Pressroom Unions-Printers League Income Sec. Fund v. Continental Assur. Co.

Decision Date07 April 1983
Docket NumberD,No. 704,UNIONS-PRINTERS,704
Citation700 F.2d 889
CourtU.S. Court of Appeals — Second Circuit
Parties, 4 Employee Benefits Ca 1112 PRESSROOMLEAGUE INCOME SECURITY FUND, Plaintiff-Appellant, v. CONTINENTAL ASSURANCE CO., a Member of the C.N.A. Group, Reserve Life Insurance Co., and its wholly owned subsidiary American Progressive Life & Health Insurance Company of New York, George S. Kriegler, Benjamin A. Kriegler, Labor Security Programs, Inc., and Raymond M. Kriegler, deceased, by John Doe, Mary Moe and Roe Corp. 1-10, the true names of the preceding defendants being presently unknown to plaintiff, the foregoing fictitious names intending to designate the executors, administrators, trustees, successors in interest and heirs-at-law of the said Raymond M. Kriegler, deceased, Defendants-Appellees. ocket 82-7631.

Joseph P. Hoey, Mineola, N.Y. (Suozzi, English & Cianciullo, P.C., Stephen C. Glasser, Mineola, N.Y., of counsel), for plaintiff-appellant.

Vincent R. Fitzpatrick, Jr., New York City (White & Case, Dwight A. Healy, Richard A. Horsch, New York City, Hughes & Hill, H. Robert Powell, Dallas, Tex., of counsel) for defendants-appellees, Reserve Life Ins. Co. and American Progressive Life and Health Ins. Co. of New York.

Robert S. Cohen, New York City (Lans, Feinberg & Cohen, Deborah E. Lans, New York City, of counsel) for defendants-appellees, George S. Kriegler, Benjamin A. Kriegler and Raymond M. Kriegler (deceased).

Before KAUFMAN, TIMBERS and NEWMAN, Circuit Judges.

IRVING R. KAUFMAN, Circuit Judge:

In the last decade, Congress has enacted nearly one hundred statutes granting additional jurisdiction to the federal courts. Areas as diverse as environmental law and child custody have been brought within the purview of the federal judiciary. Exercising this new jurisdiction, however, requires us not only to adjudicate complex disputes, but also to define the limits of our expanded authority. The instant action, brought pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. Secs. 1001-1461, provides one such occasion. We are called upon today to determine, as a matter of first impression, whether a pension fund may assert a federal cause of action under the provisions of that important employee benefits statute.


The Pressroom Unions-Printers League Income Security Fund ("the Fund") was established in May 1971 to provide life insurance and mutual fund benefits to members of the New York Printing Pressmen's & Offset Workers Union, Local 51. In later years members of two other unions were allowed to participate in the Fund pursuant to their collective bargaining agreements. 1 The Fund currently has approximately 1,700 participants and is financed by contributions from the employers of the union members. Its management functions are vested in a Board of Directors whose membership consists of union and employer representatives in equal numbers.

The Fund contends that during the period from July 1, 1971 through June 30, 1980 it was the victim of a fraudulent scheme engineered by appellees George S. Kriegler, Benjamin A. Kriegler and Raymond M. Kriegler, deceased. ("Krieglers") The gravamen of this charge is that George and Raymond Kriegler were officers and stockholders of Labor Security Programs, Inc. ("LSP"), a consulting firm engaged by the Fund, and they allegedly caused LSP to enter into insurance contracts at exorbitant rates. Allocation and assignment of such contracts purportedly depended upon the results of a competitive bidding process, but the Krieglers allegedly circumvented this procedure and gave appellees Continental Assurance Co. ("Continental") and Reserve Life Insurance Co. ("Reserve") the exclusive right to sell insurance to the Fund. 2

The Fund's complaint alleges that the insurance contracts resulted in excessive premium payments to the insurers and extravagant fees to the Krieglers. The Fund further contends that appellees concealed the fraudulent nature of the insurance contracts from the Board of Directors by providing misleading statements and reports. The Krieglers, it is claimed, perpetuated this fraud by providing false assurances to the Board and by misrepresenting the nature of the contracts entered into and the process through which the insurers were selected.

In January 1982 the Fund filed suit in the Southern District of New York asserting that appellees breached their fiduciary duties, and seeking declaratory relief as well as compensatory and punitive damages. Jurisdiction was said to be based upon the relevant provisions of the Employee Retirement Income Security Act, 29 U.S.C. Sec. 1132(e) ("ERISA") and the Welfare and Pension Plans Disclosure Act, 29 U.S.C. Sec. 308(g) ("WPPDA"). 3 The defendants moved to dismiss the action pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction, claiming that neither statute afforded the Fund a cause of action cognizable in federal court. The district judge granted the defendants' motion and dismissed the complaint on June 3, 1982. He also denied the Fund's request to amend its complaint. Subsequently the Fund moved for reconsideration of the district court's order, and sought to substitute individual plan participants as plaintiffs. Judge Conner denied this request, 4 and the Fund now appeals from the judgment entered on his order and from the supplemental order denying its motion for reconsideration. 5


The jurisdictional provisions of ERISA do not on their face authorize a pension fund to assert a cause of action. 29 U.S.C. Sec. 1132(e)(1) gives the district courts "exclusive jurisdiction of civil actions under this subchapter brought by the Secretary [of Labor] or by a participant, beneficiary or fiduciary." Similarly, Sec. 1132(a), the Act's provision dealing with standing, states that the Secretary or a "participant, beneficiary or fiduciary" may bring an action for civil enforcement of the Act's fiduciary and other provisions.

The Fund does not contend that it may be viewed as one of the parties specifically authorized to file suit under these provisions; rather, it claims that these sections are not exclusive and do not foreclose the possibility of other parties suing under the Act. In support of this assertion, the Fund argues that Sec. 1132(d)(1), which states that "[a]n employee benefit plan may sue or be sued under this subchapter as an entity," contemplates the existence of a cause of action which a pension fund may assert, and therefore necessarily implies that federal jurisdiction would exist for such suits.

It is beyond dispute that only Congress is empowered to grant and extend the subject matter jurisdiction of the federal judiciary, and that courts are not to infer a grant of jurisdiction absent a clear legislative mandate. Rice v. Railroad Co., 66 U.S. (1 Black) 358, 374, 17 L.Ed. 147 (1861); Dalehite v. United States, 346 U.S. 15, 30-31, 73 S.Ct. 956, 965, 97 L.Ed. 1427 (1953); see also Middlesex County Sewerage Authority v. National Sea Clammers Assoc., 453 U.S. 1, 13-18, 101 S.Ct. 2615, 2622-25, 69 L.Ed.2d 435 (1981). We therefore decline to construe Sec. 1132(d)(1) as sub silentio conferring jurisdiction over actions brought by parties other than those specified in Sec. 1132(e)(1).

We have previously held that an employer, also not named in ERISA's jurisdictional provisions, may not bring suit under the Act. See Stone & Webster Engineering Corp. v. Ilsley, 690 F.2d 323, 326 (2d Cir.1982). While this does not, of course, resolve the instant dispute, it does undercut the Fund's reliance on Fentron Industries, Inc. v. National Shopmen Pension Fund, 674 F.2d 1300 (9th Cir.1982) ("Fentron" ). In Fentron the court held that an employer could bring an action pursuant to ERISA. Although neither Sec. 1132(a) nor Sec. 1132(e)(1) specifically authorizes suits by employers, the court observed "[t]here is nothing in the legislative history to suggest ... that the list of parties empowered to sue under this section is exclusive...." Fentron, supra, 674 F.2d at 1305. 6

In our view, the Fentron court applied an inappropriate standard in resolving this issue. We focus not on whether the legislative history reveals that Congress intended to prevent actions by employers or other parties, but instead on whether there is any indication that the legislature intended to grant subject matter jurisdiction over suits by employers, funds, or other parties not listed in Sec. 1132(e)(1). As the Ninth Circuit noted, ERISA's legislative history is silent on both of these questions, see, e.g., H.R.Conf.Rep. No. 1280, 93rd Cong. 2d Sess., reprinted in [1974] U.S.Code Cong. & Ad.News 4639, 5038, 5109 (1974), and we therefore conclude that absent such expression, Sec. 1132(e)(1) should be viewed as an exclusive jurisdictional grant. 7

What makes the instant case both unique and difficult is the language of Sec. 1132(d)(1) which provides that a fund "may sue or be sued under this subchapter as an entity." There is no doubt that this section authorizes suits against a fund. The difficulty arises with those portions of the section which authorize a fund to bring an action. The uncertainty generated by this language, however, is troubling only upon first blush. More careful analysis demonstrates that Sec. 1132(d)(1) is not inconsistent with the specific and exclusive grant of subject matter jurisdiction contained in Sec. 1132(e)(1). Subsection (d)(1) only establishes the right of employee benefit plans created by ERISA to sue and be sued like corporations and other legal entities. Without such a provision a pension plan would not be a legally cognizable body. See, e.g., Coverdell v. Mid-South Farm Equipment Assoc., 335 F.2d 9, 12-13 (6th Cir.1964). Affording plans the power to sue does not, however, imply that they may bring actions under ERISA; it merely authorizes suits to be brought...

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