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LIVOLSI v. CITY OF NEW CASTLE

November 24, 1980

Peter J. LIVOLSI and Albert W. Betler, on behalf of the Laborers' District Council of Western Pennsylvania Welfare Fund, Plaintiffs,
v.
CITY OF NEW CASTLE, PENNSYLVANIA, and New Castle Sanitation Authority, Defendants



The opinion of the court was delivered by: WEBER

In this case the Plaintiffs, Trustees of an employee welfare benefit fund, are suing the City of New Castle, and the New Castle Sanitation Authority. In its complaint the Plaintiffs allege that the City and Authority, as participating employers in the Fund, violated the provisions of both the Trust Fund Agreement and of their individual collective bargaining agreements. The Fund is a multi-employer welfare fund to which various employers, both private and public, have agreed to contribute. According to the Plaintiffs under these agreements the City and Authority were obligated to file monthly reports listing all employees who were eligible for fund benefits.

Plaintiffs contend that the Defendants did not meet this contractual obligation and, in fact, listed as eligible individuals who were not qualifying employees under the Fund. As a result of this action by the Defendants monies were paid out of the Fund to ineligible beneficiaries. In order to redress these losses the Plaintiffs now seek damages and injunctive relief.

 The Defendants in this case have responded by filing a Motion to Dismiss the Plaintiffs' complaint. The Defendants challenge the Plaintiffs' right to bring this action on a variety of grounds, including: Lack of subject matter jurisdiction under the Labor Management Relations Act or the Employee Retirement Income Security Act of 1974; lack of jurisdiction over claims arising prior to the effective date of the Employee Retirement Income Security Act; the statute of limitations; laches; estoppel and waiver; failure to state a claim upon which relief can be granted; and failure to join indispensable parties. While some of Defendants' contentions have merit, they do not justify dismissal of the Plaintiffs' complaint at this time and we will deny this motion.

 I. SUBJECT MATTER JURISDICTION.

 Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, confers jurisdiction to the Federal District Court in all "suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce...". In its motion to dismiss the Defendants argue that this court does not have subject matter jurisdiction over the instant case under the Labor Management Relations Act because (1) the Welfare Fund is not a "labor organization" and (2) the City and Authority are specifically excluded from the provisions of the Act.

 Defendants first argument requires little discussion. The contention that the plaintiff must be a labor organization in order to confer federal subject matter jurisdiction fundamentally misconstrues the nature of the jurisdictional grant established in § 301. That provision does not mechanistically limit federal jurisdiction to suits between employers and labor unions. Rather it confers jurisdiction to the court in all cases involving violations of contracts between employers and labor organizations. Clearly this broader language includes within its scope suits by third parties to enforce rights arising under collective bargaining agreements. It would, therefore, include suits by the trustees of welfare or pension funds alleging violations of the terms of the fund agreement. See, e.g. Nedd v. United Mine Workers of America, 556 F.2d 190, 197 (3d Cir. 1977), cert. denied 434 U.S. 1013, 98 S. Ct. 727, 54 L. Ed. 2d 757 (1978); Crawford v. Cianciulli, 357 F. Supp. 357 (E.D.Pa.1973).

 The Defendants' second argument, however, is valid. The Labor Management Relations Act, by its express terms, excludes from the definition of employer "any state or political subdivision thereof." 29 U.S.C. § 152.

 In this case we feel that the exclusions set forth in 29 U.S.C. § 152 would clearly preclude the exercise of federal jurisdiction over either the City of New Castle or the New Castle Sanitation Authority. Both are political subdivisions of the state; both constitute department or administrative arms of the government; and both are administered by individuals who are responsible either to public officials or to the general electorate. Accordingly, we conclude that this court has no jurisdiction over the Defendants in this case under the Labor Management Relations Act. See, National Labor Relations Board v. Natural Gas Utility District of Hawkins County, Tennessee, 402 U.S. 600, 604-605, 91 S. Ct. 1746, 1749-1750, 29 L. Ed. 2d 206 (1971); Crilly v. Southeastern Pennsylvania Transportation Authority, 529 F.2d 1355 (3d Cir. 1977). The LMRA cause of action is stricken.

 Plaintiff also asserts jurisdiction under the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. which gives the federal district courts jurisdiction over all civil actions involving benefit plans covered by the Act. See, 29 U.S.C. § 1132. The coverage of the Act in turn is defined in the following terms: "This subchapter shall apply to any employee benefit plan if it is established or maintained (1) by an employer engaged in commerce or in any industry or activity affecting commerce, or (2) by any employee organization or organizations representing employees engaged in commerce or in any industry or activity affecting commerce, or (3) both." 29 U.S.C. § 1003(a)(1)-(3).

 On the ERISA cause of action the Defendants first claim that this court has no jurisdiction because neither the Fund nor the City and Authority constitute an industry or activity affecting commerce, and therefore this employee benefit plan does not fall within the statutory ambit of ERISA.

 We disagree. By its very terms the Act covers all plans which are established or maintained by an employer who is in or affecting commerce or by an employee organization which is in or affecting commerce. Given this very expansive description of the scope of ERISA, it is evident that the welfare fund at issue here does fall under the coverage of the Act. As this court views it both the City and the employee organizations making up the Fund are in or affecting commerce. For example, the City of New Castle itself is located only 10 miles from the Ohio-Pennsylvania border. Moreover, several interstate highways pass directly through the City. Therefore, the effect of the actions of the City and Sanitation Authority as employers cannot be narrowly proscribed to the city limits of New Castle itself. Rather, we believe that these actions, although geographically limited within Pennsylvania, would necessarily have an impact upon interstate commerce. Similarly we believe that the employee organizations involved in this Fund are also engaged in activities affecting commerce. These organizations represent some 11,000 employees. Of this number the vast majority are employed in the private sector. Moreover, many of the private industries employing these 11,000 individuals are directly involved in interstate commerce. Therefore, we conclude that the employee organizations involved in this Fund are also industries or activities affecting interstate commerce as that phrase is defined in ERISA. See, 29 U.S.C. § 1002(12).

 The Defendants next contend that this court cannot exercise jurisdiction over them under ERISA, because such an exercise of federal jurisdiction would violate the principle of local sovereignty and autonomy under National League of Cities v. Usery, 426 U.S. 833, 96 S. Ct. 2465, 49 L. Ed. 2d 245 (1976). We feel that this case is clearly distinguishable from Usery. Furthermore, we believe that the holding in Usery in no way divests this court of jurisdiction.

 Usery involved a constitutional challenge to the validity of certain amended provisions of the Fair Labor Standards Act. These amendments extended the Act's mandatory wage and hour provisions to virtually all employees of states and their political subdivisions. The Court held these amendments to be unconstitutional. In reaching this conclusion the Court emphasized the fact that these changes in the Fair Labor Standards Act compelled the states to conform with federally mandated standards. It was this element of compulsion, this "forced relinquishment of important governmental activities" which, in the court's view, rendered these amendments subject to constitutional attack.

 In the present case, however, the element of compulsion that was so important to the Court in Usery is markedly absent. The statutory scheme established under ERISA does not contemplate federal regulation of state and local governments. Quite the contrary ERISA explicitly exempts welfare plans operated by state and local governments from its regulation. See 29 U.S.C. § 1003(b)(1). However, when a state or local government body chooses a private welfare benefit plan for its employees, it will subject itself to federal jurisdiction under ERISA. Since the local governmental body voluntarily accepted a private welfare benefit plan for its employees it cannot later complain that ERISA ...


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