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Peabody Holding Company, LLC v. Black

United States District Court, Ninth Circuit

May 29, 2013

Peabody Holding Company, LLC, Administrator of the Peabody Western — UMWA 401(k) Plan, Plaintiff,
v.
Dianarose Black, an individual; and Raelene Brown, Administrator of the Estate of Roy Lee Black, Defendants.

ORDER

DAVID G. CAMPBELL, District Judge.

Peabody Holding Company, LLC ("PHC") filed a complaint in interpleader seeking to have the Court adjudicate the competing claims of Defendants Dianarose Black and Raelene Brown to the benefits of decedent Roy Lee Black that PHC holds as the administrator and fiduciary of the Peabody Western - UMWA 401(k) Plan ("the Plan"). Doc. 1. The Plan is an "employee pension benefit plan" governed by the Employee Retirement Income Security Act ("ERISA"). Id., ¶¶ 9-10. PHC asserts federal question jurisdiction under 28 U.S.C. § 1331 pursuant to ERISA's jurisdictional provision in 29 U.S.C. § 1132(e). Id., ¶ 5. Defendants are members of the Navajo Nation, residing on Navajo land in Arizona, and the benefits were derived from the employment of Robert Lee Black, also a Navajo, on Navajo land. Per the Court's request on April 3, 2013, the parties have filed briefs addressing whether the Court has subject matter jurisdiction over this action and, if so, whether it should nonetheless stay or dismiss the action in favor of tribal court jurisdiction. Docs. 16, 17.

I. Background.

Decedent Roy Lee Black was employed by Peabody Western Coal Company ("Peabody") on the Navajo Reservation. Doc. 1, ¶¶ 12-13. During his employment, Mr. Black participated in and maintained a 401(k) account as part of Peabody's "employee pension benefit plan" ("the Peabody Western - UMWA 401(k) Plan" or "the Plan"). Id., ¶¶ 8-9. Mr. Black died on February 11, 2011, and, as of September 14, 2012, his account contained a balance of $66, 452.88. Id., ¶¶ 14-15. The governing provisions of the Plan (the "Plan Instrument") provide that, unless otherwise designated, the balance of a decedent's account will be paid out to his or her surviving spouse, and, if the decedent has no surviving spouse or designees, it will be paid out to the administrator of his or her estate. Id., ¶¶ 16-20 (citing Plan Instrument provisions).

Mr. Black did not have a surviving spouse, and he named his daughter Dianarose Black as his sole beneficiary on the Plan's Designation Form. Id., ¶¶ 4, 22. The Plan Instrument allows for any persons who believe they are being denied a benefit to submit a written claim to the Plan administrator. Id., ¶ 25. Raelene Brown, the administrator of Mr. Black's estate, submitted a claim to PHC, contesting the validity of the Designation Form and making a claim to the account balance on behalf of the estate. Id., 25-26.

PHC has a fiduciary duty under ERISA to distribute the balance according to the Plan Instrument. Id., ¶ 30 (citing 29 U.S.C. § 1104(a)(1)(D)). PHC has received no other claims to the account balance, and it has so far made no distributions pending resolution of whether Defendant Black or Mr. Black's estate, represented by Defendant Brown, is the proper beneficiary. Id., ¶¶ 29-32. PHC filed this action in interpleader, seeking to pay the account balance into the Registry of the Court and to have the Court require Defendants to submit their respective claims to the Court for determination. Id., ¶¶ 38.

II. Federal Court Jurisdiction.

ERISA's jurisdictional statement provides that "[e]xcept for actions under section (a)(1)(B) [authorizing suits by participants or beneficiaries], the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by... [a] fiduciary, or any person referred to in section 1021(f)(1) of this title." 29 U.S.C. § 1132(e)(1). PCH filed this action under §1132(a)(3), which authorizes a fiduciary to bring a civil action "to obtain... appropriate equitable relief [and] to enforce any provision of this subchapter or the terms of the plan." 29 U.S.C. § 1132(a)(3)(B). The Ninth Circuit has recognized that an interpleader action brought by a plan administrator to ensure the proper disbursement of ERISA funds is as an equitable action properly brought under § 1132(a)(3)(B). See Aetna Life Ins. Co. v. Bayona, 223 F.3d 1030, 1033-34 (9th Cir. 2000); see also Estate of Strickland v. Strickland, No. CV-12-433-TUC-JGZ, 2013 WL 673513, at *4 (D. Ariz. Feb. 25, 2013) ("An interpleader action is an equitable proceeding that permits a plan administrator to seek equitable relief to enforce terms of an ERISA plan."). Because ERISA grants federal court jurisdiction for civil actions brought by a fiduciary, and PHC's interpleader action is properly asserted under § 1132(a)(3)(B), the Court has subject matter jurisdiction.

III. Tribal Court Jurisdiction.

A. Principles of Comity and Exhaustion.

Even where the federal court has subject matter jurisdiction over a claim involving Indians on Indian land, principles of comity generally require that examination of the existence and extent of a tribal court's jurisdiction "be conducted in the first instance in the Tribal Court itself." Nat'l Farmers Union Ins. Cos. v. Crow Tribe of Indians, 471 U.S. 845, 856 (1985). "[T]he federal policy supporting tribal self-government directs a federal court to stay its hand in order to give the tribal court a full opportunity to determine its own jurisdiction." Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 16 (1987) (quotation marks and citation omitted). National Farmers articulated three exceptions to this requirement: (1) "where an assertion of tribal jurisdiction is motivated by a desire to harass or is conducted in bad faith, " (2) "where the action is patently violative of express jurisdictional prohibitions, " and (3) "where exhaustion would be futile because of the lack of an adequate opportunity to challenge the court's jurisdiction." 471 U.S. at 857, n. 21 (internal quotation marks and citations omitted).

Defendant Black did not submit briefing on the jurisdictional issue. Defendant Brown contends that the Court should dismiss or stay this action to allow the Navajo tribal court to determine its own jurisdiction. Doc. 16 at 6, 10. She argues that this is appropriate because (1) the dispute is between Navajo family members arising from events on the Navajo Reservation, (2) proper distribution of the account balance implicates issues of Navajo law and custom, and (3) the Navajo probate court has jurisdiction over other matters related to Mr. Black's estate. Id. at 2-9. PHC does not argue that Defendant's assertion of tribal court jurisdiction is in bad faith, nor that exhaustion in tribal court would be futile. Rather, it argues that requiring exhaustion in tribal court would be "patently violative of [ERISA's] express jurisdictional prohibitions, " and would "serve no purpose other than delay." Doc. 17 at 2 (quoting National Farmers, 471 U.S. at 857, n. 21; Nevada v. Hicks, 533 U.S. 353, 369 (2001)).

B. Would Tribal Court Jurisdiction Violate ...


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