Local 159 v. Nor-Cal Plumbing

• Decision Date: 12 January 1999
• Docket Number: Nos. 96-16172,NOR-CAL,R-CAL,s. 96-16172
• Citation: 185 F.3d 978
• Parties: (9th Cir. 1999) LOCAL 159, 342, 343 & 444; LOCAL 343 UNITED ASSOC. JOURNEYMEN & APPRENTICE TRAINING TRUST FD; LOCAL 343 UNITED ASSOC.OF PLUMBING, Plaintiffs-Appellees and Cross-Appellants, v.PLUMBING, INC.; NORTH BAY PLUMBING, INC.; ELMAR LEE PETTIT, a.k.a. ELMER LEE PETTIT; AUDREY JEAN PETTIT, Defendants-Appellants and Cross-Appellees
• Court: U.S. Court of Appeals — Ninth Circuit

Page 978

185 F.3d 978 (9th Cir. 1999)

LOCAL 159, 342, 343 & 444; LOCAL 343 UNITED ASSOC. JOURNEYMEN & APPRENTICE TRAINING TRUST FD; LOCAL 343 UNITED ASSOC.OF PLUMBING, Plaintiffs-Appellees and Cross-Appellants, v. NOR-CAL PLUMBING, INC.; NORTH BAY PLUMBING, INC.; ELMAR LEE PETTIT, a.k.a. ELMER LEE PETTIT; AUDREY JEAN PETTIT, Defendants-Appellants and Cross-Appellees.

Nos. 96-16172

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted January 11, 1999

Submission Deferred January 12, 1999

Re-Submitted February 10, 1999

Decided July 27, 1999

[Copyrighted Material Omitted]

Patrick W. Jordan, Jeffer, Mangels, Butler & Marmaro, San Francisco, California, for the defendants-appellants and cross- appellees Nor-Cal Plumbing, Inc., and Elmar Lee Pettit.

Henry F. Telfeian, Berkeley, California, for the defendants-appellants and cross-appellees North Bay Plumbing, Inc., and Audrey Jean Pettit.

John J. Davis, Jr., McCarthy, Johnson & Miller, San Fran-cisco, California, for the plaintiffs-appellees and cross- appellants.

Appeals from the United States District Court for the Northern District of California Susan Y. Illston, District Judge, Presiding. D.C. No. CV 87-02365 SYI.

Before: Charles Wiggins, A. Wallace Tashima, and Barry G. Silverman, Circuit Judges.

OPINION

TASHIMA, Circuit Judge:

Nor-Cal Plumbing, Inc. ("Nor-Cal"), a plumbing contracting business, was a signatory to a collective bargaining agreement ("CBA") with Local 343 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry (the "Union"). The CBA incorporated a Trust Agreement obligating Nor-Cal to make pension and welfare benefit contributions to employee benefit plans (the "Trust Funds")¹ based on the number of hours worked by Nor-Cal's employees.

The owner and manager of Nor-Cal, Elmar Pettit, began "double-breasting" when he opened a non-union plumbing business, North Bay Plumbing, Inc. ("North Bay"), while still maintaining Nor-Cal, which was unionized. He started transferring work from Nor-Cal to North Bay, until Nor-Cal finally stopped bidding on jobs altogether and shut down its operations in 1987.

The Trust Funds sued Nor-Cal, North Bay, Pettit and his wife Audrey Pettit (collectively the "Employers"), on the theory that the CBA covered North Bay employees because North Bay was the alter ego of Nor-Cal. The suit primarily sought to recover contributions for hours worked by North Bay employees. A jury found that Nor-Cal and North Bay were alter egos and pierced the corporate veil as to Elmar Pettit, but not his wife. We must decide whether ERISA or LMRA provided subject matter jurisdiction over the action brought by the Trust Funds. We have appellate jurisdiction under 28 U.S.C. S 1291, and we affirm on the ground that jurisdiction over the suit existed under LMRA.²

I.

The Trust Funds initially brought suit against the Employers in 1987, claiming that Nor-Cal and North Bay were alter egos and a single employer; therefore, that contributions were owed under the Trust Agreement to the Trust Funds for work done by North Bay employees. The Trust Funds also sought to hold the Pettits individually liable for the unpaid contributions. In 1992, the district court granted summary judgment in favor of the Trust Funds. It found that North Bay was the alter ego of Nor-Cal and that Nor-Cal and North Bay had breached the CBA by failing to observe its terms and conditions of employment with respect to North Bay employees. The district court also entered judgment against the Pettits in their individual capacities under a veil-piercing theory. See UA Local No. 343 of the United Ass'n of Journeymen v. Nor-Cal Plumbing, Inc., 797 F. Supp. 767 (N.D. Cal. 1992).

On appeal, we reversed in part the district court's summary judgment ruling. See UA Local 343 of the United Ass'n of Journeymen v. Nor-Cal Plumbing, Inc., 48 F.3d 1465 (9th Cir.), cert. denied, 516 U.S. 912 (1995) ("UA Local 343 I"). We remanded the alter ego claim for trial because genuine issues of material fact remained as to whether Pettit had the intent to use North Bay in a sham effort to avoid Nor-Cal's CBA obligations. See id. at 1473-74. Similarly, we found that issues of fact remained on the request to pierce the corporate shell. See id. at 1475-76.

After a seven-week trial, a jury found that Nor-Cal and North Bay were indeed alter egos and that North Bay was therefore bound by the terms of the Trust Agreement. It also found Nor-Cal and North Bay liable for fraud. Finally, it determined that Pettit, but not his wife, should be held individually liable on a veil-piercing theory. It awarded compensatory damages in the amount of $1,812,897.60. The district court entered judgment on the verdict on April 15, 1996, and on May 21, 1996, entered an order denying the Employers' motion for judgment as a matter of law and for a new trial. Both sides now appeal.

II.

Whether subject matter jurisdiction exists is a question of law reviewed de novo. See Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1153 (9th Cir. 1998). The district court's interpretation of a statute is also reviewed de novo. See United States v. Mack, 164 F.3d 467, 471 (9th Cir. 1999). The district court's finding that a party is a "fiduciary" under ERISA is a factual conclusion reviewed for clear error. See Steen v. John Hancock Mut. Life Ins. Co., 106 F.3d 904, 913-14 (9th Cir. 1997).

III.

A. Jurisdiction under ERISA

Section 502(e) of ERISA grants exclusive jurisdiction to the district courts to hear "civil actions under this subchapter brought by the Secretary [of Labor] or by a participant, beneficiary, [or] fiduciary." 29 U.S.C. S 1132(e)(1). Similarly, S 502(a)(3) provides that "a participant, beneficiary, or fiduciary" has standing to enforce any ERISA provisions. S 1132(a)(3)(ii). Therefore, "a federal court has no jurisdiction to hear a civil action under ERISA that is brought by a person who is not a `participant, beneficiary, or fiduciary.' " Harris v. Provident Life & Accident Ins. Co., 26 F.3d 930, 933 (9th Cir. 1994); see Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 27 (1983).

The Employers contend that the district court improperly exercised jurisdiction under ERISA because the Trust Funds are neither a participant, beneficiary, nor fiduciary of an ERISA plan.³ The Trust Funds assert that they are indeed "fiduciaries" under ERISA.

ERISA "defines `fiduciary' not in terms of formal trusteeship, but in functional terms of control and authority over the plan." Mertens v. Hewitt Assocs., 508 U.S. 248, 262 (1993) (emphasis in original).

[A] person is a fiduciary with respect to a plan [governed by ERISA] to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, . . . or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan.

29 U.S.C. S 1002(21)(A); see Credit Managers Ass'n v. Kennesaw Life & Accident Ins. Co., 809 F.2d 617, 625-26 (9th Cir. 1987) ("An ERISA fiduciary includes anyone who exercises discretionary authority over the plan's management, anyone who exercises authority over the management of its assets, and anyone having discretionary authority or responsibility in the plan's administration.").

In providing that "a person is a fiduciary with respect to a plan," the statute suggests that the "person" and the "plan" must be separate entities. 29 U.S.C.S 1002(21)(A). ERISA includes a "trust" in its definition of "persons," see 29 U.S.C. S 1002(9), and thus a trust fund could qualify as a fiduciary of a separate ERISA plan so long as it exercises discretionary authority over the management or administration of the plan or its assets. See Penn Cent. Corp. v. Western Conference of Teamsters Pension Trust Fund, 75 F.3d 529, 532 (9th Cir. 1996) (finding that pension trust fund, as sponsor of multiemployer pension plan, administered plan); Credit Managers Ass'n, 809 F.2d at 625-26 (finding that master trust could be fiduciary to several individual employer ERISA plans because it collected and disposed of plan premiums and arranged for payment of claims); U.S. Steel Mining Co. v. District 17, UMW, 897 F.2d 149, 152 (4th Cir. 1990) (holding that "[a]s the plan administrator, the [pension] fund is clearly a fiduciary"). We therefore disagree with the Second Circuit's contrary dicta that it is "difficult to imagine a situation in which a fund could fulfill" the role of a fiduciary and thus bring an ERISA suit in its own name. Pressroom Unions Printers League Income Sec. Fund v. Continental Assurance Co., 700 F.2d 889, 893 n.8 (2d Cir. 1983).

While there are cases where the facts reveal that a fund serves as a fiduciary to a pension plan that constitutes a separate entity, we do not confront such a situation here. The Trust Funds assert that they have fiduciary responsibility over separate ERISA plans, but the record does not reflect that the Trust Funds and the plans are distinct entities. The Trust Agreement and even the Trust Funds' complaint treat them as one and the same. We conclude that, in the instant case, the Trust Funds are the ERISA plans themselves. See 29 U.S.C. S 1002(1), (2) (providing that employee benefit plan governed by ERISA can be a "fund"). As such, they cannot be ERISA fiduciaries with respect to the plans.

We recognize that a few of our decisions have treated trust funds as proper plaintiffs under ERISA without setting forth the facts establishing that the trust funds are "fiduciaries" with respect to distinct ERISA plans. See, e.g., Pension Trust Fund for Operating Eng'rs v. Triple A Mach. Shop, Inc. , 942 F.2d 1457, 1461 (9th Cir. 1991) (permitting ERISA action by trust fund against employer for failure to report timely and accurate pension fund contributions); Brick Masons Pension Trust v....