RM Bowler Contract Hauling v. CENTRAL STATES, ETC.

• Decision Date: 24 September 1982
• Docket Number: Civ. No. 81-3386.
• Parties: R. M. BOWLER CONTRACT HAULING CO., INC., an Illinois corporation, et al., Plaintiffs, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, et al., Defendants.
• Court: U.S. District Court — Southern District of Illinois

547 F. Supp. 783

R. M. BOWLER CONTRACT HAULING CO., INC., an Illinois corporation, et al., Plaintiffs, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, et al., Defendants.

Civ. No. 81-3386.

United States District Court, S. D. Illinois.

September 24, 1982.

Kurtis B. Reeg, Coburn, Croft & Putzell, Belleville, Ill., for plaintiffs.

Clyde E. Craig & Fred A. Ricks, Jr., St. Louis, Mo., Joseph B. McDonnell, Belleville, Ill., for Local Union 525.

John D. Wendler, Belleville, Ill., and Timothy G. Costello, Milwaukee, Wis., for Central States.

ORDER

FOREMAN, Chief Judge:

Before the Court is defendant Funds' Motion to Dismiss Count I or in the alternative transfer Count I, and Motion to Dismiss Count II of the Complaint. Defendants' Motion to Transfer became moot when the Court on April 5, 1982, consolidated this action with Case No. 82-3172 which was transferred to this Court from the Northern District of Illinois. Thus, the Court will only address the motions to dismiss Counts I and II. Count I seeks a declaratory judgment on behalf of plaintiff R. M. Bowler Contract Hauling Co., Inc., as to its rights and liabilities under the Funds. Count II seeks pension benefits for Roger W. Bowler, an individual. Defendants assert that the Court is without jurisdiction to entertain either claim.

Plaintiffs allege that the Court has subject matter jurisdiction over Count I under Section 502(e)(1) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132(e)(1). Section 502(e)(1) of ERISA states that the "district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by the Secretary or by a participant, beneficiary, or fiduciary." Plaintiff in Count I is an Illinois corporation and contributing employer to defendant Funds. Courts have held that employers who contribute to employee benefit plans do not fit into any of the four limited categories of plaintiffs in § 502(e)(1). Wong v. Bacon, 445 F.Supp. 1177, 1183 (N.D.Cal.1977); Modern Woodcrafts, Inc. v. Hawley, 534 F.Supp. 1000, 1014 (D.Conn.1982). While it has been held that employers could be fiduciaries under the Act, U. S. Steel Corp. v. Com. of Pa. Human Relations Com'n, 669 F.2d 124, 127-28 (3d Cir. 1982), employers who contribute to employee benefit plans cannot claim standing under that heading. Nonetheless, plaintiff, although an employer who contributes to employee benefit plan, argues that it has standing as a "beneficiary" under the Act.

The term "beneficiary" is defined in 29 U.S.C. § 1002(8) to be "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder." Employers have never been held to fall within this definition. Plaintiff claims to be a "beneficiary" because it is a person who receives a benefit from the provisions in the pension fund which provide for the processing and settlement of controversies between the Fund and employers.

While plaintiffs' argument is creative, it is unpersuasive. Although the word "benefit" is not specifically defined in ERISA, it is used, most notably in 29 U.S.C. § 1002(1), to mean traditional fringe benefits to which employees are entitled, such as medical, disability, unemployment and vacation benefits. In Hibernia Bank v. International Brotherhood of Teamsters, 411 F.Supp. 478, 489 (N.D.Cal.1976), the plaintiff Bank argued it was a beneficiary because it received the costs of administration of the trust out of the corpus of the trust. The court held that in order to have standing as a beneficiary a person must be entitled to "fringe benefits" under the applicable benefit plan. This interpretation is consistent with those cases which have restricted standing to employee beneficiaries. National Bank of North America v. Local 553 Pension Fund, 463 F.Supp. 636, 638 n.2 (E.D.N.Y.1978); Smith v. Hickey, 482 F.Supp. 644, 650 (S.D.N.Y.1979). Therefore, contributing employers are not "beneficiaries" under ERISA, and, thus, plaintiff corporation does not have standing to assert a claim under the Act.

Turning to Count II, it is obvious that R. W. Bowler, as an individual, has standing as an employee-beneficiary under the Act. Nonetheless, defendant argues that the Court lacks jurisdiction over Count II because Bowler failed to exhaust his remedies with the Funds before going to federal court. It is well settled that a claimant for benefits must exhaust his interfund remedies before seeking federal court review. Amato v. Bernard, 618 F.2d 559, 567-68 (9th Cir. 1980); Taylor v. Bakery & Confectionary Union, Etc., 455 F.Supp. 816, 819-20 (E.D.N.C.1978). Courts have excused exhaustion if it would be "futile" for the claimant to resort to the interfund procedures. Glover v. St. Louis-San Francisco Railway Company, 393 U.S. 324, 330-31, 89 S.Ct. 548, 551-52, 21 L.Ed.2d 519 (1969). Amato v. Bernard, supra, 618 F.2d at 568. Plaintiff concedes he did not formally exhaust the interfund procedures, but asserts that federal jurisdiction at this time is proper under the "futility" exception.

The defendant Funds have three stages in their claims procedure. First, a claimant must apply to the Benefits Claim Review Committee. If the application is denied the claimant must go to the Benefits Claim Appeals Committee. Finally, if the claimant remains unsatisfied, he has a right to have the Board of Trustees review his application. Plaintiff argues that the following history of his claim reveals that any further attempt to obtain benefits via the interfund procedures would be time consuming, expensive and futile.

                September 1978  -  Mr. Bowler applied for
                                   pension benefits
                September 15,   -  Application denied by the
                  1978             Benefits Claim Review
                                   Committee
                September 15,   -  Mr. Bowler appealed
                  1978
                

                November 9,     -  Benefits Claim Review
                  1978             Committee requests
                                   additional information
                                   from claimant
                December 20,    -  Additional information
                  1978             furnished
                February 12,    -  Application denied again
                  1979

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