IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

WILLIAM J. EINHORN,

administrator of the TEAMSTERS

PENSION TRUST FUND OF

PHILADELPHIA & VICINITY

 Plaintiff,

v.

TWENTIETH CENTURY REFUSE

REMOVAL COMPANY, et al.,

 Defendants.

HON. JEROME B. SIMANDLE

Civil No. 11-1451 (JBS/AMD)

OPINION

APPEARANCES:

Jo Bennett, Esq.

Frank C. Sabatino, Esq.

STEVENS & LEE, PC

1818 Market Street, 29th Floor

Philadelphia, PA 19103

Counsel for Plaintiff

John A. Adams, Esq.

SUSANIN, WIDMAN & BRENNAN, P.C.

455 S. Gulph Road, Suite 240

King of Prussia, PA 19406

Counsel for Defendants James F. Anthony, III and James F.

Anthony, IV 

SIMANDLE, District Judge:

I. INTRODUCTION

This matter is before the Court on the motions of Defendants

James F. Anthony, III and James F. Anthony, IV to dismiss for

failure to state a claim upon which relief can be granted.

[Docket Items 6 & 9.] Plaintiff in this matter is William J.

Einhorn, administrator of the Teamsters Pension Trust Fund of

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Philadelphia & Vicinity. Plaintiff seeks to recover withdrawal

liability assessed pursuant to ERISA and the Multi-Employer

Pension Plan Amendment Act of 1980 (“MPPAA”), 29 U.S.C. § 1381 et

seq. from Defendant Twentieth Century Refuse Removal Company

(“20th Century Refuse”) as well as the Moving Defendants Anthony

III and Anthony IV. This motion requires the Court to determine

three questions: first, whether Plaintiff can seek recovery of

assets transferred from 20th Century Refuse to the Moving

Defendants despite the fact that the Moving Defendants are not

alleged to have been “employers” within the meaning of the MPPAA;

second, whether funds that could have been used to pay assessed

withdrawal liability are “plan assets” within the meaning of the

MPPAA; and third, whether Plaintiff sufficiently pleads a cause

of action or a remedy for equitable relief in Count IV of the

Amended Complaint. For the reasons explained below, the Court

will grant in part and deny in part Defendants’ motions to

dismiss.

II. BACKGROUND

The facts set forth here are those alleged in the Amended

Complaint which the Court must accept as true for purposes of a

Rule 12(b)(6) motion. Plaintiff in this matter is the

administrator and fiduciary of the Teamsters Pension Trust Fund

of Philadelphia & Vicinity, which is alleged to be a

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multiemployer pension plan within the meaning of 29 U.S.C. §

1002(2)(A),(37). Am. Compl. ¶¶ 3-4. 

Plaintiff alleges that Defendant 20th Century Refuse was

formerly a party to a series of successive collective bargaining

agreements that obligated the company to make monthly

contributions to the Pension Fund on behalf of its employees. 

Id. ¶¶ 9-10. The withdrawal liability at issue in this matter

arises from the sale of substantially all of Defendant 20th

Century Refuse’s assets to non-party Waste Management on

September 30, 2009, resulting in a “complete withdrawal” from the

Pension Plan. Id. ¶¶ 11-18. This withdrawal allegedly triggered

MPPAA withdrawal liability under 29 U.S.C. § 1381(a) in the

amount of $489,503.78. Id. ¶ 20-21. Plaintiff further alleges

that, by not responding to proper notice of this assessed

liability, 20th Century Refuse has waived its right to challenge

the assessment of this liability, and, having failed to make any

payments on the liability is currently in default under §

1399(c)(2),(5). Id. ¶¶ 22-25. No portion of the withdrawal

liability has been paid to the Pension Fund, by 20th Century

Refuse or any other party. Id. ¶ 33.

Plaintiff further alleges that Defendant James Anthony III

is “a principal owner” of 20th Century Refuse, and Defendant

James Anthony IV is “an owner” of 20th Century Refuse. Id. ¶¶ 7-

8. On September 2, 2009, Anthony III and Anthony IV signed, as

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“owners” (and which Anthony III signed as President) a letter of

intent spelling out the details of the sale of 20th Century

Refuse to Waste Management. Am. Compl. Ex. A. On September 30,

2009, Plaintiff William Einhorn sent 20th Century Refuse a

request for information and notice regarding possible withdrawal

liability arising from the sale of the company’s assets. Am.

Compl. Ex. B. On December 10, 2009, Plaintiff sent a letter to

20th Century Refuse notifying it of the assessed withdrawal

liability of $489,503.78. Am. Compl. Ex. C.

Plaintiff further alleges that at the time that 20th Century

Refuse withdrew from the Pension Fund, it “had assets that should

have been used to pay some or all of the withdrawal liability”

which came from the sale to Waste Management. Am. Compl. ¶ 40. 

The Moving Defendants knew or had notice of the company’s

obligation to pay the withdrawal liability. Id. ¶ 41. 

Plaintiff alleges that Defendants converted the assets of

20th Century Refuse to their own use, and have “used for their

own benefit assets of 20th Century Refuse that should have been

used to pay the withdrawal liability owed the Pension Fund.” Id. 

¶¶ 34, 42. Specifically, Plaintiff alleges that the Moving

Defendants “engaged in a series of transactions to divest 20th

Century Refuse” of assets to pay the withdrawal liability, which

“included transferring the Assets to their own use, erroneously

representing that 20th Century Refuse had no money to pay the

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withdrawal liability, and failing to respond to the Pension

Fund’s efforts to collect the withdrawal liability.” Id. ¶ 43.

On March 15, 2011, Plaintiff filed his original Complaint in

this matter, naming a collection of corporate defendants

affiliated with 20th Century Refuse, and James F. Anthony III,

individually. [Docket Item 1.] Service was effected on April 14,

2011. [Docket Item 3.] On May 24, 2011, Defendant Anthony III

filed a motion to dismiss for failure to state a claim. [Docket

Item 6.] On June 15, 2011, Plaintiff filed his Amended

Complaint, adding as Defendant James F. Anthony IV. [Docket Item

8.] On June 29, 2011, Defendants Anthony III and Anthony IV

filed the instant motion to dismiss. [Docket Item 9.] Defendant

20th Century Refuse has not entered an appearance in this matter

or filed any responsive pleading, and, on September 23, 2011, the

Clerk of Court entered default against it pursuant to Rule 55(a),

Fed. R. Civ. P. As Defendant Anthony III’s initial motion to

dismiss [Docket Item 3] sought to dismiss Plaintiff’s no-longeroperative initial Complaint, the Court will deny this motion as

moot.

Plaintiff seeks recovery in the currently operative Amended

Complaint in four Counts. Count I seeks recovery of the assessed

withdrawal liability from 20th Century Refuse pursuant to 29

U.S.C. § 1381(a). Am. Compl. ¶¶ 19-25. Count II seeks recovery

of the assessed withdrawal liability from Defendants Anthony III

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and Anthony IV on a theory of breach of fiduciary duty. Id. ¶¶

26-38. Count III seeks recovery of assets from Anthony III and

Anthony IV under 29 U.S.C. § 1392(c) for funds transferred from

20th Century Refuse to the Moving Defendants, with the intent to

avoid or evade withdrawal liability. Id. ¶¶ 39-44. Count IV

seeks recovery of the identified assets under the equitable

theories of constructive trust and equitable subrogation. Id. ¶¶

45-49. Defendants Anthony III and Anthony IV move to dismiss

Counts II, III and IV.

III. DISCUSSION

A. Standard of Review

In order to give defendant fair notice, and to permit early

dismissal if the complained-of conduct does not provide adequate

grounds for the cause of action alleged, a complaint must allege,

in more than legal boilerplate, those facts about the conduct of

each defendant giving rise to liability. Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 555 (2007); Fed. R. Civ. P. 8(a) and

11(b)(3). These factual allegations must present a plausible

basis for relief (i.e., something more than the mere possibility

of legal misconduct). See Ashcroft v. Iqbal, 129 S.Ct. 1937,

1951 (2009). In its review of a motion to dismiss pursuant to

Rule 12(b)(6), Fed. R. Civ. P., the Court must "accept all

factual allegations as true and construe the complaint in the

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light most favorable to the plaintiff." Phillips v. County of

Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (quoting Pinker v.

Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)). 

The assumption of truth does not apply, however, to legal

conclusions couched as factual allegations or to “[t]hreadbare

recitals of the elements of a cause of action, supported by mere

conclusory statements.” Iqbal, 129 S.Ct. at 1949.

The Court, in evaluating a Rule 12(b)(6) motion to dismiss

for failure to state a claim, may consider the complaint,

exhibits attached thereto, matters of public record, and

undisputedly authentic documents if the plaintiff's claims are

based upon those documents. See Pension Benefit Guar. Corp. v.

White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).

B. Analysis

1. Evade/Avoid Liability under 29 U.S.C. § 1392(c)

The Court first turns to Plaintiff’s Third Count, which

seeks recovery from the Moving Defendants on a theory that the

funds they allegedly transferred to themselves from 20th Century

Refuse intending to evade or avoid withdrawal liability can be

recovered under § 1392(c). Defendants argue that the Court must

dismiss this Count because the statute only permits recovery of

withdrawal liability from “employers,” which Plaintiff has not

alleged the Moving Defendants are, under a theory of either alter

ego or piercing the corporate veil.

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The statute sets out the authority of a fund such as

Plaintiff’s Fund to recover withdrawal liability in Part I of the

MPPAA. The statute provides that “[i]f an employer withdraws

from a multiemployer plan in a complete withdrawal or a partial

withdrawal, then the employer is liable to the plan in the amount

determined under this part to be the withdrawal liability.” 29

U.S.C. § 1381(a) (emphasis added). A later section of this part

of the statute sets out liability for “transactions to evade or

avoid liability.” “If a principal purpose of any transaction is

to evade or avoid liability under this part, this part shall be

applied (and liability shall be determined and collected) without

regard to such transaction.” 29 U.S.C. § 1392(c). 

The Third Circuit has previously applied this section of the

MPPAA to set aside agreements between the contributing (and

withdrawing) employer and unions when such agreements were

designed to avoid incurring withdrawal liability, thereby

permitting the injured pension fund to recover withdrawal

liability from the employer despite the agreement. See

SUPERVALU, Inc. v. Board of Trustees of the Southwestern

Pennsylvania and Western Maryland Area Teamsters and Employers

Pension Fund, 500 F.3d 334, 340-41 (3d Cir. 2007) (“Under a plain

language statutory reading the provision applies when a

contributing employer enters a transaction with a principal

purpose of escaping its duty to pay withdrawal liability to the

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plan or fund.”). The Third Circuit has not, however, considered

whether § 1392(c) permits recovery from defendants other than the

withdrawing employer.

Defendants argue that any recovery under § 1392(c) must be

limited by § 1381(a) to permit recovery only from an employer. 

In support of this position, Defendants cite to IUE AFL-CIO

Pension Fund v. Locke Machine Co., 726 F. Supp. 561 (D.N.J.

1989), which held that a pension fund could not recover

withdrawal liability under § 1392(c) from shareholders that were

not alleged to be “employers” under a theory of alter ego or

piercing the corporate veil.

[W]hether or not the ERISA definition of

‘employer’ includes individual shareholders of

a corporation, the principle of limited

corporate liability prevents the plaintiff

from proceeding against shareholders for

delinquent contributions or withdrawal

liability unless there is some reason to

disregard the corporate form.

Id. at 569. The Locke Machine court interpreted the MPPAA to

permit recovery “only against an ‘employer’”, even via § 1392(c)

for transactions to a non-employer party that were intended to

evade or avoid withdrawal liability. Id. at 570. 

In the absence of any controlling Third Circuit precedent on

the question, the Court looks to the decisions of other circuit

courts for persuasive authority. The only circuit court to have

considered the question is the Second Circuit, which has held

that § 1392(c) permits a fund to pursue funds transferred to non9

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employers, provided that the transfer was made by the employer

intending to evade or avoid incurring withdrawal liability. IUE

AFL-CIO Pension Fund v. Hermann, 9 F.3d 1049, 1056 (2d Cir.

1993).

[I]f a pension fund . . . is adversely

affected by the acts of any party who has

attempted to ‘evade or avoid liability’ under

the MPPAA . . . then the MPPAA shall be

applied ‘without regard to such transaction .

. . any assets that were transferred in order

to ‘evade or avoid liability,’ as well as the

parties to whom they were improperly

transferred, must be within the reach of the

statute . . . . Those assets must therefore be

recoverable from the parties to whom they have

been illegitimately transferred.

Id. 

This reasoning is persuasive. The Court concludes that

nothing in the text of the MPPAA statute would appear to limit

recovery of the allegedly transferred funds from the Moving

Defendants, regardless of whether they are alleged to have been

‘employers.’ The Court is not persuaded by the reasoning of the

Locke Machine court, which appears to have read a limitation into

§ 1381(a) that is not present in the text of the statute. 

Section 1381(a) merely permits the proper plaintiff to pursue an

employer for withdrawal liability directly, but is silent on the

issue of whether such funds can be pursued from other parties

under a different cause of action, such as that in § 1392(c).

The Court has found no other district court to have

interpreted the statute in the limited way urged by Defendants;

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every other court to have considered the issue has recognized

that, to give meaning to § 1392(c), a fund must be able to pursue

the transferred assets from the transferee as well as the

employer/transferor. See e.g. UNITE National Retirement Fund v.

Rosal, Civ. No. 07-0773, 2009 WL 3241660 at *7 (E.D. Pa., Oct. 1,

2009) (denying summary judgment motion by individual defendants

against claim to recover funds transferred upon evidence that

funds were transferred with intent to evade or avoid withdrawal

liability under § 1392(c)); Central States, Southeast and

Southwest Areas Pension Fund v. Denny, 250 F. Supp. 2d 948, 953

(N.D. Ill. 2003) (“[l]iability here can therefore extend to

[individual] Defendants if a principal purpose of the

[transaction] was to evade or avoid liability.”); Connors v.

Marontha Coal Co., Inc., 670 F. Supp. 45, 46-47 (D.D.C. 1987)

(“[w]henever a transaction has removed assets from the formal

structure of the corporation being assessed for withdrawal

liability, liability can only be 'collected' if there is a right

of action against the transferee, whether or not it fits the

definition of 'employer’”). 

The Court finds, upon consideration of the language of the

statute and the weight of authority considering the issue, that §

1392(c) permits Plaintiff to pursue transferred funds intending

to evade or avoid withdrawal liability, even from defendants that

are not alleged to be employers under MPPAA. Congress, by

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enacting the MPPAA, made a policy determination that employers

bear an obligation to their employees to ensure that the pensions

promised to those employees would not be rendered illusory by the

insolvency of the pension plan caused by the employer’s

withdrawal from the plan. Connolly v. Pension Benefit Guaranty

Corp., 475 U.S. 211, 215 (1986). The employer is therefore able

to compensate its employees marginally less in salary in exchange

for the security these employees gain by knowing that their

promised pensions will be secure. As a result, Defendant 20th

Century Refuse has economically benefitted from this statutory

structure during the time that is has been contributing to the

Fund. If, in an attempt to avoid meeting its statutory

obligation to its employees, 20th Century Refuse has transferred

these economic benefits to the Anthony Defendants, the Court is

permitted to set that transaction aside, and those assets are

recoverable by the Fund, under § 1392(c). Consequently, the

Court will deny Defendants’ motion to dismiss as to Count III.

2. Breach of Fiduciary Duty

In addition to seeking recovery of assets transferred to the

Moving Defendants from 20th Century Refuse, Plaintiff also seeks

to recover the withdrawal liability from the Moving Defendants on

a theory of breach of fiduciary duty. Under ERISA, a fiduciary

of a covered plan can be held personally liable for losses to the

plan caused by a breach of the fiduciary’s duties. 29 U.S.C. §

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1109(a). The Third Circuit has defined a “fiduciary” under ERISA

as a person who, among other things, “exercises any authority or

control respecting management or disposition of [plan] assets.”

Board of Trustees of Bricklayers & Allied Craftsmen Local 6 of

New Jersey Welfare Fund v. Wettlin Assoc., Inc., 237 F.3d 270,

275 (3d Cir. 2001) (quoting 29 U.S.C. § 1002(21)(A)(i)). 

Defendants move to dismiss the claim for breach of fiduciary duty

on the ground that Plaintiff cannot allege that either Moving

Defendant exercised authority or control over any plan asset.

Plaintiff alleges that the Moving Defendants exercised

discretionary authority over monies that should have been used to

pay withdrawal liability, which Plaintiff further argues

constitutes “plan assets” of the Pension Fund. Am. Compl. ¶¶ 34-

36. Plaintiff therefore argues that the Moving Defendants

breached their fiduciary duties to the Fund under ERISA. 

Defendants argue that the withdrawal liability assets over which

Plaintiff alleges the Moving Defendants exercised control are not

“plan assets” under ERISA, and that the Moving Defendants are

therefore not “fiduciaries” as a matter of law. The question

before the Court is therefore whether the assessed withdrawal

liability in this case constituted a “plan asset” under ERISA.

The Court begins by reiterating that it is only bound to

accept as true factual allegations, but not legal conclusions. 

Iqbal, 129 S.Ct. at 1949. Thus, Plaintiff’s allegation that, by

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failing to pay the assessed withdrawal liability, the Moving

Defendants “have taken custody of ‘plan assets’ of the Pension

Fund and have, therefore, become fiduciaries of the Pension Fund”

is not entitled to the presumption of truth on a Rule 12(b)(6)

motion. Am. Compl. ¶ 36. 

The Court, following the parties’ lead, will analyze whether

withdrawal liability constitutes a plan asset first as a matter

of law, and second as a matter of contract.

a. Plan assets as a matter of law

The Third Circuit has not addressed whether assets that

could be used to pay assessed withdrawal liability constitute

plan assets under ERISA. However, the Circuit has, helpfully,

noted that the term “plan assets” under ERISA can refer to more

than simply assets that have been deposited into a qualified

benefit plan. Bottle Beer Drivers, Warehousemen & Helpers

Teamsters Local 843 v. Anheuser Busch, Inc., 96 F. App’x 831, 835

(3d Cir. 2004) (“funds may, in some cases, be plan assets before

they are actually deposited into the benefit plans”). Thus, that

the assets that Plaintiff identifies had not yet been paid to the

Fund does not decide the question.

While the statute itself provides a definition of “plan

assets”, the definition is not helpful in this context, except to

the extent that it authorizes the Secretary of Labor to define

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the term by regulation. See 29 U.S.C. § 1002(42). No 1

regulation explicitly confronts whether unpaid withdrawal

liability might constitute plan assets. The Department of Labor 2

has issued advisory opinions stating that, absent an applicable

regulation, “plan assets” are defined according to “ordinary

notions of property rights under non-ERISA law,” which “include

any property, tangible or intangible, in which the plan has a

beneficial ownership interest,” considering “any contract or

other legal instrument involving the plan, as well as the actions

and representations of the parties involved.” Faber v.

Metropolitan Life Ins. Co., 648 F.3d 98, 106 (2d Cir. 2011)

(quoting U.S. Dep’t of Labor, Advisory Op. No. 93-14A, 1993 WL

188473 at *4 (May 5, 1993) (finding that interest generated from

plan assets held by insurance company does not constitute plan

assets because plan and beneficiaries had no “ownership interest”

in such additional funds). 

The question on this point is thus whether the Fund had an

“ownership interest” in the money in possession of 20th Century

Refuse that could have been used to pay withdrawal liability at

 Section 1002(42) states that “the term ‘plan assets' means 1

plan assets as defined by such regulations as the Secretary may

prescribe” and provides various exceptions not applicable here. 

29 U.S.C. § 1002(42).

 However, see 29 C.F.R. § 2510.3-102(a) (defining plan 2

assets to include employee contributions to qualified plan that

were withheld by the employer from the employee paycheck to be

plan assets).

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the time Defendants are alleged to have exercised control over

it. In general terms, withdrawal liability under MPPAA

represents the withdrawing employer’s “proportional share of the

plan’s unfunded benefit obligations”, In re Marcal Paper Mills,

Inc., 650 F.3d 311, 316 (3d Cir. 2011), which is “based largely

on the withdrawing employer’s contribution history over the five

. . . years preceding the withdrawal.” Id. at 317 (quoting

CenTra, Inc. v. Cent. States Se. & Sw. Areas Pension Fund, 578

F.3d 592, 599-600 (7th Cir. 2009).

Plaintiff offers two justifications for finding that

withheld withdrawal liability constitutes plan assets as a matter

of law. First, Plaintiff cites to the case of Schaffer v.

Charles Benjamin, Inc., Civ. Nos. 90-6225, 91-6954, 1992 WL 59152

at *8 (E.D. Pa. Mar. 18, 1992) for the proposition that corporate

assets diverted from the payment of an adjudicated withdrawal

liability constitutes plan assets. In Schaffer, the district

court held a bench trial in which it found joint and several

liability for withdrawal liability among, inter alia, the

withdrawing employer corporation and the two individual corporate

officers/owners. The court found liability on several grounds,

including via piercing the corporate veil to find that the

individual owners could be reached for the employer’s direct

liability. Id. at *6-7. Additionally, the court found that the

individual defendants could be declared constructive trustees of

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the assets of the corporation, and that, therefore, their use of

corporate assets for personal reasons constituted a breach of

fiduciary duty to the trust. Id. at *8-10.

Defendants respond that Plaintiff reads too much into

Schaffer, pointing out that the Schaffer court never expressly

held that corporate assets which could be used to pay withdrawal

liability constitute plan assets. The Court agrees. The Court

finds that the Schaffer court merely assumed, without explicitly

deciding, that the individual defendants were “fiduciaries” of

the pension fund. The decision did not consider whether

withdrawal liability constituted a plan asset, or explain under

what theory the individual defendants (Mr. Benjamin and Ms.

Benjamin) could be considered fiduciaries.

Benjamin, Inc. has been adjudged to owe

withdrawal liability to the plaintiff. 

Nevertheless, Mr. Benjamin and Ms. Benjamin

have transferred funds from the corporations .

. . for their own personal use. The imposition

of a constructive trust would deny Mr.

Benjamin and Ms. Benjamin, who are fiduciaries

of the Pension Fund, the ability to refuse to

remedy the withdrawal liability of Benjamin,

Inc.

Id. at *8. The Court interprets this section of the Schaffer

decision to state merely that when a fiduciary appropriates

assets belonging to beneficiaries for his or her personal use,

the fiduciary has breached his or her duty and that a

constructive trust is therefore an appropriate remedy. Schaffer

does not address the question of how the court determined the

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individual owners were fiduciaries, and, as that is the question

before this Court, the case is of limited use here.

To the extent that the Schaffer decision can be interpreted

to hold that corporate officers of an employer that has been

assessed withdrawal liability can be held liable for breach of

fiduciary duty merely by exercising control over company assets

not immediately paid to the assessing pension fund, the Court

finds the holding to be unpersuasive. The result of such a

holding would be that a beneficiary of an ERISA plan, or the fund

itself, would have an automatic claim for breach of fiduciary

duty whenever an employer contests (and refuses to immediately

pay) the assessment of withdrawal liability. The Court therefore

cannot conclude, on the basis of Schaffer, that withdrawal

liability constitutes a plan asset under ERISA as a matter of

law.

Plaintiff’s second argument for determining unpaid

withdrawal liability to be “plan assets” under ERISA is by

analogy to withheld employee contributions under ERISA. As

stated in 29 C.F.R. § 2510.3-102(a) and recognized in several

Circuit Court opinions, funds that were withheld from employee

paychecks for the purpose of paying pension plan contributions

constitute plan assets for the purpose of determining fiduciary

duties under ERISA. See, e.g. United States v. Whiting, 471 F.3d

792, 799-800 (7th Cir. 2006) (“[o]nce the contributions are

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withheld, the money no longer belongs to the company; rather, the

funds belong to the employees. Therefore, employees have a

present interest in the funds.”). 

Plaintiff argues that 20th Century Refuse’s withdrawal

liability, like withheld employee contributions, should be deemed

plan assets. Plaintiff argues that, according to the logic of

the recent Third Circuit case of In re Marcal Paper Mills, Inc.,

650 F.3d 311 (3d Cir. 2011), the Court should conclude that the

beneficiaries and Fund had a vested ownership interest in 20th

Century Refuse’s assessed withdrawal liability. In Marcal, the

Third Circuit concluded that an employer’s withdrawal liability

represents a debt owed by the employer to the beneficiaries of

the fund “in fulfillment of the promise . . . to provide pension

benefits in consideration for . . . [the employee-beneficiary’s]

work.” Marcal, 650 F.3d at 317. Put another way, the Marcal

court stated that 

unfunded vested benefits from which withdrawal

liability is calculated are benefits which are

promised and earned but not yet funded as of

the calculation day. The liability for

unfunded vested benefits represents a

pre-existing obligation on the employer's

part, and is not simply ‘incurred’ as of the

date of withdrawal.

Id. at 318 (quoting Huber v. Casablanca Indus. Inc., 916 F.2d 85,

96 (3d Cir. 1990) (internal punctuation and quotation marks

omitted)). Therefore, Plaintiff argues, the Fund had an accrued,

vested ownership interest (on behalf of the Fund’s beneficiaries)

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to 20th Century Refuse’s assessed withdrawal liability, an

interest which pre-existed 20th Century Refuse’s withdrawal from

the Plan, and that therefore the Moving Defendants’ exercise of

control over company assets which could have satisfied this

obligation constituted a breach of fiduciary duty within the

meaning of ERISA.

Defendants respond that Plaintiff’s analogy to employee

contributions is not reasonable because Marcal did not hold that

the withdrawal liability vested as the employees hours were

worked. The Court agrees. The Marcal court confronted a

different factual and legal situation from the instant one,

namely, whether assessed withdrawal liability of an employer who

had declared bankruptcy could be apportioned to pre- and postpetition amounts. The court concluded that it could, reasoning

that, once the employer withdrew from the pension fund (several

months after petitioning for bankruptcy protection), the assessed

withdrawal liability could be determined to represent some

portion of benefits earned by employees before and some portion

earned after the time when the employer filed its bankruptcy

petition. Id. at 320. Thus, at most, Marcal held that once an

employer withdraws pursuant to the MPPAA, the assessed withdrawal

liability can be attributed to different time periods, but does

not indicate that the employer’s withdrawal liability debt vests

or is automatically due and owing as each employee hour is

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worked. It could not be otherwise, in fact, because an employer

that never withdraws from a plan will, pursuant to the MPPAA,

never be required to pay such liability.

The Court finds support in this conclusion by reference to

the non-precedential Third Circuit opinion of Bottle Beer Drives,

Warehousemen & Helpers Teamsters Local 483 v. Anheuser Busch

Inc., 96 F. App’x 831, 834-36 (3d Cir. 2004). In Anheuser Busch,

the employer was alleged to have breached a fiduciary duty by

keeping payments made to the employer from the union rather than

depositing such payments in the employee pension fund. The union

paid the employer for loaning to the union employees on leave

from the employer, and the amount paid was equal to (and

calculated to equate to) the estimated cost of providing pension

benefits for the employees on loan. Id. at 834. 

The court concluded that, in the absence of a contractual

obligation on the part of the employer to remit such specific

payments to the pension fund, the union payments did not

automatically convert into employee contributions (and therefore

“plan assets”) when they were paid to the employer, even though

the employer would, eventually, be required to pay the employee

benefits that the loaned employees were earning. The employer

only would become a fiduciary under these conditions, the panel

reasoned, were it or the union contractually obligated to remit

such payments to the fund at the time the payments were made. 

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Applying the same principle to the instant matter, the Court

concludes that 20th Century Refuse’s withdrawal liability debt

did not automatically vest or otherwise transform into plan

assets as the employee hours were worked.

The Court therefore concludes that 20th Century Refuse’s

withdrawal liability was not vested prior to assessment in the

way that an employee contribution withheld from the employee’s

paycheck is. Therefore, absent an agreement among the parties

defining the company’s withdrawal liability as a plan asset due

and owing at a particular time prior to the Moving Defendant’s

alleged disposition of it, the Court cannot find that the

assessed withdrawal liability was a plan asset as a matter of

law.

b. Plan assets as defined by agreement

Plaintiff additionally argues that the Fund’s Amended and

Restated Agreement and Declaration of Trust dated July 1, 2000

(the “Pension Trust Agreement”) defines unpaid withdrawal

liability as a “plan asset” sufficient to render the Moving

Defendants as fiduciaries over such assets. Plaintiff attaches

the Pension Trust Agreement to the Amended Complaint. Am. Comp.

Ex. D. Defendants do not dispute that if there were a valid

agreement binding on the parties that treated withdrawal

liability as a plan asset, such an agreement would suffice to

create a fiduciary duty over the assets.

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However, Defendants respond that the Pension Trust Agreement

fails to transform the unpaid withdrawal liability into plan

assets for two reasons. First, Defendants argue that, as nonparties to the Pension Trust Agreement, they are not bound by its

terms. Second, Defendants argue that the terms of the Pension

Trust Agreement do not contemplate treating unpaid withdrawal

liability as a plan asset. 

The Court need not determine whether the Pension Trust

Agreement is binding on the Moving Defendants because it

concludes that, even if it were binding on Defendants, an

interpretation of the Agreement treating withdrawal liability as

a plan asset would be arbitrary and capricious.3

Plaintiff argues that withdrawal liability is to be treated

as a plan asset under the Trust Agreement by reference to two

different sections. First, Plaintiff points to Article I,

Section 10, which defines the term “CONTRIBUTIONS.” Am. Compl.

Ex. D at 4. The term is defined as meaning “the money paid into

the PENSION FUND by a COVERED EMPLOYER or contributions or

withdrawal liability owed to the PENSION FUND from a COVERED

EMPLOYER.” Id. (capitalization original). Thus, Plaintiff

 Plaintiff argues that the Court should defer to the Fund’s 3

interpretation of the Pension Trust Agreement unless such

interpretation is arbitrary and capricious, pursuant to Art. IV,

Sec. 1(s) of the Agreement. Defendants do not dispute

Plaintiff’s claim to such discretion, and the Court will,

therefore, apply an “arbitrary and capricious” standard of review

to Plaintiff’s interpretation.

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argues, the identified section defines “CONTRIBUTIONS” as

“withdrawal liability.” 

Then, Plaintiff turns to Article VI, Section 5. Article IV

is titled “Contributions or Payments to the Pension Fund” and

Section 5 states:

As each hour is worked and/or paid for which

contributions are payable to the PENSION FUND,

the payment of contributions due from the

COVERED EMPLOYER to the PENSION FUND accrues

and shall be considered as being as held in

trust by the COVERED EMPLOYER for the benefit

of the PENSION FUND to whom such trust money

is due and payable.

Am. Compl. Ex. D at 15. (capitalization original). Thus,

Plaintiff argues, because “withdrawal liability” is defined as a

“CONTRIBUTION” under Art. I Sec. 10, and “the payment of

contributions due from the COVERED EMPLOYER to the PENSION FUND

accrues and shall be considered as being as held in trust by the

COVERED EMPLOYER for the benefit of the PENSION FUND” pursuant to

Art. VI Sec. 5, the Court should conclude that the Trust

Agreement establishes that withdrawal liability is a plan asset.

Defendants object to this interpretation by concluding that

Art. VI Sec. 5 unambiguously refers only to employee

contributions themselves, not to the employer’s withdrawal

liability. Defendants argue that this can be seen in two ways. 

First, Defendants look at the language of Art. VI Sec. 5 itself,

which states that contributions become due and owing to the Fund

“[a]s each hour is worked and/or paid for” which Defendants argue

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is clearly a reference to employee plan contributions alone

rather than withdrawal liability, as withdrawal liability is not

paid to the fund on an ongoing basis as each employee hour is

paid. 

Second, Defendants point out that the definition in Art. I

Sec. 10 which equated withdrawal liability with “CONTRIBUTIONS”

is clearly a reference to a specialized term, distinct from

“contributions” in lower-case letters. Defendants point out that

the grammatical structure of this definition equates the defined

term “CONTRIBUTIONS” with three things: (1) money paid to the

PENSION FUND, (2) “contributions” (uncapitalized), and (3)

withdrawal liability. As a result, Defendants argue, the

definition clearly and unambiguously treats the uncapitalized

“contributions” as distinct from withdrawal liability, and only

suggests that withdrawal liability is a component of

“CONTRIBUTIONS”. Thus, Defendants argue, because Art. VI Sec. 5

only states that (lower-case) “contributions” are due and owing

after each hour is worked, the only reasonable interpretation of

the two sections must be that Art. VI Sec. 5 is referring only to

the generalized form of “contributions” which is established as

distinct from “withdrawal liability” in Art. I Sec. 10.

Plaintiff responds only to the first of Defendants’

arguments on this point, arguing that, under Marcal, as discussed

above, the Third Circuit recognized that withdrawal liability is

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calculated, in part, based on the hours worked by the employee

beneficiaries under the plan. Plaintiff therefore reasons that

the language of Art. VI Sec. 5 describing contributions in this

way is not necessarily inconsistent with interpreting the

provision to include withdrawal liability. 

Plaintiff does not, however, respond at all to Defendants’

contract interpretation argument distinguishing the defined term

“CONTRIBUTIONS” from the general term “contributions” and the

fact that the latter term is used disjunctively from “withdrawal

liability” in the definitions section. The Court agrees that

Art. I Sec. 10 must be read to distinguish withdrawal liability

from the general term of “contributions”, and Plaintiff offers no

interpretation of the terms of the Agreement that would explain

why the Court should disregard this distinction. Thus, the Court

must conclude that interpreting Art. VI Sec. 5 in a way that

conflicts with Art. I Sec. 10 would be arbitrary and capricious. 

Consequently, the Court finds no contractual provision

establishing that withdrawal liability constitutes plan assets.

The Court will, therefore, grant Defendants’ motion to

dismiss Count II of the Amended Complaint for failure to state a

claim, as Plaintiff cannot allege that Defendants were

fiduciaries under ERISA.

3. Claim for Equitable Relief

Finally, Defendants move for dismissal of Plaintiff’s Fourth

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Count, a claim for equitable subrogation and constructive trust. 

Defendants argue that the Count should be dismissed for two

reasons. First, because ERISA does not create an independent

cause of action for equitable relief absent some other violation

of the statute, and second because Plaintiff fails to adequately

plead the necessary elements for either the imposition of a

constructive trust or equitable subrogation.

As to the first argument, Plaintiff responds that the

Supreme Court decision Sereboff v. Mid-Atlantic Servs., Inc., 547

U.S. 356 (2006) recognizes an independent cause of action for a

fiduciary (such as Plaintiff) to obtain equitable relief for a

violation of ERISA or to enforce the terms of a Pension Plan

under 29 U.S.C. § 1132(a)(3). Plaintiff further argues that he

has adequately alleged that the Moving Defendants violated other

provisions of ERISA, and further that the equitable relief he

seeks is to enforce Article IX of the Fund’s Pension Plan (which

requires an employer to pay withdrawal liability in accordance

with the statute.4

Defendants argue in reply that the Article IX of the Plan

only obligates the employer, which does not include the Moving

 Article IX, Section D governs payment of withdrawal 4

liability, and requires an employer that has been assessed

withdrawal liability to pay that liability, even if the employer

contests the assessment. Pl.’s Br. Ex. A at 45. While the Plan

document cited here was not attached to the Amended Complaint,

Plaintiff suggests, and Defendants do not dispute, that the Court

can take note of its provisions as it is a “public document.”

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Defendants. However, the Court finds Defendant’s argument

irrelevant as it has already determined that Plaintiff has

adequately stated a claim for a violation by the Moving

Defendants of 29 U.S.C. § 1392(c). Thus, the Court finds that §

1132(a)(3) provides Plaintiff with a cause of action to seek

equitable relief to remedy that alleged violation.

As to Defendants’ second argument, that Plaintiff fails to

adequately plead the elements of the equitable relief he seeks,

Plaintiff responds only to his claim for a constructive trust. 

Plaintiff does not argue that he has adequately plead the five

elements identified by Defendants as being necessary to state a

claim for equitable subrogation. See Tudor Dev. Grp. v. United

States Fidelity & Guar. Co., 968 F.2d 357, 361 (3d Cir. 1992)

(citing Pennsylvania law). The Court agrees with Defendants 5

that Plaintiff has not alleged all five of these elements, and

Plaintiff has not argued that Tudor’s elements are inapplicable

in this case. Thus, the Court will grant Defendants’ motion to

dismiss with regard to Plaintiff’s equitable subrogation claim. 

However, as to the adequacy of Plaintiff’s claim for the

imposition of a constructive trust, the Court finds that

 The elements identified are “(1) the claimant paid the 5

creditor to protect his own interests; (2) the claimant did not

act as a volunteer; (3) the claimant was not primarily liable for

the debt; (4) the entire debt has been satisfied; and (5)

allowing subrogation will not cause injustice to the rights of

others.” Tudor Dev. Grp. at 361.

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Plaintiff has adequately alleged this claim. Defendants argue

that, to state a claim for the imposition of a constructive

trust, Plaintiff is required to specifically trace the particular

assets to be placed in trust to specific funds or assets in

Defendants’ possession. The Court finds that Plaintiff has

sufficiently alleged the necessary elements of this claim. 

Plaintiff has alleged that the particular assets he seeks to be

held in trust are separate and identifiable and are still in the

possession of the Defendants. To the extent that Defendants

argue that Plaintiff must, at the pleading stage, specifically

allege the particular location of such assets and identify the

specific bank account where such funds are held, the Court

disagrees, finding no support in the cases cited by Defendant.

Toy v. Plumbers & Pipefitters Local Union No. 74 Pension

Plan, 317 F. App’x 169 (3d Cir. 2009) merely states that a claim

for constructive trust is not sufficiently alleged when a

plaintiff makes simple “demands for monetary compensation that

are not addressed to a particular fund” because “[s]uch demands

constitute legal, rather than equitable, remedies.” Id. at 171. 

Similarly, Great-West Life & Annuity Ins. Co. v. Knudson, 534

U.S. 204, 213 (2002) states that the imposition of a constructive

trust under § 1132(a)(3) is permissible when Plaintiff has

alleged “money or property identified as belonging in good

conscience to the plaintiff [that] could clearly be traced to

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particular funds or property in the defendant's possession.” Id. 

These cases, therefore, stand for the proposition that a

plaintiff seeks equitable relief sufficient to state a claim

under § 1132(a)(3) provided that the plaintiff alleges the

existence of a fund where the specific assets alleged to belong

to the plaintiff can be found, as opposed to merely seeking cash

damages in the guise of equitable relief.

Plaintiff has adequately alleged that he seeks to recover

the money that 20th Century Refuse possessed at the time of the

assessment of withdrawal liability that the Moving Defendants

subsequently converted into personal accounts to prevent the

payment of such liability. Plaintiff has further alleged that

such funds are still in the possession of these Defendants. The

Court finds these allegations to adequately state a claim for

constructive trust under § 1132(a)(3). The Court will deny

Defendants’ motion to dismiss Plaintiff’s Count IV as to the

imposition of a constructive trust, but will grant Defendants’

motion to dismiss Count IV as to the claim for equitable

subrogation.

IV. CONCLUSION

For the reasons stated above, the Court concludes that

Plaintiff has sufficiently alleged a cause of action to recover

funds transferred with the intent to evade or avoid withdrawal

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liability pursuant to 29 U.S.C. § 1392(c). The Court similarly

concludes that Plaintiff has sufficiently alleged a cause of

action to pursue a constructive trust pursuant to 29 U.S.C. §

1132(a)(3). The Court will, therefore, deny Defendants’ motion

to dismiss Count III and Count IV as to those claims. However,

the Court has also concluded that Plaintiff has failed to state a

claim for breach of fiduciary duty in Count II because Plaintiff

has not alleged that Defendants exercised authority or control

over any plan assets. Consequently, the Court will grant

Defendants’ motion to dismiss as to Count II of the Amended

Complaint. The Court will also grant Defendants’ motion to

dismiss as to Plaintiff’s claim for equitable subrogation in

Count IV. The accompanying Order will be entered. 

December 22, 2011 s/ Jerome B. Simandle 

Date JEROME B. SIMANDLE

United States District Judge

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