") - are subject to personal jurisdiction in the United States. The district court concluded personal jurisdiction was not established and granted a motion to dismiss. In the prior appeal, we agreed that the facts then presented did not support the exercise of personal jurisdiction over Coleridge and Jelniki, but we reversed and remanded for jurisdictional discovery. GCIU-Emp'r Ret. Fund v. Coleridge Fine Arts, 700 F. App'x 865, 867-71 (10th Cir. 2017) (unpublished).

On remand, after the parties conducted further discovery, Coleridge and Jelniki again moved to dismiss on jurisdictional grounds. The district court granted the motion, concluding the additional evidence generated by the Fund did not establish that (1) Coleridge and Jelniki were involved in Greystone's day-to-day operations; or (2) the Fund's claims arose out of or related to Coleridge's and Jelniki's contacts with the United States. We affirm the district court's second dismissal for a lack of personal jurisdiction. We conclude that the Fund did not make a prima facie showing of purposefully-directed activities by Coleridge and Jelniki in connection with Greystone's withdrawal from the pension fund. We also conclude that the Fund forfeited any argument its injuries arose out of Coleridge's and Jelniki's allegedcontacts with the United States. Given these conclusions, we need not proceed to also consider whether exercising personal jurisdiction over Coleridge and Jelniki would be consistent with fair play and substantial justice.

I

Multi-employer pension plans are regulated by ERISA, with the goal of protecting anticipated retirement benefits when such plans terminate "before sufficient funds have been accumulated[.]" Ceco Concrete Constr., LLC v. Centennial State Carpenters Pension Tr., 821 F.3d 1250, 1252 (10th Cir. 2016) (brackets added). To prevent employers from pulling out to "avoid paying for any shortfalls" upon termination, Congress amended ERISA by enacting the MPPAA. Id. at 1252-53. The MPPAA imposes "withdrawal liability" on any employer that has an obligation to contribute but withdraws from the plan. 29 U.S.C. § 1381(a). An obligation to contribute may arise under "one or more collective bargaining (or related) agreements[.]" Id. § 1392(a)(1) (brackets added). A "complete withdrawal" occurs when an employer "permanently ceases to have an obligation to contribute under the plan," or "permanently ceases all covered operations under the plan." Id. § 1383(a)(1)-(2); see also Ceco, 821 F.3d at 1253 (reiterating that "withdrawal liability arises when the employer stops its duty to contribute or ceases covered operations").

The MPPAA broadly defines "employer." The statute provides that all "trades or businesses (whether or not incorporated) which are under common control" shall be treated as "a single employer." 29 U.S.C. § 1301(b)(1). The law incorporatesTreasury regulations specifying that "common control" businesses include a "parent-subsidiary group" connected through "ownership of a controlling interest[.]" 26 C.F.R. § 1.414(c)-2(a)-(b) (brackets added). The statutory definition of "employer" thus "extend[s] beyond the business entity withdrawing from the pension fund," imposing liability on related entities "which, in effect, pierces the corporate veil and disregards formal business structures." Ceco, 821 F.3d at 1259 (brackets added, citation omitted). "[I]f a withdrawing employer is unable to pay in full, a pension plan can recover the deficiency jointly and severally from any other trade or business under common control with the withdrawing employer." Id. (brackets added, citation omitted).

According to the Fund's First Amended Complaint, the Fund receives contributions from several employers as a result of negotiated collective bargaining agreements ("CBAs") with certain local unions. App. at 100 ¶ 6. Greystone, a now defunct Kansas corporation, was one of the employers that previously contributed to the Fund pursuant to CBAs with the Graphic Communications International Union (the "Union"). Id. at 101, 103, 106 ¶¶ 11, 22, 44. Coleridge, an Irish company, became the 100% stockholder of Greystone in 2002. Id. at 100-02, 106 ¶¶ 8, 13, 20, 45. Jelniki, another Irish company, is the parent of Coleridge. Id. at 101, 106 ¶¶ 9-10, 14, 45. Greystone ceased doing business in 2011, effectuating a complete withdrawal from the Fund. Id. at 105 ¶ 39.

The Fund alleges that the 2011 withdrawal triggered shared liability for Coleridge and Jelniki, which were part of Greystone's common control group underERISA. Id. at 101-02, 107 ¶¶ 11, 21, 48. In 2013, the Fund obtained a default judgment against Greystone and its domestic "control group" entities. Id. at 106, 170-71 ¶ 41. The judgment imposed joint and several withdrawal liability upon those American companies in the amount of $4,454,092.02, but apparently the Fund has been unable to collect. Id. The Fund initiated this lawsuit in 2014, seeking to recover from Greystone's foreign "control group" entities - Coleridge and Jelniki. Id. at 2, 9-13. The Fund alleges Coleridge and Jelniki used Greystone to expand their operations in the United States. Id. at 105 ¶¶ 37-38.

The Fund also alleges that Greystone, Coleridge, and Jelniki had overlapping officers or directors. For example, Kevin Walsh served on the board of directors for Coleridge, Jelniki, and Greystone. Id. at 105-06 ¶¶ 34, 40. The Fund asserts that Eugene Reynolds, in addition to serving as a director for Coleridge and Jelniki, acted as President, Chief Executive Officer, and a board member for Greystone. Id. at 102, 105-06 ¶¶ 29, 40. The Fund maintains that Reynolds played an active role in negotiating one or more CBAs, pointing to (1) June 2007 correspondence on Greystone letterhead in which Reynolds urged the Union to accept a "Final" collective bargaining proposal; and (2) a March 2007 "Agreement" with the Union, signed by Reynolds and mentioning Greystone, to hold an "off the record" meeting to allow the Union to "communicate their concerns directly to the owner." Id. at 104, 142-43 ¶ 30. The Fund avers that, given the managerial positions he held with Greystone, Reynolds must have known about ERISA withdrawal liability as far back as 2007. That same year an actuary hired by Greystone indicated he was looking intothe issue because it could impact Greystone's business planning. Id. at 103 ¶ 26. Reynolds additionally signed a 1994 CBA between the Union and a predecessor to Greystone. Id. at 104, 144-69 ¶ 32.

Claiming a lack of personal jurisdiction, Coleridge and Jelniki moved to dismiss the First Amended Complaint. Id. at 180-89. The district court granted the motion. Id. at 292-310. On appeal, we agreed that the facts set forth in the parties' pleadings, affidavits, and exhibits were insufficient to establish minimum contacts consistent with due process. GCIU, 700 F. App'x at 868-71. However, because we concluded that the Fund was entitled to discovery on the issue of day-to-day involvement as a potential route to establish minimum contacts, we reversed and remanded for further proceedings. Id. at 871; see also id. ("On remand, the district court shall permit jurisdictional discovery of material relating to the question of whether Coleridge and Jelniki, either directly or through their owners, directors, or agents, were involved in the day-to-day management of Greystone.").

We made the following observations in the first appeal. We agreed with the Seventh Circuit that the "MPPAA's control group provision regarding withdrawal liability" does not alter the rule that "stock ownership in or affiliation with a corporation, without more, is not a sufficient minimum contact." Id. at 869 (quoting Cent. States, Se. & Sw. Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 943-45 (7th Cir. 2000)). We assumed arguendo that Reynolds served on multiple boards and actively participated in the day-to-day management of Greystone, but found this activity lacking because there were "no credible allegationsMr. Reynolds routinely acted on behalf of Coleridge and Jelniki when he discharged any of his duties as an officer and director of Greystone." Id. at 870. We added that the Fund's First Amended Complaint failed to allege any involvement by Reynolds in the actuary's 2007 decision to solicit withdrawal liability information from the Fund, let alone any actuarial involvement by Reynolds "in his capacity as an owner or director of Coleridge or Jelniki." Id.

To round out our discussion of minimum contacts in the first appeal, we commented that Reynolds's involvement in the negotiation of the 2007 CBA presented "a slightly closer...