Unpublished Disposition, 936 F.2d 577 (9th Cir. 1991)

MEMORANDUM^* 

The appellants are members of the Board of Trustees of the Hotel Employees and Restaurant Employees International Union Welfare Fund. In 1980, that Fund merged with the Southern Nevada Culinary Workers and Bartenders Health and Welfare Trust Fund. Prior to that merger, the appellees, an accounting firm and its employee, had provided accounting services to the Southern Nevada Fund. The trustees now claim that advice rendered in the context of these services had a detrimental effect on beneficiaries of that Fund. They brought suit against the firm and the employee who had personally rendered the advice, charging them with violations of fiduciary duty under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq. They also filed pendent state claims based on negligence and breach of contract.

The district court granted summary judgment to the accountants, holding that they were not fiduciaries within the meaning of ERISA and hence not liable under that statute. It then dismissed the pendent claims because the suit no longer had any basis in federal subject matter jurisdiction. The plaintiffs appeal.

Under ERISA, a person is a fiduciary of an employee benefit plan if that person is named as a fiduciary in the documents that set up the plan or if fiduciary duties are formally delegated to that person by means specified in those documents. See 29 U.S.C. § 1105(c). In addition, a person may become a fiduciary without formal designation pursuant to 29 U.S.C. § 1002(21) (A) under certain circumstances. These include exercising discretionary authority respecting the plan's "management or disposition of its assets," rendering investment advice for a fee, or having discretionary authority in the "administration" of the plan.

The facts in this case stated most favorably for the appellants establish that the trustees relied upon the accountant's advice as to the sufficiency of assets in the plan to support an increase in benefits. There was no evidence that the accountant gave any advice with respect to the investment of assets. Nor was there any evidence that he or his firm exercised any actual control over the administration of the plan. The trustees at all times retained discretion to refuse to follow any advice that the appellees gave or to rely on others. The district court thus did not err in concluding that the conduct shown did not amount to an exercise of control necessary to support a finding that the appellees became fiduciaries of the Fund within the meaning of ERISA. See Yeseta v. Baima, 837 F.2d 380, 385 (9th Cir. 1988) (attorney or accountant on whose professional advice plan administrators rely in making withdrawals is not a fiduciary).

The appellants also challenge the district court's dismissal of the pendent claims. Appellants' concern stems from the fact that by the time these claims were dismissed, the statute of limitations had apparently run. Although the decision to exercise pendent jurisdiction over state claims is a matter of discretion with the trial court, see United Mine Workers of America v. Gibbs, 383 U.S. 715, 726 (1966), we have said that generally the proper exercise of that discretion is to dismiss the state claims where federal claims are dismissed before trial. See, e.g., Jones v. Community Redevelopment Agency, 733 F.2d 646, 651 (9th Cir. 1984). In the circumstances of this case, we see no abuse of the district court's discretion. It would serve no useful purpose for this court to order a further exercise of the district court's discretion given the small likelihood of the pendent claims surviving a motion to dismiss on preemption grounds even if they were to be reinstated. See Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1095 (9th Cir. 1985) (contract claims preempted by ERISA). Because the district court did not purport to review the merits of the state claims, however, dismissal should be regarded as one without prejudice. See Carnegie-Mellon University v. Cohill, 484 U.S. 343, 350 (1988).

AFFIRMED.