Longo v. Trojan Horse Ltd.

• Decision Date: 15 January 2014
• Docket Number: No. 5:13–CV–418–BO.,5:13–CV–418–BO.
• Citation: 992 F.Supp.2d 612
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: Garibaldi LONGO, et al., Plaintiffs, v. TROJAN HORSE LTD., et al., Defendants.

992 F.Supp.2d 612

Garibaldi LONGO, et al., Plaintiffs,

v.TROJAN HORSE LTD., et al., Defendants.

No. 5:13–CV–418–BO.

United States District Court,

E.D. North Carolina,

Western Division.

Jan. 15, 2014.

Mark S. Fistos, Steven R. Jaffe, Farmer, Jaffe, Weissing, Edwards, Fistos & Lehrman, P.L., Fort Lauderdale, FL, Stephen A. Dunn, Emanuel & Dunn, Raleigh, NC, for Plaintiffs.

Charles F. Marshall, III, Brooks Pierce McLendon Humphrey & Leonard, LLP, Raleigh, NC, Jack L.B. Gohn, Gohn, Hankey & Stichel, LLP, Baltimore, MD, for Defendants.

TERRENCE W. BOYLE, District Judge.

This cause comes before the Court on a motion to dismiss or alternatively to stay or transfer this action filed by defendants Trojan Horse, Ltd., Glen Burnie Hauling, Inc., the Trojan Horse LTD 401(k) Plan, Brian Hicks, Susan Stubbs, and Sherry Korb. A hearing was held on the matter before the undersigned on December 12, 2013, at Raleigh, North Carolina. For the reasons discussed below, defendants' motion is denied.

BACKGROUND

Plaintiffs filed this putative class action regarding the alleged failure of defendants to make contributions to a “defined contributions plan,” or 401(k) plan, of which plaintiffs are beneficiaries. Plaintiffs, participating employees of defendants, allege that since January 1, 2009, eligible participants have contributed a portion of their wages to the plan, but that beginning in May or June 2012 defendants have failed to make deposits into the plan, notwithstanding that they have continued to deduct and withhold the regular contributions from plaintiffs' wages. Defendants Trojan Horse and Glen Burnie are trucking companies that haul mail for the United States Postal Service, and plaintiffs are truck-driver employees of defendants. Plaintiffs filed this action under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq. Plaintiff seek recover of benefits under 29 U.S.C. section 1132(a)(1)(B) and allege that defendants breached their fiduciary duties under 29 U.S.C. section 1132(a)(2). Plaintiffs further seek injunctive and other equitable relief under 29 U.S.C. section 1132(a)(3) and attorneys' fees as provided in 29 U.S.C. § 1132(g).

DISCUSSION

Defendants have moved to dismiss this action for lack of subject matter jurisdiction and failure to state a claim. Fed.R.Civ.P. 12(b)(1); (6). The individual defendants seek dismissal for lack of personal jurisdiction. Fed.R.Civ.P. 12(b)(2). Defendants also seek dismissal for improper venue and ask alternatively that this Court stay this action or transfer it to the District of Maryland. Fed.R.Civ.P. 12(b)(3); 28 U.S.C. § 1404.

I. The Court has subject matter jurisdiction and plaintiffs have stated claims upon which relief can be granted

Federal Rule of Civil Procedure 12(b)(1) authorizes dismissal of a claim for lack of subject matter jurisdiction. When subject matter jurisdiction is challenged, the plaintiff has the burden of proving jurisdiction to survive the motion. Evans v. B.F. Perkins Co., 166 F.3d 642, 647–50 (4th Cir.1999). “In determining whether jurisdiction exists, the district court is to regard the pleadings' allegations as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Richmond, Fredericksburg & Potomac R.R Co. v. United States, 945 F.2d 765, 768 (4th Cir.1991).

A Rule 12(b)(6) motion tests the legal sufficiency of the complaint. Papasan v. Allain, 478 U.S. 265, 283, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986). When acting on a motion to dismiss under Rule 12(b)(6), “the court should accept as true all well-pleaded allegations and should view the complaint in a light most favorable to the plaintiff.” Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993). A complaint must allege enough facts to state a claim for relief that is facially plausible, meaning that recitals of elements and conclusory statements do not suffice. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

Defendants contend that the Court is without subject matter jurisdiction to consider plaintiffs' claims, and that plaintiffs have therefore failed to state a claim upon which relief can be granted, because the plan contributions in question are governed by the Service Contract Act (SCA), 41 U.S.C. §§ 6701 et seq., and not by ERISA as asserted by plaintiffs in their complaint.

The SCA “was passed to provide labor standards for the protection of employees of contractors who perform maintenance service for federal agencies.” Masters v. Maryland Mgmt. Co., 493 F.2d 1329, 1332 (4th Cir.1974). “The administrative remedies provided under the SCA are tailored for the recovery of wages and benefits due employees,” Berry v. Andrews, 535 F.Supp. 1317, 1318 (M.D.Ala.1982), and there is no private right of action under the SCA. Lee v. Flightsafety Servs. Corp., 20 F.3d 428, 431 (11th Cir.1994). Defendants contend that, as “service employees” within the meaning of the SCA, plaintiffs must seek administrative remedies through the Department of Labor in order to recover any unpaid employer contributions they seek. See e.g., Oji v. PSC Envtl. Mgmt. Inc., 771 F.Supp. 232, 234 (N.D.Ill.1991).

Plaintiffs do not contest that defendants' contracts with the U.S. Postal Service are governed by the SCA. Rather, plaintiffs contend that ERISA and the SCA are mutually supplemental, and thus that they are not limited to the administrative remedies provided by the SCA. ERISA governs elective contributions by employees to qualifying 401(k) plans, whether they are withheld from wages or paid to an employer, 29 C.F.R. § 2510.3–102, and “the district courts of the United States ... have exclusive jurisdiction of civil actions under [ERISA] brought by the Secretary or by a participant, beneficiary, [or] fiduciary,....” 29 U.S.C. § 1132(e)(1).

When considering the relationship between other statutes and the SCA, courts have found that the two are not mutually exclusive and have allowed plaintiffs otherwise covered by the SCA to bring suit, so long as the provisions at issue are not in direct conflict. See e.g., Masters, 493 F.2d at 1332 (Fair Labor Standards Act (FLSA) and SCA mutually supplemental where not in direct conflict); Berry, 535 F.Supp. at 1318 (allowing employee whose contract was covered by the SCA to bring FLSA retaliation claim). While there is a paucity of case law considering the relationship between ERISA and the SCA, there is nothing to suggest that ERISA, like the FLSA, cannot be considered to be mutually supplemental to the SCA. See Pantoja v. Edward Zengel & Son Express, Inc., Case No. 10–20663–CV–Lenard/Turnoff, 2011 U.S. Dist. LEXIS 154845 *9–*10 (S.D.Fla. May 31, 2011) (SCA and ERISA can mutually co-exist).

“Indeed, ‘when two statutes are capable of coexistence, it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective.’ ” J.E.M. Ag Supply, Inc. v. Pioneer Hi–Bred Int'l, Inc., 534 U.S. 124, 143–44, 122 S.Ct. 593, 151 L.Ed.2d 508 (2001) (quotation omitted). ERISA was enacted to be a bold and comprehensive statute, and the Court is informed here by “the deliberate care with which ERISA's civil enforcement remedies were drafted” to be in many instances exclusive. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987). The Court is unaware of any clearly expressed intention of Congress to cut away at this preemptive scheme, nor is the Court aware of any indication of a congressional intention that the SCA should be preemptive or occupy any field. Accordingly, the Court holds that ERISA and the SCA can each be given effect and plaintiffs are not limited to a remedy under the SCA for claims of unpaid benefits or breach of fiduciary duty under ERISA.

Defendants further argue that the contributions at issue in this matter were made by the employer, not the employees, and are thus not covered by ERISA. The Eleventh Circuit has recently held that claims for violations of fiduciary duty regarding employer contributions to qualifying 401(k) plans are not governed by ERISA, and must in applicable circumstances be brought under the SCA. SeePantoja v. Edward Zengel & Son Exp., Inc., 500 Fed.Appx. 892, 895 (11th Cir.2012).

Defendants have submitted an affidavit in support of their contention that “almost all” of the contributions at issue here are employer and not employee contributions. Tolson Aff. ¶ 4. This evidence is simply insufficient to convince the Court at this stage of the proceeding that the SCA provides the sole remedy for plaintiffs on their fiduciary duty claim. Defendants' own evidence supports that at least some of the contributions at issue were made by employees and not the employers, and without further evidence on this issue the Court cannot decide as a matter of law that the type of contribution at issue in this matter requires resolution through the administrative procedures of the SCA.

II. Stay or dismissal under the primary jurisdiction doctrine is not warranted

The doctrine of primary jurisdiction is “specifically applicable to claims properly cognizable in court that contain some issue within the special competence of an administrative agency.” Reiter v. Cooper, 507 U.S. 258, 268, 113 S.Ct. 1213, 122 L.Ed.2d 604 (1993). Primary jurisdiction “requires the court to enable a ‘referral’ to the agency, staying further proceedingsso as to give the parties reasonable opportunity to seek an administrative ruling.” Id. No fixed formula exists for the application of the doctrine of primary jurisdiction to the facts of a particular case. United States v. Western Pac. R.R. Co., 352 U.S. 59, 64, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956). Though not an exhaustive list, four factors may be considered in deciding whether to stay the district court's jurisdiction in...