Unpublished Disposition, 940 F.2d 1533 (9th Cir. 1991)

No. 90-55341.

United States Court of Appeals, Ninth Circuit.

Before HUG, WILLIAM A. NORRIS and LEAVY, Circuit Judges

MEMORANDUM^* 

This is an appeal in an action brought under ERISA and RICO against Virginia Oliver and several other individual and corporate defendants. We affirm in all respects as to Virginia, and reverse on one aspect of damages awarded against other defendants found liable under RICO, none of whom has entered an appearance in this appeal.

First, we address appellants' challenge to the district court's decision not to pierce the corporate veil with regard to Virginia Oliver, and its consequent dismissal of Virginia from this part of the case.

The district court was correct in applying Seymour v. Hull & Moreland Eng'g, 605 F.2d 1105 (9th Cir. 1979), in deciding whether to pierce the veil. The district court was also correct in determining that the Seymour factors had to be applied to each individual officer/shareholder in determining whether to pierce the veil with regard to that particular individual defendant. Finally, the court did not commit clear error in its findings of fact in support of its decision not to pierce the corporate veil. In particular, the court did err in finding that Virginia did not act with fraudulent intent, an important factor in determining whether to pierce the corporate veil with regard to an officer/shareholder under Seymour, 605 F.2d at 1112.

Second, appellants challenge the district court's conclusion that Virginia did not violate RICO. The court's finding that Virginia did not act with fraudulent intent sufficiently supports its conclusion that Virginia "did not conduct or participate in the conduct of the enterprise's affairs through a pattern of racketeering activity and [is] thus not liable under RICO." See Sun Savs. & Loan Ass'n v. Dierdorff, 825 F.2d 187, 195 (9th Cir. 1987).

Third, appellants argue the district court should have awarded punitive damages under ERISA, in addition to the damages awarded pursuant to Sec. 1132(g) (2) (A)-(D). We review the district court's decision for an abuse of discretion. See Winterrowd v. David Freeman & Co., 724 F.2d 823, 827 (9th Cir. 1984). Although the conduct of the defendants in the case was serious, we cannot say it was so egregious that the district court abused its discretion in denying punitive damages.

Finally, appellants challenge the district court's legal determination that the extra interest component awarded under Sec. 1132(g) (2) (C) was not subject to trebling under RICO. Appellants note that RICO mandates that a party awarded damages under RICO "shall recover threefold the damages he sustains." 18 U.S.C. § 1964(c). Appellants characterize the subsection (C) damages as "an element of compensatory damages, designed to assist ... [appellants] in recovering the myriad administrative and opportunity costs occasioned by their failure to receive required contributions." Brief of Appellants at 44. Appellants note that we have referred to the subsection (C) damages as a form of liquidated damages. Operating Eng'g v. Beck, 746 F.2d 557, 569 (9th Cir. 1984). Appellants also note similar references by other courts. See Vernau v. Bowen Enters., 648 F. Supp. 721, 724 (W.D. Pa. 1986) (describing subsection (C) damages as "liquidated damages"); Bennett v. Machined Metals Co., Inc., 591 F. Supp. 600 (E.D.1984) (stating that subsection (C) damages could compensate plans for incidental costs by delays in payment); Central States, Southeast and Southwest Areas Pension Fund v. Alco Express Co., 522 F. Supp. 919, 925-928 (E.D.Mi.1981) (concluding that subsection (C) damages were compensatory based on legislative history).

We find the question of trebling an important question of statutory interpretation. Regrettably, we have only the benefit of briefing and argument by appellants because the only appellee to enter an appearance was Virginia, who did not argue this point. Because we find appellants' argument for trebling plausible on its face, we will decide in appellants' favor for the purposes of this case only. We feel the issue too important to resolve as the law of the circuit in the absence of a truly adversarial process. Accordingly, we reverse the district court on this issue, but our decision will not be published and may not be cited, except as provided by Ninth Circuit Rule 36-3.

The case is AFFIRMED IN PART, and REVERSED IN PART and REMANDED to the district court to enter an order consistent with this disposition.