Source: https://openjurist.org/112/f3d/252/23934w-central-states-southeast-and-southwest-areas-pension-fund
Timestamp: 2019-12-09 23:43:00
Document Index: 36482775

Matched Legal Cases: ['§ 1399', '§ 1399', '§ 1399', '§ 1451', '§ 1399', '§ 1113']

112 F3d 252 23934w Central States Southeast and Southwest Areas Pension Fund | OpenJurist
112 F. 3d 252 - 23934w Central States Southeast and Southwest Areas Pension Fund
112 F3d 252 23934w Central States Southeast and Southwest Areas Pension Fund
112 F.3d 252
21 Employee Benefits Cas. 1068,
Pens. Plan Guide (CCH) P 23934W
and Howard McDougall, Plaintiffs-Appellants,
MAHONING NATIONAL BANK; Jeffrey Feldman; Sheldon Feldman;
and Benjamin Reiff, Defendants-Appellees.
On March 14, 1987, Central States sent a "notice and demand for payment of withdrawal liability," to Frydman and the Companies, pursuant to 29 U.S.C. § 1399(b)(1). On December 31, 1987, the district court vacated the delinquent contributions judgment in light of the bankruptcy proceedings. Central States moved to intervene in the bankruptcy proceedings in March 1988, and to lift the stay. On June 27, 1988, the bankruptcy proceeding was dismissed and the stay was lifted.
On July 12, 1988, Central States sent out a second letter to Frydman and the Companies. The letter indicated that the Companies were in default on their obligation to make payment on their withdrawal liability, and gave the Companies 60 days to pay, or "the entire withdrawal liability assessment, in the amount of $493,529.09, would become due." See 29 U.S.C. § 1399(c)(5)(A).
On January 21, 1994, Central States brought suit against the Individuals and MNB in the Northern District of Illinois. This action alleged causes of action under ERISA's withdrawal liability provisions, and under Illinois common law and federal common law, including fraud on creditors and civil conspiracy. The district court dismissed the case on November 30, 1994. Central States v. Feldman, 872 F.Supp. 493 (N.D.Ill.1994). The court held that the action accrued as of May 13, 1987, sixty days after the March 14, 1987, letter sent by Central States to the Companies putting them on notice of withdrawal liability. Id. at 494, 496-97; see 29 U.S.C. § 1399(c)(2). Because the ERISA withdrawal liability claim was not brought within six years of that date, the court dismissed it under FED.R.CIV.P. 12(b)(6), as untimely filed under 29 U.S.C. § 1451(f), ERISA's statute of limitations for such claims. The court dismissed all other claims under FED.R.CIV.P. 12(b)(2). Feldman, at 494 n. 1 and 498 n. 5.
Whether the district court correctly dismissed an action pursuant to Federal Civil Rule 12(b)(6) is a question of law subject to de novo review. Wright v. MetroHealth Med. Ctr., 58 F.3d 1130, 1138 (6th Cir.1995) cert. denied, 516 U.S. 1158, 116 S.Ct. 1041, 134 L.Ed.2d 188 (1996). We must construe the complaint in a light most favorable to the plaintiffs, accept all the factual allegations as true, and affirm the dismissal only if we determine that the plaintiffs undoubtedly can prove no set of facts in support of their claims that would entitle them to relief. Id.
A. Preemption Of State Law
In a unanimous decision discussing the exclusivity of ERISA remedies and ERISA's preemption of state claims, the United States Supreme Court in Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), noted that the care with which Congress drafted the civil enforcement remedies and the balancing of policies embodied in its choice of remedies "argue strongly for the conclusion that ERISA's civil enforcement remedies were intended to be exclusive." Id. at 54, 107 S.Ct. at 1556; see also Ingersoll-Rand v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990); Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).
As the Supreme Court has observed, in enacting ERISA, Congress made a careful, well-reasoned decision to limit the involvement of the judicial system in the administration of employee benefit plans. ERISA is a "comprehensive and reticulated statute," Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 361-62, 100 S.Ct. 1723, 1726-27, 64 L.Ed.2d 354 (1980), with "deliberately expansive" preemption provisions. Pilot Life Ins. Co., 481 U.S. at 45-46, 107 S.Ct. at 1551-52 (1987); see also Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990); Holland v. Burlington Industries, Inc., 772 F.2d 1140, 1147 (4th Cir.1985), aff'd, 477 U.S. 901, 106 S.Ct. 3267, 91 L.Ed.2d 559 (1986).
In Cromwell v. Equicor--Equitable HCA Corp., 944 F.2d 1272, 1276 (6th Cir.1991), the Sixth Circuit set forth the well-settled rule regarding ERISA's broad preemption provisions as follows:
Plaintiffs attempt to avoid ERISA's preemption by mischaracterizing their claims either as fraud claims or claims for collection of a judgment. Based on these mischaracterizations, plaintiffs argue that this case fits within the narrow exception to federal preemption reserved for state law claims which only tenuously, remotely or peripherally relate to ERISA plans. See Shaw v. Delta Air Lines, 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). The fallacy of plaintiffs' argument is that the claims raised here are not for collection of a judgment nor are they fraud claims. Instead, they are poorly disguised ERISA withdrawal liability claims. See 29 U.S.C. § 1399. This action was brought by an ERISA plan; it names as defendants parties against whom the plan has never obtained any judgment; it is driven entirely by the failure of an employer to pay its withdrawal liability to the plan pursuant to specific ERISA provisions; and in each count of the complaint, the plaintiffs seek to recover the amount of the withdrawal liability. This is not an action raising state law claims that only tenuously, remotely or peripherally relate to an ERISA plan. This is an action that has no basis whatsoever but for the ERISA plan, and which seeks to recover for the plan the amount of the ERISA withdrawal liability of the employer. The claims ostensibly brought under state law are therefore preempted by ERISA, and the district court's order granting summary judgment for the defendants as to those claims must be affirmed.
The creation and use of federal common law by the courts historically has been very limited. The United States Supreme Court has made clear that "federal common law" is an "unusual exercise of lawmaking" which should be indulged only "in a 'few restricted' instances." Milwaukee v. Illinois, 451 U.S. 304, 313, 101 S.Ct. 1784, 1790, 68 L.Ed.2d 114 (1981) (quoting Wheeldin v. Wheeler, 373 U.S. 647, 651, 83 S.Ct. 1441, 1444-45, 10 L.Ed.2d 605 (1963)). The limited nature of the federal common law has been echoed by the various circuits, including this one.
In Tassinare v. American National Insurance Co., 32 F.3d 220 (6th Cir.1994), employees brought an action against their employer's directors under ERISA. The Tassinare court ruled that the ERISA claim was barred by ERISA's three year statute of limitations contained in 29 U.S.C. § 1113(2). Id. at 224. Addressing the plaintiffs' "federal common law" claims, the court stated:
But the '[f]ederal courts, unlike state courts, are not general common-law courts and do not possess a general power to develop and apply their own rules of decision.' Creation of a cause of action under federal common law is only 'resorted to in absence of an applicable Act of Congress, and because the Court is compelled to consider federal questions which cannot be answered from federal statutes alone.'
Id. at 225 (quoting Milwaukee v. Illinois, 451 U.S. at 312 and 314, 101 S.Ct. at 1789-90 and 1791). Addressing the facts of the case before it, the Tassinare court stated:
In Flacche v. Sun Life Assurance Co. of Canada, 958 F.2d 730, 735 (6th Cir.1992), this court addressed the intermingling of ERISA and federal common law claims. We held that federal common law should be created "only where the federal statute does not expressly address the issue before the court." Id. Most recently, in Muse v. IBM, 103 F.3d 490 (6th Cir.1996), petition for cert. filed, 65 USLW 3666 (March 25, 1997) (No. 96-1520), we addressed a request by plaintiffs that their five common law claims (which had been dismissed by the district court on summary judgment) be reinstated "either as federal ERISA common law claims or as state common law claims." Id. at 495. In regard to plaintiffs' contention that even if their state law claims were preempted by ERISA, those claims could be "repackaged and saved" as federal common law claims, we noted, "federal common law is developed under ERISA only in those instances in which ERISA is silent or ambiguous." Id. We concluded that because the previously dismissed claims sought to recover for conduct that fell within the purview of specific provisions of ERISA, those claims could not "be reasserted as separate claims arising under federal common law." Id.