Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 78-C-2643 -- Nicholas J. Bua, Judge.
Before Tone and Wood, Circuit Judges, and Dumbauld, Senior District Judge.*fn*
This appeal involves an interpretation of certain provisions of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, Et seq. (ERISA). The plaintiffs, trustees of an employee pension benefit fund established pursuant to the Labor-Management Relations Act of 1947, 29 U.S.C. § 186(c)(5), and governed by ERISA, brought suit for declaratory relief. They sought a determination that defendants William Hamil and Donald Butler, doing business as partners, are ineligible to participate in the "employees only" pension fund. Further, they sought a ruling that defendants are not entitled to a refund for contributions improperly paid to the fund.
After a bench trial Judge Bua ruled that defendants could not participate in the employees' pension fund. He further ruled that defendants were not entitled to a refund for contributions made after January 1, 1975, the effective date of ERISA, because defendants did not show that they paid into the fund due to a mistake of fact. The court, however, refused to rule that defendants were not entitled to a refund for contributions made prior to January 1, 1975. The court concluded that claims concerning pre-1975 contributions must be pursued in state court. Defendants appeal the decision.
Defendants argue on appeal that, in paying into the pension fund, they reasonably relied on statements of a union business agent and an independent auditor to continue making payments to the fund; that their contributions resulted from a mistake of fact; that the pension fund cannot be unjustly enriched; and that ERISA does not forbid a refund unless the pension fund shows that the fund's securities are jeopardized. Plaintiffs, without filing a cross appeal, ask this court to hold that the refund of pre-1975 contributions, paid due to a mistake of law, is prohibited by the nonreversionary provisions of the Internal Revenue Code.
We affirm the district court's judgment.
Defendants Hamil and Butler for several years were operating engineers and members of the International Union of Operating Engineers, AFL-CIO, Local 150. In 1971 defendants formed a small gravel pit mining business. They operated the business, Pistakee Sand & Gravel Co., as a partnership. In their new business the defendants operated cranes and continued to be union members.
In 1971 Pistakee Sand & Gravel became a party to a collective bargaining agreement with Local 150. Since 1972 continuous collective bargaining agreements with the union, signed by Pistakee Sand & Gravel, have provided for the Midwest Operating Engineers Pension Trust Fund and required participating employers to make employer contributions to the Trust Fund for the benefit of union employees.*fn1 Plaintiffs, the trustees of the Trust Fund, administer the Fund. The collective bargaining agreement requires the trustees to administer and maintain the Fund in accordance with the Labor-Management Relations Act of 1947 (LMRA), as amended, 29 U.S.C. §§ 141 Et seq., and the employee benefit plan is governed by the provisions of ERISA. One section of the LMRA, 29 U.S.C. § 186(c)(5), provides that a trust fund may only receive employer contributions "for the sole and exclusive benefit of the employees of such employer . . ."; the contributions may not inure to the benefit of the employer.*fn2 In addition the collective bargaining agreement contained the following provision: "Anything to the contrary notwithstanding, an owner of a sole proprietorship, or a partner in a partnership or similar business entity, required to make Employer Contributions to the Trust Fund shall in no event be deemed an "Employee.' " The trustees, on a monthly contribution report furnished to employers, presumably to make these other provisions clear, placed a legend which stated "PARTNERS OR A SOLE PROPRIETOR ARE NOT TO MAKE CONTRIBUTIONS ON THEIR OWN BEHALF."
Despite these provisions defendants Hamil and Butler, relying on the advice of a union business agent and an auditor, made contributions both before and after the effective date of ERISA to the Trust Fund on their own behalf.
Initially, we note as defendants concede, that defendants are not entitled to any benefits from the employee pension plan. Provisions of the LMRA and the collective bargaining agreement indicate that contributions to this Trust Fund must be for the sole and exclusive benefit of employees, and that partners are not employees. Therefore, defendants may not receive benefits from the pension Fund. Defendants argue, however, that they are entitled to a refund from the Trust Fund because the mistake which led to their paying into the Fund should be excused.
We begin our analysis of this question by reference to section 403(c) of ERISA. As a general rule this section provides that "the assets of a plan shall never inure to the benefit of any employer . . . ." It then lists three exceptions to this rule. Section 403(c)(2)(A), the only relevant exception, explicitly permits restitution for contributions made by mistake of fact within one year after the payment of the contribution and does not include restitution for contributions due to a mistake of law.*fn3 Under the principle of statutory construction "expressio unius est exclusio alterius," the absence of an exception permitting restitution for mistake of law indicates that Congress did not intend to permit restitution for that reason. The exceptions listed are not different in kind from an exception for a mistake of law and we find it is a proper inference to draw, from the statutory section, that mistake of law is not an exception to the general rule.
An examination of the legislative history suggests nothing to contradict this inference. The only example in the legislative history of a mistake permitting restitution is that of an arithmetical error in calculating contributions. H.Conf.Rep. No. 93-1280, 93d Cong., 2d Sess., Reprinted in (1974) U.S.Code Cong. & Admin.News, pp. 5038, 5083. This suggests narrow exceptions to the general rule excluding restitution for mistakes of law. We also note that two district courts that have considered this issue have concluded that Congress did not intend to permit restitution for a mistake of law. Trowel Trades Pension Trust Fund of Dade County v. Shirey, No. 76-1544-Civ-PF (S.D.Fla. July 31, 1978); Bacon v. Wong, 445 F. Supp. 1189, 1193 (N.D.Cal.1978). Therefore ...