Wong v. Bacon, C-75-2481-CBR and 75-2740-CBR.
| Decision Date | 27 December 1977 |
| Docket Number | No. C-75-2481-CBR and 75-2740-CBR.,C-75-2481-CBR and 75-2740-CBR. |
| Court | U.S. District Court — Northern District of California |
| Parties | John K. WONG and Johnnie B. Lee, on behalf of themselves and all other persons similarly situated, Plaintiffs, v. John W. BACON, A. E. Lafayette, Louis Ottone, Jr., David R. Cox, William W. Ward, Jr., A. L. Diamond, Roy Mack, Everett Matzen, Roy Benner, Edwin Laboure, and James Whiting, Trustees of the California Butchers Pension Trust Fund, Defendants. John K. WONG and Johnnie B. Lee, Plaintiffs, v. John W. BACON, A. E. Lafayette, Louis Ottone, Jr., Lawrence A. Peifer, William W. Ward, Jr., A. L. Diamond, Fred L. Feci, Roy Mack, Everett Matzen, Roy Benner, Edwin Laboure, and James Whiting, Trustees of the California Butchers' Pension Trust Fund, Defendants. |
COPYRIGHT MATERIAL OMITTED
COPYRIGHT MATERIAL OMITTED
Hon Chew, John H. Wallace, Oakland, Cal., for plaintiffs.
Charles P. Scully, Donald C. Carroll, Stephen G. Schrey, McLaughlin & Irvin, William B. Irvin, Patrick W. Jordan, San Francisco, Cal., for defendants.
These related lawsuits involve the right to restitution of various employers who made contributions to the California Butchers' Pension Trust Fund ("Fund") on behalf of individuals who were in fact ineligible to receive benefits from the Fund but whom the employers believed were eligible.
The Fund, whose trustees are defendants in these lawsuits, was established as a trust under the laws of California and under § 302(c)(5) of the Labor-Management Relations Act of 1947, as amended, 29 U.S.C. § 186(c)(5). It has been administered as part of collective bargaining agreements between employers engaged in the wholesale and retail meat industry in California and various Butcher Union locals which are the exclusive bargaining representatives of the employees of those employers.
Under the terms of the trust and the collective bargaining agreements, self-employed individuals and people holding partnership interests of ten percent or more and corporate officers who work less than 50 percent of the time in employment covered by the collective bargaining agreements are not eligible to receive benefits from the Fund. Nevertheless, substantial sums have been paid into the Fund on behalf of members of those groups in the mistaken belief that they were eligible for benefits.1
Toward the end of 1974, the Fund discovered that a significant number of employers had mistakenly been making payments into the Fund on behalf of ineligible individuals. Willing to make restitution to those employers and concerned about the effect of the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. ("ERISA"), on his ability to do so, the Administrator of the Fund sent on November 25, 1974, a letter to all contributing employers advising them to make a prompt application for refunds of any mistakenly paid contributions.2 The Administrator subsequently received approximately 100 requests for refunds before December 31, 1974, including one from the named plaintiffs. The Trustees of the Fund adopted a motion requiring payment before December 31, 1974, of refunds upon valid application, but the administrative difficulty of processing the often incomplete claims prevented the Fund from making a decision about the validity of the request and from making the refund before the end of 1974.
The significance of December 31, 1974, is that the fiduciary standards of ERISA became effective on January 1, 1975. Section 414(a), 29 U.S.C. § 1114(a). Section 403(c)(1) of ERISA, 29 U.S.C. § 1103(c)(1), prohibited the payment of trust funds to employers except under specified circumstances, and the only exception involving mistaken contributions, § 403(c)(2)(A), permitted the return "of a contribution which is made by an employer by a mistake of fact * * * within one year after the payment of the contribution."3
The Fund finished processing the refund claims in March, 1975. Because it concluded on the basis of legal advice that § 403(c)(2)(A) controlled its decision and permitted refunds only for the year before the actual payment of the refund, the Fund made a partial refund limited to the period March to December, 1974, to employers who mistakenly made contributions.4
After the receipt of their partial refund, plaintiffs filed suit in both state court and federal court seeking the remainder of the claimed refund. The state suit, Action No. C-75-2740-CBR, was removed to federal court and related to Action No. C-75-2481-CBR pursuant to now Local Rule 205-2.
The parties have stipulated that Action No. C-75-2481-CBR should be maintained as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure. On July 15, 1976, the Court designated a class consisting of the following:
The parties estimate that the members of that class seek refunds of mistaken contributions totalling approximately $250,000.5
The basic relief sought by plaintiffs in the suit commenced in federal court is a declaratory judgment that plaintiffs' claims are governed by California law, which both parties agree gives plaintiffs a right to restitution. Defendants' position is not completely adversary. They would like to make a complete refund to plaintiffs but are unsure of their legal authority to do so, although they argue that § 403(c)(2)(A) of ERISA, which they contend controls the scope of their authority, permits restitution of contributions paid under mistake of law.6
Cross-motions for summary judgment are currently pending before the Court. Before deciding those motions, the Court must straighten out the jurisdictional posture of the case.
Before reaching the merits of this or any other lawsuit, the Court must satisfy itself that it has jurisdiction. The parties have not focused on this issue, but the Court is obligated to raise the issue sua sponte in cases where jurisdiction is in doubt. Fed.R.Civ.P. 12(h)(3); Clark v. Paul Gray, Inc., 306 U.S. 583, 588, 59 S.Ct. 744, 83 L.Ed. 1001 (1939).
In their complaint in No. C-75-2481-CBR, plaintiffs allege jurisdiction only under the federal Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202. By itself, that jurisdictional allegation is clearly inadequate because the Declaratory Judgment Act does not confer substantive jurisdiction on the federal courts and only permits them to provide a different kind of remedy in cases for which they had an independent basis of jurisdiction. Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671-672, 70 S.Ct. 876, 94 L.Ed. 1194 (1950); Montana Power co. v. EPA, 429 F.Supp. 683, 692 (D.Mont.1977). The failure to comply with the requirement of Rule 8(a)(1) of the Federal Rules of Civil Procedure that the complaint contain "a short and plain statement of the grounds upon which the court's jurisdiction depends" does not require dismissal for lack of jurisdiction provided that the complaint reveals a proper basis for jurisdiction. Kelly v. West Baton Rouge Parish School Board, 517 F.2d 194, 197 (5 Cir. 1975) (alternative ground); New York State Waterways Ass'n, Inc. v. Diamond, 469 F.2d 419, 421 (2 Cir. 1972); Williams v. United States, 405 F.2d 951, 954 (9 Cir. 1969); 5 C. Wright & A. Miller, Federal Practice and Procedure § 1206 at 77-78 & n.66 (1969) (hereinafter cited as Wright & Miller).
There is no independent basis for federal jurisdiction over plaintiffs' claim because plaintiffs explicitly want a federal forum to litigate a possible federal defense to a state claim for restitution. The nature of the claim must be determined from the face of the complaint, Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125, 127-128, 94 S.Ct. 1002, 39 L.Ed.2d 209 (1974) (per curiam); Gully v. First National Bank, 299 U.S. 109, 113, 57 S.Ct. 96, 81 L.Ed. 70 (1936); Gold-Washing & Water Co. v. Keyes, 96 U.S. 199, 24 L.Ed. 656 (1877); Smith v. Grimm, 534 F.2d 1346, 1350 (9 Cir. 1976), and the claim plaintiffs assert in their amended complaint is a right to restitution under California law. According to the amended complaint, the "exclusive jurisdiction" over the action lies in the state courts. The fact that "nowhere does the complaint allege that any federal statute or constitutional provision is the basis for this cause of action" also suggests that plaintiffs' claim relies exclusively on state law. See Smith v. Grimm, supra, 534 F.2d at 1350.
Even if ERISA might create a substantive law of restitution for mistake, see p. 1185, infra, that claim does not appear from the face of the complaint and in fact directly contradicts its theory. That plaintiffs could have pleaded in the alternative a state and a federal claim for restitution is not enough because the presence of a federal question in a claim for relief depends not on how the claim might have been formulated but on how it is in fact formulated. Pan American Petroleum Corp. v. Superior Court, 366 U.S. 656,...
To continue reading
Request your trial
-
Franchise Tax Board of the State of California v. Construction Laborers Vacation Trust For Southern California
... ... Greenwald, 591 F.2d, at 423; Wong v. Bacon, 445 F.Supp. 1177, 1183-1184 (ND Cal.1977). Apparently, CLVT ... ...
-
Crown Cork & Seal v. TEAMSTERS PENSION FUND, ETC.
...categories of individuals empowered to bring a civil action to four groups of persons, none of which includes employers. See Wong v. Bacon, 445 F.Supp. at 1183. Thus, I find by the express language of this section that plaintiff is not entitled to assert a cause of action for restitution.5 ......
-
Texas Employers' Ins. Ass'n v. Jackson, s. 85-2583
... ... as cost and convenience to the public as well as to the parties."); Wong v. Bacon, 445 F.Supp. 1177, 1186-87 (N.D.Cal.1977), cited in Franchise Tax ... ...
-
Nat. Bank of N. America v. LOC. 553 PENSION FUND, ETC.
... ... 1034, 96 S.Ct. 567, 46 L.Ed.2d 408 (1975). See generally Wong ... 1034, 96 S.Ct. 567, 46 L.Ed.2d 408 (1975). See generally Wong v. Bacon ... ...