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Lehman v. Nelson

United States District Court, W.D. Washington, Seattle

September 11, 2014

RICHARD LEHMAN, on behalf of himself and others similarly situated, Plaintiffs,


RICARDO S. MARTINEZ, District Judge.

THIS MATTER comes before the Court upon Defendants' Motion to Dismiss Complaint pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6) (Dkt. # 22), Plaintiff's Motion for Summary Judgment (Dkt. # 23), Defendants' Motion to Postpone Ruling (Dkt. # 31), and Plaintiff's unopposed Motion for Leave to File Supplemental Briefing (Dkt. # 41). The Court finds these matters appropriate for resolution on the briefing. Having considered the parties' motions and supporting documentation and opposition thereto as well as the remainder of the record, and for the reasons stated herein, the Court denies Defendants' Motion to Dismiss, denies Defendants' Rule 56(d) request to postpone judgment, grants Plaintiff's request to file supplemental briefing, and grants in part summary judgment in favor of Plaintiff.


Plaintiff Richard Lehman brings this purported class action pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA") to recover reciprocity contributions to his pension plan that he alleges were improperly withheld by Defendants, the plan's trustees. Mr. Lehman has worked for a number of years as an electrician subject to collective bargaining agreements. Dkt. # 38 ("Compl."), ¶ 4.1. He is a member of the Puget Sound Electrical Workers Pension Trust (hereinafter, the "Puget Sound Trust" or the "Home Fund"), his local pension fund. Like many union members, Mr. Lehman's profession frequently requires him to perform work for employers outside of the jurisdiction of his Home Fund, including in a region governed by the IBEW Pacific Coast Pension Fund (the "Pacific Coast Fund"). In the latter half of 2008 alone, Mr. Lehman worked over 1000 hours within the jurisdiction of the Pacific Coast Fund. Dkt. # 24, ¶ 4, Ex. B.

In order to protect employees who work in multiple jurisdictions from losing benefits or being unable to accumulate them in one pension fund, the National Electrical Industry Pension Reciprocal Agreement (hereinafter, the "Reciprocity Agreement" or the "Agreement") was created to govern transfer of contributions between funds. See Dkt. # 24, Ex. D. Section 11 of the Reciprocity Agreement provides that "Participating Fund(s) shall transfer to the Temporary Employee's Home Fund(s) an amount of money equal to all Contributions Received. There shall be no administrative fee charged by a Participating Fund for the transfer or for any other reason." Id. at p. 11. It is undisputed that the Pacific Coast Fund is a Participating Fund to the Reciprocity Agreement. Dkt. # 24, Ex. D.

During the time that Mr. Lehman has worked in the jurisdiction of the Pacific Coast Fund, he has requested that his contributions be transferred to his Home Fund, in accordance with the Reciprocity Agreement and with transfer and contribution provisions of the Pension Plan of the Pacific Coast Fund (hereinafter, the "Pension Plan" or the "Plan"). One such provision, § 5.04 of the Pension Plan, provides that:

Under the Agreement at least monthly, each Participating Fund shall collect and transfer to the Home Pension Fund all contributions received on behalf of the Employee for work performed by the Employee within the jurisdiction of the transferring Participating Pension Fund. The transferred contributions shall be accompanied by such records and reports as are required by the National Electrical Industry Pension Reciprocal Agreement. Dkt. # 24, Ex. A, p. 29.

The Pacific Coast Fund and Puget Sound Trust have also entered into their own reciprocity agreement providing for reciprocal contribution transfers between funds. Dkt. # 24, Ex. C. To allow for these reciprocal transfers, Mr. Lehman executed an Electronic Reciprocal Transfer System ("ERTS") authorization form, which authorizes the transfer of pension contributions from the Pacific Coast Fund to his Home Fund. Dkt. # 27, Ex. A.

On May 8, 2008, the Trustees of the Pacific Coast Fund approved Amendment No. 14 to the Pension Plan for the purpose of improving the Plan's funding condition. Dkt. # 31, Ex. 1-A. Pursuant to the Amendment, Defendants began to withhold the first dollar of each hourly contribution into the Plan, including contributions made for reciprocal transfers pursuant to Article 5 of the Plan document. Id. at ¶ 22, Ex. 1-A. As a result, the Pension Plan has withheld $1.00 for all hourly contributions made on behalf of Mr. Lehman since July 1, 2008, with the remaining contributions continuing to be transferred into his Home Fund. For instance, in March 2009, Mr. Lehman worked 136 hours in the jurisdiction of the Plan, for which his employer contributed $4.62 per hour towards Mr. Lehman's pension. Of the total $628.32 of pension contributions, the Pension Plan withheld $136.00 for use by the Pacific Coast Fund and transferred $492.32 to Mr. Lehman's Home Fund.

The Plan entered critical status for the Plan year beginning April 1, 2009. Id. at ¶ 15. In response, the Trustees developed a Rehabilitation Plan pursuant to the Pension Protection Act of 2006. Id. at ¶ 16.The Rehabilitation Plan created a default schedule, incorporated into the Plan, which provides, in relevant part, that traveling employees who work inside the Plan's jurisdiction "shall have the first dollar of each hourly contribution (for contributions rates less than $3.00 per hour), all increased non-benefit contributions under any Schedule and all employer surcharge contributions remain in the [Pacific Coast Fund] for funding purposes only." Id. at Ex. 1-E, p. 83. The Pension Plan thereafter continued to withhold the first dollar for each hourly contribution made on behalf of Mr. Lehman, for which he received no pension benefits. See Dkt. # 25 (Lehman Decl.), ¶ 5. On May 29, 2013, Mr. Lehman sent a letter to the Pacific Coast Fund making a claim for contributions made on his behalf, requesting that all withheld contributions be transferred to his Home Fund. Id. at Ex. A. Mr. Lehman received no response to his claim. Id. at ¶ 7.

Mr. Lehman filed the instant civil action on October 10, 2013. Dkt. # 1. Mr. Lehman's Complaint states three claims for relief pursuant to ERISA: recovery of benefits due under the Pension Plan under § 1132(a)(1)(b), relief for fiduciary breaches of the Plan under § 1132(a)(2), and equitable and injunctive relief under § 1132(a)(3). Plaintiff claims that the withholding of $1.00 for each hourly contribution into the Pension Plan without benefit accrual violates Plan provisions, the Reciprocal Agreement incorporated into the Plan, and Sections 204 and 305 of ERISA. The instant Motions to dismiss and for summary judgment followed.

Motion to Dismiss

Defendants have moved to dismiss Plaintiff's complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) on the grounds that: (1) Mr. Lehman is not a Participant in the Pension Plan and therefore has no statutory standing to bring a claim against it, [1] (2) Mr. Lehman has waived his right to bring a claim for the withheld funds, and (3) Mr. Lehman's claim for benefits under the Reciprocity Agreement is improper as he has no rights to enforce the terms of the agreement. See Dkt. # 22. Though Defendants raise their claim to dismiss for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1), the Ninth Circuit has made clear that a challenge to participant status under ERISA is a merit-based determination rather than a jurisdictional one. See Leeson v. Transamerica Disability Income Plan, 671 F.3d 969, 979 (9th Cir. 2012) (holding that "[t]he issue of participant status goes to the merits of [plaintiff's] claim and not to the subject matter jurisdiction of the district court."). Defendants have so conceded on reply. See Dkt. # 30, p. 1, n. 2. Accordingly, as Defendants challenge Plaintiff's statutory rather than constitutional standing, the Court considers whether Plaintiff's complaint must be dismissed for failure to state a claim on which relief can be granted, pursuant to Fed.R.Civ.P. 12(b)(6).

a) Legal Standard

To survive a motion to dismiss under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Id. at 678 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Where the plaintiff fails to "nudge[] [his] claims across the line from conceivable to plausible, [his] complaint must be dismissed." Twombly, 550 U.S. at 570. A claim is facially plausible if the plaintiff has pled "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Twombly, 550 U.S. at 555). In making this assessment, the Court accepts all facts alleged in the complaint as true, and makes all inferences in the light most favorable to the non-moving party. Baker v. Riverside County Office of Educ., 584 F.3d 821, 824 (9th Cir. 2009) (internal citations omitted). Where claims are dismissed under Rule 12(b)(6), the court "should grant leave to amend...unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000).

b) Participant Status

Defendants first argue that Plaintiff lacks standing to bring a claim under ERISA against Defendants because he is not a participant in the Pension Plan. Whether Plaintiff is a participant in the Plan for purposes of ERISA is a substantive element of his claims and not a jurisdiction pre-requisite. Leeson, 671 F.3d at 971. In order to possess standing to bring a claim under ERISA, a plaintiff must assert "a colorable claim that he or she is a participant" in the ERISA-governed plan at issue. Id. at 978. A claimant is a participant under ERISA if the claimant has a "colorable claim that (1) he or she will prevail in a suit for benefits, or that (2) eligibility requirements will be fulfilled in the future." Firestone Tire and Rubber Co. c. Bruch, 489 U.S. 101, 11718 (1989); see also 29 U.S.C. § 1002(7). Further, in the Ninth Circuit, the definition of "participant" contained in the Plan itself controls the court's inquiry, so long as it does not conflict with statutory requirements. Flanagan v. Inland Empire Electrical Workers Pension Plan and Trust, 3 F.3d 1246, 1248 (9th Cir. 1993).

Here, the Court has little trouble in finding that Plaintiff meets the Plan's requirements for participation, giving rise to his standing to bring ERISA claims. Section 1.15 of the Pension Plan defines a "Participant" as a "Pensioner, Beneficiary, or an Employee who meets the requirements for participation in the Plan as set forth in Article 2, or a former Employee who has attained Vested Status under this Plan." Dkt. #24, Ex. A at p. 14. The definition of "Employee" encompasses those who "perform[] work covered by any of the collective bargaining agreements" as well as workers who do not perform work covered by a "collective bargaining agreement provided all such Employees are covered by contributions to this Fund." Id. at p. 11, § 1.08.[2] Section 2.02 further lays out the requirements for Participation in the Plan: "An Employee who works in Covered Employment during the Contribution Period shall become a Participant in the Plan as soon as he has at least 435 Hours of Work in Covered Employment during any Plan Credit Year." Id. at p. 18. It is undisputed that Mr. Lehman has performed more than 435 Hours of Covered Employment during a Plan Year, thereby meeting the ...

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