Trustees of Screen Actors Guild-Producers v. Nyca

• Decision Date: 15 July 2009
• Docket Number: No. 08-55409.,08-55409.
• Citation: 572 F.3d 771
• Parties: TRUSTEES OF the SCREEN ACTORS GUILD-PRODUCERS PENSION AND HEALTH PLANS, Plaintiff-Appellant, v. NYCA, INC., a California corporation; TaylorMade-Adidas Golf Company Inc., a Delaware corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

572 F.3d 771

TRUSTEES OF the SCREEN ACTORS GUILD-PRODUCERS PENSION AND HEALTH PLANS, Plaintiff-Appellant, v. NYCA, INC., a California corporation; TaylorMade-Adidas Golf Company Inc., a Delaware corporation, Defendants-Appellees.

No. 08-55409.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 5, 2009.

Filed July 15, 2009.

Peter S. Dickinson, Bush Gottlieb Singer Lopez Kohanski Adelstein & Dickinson, Glendale, CA, argued the cause for the plaintiffs-appellants and filed the briefs. Robert A. Bush and Ira L. Gottlieb, Glendale, CA, were on the briefs.

Robert S. Gerber, Sheppard, Mullin, Richter & Hampton LLP, San Diego, CA, argued the cause for the defendants-appellees and filed the brief. Matthew W. Holder, San Diego, CA, was on the brief.

Appeal from the United States District Court for the Central District of California, George P. Schiavelli, District Judge, Presiding. D.C. No. CV-01912-GPS-JC.

Before: ALFRED T. GOODWIN, DIARMUID F. O'SCANNLAIN, and SUSAN P. GRABER, Circuit Judges.

O'SCANNLAIN, Circuit Judge:

We consider whether the Employee Retirement Income Security Act of 1974 allows employee benefit plans to recover unpaid contributions from an employer who is not a party to the applicable collective bargaining agreement.

I

NYCA, Inc., is an advertising agency based in southern California. Along with other advertising agencies, NYCA is party to a collective bargaining agreement (the "Commercials Contract") with the Screen Actors Guild, a union that represents actors. The Commercials Contract requires signatory advertising agencies, referred to as "producers," to contribute to employee health and pension plans. The producers must pay an amount equal to 14.30 percent of the "gross compensation" paid to "principal performers" for acting in commercials. That is to say, when a performer performs, the agreement requires producers to contribute to the plans.

TaylorMade-Adidas Golf Company, Inc. ("TaylorMade"), manufacturers golf-related products. In 2003, TaylorMade recruited Fred Couples, a famous professional golfer, to endorse its products. Under this lucrative deal, Couples receives a hefty sum for promoting TaylorMade's golf products in television commercials and during personal appearances.¹ The endorsement agreement ensures that, in the event payments under a collective bargaining agreement are necessary, TaylorMade will make the required contributions. Significantly, TaylorMade is not a signatory to the Commercials Contract.

NYCA and TaylorMade also have their own contractual relationship, which began before TaylorMade signed the endorsement deal with Couples. Under this arrangement, NYCA acts as TaylorMade's exclusive advertising agent for golf-related products and equipment. Under one provision of this agreement, "[TaylorMade] recognize[s] that [NYCA is] signatory to collective bargaining agreements with the Screen Actors Guild and other talent-related union agreements, and that the hiring and use of talent by [NYCA] on[TaylorMade's] behalf will be subject to the terms of such agreements."

As TaylorMade's advertising agent, NYCA works with Couples to produce golf advertisements. Both TaylorMade and NYCA, however, split the considerable bill for Couples' services. NYCA paid Couples $102,181.50, while TaylorMade paid Couples significantly more. NYCA, however, calculated its contribution obligations under the Commercials Contract with reference only to its own payments to Couples, instead of the combined payments made by NYCA and TaylorMade. This resulted in a significantly lower obligation than NYCA would otherwise have owed.

Not everyone was happy with NYCA's arithmetic. The trustees of employee benefit plans covered by the Commercials Contract sued both NYCA and TaylorMade. They claimed that the Employee Retirement Income Security Act of 1974 ("ERISA") entitles them to contributions based upon Couples' total compensation, not merely the portion paid by NYCA. The district court dismissed the case for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). The trustees timely appealed.

II

The trustees contend that TaylorMade, which has not signed the Commercials Contract, is nonetheless liable for unpaid contributions as a "joint employer" of Couples. According to the trustees, "NYCA and TaylorMade jointly exercised sufficient control over Fred Couples' employment such that NYCA and TaylorMade are `joint employers' for purposes of federal labor law." In support of this theory, the trustees identify analogous cases holding companies liable as "joint employers" under the Fair Labor Standards Act of 1938 ("FLSA").

This argument presents us with a straightforward issue of statutory interpretation. We begin, as we must, with the text of the statute. ERISA requires employers to contribute to employee benefit plans in accordance with the terms of collectively bargained agreements. 29 U.S.C. § 1145. Specifically:

Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.

Id. (emphasis added).² Thus, we must decide whether an alleged "joint employer" who is not a signatory to a collective bargaining agreement may nevertheless qualify as an "employer who is obligated to make contributions" within the meaning of § 1145.

A

Before reaching that question, however, we pause to satisfy ourselves that we have subject-matter jurisdiction over this appeal. At the outset, TaylorMade challenges our jurisdiction, asserting that we may not hear this case because TaylorMade is not an "employer who is obligated to make contributions" with the meaning of § 1145. According to TaylorMade, the district court should have dismissed the trustees' action for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) rather than for failure to state a claim under Rule 12(b)(6). The two concepts, of course, are distinct: "the former determines whether the plaintiff has a right to be in the particular court and the latter is an adjudication as to whether a cognizable legal claim has been stated." 5B Wright & Miller, Federal Practice and Procedure § 1350 (3d ed.2004).

We disagree with TaylorMade, and take this opportunity to clear up a persistent procedural confusion that has bedeviled the courts of appeals.³ It is a cardinal principle of federal "arising under" jurisdiction that "[a]ny non-frivolous assertion of a federal claim suffices to establish federal question jurisdiction, even if that claim is later dismissed on the merits." Cement Masons Health & Welfare Trust Fund for N. Cal. v. Stone, 197 F.3d 1003, 1008 (9th Cir.1999); see also Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 90 L.Ed. 939 (1946) ("If the court ... exercise[s] its jurisdiction to determine that the allegations in the complaint do not state a ground for relief, then dismissal of the case would be on the merits, not for want of jurisdiction.").

Guided by this principle, we clarify today that whether a defendant is an "employer who is obligated to make contributions" within the meaning of 29 U.S.C. § 1145 is a question on the merits of the claim, not an issue of subject-matter jurisdiction. No one suggests that the trustees are attempting to sneak through the courthouse doors on the back of a frivolous federal claim. To the contrary: we are satisfied that the trustees have made out a colorable federal claim that properly belongs in federal court. Whether the trustees will ultimately prevail, of course, remains to be seen. At this stage, however, the district court correctly analyzed this case under Rule 12(b)(6) rather than under Rule 12(b)(1).

B

Persuaded that we may decide this case, we return to the merits of the trustees' claims against TaylorMade. We need look no further than the plain language of § 1145 to reach our conclusion. In our view, § 1145 imposes no independent obligation upon employers; it merely provides a federal cause of action to enforce pre-existing obligations created by collective bargaining agreements. Indeed, § 1145, though clumsily phrased in the passive voice, nonetheless expressly locates the source of the duties imposed on employers in "the terms of a collectively bargained agreement," not in any independent provision of federal law. Because TaylorMade has not signed the Commercials Contract, it follows that it has not incurred any such pre-existing obligations under § 1145. The trustees' "joint employer" theory, by seeking to impose obligations above and beyond those required by collective bargaining agreements, directly conflicts with the plain language of the statute. Therefore, we decline the invitation to extend the "joint employer" theory to the context now before us.

That several other circuits have adopted the same reading of the statutory language supports our conclusion. See Cement & Concrete Workers Dist. Council Welfare Fund v. Lollo, 35 F.3d 29, 36-37 (2d Cir.1994) ("[Section] 1145 does not impose a duty to make pension contributions, even on one who qualifies as an `employer' under the general definition provided in 29 U.S.C. § 1002(5), if the duty to contribute did not previously exist."); Mass. Laborers' Health & Welfare Fund v. Starrett Paving Corp., 845 F.2d 23, 25 (1st Cir. 1988); Int'l Bhd. of Painters & Allied Trades Union v. George A. Kracher, Inc., 856 F.2d 1546, 1549 (D.C.Cir.1988) ("ERISA does not require employers to provide pension plans; the obligation to do so, and to contribute to them, springs from a privately-made contract embodied in a plan or a collective bargaining agreement.").⁴ Thus, we are satisfied that the trustees cannot hold TaylorMade liable under the "joint employer" theory.

We hasten to point out that an employer may not avoid liability merely by showing...