Opinion
Civil Action No. 3:00-CV-2607-BF
October 21, 2002
MEMORANDUM OPINION AND ORDER
Plaintiffs' "Motion for a New Trial," filed September 13, 2002, is before this Court. The Court construes the instant motion as a motion to reconsider this Court's Order of August 30, 2002, in which the Court granted Defendant's motion for summary judgment and dismissed the case. The Court held a hearing on this matter on October 15, 2002. For the reasons stated on the record and incorporated herein, the Court GRANTS the motion to reconsider and VACATES its Order of August 30, 2002. Upon reconsideration of the cross-motions for summary judgment, the Court DISMISSES the action for lack of subject matter jurisdiction.
Unless otherwise noted, the background facts are not disputed by the parties.
Plaintiffs IBEW-NECA Southwestern Health and Benefit Fund and its trustees ("IBEW-NECA"), National Electrical Benefit Fund and its Trustees ("NEBF"), and Arkansas Chapter NECA-IBEW Retirement Trust Fund and its Trustees ("Arkansas Chapter") filed this action in the Northern District of Texas on November 30, 2000, alleging Employee Retirement Income Security Act ("ERISA") violations and breach of contract against Defendant Streeter Service Electric, Inc. ("Streeter Service").
Steve Streeter ("Streeter") is the president and sole manager, sole shareholder, and sole employee of Streeter Service, a small electrical contracting company in Monroe, Louisiana. (D.'s Aff. at 1.) On April 6, 1998, and October 25, 2001, respectively, Streeter Service signed a letter of assent and an inside labor agreement with Local Union 446, International Brotherhood of Electrical Workers ("the agreements"). (P.s' Mot. at 2-3; P.s' App. at 5-29, 30.) The agreements required Streeter Service to pay contributions to, and file monthly reports with, Plaintiffs for any bargaining unit employees that Streeter Service employed. (P.s' Mot. at 2-6; P.s' App. at 5-29, 30.) Plaintiffs contend that although Streeter Service filed the appropriate monthly reports for the period of March 2001 to December 2001, it has not paid contributions for the period of March 2001 and after on behalf of its sole employee — Streeter. (P.s' Mot. at 5-6.) Plaintiffs further contend that Streeter Service has not filed monthly reports since December 2001. ( Id.)
Although Streeter admits to being the sole employee of Streeter Service, he claims not to be a "bargaining unit employee" due to his other roles as president, sole manager, and sole shareholder. (D.'s Aff. at 1.)
Streeter Service contends that it employed only one bargaining unit employee — Josh Bryant — until March 24, 2000, and that it has not employed any other bargaining unit employees since that time. (D.'s Aff. at 1.) Streeter Service further contends — and Plaintiffs do not dispute — that Streeter Service paid all contributions for Mr. Bryant pursuant to the agreements. ( Id.)
Plaintiffs NEBF and Arkansas Chapter move for summary judgment on their claims of ERISA violations and breach of contract against Streeter Service. (P.s' Mot. at 1.) Streeter Service counters with a motion for summary judgment on the basis that Streeter — its president and sole manager, sole shareholder, and sole employee — is not a bargaining unit employee under the agreements and that Streeter Service is therefore not required to pay contributions or file monthly reports under the agreements. (D.'s Resp. at 3-9.) However, because the Court concludes that Plaintiffs' pension plan is not an "employee benefit plan" for purposes of ERISA with respect to Streeter Service, the ERISA action is DISMISSED with prejudice for lack of subject matter jurisdiction.
II. Analysis
Under Rule 12(h)(3) of the Federal Rules of Civil Procedure, a court sua sponte may raise the issue of subject matter jurisdiction. Fed.R.Civ.P. 12(h)(3); Burge v. Parish of St. Tammany, 187 F.3d 452, 465-66 (5th Cir. 1999). The issue of whether an "employee benefit plan" exists in an ERISA action is a jurisdictional question. Memorial Hospital System v. Northbrook Life Ins. Co., 904 F.2d 236, 240 (5th Cir. 1990) (recognizing that the "threshold question" regarding the existence of an "employee benefit plan" in an ERISA action is a "jurisdictional one."). See also Gonzalez-Garcia v. Williamson Dickie Manufacturing Co., 99 F.3d 490, 491-92 (1st Cir. 1996) (noting that a district court's decision that a plan did not qualify as an "employee benefit plan" under ERISA constituted a decision that the district court lacked subject matter jurisdiction); Kulinski v. Medtronic Bio-Medicus, Inc., 21 F.3d 254, 256 (8th Cir. 1994) (holding that the existence of an "employee benefit plan" in an ERISA action is a jurisdictional question); UIU Severance Pay Trust Fund v. Local Union No. 18-U, 998 F.2d 509, 510 n. 2 (7th Cir. 1993) (determining that "the existence of an `ERISA-governed plan' is an essential precursor to federal jurisdiction"). Thus, the Court sua sponte raises the jurisdictional question of whether an "employee benefit plan" exists in the instant ERISA action.
Under ERISA, an "employee benefit plan" is "an employee welfare benefit plan or an employee pension benefit plan or a plan which is both an employee welfare benefit plan and an employee pension benefit plan." 29 U.S.C. § 1002 (3). In the instant case, it is undisputed that should Plaintiffs' pension plan qualify as an "employee benefit plan" under ERISA, it would do so as an "employee pension benefit plan." An "employee pension benefit plan" is
[A]ny plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program —
(i) provides retirement income to employees, or
(ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond,
regardless of the method of calculating the contributions made to the plan, the method of calculating the benefits under the plan or the method of distributing benefits under the plan.29 U.S.C. § 1002 (2)(A).
In the Fifth Circuit, a plan qualifies as an "employee welfare benefit plan" under ERISA where the plan: "(1) exists; (2) falls within the safe-harbor provision established by the Department of Labor; and (3) satisfies the primary elements of an ERISA `employee benefit plan' — establishment or maintenance by an employer intending to benefit employees." Meredith v. Time Ins. Co., 980 F.2d 352, 355 (5th Cir. 1993). All three prongs of the Meredith test must be met to qualify as an "employee welfare benefit plan" under ERISA. Id. The Court concludes that the test articulated in Meredith is equally appropriate for determining whether a particular plan qualifies as an "employee pension benefit plan" under ERISA.
The Court recognizes that Meredith involved a sole proprietor who brought suit against an insurance plan for payment of health benefits. Meredith, 980 F.2d at 353. For purposes of determining whether a plan qualifies as an "employee benefit plan" under ERISA, the Court concludes that it would be incongruous not to apply the Meredith test where, as here, a pension plan has brought suit against an individual who is the president and sole manager, sole shareholder, and sole employee of a corporation in order to recover delinquent contributions.
Even if the Meredith test for determining the existence of an "employee welfare benefit plan" is not entirely applicable to the instant circumstance of determining the existence of an "employee pension benefit plan," the Court concludes that the third prong of the Meredith test, which is at issue in this case, would nevertheless be a required element of any test to determine the existence of an "employee pension benefit plan." The third prong of the Meredith test describes the "primary elements of an ERISA `employee benefit plan.'" Meredith, 980 F.2d at 355. Because an "employee pension benefit plan," like an "employee welfare benefit plan," is a subset of an "employee benefit plan" under ERISA, 29 U.S.C. § 1002 (3), any "employee pension benefit plan" under ERISA would need to satisfy the "primary elements of an ERISA `employee benefit plan.'"
In the instant case, Plaintiffs' pension plan fails to satisfy the third prong of the Meredith test with respect to Streeter Service. It is undisputed that Streeter is the president and sole manager, sole shareholder, and sole employee of Streeter Service and that he has held those roles for the entire period of March 2001 and after. Moreover, Plaintiffs have failed to present any evidence that Streeter Service employed any other person during the period of March 2001 and after. "[A] plan must have employees besides the owners to qualify as an ERISA plan." Vega v. Nat'l Life Ins. Services, Inc., 188 F.3d 287, 294 n. 6 (5th Cir. 1999). See also Cristantielli v. Kaiser Foundation Health Plan of Texas, 113 F. Supp.2d 1055, 1060 (N.D. Tex. 2000) (recognizing that owners, without other employees, are not counted as "employees" for purposes of satisfying the employee requirement of an "employee benefit plan" under ERISA). Thus, Plaintiffs' pension plan does not qualify as an "employee benefit plan" under ERISA with respect to Streeter Service.
In fact, Plaintiffs admit in their reply that Streeter Service "failed to pay contributions and submit payroll reports to Plaintiffs regarding its employee Steve Streeter." (P.s' Reply at 9.) Throughout their pleadings, Plaintiffs have never alleged, nor have they presented evidence, that Streeter Service employed any other person for whom contributions were owed to Plaintiffs.
The Court's decision is limited in two respects. First, the Court's decision does not comment on whether Plaintiffs' pension plan qualifies as an "employee benefit plan" under ERISA with respect to other employers. It merely concludes that Plaintiffs' pension plan does not qualify as an "employee benefit plan" under ERISA with respect to Streeter Service. Second, the Court's decision does not comment on anything other than the very unique set of facts presented in this case.
In their motion to reconsider, Plaintiffs cite to Trustees of the Amalgamated Ins. Fund v. Sheldon Hall Clothing, Inc., 862 F.2d 1020 (3d Cir. 1989), to support their contention that the Meredith test should not be applied in the instant case. However, the Third Circuit does not mention whether there were employees other than the owner/operator in Sheldon Hall. Indeed, the amount of withdrawal liability in that case — $238,198.75 — indicates that there were employees other than the owner/operator. Thus, Sheldon Hall is insufficient to overcome this Court's conclusion that it lacks subject matter jurisdiction.
Because the Court determines that Plaintiffs' pension plan does not constitute an "employee benefit plan" for purposes of ERISA with respect to Streeter Service, Plaintiffs' ERISA cause of action is DISMISSED with prejudice for lack of subject matter jurisdiction. Furthermore, the Court declines to exercise supplemental jurisdiction, pursuant to 28 U.S.C. § 1367 (c)(3), over the remaining state law breach of contract cause of action. As such, the state law breach of contract cause of action is DISMISSED without prejudice to refiling the action in state court.
The Court's decision in this case should not be construed as commenting on the merits of the state law breach of contract cause of action.
III. Conclusion
For the foregoing reasons, the ERISA cause of action is DISMISSED with prejudice for lack of subject matter jurisdiction, and the state law breach of contract cause of action is DISMISSED without prejudice to refiling the action in state court.
SO ORDERED. October 21, 2002.