Plucinski v. I.A.M. Nat. Pension Fund

• Decision Date: 19 May 1989
• Docket Number: No. 88-5352,88-5352
• Citation: 875 F.2d 1052
• Parties: , 57 USLW 2702, 11 Employee Benefits Ca 1185 Henry F. PLUCINSKI v. I.A.M. NATIONAL PENSION FUND, Perth Amboy Dry Dock Co., Perth Amboy Management Pension Fund, William T. Harth, Alfred C. Bruggeman, John Doe and Richard Roe, Defendants, Third Party Plaintiffs v. DISTRICT NO. 15, INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, Third Party Defendant. Appeal of I.A.M. NATIONAL PENSION FUND, Appellant. Perth Amboy Dry Dock Co., Appellee.
• Court: U.S. Court of Appeals — Third Circuit

Page 1052

875 F.2d 1052

100 A.L.R.Fed. 595, 57 USLW 2702,

11 Employee Benefits Ca 1185

Henry F. PLUCINSKI v. I.A.M. NATIONAL PENSION FUND, Perth Amboy Dry Dock Co.,

Perth Amboy Management Pension Fund, William T.

Harth, Alfred C. Bruggeman, John Doe and

Richard Roe, Defendants, Third

Party Plaintiffs v. DISTRICT NO. 15, INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, Third Party Defendant.

Appeal of I.A.M. NATIONAL PENSION FUND, Appellant.

Perth Amboy Dry Dock Co., Appellee.

No. 88-5352.

United States Court of Appeals Third Circuit.

Argued Dec. 9, 1988.

Decided May 19, 1989.

Robert T. Osgood (argued), I.A.M. Nat. Pension Fund, Washington, D.C., Eugene M. Haring, McCarter & English, Newark, N.J., for I.A.M. Nat. Pension Fund.

Thomas P. Vitolo (argued), Yauch, Peterpaul, Clark & Vitolo, Springfield, N.J., for Perth Amboy Dry Dock Co.

Before SLOVITER, BECKER, Circuit Judges, and FULLAM, Chief Judge, District Court. ^*

OPINION OF THE COURT

BECKER, Circuit Judge.

This case arises under the Employee Retirement Income Security Act ("ERISA") 29 U.S.C. Secs. 1001-1461 (1982). Appellant I.A.M. National Pension Fund ("IAM Fund" or "Fund") is an ERISA qualified multiemployer pension plan. See 29 U.S.C. Sec. 1002(2)(A). Appellee Perth Amboy Dry Dock Co. ("PADD"), an employer participating in the IAM Fund, alleges that it paid contributions to the Fund for the account of employee Henry F. Plucinski by mistake. The appeal requires us to decide whether employers such as PADD have either an implied right of action or a federal common law right of action under ERISA for equitable restitution of payments made to a pension fund under mistake of fact or law, as against the contention that ERISA's purpose of ensuring the stability of pension funds forecloses such actions.

Our sister circuits have split on both the implied right of action and federal common law issues. We conclude that there is no implied right under ERISA for such recovery, but that there is an action available under federal common law, which we are charged with applying interstitially in ERISA cases. See Van Orman v. American Insurance Co., 680 F.2d 301, 311 (3d Cir.1982). More precisely, we hold that an employer may recover such funds when the court finds it equitable, but we further hold that when restitution would result in the underfunding of a plan, it would be inequitable to order it. To the extent that the district court recognized a federal common law action for restitution, we affirm. However, because the district court did not address the equities of ordering restitution in this case, we remand for a development of the record and for the district court to exercise its equitable discretion. ¹

I. Background

Plucinski was employed by PADD as a storekeeper commencing in October 1945. Beginning in 1966, PADD entered into a series of collective bargaining agreements that obligated it to make contributions to the IAM Fund on behalf of employees covered by the agreements. Members of the local union of the International Association of Machinists and Aerospace Workers ("IAM"), as well as painters, carpenters, and electricians, who were members of three other unions, were covered by the agreements. Plucinski, however, was not a member of the IAM or any other labor union. Furthermore, it is undisputed that the job classification "storekeeper" was not covered by the 1966 collective bargaining agreements or by any subsequent collective bargaining agreement between PADD and its employees.

The IAM Fund is a "defined benefit" fund, which means that eligible employees are paid a predetermined amount upon retirement. The Fund does not keep segregated accounts for individual employees; all of its assets are pooled to pay benefits for those who are eligible. The Fund was obligated to provide pensions for covered PADD employees at the time of their retirement from PADD.

In March 1972, in response to an inquiry as to whether PADD management could participate in the fund, PADD was advised in writing that the IAM Fund would not permit participation in the Fund by any more employees who were not members of the IAM. However, for reasons that are in dispute, in late 1972 or early 1973, PADD began to make contributions to the IAM Fund on behalf of Plucinski. PADD alleges that in 1971 it had become aware that Plucinski was one of several employees who was not a member of any pension plan, and that, to remedy this, PADD management reached an agreement with a union representative allowing Plucinski to participate in the IAM Fund. See Certification of Alfred C. Bruggeman at 2. The IAM Fund disputes that such an agreement had been reached and alleges that PADD made the contributions in order to defraud the IAM Fund into accepting Plucinski as a participant although he was not entitled to participate under the agreements. See Appellant's Br. at 10-11.

In October 1984, shortly before he reached age 65, Plucinski filed an application for pension benefits with the IAM Fund. The Fund denied the request for benefits on the ground that, as a storekeeper, Plucinski was not entitled to benefits under any collective bargaining agreement and that there was no other written agreement that would have made Plucinski eligible for benefits. On March 17, 1986, Plucinski brought suit in the district court for the District of New Jersey against PADD, the PADD Management Pension Fund, PADD's former President, Alfred C. Bruggeman, its Vice President, William T. Harth, and the IAM Fund, seeking to recover the value of the pension benefits that he had been promised. PADD, the Management Fund, and Messrs. Bruggeman and Harth cross-claimed against the IAM Fund and the IAM Fund cross-claimed against them. ²

On cross-motions for summary judgment, the district court held that PADD was solely responsible for paying Plucinski's pension. The court also directed the IAM Fund to refund to PADD the value of all contributions paid by PADD to the Fund on behalf of Plucinski, plus interest. The court rejected an argument by the IAM Fund that ERISA does not provide a cause of action for an employer to recover erroneously paid contributions, finding that it was appropriate to create a federal common law right of action for such recovery. See Dist.Ct. Bench Op. at 6-7 (April 13, 1987) [hereinafter "Bench Op. II"]. In so doing, the district court adopted the holding and reasoning of Airco Industrial Gases v. Teamsters Health & Welfare Pension Fund, 618 F.Supp. 943 (D.Del.1985), rev'd in part on other grounds, 850 F.2d 1028 (3d Cir.1988).

The district court directed the entry of final judgment against PADD and the IAM Fund pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, determining that there was no just reason for delay in entering a final judgment. Both PADD and the IAM Fund appealed. However, Plucinski subsequently settled his claims against PADD, the Management Fund, and Messrs. Bruggeman and Harth. PADD withdrew its appeal and the claims in the district court against the remaining defendants (the Management Fund, Bruggeman, and Harth) were dismissed by consent. Hence the only order subject to this appeal is the district court's order that IAM refund to PADD with interest the contributions made on behalf of Plucinski.

II. Do Employers Have a Cause of Action to Recover Mistakenly Paid Pension Fund Contributions?

ERISA does not explicitly provide a right of action for employers to recover mistakenly paid contributions to multiemployer pension funds. The only reference in the statute to mistakenly paid funds is in section 403, which provides as follows:

(1) Except as provided in paragraph (2) ... of this section ... the assets of [an employee benefit] plan shall never inure to the benefit of any employer and shall be held for the exclusive purposes of providing benefits to participants in the plan and their beneficiaries and defraying reasonable expenses of administering the plan.

(2)(A) In the case of a contribution ... (ii) made by an employer to a multiemployer plan by a mistake of fact or law ... paragraph (1) shall not prohibit the return of such contribution or payment to the employer within 6 months after the plan administrator determines that the contribution was made by such a mistake.

29 U.S.C. Sec. 1103(c) (emphasis added). Section 403(c)(2)(A)(ii) makes it possible for the trustees of a fund to refund mistaken contributions without facing a suit from beneficiaries for violating the non-inurement provision of section 403(c)(1). But section 403 neither requires such refunds to be made, nor provides employers a right of action against the fund if such refunds are not made.

PADD argues, and the district court found, that despite the lack of an explicit cause of action for such recovery, such a cause of action is available as a matter of federal common law. The IAM Fund contends that there is neither an implied right of action nor a federal common law cause of action for such recovery. Although PADD appears to concede that there is no implied right of action, because recognizing a cause of action under either theory would allow us to affirm the district court's judgment, we will address both issues. cf. Jurinko v. Edwin L. Weigand Co., 477 F.2d 1038, 1045 (3d Cir.1973) ("An appellate court may uphold a judgment on any theory which finds support in the record.").

A. Implied Right of Action

Whether there is an implied right of action under a federal statute turns on four factors: (1) whether the plaintiff is in the class for whose especial benefit the statute was enacted; (2) whether there is any indication that Congress intended to imply a remedy; (3) whether a remedy is consistent with the purposes underlying the legislative scheme; and (4) whether the cause of action is one traditionally relegated to state law. See Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2088, 45 L.Ed.2d 26 (1975). The question, however, is one of statutory construction, and the key to the...