Smith v. ABS Industries, Inc.

• Decision Date: 30 June 1986
• Docket Number: Civ. A. No. C85-3180.
• Citation: 653 F. Supp. 94
• Parties: William L. SMITH, et al., Plaintiffs, v. ABS INDUSTRIES, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

653 F. Supp. 94

William L. SMITH, et al., Plaintiffs, v. ABS INDUSTRIES, INC., et al., Defendants.

Civ. A. No. C85-3180.

United States District Court, N.D. Ohio, E.D.

June 9, 1986.

As Amended June 30, 1986.

COPYRIGHT MATERIAL OMITTED

Melvin S. Schwarzwald, Mark A. Rock, Schwarzwald, Robiner, Wolf & Rock, Cleveland, Ohio, for plaintiffs.

Carey S. Sheldon, Sheldon and Andrews, Ashtabula, Ohio, James M. Miles, Haynsworth, Baldwin, Miles, Johnson, Greaves & Edwards, Greenville, S.C., Gerald A. Messerman, Messerman & Messerman, Cleveland, Ohio, for defendants.

MEMORANDUM AND ORDER

ANN ALDRICH, District Judge.

This action is brought by former employees of the defendants¹ to establish their rights to medical and life insurance after retirement. These benefits were terminated for all retirees upon the shutdown on October 29, 1982 of the plant in which plaintiffs worked. The plaintiffs, who seek to represent classes of retirees and their eligible dependents, allege that their medical and life insurance benefits have been terminated in violation of two collective bargaining agreements and a "Hospital Medical Plan," stating causes of action under § 301 of the Labor Management Relations Act, 29 U.S.C. § 185 (1982) ("§ 301") and § 502(a)(1)(B) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B) (1982) ("§ 502(a)(1)(B)"). They also allege that the defendants have breached a fiduciary duty owed to plaintiffs under § 404 and § 409 of ERISA, § 29 U.S.C. §§ 1104, 1109 (1982) ("§ 404" and "§ 409"), and they request that additional "continuous service" be credited before determining eligibility under the Hospital Medical Plan if the shutdown of the plant is found to be an unfair labor practice in an administrative action initiated by the National Labor Relations Board ("NLRB").

Defendants submit nine motions to dismiss this action in whole or in part.² In this posture of the case, the allegations of the complaint must be taken as true and be construed in favor of the plaintiff. Westlake v. Lucas, 537 F.2d 857, 858 (6th Cir. 1976). The complaint or any of its claims can be dismissed only if the plaintiffs can prove no set of facts which would entitle them to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). The Court has reviewed each motion to dismiss with reference to the face of the complaint, declining to treat the motions as summary judgment motions by considering matters outside of the pleadings. Fed.R.Civ.P. 12(c). It denies the defendants' motions to strike the demand for jury trial and to strike the prayer for extracontractual and punitive damages, although it limits the scope of these requests. The remaining motions are denied without prejudice to their reassertion as summary judgment motions at a later phase of this litigation, except that the Court rejects on the merits defendants' argument that some plaintiffs' § 301 claims are barred by a six-month statute of limitations.

I.

Defendants argue that those plaintiffs who assert ERISA claims are not entitled to a trial by jury, citing this Court's decision in Diano v. Central States, 551 F.Supp. 861, 862-63 (N.D.Ohio 1982). In Diano, plaintiffs sued for specific performance by the trustee of defendant pension funds, requesting payment of benefits owed under the pension plan. This Court relied heavily on Wardle v. Central States, 627 F.2d 820 (7th Cir.1980), cert. denied, 449 U.S. 1112, 101 S.Ct. 922, 66 L.Ed.2d 841 (1981), in holding that plaintiffs were not entitled to a jury trial on their ERISA claims.

The Sixth Circuit Court of Appeals recently faced the issue of whether jury trial is available in ERISA cases in an action in which the plaintiff sought to recover contributions to an employee benefit plan. The court surveyed the precedent on this issue:

While one of the first courts to consider this issue found that there was a right to a jury trial in an action for benefits pursuant to 29 U.S.C. § 1132(a)(1)(B), Stamps v. Michigan Teamsters Joint Council No. 43, 431 F.Supp. 745 (E.D. Mich.1977), most courts have rejected this view and followed Wardle v. Central States, 627 F.2d 820, 829-30 (7th Cir.1980), finding no right to a jury trial under ERISA, Turner v. CF & I Steel Corp., 770 F.2d 43 (3d Cir.1985), cert. denied, ___ U.S. ___, 106 S.Ct. 800, 88 L.Ed.2d 776 (1986); Berry v. Ciba-Geigy Corp., 761 F.2d 1003 (4th Cir.1985); Blau v. Del Monte Corp., 748 F.2d 1348, 1357 (9th Cir.1984), cert. denied, ___ U.S. ___, 106 S.Ct. 183, 88 L.Ed.2d 152 (1985); Katsaros v. Cody, 744 F.2d 270, 278 (2d Cir.), cert. denied, 469 U.S. 1072, 105 S.Ct. 565, 83 L.Ed.2d 506 (1984); Bugher v. Feightner, 722 F.2d 1356, 1359 (7th Cir.1983), cert. denied, 469 U.S. 822, 105 S.Ct. 98, 83 L.Ed.2d 43 (1984); In re Vorpahl, 695 F.2d 318, 321 (8th Cir.1982); Calamia v. Spivey, 632 F.2d 1235, 1236-37 (5th Cir.1980); Strout v. GTE Products Corp., 618 F.Supp. 444, 445 (D.Me.1985); Gilliken v. Hughes, 609 F.Supp. 178, 181 (D.Del.1985); Hollenbeck v. Falstaff Brewing Corp., 605 F.Supp. 421, 430-31 (E.D.Mo.1985); The Sixty-Five Security Plan v. Blue Cross and Blue Shield of Greater New York, 583 F.Supp. 380, 389 (S.D.N.Y.1984); Cowden v. Montgomery County Society for Cancer Control, 591 F.Supp. 740, 746-47 (S.D.Ohio 1984). But see Paladino v. Taxicab Industry Pension Fund, 588 F.Supp. 37, 38 (S.D.N.Y.1984); Pollock v. Castrovinci, 476 F.Supp. 606, 609 (S.D.N.Y.1979), aff'd, 622 F.2d 575 (2d Cir.1980). These cases have limited applicability in light of the fact that Crews' action is not a traditional ERISA action within the parameters of 29 U.S.C. § 1132.

Crews v. Central States, 788 F.2d 332, 338 (6th Cir.1986). Since the court did not find the cases which it cited sufficiently analogous to the dispute before it, the court analyzed the dispute to determine whether it would traditionally be rectified by a legal or equitable remedy. Deciding that the action was best characterized as a suit for restitution seeking an equitable remedy, the court held that the plaintiff was not wrongly denied a jury trial. Id. at 338.

The Crews court cited Bugher v. Feightner, 722 F.2d 1356 (7th Cir.1983), cert. denied, 469 U.S. 822, 105 S.Ct. 98, 83 L.Ed.2d 43 (1984), for the proposition that an action must be determined to be legal or equitable in order to decide a plaintiff's right to jury trial. Crews, 788 F.2d at 338. In Bugher, trustees of union trust funds sought contributions allegedly owed under a collective bargaining agreement under § 502 of ERISA and § 301(a). The defendant requested a jury trial, arguing that the dispute implicated a breach of contract claim traditionally enforced in an action at law and guaranteeing a constitutional right to trial by jury under Dairy Queen, Inc. v. Wood, 369 U.S. 469, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962). The Seventh Circuit agreed that delinquency actions brought by plan trustees were breach of contract actions, permitting a jury demand for the § 301 claim. Bugher, 722 F.2d at 1358. Although the court conceded that § 502(a)(3) by its own terms authorizes only equitable actions, id., it concluded that the § 301 claim was a permissible supplement to the ERISA claim, thus entitling the appellant to a jury trial. Id. at 1360. The Seventh Circuit distinguished its earlier Wardle decision as involving a traditionally equitable claim. Id.

It is clear, then, that this Court is required to determine the nature of the plaintiffs' claims in order to decide whether jury trial is appropriate, particularly because this suit "is not a traditional ERISA action within the parameters of 29 U.S.C. § 1132." Crews, 788 F.2d at 338. Another district court recently confronted a motion to strike a jury demand in an action for reinstatement of retirees' hospital benefits and did not find Wardle controlling with regard to all of the ERISA claims before it. In Bower v. Bunker Hill Company, 114 F.R.D. 587 (E.D.Wash.1986), the court analyzed the characterization of ERISA actions as "equitable," rather than "legal." It accepted the Wardle court's characterization of ERISA claims for breach of fiduciary duty as equitable in nature, thus finding jury trial inappropriate for § 409 claims brought under § 502(a)(2).³ Bower, at 597. However, the court distinguished from claims for breach of fiduciary duty claims arising under § 502(a)(1)(B):

Plaintiffs style their claim for damages as a breach of contract action arising under § 301 of the LMRA or presumably under § 502(a)(1)(B) ... of ERISA. They assert that breach of contract claims are traditionally legal and thus the Seventh Amendment guarantees them the right to a jury trial of this issue. I agree. Section 301 of the LMRA provides that an employee may bring an action for damages against an employer for breach of a collective bargaining agreement. Rehmar v. Smith, 555 F.2d 1362 (9th Cir.1976). Similarly, § 502(a)(1)(B) of ERISA provides that a beneficiary may bring an action for redress of violations of the terms of the plan. A suit for breach of contract seeking damages was traditionally an action at law and thus triable to a jury under the Seventh Amendment. Dairy Queen, Inc. v. Wood, 369 U.S. 469 82 S.Ct. 894, 8 L.Ed.2d 44 (1962). Thus, the plaintiffs have a right to a jury determination of not only whether the contract has been breached and the extent of damages if any, but also just what the contract is. Id. at 479 82 S.Ct. at 900.

At 597-98. The court also distinguished the factual situation presented in Wardle (and Diano) — actions to enforce payment of pension benefits — from the issue of whether a contract provides for vested benefits. Citing International Union, United Automobile, Aerospace & Agricultural Implement Workers v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir.1983), cert. denied, 464 U.S. 1007, 104 S.Ct. 1002, 79 L.Ed.2d 234 (1984), the court stated that the latter type of dispute had been resolved by the application of traditional contract principles. At...