Iron Workers Local 25 Pension Fund v. Harmon, Inc.

Background

The plaintiffs provide pension, medical, vacation, and other employee benefits to certain workers. They alleged that Harmon had agreed to follow the applicable union work rules and make benefit contributions for covered work performed within the territorial jurisdiction of Local Union No. 25. The plaintiffs claimed Harmon had not paid all required contributions and sued under the Employee Retirement Income Security Act of 1972, commonly known as ERISA, seeking the unpaid contributions.

Harmon sought leave under Federal Rule of Civil Procedure 14 to file a third-party complaint against the home local benefit funds of traveling union workers. Harmon alleged that Local 25 could not supply enough workers for a project, so Harmon used workers from other local unions who traveled into Local 25’s territory. Harmon claimed it paid benefit contributions to those workers’ home local funds instead of to the plaintiffs. Harmon’s proposed claim alleged that the home local funds would be unjustly enriched if Harmon had to pay the plaintiffs for contributions Harmon had already paid to the home local funds.

Rule 14 analysis

Rule 14 allows a defendant to bring in a nonparty that may be liable to the defendant for all or part of the plaintiff’s claim. The proposed third-party claim must involve derivative or dependent liability; Rule 14 does not permit a separate, independent claim merely because it arises from the same facts.

The court concluded that Harmon’s proposed unjust-enrichment claim met that requirement. Whether the home local funds were unjustly enriched depended on whether Harmon was liable to the plaintiffs for the same benefit contributions. The court found this situation sufficiently similar to the reasoning in a prior related proceeding involving employee-benefit funds and traveling union workers, although the court noted that the earlier decision was persuasive rather than binding and that the allegations were not identical.

The plaintiffs argued that Harmon could seek a refund from the home local funds under 29 U.S.C. § 1103(c)(2)(A)(ii) without adding them to this case. The court held that this possibility did not change the dependent nature of Harmon’s proposed claim.

Efficiency and personal jurisdiction

The plaintiffs also argued that adding the home local funds would complicate and delay the case. They questioned whether the court had personal jurisdiction—the authority to exercise power over those proposed defendants—and whether Harmon had requested reimbursement from them.

The court did not decide whether it ultimately had personal jurisdiction over any proposed third-party defendant. It found, however, that Harmon had identified a potential basis for jurisdiction, including monthly email communications with the home local funds. Because the proposed claim was not obviously meritless, the court said that any home local fund challenging personal jurisdiction could do so through a motion to dismiss after being brought into the case.

The court further found that the plaintiffs had not shown specific unfair prejudice beyond possible delay. It concluded that the claims were closely connected because the plaintiffs sought the money Harmon said it had already paid to the home local funds. Resolving the disputes in one lawsuit could therefore promote efficiency and reduce expense.

Ruling

Judge Tony N. Leung granted Harmon’s Motion for Leave to File a Third-Party Complaint. The court ordered Harmon to serve the proposed third-party complaint on the proposed third-party defendants within 14 days of the order. The court did not decide the ultimate merits of the plaintiffs’ ERISA claim, Harmon’s unjust-enrichment claim, or the question of personal jurisdiction.