Shrader v. Harman Min. Corp.

• Decision Date: 03 April 1997
• Docket Number: Civil Action No. 96-0058-A.
• Parties: Jackie SHRADER, Plaintiff, v. HARMAN MINING CORP., Defendant and Third-Party Plaintiff, v. Michael H. HOLLAND, et al., as Trustees of the United Mine Workers of America 1974 Pension Plan and Old Republic Ins. Co., Third-Party Defendants.
• Court: U.S. District Court — Western District of Virginia

961 F.Supp. 137

Jackie SHRADER, Plaintiff, v. HARMAN MINING CORP., Defendant and Third-Party Plaintiff, v. Michael H. HOLLAND, et al., as Trustees of the United Mine Workers of America 1974 Pension Plan and Old Republic Ins. Co., Third-Party Defendants.

Civil Action No. 96-0058-A.

United States District Court, W.D. Virginia, Abingdon Division.

April 3, 1997.

John M. Lamie, Abingdon, VA, for Jackie Shrader.

Thornton L. Newlon, Tazewell, VA, for Harman Mining Corp.

Stanford T. Mullins, Grundy, VA, for Old Republic Ins. Co. Charlie R. Jessee, Jessee & Read, Abingdon, VA, Robert D. Valer, UMWA Health and Retirement Funds, Washington, DC, for UMWA.

GLEN M. WILLIAMS, Senior District Judge.

This action is presently before this court on Third-Party Defendants' Michael H. Holland, Donald E. Pierce, Elliot A. Segal, and Joseph J. Stahl II (collectively, "Trustees") Fed.R.Civ.P. 12(b)(1) and (6) motions to dismiss. Third-Party Plaintiff Harman Mining Corporation (Harman) opposes the Trustees' motion. In considering a Fed.R.Civ.P. 12(b)(1) and (6) motions, this court will not consider any matters outside the pleadings which have been presented to this court.

I.

Plaintiff Jackie Shrader (Shrader) originally filed this action against Harman pursuant to 29 U.S.C. §§ 185 and 1132 alleging that Harman has refused to provide health benefits due to Shrader. Harman admits that it has refused to provide the health benefits. However, Harman asserts that it is justified in doing so because the Trustees erroneously granted Shrader pension benefits under the United Mine Workers of America (UMWA) 1974 Pension Plan (1974 Pension Plan). In its collective bargaining agreements (CBA) with the UMWA,¹ Harman is required to contribute to the 1974 Pension Plan. Under these CBAs, Harman's liability to provide health benefits to Shrader is contingent upon the Trustee's determination of eligibility under the 1974 Pension Plan, which is incorporated into the agreements by reference, for benefits. Harman filed a third-party complaint against the Trustees alleging that the Trustees breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA), as amended, 29 U.S.C. §§ 1001, et seq., by failing to investigate and determine the eligibility of Shrader for a pension as required by Article XX(g)(3) of the 1988 National Bituminous Coal Wage Agreement and in finding that Shrader is eligible for pension benefits under the 1974 Pension Plan.

II.

Harman first alleges jurisdiction under § 302 of the Labor Management Relations Act (LMRA). 29 U.S.C. § 186. This section of the LMRA provides that employers may not pay anything of value to its employees in excess of their normal compensation for the purpose of influencing them in the exercise of their right to organized and bargain collectively. 29 U.S.C. § 186(a)(3). It further provides: "[i]t shall be unlawful for any person to request, demand, receive, or accept, or agree to receive or accept, any payment, loan or delivery of any money or other thing of value prohibited by subsection (a) of this section." 29 U.S.C. § 186(b)(1). Harman specifically cites section 302(c) as a basis for this court's jurisdiction. This section provides exceptions to the general rule stated above. At issue in this case is § 302(c)(5) which excepts from the above stated rule money paid by an employer for the sole and exclusive benefit of its employees provided that the money is placed in trust for the purpose of providing pensions on retirement or death of employees.

Harman argues that it has "long been recognized" that this section provides jurisdiction for the federal courts to enforce "compliance with standards for the administration of union welfare funds." (Brief in Opposition to Third-Party Defendant Trustees' Motion to Dismiss [Harman Brief] at 3). In 1993, the United States Supreme Court held that § 302(e), which provides jurisdiction to federal district courts to restrain violations of the section, "does not provide authority for a federal court to issue injunctions against a trust fund or its trustees requiring the trust funds to be administered in the manner described in § 302(c)(5)." Local 144 Nursing Home Pension Fund, et al., v. Demisay, 508 U.S. 581, 587, 113 S.Ct. 2252, 2257, 124 L.Ed.2d 522 (1993).² The Court held that § 302(e) provides jurisdiction to "restrain" violations of § 302, and a violation of § 302

occurs when the substantive restrictions in §§ 302(a) and (b) are disobeyed, which happens, not when funds are administered by the trust fund, but when they are "pa[id], len[t], or deliver[ed]" to the trust fund, § 302(a), or when they are "receive[d], or accept[ed]" by the trust find or "request[ed], [or] demand[ed]" for the trust fund, § 302(b)(1).

508 U.S. at 588, 113 S.Ct. at 2257. The Court rejected the argument that § 302 should be interpreted expansively, as § 301 of the LMRA has been interpreted, so as to create "a specialized body of federal common law of trust administration." 508 U.S. at 589, 113 S.Ct. at 2258. The Court distinguished § 301, which provides jurisdiction for any violation of a contract between an employer and a labor union, from § 302 which only provides jurisdiction to restrain violations of that particular section. The Court found that "[t]here is nothing to suggest that [§ 302(c)(5)] had the ambitious purpose of establishing an entire body of federal trust law, rather than merely describing the character of the trust to which payments are allowed...."³ 508 U.S. at 590, 113 S.Ct. at 2258.

Harman cites the Supreme Court decision of Arroyo v. United States, 359 U.S. 419, 429-27, 79 S.Ct. 864, 869, 3 L.Ed.2d 915 (1959) in support of its argument that § 302(e) provides jurisdiction to enforce "compliance with standards for the administration of union welfare funds." (Harman Brief at 3). However, the Demisay decision specifically addresses the quote taken from Arroyo and language from other prior decisions which was also used in Demisay to support of the proposed jurisdiction under § 302(e):

But in any case, Arroyo was a criminal prosecution brought under § 302(d), and the statement was therefore pure dictum. Also dictum was our statement in NLRB v. Amax Coal Co., 453 U.S. 322, 331, 101 S.Ct. 2789, 2795, 69 L.Ed.2d 672 (1981), later quoted in [United Mine Workers of America Health & Retirement Funds v.] Robinson, supra, 455 U.S. [562] at 570, 102 S.Ct. [1226] at 1231 [, 71 L.Ed.2d 419 (1982)], that "the `sole purpose' of § 302(c)(5) is to ensure that employee benefit trust funds `are legitimate trust funds, used actually for the specified benefits to the employees of the employers who contribute to them....'" ... This obiter quotation of a line from the floor debate on the LMRA cannot convert (1) a statutory statement of trust obligations that must exist to obtain an exemption into (2) a statutory authorization to enforce trust obligations.

508 U.S. at 591, 113 S.Ct. at 2258-59. In conclusion, the Court held that the "sole and exclusive benefit" and the "held in trust" provisions of § 302(c)(5) simply require a trust obligation for specified purposes which are "defined and enforced originally under state law ... and now under ERISA." 508 U.S. at 589, 113 S.Ct. at 2259.

The 1974 Pension Plan is an employee welfare benefit plan within the meaning of ERISA. 29 U.S.C. § 1002(1). ERISA provides that civil enforcement of the Act for breaches of fiduciary duty can be brought by the Secretary of Labor or by a participant, beneficiary, or fiduciary.⁴ 29 U.S.C § 1132(a)(2). Harman does not fall within any of these categories.

In Massachusetts Mutual Life Ins. Co., et al. v. Russell, 473 U.S. 134, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985), the Supreme Court stated:

We are reluctant to tamper with an enforcement scheme crafted with such evident care as the one in ERISA. As we stated in Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 19, 100 S.Ct. 242, 246 (1979): "[W]here a statute expressly provides a particular remedy or remedies, a court must be chary of reading others into it." See also Touche Ross & Co. v. Redington, 442 U.S. 560, 571-574, 99 S.Ct. 2479, 2486-2488 (1979). "The presumption that a remedy was deliberately omitted from a statute is strongest when Congress has enacted a comprehensive legislative scheme including an integrated system of procedures for enforcement." Northwest Airlines, Inc. v. Transport Workers [Union of America], 451 U.S., [77] at 97, 101 S.Ct., [1571] at 1583 [, 67 L.Ed.2d 750 (1981)].

473 U.S. at 147, 105 S.Ct. at 3093. ERISA's "carefully crafted and detailed enforcement scheme provides `strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.'" Mertens v. Hewitt Assoc., 508 U.S. 248, 254, 113 S.Ct. 2063, 2067, 124 L.Ed.2d 161 (1993) (quoting Russell, 473 U.S. at 146-47, 105 S.Ct. at 3092). This court finds that Harman lacks standing to sue on the face of the ERISA remedial scheme.

Harman's second argument for jurisdiction is based on 28 U.S.C. § 1331(a)⁵ and the Fourth Circuit case of Provident Life & Accident Ins. Co. v. Waller, 906 F.2d 985 (4th Cir.1990) cert. denied, 498 U.S. 982, 111 S.Ct. 512, 112 L.Ed.2d 524 (1990). In Waller, the defendant had been unjustly enriched and ERISA provided no appropriate remedy for the plaintiff. The Fourth Circuit held in that case that federal common law could be used as a basis for jurisdiction under 28 U.S.C. § 1331(a) for an action brought pursuant to ERISA even though the plaintiff did not qualify as an entity to sue for civil enforcement of the Act under 29 U.S.C. § 1132, but only because the issue involved was of "central concern" to the federal statute. Id. at 990. In Waller a plan administrator sought to recover, under the common law theory of unjust enrichment, money which was advanced to one of its participants.⁶ Id. at 985.

Harman asserts two common law theories as bases for this...