ERISA Case Survives Numerous Procedural Motions

Clifton L. Brinson, Michael W. Mitchell and Donald H. Tucker, Jr.

In Longo v. Trojan Horse Ltd., No. 5:13-CV-418-BO (E.D.N.C. Jan. 15, 2014)(J., Boyle), the court for the Eastern District considered a motion to dismiss or transfer an ERISA action in which the plaintiffs claimed that the defendants had failed to make required employer contributions to a 401(k) plan.

The defendants presented a number of jurisdictional motions, starting first with subject matter jurisdiction. The defendants argued that a different statute, the Service Contract Act (SCA), 41 U.S.C § 6701 et seq. applied, to the exclusion of ERISA. The court disagreed, holding that the two statutes were not mutually exclusive. The court acknowledged there was a paucity of case law, but that there is nothing in ERISA to suggest it cannot be considered supplemental to the SCA. The court, quoting the U.S. Supreme Court, explained that “when two statutes are capable of coexistence, it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective.” J.E.M. Ag Supply, Inc. V. Pioneer Hi-Bred Int’l, Inc., 534 U.S. 124, 143-44 (2001).

The defendants next argued that the case should be dismissed under the “primary jurisdiction doctrine.” The doctrine applies to claims that, while “properly cognizable in court,” contain some issue within the special competence of an administrative agency. When applicable, a court would refer a case to the relevant agency, staying further proceedings so as to give the parties reasonable opportunity to seek an administrative ruling. Applying a non-exhaustive list of factors as guidance, the court refused to refer the matter to the Department of Labor (DOL). The court noted that the plaintiffs had notified the DOL of the lawsuit and yet it had not sought to intervene, and the defendants had not demonstrated that action by the DOL would necessarily lead to any inconsistent rulings.

The defendants then challenged personal jurisdiction as to the named individual defendants. Citing a pair of Middle District opinions, the court recognized that 29 U.S.C. § 1132(e)(2) has been interpreted to provide a national contacts test for personal jurisdiction. Hall v. Tyco Intern. Ltd., 223 F.R.D. 219, 229 (M.D.N.C. 2004); Schrader v. Trucking Emps. of New Jersey Welfare Fund, Inc., 232 F.Supp.2d 560, 571 (M.D.N.C. 2002). “The relevant question is this whether the defendants have sufficient minimum contacts with the United States, not with the forum state.” The court also determined that personal jurisdiction would comport with Fifth Amendment due process because “”it is only the highly unusual cases that [any] inconvenience will rise to the level of constitutional concern’ where the national contacts test applies and the defendant is located within the United States.” Quoting Schrader at 572.

Leaving no stone unturned, the defendants also challenged venue. The court explained that “venue is proper under ERISA where the plan is administered, where the alleged breach took place, or where a defendant resides or may be found.” And an alleged breach occurs where the beneficiary receives his benefits. Two of the named plaintiffs reside in the Eastern District and thus venue is proper. The court also declined to transfer venue to the District of Maryland.

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