true all allegations in the complaint and all reasonable inferences that can be drawn therefrom, and to view them in the light most favorable to the non-moving party. See Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 (3d Cir. 1994). Moreover, in assessing motions to dismiss, courts must be cautious, "particularly where granting such a motion would terminate the litigation before the parties have had their day in court." Kiser v. General Electric Corp., 831 F.2d 423, 427 (3d Cir. 1987). When the motion is directed as a counterclaim, the standard is the same: the assertions of the counterclaim are assumed to be true; all reasonable inferences are drawn in favor of the counterclaim-plaintiff; and the counterclaim may only be dismissed if there is no set of facts under which it could state a claim. Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1410 (3d Cir.), cert denied, 501 U.S. 1222, 115 L. Ed. 2d 1007, 111 S. Ct. 2839 (1991).
Congress enacted ERISA to provide employee benefit plan participants and beneficiaries with a comprehensive system for adjudicating claims brought against fiduciaries responsible for overseeing the administration of the various plans protected by the statute. See 29 U.S.C. § 1001(b). The United States Supreme Court has explained that the right to seek contribution or indemnification under a federal statute may arise either (1) where Congress has expressly or by clear implication created such a right, or (2) where federal courts have fashioned such a remedy under federal common law. Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 638-640, 68 L. Ed. 2d 500, 101 S. Ct. 2061 (1981). As plaintiffs correctly observe, ERISA does not expressly provide for contribution and indemnification between co-fiduciaries. While there is no general federal common law, the Supreme Court has explained that the federal courts have the authority to create such law when a "federal rule of decision is necessary to protect uniquely federal interests" and when "Congress has given the courts the power to develop substantive law." Id. at 640.
The Third Circuit has not yet addressed whether ERISA permits claims for contribution or indemnity among fiduciaries. In Cohen v. Baker, 845 F. Supp. 289 (E.D.Pa. 1994), the only district court within this circuit to consider this issue held that claims for contribution among breaching fiduciaries of an employee benefit plan are cognizable under federal common law. In so ruling, the court primarily relied upon the Second Circuit's analysis in Chemung Canal Trust Co. v. Sovran Bank/Maryland, 939 F.2d 12 (2d Cir. 1991). In Chemung, the Second Circuit held that ERISA does not preclude fiduciaries from seeking contribution or indemnity from other fiduciaries. The Second Circuit observed that the United States Supreme Court has directed federal courts "'to develop a federal common law of rights and obligations under ERISA-regulated plans'" and explained that ERISA's legislative history "confirms that its fiduciary responsibility provisions . . . 'codify and make applicable to ERISA fiduciaries certain principles developed in the evolution of the law of trusts.'" Id. at 16 (quoting Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 110, 103 L. Ed. 2d 80, 109 S. Ct. 948 (1989) (internal quotations omitted).
Guided by traditional trust law principles, the Second Circuit noted that "the right of contribution among co-trustees has been for over a century, and remains, an integral and universally recognized part of the trust doctrine." Id. (citing Restatement (Second) of Trusts § 258 (1959)). (additional citations omitted). Accordingly, the court held that this right to contribution must also be recognized as a part of ERISA. In so ruling, the court remarked that "even a breaching fiduciary should be entitled to the protection of contribution that has been traditionally granted fiduciary defendants under the equitable provisions of trust law." Id. A number of other courts have agreed with Chemung's analysis, and likewise have permitted claims of contribution or indemnity among co-fiduciaries. See, e.g., Duncan v. Santaniello, 900 F. Supp. 547, 550-51 (D.Mass. 1995); Maher v. Strachan Shipping Co., 817 F. Supp. 43, 44-45 (E.D.La. 1993); Jones v. Trevor, Stewart, Burton and Jacobsen, Inc., 1992 U.S. Dist. LEXIS 14441, 1992 WL 252317 (N.D.Ga. 1992).
Plaintiffs argue that PFE is not entitled to contribution or indemnification because neither ERISA's language nor its legislative history suggests that Congress-extended to the federal courts the power to develop substantive law in this area. Moreover, they argue that the Chemung is flawed because it relied on "convoluted negative reasoning" in concluding that Congress's silence on the issue of contribution and indemnification among co-fiduciaries provides the authority to infer a right of contribution. Instead, plaintiffs urge the Court to follow Judge Altimari's dissent and several other district courts which have expressly disallowed claims for indemnification and contribution. See Chemung, 939 F.2d at 18-19 (Altimiri J. dissenting); Daniels v. National Employee Benefit Services, Inc., 877 F. Supp. 1067 (N.D.Ohio); Schloegel v. Boswell, 766 F. Supp. 563 (S.D.Miss. 1991); Mutual Life Insurance Co. of New York v. Yampol, 706 F. Supp. 596 (N.D.Ill. 1989).
This Court, however, is not persuaded by the reasoning for these decisions. These courts have construed Congress's failure to expressly provide for contribution among fiduciaries despite of its knowledge of traditional trust law principles as a rejection of a scheme of contribution and indemnification. Instead, the Court is more persuaded by the reasoning of Chemung and other courts, which have interpreted Congress's silence as reflecting that in enacting ERISA, it focused on "providing remedies to plan beneficiaries and participants and was content to allow gaps to be filled by the courts applying trust law." Cohen, 845 F. Supp. at 291. Moreover, the court believes that disallowing claims for contribution or indemnification would frustrate "ERISA's purpose of deterring pension plan abuse" by allowing breaching fiduciaries "to escape the consequences of their actions." In re Masters Mates & Pilots Pension Plan and IRAP Litigation, 957 F.2d 1020, 1029 (2d Cir. 1992). Accordingly, this Court finds that defendants have asserted a valid counterclaim for contribution or indemnity and denies plaintiffs' motion to dismiss.
For the reasons discussed, plaintiffs' motion to dismiss defendants' counterclaim is denied.
William H. Walls, U.S.D.J.
This matter comes before the Court upon plaintiffs' motion to dismiss the counterclaim of defendants Pension Fund Evaluations, Inc. ("PFE") and George W. Phillips. Having reviewed the record,
It is on this 29th day of August 1997;
ORDERED that plaintiffs' motion is denied.
William H. Walls, U.S.D.J.
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