Opinion
Civil Action No. 04-1988.
July 9, 2004
MEMORANDUM
Before the court is the motion of defendant Michelle Morris to dismiss plaintiffs' complaint as to her for failure to state a claim in Count I and for lack of subject matter jurisdiction and for failure to state a claim in Count III.
The plaintiffs, a local union and the trustees of associated employee benefit funds, bring this suit against Michelle Morris and John Robinson. Ms. Morris was the former Chief Financial Officer of Garney Morris, Inc. while Mr. Robinson was its former Vice President. The plaintiffs claim in Count I and Count II that the defendants are liable as ERISA fiduciaries under 29 U.S.C. § 1109 for the failure of Garney Morris, Inc. to make payments to the union's Health and Welfare Fund as required by collective bargaining agreements. In Counts III and IV, the plaintiffs allege that the defendants are liable under Pennsylvania's Wage Payment and Collection Law ("WPCL"), 43 P.S. § 260.1 et seq., for the corporation's failure to pay working dues to the union.
John Robinson is representing himself and as of this point has not filed a corresponding motion to dismiss.
The questions before us are similar to those in Local Union No. 98, et al. v. Garney Morris, Inc., et al. ("Garney Morris I"), No. 03-5272 (E.D. Pa. filed Sept. 19, 2003). In that case, Local Union No. 98 and the trustees of employee benefit funds associated with it sued Garney Morris, Inc. as well as Garnett L. Morris, Jr., the former President, and Mary Beth Morris, the former Secretary, for their failure to make payments as required by collective bargaining agreements between the union and Garney Morris, Inc. In addressing cross-motions for summary judgment, we held that the corporate defendant Garney Morris, Inc. was liable under ERISA for its failure to make contributions to employee benefit funds. We concluded, however, that neither Garnett L. Morris, Jr. nor Mary Beth Morris was an ERISA fiduciary under 29 U.S.C. § 1109 because the moneys owed to the union's Health and Welfare Fund were not "plan assets" as that phrase has been construed by courts in our Circuit. On the other hand, we determined that Garnett L. Morris, Jr. was responsible for unpaid working dues under Pennsylvania's WPCL on the ground that he was an "employer" under the terms of the statute. He presented no argument that this state statute was preempted by federal law. Finally, we ruled that Mary Beth Morris had no liability under the WPCL because she was not a policymaker of the corporation and could not be considered an "employer" under the state statute. While the motions for summary judgment in Garney Morris I were still pending, the plaintiffs filed the present action.
We first consider the motion of Michelle Morris to dismiss Count I of the complaint in which plaintiffs allege she is an ERISA fiduciary under 29 U.S.C. § 1109. Defendant contends that plaintiffs have failed to state a claim upon which relief can be granted. For the purposes of such a motion, we will accept as true the plaintiff's well-pleaded allegations. Our "court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King Spalding, 467 U.S. 69, 73 (1984).
An individual is an ERISA fiduciary only if (1) the unpaid contributions were "plan assets," and (2) "the individual exercised discretionary control or authority over such assets."Teamsters Health and Welfare Fund v. World Transportation, Inc., 241 F. Supp. 2d 499, 505 (E.D. Pa. 2003); PMTA-ILA Containerization Fund v. Rose, No. Civ.A. 94-5635, 1995 WL 461269 at *4 (E.D. Pa. Aug. 2, 1995). There is no dispute between the present parties that the contract language governing the union's Health and Welfare Fund provides in relevant part:
title to all monies paid into said fund shall be vested in and remain exclusively in the Trustees of the Fund, in trust. No Contributing Employer, whether signatory hereto or not, or the Union or any member thereof, or any Employee, or any person claiming by, through or under any of them, shall have the right, title or interest in or to the Fund, or any party thereof, except as provided in any Schedule of Benefits hereby adopted or hereafter amended in accordance with this Agreement.
In a motion to dismiss, we may consider an undisputed contract which is the subject of the motion. See Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).
(emphasis added).
As we observed in Garney Morris I, this language provides that the moneys become "plan assets" only when they are "paid into said fund." The contract does not cause the unpaid contributions to become "plan assets" as soon as they are due and owing. Cf. Galgay v. Gangloff, 677 F. Supp. 295, 301-02 (M.D. Pa. 1987), aff'd without opinion 932 F.2d 959 (3d Cir. 1991). Since the unpaid contributions at issue were never "plan assets," the plaintiffs are unable to satisfy the first part of the test. Thus, we need not reach the question as to whether the defendants were ERISA fiduciaries.
Plaintiffs rely on the unpublished opinion in Local Union No. 98, IBEW et al. v. Fisher Electric, Inc. et al., No. Civ.A. 02-8323 (E.D. Pa. June 4, 2003). This case is distinguishable. In denying the motion of the corporate defendant to dismiss, Judge Dalzell observed that the amended complaint in that case alleged that "the plan agreement . . . designates delinquent benefit contributions as plan assets." Id. at *3. As noted above, the contract before us does not contain that critical language.
We are also unconvinced by the suggestion in ¶ 24 of the complaint that the unremitted contributions should be considered "plan assets" by operation of 29 C.F.R. § 2510.3-102. The plaintiffs, in their response to the motion to dismiss, fail to address the argument of Michelle Morris that this regulation is inapplicable to the contracts related to the Health and Welfare Fund that are attached to the complaint. Furthermore, the plaintiffs conceded in Garney Morris I that 29 C.F.R. § 2510.3-102 is not applicable to the Health and Welfare Trust Agreement funds at issue here.
Michelle Morris also moves to dismiss the plaintiffs' WPCL claim against her pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. She contends that it is preempted by the Labor Management Relations Act ("LMRA"), 29 U.S.C. §§ 141 et seq.
Our Court of Appeals has ruled that § 301 of the LMRA completely preempts a WPCL claim against corporate officers when it is based on a collective bargaining agreement. Antol v. Esposto, 100 F.3d 1111, 1118 (3d Cir. 1996). In the case before us, the WPCL claim against Michelle Morris charges that she failed to make payments of "working dues" as required by collective bargaining agreements between Garney Morris, Inc. and the union. These agreements are attached as exhibits to the complaint. Compl. ¶ 45; see also Compl. App. B § 3.07 and App. D § 2.09. The plaintiffs' claim under the WPCL is a "claim based squarely on a collective bargaining agreement," and therefore it is subject to complete preemption. See Antol, 100 F.3d at 1117.
Notably, we did not address the question of federal preemption in Garney Morris I because the defendants there did not raise the issue.
It is true, as the plaintiffs point out, that "not every dispute concerning employment, or tangentially involving a provision of a collective-bargaining agreement, is preempted."Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 211 (1985). Since a plaintiff is the master of its claim, it "is permitted to assert legal rights independent of [the collective bargaining] agreement, including state-law contract rights, so long as the contract relied upon is not a collective-bargaining agreement."Caterpillar, Inc. v. Williams, 482 U.S. 386, 396 (1987) (italics in original); see also Gardner v. Beasley FM Acquisition Corp., No. Civ.A. 97-2900, 1997 WL 325794 (E.D. Pa. June 6, 1997). However, the WPCL claim against Michelle Morris is rooted in the obligations that were created by one or more collective bargaining agreements and not another type of contract under state law.
Since the WPCL claim against Michelle Morris is completely preempted by § 301 of the LMRA, the claim arises under federal law, and we may properly exercise jurisdiction. See Caterpillar, 482 U.S. at 393-94; Antol, 100 F.3d at 1117-18. We will grant the motion to dismiss the WPCL cause of action for failure to state a claim because it is preempted by and thus is not viable under federal law. See Antol, 100 F.3d at 1121. As our Court of Appeals has emphasized, "[f]ederal law rests on the premise that limitation of certain rights afforded by the states is justified by having a uniform labor policy." Id.
Accordingly, we will dismiss the complaint as to defendant Michelle Morris.