Opinion ID: 506205
Heading Depth: 2
Heading Rank: 3

Heading: The Substantive Basis for the Claim

Text: 25 Colteryahn advances two potential substantive bases for its claim. It points first to Sec. 1411, which provides both substantive and procedural criteria that must be satisfied in order to consummate a valid merger of two multiemployer plans under MPPAA. 10 Second, it relies upon federal common law. It is our obligation first to explore a possible statutory basis for the claim. For the reasons noted in the margin, such a claim (under Sec. 1411) may or may not be viable; 11 while Colteryahn is free to pursue this claim in the remanded proceeding, we do not rely upon it here. Rather, we rely upon the second ground. 26 It is by now well settled that federal courts are empowered to create a federal common law of pension plans under ERISA, in order to effectuate Congress' intent to preempt the area, see infra note 22, and create a comprehensive federal regulatory scheme. See Murphy v. Heppenstall Co., 635 F.2d 233, 237 (3d Cir.1980), cert. denied, 454 U.S. 1142, 102 S.Ct. 999, 71 L.Ed.2d 293 (1982); see also Northeast Dep't ILGWU Health & Welfare Fund v. Teamsters Local Union No. 229 Welfare Fund, 764 F.2d 147, 157-58 (3d Cir.1985) (opinion of Becker, J.); Barrowclough v. Kidder, Peabody & Co., 752 F.2d 923, 936-37 (3d Cir.1985); In re White Farm Equip. Co., 788 F.2d 1186, 1191 (6th Cir.1986) (federal court must develop its own rule of decision in cases involving employee welfare plans where ERISA itself furnishes no answer); 29 U.S.C. Sec. 1144(a) (1982). 27 It is axiomatic that, as a general rule, a party should not be allowed to profit from its own wrongs. We believe that this rule is particularly apposite when dealing with federally regulated pension plans, because Congress has emphasized 'the equitable character' of [these] plans, 29 U.S.C. Sec. 1001(c), [and therefore] we believe that equitable principles should be applied in this case. Reuther v. Trustees of Trucking Employees Welfare Fund, 575 F.2d 1074, 1078 (3d Cir.1978). 12 Assuming the truth of Colteryahn's allegations, the substantial withdrawal liability assessed upon Colteryahn in this case stemmed in large part (if not entirely) from fraudulent misrepresentations by the Fund, for which the federal common law of pension plans would provide a remedy. 13 Indeed, we would find it quite curious if Congress had given multiemployer plans the immense power that the Fund has exercised in this case--viz., the power to assess upon a withdrawing employer a substantial penalty while providing the employer with few defenses--yet did not intend to place some check on the conduct and practices of such plans. Moreover, we doubt that Congress intended that innocent employers, penalized by the fraudulent exercise of such powers, would be without remedy. Finally, given the predominant federal interest in the conduct of pension plans' affairs, any check on such power must be available in federal court. 28 The fraud alleged in this case presents a much more appropriate occasion for invocation of equitable principles than the cases that have permitted employers to gain restitution of improperly paid contributions when the fault for the improper payments lay solely with the contributing employer rather than with the plan. See, e.g., Airco Indus. Gases v. Teamsters Health and Welfare Pension Fund, 618 F.Supp. 943, 948, 951 (D.Del.1985) (Airco I ) (although an employer has no standing to sue under Sec. 1132(a), a cause of action for unjust enrichment to recover pension contributions mistakenly made to a plan will be permitted because such an action, equitable in nature, and developed in light of the policies of ERISA, is appropriate and 'necessary to fill in interstitially or otherwise effectuate the statutory pattern enacted in the large by Congress' ) (quoting Van Orman v. American Ins. Co., 680 F.2d 301, 312 (3d Cir.1982)) (other citations omitted); Whitworth Bros. Storage Co. v. Central States, Southeast and Southwest Areas Pension Fund, 794 F.2d 221, 233-36 (6th Cir.) (recognizing an equitable claim for restitution of mistaken pension contributions under federal common law), cert. denied, --- U.S. ----, 107 S.Ct. 645, 93 L.Ed.2d 701 (1986); Airco Indus. Gases v. Teamsters Pension Trust Fund, 668 F.Supp. 893, 900-01 (D.Del.1987) (fleshing out the cause of action recognized in Airco I, and collecting cases that have recognized similar causes of action), appeal docketed, No. 87-3642 (3d Cir. Sept. 28, 1987); contra Dime Coal Co. v. Combs, 796 F.2d 394, 399 n. 7 (11th Cir.1986) (Although the question is not well presented, ... we hold that no federal common law right to recovery of the disputed [mistaken] contributions at issue in this case exists.); McHugh v. Teamsters Pension Trust Fund, 638 F.Supp. 1036, 1048-49 (E.D.Pa.1986) (no cause of action for restitution of mistaken contributions); Crown Cork & Seal Co. v. Teamsters Pension Fund, 549 F.Supp. 307, 310-12 (E.D.Pa.1982) (same), aff'd mem., 720 F.2d 661 (3d Cir.1983). 29 We have no occasion in this case to consider ruling on the issue of the viability of a claim based on the employer's mistake. In this case the issue is fraud. 30 In sum, we hold that, under the federal common law of pension plans, Colteryahn, as a defrauded employer, may sue in federal court for the return of any withdrawal liability sums that were assessed as a result of a fraudulent inducement to join the Fund. Colteryahn may thus proceed with Counts 1, 3 and 4 of its complaint. 31