United States District Court, Southern District of Illinois
September 24, 1982
R.M. BOWLER CONTRACT HAULING CO., INC., AN ILLINOIS CORPORATION, ET AL., PLAINTIFFS,
CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, ET AL., DEFENDANTS.
The opinion of the court was delivered by: Foreman, Chief Judge:
Before the Court is defendant Funds' Motion to Dismiss Count
I or in the alternative transfer Count I, and Motion to
Dismiss Count II of the Complaint. Defendants' Motion to
Transfer became moot when the Court on April 5, 1982,
consolidated this action with Case No. 82-3172 which was
transferred to this Court from the Northern District of
Illinois. Thus, the Court will only address the motions to
dismiss Counts I and II. Count I seeks a declaratory judgment
on behalf of plaintiff R.M. Bowler Contract Hauling Co., Inc.,
as to its rights and liabilities under the Funds. Count II
seeks pension benefits for Roger W. Bowler, an individual.
Defendants assert that the Court is without jurisdiction to
entertain either claim.
Plaintiffs allege that the Court has subject matter
jurisdiction over Count I under Section 502(e)(1) of the
Employee Retirement Income Security Act of 1974 (ERISA),
29 U.S.C. § 1132(e)(1). Section 502(e)(1) of ERISA states that the
"district courts of the United States shall have exclusive
jurisdiction of civil actions under this subchapter brought by
the Secretary or by a participant, beneficiary, or fiduciary."
Plaintiff in Count I is an Illinois corporation and
contributing employer to defendant Funds. Courts have held
that employers who contribute to employee benefit plans do not
fit into any of the four limited categories of plaintiffs in
§ 502(e)(1). Wong v. Bacon, 445 F. Supp. 1177, 1183 (N.D.Cal.
1977); Modern Woodcrafts, Inc. v. Hawley, 534 F. Supp. 1000,
1014 (D.Conn. 1982). While it has been held that employers
could be fiduciaries under the Act, U.S. Steel Corp. v. Com. of
Pa. Human Relations Com'n, 669 F.2d 124, 127-28 (3d Cir. 1982),
employers who contribute to employee benefit plans cannot claim
standing under that heading. Nonetheless, plaintiff, although
an employer who contributes to employee benefit plan, argues
that it has standing as a "beneficiary" under the Act.
The term "beneficiary" is defined in 29 U.S.C. § 1002(8) to
be "a person designated by a participant, or by the terms of an
employee benefit plan, who is or may become entitled to a
benefit thereunder." Employers have never been held to fall
within this definition. Plaintiff claims to be a "beneficiary"
because it is a person who receives a benefit from the
provisions in the pension fund which provide for the processing
and settlement of controversies between the Fund and employers.
While plaintiffs' argument is creative, it is unpersuasive.
Although the word "benefit" is not specifically defined in
ERISA, it is used, most notably in 29 U.S.C. § 1002(1), to mean
traditional fringe benefits to which employees are entitled,
such as medical, disability, unemployment and vacation
benefits. In Hibernia Bank v. International Brotherhood of
Teamsters, 411 F. Supp. 478, 489 (N.D.Cal. 1976), the plaintiff
Bank argued it was a beneficiary because it received the costs
of administration of the trust out of the corpus of the trust.
The court held that in order to have standing as a beneficiary
a person must be entitled to "fringe benefits" under the
applicable benefit plan. This interpretation is consistent with
those cases which have restricted standing to employee
beneficiaries. National Bank of North America v. Local 553
Pension Fund, 463 F. Supp. 636, 638 n. 2 (E.D.N.Y. 1978);
Smith v. Hickey, 482 F. Supp. 644, 650 (S.D.N.Y. 1979).
Therefore, contributing employers are not "beneficiaries" under
ERISA, and, thus, plaintiff corporation does not have standing
to assert a claim under the Act.
Turning to Count II, it is obvious that R.W. Bowler, as an
individual, has standing as an employee-beneficiary under the
Act. Nonetheless, defendant argues that the Court lacks
jurisdiction over Count II because Bowler failed to exhaust
his remedies with the Funds before going to federal court. It
is well settled that a claimant for benefits must exhaust his
interfund remedies before seeking federal court review.
Amato v. Bernard, 618 F.2d 559, 567-68 (9th Cir. 1980); Taylor
v. Bakery & Confectionary Union, Etc., 455 F. Supp. 816, 819-20
(E.D.N.C. 1978). Courts have excused exhaustion if it would be
"futile" for the claimant to resort to the interfund
procedures. Glover v. St. Louis-San Francisco Railway Company,
393 U.S. 324, 330-31, 89 S.Ct. 548, 551-52, 21 L.Ed.2d 519
(1969). Amato v. Bernard, supra, 618 F.2d at 568. Plaintiff
concedes he did not formally exhaust the interfund procedures,
but asserts that federal jurisdiction at this time is proper
under the "futility" exception.
The defendant Funds have three stages in their claims
procedure. First, a claimant must apply to the Benefits Claim
Review Committee. If the application is denied the claimant
must go to the Benefits Claim Appeals Committee. Finally, if
the claimant remains unsatisfied, he has a right to have the
Board of Trustees review his application. Plaintiff argues
that the following history of his claim reveals that any
further attempt to obtain benefits via the interfund
procedures would be time consuming, expensive and futile.
September 1978 — Mr. Bowler applied for
September 15, — Application denied by the
1978 Benefits Claim Review
September 15, — Mr. Bowler appealed.
November 9, — Benefits Claim Review
1978 Committee requests
December 20, — Additional information
February 12, — Application denied again
1979 by the Benefits Claim
April 18, 1980 — R.M. Bowler Contract
Hauling Co., Inc., requests
refund for all money
contributed to the Pension
May 29, 1981 — Fund for Mr. Bowler.
Request for refund denied
by the Trustees of the
Central States Pension
August 31, 1981 — Funds filed suit in the
Federal District Court for
the Northern District of
Illinois seeking $30,000 in
from R.M. Bowler
September 25, — Plaintiff corporation filed
1981 this action.
March 24, 1982 — Plaintiff's second
amended complaint adds
Mr. Bowler's individual
action for pension
The Court finds that under these facts plaintiff has failed
to exhaust his interfund remedies. In light of the potential
burden on federal courts and the expertise of the trustees of
the pension funds, there is a strong policy in favor of
letting the trustees decide an employee's eligibility to
benefits. Taylor v. Bakery & Confectionary Union, Etc., supra,
455 F. Supp. at 820. Plaintiff's claim for pension benefits
ended on February 12, 1979, after he had two reviews by the
Benefits Claim Review Committee based solely on documentary
evidence. The rest of the procedural history outlined by
plaintiff is irrelevant to this inquiry. While plaintiff may
have thought that to go on would be futile, an inspection of
the Pension Plan (Defendant's Exhibit C at 78-79) reveals that
at the appeals stage and the Trustee stage plaintiff has an
opportunity for a hearing and a right to be represented.
Indeed, the Board of Trustees is authorized under some
circumstances to grant an evidentiary hearing. In light of
these opportunities to more fully present his claim,
plaintiff's claim of futility is unreasonable.
Furthermore, plaintiff's reliance on Morgan v. Laborers
Pension Trust Fund for N.tCal., 433 F. Supp. 518 (N.D.Cal. 1977)
to support his futility argument is misplaced. In Morgan, the
court excused the exhaustion requirement as to plaintiff Stone
due to futility. Stone based his claim for benefits on the
illegality of the Pension's "break in service rule" and the
Pension's method of computing service credits. 433 F. Supp. at
529. The Pension's position on the legality of these rules and
procedures was well established. Thus, the court held that
under these "unique circumstances" it would be futile to press
the legal argument through all the procedures. Plaintiff's
case, however, does not rest on an established interpretation
of the Trustees, rather on a narrow issue of fact; whether
plaintiff had employee status with the company. Thus, the
"unique circumstances" of Morgan are not present in this case.
Accordingly, on the basis of the above discussion,
defendants' Motion to Dismiss Counts I and II of the complaint
is hereby GRANTED.
IT IS SO ORDERED.
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