Moore v. Amer. Fed. Television & Radio Artists

• Decision Date: 29 June 2000
• Docket Number: Nos. 98-8895,98-9263,s. 98-8895
• Citation: 216 F.3d 1236
• Parties: (11th Cir. 2000) Samuel D. MOORE, Curtis Mayfield, et al., Plaintiffs-Appellants, v. AMERICAN FEDERATION OF TELEVISION AND RADIO ARTISTS, AFTRA Health and Retirement Fund, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1236

216 F.3d 1236 (11th Cir. 2000)

Samuel D. MOORE, Curtis Mayfield, et al., Plaintiffs-Appellants, v. AMERICAN FEDERATION OF TELEVISION AND RADIO ARTISTS, AFTRA Health and Retirement Fund, et al., Defendants-Appellees.

Nos. 98-8895, 98-9263.

United States Court of Appeals Eleventh Circuit.

June 29, 2000.

[Copyrighted Material Omitted] Appeals from the United States District Court for the Northern District of Georgia.

(No. 98-02358-1-CV-CC), Clarence Cooper, Judge.

Before ANDERSON, Chief Judge, and TJOFLAT and FAY, Circuit Judges.

TJOFLAT, Circuit Judge:

Plaintiffs, eighteen recording artists, brought this suit against their union's benefit plans, AFTRA Health and Retirement Funds (the "Funds"); the trustees of the Funds ("Funds Trustees"); and eight record companies (the "Record Company Defendants") who contribute to the Funds on plaintiffs' behalf. Plaintiffs' complaint contains eight counts, each purporting to allege a separate cause of action.¹ Albeit under separate theories of recovery, all eight counts allege that the Record Company Defendants, with whom the plaintiffs have recording contracts, improperly interpreted the provision of the union's collective bargaining agreement with the record companies which determines the amount the companies should contribute to the Funds on the plaintiffs' behalf, and therefore failed to contribute the amounts due. The eight counts also allege that the Funds Trustees breached their fiduciary duty by failing to collect the delinquencies.

After filing suit, the plaintiffs moved the district court to certify a class of recording artists for the purpose of litigating three breach of fiduciary duty claims against the Funds Trustees, and a civil RICO claim against the Record Company Defendants. The district court denied the plaintiffs' motion. In its order, the court certified a question of law for appeal under 28 U.S.C. § 1292(b) (1994), and we granted the plaintiffs leave to appeal the order, Appeal No. 98- 9265. Appeal No. 98-8895, which is from a final judgment entered pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, presents the question whether the district court properly dismissed two claims against the Record Company Defendants: a derivative delinquent contribution claim under the Employee Retirement Income Security Act of 1974 ("ERISA") section 509(g)(2) (codified at 29 U.S.C. § 1132(g)(2) (1994)), and a claim for equitable relief under ERISA section 509(a)(3) (codified at 29 U.S.C. § 1132(a)(3)). We find no abuse of discretion in the district court's denial of class certification and no error in the court's dismissal of these ERISA claims, and accordingly affirm.

I.

A.

Plaintiffs and the class they seek to represent are recording artists; all of them are singers.² Through agents, they negotiate and enter into individual contracts with record companies, including the Record Company Defendants, relating to the creation, promotion, and sale of record albums. The plaintiffs are compensated with royalties; the record companies receive the profits from the sale of the albums.

The American Federation of Television and Radio Artists ("AFTRA"), a union, represents the singers (and thus the plaintiffs) and several other categories of entertainers, such as actors and musicians. At all times material to this suit, a collective bargaining agreement for the benefit of the singers has existed between AFTRA and the record companies (including the Record Company Defendants). This agreement is called "Phono Code."

The Phono Code originated in the mid-1950s. In 1959, AFTRA and the record companies (and other entities not pertinent here) entered into an Agreement and Declaration of Trust ("the Trust Agreement") in order to provide fringe benefits for singers (and other artists AFTRA represents). The agreement created two funds, a health fund and a retirement fund ("the Funds"), and twenty trusteeships, the Funds Trustees. Ten of the trustee positions are held by individuals chosen by the record companies, and ten are held by individuals chosen by AFTRA.³ Contemporaneously with the enactment of the Trust Agreement, AFTRA and the record companies amended the Phono Code in order to provide underwriting for the singers' benefits; the amendment incorporated by reference the Trust Agreement and obligated the record companies to contribute to the Funds five percent of the "gross compensation" the companies paid to the singers. Through amendments, that percentage has become eleven percent.

Under the Trust Agreement, the Funds Trustees have "full authority to determine the form, nature, and amount of benefits" to be paid to the singers, and are "authorized and empowered to ... compromise, settle, arbitrate and release claims or demands in favor or against" the Funds and to "construe the provisions of the Trust Agreement." Any construction of the agreement the Funds Trustees render "in good faith" is "binding" on AFTRA and the record companies.

The Phono Code requires a record company to send the Funds and each singer with whom it has contracted a semi-annual statement of the "gross compensation" the company has paid the singer during the previous six months.⁴ The central issue in these appeals (and in the counts of the complaint not before us) is the meaning of the term "gross compensation."⁵ In 1959, when the Trust Agreement was created and the Phono Code was amended to incorporate its terms, a singer's "gross" compensation amounted to the royalty payments he received from his record company for the albums it sold. Since the parties' recording contract obligated the company to underwrite all of the costs of producing and selling an album,⁶ it deducted nothing from the royalties; hence, there was no such thing as "net" compensation. Over time, however, the record companies shifted the costs of producing and selling albums to the artists, such that by the 1970s the singers had assumed the lion's share of these costs.⁷ Not infrequently, a contract between a record company and a singer called for the company to front certain costs. The singer would reimburse the company from royalties, in which case, the company's semi-annual statement to the singer and the Funds would reflect as "gross" compensation the "net" compensation actually paid to the singer-after deducting the costs the company had fronted. The result of this arrangement was that the term "gross compensation" in the Phono Code became ambiguous. The record companies took the position that the term did not include the expenses it fronted for the singer; the Funds Trustees, once the ambiguity was called to their attention, disagreed; gross compensation included such expenses. Which interpretation of gross compensation is correct would depend on what AFTRA and the record companies intended the phrase to mean when the phrase first appeared in an amendment to the Phono Code. Nothing in the record, however, indicates what AFTRA and the record companies had in their minds and said to one another when they adopted the phrase "gross compensation."

In any event, as early as the 1970s, the record companies and the Funds Trustees attempted to resolve this problem through negotiations. Their efforts failed, and the record companies adhered to their interpretation of "gross compensation." The Funds Trustees and AFTRA acceded to the record companies' interpretation rather than seeking a judicial declaration that gross compensation included the monies the companies fronted the singers and deducted from their royalties.⁸ In 1995, AFTRA and the record companies eliminated the problem when they renegotiated the Phono Code and defined the phrase "gross compensation."⁹

B.

The plaintiffs brought the instant action in 1993, prior to the Phono Code amendment defining gross compensation. In their complaint, they sought to recover (for the benefit of the Funds and, thus, indirectly themselves) the contributions they contend the record companies should have paid to the Funds from the time the companies started fronting expenses for the singers and deducting those expenses from their royalties to the day plaintiffs filed their suit. The plaintiffs amended their complaint twice.¹⁰ In 1996, after the Funds Trustees rejected the plaintiffs' demand that they bring suit against the record companies (for the Funds contributions the plaintiffs contend were due), they filed a second amended complaint (the "complaint") which seeks recovery of sums allegedly due from the Record Company Defendants for the period extending from the 1970s to the 1995 amendment of the Phono Code.¹¹

The plaintiffs' complaint resembles the "shotgun" pleading we condemned in Pelletier v. Zweifel, 921 F.2d 1465, 1518-19 (11th Cir.1991). It is 96 pages long with 232 numbered paragraphs; each count incorporates by reference all previous paragraphs. Counts I, II, IV, V, VI, and VII are implicated in these appeals. Counts II, V, VI, and VII are here because the district court refused to certify them as class actions. Counts I and IV are here because the district court dismissed them for failure to state a claim for relief. See Fed.R.Civ.P. 12(b)(6). In part II, we review the court's refusal to grant class certification; in part III we review the court's Rule 12(b)(6) rulings.

II.

A district court's decision to grant or deny class certification is discretionary; hence, we review the court's decision under the abuse-of-discretion standard. Hudson v. Delta Air Lines, Inc., 90 F.3d 451, 455 (11th Cir.1996); see also Armstrong v. Martin Marietta Corp., 138 F.3d 1374, 1381 (11th Cir.) (en banc) ("[D]enials of class certification usually stand."), cert. denied, 525 U.S. 1019, 119 S.Ct. 545, 142 L.Ed.2d 453 (1998).

In order to obtain class certification of Counts II, V, VI, or VII, the plaintiffs had to satisfy all four of the conditions of Rule 23(a) of the Federal Rules of Civil Procedure:

(1) the class is so numerous that joinder of all members is...