Trs. of the Nat'l Elevator Indus. Pension Fund v. CEMD Elevator Corp.

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TRUSTEES OF THE NATIONAL ELEVATOR INDUSTRY PENSION FUND, et al. v. CEMD ELEVATOR CORP., et al.

Civil Action No. 22-2304

United States District Court, E.D. Pennsylvania

March 1, 2023

MEMORANDUM

BARTLE, J.

Plaintiffs commenced this action to recover, among other things, unpaid pension benefits pursuant to the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001, et seq. Defendants CEMD Elevator Corp. and Stephan Diemer have moved to dismiss the complaint for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Defendants contend that plaintiffs' claims are barred by statutes of limitations.

I

When considering a motion to dismiss for failure to state a claim under Rule 12(b)(6), the court must accept as true all well-pleaded factual allegations in the complaint and draw all reasonable inferences in the light most favorable to the plaintiffs. See Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008); Umland v. PLANCO Fin Servs., Inc., 542 F.3d 59, 64 (3d Cir. 2008). Rule 8 requires that a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P 8(a)(2). A complaint need not include “detailed factual allegations,” but it must state “more than labels and conclusions” and must provide factual allegations “enough to raise a right to belief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

In reviewing a motion under Rule 12(b)(6), the court may consider “allegations contained in the complaint, exhibits attached to the complaint and matters of public record.” Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993) (citing 5A Charles Allen Wright & Arthur R. Miller, Federal Practice & Procedure § 1357 (2d ed. 1990)); see also Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006). Relevant here, the court may take judicial notice of filings in prior federal court actions. FCS Cap. LLC v. Thomas, 579 F.Supp.3d 635, 647 (E.D. Pa. 2022) (citing Mar. Elec. Co. v. United Jersey Bank, 959 F.2d 1194, 1200 (3d Cir. 1991), reh'g granted and opinion vacated (Jan. 10, 1992), opinion reinstated on reh'g (Mar. 24, 1992)).

II

Three of the plaintiffs are the trustees of multiemployer employee benefit plans as defined under ERISA, 29 U.S.C. §§ 1002(3), (37): National Elevator Industry Pension Fund, National Elevator Industry Health Benefit Plan, and National Elevator Industry Educational Plan. The fourth plaintiff is the Trustees of Elevator Industry Work Preservation Fund, a labor-management cooperation committee as provided for under the Labor-Management Cooperation Act of 1978 and the Taft-Hartley Act. 29 U.S.C. §§ 175a, 186(c)(9). Defendant CEMD Elevator Corp. (“CEMD”) is a New York elevator contractor. Defendant Stephan Diemer is an officer of CEMD and its owner.^[1]

Pursuant to a collective bargaining agreement, CEMD was obligated to pay contributions to plaintiffs' benefit plans in amounts based on the number of hours of work that CEMD's employees performed. CEMD must self-report to plaintiffs on a monthly basis the number of hours worked by each of its employees. In addition, plaintiffs may demand an audit of CEMD's payroll to ensure that it is meeting its contribution obligations.

Plaintiffs have filed two prior actions in this court against the defendants over CEMD's contribution practices. On July 8, 2016, plaintiffs filed an action to recover unpaid and underpaid contributions for the period of January 1, 2010, through February 29, 2012, as well as for the month of May 2016. See Trs. of the Nat'l Elevator Indus. Pension, Health Benefit, Educ., Elevator Indus. Work Pres. Funds, Elevator Constructors Annuity & 401(k) Retirement Plan v. CEMD Elevator Corp., et al., Civ. A. No. 16-3738 (CEMD I). They also sued Diemer for breaching his fiduciary duty with respect to the unpaid contributions by commingling them with other CEMD assets.

Plaintiffs filed a second action against CEMD and Diemer on January 12, 2018. See Trs. of the Nat'l Elevator Indus. Pension, Health Benefit, Educ., Elevator Indus. Work Pres. Funds, Elevator Constructors Annuity & 401(k) Retirement Plan v. CEMD Elevator Corp., et al., Civ. A. No. 18-170 (CEMD II). In that action, plaintiffs sought to recover underpaid contributions for the months of June and July 2016. They sought to compel CEMD to comply with an audit of its payroll for the period of March 1, 2012, through August 31, 2016. They also brought a similar breach-of-fiduciary-duty claim against Diemer.

CEMD I and CEMD II were both dismissed by joint stipulations of voluntary dismissal on May 22, 2019. CEMD I was dismissed with prejudice while CEMD II was dismissed without prejudice. In addition, the stipulation entered in CEMD II stated, “The Defendants have agreed to submit to the payroll audit, subject to the Defendants' right to object to the Plaintiffs' designated auditor's findings and/or determination of any underpayment, and to pay any undisputed amounts found due.” See CEMD II, Doc. # 26, at 1.

A certified public accounting firm completed this audit in February 2021. According to the audit, plaintiffs are owed contributions for unreported work that CEMD's employees performed in and between March 2012 and August 2016.

Plaintiffs initiated this action on June 10, 2022. They seek to recoup unpaid contributions as discovered by the February 2021 audit for work performed by CEMD's employees in months between March 2012 and August 2016 that they claim CEMD owes pursuant to ERISA, 29 U.S.C. § 1132. They also allege that Diemer is independently liable for breaching a fiduciary duty pursuant to ERISA, 29 U.S.C. § 1109, by commingling the unpaid contributions that they assert they are owed with other CEMD funds.

III

Defendants first move to dismiss plaintiffs' ERISA claims under § 1132 for underpaid contributions on the ground that they are time-barred. A statute of limitations defense is an affirmative defense that a defendant must typically plead in its answer. See Fed.R.Civ.P. 8(c). The court however, may dismiss a time-barred claim under Rule 12(b)(6) if “the time alleged in the statement of a claim shows that the cause of action has not been brought within the statute of limitations.” Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014) (quoting Robinson v. Johnson, 313 F.3d 128, 134-35 (3d Cir. 2002)). In reviewing defendants' argument, the court is cognizant that it is not plaintiffs' obligation “to plead around an affirmative defense.” Id. at 252.

ERISA does not set any limitations period for civil enforcement actions brought under § 1132. Our Court of Appeals has directed courts in such ERISA actions to borrow and apply the three-year statute of limitations provision set forth in the analogous Pennsylvania Wage Payment and Collection Law. Vernau v. Vic's Market, Inc., 896 F.2d 43, 45 (3d Cir. 1990); 43 Pa. Stat. Ann. § 260.9a(g). In addition, the court must apply Pennsylvania tolling principles in analyzing whether such an action has been filed within the limitations period. Vernau, 896 F.2d at 45-46.

A § 1132 claim accrues, and the limitations period begins to run, when a delinquent contribution payment becomes due. Id. at 45. Plaintiffs seek to recover underpaid contributions for each month between March 2012 and August 2016. Therefore, unless tolling of the limitations period is warranted, the limitations period for the last month for which plaintiffs seek recovery ended in August 2019. This lawsuit as noted above was not filed until June 10, 2022.

Plaintiffs first argue that the limitations period was tolled under Pennsylvania's discovery rule. That rule defers the accrual of a claim until “plaintiff knew or, exercising reasonable diligence, should have known (1) he or she was injured and (2) that the injury was caused by another.” Adams v. Zimmer US, Inc., 943 F.3d 159, 163 (3d Cir. 2019) (citing Coleman v. Wyeth Pharms., 6 A.3d 502, 510-11 (Pa. Super. Ct. 2010)). A party is not entitled to tolling under the discovery rule simply because it does not know “the full extent of the injury, the fact of actual negligence, or [the] precise cause.” Gleason v. Borough of Moosic, 15 A.3d 479, 484 (Pa. 2011) (citation omitted). Plaintiffs contend that the discovery rule tolled the limitations period for their claims until February 2021 when the audit revealed the underpaid contributions.

Alternatively, plaintiffs assert that the limitations period tolled under Pennsylvania's inherent fraud doctrine. This doctrine tolls the limitations period “when ‘the underlying events are based upon fraud or deceit' and, if applicable, ‘will toll the statute of limitations until such time as the fraud has been revealed or should have been revealed by the exercise of due diligence by plaintiffs.'” Trs. & Fiduciaries of Iron Workers Dist. Council (Phila. & Vicinity) Benefit & Pension Plans v. Carson Concrete Corp., Civ. A. No. 19-1928, 2022 WL 17741694, at *5 (E.D. Pa. Dec. 16, 2022) (quoting Sheet Metal Workers, Local 19 v. 2300 Group, Inc., 949 F.2d 1274, 1280 (3d Cir. 1991)).

Our Court of Appeals considered how to apply Pennsylvania tolling rules to ERISA civil enforcement claims under § 1132 in Sheet Metal Workers, Local 19 v. 2300 Group, Inc. 949 F.2d 1274 (3d Cir. 1991). There, a labor union and a union welfare and pension fund initiated an action in 1989 to recover unpaid contributions for work that the defendant's employees completed between 1983 and 1985. As in the present action, the defendant had been submitting to the plaintiffs inaccurate self-reports of the number of hours its employees worked at the end of the month each month. The defendant argued that the action...