Source: https://law.justia.com/cases/federal/appellate-courts/F2/870/1129/312243/
Timestamp: 2019-08-20 09:51:10
Document Index: 45327843

Matched Legal Cases: ['§ 1113', '§ 1132', '§ 1132', '§ 1109', '§ 1132', '§ 1132', 'art:\n29', '§ 1109']

Keith Farrell, William Murray and Richard Richardson,plaintiffs-appellants, v. Automobile Club of Michigan, Defendant-appellee, 870 F.2d 1129 (6th Cir. 1989) :: Justia
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Keith Farrell, William Murray and Richard Richardson,plaintiffs-appellants, v. Automobile Club of Michigan, Defendant-appellee, 870 F.2d 1129 (6th Cir. 1989)
US Court of Appeals for the Sixth Circuit - 870 F.2d 1129 (6th Cir. 1989)
Argued Dec. 8, 1988. Decided March 28, 1989
Both parties agree that actions for violation of ERISA may not be brought after the earlier of (1) six years after the date of the last action which constituted the breach or violation; or (2) three years after the earliest date on which plaintiff had actual knowledge of the breach or violation; or (3) three years after the earliest date on which a report from which the plaintiff could reasonably be expected to have learned of the breach or violation was filed with the Secretary. 29 U.S.C. § 1113(a). Where fraud or concealment of the breach is involved, an action must be brought within six years of the date of discovery of the breach or violation. Id.
We agree with the District Court--there was no genuine issue of fact as to plaintiffs' actual knowledge of the breach. Indeed, as the Second Circuit stated in Perma Research & Development Co. v. The Singer Co., 410 F.2d 572, 578 (2d Cir. 1969), and this Court adopted in Biechele v. Cedar Point, Inc., 747 F.2d 209, 215 (6th Cir. 1984):
Our inquiry, however, does not stop there. Plaintiffs assert that even if their action was filed outside the applicable statute of limitations, the statute of limitations was tolled by the filing of the state court action. As authority for this proposition, plaintiffs cite Burnett v. New York Central Railroad Co., 380 U.S. 424, 85 S. Ct. 1050, 13 L. Ed. 2d 941 (1964). In Burnett, the plaintiff filed his FELA action in federal court after his state FELA action was dismissed for improper venue. The state action was filed within the three year time bar; the federal action was not. The Court held that where a timely FELA action is begun in a state court having jurisdiction, the defendant is served with process and the case is dismissed for improper venue, the FELA statute of limitations is tolled during the pendency of the state suit and until the state court dismissal becomes final. Id. Such tolling, the Court reasoned, was fair to both plaintiff and defendant, carried out the policies of FELA and best served the policies of uniformity and certainty in applying the FELA limitations provision. Id. at 436, 85 S. Ct. at 1058.
The District Court rejected this argument, however. Construing plaintiffs' claim as one "for breach of fiduciary duty" and reasoning that pursuant to 29 U.S.C. § 1132(e) (1),1 federal courts have exclusive jurisdiction over ERISA breach of fiduciary duty actions, the District Court held that the statute of limitations was not tolled because the state action was filed in a court which "clearly lacked jurisdiction." As principal authority for this proposition, the District Court cites the following two cases: Silverberg v. Thompson McKinnon Securities, Inc., 787 F.2d 1079, 1082 (6th Cir. 1986) (Securities Exchange Act statute of limitations not tolled by filing of action in state court because federal jurisdiction exclusive); Fox v. Eaton Corp., 615 F.2d 716, 718-720 (6th Cir. 1980), cert. denied, 450 U.S. 935, 101 S. Ct. 1401, 67 L. Ed. 2d 371 (1981) (90 day Title VII limitations period tolled by filing action in state court which plaintiff reasonably believes has subject matter jurisdiction).
The ERISA jurisdiction clause, 29 U.S.C. § 1132(e) (1),2 provides in pertinent part that jurisdiction of actions brought under Sec. 1132(a) (1) (B)3 is concurrent between state and federal courts. All other actions must be brought exclusively in federal courts. Id. The Michigan court had jurisdiction over plaintiffs' ERISA complaint, therefore, only if it was brought under Sec. 1132(a) (1) (B).
Plaintiffs' claim can be construed as arising under at least two different ERISA provisions, although, as we shall see, Sec. 1132(a) (1) (B) seems the most appropriate. The language in paragraph 17 of plaintiffs' complaint, claiming "serious breaches of defendant's fiduciary duty" could be construed as an exclusively federal claim arising under 29 U.S.C. § 1109,4 outlining liability for breach of fiduciary duty. But there is a serious flaw in this reasoning. Section 1109 authorizes relief only to the plan itself, not to individual beneficiaries. See Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134, 140, 105 S. Ct. 3085, 3089, 87 L. Ed. 2d 96 (1985) (Sec. 1109 does not provide a cause of action for extra-contractual damages to a beneficiary caused by improper or untimely processing of benefit claims because Sec. 1109 relief inures to the benefit only of the plan itself not an individual beneficiary). Plaintiffs' request for relief, however, is for themselves as individual beneficiaries, not for the plan as a whole.
Alternatively, plaintiffs' complaint could be construed as a Sec. 1132(a) (1) (B)5 action to recover accrued benefits, a claim for which federal jurisdiction is concurrent with state court jurisdiction. This construction is supported by plaintiffs' prayer for individual relief in its state complaint and by plaintiffs' federal complaint which expressly requests Sec. 1132(a) (1) (B) relief. The District Court's refusal to toll the statute of limitations on the ground that the state court "clearly lacked jurisdiction" is, therefore, erroneous.
Tolling is justified in this case for several reasons. First, as we have shown, the state court appears to have had jurisdiction over the claims of the individual plaintiffs under Sec. 1132(a) (1) (B) of ERISA.
Second, as Burnett, supra, teaches, the primary purpose of statutes of limitations is to promote fairness to defendants by preventing prosecution of stale claims and the loss of relevant evidence and by encouraging diligence by plaintiffs. 380 U.S. at 428, 85 S. Ct. at 1054. See also Morgan v. Washington Manufacturing Co., 660 F.2d 710, 712 (6th Cir. 1981) (in the absence of prejudice to the defendant or a showing of bad faith or lack of diligence by a claimant, equitable considerations should toll the 180 day period for filing a complaint under Title VII when the claimant makes a timely filing with a federal agency). Where circumstances arise in which the plaintiff has been diligent and the defendant has been given adequate notice of the claim, "courts must be flexible to assure that the true purpose of the limitation is served." Joseph v. Syrian Arab Airlines, 88 F.R.D. 530, 532 (S.D.N.Y. 1980).
29 U.S.C. § 1132(e) (1) provides in pertinent part:
Except for actions under subsection (a) (1) (B) ..., the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter.... 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.
29 U.S.C. § 1132(a) (1) (B) provides in pertinent part:
29 U.S.C. § 1109 provides in pertinent part: