Opinion
No. 1:03-cv-111
August 11, 2003
MEMORANDUM AND ORDER
Plaintiffs James Barry Coulter and his wife, Martha Ann Coulter, bring this action pursuant to the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. ("ERISA"). Plaintiffs seek to recover pension benefits under an ERISA plan, redress alleged breaches of fiduciary duty, recover statutory penalties caused by the defendants' alleged failure to make disclosure as required by ERISA, and recover the plaintiffs' attorney's fees and costs.
Defendants move pursuant to FED. R. CIV. P. 12(b)(3) to dismiss the complaint on the ground of improper venue. [Court File No. 13]. After reviewing the record, the Court concludes that the defendants' Rule 12(b)(3) motion to dismiss is DENIED. Venue properly lies in the Eastern District of Tennessee pursuant to 29 U.S.C. § 1132(e)(2).
I. Facts
To analyze the venue question, it is necessary to identify the parties and summarize the plaintiffs' causes of action. The following facts are derived from the plaintiffs' amended complaint. [Court File No. 3].
A. The Parties
James Coulter and his wife, Martha, are citizens and residents of Chattanooga, Tennessee. James Coulter is a vested participant in the Office and Professional Employees International Union Pension Plan ("Plan"). James Coulter was hired as a business representative for the Office and Professional Employees International Union Local 119 in Chattanooga on July 19, 1982. He became a participant in the Plan as of January 1, 2000. James Coulter applied for pension benefits under the Plan with an effective retirement date of January 10, 2003.
The complaint names five defendants. Defendant Plan is a multi-employer ERISA plan as defined in 29 U.S.C. § 1002(37). The Plan was established in 1963 and has been maintained continuously by defendant Office and Professional Employees International Union ("OPEIU"). Plaintiff's contend that OPEIU is a sponsor and fiduciary of the Plan. The Plan's office and the principal place of business of OPEIU are in Washington, D.C.
Defendant Office and Professional Employees International Union Pension Plan Retirement Committee ("Retirement Committee") is the named fiduciary and administrator of the Plan. Defendant James B. Coulter Benefit Appeal Subcommittee ("Appeal Subcommittee") is an administrator of the Plan. The Retirement Committee and the Appeal Subcommittee maintain their offices in Washington, D.C.
Defendant Michael Goodwin ("Goodwin") serves as President of OPEIU and Chairman of the Retirement Committee. The complaint avers that Goodwin performs the functions of a Plan administrator and fiduciary. Goodwin maintains an office and the Plan's business records in New York, New York.
B. Plaintiffs' Causes of Action
The plaintiffs' amended complaint [Court File No. 3] contains seven counts. Count One claims there has been a breach of the Plan and seeks to recover pension benefits. Count Two avers that the defendants violated 29 U.S.C. § 1054(b)(1)(H)(i) by imposing a purported Plan provision which reduces the rate of James Coulter's pension benefit accrual based on the attainment of combined age and years of service of 60 or greater.
Count Three is a cause of action for breach of fiduciary duty. Count Four is a claim for breach of duty of disclosure.
Count Five avers that OPEIU is jointly and severally liable for the breaches of fiduciary duties specified in Counts Three and Four. Plaintiffs contend that OPEIU is a Plan sponsor and fiduciary that appointed the Retirement Committee, Appeal Subcommittee, and Goodwin to their fiduciary positions. Plaintiffs allege that OPEIU failed to monitor the performance of these other fiduciaries and failed to assure that the Retirement Committee, Appeal Subcommittee, and Goodwin perform their fiduciary duties in accordance with the requirements of ERISA. As a result of such conduct, the plaintiffs claim that OPEIU has violated or breached its fiduciary duties under 29 U.S.C. § 1104 and 1105.
The Court recognizes that the defendants dispute the plaintiffs' theory of liability concerning OPEIU as pleaded in Count Five. Defendants respond that OPEIU is merely a sponsor of the Plan and does not itself perform any fiduciary duties. [Court File No. 14, p. 2 n. 1]. The Court expresses no opinion at this time whether OPEIU can be held liable under Count Five. The Court here reviews the plaintiff's complaint only to determine the question of venue.
Count Six seeks the removal of Goodwin as Plan administrator and fiduciary pursuant to 29 U.S.C. § 1109(a). Plaintiffs contend that Goodwin has shown himself to be unwilling or unable and incompetent to perform the duties required of the Plan's fiduciary and administrator under ERISA. Plaintiffs want Goodwin to be removed from all fiduciary positions under the Plan, and for the Court to appoint an appropriate independent financial institution or professional ERISA plan administrator to replace Goodwin.
In Count Seven the plaintiffs claim they are entitled to recover reasonable attorney's fees and costs pursuant to 29 U.S.C. § 1132(g).
II. Analysis
Plaintiffs bear the burden of showing proper venue. As a general rule, venue must be established as to each separate cause of action. Beattie v. United States, 756 F.2d 91, 100 (D.C. Cir. 1984); Solow Building Co., LLC v. ATC Associates, Inc., 175 F. Supp.2d 465, 469 (E.D.N.Y. 2001); 15 CHARLES ALAN WRIGHT, ARTHUR R. MILLER EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE: JURISDICTION 2D § 3808 n. 1 (1986). The ERISA venue statute, 29 U.S.C. § 1132(e)(2), provides that an ERISA action may be brought in the federal district court "where the plan is administered, where the breach took place, or where a defendant resides or may be found. . . ."
The Plan is not administered in the Eastern District of Tennessee and the defendants do not reside in the Eastern District of Tennessee. The Court focuses its attention on determining whether the alleged breaches took place in the Eastern District of Tennessee and whether the defendants may be "found" in the Eastern District of Tennessee within the meaning of § 1132(e)(2).
A. Place of the Breach
It is undisputed that the Eastern District of Tennessee is a proper venue pursuant to 29 U.S.C. § 1132(e)(2) to the extent the plaintiffs claim there is a breach of the ERISA Plan and they seek to recover pension benefits under the Plan. The parties agree that where a plaintiff claims that failure to pay a benefit breaches the terms of an ERISA plan, the alleged breach is deemed, for purposes of venue under § 1132(e)(2), to have occurred in the place where the plaintiff receives his or her benefits. Schrader v. Trucking Employees of N.J. Welfare, 232 F. Supp.2d 560, 573 (M.D.N.C. 2002); Cole v. Central States Southeast and Southwest Areas Health and Welfare Fund, 227 F. Supp.2d 190, 194-95 (D.Mass. 2001); Keating v. Whitmore Mfg. Co., 981 F. Supp. 890 (E.D. Pa. 1997); Brown Schools, Inc. v. Florida Power Corp., 806 F. Supp. 146, 149, 151 (W.D.Tex. 1992); Helder v. Hitachi Power Tools, USA Ltd., 764 F. Supp. 93, 95 (E.D.Mich. 1991); Wallace v. American Petrofina, Inc., 659 F. Supp. 829, 831 (E.D.Tex. 1987); Bostic v. Ohio River Co. Basic Pension Plan, 517 F. Supp. 627 (S.D.W.Va. 1981). Accordingly, venue is proper in the Eastern District of Tennessee because the payment of benefits under the Plan are received by James and Martha Coulter at their residence in Chattanooga, Tennessee.
With regard to the plaintiffs' causes of action predicated on the theory of breach fiduciary duties imposed by ERISA, defendants contend the Eastern District of Tennessee is an improper venue. Defendants argue that under 29 U.S.C. § 1132(e)(2), a breach of fiduciary duty is deemed to have taken place only where the defendants are alleged to have committed or failed to commit the actions that constitute the breach of fiduciary duty in violation of ERISA. Brown Schools, 806 F. Supp. at 149; McFarland v. Yegen, 699 F. Supp. 10, 13 (D.N.H. 1988). In other words, the defendants say that a breach of fiduciary duty takes place for purposes of venue under § 1132(e)(2) only where the ERISA fiduciaries meet or where the ERISA plan is managed or administered. Id.
The Sixth Circuit has not rendered a decision on this particular question. In the absence of controlling precedent in the Sixth Circuit, this Court looks to opinions in other federal circuits. The defendants' argument is not persuasive. This Court agrees with the plaintiffs that the defendants' reliance on Brown Schools and McFarland is misplaced. Brown Schools and McFarland are distinguishable from the instant case.
In McFarland, 699 F. Supp. 10, the plaintiff did not seek benefits due based on an alleged breach of an ERISA plan. The plaintiff in McFarland only made a claim for breach of fiduciary duty under ERISA. McFarland is clearly distinguishable from the present case where the amended complaint filed by plaintiffs James and Martha Coulter does plead a claim for breach of the ERISA Plan and demands benefits due under the Plan in addition to claims for breach of fiduciary duty.
The instant complaint by James and Martha Coulter is analogous to Schrader, 232 F. Supp.2d 560, and Keating, 981 F. Supp. 890. In Schrader and Keating, the plaintiffs there filed civil actions suing both for breach of an ERISA plan and breach of fiduciary duty. The federal district courts in Schrader and Keating held venue was proper in the places where the plaintiffs were to receive their benefits. Schrader and Keating can be fairly read as standing for the proposition that where a complaint contains a combination of both a claim for benefits due under an ERISA plan and a related claim for breach of fiduciary duty, 29 U.S.C. § 1132(e)(2) venue is proper in the place where the plaintiff beneficiary receives the benefit. This result is consistent with the broad policy of Congress to provide participants and beneficiaries of ERISA plans with "ready access to the Federal courts," 29 U.S.C. § 1001(b), and the federal courts' liberal construction of ERISA venue provisions. See Varsic v. United States District Court for the Central District of California, 607 F.2d 245, 247-48 (9th Cir. 1979); Schrader, 232 F. Supp.2d at 573-74; Keating, 981 F. Supp. at 892-93; McFarland, 699 F. Supp. at 12; Ballinger v. Perkins, 515 F. Supp. 673, 675 (W.D.Va. 1981).
Brown Schools, 806 F. Supp. 146, provides little support for the defendants' position in the case at bar. In Brown Schools, the participant in an ERISA health plan resided in Florida with his daughter. The participant's employer and ERISA plan were also located in Florida. The ERISA plan was administered in Florida. The daughter received medical treatment at a hospital in Texas. When the participant's daughter was admitted to the hospital, the participant assigned his right to benefits under the ERISA plan to the Texas hospital. The Texas hospital brought an action in federal court in the Western District of Texas seeking to recover those benefits and argued that venue was proper in Texas under 29 U.S.C. § 1132(e)(2). The Texas hospital asserted claims for breach of the ERISA plan and breach of fiduciary duty based on the alleged improper denial of benefits.
The district court in Brown Schools reasoned that the claim for breach of fiduciary duty predicated upon the theory of improper denial of benefits under the ERISA plan was really better described as a claim for breach of the ERISA plan. To decide the venue dispute, Brown Schools followed the general rule that breach of an ERISA plan takes place where the beneficiary was to receive the benefits or where the decision regarding the payment of benefits was made. Applying this general rule, venue was deemed improper in Texas. The Texas hospital was merely an assignee that was limited to pursuing only those rights that the assignor enjoyed under the ERISA plan. Because the assignee stands in the shoes of the assignor, the assignee accepts the assignor's location for venue purposes. Brown Schools held venue was only proper in Florida pursuant to 29 U.S.C. § 1132(e)(2) because: (1) the decision to deny benefits was made in Florida where the ERISA plan was administered; and (2) the ERISA participant was entitled to receive payment of benefits at his residence in Florida. Brown Schools, 806 F. Supp. at 151-52.
Contra, Cole v. Central States Southeast and Southwest Areas Health and Welfare Fund, 227 F. Supp.2d 190, 195-97 (D.Mass. 2001) (rejecting Brown Schools).
After reviewing the relevant case law, this Court concludes that venue in the case at bar is proper in the Eastern District of Tennessee under 29 U.S.C. § 1132(e)(2) because James and Martha Coulter make a claim for pension benefits based on an alleged breach of the Plan. James and Martha Coulter reside and receive benefits from the Plan in the Eastern District of Tennessee. Moreover, venue is proper in the Eastern District of Tennessee even though the plaintiffs assert additional claims for breach of fiduciary duty under ERISA.
B. Defendants May Be Found in This District
The Court agrees with the plaintiffs that venue also is proper in the Eastern District of Tennessee pursuant to 29 U.S.C. § 1132(e)(2) because the defendants may be found here. A defendant "may be found" in the Eastern District of Tennessee for purposes of § 1132(e)(2) where the defendant's contacts are sufficient to support personal jurisdiction. A defendant in an ERISA action can be found in a federal district if the defendant has sufficient "minimum contacts" with the district that establishes personal jurisdiction based on the standard set forth in International Shoe Co. v. Washington, 326 U.S. 310 (1945), and its progeny. Waeltz v. Delta Pilots Retirement Plan, 301 F.3d 804, 809-10 (7th Cir. 2002); Varsic, 607 F.2d at 248-49; Cole, 227 F. Supp.2d at 197-98; Wallace, 659 F. Supp. at 831-32; Bostic, 517 F. Supp. at 632-34.
The seminal case is Varsic, 607 F.2d 245. In Varsic, the Ninth Circuit held that a defendant pension fund, including its board of trustees and administrator, could be "found" for purposes of § 1132(e)(2) venue in any district in which an ERISA plan's participant/beneficiary worked and earned pension credits, so long as personal jurisdiction is properly asserted over the defendant. The defendant union pension fund in Varsic received contributions from employers on behalf of their employees working in the Central District of California and provided pension benefits to beneficiaries who resided in the Central District of California. The activities of the defendant pension fund generated fiduciary duties owed to Mr. Varsic and other workers on whose behalf it had accepted contributions. This constituted sufficient minimum contacts with the Central District of California to support personal jurisdiction over the defendant pension fund and establish proper venue in the Central District of California under § 1132(e)(2) because the defendant could be "found" there. Varsic, 607 F.2d at 249-50 (Pension fund's decision to participate with labor union in federal district, and to undertake the fiduciary duty of receiving contributions and making payments based on worked performed there, were sufficient to support in personam jurisdiction and venue in that forum).
In the instant case, the defendants constitute a union pension plan and the entities and individuals who administer the Plan. Plaintiffs allege that the defendants accepted contributions on behalf of James Coulter while he worked and resided in the Eastern District of Tennessee. Defendants undertook the responsibility to credit James Coulter with the work he performed and to make pension payments in accordance with the Plan to James Coulter at his residence in the Eastern District of Tennessee. Based on these facts, the Court finds that the defendants have had sufficient minimum contacts with the Eastern District of Tennessee to allow this Court to exercise personal jurisdiction over them.
The maintenance of the present suit in this Court does not offend traditional notions of fair play and substantial justice. The defendants' contacts with the Eastern District of Tennessee make it reasonable and fair to require them to appear and defend themselves in this forum. The defendants' actions and decision to deny certain pension benefits to James and Martha Coulter have a direct effect within the Eastern District of Tennessee which reasonably supports this Court exercising personal jurisdiction over the defendants. Varsic, 607 F.2d at 249-50. Therefore, venue over the plaintiffs' complaint properly lies in the Eastern District of Tennessee pursuant to 29 U.S.C. § 1132(e)(2) because the defendants may be found here.
Accordingly, the defendants' motion pursuant to FED. R. CIV. P. 12(b)(3) to dismiss the complaint on the ground of improper venue [Court File No. 13] is DENIED.
SO ORDERED.