The opinion of the court was delivered by: McCLURE, District Judge.
Plaintiffs filed this action to recover for alleged
ERISA*fn1 and RICO*fn2 violations committed in connection
with the administration of an employee benefit plan established
to provide health care coverage for the employees of members of
the West Branch Manufacturing Association ("WBMA"). The ten
plaintiffs*fn3 are employers who purchased health care
coverage for their employees through the WBMA Voluntary
Employee Benefit Plan and Trust (the "trust").
Named as defendants are: (1) the trust; (2) the plan
administrator, Hartman Financial Services, Inc. ("Hartman");
(3) the claims administrator, NEP Insurance Services, Inc.
("NEP"); (4) David Roche, an employee of Hartman who served as
trust manager; and (5) Michael J. Sharbaugh, Executive Director
of the trust. (Plaintiffs' fourth amended complaint, filed Oct.
11, 1989, paras. 15-21.)*fn4
Plaintiffs' claims arise out of a series of events which led,
ultimately, to the termination of the trust effective October
1, 1987. Funding problems precipitated the trust's termination.
Trust administrators first noted a disturbing trend of cost
overruns due to an unexpected increase in claims during the
winter of 1986. By spring of 1987, the trust was operating at
a deficit and a funding increase was required to render it
solvent. At a meeting held in March, 1987, participating
employers voted to increase contribution rates to fund the
deficit, and, hopefully, ensure future liquidity.
Unfortunately, the increase did not solve the problem, and
the trust continued to operate at a deficit. At a meeting held
September 13, 1988 and attended by representatives from fifty
nine of the sixty-seven participating employers, two possible
solutions were considered:*fn6 (1) fund the deficit, terminate
the trust and re-institute coverage for employees of WBMA
members through a group plan purchased from an insurance
carrier, or (2) fund the deficit, increase trust contributions
to guarantee future liquidity, and continue providing health
care coverage through the trust.
The employers voted unanimously to terminate the trust
effective October 1, 1988, fund the deficit, and re-institute
coverage through a carrier. Thereafter, the amount required
from each participating employer was calculated actuarially and
employers were advised of the amount they owed. All but ten of
the participating employers paid their assessed share. The
trust filed an action against the ten recalcitrant employers
before the Court of Common Pleas of Lycoming County,
Pennsylvania to collect their withdrawal assessments.
The ten employers then filed this action alleging various
improprieties on the part of trust administrators. The trust
filed a counterclaim for the unpaid withdrawal assessment.
Before the court are: (1) a motion for partial summary
judgment on the counterclaim, filed by plaintiffs on April 20,
1990 (Record Document No. 78); (2) a motion for summary
judgment by all defendants, filed June 17, 1990 (Record
Document No. 98); and (3) a motion for summary judgment filed
separately by defendant NEP on August 1, 1990 (Record Document
Defendants' June 17th motion seeks judgment in their favor on
plaintiffs' ERISA and RICO claims, the former on the ground
that plaintiffs lack standing to pursue claims under ERISA, and
the latter on the ground that plaintiffs have failed to
establish the fundamental prerequisites for a RICO claim. We
find in defendants' favor on both issues and will enter an
order granting summary judgment in favor of all defendants on
both federal claims. Because only pendent state claims remain,
we will dismiss those claims so that they may more
appropriately be resolved in state court, where the first
action between these parties was filed.
A. Motion for summary judgment standard
Summary judgment is appropriate if the "pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law." Fed.R.Civ.P.
56(c) (Emphasis supplied).
. . [T]he plain language of Rule 56(c) mandates
the entry of summary judgment, after adequate time
for discovery and upon motion, against a party who
fails to make a showing sufficient to establish
the existence of an element essential to that
party's case, and on which that party will bear
the burden of proof at trial. In such a situation,
there can be `no genuine issue as to any material
fact,' since a complete failure of proof
concerning an essential element of the nonmoving
party's case necessarily renders all other facts