Licensed Div. Dist. No. 1 MEBA/NMU, AFL-CIO v. Defries

• Citation: 943 F.2d 474
• Decision Date: 26 August 1991
• Docket Number: Nos. 91-2033,P,AFL-CI,91-2056,s. 91-2033
• Parties: 138 L.R.R.M. (BNA) 2526, 120 Lab.Cas. P 10,993, 14 Employee Benefits Cas. 1736 LICENSED DIVISION DISTRICT NO. 1 MEBA/NMU,laintiff-Appellee, v. Clayton Eugene DEFRIES; Clyde E. Dodson; Claude W. Daulley; R.F. Schamann; Karl Landgrebe; Donald Masingo, Defendants-Appellants (Two Cases).
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

Page 474

943 F.2d 474

138 L.R.R.M. (BNA) 2526, 120 Lab.Cas. P 10,993,

14 Employee Benefits Cas. 1736

LICENSED DIVISION DISTRICT NO. 1 MEBA/NMU, AFL-CIO, Plaintiff-Appellee, v. Clayton Eugene DEFRIES; Clyde E. Dodson; Claude W.

Daulley; R.F. Schamann; Karl Landgrebe; Donald

Masingo, Defendants-Appellants (Two Cases).

Nos. 91-2033, 91-2056.

United States Court of Appeals,

Fourth Circuit.

Argued May 8, 1991.

Decided Aug. 26, 1991.

Robert J. Higgins, Dickstein, Shapiro & Morin, Washington, D.C., argued (Angelo V. Arcadipane, Joseph E. Kolick, Jr., Marcus C. Migliore and David B. Killalea, on brief), for defendants-appellants.

Susan Souder, Gordon, Feinblatt, Rothman, Hoffberger & Hollander, Baltimore, Md., argued (Nancy E. Paige, Charles R. Bacharach, Mark H. Kolman, on the brief), for plaintiff-appellee.

Before PHILLIPS and WILKINS, Circuit Judges, and HALLANAN, District Judge for the Southern District of West Virginia, sitting by designation.

OPINION

PHILLIPS, Circuit Judge:

The Licensed Division of District No. 1 of the Marine Engineers' Benefits Association/National Maritime Union (Licensed Division), filed suit seeking a declaratory judgment that the Licensed Division, and not its "parent union," District No. 1--MEBA/NMU (District No. 1), had authority to appoint the union trustees of benefit plans of recently merged unions. The Licensed Division sought the ruling after it had tried to remove the six defendants-appellants as the union trustees, but the defendants had refused to vacate their offices. The district court found that under the applicable agreements, the Licensed Division has appointment authority. We agree, and affirm.

I

The controversy giving rise to this action arose because of a merger in March 1988 between District No. 1--Pacific Coast District (PCD), which was composed mostly of supervisory maritime officers, and the National Maritime Union (NMU), which was composed of non-supervisory maritime workers. The new union was called "District No. 1--MEBA/NMU." As part of the structuring of the new union, and to accommodate potential problems with having supervisory and non-supervisory employees in the same bargaining unit, see generally 29 U.S.C. § 164(a), two divisions were created: the Licensed Division, which includes supervisory maritime personnel licensed by the Coast Guard and consists of all the former employees of PCD; and the Unlicensed Division, which includes all other members and consists of all members of NMU. At the time of the merger, defendants, who hold offices in the MEBA/NMU, placed themselves in control of the Licensed Division, and appointed themselves as trustees of the benefits plan.

The merger of the unions was approved by a vote of the membership of both unions, and the merger agreement included changes to the relevant union constitutional provisions. However, no amendment was made to the trust agreements that govern administration of the employer-employee controlled trusts for pension and medical benefits, vacation benefits, and training. (Pursuant to 29 U.S.C. § 186(c)(5)(B), employees and employers appoint equal members to control these multi-employer, multi-union plans.) Those trust agreements provide that "the Union" should appoint the trustees, but the antecedent to "the Union" in the agreements, District No. 1--Pacific Coast Division, no longer exists. This raised the question that prompted this litigation: what, under the relevant documents, is now "the Union"? It is a question that requires answer because in new elections the defendants were all defeated as the leaders of the Licensed Division. The new leadership wanted to appoint the trustees, but the old leadership, who remain officers of the District No. 1 union, resisted.

The district court, after a trial, held that the Licensed Division is "the Union." This timely appeal by the defendant-trustees followed.

II

An initial question is whether the district court had jurisdiction to entertain an action by the Licensed Division, which is the only named plaintiff. On the challenge of subject matter jurisdiction, the district court held that though the Licensed Division did not have standing as a "fiduciary" or "participant" to bring this action under 29 U.S.C. § 1132 of ERISA (authorizing suits by a "participant, beneficiary, or fiduciary"), the officers of the division would have. Building on this, the court held that though the plaintiff "may not have fully stated the correct federal statutory provision under which the claim arises [plaintiff relied on ERISA § 1132] or fully stated the correct plaintiff(s)," such failure does not warrant dismissal, since "[i]t is well settled that courts may excuse pleading defects if the facts alleged in the complaint and relief requested demonstrate the existence of a substantial federal question."

We agree that in an appropriate situation a court may excuse pleading defects for the purpose here in issue. In Provident Life & Accident Ins. Co. v. Waller, 906 F.2d 985 (4th Cir.1990), for example, we held that though a plan administrator did not have standing to sue under § 1132, it could be deemed to have invoked general federal question jurisdiction under 28 U.S.C. § 1331, even though the claim as pleaded never invoked that statute as its jurisdictional basis. In that case, faced with a claim "central" to ERISA yet one that fell "in the interstices of this comprehensive and labyrinthine statute[,]" we held that the "pleading defect" of not invoking the right statutory provision could be overlooked when "the facts alleged in the complaint and the relief requested demonstrate the existence of a substantial federal question." 906 F.2d at 988. Lack of standing, however, is not a "pleading defect" that can be excused by such a taking of judicial notice. Though such a defect might be cured by timely amendment, see generally Fed.R.Civ.P. 15; 6 C. Wright, A. Miller, M. Kane, Federal Practice & Procedure: Civil 2d § 1474 (1990), and was attempted here, the curing amendments were offered belatedly (post-judgment), and were rightly rejected.

Consequently, jurisdiction in this case can only be grounded in a determination that the Licensed Division, as sole named plaintiff, has standing under ERISA § 1132 to maintain this action, or that it may bring this action as one asserting a claim "central to ERISA," hence cognizable as one implicitly invoking the general federal question jurisdiction of § 1331 under the reasoning of Provident Life. Though we think that subject matter jurisdiction might be upheld on either basis, we conclude that it is properly rested here on the basis that the Licensed Division has standing as a "fiduciary" to invoke the jurisdiction conferred by ERISA § 1132.

The Licensed Division's contention, not accepted by the district court, that it had standing to sue as a "fiduciary" under § 1132 boils down to this. Section 1132(a)(3) provides that a civil suit may be brought "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...." In turn, "fiduciary" is defined thusly: "A person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan ..., or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan." 29 U.S.C. § 1002(21)(A). The Licensed Division is a fiduciary "to the extent" that it exercises "discretionary authority or discretionary control in the administration of a plan." Removing and replacing trustees is a manifestation of such an exercise of discretionary authority in the administration of the plan. Therefore, "to the extent" the Licensed Division has authority to appoint trustees (concededly the issue on the merits of the case) it is a fiduciary.

Appellants challenge this assertion on two levels. First, they contend, on a semantic level, that a union appointing trustees cannot exercise "authority or control" respecting the administration of a plan since by law, id. § 186(c)(5)(B), the union only can appoint one-half of a plan's trustees, and a majority of trustees is needed for the plan to act. Hence, appellants say fifty percent is not "control or authority." This argument is unavailing because it depends on an unduly restrictive interpretation of "control or authority." The statute defines fiduciary as a person who "exercises any discretionary authority" over the management of a plan. In common usage "authority" includes "power to influence or command thought, opinion, or behavior." Webster's Ninth New Collegiate Dictionary 117 (1987). Appointing one-half of a governing board reflects a "power to influence" the behavior of an enterprise. That is all that is required to satisfy the statutory definition.

The second challenge is similarly unavailing. It relies on cases that have emphasized the strict limiting effect on the definition of "fiduciary" that is imposed by the qualifying phrase "to the extent." As the Fifth Circuit has noted, "[t]he phrase 'to the extent' indicates that a person is a fiduciary only with respect to those aspects of the plan over which he exercises authority or control." Sommers Drug Stores v. Corrigan Enters., Inc., 793 F.2d 1456, 1459-60 (5th Cir.1986). On this basis, a number of courts have held that a union does not have standing under § 1132 simply to sue for pension benefits on behalf of its members since in such a representative role it is not acting as a fiduciary. See, e.g., Forys v. United Food & Commercial Workers Int'l Union, 829 F.2d 603, 607 (7th Cir.1987) (union is not a fiduciary when it "performs solely the task of presenting the claims of its individual members to the fund"); New Jersey State AFL-CIO v. State of New Jersey, 747 F.2d 891, 892-93 (3d Cir.1984) (union has no standing to bring an ERISA action to clarify the rights of its members to future...