Opinion ID: 670809
Heading Depth: 1
Heading Rank: 5

Heading: Claims Under ERISA and LMRA

Text: 28 The Trust Funds' complaint also asserts a claim under ERISA Sec. 502(a)(2) and (3), which provides for civil suits by plan beneficiaries to redress violations of the terms of a plan. 29 U.S.C. Sec. 1132(a)(2) and (3) (1988). The Trust Funds assert as an alternative basis for the claim LMRA Sec. 301, which establishes federal jurisdiction for [s]uits for violation of contracts between an employer and a labor organization. 29 U.S.C. Sec. 185(a) (1988). 29
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31 The Trust Funds first allege that Mark violated ERISA Sec. 515, which provides that 32 [e]very employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement. 33 29 U.S.C. Sec. 1145 (1988) (emphasis added). ERISA defines an employer as any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan. 29 U.S.C. Sec. 1002(5) (1988). The Trust Funds contended that by agreeing to the joint check provision, Mark was acting indirectly in the interest of an employer because it was in the interest of Stark, the direct employer, for Mark to enter into the subcontract agreeing to make the benefit payments. The district court rejected this argument and dismissed the claim on the ground that Mark was not an employer and thus not subject to the obligations of Sec. 515. 34 Our circuit has never addressed the precise question of whether a nonsignatory to a collective bargaining agreement who agrees in another contract to pay by joint check the benefit contribution obligations of the signatory is a Sec. 1002(5) employer. 7 The district court relied on two of our opinions holding that nonsignatories whose obligations to trust funds are fixed solely by state law cannot be sued as Sec. 515 employers. In Carpenters S. Cal. Admin. Corp. v. D & L Camp Constr. Co., 738 F.2d 999 (9th Cir.1984), we held that a surety company, which held a defaulting contractor's license bond and was therefore required under California state law to protect those damaged by the actions of the contractor, was not an employer under ERISA. Id. at 1000. We stated that 35 Neither the legislative history of ERISA ... nor of its 1980 amendments ... indicate that Congress meant to expand the concept of employer or the jurisdiction of the federal courts to include sureties, whose obligations are fixed by contract and regulated by state law for the protection of the public. 36 The surety that provides a bond pursuant to the California contractor licensing statute is not acting for the benefit of the employer; it is acting for the benefit of those who have been damaged by the employer's failure to pay. [ ...] The protection is aimed at a broad class of entities that deal with contractors, not, as plaintiff would have us believe, primarily as protection of employee benefit plans. Any obligation of the surety to this plaintiff is founded in state, not federal law. 37 Id. at 1000-01 (citations omitted). 38 We followed this reasoning in Carpenters S.Cal. Admin. Corp. v. Majestic Housing, 743 F.2d 1341 (9th Cir.1984), which involved a suit by employee benefit trust funds to enforce a mechanic's lien they had filed against a housing developer. The developer had hired a subcontractor who had failed to make certain fringe benefit contributions due under the terms of a collective bargaining agreement the subcontractor had signed with the union. We held that the developer was not a proper defendant under ERISA Sec. 515 because, like the surety in D & L Camp, it was a non-party to the bargaining agreement that is made responsible by the operation of state [mechanic's lien] law for the failed obligations of the employer. Id. at 1346. 8 39 Mark's posture is analogous to that of the surety in D & L Camp and the developer in Majestic Housing. Mark is not a signatory to the collective bargaining agreement, but only to the contract between Mark and Stark. Any responsibility that Mark may have for Stark's obligations--and it is not clear that it bears any such responsibility 9 --therefore derives from state third-party beneficiary law, not the plan or the collective bargaining agreement. Mark and Stark may well have intended the joint check arrangement to benefit the Trust Funds, although it appears that the arrangement was primarily intended to benefit Mark; 10 but no matter how strong that intent and no matter how strong a state law case the Trust Funds may have against Mark but for federal preemption, the claim asserts a state right of action, not a right under ERISA Sec. 515. 40
41 The Trust Funds next contend that Mark is an ERISA fiduciary and that Mark breached its fiduciary duty by not making the fringe benefit contributions. The district court dismissed the claim on the ground that the Trust Funds had not alleged that Mark possessed any of the indicia of an ERISA fiduciary. 42 Under ERISA, 43 a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan. 44 29 U.S.C. Sec. 1002(21)(A) (1988). As the district court noted, the Trust Funds have not alleged that [Mark] did any of these things or assumed any of these obligations. [ER at 94]. The Trust Funds argue that [f]acts not before this Court on this appeal of dismissal may well show that Mark assumed and breached a fiduciary duty with respect to the contributions. [Blue Brief at 26.] However, this argument is irrelevant, because in reviewing a Rule 12(b)(6) dismissal this court is limited to the facts pleaded in the complaint. Love, 915 F.2d at 1245. In any event, the Trust Funds give no indication of what these facts might be. 45
46 The Trust Funds also contend that in addition to being an ERISA employer, Mark is an ERISA party in interest to an employee benefit plan. ERISA defines such a party in interest as: 47 (A) any fiduciary, ... counsel, or employee of such employee benefit plan; 48 (B) a person providing services to such plan; 49 (C) an employer any of whose employees are covered by such plan; 50 (D) an employee organization any of whose members are covered by such plan; 51 (E) a [50% or more owner of the voting power, capital interest, or beneficial interest of any] employer or ... employee organization described in subparagraph (C) or (D); 52 (F) a relative of [any of the above parties in interest]; 53 (G) a corporation [controlled by any of the above parties in interest]; 54 (H) an employee, officer, director ... or a 10 percent or more shareholder, directly or indirectly, of [any of the above parties in interest]; 55 (I) a 10 percent or more ... partner or joint venturer of [any of the above parties in interest]. 56 29 U.S.C. Sec. 1002(14) (1988). We held above that Mark is not a fiduciary or an employer, and the Trust Funds have not alleged that Mark falls into any of the other categories. Mark is therefore not an ERISA party in interest. 57
58 The Trust Funds' complaint fails to show that Mark is an ERISA employer, fiduciary, or party in interest. Therefore, under no set of facts pleaded in the complaint can the Trust Funds show that Mark owes them the contributions under some ERISA-based duty. We affirm the district court's Rule 12(b)(6) dismissal of the ERISA third-party beneficiary claim. 59
60 The Trust Funds' complaint also asserts LMRA Sec. 301 as a federal jurisdictional basis for their second claim. The district court relied on a Sixth Circuit case, Metropolitan Detroit Bricklayers Dist. Council v. J.E. Hoetger & Co., 672 F.2d 580 (6th Cir.1982), to hold that a prime contractor (such as Mark) may not be held liable under Sec. 301 for benefits under a collective bargaining agreement between a subcontractor (such as Stark) and a union (the carpenters). However, the Sixth Circuit in Hoetger expressly left open an issue similar to the question facing us: 61 If [the contractor] had obligated itself in its contract with [the subcontractor] to escrow amounts due as fringe benefits and had failed to do so ... [the union and its trust funds] would have had a claim against [the contractor] as third-party beneficiaries, though not necessarily under Sec. 301(a). 62 Id. at 585 n. 8 (emphasis added). Therefore, we may not rely on Hoetger. 63 Section 301(a) of the LMRA provides in relevant part that 64 [s]uits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce ... may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties. 65 29 U.S.C. Sec. 185(a) (1989). The Trust Funds' first amended complaint alleges that the subcontract between Mark and Stark contains a provision stating that [l]abor benefits will be paid under a joint check agreement between [Mark, Stark] and the appropriate agency. [ER at 69 (emphasis added) ]. 11 The Trust Funds' complaint then alleges that 66 [i]t was understood by MARK, STARK and by the Plaintiffs that payment of required fringe benefit contributions to Plaintiffs were to be made via joint check, naming as Payees both the Carpenters Trust Funds and Stark Construction. 67 24. MARK knew weekly the number of carpentry hours for which benefit contributions were due because STARK submitted weekly certified payroll records to MARK. On October 12, 1989, Plaintiffs, who are third-party beneficiaries to the subcontract, notified MARK of the benefit contributions due and requested payment. To date, Defendant MARK has failed and refused to pay to Plaintiffs any amounts in fringe benefit contributions or issue the joint checks pursuant to [the subcontract]. 68 25. An actual controversy has arisen and now exists between Plaintiffs and defendant MARK and Plaintiffs desire a judicial determination and declaration of Plaintiffs' rights under the subcontract and an injunction requiring defendant MARK to issue a joint check to Plaintiffs and Stark and to deliver it to Plaintiffs and enjoining MARK from its failure and refusal to make the payments as required by the Subcontract. 69 [ER at 34-35 (emphasis added) ]. We have held that 70 [a]ll that is required for jurisdiction to be proper under Sec. 301(a) is that the suit be based on an alleged breach of contract between an employer and a labor organization and that the resolution of the lawsuit be focused upon and governed by the terms of the contract. 71 Painting & Decorating Contractors Ass'n v. Painters & Decorators Joint Comm., Inc., 707 F.2d 1067, 1071 (9th Cir.1983), cert. denied, 466 U.S. 927, 104 S.Ct. 1709, 80 L.Ed.2d 182 (1984) (emphasis added). The contract at issue need not be a collective bargaining agreement, but only an agreement between [an] employer[ ] and [a] labor organization[ ] significant to the maintenance of labor peace between them. Retail Clerks Int'l Ass'n v. Lion Dry Goods, Inc., 369 U.S. 17, 28, 82 S.Ct. 541, 548, 7 L.Ed.2d 503 (1962). See Hotel Employees v. Marriott Corp., 961 F.2d 1464, 1466 n. 3 (9th Cir.1992) (letter agreement between Marriott and union, designed to end union opposition to Marriott's involvement in the construction of a large hotel and to guide employment of the hotel staff, is such an agreement); General Teamsters v. Mitchell Bros. Truck Lines, 682 F.2d 763, 765-66 (9th Cir.1982) (strike settlement agreement between union and trucking company is such an agreement). 12 72 No facts have been alleged to establish that the alleged understanding constitutes a valid and enforceable contract. 13 In any event, we need not decide whether such an understanding could form the basis for Sec. 301 jurisdiction as an agreement between a labor organization and an employer, even though it is not a collective bargaining agreement. The Trust Funds do not allege that Mark breached this understanding or any other agreement between Mark and the Trust Funds contemplated by the subcontract. Rather, the Trust Funds alleges that Mark breached the subcontract itself. Because the subcontract is not a contract between an employer and a labor organization, the complaint does not allege facts sufficient to provide Sec. 301 jurisdiction.