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REICH v. COMPTON

September 1, 1993

ROBERT REICH, Secretary of the United States Department of Labor, Plaintiff
v.
FRED COMPTON, JOSEPH MC HUGH, JOHN NEILSON, FREDERICK HAMMERSCHMIDT, GERSIL N. KAY, ELECTRICAL MECHANICS ASSOC., FIDELITY-PHILADELPHIA TRUST CO., and the INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS,LOCAL 98, Defendants.



The opinion of the court was delivered by: ANITA B. BRODY

 Before me is the motion of plaintiff the Secretary of the United States Department of Labor ("the Secretary") for reconsideration of my July 21, 1993 order entering judgment against plaintiff and in favor of defendants on plaintiff's claims alleging violations of the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001, et seq., by Local Union No. 98 International Brotherhood of Electrical Workers Pension Plan ("the Plan") fiduciaries Fred Compton ("Compton"), Joseph McHugh ("McHugh"), John Neilson ("Neilson"), Frederick Hammerschmidt ("Hammerschmidt"), Gersil Kay ("Kay") and the Fidelity-Philadelphia Trust Company ("Fidelity"), and by Plan non-fiduciaries the International Brotherhood of Electrical Workers Local 98 ("Local 98") and the Electrical Mechanics Association ("EMA").

 I am being called upon to decide:

 Whether a mortgage and loan and subsequent sale of the mortgage note by a pension plan to a third party corporation that I have previously held is not a party in interest to the plan under the statute were prohibited indirect transactions with a party in interest or indirect transactions for the use and benefit of a party in interest. I find that they were not.

 Whether statutory prohibitions against dealings between a plan and its fiduciaries were violated because three plan trustees were members - but not a majority -- of the board of trustees of a corporation that purchased a mortgage note from the plan? I find that they were not.

 I. Procedural background.

 My July 21, 1993 memorandum and order granting summary judgment in favor of the non-moving defendants recites the lengthy procedural history of this challenge by the Secretary to the Plan's 1972 mortgage and loan to EMA and the subsequent 1984 sale of the mortgage note to EMA as party in interest transactions that violated ERISA.

 I held that ERISA, as a matter of law, did not allow me to pierce the corporate veil of a corporation that is not a "party in interest" to the plan as defined by the statute but which is closely related to -- but not co-extensive with -- a labor organization that is a "party in interest" to the plan in order to find that the pension plan's mortgage and loan and subsequent sale of the mortgage note to the corporation were not prohibited "party in interest" transactions.

 On July 29, 1993, the Secretary filed a self-styled "motion for reconsideration" attempting "to demonstrate that the literal text of ERISA does indeed prohibit the transactions in this case, even though EMA is not a party in interest." (Secretary's motion at 1.)

 I will assume that the Secretary's motion, which does not cite any procedural authority, is brought pursuant to Federal Rule of Civil Procedure 59(e). The purpose of a motion for reconsideration is to correct manifest errors of law or fact or to present newly discovered evidence. Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3rd Cir.)(setting forth the standard for a motion for reconsideration), cert. denied, 476 U.S. 1171, 90 L. Ed. 2d 982, 106 S. Ct. 2895 (1986). Thus, a Rule 59(e) motion must rely on at least one of three grounds: (1) an intervening change in controlling law, (2) the availability of new evidence not previously available, or (3) the need to correct a clear error of law or to prevent manifest injustice. Dodge v. Susquehanna Univ., 796 F. Supp. 829, 830 (M.D. Pa. 1992).

 "With regard to the third ground, ... any litigant considering bringing a motion to reconsider based upon that ground should evaluate whether what may seem to be a clear error of law is in fact simply a disagreement between the Court and the litigant." Id. (citation omitted). Motions for reconsideration should not relitigate issues already resolved by the court and should not be used "to put forward additional arguments which [the movant] could have made but neglected to make before judgment." Id. (citation omitted); see also Rottmund v. Continental Assurance Co., 813 F. Supp. 1104, 1107 (E.D. Pa. 1992).

 The Secretary has not shown that I made an error of law or fact and does not present any newly discovered evidence. At best, he advances "additional" arguments -- not raised in his prior brief on the impact of Mertens v. Hewitt Assoc., 124 L. Ed. 2d 161, 113 S. Ct. 2063 (1993 Westlaw 179274) (June 1, 1993) -- to demonstrate that the plain language of the statute explicitly authorizes his claims. The Secretary admits that he did not raise these arguments in his earlier brief because "counsel failed to anticipate that the Court, in deference to Mertens, would read ERISA as narrowly as it did." (Secretary's motion at 2.).

 Thus, it would be appropriate to deny the motion on purely procedural grounds. Nonetheless, I will address the merits of the statutory construction ...


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