eligible to receive a pension v. Pension Trust of Bethlehem Steel Corporation

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 FRANK STEWART; CHARLES WISEMAN;
ERVIN D. CHANNELL; LAWRENCE
DOSWELL, all other individuals who
are similarly situated in that they: 1)
at some time were members of the
Industrial Union of Marine and
Shipbuilding Workers of America,
(now incorporated into the
International Association of
Machinists and Aerospace Workers)
Local 33; and, 2) worked for
Bethlehem Steel Corporation at the
Sparrows Point and/or Key
Highway Shipyards; and, 3) are
receiving, have received or are No. 00-1804 eligible to receive a pension; and,
4) who had their pensions
calculated in such a manner as to
reduce the pension by
inappropriately deducting cost-of-
living allowances from the class
members’ pension-related earnings,
Plaintiffs-Appellants,
v.
PENSION TRUST OF BETHLEHEM STEEL
CORPORATION AND SUBSIDIARY
COMPANIES; BETHLEHEM STEEL
CORPORATION,
Defendants-Appellees. 

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Appeal from the United States District Court
for the District of Maryland, at Baltimore.
J. Frederick Motz, Chief District Judge.
(CA-00-418-JFM)
Argued: May 9, 2001
Decided: June 20, 2001
Before WILKINSON, Chief Judge,
NIEMEYER, Circuit Judge, and Arthur L. ALARCON,
Senior Circuit Judge of the United States Court of Appeals
for the Ninth Circuit, sitting by designation.
Affirmed in part, vacated in part, and remanded by unpublished per
curiam opinion.
COUNSEL
ARGUED: Paul Anthony Weykamp, Baltimore, Maryland, for
Appellants. G. Stewart Webb, Jr., VENABLE, BAETJER & HOW-
ARD, L.L.P., Baltimore, Maryland, for Appellees. ON BRIEF:
Maria E. Rodriguez, VENABLE, BAETJER & HOWARD, L.L.P.,
Baltimore, Maryland; Kathleen M. Mills, Office of the General Coun-
sel, BETHLEHEM STEEL CORPORATION, Bethlehem, Pennsylva-
nia, for Appellees.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
Appellants, former employees of the Shipbuilding Division of
Bethlehem Steel Corp. (hereinafter "Bethlehem"), appeal from the
dismissal of their ERISA action pursuant to Rule 12(b)(6) of the Fed-
eral Rules of Civil Procedure. Appellants contend that the district
court erred in determining that the governing Pension Agreement is
unambiguous and in resolving controverted allegations contained in
their complaint in favor of Appellees. We conclude that the district
court erred by failing to take as true material allegations in Appel-
lants’ complaint, and we vacate the dismissal of Appellants’ cause of
action for breach of contract. We affirm the dismissal of the Appel-
lants’ claim for breach of fiduciary duty.
I
Appellants are participants in an ERISA plan administered by the
Pension Trust of Bethlehem (hereinafter "the Pension Trust"). Seek-
ing certification as a class, Appellants filed this action contending that
Bethlehem and the Pension Trust improperly reduced Appellants’
pensions by deducting cost-of-living adjustments (hereinafter
"COLAs") from their "earnings" as defined by the Pension Agree-
ment. Appellants alleged causes of action for both breach of fiduciary
duty and breach of contract.
Appellees moved to dismiss Appellants’ action for failure to state
a claim, pursuant to Rule 12(b)(6). In support of their motion to dis-
miss, Appellees offered copies of the Pension Agreement, as well as
copies of the collective bargaining agreements (hereinafter "CBAs")
which governed Appellants’ employment. Appellants offered numer-
ous exhibits in opposition to Appellees’ motion to dismiss, including
pay stubs purporting to show that Appellants had not received COLAs
claimed by Appellees. The district court determined that the relevant
terms of the Pension Agreement unambiguously provided that
COLAs would not be included as earnings for purposes of determin-
ing Appellants’ pension benefits. The district court concluded that its
interpretation of the Pension Agreement barred Appellants’ claims.
Accordingly, the court dismissed Appellants’ action without reaching
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the question whether Appellants should be certified as a class. Appel-
lants filed a timely notice of appeal. We have jurisdiction pursuant to
28 U.S.C. § 1291.
II
We determine, as a preliminary matter, that the district court did
not err in considering copies of the Pension Agreement and CBAs
offered by Appellees because Appellants explicitly relied on these
documents in their complaint. New Beckley Mining Corp. v. Int’l
Union, United Mine Workers of Am., 18 F.3d 1161, 1164 (4th Cir.
1994); see also Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir.
1998) ("[A] district court ruling on a motion to dismiss may consider
a document the authenticity of which is not contested, and upon
which the plaintiff’s complaint necessarily relies.") (citing Cortec
Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991));
Weiner v. Klais & Co., Inc., 108 F.3d 86, 89 (6th Cir. 1997) (same
holding in ERISA context). Moreover, because the district court did
not consider any other evidence in ruling on Appellees’ motion to dis-
miss, it was not required to convert the motion into one for summary
judgment. See Laughlin v. Metro. Washington Airports Auth., 149
F.3d 253, 260-61 (4th Cir. 1998) (stating that the district court is
required to treat a Rule 12(b)(6) motion as one for summary judgment
if it considers matters outside the complaint).
We review de novo a district court’s decision to grant a motion to
dismiss. Flood v. New Hanover County, 125 F.3d 249, 251 (4th Cir.
1997). We must accept all the properly pled allegations of the com-
plaint as true and construe all facts in the light most favorable to the
plaintiff. Id. "We may affirm the district court’s dismissal only if it
appears beyond doubt that the Plaintiffs can prove no set of facts in
support of their claim that would entitle them to relief." Id.
Appellants first cause of action alleged that Appellees breached
their fiduciary duty under ERISA. The district court found that Appel-
lants had failed to state a cause of action for breach of fiduciary duty
because they did not allege "that they have given the Union an oppor-
tunity to act on their behalf and that the Union has breached its duty
to represent them." The court further noted that Appellants had
waived their breach of fiduciary duty claim because they had "provi-
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sionally agree[d] to proceed only on the breach of contract claim
against both defendants." Appellants have not challenged these find-
ings on appeal. Thus, we must affirm the district court’s dismissal of
Appellants’ breach of fiduciary duty cause of action. See, e.g.,
Canady v. Crestar Mortgage Corp., 109 F.3d 969, 973-74 (4th Cir.
1997) (stating that issues not briefed on appeal are waived).
In their second cause of action, Appellants alleged that Appellees
breached the Pension Agreement by "improperly and routinely reduc-
[ing] class members’ pensions by (1) deducting ‘phantom cost-of-
living adjustments’ . . . [i.e., never earned cost-of-living adjustments]
. . . and by (2) deducting COLAs which were rolled into the base rate
of pay in subsequent contracts." (second parenthetical and emphasis
in original). The district court determined that the "Pension Agree-
ment provides that an employee’s pension is calculated on the basis
of his average monthly earnings during the best 60 of 120 months
immediately preceding his retirement." The district court further con-
cluded that the Pension Agreement specifically defines "earnings" to
mean "the participant’s earnings (including the amount resulting from
a cost-of-living adjustment provision only to the extent of the cost-of-
living adjustment which was included in the base hourly rates effec-
tive August 1, 1975)." (quoting Pension Agreement ¶ 1(j)). The court
held that any COLAs earned after August 1, 1975 were therefore not
"earnings" for purposes of the Pension Agreement, even if such
COLAs were "‘rolled into’ the base rate of pay and appeared as [base
pay] on employee’s pay stubs."
Appellants contend that COLAs which were "rolled in" to their
base pay are "earnings" for purposes of the Pension Agreement
because the terms of subsequent CBAs either supplemented or super-
ceded the terms of the Pension Agreement. "In interpreting ERISA
plans, we turn to principles of the federal common law of contracts."
Denzler v. Questech, Inc., 80 F.3d 97, 101 (4th Cir. 1996).
Our review of the Pension Agreement reveals that the disputed
terms are unambiguous, and thus we need not refer to the CBAs in
order to resolve Appellants’ claim. See id. at 103 (concluding that
because plan documents were unambiguous, court was not required
to consider extrinsic evidence or principles of estoppel). Moreover,
because Appellants do not allege that the CBAs were formally
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adopted in conformance with the amendment procedures of the Pen-
sion Agreement, they cannot maintain that the CBAs supercede the
terms of that agreement. See Healthsouth Rehab. Hosp. v. Nat’l Red
Cross, 101 F.3d 1005, 1009 (4th Cir. 1996) (stating that "any modifi-
cation to a plan must be implemented in conformity with the formal
amendment procedures [of the plan] and must be in writing.") (quot-
ing Coleman v. Nationwide Life Ins. Co., 969 F.2d 54, 58 (4th Cir.
1992)). The district court did not err in determining that the plain
terms of the Pension Agreement do not permit COLAs earned after
August 1, 1975 to be treated as "earnings," even if those COLAs were
later rolled into Appellants’ base rate of pay.
Appellants alleged in their complaint that Appellees breached the
Pension Agreement by "rolling in" COLAS that Appellants never
received. Appellees asserted in their motion to dismiss that Appellants
were paid COLAs, that these COLAs were later "rolled in" to their
base pay, and that the "rolled in" COLAs were properly excluded
under the Pension Agreement. This dispute regarding whether the
allegedly "rolled in" COLAs were actually received must be resolved
in favor of Appellants for purposes of a motion to dismiss pursuant
to Rule 12(b)(6). Flood, 125 F.3d at 251. Taking Appellants’ factual
allegations as true, they have stated a cause of action for breach of the
Pension Agreement under 29 U.S.C. § 1132(a)(1). Accordingly, we
vacate the district court’s dismissal of this action and remand for fur-
ther proceedings concerning Appellants’ breach of contract claim
based on the deduction of COLAs that the Appellants allege they
never received. We affirm the dismissal of Appellants’ cause of
action for breach of fiduciary duty.
AFFIRMED IN PART, VACATED IN PART,
AND REMANDED
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