EDWARD F. GRODEN, FUND MANAGER OF THE NEW ENGLAND TEAMSTERS AND TRUCKING INDUSTRY PENSION FUND, Plaintiff, Appellant,
N&D TRANSPORTATION COMPANY, INC.; LAURENT J. DUHAMEL; ELIZABETH A. DUHAMEL; JED REALTY ASSOCIATES, LLC, Defendants, Appellees.
FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS [Hon. Rya W. Zobel, U.S. District Judge]
Melissa A. Brennan, with whom Catherine M. Campbell and
Feinberg, Campbell & Zack, PC were on brief, for
Nikolyszyn for appellees Laurent J. Duhamel and Elizabeth A.
A. Mitson, with whom Mitson Law Associates was on brief, for
Torruella, Lipez, and Barron, Circuit Judges.
appeal, we consider whether the Supreme Court's decision
in Peacock v. Thomas, 516 U.S. 349
(1996), requires dismissal of a pension fund's lawsuit
against an employer's alleged alter egos. Specifically,
we must decide whether there is federal subject matter
jurisdiction for the fund's suit seeking $1.2 million in
unpaid withdrawal liability that previously was assessed
against the employer in a default judgment. The pension
fund's manager, appellant Edward F. Groden, maintains
that subject matter jurisdiction exists under the Employee
Retirement Income Security Act of 1974 ("ERISA").
Concluding otherwise, the district court dismissed the case
and subsequently denied appellant's motion for
post-judgment relief. Having carefully reviewed the law and
the fund's allegations, we vacate the court's
post-judgment ruling and remand the case for further
September 2012, the New England Teamsters and Trucking
Industry Pension Fund ("the Fund") secured a
default judgment in federal court against D&N
Transportation, Inc. ("D&N") for unpaid
withdrawal liability the company owed, pursuant to ERISA as
amended by the Multiemployer Pension Plan Amendments Act
("MPPAA"), when it ceased operations. See 29
U.S.C. §§ 1132(e); 1381; 1451. Defendants
Laurent and Elizabeth Duhamel ("the Duhamels"), who
are husband and wife, were D&N's sole stockholders
during the company's forty-odd years in business.
Eighteen months after the default judgment, with no payments
having been made, the Fund filed a new complaint -- i.e.,
this action -- against the Duhamels, N&D Transportation,
Inc. ("N&D"), and JED Realty Associates, LLC
("JED Realty"), seeking to hold them liable for the
Fund claimed, inter alia, that the Duhamels and N&D, a
corporation owned by their two children (Nancy Belsito and
David Duhamel), are alter egos of D&N and, accordingly,
are equally responsible for the unpaid ERISA obligation. The
Fund also alleged that JED Realty, another business owned by
David Duhamel, is an alter ego of N&D and, as such, is
likewise responsible for the D&N debt. In support of its
alter ego contentions, the Fund asserted, inter alia, that
the operations of D&N and N&D overlapped in
significant respects, including use of the same office space
and telephone number, joint insurance coverage, linked bank
accounts, and shared employees. Put simply, the Fund alleges that
D&N and N&D were, in practical effect, the same
entity, with "common ownership, management, business
purpose, customers, employees and operation." In
addition, the Fund claims that the Duhamels as individuals
took "functional control" of D&N's assets
when they sold the company's building to JED Realty and
assigned the mortgage on the property to themselves
personally. Langone v. N&D Transp.
Co. ("Langone I"), No.
1:14-cv-11028-RWZ, Mem. Dec. at 2 (D. Mass. Aug. 27, 2015).
The Fund's first amended complaint includes two counts
stemming from this transaction, one alleging a fraudulent
transfer and the other seeking to reach and apply the funds
owed by JED Realty to the Duhamels.
defendants moved to dismiss the amended complaint pursuant to
Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).
Citing the Supreme Court's decision in Peacock,
which we describe below, defendants argued that suits
premised on an alter ego theory or based on piercing a
corporate veil do not present a federal question. They also
invoked Futura Development of Puerto Rico, Inc.
v. Estado Libre Asociado De Puerto Rico,
144 F.3d 7 (1st Cir. 1998), in which this court rejected an
alter ego claim as a basis for ancillary federal
jurisdiction. Defendants asserted that the Fund's
complaint does not specify any ERISA provision authorizing
the Fund to enforce the judgment rendered in the earlier
action against third parties. Hence, defendants contended,
the complaint should be dismissed for lack of federal subject
matter jurisdiction and because it failed to state a claim
for which relief could be granted. Defendants also challenged
the fraudulent transfer claim on multiple additional grounds,
including that it was untimely.
The District Court's First Ruling
district court initially granted the defendants' motion
to dismiss based on the factual inadequacy of the complaint.
Langone I, at 8-9. Although the court noted
differences among the circuits as to when federal subject
matter jurisdiction exists for "a follow-on suit to
collect an ERISA judgment from an alleged alter ego of a
judgment-debtor, " id. at 7, the court
sidestepped that legal issue because it found the Fund's
allegations insufficient to support an inference that any
defendant was D&N's alter ego at the time D&N
violated ERISA, id. at 8-9. The court thus dismissed the
alter ego counts (Counts I, II, and V) for failure to state a
claim, and it declined to exercise supplemental jurisdiction
over the state law fraudulent-transfer and reach-and-apply
claims (Counts III and IV).
Fund responded by filing a motion for relief from judgment
under Federal Rule of Civil Procedure 60(b)(6) or,
alternatively, to amend the judgment under Rule 59(e). The
Fund argued, inter alia, that the district court had
misconstrued ERISA case law and that, under the correct
analysis, the Fund could "easily remed[y]" its
failure to allege the pertinent timing through an amendment
to its complaint. The court committed legal error, according
to the Fund, by holding that a valid ERISA claim requires a
showing that the defendants were plan fiduciaries. The Fund
also pointed to the court's incorrect statement that its
first amended complaint did not allege that N&D is an
"employer" within the meaning of ERISA.
See 29 U.S.C. §§ 1002(5), 1301(b), 142(1),
152(2), (6), (7). The Fund did not object, however, to
dismissal of the alter ego claim against the Duhamels
personally (Count II).
The District Court's Second Ruling
district court denied the Fund's post-judgment motion,
finding no basis for setting aside the judgment under Rule
60(b) or modifying the decision under Rule
59(e). Langone v. N&D
Transp. Co. ("Langone II"), No.
1:14-cv-11028-RWZ, Mem. Dec. at 7 (D. Mass. Nov. 18, 2015).
With respect to the former, the court refuted the Fund's
assertion that the decision should be vacated because the
court had committed legal error in holding that ERISA alter
ego claims require an allegation of fiduciary status. To the
contrary, the court stated, it had merely identified
fiduciary status as one alternative prerequisite for an ERISA
claim, along with a breach of duty under an ERISA plan or
alter ego status at the time the primary actor violated
ERISA. The court clarified that it had dismissed the alter
ego claims because the Fund had not adequately alleged
any of those grounds for ERISA liability.
Id. at 5. The court thus found no
"extraordinary circumstances" to justify vacating
the prior judgment. Id.
court also refused to alter its judgment so that the Fund
could file an amended complaint. Id. at 7. Relying
on Peacock and Futura Development, the
court ruled that, even with the proposed new timing
allegation, the ERISA claims "would not provide a basis
for federal jurisdiction." Id. at 6-7.
appeal, the Fund's primary argument is that the district
court erred as a matter of law in finding that its alter ego
claims (Counts I and V) would not fall within the federal
courts' subject-matter jurisdiction even if the complaint
were amended to allege that N&D was the alter ego of
D&N at the time the latter withdrew from the Fund and
violated ERISA. The Fund also argues that the district
court should have granted its motion to amend the complaint
to cure the temporal deficiency and erroneously declined to
exercise supplemental jurisdiction over its state-law ...