Whitworth Bros. Storage Co. v. Central States, Southeast and Southwest Areas Pension Fund

• Citation: 794 F.2d 221
• Decision Date: 26 August 1986
• Docket Number: No. 85-3247,85-3247
• Parties: WHITWORTH BROS. STORAGE COMPANY, Plaintiff-Appellant, v. CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, et al., Defendants- Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 221

794 F.2d 221

WHITWORTH BROS. STORAGE COMPANY, Plaintiff-Appellant,

v.

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND,

et al., Defendants- Appellees.

No. 85-3247.

United States Court of Appeals, Sixth Circuit.

Argued March 10, 1986.

Decided June 25, 1986.

Rehearing and Rehearing En Banc Denied Aug. 26, 1986.

Eugine I. Selker, argued, Mark, A. Selker, Cleveland, Ohio, for plaintiff-appellant.

Bernard S. Goldfarb, Mark V. Webber, argued, Goldfarb & Reznick, Cleveland, Ohio, for defendants-appellees.

Before: ENGEL, CONTIE and MILBURN, Circuit Judges.

CONTIE, Circuit Judge.

Whitworth Brothers Storage Co. (Whitworth) appeals from an order of the district court dismissing Whitworth's complaint filed pursuant to 29 U.S.C. Sec. 1103(c)(2)(A)(ii) against Central States, Southeast and Southwest Areas Pension Fund, its trustees and executive director for lack of subject-matter jurisdiction. ¹ For the reasons that follow, the judgment of the district court is reversed.

I.

On September 15, 1983, Whitworth filed a complaint against Central States alleging that Central States is a multi-employer employee benefit plan covered by ERISA. The complaint alleged that Whitworth was an Ohio corporation, that Central States was headquartered in and had its principal place of business in Illinois, and that since 1955 William and Ernest Whitworth have been employees, co-owners and officers of Whitworth. Count I alleged jurisdiction pursuant to 29 U.S.C. Sec. 1132(e)(1), and 28 U.S.C. Sec. 1331. Whitworth styled the action as one "for recovery of Plaintiff's contributions to Central States on and after January 1, 1975 ... pursuant to 29 U.S.C. Sec. 1103(c)(2)(A)(ii)," and claimed to have made $11,000 in contributions to Central States on behalf of William and Ernest in the mistaken belief that they were employees covered by the collective bargaining agreement. Payments were made on behalf of William from January 1, 1975 through July 1981 and on behalf of Ernest from January 1, 1975 through March 1980. Whitworth alleged that a request was made on Central States for return of such contributions, and that, on July 23, 1981, such request was denied with respect to payments from January 1, 1975 through November 10, 1979 on behalf of William, but granted with respect to payments from November 11, 1979 through March 1, 1980 on behalf of William. Whitworth alleged that the refusal to refund the payments was "arbitrary and capricious," and violated fiduciary duties pursuant to ERISA and 29 U.S.C. Sec. 1104(a). The complaint was served on the Secretaries of Labor and of the Treasury. In Count II, Whitworth sought restitution pursuant to a state claim for contributions prior to January 1, 1975, alleging that $9,000 was paid on behalf of Ernest and William Whitworth from 1955 through December 31, 1974. Whitworth alleged that demand was made on Central States but that Central States had refused to review the claim for the period 1955 through May 30, 1964, and had denied the request for a refund of contributions made May 31, 1964 through December 31, 1974. Whitworth claimed that Central States' approval of the claim for the period November 11, 1979 through March 1, 1980 estopped Central States from denying Whitworth's claim and that such approval "constitutes a waiver to deny Plaintiff's claim." In Count III, Whitworth, invoking jurisdiction pursuant to 29 U.S.C. Sec. 1132(e)(1), (f), 28 U.S.C. Sec. 1331, sought a declaratory judgment that Ernest Whitworth is not covered by the collective bargaining agreement, that Whitworth is entitled to restitution plus interest of the payments made on Ernest's behalf from 1955 through July 1981, and that Central States is not entitled to contributions for the period August 1981 through May 1983. On Count I, Whitworth sought a refund of $11,000 plus pre-judgment interest and attorney's fees and costs pursuant to 29 U.S.C. Sec. 1132(g), and on Count II, a refund of $9,000 plus interest and costs.

On November 6, 1984, Central States moved to dismiss for lack of subject-matter jurisdiction or, in the alternative, for failure to state a claim. On January 15, 1985, the district court dismissed the complaint for lack of subject-matter jurisdiction. The district court held that employers are not authorized to maintain an ERISA action pursuant to 29 U.S.C. Sec. 1132(a), (e)(1).

The Sixth Circuit has not specifically ruled on whether an employer may bring an action for recovery of mistaken payments to a pension fund under Sec. 1103(c). The circuit has found that the benefit plan administrator determines whether a mistaken contribution was made and the trustees' action is conclusive unless arbitrary or capricious, not supported by substantial evidence, or erroneous on a question of law. Transisters [sic] Local 348 Health and Welfare Fund v. Kohn Beverage Co., 749 F.2d 315 (6th Cir.1984). The Court noted that employers who pay mistaken contributions have no right of action or entitlement to a refund. Id. fn. 6.

The district court concluded that ERISA provides employers with no cause of action, and, therefore, dismissed Counts I and III, and dismissed Count II as a pendant claim. An order of dismissal was entered January 22, 1985.

On February 1, 1985, Whitworth moved for reconsideration and to alter or amend the judgment, and for leave to file an amended complaint. On March 11, 1985, the district court denied the motion based on the decision in Kohn Beverage, finding that "[t]he Sixth Circuit Court of Appeals did not hold that an employer may now bring an action under ERISA. In fact the Court noted that an employer who mistakenly makes a contribution to a pension fund has no cause of action for recovery." The district court found that Whitworth attempted to add William and Ernest Whitworth as individual plaintiffs to establish "standing as participants of the fund to file an action under ERISA." The court held that it could not grant the motion for leave until it first vacated the judgment, and concluded that even the amended complaint failed to state a cause of action, and, therefore, the grant of leave would be futile. "There is nothing in ERISA providing a cause of action by an employee to recover mistaken contributions to a plan by his employer."

II.

The essence of Whitworth's complaint is that Whitworth made contributions to Central States on behalf of its employees pursuant to written contracts, a trust agreement and a collective bargaining agreement, which Whitworth believed obligated it to make such payments. When Central States determined that certain of Whitworth's employees were not entitled to benefits, Whitworth concluded that it had made contributions which it was not contractually obligated to make, and, accordingly, sought restitution of the erroneously paid monies. Accordingly, we consider whether the district court had jurisdiction of such a claim based on (1) the express actions recognized in ERISA; (2) an action implied from the terms of the statute; or (3) an action arising under federal common law.

A.

The pertinent provisions of ERISA are reviewed below. 29 U.S.C. Sec. 1132(e)(1) provides, with respect to jurisdiction, that:

Except for actions under subsection (a)(1)(B) of this section, the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by the Secretary or by a participant, beneficiary, or fiduciary. State courts of competent jurisdiction and district courts of the United States shall have concurrent jurisdiction of actions under subsection (a)(1)(B) of this section.

Actions available under ERISA are defined in section 502(a), 29 U.S.C. Sec. 1132(a):

A civil action may be brought--

(1) by a participant or beneficiary--

(A) for the relief provided for in subsection (c) of this section, or

(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan;

(2) by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title;

(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan;

(4) by the Secretary, or by a participant, or beneficiary for appropriate relief in the case of a violation of 1025(c) of this title.

(Emphasis added). ² It is clear that Whitworth, the plaintiff-employer in this case, is neither a "participant," 29 U.S.C. Sec. 1002(7), "beneficiary," 29 U.S.C. Sec. 1002(8), or "fiduciary," 29 U.S.C. Sec. 1002(21). Accordingly, from the face of the statute it does not appear that Whitworth can premise jurisdiction on section 502(e), 29 U.S.C. Sec. 1132(e). ³

However, Whitworth further relies on section 403(c)(1), 29 U.S.C. Sec. 1103(c)(1), which provides:

Except as provided in paragraph (2), (3), or (4) or subsection (d) of this section, or under sections 1342 and 1344 of this title (relating to termination of insured plans), 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.

(Emphasis added). An exception to this prohibition in subsection (c)(2)(A)(ii) provides:

In the case of a contribution ... made by an employer to a multiemployer plan by a mistake of fact or law ..., paragraph (1) 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. ⁴

Whitworth, accordingly, argues that section 1103 provides an employer with an action for...