Sheet Metal Workers Pension Trust of Northern California v. Bay Area Balancing…

Background

Several union benefit trust funds and their trustees sued Bay Area Balancing and Cleanrooms, Inc. under the Employee Retirement Income Security Act (ERISA), seeking allegedly unpaid contributions. Bay Area Balancing and its individual owner, Mark Avila, filed several purported cross-claims against one of the plaintiff trust funds to recover pension benefits allegedly owed to Avila.

The plaintiffs moved to dismiss the cross-claims. They argued, among other things, that Avila was not a party to the case and that Bay Area Balancing lacked legal standing—the authority to sue—for Avila’s pension benefits.

Court’s analysis

The court held that Avila could not assert a claim in the case without first becoming a party. The court identified a motion to intervene under Federal Rule of Civil Procedure 24 as the procedure for someone who wants to join an existing case voluntarily. Avila had not filed such a motion, and Bay Area Balancing cited no authority allowing a nonparty to assert a cross-claim through the rules governing required parties.

Bay Area Balancing did not dispute that it lacked standing to sue for Avila’s pension benefits. Instead, it argued that ERISA’s provision concerning attorney’s fees allowed it to bring a cross-claim for fees. The court concluded that this provision is generally understood to authorize a prevailing party to request fees by motion, not to create a separate cause of action or counterclaim. Bay Area Balancing cited no authority treating the provision as a basis for a counterclaim.

Ruling

The court granted the plaintiffs’ motion to dismiss the cross-claims asserted on Avila’s behalf, without prejudice to Avila filing a motion to intervene or bringing a separate action. The court also granted the motion to dismiss Bay Area Balancing’s purported cross-claims, without prejudice to Bay Area Balancing moving for attorney’s fees later if warranted.

Bay Area Balancing and Avila had requested permission to amend if the motion to dismiss was granted. The court denied leave to amend as to Avila because amendment would be futile while he remained a nonparty. The court stated that Bay Area Balancing remained free to file a counterclaim if it believed it had grounds to do so. Judge Joseph C. Spero also vacated the previously scheduled hearing and continued the case-management conference to February 25, 2022.