SOFT DRINK IND. LOCAL UN. 744 PEN. FUND v. Coca-Cola

• Decision Date: 15 January 1988
• Docket Number: No. 87 C 4178.,87 C 4178.
• Citation: 679 F. Supp. 743
• Parties: SOFT DRINK INDUSTRY LOCAL UNION NO. 744 PENSION FUND, Plaintiff, v. COCA-COLA BOTTLING CO. OF CHICAGO, Defendant.
• Court: U.S. District Court — Northern District of Illinois

679 F. Supp. 743

SOFT DRINK INDUSTRY LOCAL UNION NO. 744 PENSION FUND, Plaintiff, v. COCA-COLA BOTTLING CO. OF CHICAGO, Defendant.

No. 87 C 4178.

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

January 15, 1988.

Stephen Feinberg, Michael C. Greenfield, Barry Collins, Asher, Pavalon, Gittler & Greenfield, Ltd., Chicago, Ill., for plaintiff.

James C. Franczek, Jr., Lawrence L. Summers, Vedder, Price, Kaufman & Kammholz, Chicago, Ill., for defendant.

MEMORANDUM OPINION

GRADY, Chief Judge.

This Employee Retirement Income Security Act, 29 U.S.C. §§ 1001-1461 ("ERISA"), case comes before the court on the motion of plaintiff and counter-defendant Soft Drink Industry Local Union No. 744 Pension Fund ("the Fund") to dismiss the counterclaim of defendant and counter-plaintiff Coca-Cola Bottling Co. of Chicago ("Coke") for failure to state a claim upon which relief can be granted. Federal Rule of Civil Procedure 12(b)(6). For the reasons stated below, the motion to dismiss is denied.

FACTS

Coke entered into a collective bargaining agreement with the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Local No. 744 ("the union"). Section 36.2 of this agreement detailed certain contributions which Coke would make to the Fund for every employee who worked eleven or more days per month. The Fund is a multiemployer pension plan administered under ERISA. In § 36.2, Coke agreed to pay the Fund the lesser of $104.54 "or a sum equal to what is actuarially determined to provide an improvement in the benefit level of no more than" $100 per month for future retirees.

The agreement took effect July 21, 1985. Answer at ¶ 9. The Fund alleges that it calculated Coke's necessary contribution to be $104.54 per month per covered employee, Complaint at ¶ 10, although Coke denies this. Answer at ¶ 10. Coke paid this amount from July 21, 1985 through January 1987. Id. at ¶ 11. Then Coke stopped making these payments to the Fund, id. at ¶ 12, and the Fund sued.

Coke answered and counterclaimed on June 26, 1987. Its answer alleged that it does not have an obligation to make further payments. Coke also argues that this court lacks subject matter jurisdiction over an ERISA claim brought by the Fund, and that the case should be dismissed for failure to join the Fund Trustees and the Union. Rule 12(b)(7). In its counterclaim Coke alleges that its earlier payments were made by mistake and requests that the Fund be ordered to return these allegedly erroneous payments.

DISCUSSION

Subject Matter Jurisdiction

Coke's answer suggests that this court lacks subject matter jurisdiction. A claim asserting a right allegedly created by a federal statute presents a federal question. See Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 776, 90 L.Ed. 939 (1946) (test of federal jurisdiction is not whether cause of action was one on which complainant could actually recover but rather whether it involves a federal controversy); see also Oneida Indian Nation of New York v. County of Oneida, 414 U.S. 661, 666-67, 94 S.Ct. 772, 776-77, 39 L.Ed.2d 73 (1974) (federal jurisdiction unless right claimed is patently specious). As the complaint purports to assert a right under ERISA, we have subject matter jurisdiction over this case. 28 U.S.C. § 1331.

Motion to Dismiss Counterclaim

The crux of this motion to dismiss is the meaning and the implications of the phrase "shall not prohibit" in § 403(c) of ERISA, 29 U.S.C. § 1103(c)(2)(A)(ii) (hereinafter "the refund section"). The refund section is one of a few narrow exceptions to the general ERISA rule that

the assets of a plan shall never inure to the benefit of any employer and shall be held for the exclusive purposes of providing benefits to participants in the plan and their beneficiaries and defraying reasonable expenses of administering the plan.

29 U.S.C. § 1103(c)(1).

Stripped of exceptions irrelevant to this motion, the refund section states that a payment

made by an employer to a multiemployer plan by a mistake of fact or law ... shall not prohibit the return of such contribution or payment to the employer within 6 months after the plan administrator determines that the contribution was made by such a mistake.

29 U.S.C. § 1103(c)(2)(A)(ii). Coke argues that the refund section gives it a private right of action to attempt to compel the return of erroneous payments. In the alternative, Coke argues that federal common law allows it to state a claim for return of mistaken contributions to a multiemployer pension plan.

The Fund's motion to dismiss for failure to state a claim raises close and complicated questions that are still largely unsettled in this circuit. The courts in other circuits which have considered these questions are divided into three camps. Some hold that there is no right of action, some that there is an implied private right of action, and some that there is a federal common law right of action. We believe this last view to be the correct one.

Does the Refund Section Create an Implied Right of Action for Employers?

We begin by examining what guidance is available from the two cases in this circuit which seem to be most relevant, Martin v. Hamil, 608 F.2d 725 (7th Cir.1979) and Bosco v. Serhant, 836 F.2d 271 (7th Cir. 1987).

Martin was a declaratory judgment action brought by the trustees of a pension fund which was subject to ERISA. The trustees sought and received a declaratory judgment that a particular employer was not entitled to repayment of monies which the employer claimed were paid due to a type of mistake then outside the scope of the refund section. 608 F.2d at 727-28. (The then-applicable version of the repayment section allowed repayments for errors of fact but not for errors of law. Id. at 728.¹) The Seventh Circuit held that the employers had committed no mistake of fact, only one of law, but stated that "defendants are entitled to restitution for ... contributions under ERISA only if they paid contributions as a result of a mistake of fact." Id. at 728-29. This statement is dictum because, as we have just noted, the court found that no mistake of fact occurred. In context, it clearly means only that not having made a mistake of fact, defendants are not entitled to restitution.

Coke nonetheless argues that the Seventh Circuit's statement in Martin "implicitly has recognized a cause of action for restitution of excess contributions under ERISA." Memorandum in Opposition to Plaintiff Motion to Dismiss Counterclaim at 4. Even if the Seventh Circuit's statement were not dictum, it alone could not support Coke's contention. Martin was a declaratory judgment action by a pension fund trustee. Pension fund trustees are one of the parties to whom ERISA explicitly grants the right to bring suits. 29 U.S.C. A. § 1132(a). Employers are not among the parties explicitly granted such a right. See id. Coke's contention that a cause of action for restitution exists under ERISA requires that we imply a cause of action under the act. In order to do this we must undertake the analysis required by Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2087, 45 L.Ed.2d 26 (1975), and its successors. The Seventh Circuit was not required to undertake this analysis in Martin, nor did it even allude to the issue, and it is therefore clear that Martin has not resolved whether an employer has an implied cause of action under ERISA for restitution of allegedly mistaken overpayments.

We turn therefore to Bosco, the most recent Seventh Circuit case concerning implied rights of action under comprehensive federal statutes. Bosco concerned portions of the Commodity Exchange Act, 7 U.S.C. §§ 7a(8), 13c(a). Writing for the panel, Judge Posner expressed some skepticism about implied rights of action:

The whole question of "implied" rights of action is deeply vexed. It lies at the crux of a series of debates over statutory interpretation. Those judges who believe that most statutes are compromises between rival interest groups hesitate to create implied rights of action no matter how defective a state's remedial scheme is without them, for they believe that in all likelihood the absence of effective remedies was a part of the compromise that enabled the statute to be passed, and they rightly do not want to undo the compromise. Those who believe that a regulatory statute should be viewed not as the point of balance between conflicting interest groups but as a straightforward effort to eliminate abuses do not hesitate to enforce a statute by whatever remedies are expedient.

Some take a different view; they believe that the question is not whether the statute's ostensible purposes would be served by adding a private right of action to the remedies expressly provided, but whether Congress consciously intended (without bothering to say) that there should be a private right of action. The Supreme Court followed this approach in Merrill Lynch, Pierce, Fenner & Smith v. Curran, 456 U.S. 353 102 S.Ct. 1825, 72 L.Ed.2d 182 (1982).... The Court reasoned that ... in 1974 when the Commodity Exchange Act was passed ... courts were freely implying rights of action and had even done so in a number of commodities cases, and because Congress must be presumed to know the decisional background against which it amends its statutes, it must have wanted the courts to keep on implying private rights of action in the same class of cases; otherwise it would have told them to stop....

As an original matter we might question the last two links in this chain.

Bosco, at 275. We understand this to mean that we should approach the implication of a private right of action with some caution.

The Cort v. Ash test for an implied right of action has four parts:

First, is the plaintiff `one of the class for whose especial benefit the statute was enacted' ... that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or

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