Shaver v. Operating Eng. Local 428 Pen. Trust Fund

• Decision Date: 18 June 2003
• Docket Number: No. 01-16922.,01-16922.
• Parties: William SHAVER; William Dereschuk, Plaintiffs-Appellants, v. OPERATING ENGINEERS LOCAL 428 PENSION TRUST FUND, a trust; Raymond Frank CISNE; David Martin; Merle Langfeldt; Thomas Royden; Robert J. Johnston; Dennis Teel, in their capacity as Trustees thereof; and David Wick, in his capacity as Administrator thereof, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

332 F.3d 1198

William SHAVER; William Dereschuk, Plaintiffs-Appellants, v. OPERATING ENGINEERS LOCAL 428 PENSION TRUST FUND, a trust;

Raymond Frank CISNE; David Martin; Merle Langfeldt; Thomas Royden; Robert J. Johnston; Dennis Teel, in their capacity as Trustees thereof; and David Wick, in his capacity as Administrator thereof, Defendants-Appellees.

No. 01-16922.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 7, 2002.

Filed June 18, 2003.

Francis G. Fanning, Tempe, AZ, for the plaintiffs-appellants.

Keith F. Overholt, David B. Earl, Jennings, Strouss & Salmon, P.L.C., Phoenix, AZ, for the defendants-appellees.

Appeal from the United States District Court for the District of Arizona; Paul G. Rosenblatt, District Judge, Presiding. D.C. No. CV-00-01832-PGR.

Before: BETTY B. FLETCHER, RICHARD S. ARNOLD,^* and JOHNNIE B. RAWLINSON, Circuit Judges.

Opinion by Judge RICHARD S. ARNOLD; Dissent by Judge RAWLINSON.

OPINION

RICHARD S. ARNOLD, Circuit Judge:

The Operating Engineers Union, Local 428, has an ERISA pension fund for its members' benefit. The plaintiffs, William Shaver and William Dereschuk, a participant and beneficiary of the plan, respectively, had concerns about the management of the fund. Eventually, they filed a two-count complaint against the trustees and administrator of the ERISA benefit plan, the defendants. The plaintiffs claimed that the defendants failed to turn over, pursuant to statutory requirements, certain financial records of the fund, and violated their fiduciary duty by not turning over those records and by neglecting to keep accurate records of the fund's operation. The District Court dismissed all the appellants' claims when it granted the appellees' 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted. This appeal is from that decision.

We agree with the District Court that the detailed records of expenditures sought by the appellants were not "instruments" under 29 U.S.C. § 1024(b)(4), and thus were not subject to the statute's disclosure requirements. In our view, however, it was premature for the District Court to dismiss the breach-of-fiduciary-duty claim for neglecting to keep adequate records. The plaintiffs sought injunctive relief, and their failure to plead that a loss occurred is not fatal to that claim. Therefore, we affirm in part, reverse in part, and remand the case to the District Court for proceedings consistent with this opinion.

I.

The Operating Engineers Local 428 Pension Trust Fund is a multi-employer pension trust fund. Six trustees are responsible for the fund. Three of the trustees are appointed by Operating Engineers Local 428, and three are appointed by the Arizona Chapter of the Associated General Contractors of America Corporation, whose members make contributions to the fund on behalf of their employees. The trustees are named fiduciaries, according to 29 U.S.C. § 1102(a)(2), and are responsible for administering the fund. They are all defendants in this suit along with the third-party administrator of the fund, American Benefit Plan Administrators, Inc.

Schedule C, form 5500, promulgated by the Internal Revenue Service, allows the trustees to aggregate, rather than itemize, certain fund expenses on Line 1 of Part 1 of the form, which the trustees must submit to the IRS. Those expenses must be less than $5,000, individually, to be listed en bloc on Line 1. Over a decade, the trustees listed more than $1.6 million in expenses of the fund this way. For two years, Messrs. Shaver and Dereschuk requested more specific information on how the money being listed on Line 1 was being spent. The trustees declined to provide this information.

Messrs. Shaver and Dereschuk then filed this suit against the trustees in September of 2000. They alleged that the financial records were "instruments under which the plan is established and operated," 29 U.S.C. § 1024(b)(4), and that, therefore, the trustees had a legal duty to turn over the requested information. They also accused the trustees of violating their fiduciary duty by failing to turn over the requested information and by failing to keep thorough records.

The defendants filed a 12(b)(6) motion to dismiss. The plaintiffs tried to supplement their response to the trustees' motion by filing a number of documents to support their breach-of-fiduciary-duty claim. During oral arguments, the District Court granted a motion to strike the supplemental material because the plaintiffs had not sought permission from the District Court to file it. Counsel for the plaintiffs then indicated, in a somewhat conditional fashion, that they would move to amend the complaint to include the more detailed allegations contained in the supplemental material. No such motion was ever filed.

In its written opinion issued after the hearing, the District Court noted that 29 U.S.C. § 1024 has traditionally been construed narrowly, and that the language of the statute seemed to limit disclosure to a narrow class of documents: those specifying the terms and conditions of the plan. The District Court determined that the records sought did not fall into that category of documents, and dismissed the claim for failure to state a claim upon which relief can be granted.

Plaintiffs' second count alleged a breach of fiduciary duty for failure to disclose the disputed records and also for failing to keep adequate records. The District Court reasoned that since there was no legal obligation to turn over the records, the trustees' failure to do so could not be a breach of fiduciary duty. Further, the Court observed that the plaintiffs had failed to allege any loss. The Court dismissed this count as well. Appeal to this Court followed.

II.

Generally, on a 12(b)(6) motion, the District Court should consider only the pleadings. Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir.2001). Plaintiffs' proffered supplemental material merely substantiated their claims that the trustees failed to keep thorough records and failed to turn over a detailed list of their expenditures incurred in managing the fund. At that point, the material was superfluous because the non-moving party does not have to substantiate its allegations; the Court presumes everything it claims is true anyway. Thus, the District Court properly declined to review the extra material at this stage in the lawsuit.

Plaintiffs also object to the failure of the District Court to rule on what they characterize as a motion to amend their complaint. It is not clear that an effective motion was ever made. In any event, the motion to dismiss was not a responsive pleading within the meaning of Fed. R.Civ.P. 15(a). Doe v. United States, 58 F.3d 494, 497 (9th Cir.1995). Thus, at the time of the hearing, the appellants still had an absolute right to amend their complaint, see Fed.R.Civ.P. 15(a), but neglected to do so. Their failure to amend constituted a waiver of that right.

The appellants' oral motion for leave to amend does not help them because they failed to obtain a ruling from the District Court on that motion. This Court has no ruling by the District Court to review. In any event, no harm was caused by appellants' failure to obtain a ruling because the breach of fiduciary duty claim should have survived, amended or not, and the claims resulting from the failure to disclose would not have survived, regardless of how the appellants reworded their complaint.

III.

This Court reviews the District Court's dismissal for failure to state a claim de novo. Chappel v. Laboratory Corp. of Am., 232 F.3d 719, 723 (9th Cir.2000). The District Court's dismissal hinged on its interpretation of an ERISA provision, and we review interpretations of statutes de novo. See United States v. Gomez-Rodriguez, 77 F.3d 1150, 1152 (9th Cir.1996). With respect to the statute before us, we have already declined to interpret it to require general disclosure. Hughes Salaried Retirees Action Committee v. Administrator of the Hughes Non-Bargaining Retirement Plan, 72 F.3d 686, 691 (9th Cir.1995) (en banc). The question remains how narrowly we interpret the statute.

Appellants argue that Section 1024(b)(4) of ERISA mandates that the trustees reveal records that explain, in detail, expenditures that the government allows to be aggregated on forms that are submitted to the IRS and to the Department of Labor. The appellants contend that these records are the "other instruments" mentioned by the statute:

The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary, plan description, and the latest annual report, any terminal report the bargaining agreement, trust agreement, contract or other instruments under which the plan is established or operated.

29 U.S.C. § 1024(b)(4) (emphasis added). We agree with the District Court. Barring indicia to the contrary, the broad term, "other instruments," should be limited to the class of objects that specifically precedes it. See Allinder v. Inter-City Products Corp., 152 F.3d 544, 549 (6th Cir.1998) (applying the interpretive principle of ejusdem generis to the term "other instruments" in Section 1024(b)(4)).

The statute mentions only legal documents that describe the terms of the plan, its financial status, and other documents that restrict or govern the plan's operation. The records that Messrs. Shaver and Dereschuk seek, itemized lists of expenditures, at most relate only to the manner in which the plan is operated. Every expense the plan incurs falls under that broad definition, and the practical result of adopting such an interpretation would be to force the plan administrators to turn over every receipt they have any time a participant or beneficiary requests that the administrators do so. We continue to believe that "instruments" refers to "... documents that provide individual participants with information about the plan and...