Iron Workers Mid-South Pension Fund v. Terotechnology Corp.

• Decision Date: 05 January 1990
• Docket Number: MID-SOUTH,No. 89-3262,89-3262
• Citation: 891 F.2d 548
• Parties: , 11 Employee Benefits Cas. 2481 IRON WORKERSPENSION FUND, et al., Plaintiffs-Appellants, v. TEROTECHNOLOGY CORP., et al., Defendants, Borden Chemical, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 548

891 F.2d 548

58 USLW 2411, 11 Employee Benefits Cas. 2481

IRON WORKERS MID-SOUTH PENSION FUND, et al., Plaintiffs-Appellants, v. TEROTECHNOLOGY CORP., et al., Defendants, Borden Chemical Defendant-Appellee.

No. 89-3262.

United States Court of Appeals, Fifth Circuit.

Jan. 5, 1990.

Rehearing and Rehearing En Banc Denied Feb. 7, 1990.

Marie Healey, New Orleans, La., for plaintiffs-appellants.

James L. Ellis, Taylor, Porter, Brooks & Phillips, Thomas R. Peak, John F. McDermott, Baton Rouge, La., for defendant-appellee.

Appeal From the United States District Court for the Middle District of Louisiana.

Before LIVELY, ¹ JOLLY, and HIGGINBOTHAM, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

Employee benefit funds appeal from the dismissal of their suit to enforce liens recorded against Borden's Geismar plant pursuant to the Louisiana Private Works Act for employee benefit plan contributions owed by Borden's contractor, Terotechnology. The district court dismissed under Fed.R.Civ.P. 12(b), holding that insofar as it pertained to employee benefit plans, the Private Works Act was preempted by ERISA. 29 U.S.C. § 1001 et seq. Because the Private Works Act creates an additional method for enforcing the funding requirements of employee benefit plans it is preempted, and we affirm.

I

On March 26, 1973, Borden Chemical entered into a plant maintenance services contract with Terotechnology Corporation for work to be performed at its Geismar, Louisiana plant. On January 6, 1985, the Baton Rouge Building and Construction Trades Council, on behalf of three unions, executed a collective bargaining agreement with Terotechnology for work to be performed at the Borden jobsite in Geismar. This agreement required Terotechnology to submit fringe benefit contributions to nine employee benefit funds for each hour worked by its employees under that agreement at the Borden jobsite, and to deduct dues from their wages for forwarding to the unions.

Terotechnology did submit reports and contributions to the funds and the unions in accordance with its collective bargaining agreement through the middle of 1986. But thereafter, for the period August 1986 through January 1987, Terotechnology failed to fulfill its obligations under the collective bargaining agreement. Following Terotechnology's default on its contract with Borden, Borden terminated the agreement on February 14, 1987. Liens were timely filed by the unions and funds under the Louisiana Private Works Act on the public records of Ascension Parish, against both Borden, as owner of the property on which the work was performed, and Terotechnology, as the contractor and employer, for the amounts owed by Terotechnology.

On August 5, 1987, the unions and funds filed a delinquency action to recover the delinquent contributions and dues from Terotechnology. This action was asserted pursuant to § 515 and § 502 of ERISA and § 302(c)(5) of the LMRA. The unions and funds also sued Borden seeking to enforce the liens recorded against the Geismar plant for fringe benefit contributions and dues owed by Terotechnology.

On September 29, 1987, Borden filed a motion to dismiss, contending that the district court lacked jurisdiction over the unions' and funds' claims against it. The unions and funds asked the court to exercise pendent jurisdiction over their state law claims based upon the federal claims against Terotechnology. A default judgment was entered against Terotechnology on November 5, 1987. On November 16, 1987, the district court denied Borden's motion to dismiss.

On July 29, 1988, Borden filed a second motion to dismiss the unions' and funds' claims pursuant to Rule 12(b) of the Federal Rules of Civil Procedure, contending that the complaint failed to state a claim upon which relief could be granted against Borden because ERISA § 514(a) expressly preempts state laws such as La.R.S. 9:4801 et seq., which relate to employee benefit plans. Borden also argued that under the facts of this case no cause of action existed against it under ERISA because it was not an "employer" who can be sued for delinquent contributions under ERISA. The unions and funds opposed this motion, contending that their claims were not preempted, but they conceded that no ERISA cause of action existed against Borden.

On December 2, 1988, Iron Workers Mid-South Pension Fund v. Terotechnology, Corp., et al., 700 F.Supp. 310 (M.D.La.1988), Borden's Rule 12(b) motion was granted and the claims of six funds were dismissed. The district court held that the Private Works Act was preempted by ERISA insofar as it was applied to employee benefit plans. Subsequently, the claims of the remaining unions and funds were voluntarily dismissed with prejudice, and final judgment was entered by the district court on March 27, 1989. Only the Iron Workers Mid-South Pension Fund, Laborers National Pension Fund, and Louisiana Laborers Health & Welfare Fund appealed the district court's decision.

II

A. Jurisdiction

The parties assert two possible bases for federal jurisdiction. First, the parties assert that there is "pendent party" jurisdiction over the funds' state law cause of action against Borden. They argue that since the federal court had jurisdiction over the federal claims against Terotechnology, it also had jurisdiction over state law claims against nondiverse Borden because the claims arose out of a common nucleus of operative fact. This is not correct in light of the Supreme Court's recent decision in Finley v. United States, --- U.S ----, 109 S.Ct. 2003, 104 L.Ed.2d 593 (1989). Although the claims brought by the funds against Terotechnology were exclusively federal, ² there was no independent ground for subject matter jurisdiction over Borden.

"As regards all courts of the United States inferior to [the Supreme Court], two things are necessary to create jurisdiction, whether original or appellate. The Constitution must have given to the court the capacity to take it, and an act of Congress must have supplied it.... To the extent that such action is not taken, the power lies dormant."

Finley, 109 S.Ct. at 2006, quoting The Mayor v. Cooper, 6 Wall. 247, 252, 18 L.Ed. 851 (1868). The Supreme Court held in Finley that while pendant-party jurisdiction may pass constitutional muster, it has not been congressionally authorized. Id. 109 S.Ct. at 2006-07. It is not enough to confer jurisdiction over pendent parties that the plaintiff's case against one defendant can only be brought in federal court. Id. at 2008. ERISA § 502(e), 29 U.S.C. § 1132(e), provides that "... the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by ... [a] fiduciary" (emphasis added). ERISA does not authorize suits against property owners to enforce liens against the property to aid collection of delinquent contributions, however, so there is no statutory grant of jurisdiction over parties such as Borden.

Alternatively, Borden asserts that this case comes within the rule of Avco Corp. v. Machinists, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968), as that rule was recently applied by the Supreme Court to certain ERISA preemption defenses in Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 1546, 95 L.Ed.2d 55 (1987). Avco holds that a state law cause of action is a well-pleaded federal claim when Congress has so completely preempted an area of the law that any civil complaint raising this select group of preempted claims is necessarily federal in character. In Taylor the Supreme Court held that under Avco a state law cause of action that is within the scope of the civil enforcement provisions of ERISA § 502(a) was a well-pleaded federal claim. Id. 107 S.Ct. at 1548.

Section 502(a), 29 U.S.C. § 1132(a) provides:

A civil action may be brought--

(1) by a participant or beneficiary--

(A) for the relief provided for in subsection (c) of this section, or

(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;

(2) by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title;

(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan; ....

The funds are fiduciaries, and attempt to enforce the provisions of ERISA, specifically § 515, 29 U.S.C. § 1145 ³, and § 502(g)(2), 29 U.S.C. § 1132(g)(2). ⁴ The suit by the funds under the Louisiana Private Works Act is preempted because the claims for delinquent contributions are within the scope of the civil enforcement provisions of ERISA, which are exclusive. Taylor holds that the federal courts have jurisdiction over such suits. 107 S.Ct. at 1548.

B. Preemption

Section 514(a) of ERISA preempts "any and all state laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a). Section 514(c) defines the terms used in § 514(a):

(1) The term "State law" includes all law, decisions, rules, regulations, or other State action having the effect of law, of any State. A law of the United States applicable only to the District of Columbia shall be treated as a State law rather than a law of the United States.

(2) The term "State" includes a State, any political subdivisions thereof, or any agency or instrumentality of either, which purports to regulate, directly or indirectly, the terms and conditions of employee benefit plans covered by this subchapter.

29 U.S.C. § 1144(c).

The funds contend that these statutory provisions require that a two-prong test be used to determine if a state law is preempted by § 514(a). The...