Teamsters Local Union No. 705 v. Burlington N. Santa Fe, LLC

• Decision Date: 24 January 2014
• Docket Number: No. 11–3705.,11–3705.
• Citation: 741 F.3d 819
• Parties: TEAMSTERS LOCAL UNION NO. 705, et al., Plaintiffs–Appellants, v. BURLINGTON NORTHERN SANTA FE, LLC (f/k/a Burlington Northern Sante Fe Corporation), et al., Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

741 F.3d 819

TEAMSTERS LOCAL UNION NO. 705, et al., Plaintiffs–Appellants,

v.BURLINGTON NORTHERN SANTA FE, LLC (f/k/a Burlington Northern Sante Fe Corporation), et al., Defendants–Appellees.

No. 11–3705.

United States Court of Appeals,Seventh Circuit.

Argued Oct. 23, 2012.

Decided Jan. 24, 2014.

Nicholas C. Kefalos, Vernor Moran, Chicago, IL, for Plaintiffs–Appellants.

David S. Birnbaum, Jones Day, Clifford Raymond Perry, III, Laner, Muchin, Dombrow, Becker, Levin & Tominberg, Ltd., Chicago, IL, Donald J. Munro, Jones Day, Jeffrey A. Bartos, Nicholas Skelly Harper, Guerrieri, Clayman, Bartos & Parcelli, P.C., Washington, DC, for Defendants–Appellees.

Before FLAUM and SYKES, Circuit Judges, and RANDA, District Judge. ^*

SYKES, Circuit Judge.

Berkshire Hathaway, Inc., owns a group of railway companies affiliated with the Burlington Northern Santa Fe railroad, which in turn owns the Corwith Intermodal Rail Yard in Chicago. (For simplicity, we refer to these companies and their corporate parent as “the Railroad.”) From 2000 to 2010, the Railroad used an independent contractor, Rail Terminal Services, Inc. (“RTS”), to operate Corwith. The Teamsters Local Union No. 705 represented RTS's employees, who were covered by the union's health-and-pension plan. The Railroad contributed to the plan, as required by its contract with RTS.

In 2010 the Railroad decided to take the Corwith work in-house. Before doing so, however, the Railroad asked for wage-and-benefits concessions from Local 705. The union agreed. But when the Railroad ended its relationship with RTS and moved the Corwith work in-house, it entered into a labor agreement with a different union, the Transportation Communications International Union (“TCIU”). RTS advised its Corwith employees of the Railroad's decision and terminated their employment. The employees could reapply with the Railroad, but its wage-and-benefits package with TCIU was not as generous as the agreement between RTS and the Teamsters.

Local 705 and six employees filed this proposed class action against the Railroad, RTS, and TCIU, alleging several claims for violation of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 et seq., and conspiracy to violate ERISA. The district court dismissed the complaint for failure to state a claim. SeeFed.R.Civ.P. 12(b)(6). The plaintiffs have narrowed their case on appeal, focusing on just two claims: (1) unlawful interference with the attainment of retirement benefits in violation of § 510 of ERISA, 29 U.S.C. § 1140; and (2) a related conspiracy claim.

We affirm the dismissal of these claims. As relevant here, § 510 of ERISA makes it unlawful for “any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant” in an employee benefits plan for the purpose of interfering with his attainment of benefits under the plan. 29 U.S.C. § 1140. Although liability under this statute is not limited to employers, the plaintiffs allege only an unlawful “discharge,” which presupposes an employment relationship. Only RTS was in an employment relationship with the members of Local 705, so the district court properly dismissed the § 510 claim against the other defendants.

As to RTS, the § 510 claim fails for a different reason. The complaint alleges that RTS discharged the employees because it lost its contract to perform the work at Corwith, not for the purpose of interfering with their attainment of pension benefits.

Finally, the conspiracy claim was properly dismissed because ERISA does not provide a cause of action for conspiracy. To the extent that the claim is premised on Illinois common law of conspiracy, it is preempted. See id. §§ 1132(a), 1144(a).

I. Background

This case comes to us on appeal from a Rule 12(b)(6) dismissal, so we take the following facts from the amended complaint. The Railroad owns Corwith Yard in Chicago and until 2000 operated it through a subsidiary.¹ In May 2000 the Railroad contracted with RTS to operate Corwith. As an independent contractor, RTS used its own employees to perform the work at the rail yard.²

Teamsters Local 705 represented the RTS employees who worked at Corwith. In fact, Local 705 had been the labor representative for the employees at Corwith for more than 60 years. Local 705 members were eligible to participate in the union's pension plan. Participants who attained 25 years or more of service were eligible for a full service pension, which (unlike early pensions) paid “unreduced pension benefits calculated at the highest rate and with no reduction for age.” In other words, the more years of service a participant had, the higher his pension would be. We do not know much more about the employee benefits plan except that the Railroad made contributions to it as required by contract.

In 2010 the Railroad decided to stop outsourcing the work at Corwith and move it in-house. Before making this change, the Railroad demanded wage-and-benefits concessions from Local 705 amounting to over $1 million. Local 705 agreed. Despite these concessions, however, when the Railroad terminated its contract with RTS and took the Corwith work in-house, it entered into a labor agreement with TCIU. This agreement contained lower wage scales and a 401(k) retirement plan instead of a pension, and the Railroad was not obligated to make contributions to the employees' 401(k) accounts.

In October 2010 RTS informed Local 705 and the Corwith employees that it was losing its contract to provide services at Corwith and the employees would be laid off at the end of the year. RTS explained that the employees could apply to work for the Railroad, but they would lose the seniority they had acquired at RTS and their wages and benefits under the labor agreement between the Railroad and TCIU were likely to be less generous than they were under RTS's agreement with the Teamsters.

Local 705 and six individual union members filed this proposed class action against the Railroad, RTS, and TCIU, alleging claims under § 510 and § 511 of ERISA and also asserting a claim for civil conspiracy.³ The plaintiffs (we refer to them collectively as “Local 705”) quickly filed an amended complaint, and the defendants moved to dismiss it for failure to state a claim. SeeFed.R.Civ.P. 12(b)(6). The district court granted the motion and dismissed all claims against all defendants. The court swiftly dispatched the claim under § 511 of ERISA; that section allows for criminal penalties, not a private civil cause of action. See29 U.S.C. § 1141 (making it a crime to use fraud, force, threats, or violence to restrain, coerce, intimidate a participant or beneficiary of an employee benefits plan).

Turning to the § 510 claim, the court noted that neither the Railroad nor TCIU had an employment relationship with the Corwith employees, so they could not be liable for unlawfully discharging them in violation of the statute. See id. § 1140 (making it unlawful to “discharge ... a participant” of an employee benefits plan “for the purpose of interfering with the attainment” of benefits under the plan). As for RTS, the employer, the court held that the § 510 claim failed because the amended complaint alleged that RTS discharged the Corwith employees because it lost its contract with the Railroad, not for the purpose of preventing them from attaining pension benefits. Finally, the court dismissed the conspiracy claim because ERISA does not provide for a cause of action for conspiracy and preempts any conspiracy claim rooted in state law. Alternatively, the court held that the amended complaint did not plead sufficient facts to plausibly allege the existence of a conspiracy.⁴

Local 705 timely appealed.

II. Discussion

We review the district court's Rule 12(b)(6) dismissal order de novo, accepting the allegations in the amended complaint as true and drawing reasonable inferences in favor of the plaintiffs. See Larson v. United Healthcare Ins. Co., 723 F.3d 905, 908 (7th Cir.2013). Local 705 challenges only the dismissal of its claim under § 510 of ERISA and the related claim for civil conspiracy. We begin with the conspiracy claim, then move to the § 510 claim for unlawful interference with the attainment of retirement benefits.

A. Conspiracy to Interfere with the Attainment of Benefits Protected by ERISA

The amended complaint alleges that the defendants conspired to interfere with the Corwith employees' attainment of benefits under the Teamsters' pension plan. It does not specify the legal source of this claim. Local 705 urges us to recognize a federal cause of action for conspiracy to violate § 510 of ERISA. We reject this argument for several reasons.

First, ERISA does not contain an express cause of action for conspiracy to violate § 510. Section 510 makes it unlawful to take certain adverse actions against the participants in an employee benefits plan for the purpose of interfering with their attainment of benefits under the plan. 29 U.S.C. § 1140. But the statute nowhere mentions conspiracies or unlawful agreements to interfere with the attainment of benefits. See id. Section 502(a) of ERISA provides a civil cause of action for the private enforcement of rights protected by § 510, see id. § 1132(a)(3); see also Tolle v. Carroll Touch, Inc., 977 F.2d 1129, 1133 (7th Cir.1992), but it, too, lacks any reference to a cause of action for conspiracy. ERISA is simply silent on the subject.

It is canonical that “[t]he express provision of one method of enforcing a substantive rule suggests that Congress intended to preclude others.” Alexander v. Sandoval, 532 U.S. 275, 290, 121 S.Ct. 1511, 149 L.Ed.2d 517 (2001); see also Nw. Airlines, Inc. v. Transp. Workers Union,451 U.S. 77, 94 n. 30, 101 S.Ct. 1571, 67 L.Ed.2d 750 (1981) (“ ‘A frequently stated principle of statutory construction is that when legislation expressly provides a particular remedy or remedies, courts should not expand the coverage of the statute to subsume other...