December 30, 1993 [NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 93-1585
PENSION ADMINISTRATION COMMITTEE OF THE SHERATON CORPORATION
RETIREMENT PLAN FOR SALARIED EMPLOYEES,
Plaintiff, Appellee,
v.
WILLIAM J. CARROLL D/B/A CARROLL CONSULTING ACTUARIES,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]
Before
Breyer, Chief Judge,
Torruella and Selya, Circuit Judges.
William J. Carroll on brief pro se.
Jerome P. Facher, Peter A. Spaeth and Hale and Dorr on brief
for appellee.
Per Curiam. This appeal arises from a civil action
brought by the named fiduciary of a pension plan to recover
certain assets alleged to be wrongfully held by the
administrator of another pension plan. The plaintiff is the
Pension Administration Committee of the Sheraton Corporation
Retirement Plan for Salaried Employees ("the PAC"). The
defendant is William J. Carroll d/b/a Carroll Consulting
Actuaries (Carroll). Pursuant to Fed. R. Civ. P. 37(b)(2),
the district court entered a default judgment against Carroll
for his failure to comply with multiple orders compelling
discovery. Carroll now appeals from the default judgment.
We affirm.
Background
The PAC commenced this action by filing a five-count
complaint which stated claims for relief under the Employee
Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C.
1001 et. seq., the Declaratory Judgment Act, 28 U.S.C.
2201, federal common law, and state law. The complaint
alleged the following facts.
PGA Resort Ltd. (PGA), a Florida limited partnership,
owned the former Sheraton PGA Resort Hotel in West Palm
Beach, Florida. In 1980, PGA began providing retirement
benefits for its salaried and hourly employees. PGA provided
those benefits by becoming a participating employer in the
Pension Plan and Trust for Hotels and Motor Inns Associated
-2-
With The Sheraton Corporation (Plan I). Under Plan I,
individual owners of hotels associated with the Sheraton
Corporation (Sheraton) adopted as their pension plans the
terms of two "master" documents - a Pension Plan Agreement
and a Pension Trust Agreement (the Plan Documents). These
documents provided that a participating employer could
withdraw from Plan I and establish a separate qualified
pension or retirement plan provided that the new plan
provided equal or greater rights and benefits to the
employees covered by Plan I. Under Plan I,
PGA and other participating employers made contributions to a
common trust fund which was held by the Bank of Boston as
trustee. The Plan Documents further provided that, upon an
employer's withdrawal from Plan I, the assets in the
participating employer's account in Plan I shall be
transferred to the trustee designated by the employer.
Carroll is the administrator for Plan I. He has the
duty to account separately for the Plan assets of each
participating employer and exclusive control over the
disposition of Plan I's assets. The complaint alleged that
as a result of the following events, Carroll continued
improperly to exercise control over the assets in PGA's
account in Plan I.
In 1986, PGA decided to participate in a new pension
plan (Plan II) that preserved the rights and benefits of all
-3-
PGA employees covered by Plan I, in addition to providing
other benefits.1 PGA informed Carroll of its intention to
withdraw from Plan I. Carroll informed PGA and its agent,
the actuarial firm of Towers, Perrin, Forster & Crosby
(TPF&C), that a new pension plan and trust approved by the
Internal Revenue Service (IRS) was the only authorization he
required to transfer PGA's assets to the trustee of the new
pension plan. PGA subsequently adopted Plan II and requested
a ruling from the IRS that Plan II was a qualified pension
plan under 26 U.S.C. 401(a). The IRS issued such a ruling
in 1988. Thereafter, TPF&C instructed Carroll to transfer
PGA's assets in Plan I to the Shawmut Bank, the trustee for
Plan II. The complaint alleged that despite PGA's compliance
with the requirements for transferring the assets set forth
in Plan I and Carroll's own conditions, Carroll refused to
transfer PGA's assets without justification.2
Effective January 1, 1989, PGA discontinued providing
retirement benefits to its employees. Pursuant to an
agreement between PGA and Sheraton, the liabilities and
assets of Plan II were merged into a third pension plan, the
1. Plan II is also known as the Sheraton Salaried and Hourly
Retirement Plans and Trusts for Managed Hotels.
2. The complaint further alleged that TPF&C made further
demands on Carroll to transfer PGA's assets during the
remainder of 1988. Carroll continued to retain control over
the assets. In December, 1988, Carroll urged the IRS to
rescind its favorable determination letters concerning Plan
II. The IRS did not do so.
-4-
Sheraton Corporation Retirement Plan for Salaried Employees
(Plan III). The PAC is the administrator and a named
fiduciary of Plan III. See 29 U.S.C. 1102(16)(A), 1102(a).
The complaint alleged that at the time this merger took
place, PGA's assets in Plan I were the lawful property of
Plan II and thus should have been received by Plan III as a
result of the merger. However, Carroll improperly continued
to refuse to transfer PGA's assets to Plan III despite
multiple demands by PGA, its agents, and the PAC. The
complaint alleged that PGA's assets in Plan I (hereafter,
"the Assets") have been the lawful property of Plan III since
January 1, 1989 and that Carroll's improper retention of
control over the Assets is in derogation of Plan III's right
to possession and control. The PAC commenced this action to
compel Carroll to transfer the Assets to Plan III. According
to the complaint, Carroll's most recent accounting indicated
that the Assets were worth at least $230,000.
The first two counts of the complaint alleged that
Carroll's improper refusal to transfer the Assets constituted
a breach of his fiduciary duty to act solely in the interest
of the participants and beneficiaries of Plan I in violation
of 29 U.S.C. 1104(a)(1), and a breach of his fiduciary duty
to act in accordance with the documents and instruments
-5-
governing Plan I in violation of 29 U.S.C. 1104(a)(1)(D).3
Carroll's refusal to transfer the Assets also was said to
violate of the terms of Plan I. These violations were said
to entitle the PAC to an order compelling Carroll to (1)
direct the Bank of Boston, the trustee of Plan I, to transfer
all assets in PGA's account in Plan I to the trustee for Plan
III, Northern Trust Company, and, (2) provide the PAC with a
final accounting of the assets in PGA's account in Plan I.
The PAC claimed this relief under ERISA's civil enforcement
provision, 29 U.S.C. 1132(a)(3).4 Count II sought a
3. 29 U.S.C. 1104(a) provides, in relevant part, that:
(1) Subject to sections 1103 (c) and (d), 1342, and
1344 of this title, a fiduciary shall discharge his
duties with respect to a plan solely in the
interest of the participants and beneficiaries and
* * *
(D) in accordance with the documents and
instruments governing the plan insofar as
such documents and instruments are
consistent with the provisions of this
subchapter and subchapter III of this
chapter.
4. 29 U.S.C. 1132(a) provides that,
A civil action may be brought -
* * *
(3) by a participant, beneficiary, or
fiduciary (A) to enjoin any act or
practice which violates any provision of
this subchapter or the terms of the plan,
or (B) to obtain other appropriate
equitable relief (i) to redress such
violations or (ii) to enforce any
provisions of this subchapter or the
terms of the plan; ....
-6-
declaratory judgment that the PAC, not Carroll, was entitled
to possession and control of the Assets in addition to the
aforementioned equitable relief. Counts four and five of the
complaint stated common law claims for breach of fiduciary
duty and conversion and claimed damages in an amount not less
than the market value of the Assets.5
Procedural History
Throughout the course of the proceedings below, Carroll
maintained that since the summons and complaint identified
him as "William J. Carroll d/b/a Carroll Consulting
Actuaries," he had been sued in his individual capacity only,
and therefore lacked the ability to respond to the complaint
and the PAC's discovery requests in his capacity as the
administrator of Plan I. Thus, the PAC filed a request for
production of documents shortly after it filed its complaint.
That request sought all correspondence, notes and files
relating to PGA, its pension plans, or the Assets, as well as
all correspondence between Carroll and any other person or
entity relating to Carroll's role as the administrator of
Plan I.
Carroll initially did not file a response to this
request for production of documents. Instead, proceeding pro
se, he filed an "Objection to Complaint and Motion to Stay
5. The complaint also claimed attorney's fees and costs
under 29 U.S.C. 1132(g).
-7-
Proceedings." This document alleged, inter alia, that the
PAC lacked the standing to bring this action and that Carroll
lacked the capacity to defend it since he had been sued only
in his individual capacity.6 Carroll withdrew this motion
before it was heard. On June 5, 1992, an initial scheduling
conference (ISC) was held before the district court. After
explaining to Carroll that the PAC was entitled to discover
the documents it had requested, the district judge ordered
Carroll to produce the requisite documents by June 26, 1992
and to submit to a deposition on August 10th and 11th, 1992.
A written order embodying these requirements was issued on
June 10, 1992.
On June 26, 1992, Carroll filed a response to the PAC's
request for production of documents. For the most part, that
response denied that Carroll possessed the requested
documents in his individual capacity and expressly disavowed
the capacity or authority to respond to the PAC's request as
the administrator of Plan I.7 On July 2, 1992, the PAC
6. We note that attached to this motion were twelve letters
and an incomplete list of other documents in Carroll's files.
These appear to be responsive to the PAC's request for
production of documents, albeit incomplete.
7. Several letters between Carroll and various parties were
attached to the response, as well as accountings for the
Hourly and Salaried Pension Plans from 1983 through 1990.
These documents and those that were attached to his initial
objection to the complaint indicate that Carroll's claim that
he did not possess the documents is disingenuous.
-8-
filed a motion to compel production of documents and for
sanctions. The motion stated that Carroll had refused to
produce documents based on his meritless attempt to
distinguish documents he possessed in an individual capacity
and documents he possessed in his capacity as administrator
of Plan I.8 On August 14, 1992, the district court denied
Carroll's motion for disqualification and allowed the PAC's
motion to compel production of documents. The court issued
an order that required Carroll to produce all documents which
he held in his individual or representative capacity.9
By letter dated August 20, 1992, plaintiff's counsel
notified Carroll to produce the requisite documents by August
24th and to appear for his deposition on August 28th. Once
again, Carroll did not comply. On August 31, 1992, the PAC
filed a motion for sanctions based on Carroll's failure to
comply with the district court's August 14, 1992 order to
produce documents and on his subsequent failure to appear for
his deposition on August 28th. The PAC also filed a motion
for summary judgment on August 31, 1992. In support of this
motion, the PAC filed multiple affidavits, including that of
8. Carroll filed a rambling and prolix opposition to the
PAC's motion to compel which raised no meritorious issues.
He also filed a motion to disqualify the district judge based
on her alleged pro-plaintiff bias.
9. Carroll appealed the order denying his motion to
disqualify the district judge and the order compelling him to
produce the requested documents. This court dismissed both
appeals on October 29, 1992.
-9-
Kathy Bascik, Sheraton's Director of Employee Benefits.
Bascik averred that after Plans II and III merged, Plan III
began paying claims submitted by the participants and
beneficiaries of PGA's pension plans. She further averred
that Plan III would continue to pay all valid claims of
participants and beneficiaries of PGA's pension plans,
although Plan III had been deprived of the assets which
correspond to these liabilities as a result of Carroll's
refusal to transfer PGA's assets in Plan I.
The district court did not rule on the PAC's motion for
sanctions while its motion for summary judgment remained
under advisement. On November 3, 1992, the district court
denied that motion on the ground that genuine issues of
material fact remained about the validity of the amendment to
Plan I and the validity of Plan II. Thereafter, the PAC
resumed its efforts to secure discovery from Carroll.
On December 18, 1992, the PAC noticed Carroll's
deposition for January 5, 1993. Anticipating that Carroll
would not comply on the ground that he could not do so in his
individual capacity, plaintiff's counsel subpoenaed Carroll
for this deposition in his capacity as the administrator of
Plan I. The subpoena also required Carroll to produce the
previously requested documents by January 4, 1993. The PAC
also requested a ruling on its August 31, 1992 motion for
sanctions. On December 29, 1992, Carroll informed
-10-
plaintiff's counsel that counsel was being engaged to
represent Plan I and that he would be unable to comply with
the subpoena for his deposition.10
On January 5, 1993, the district court allowed the PAC's
motion for sanctions. The court ordered Carroll to pay $2000
to the plaintiff forthwith as partial compensation for the
costs it had incurred in its unsuccessful attempts to
discover documents and depose him.11 On January 13, 1993,
having received no payment from Carroll, the PAC moved to
default Carroll pursuant to Fed. R. Civ. P. 37(b) and (d).
The motion was based on Carroll's willful refusal to obey the
district court's orders to produce documents and submit to a
deposition as well as the order compelling Carroll to pay the
$2000 sanction for his past misconduct.12
On March 10, 1993, the district court held a hearing on
the PAC's motion for a default judgment. Despite Carroll's
10. We note that Carroll has proceeded pro se throughout
this litigation and never secured counsel.
11. On January 25, 1993, Carroll filed a notice of appeal
from the sanction order. We dismissed that appeal for lack
of jurisdiction on March 17, 1993.
12. On January 18, 1993, Carroll forwarded a $2000 check to
the Senior Counsel for ITT Corporation (Sheraton's parent
corporation) in New York. While the check was made payable
to the PAC, it included a list of conditions seemingly
designed to render it non-negotiable. For example, the check
indicated that it was good for 30 days only. An accompanying
document provided that the PAC's deposit of the check would
constitute an admission against its interest. Thus,
plaintiff's counsel was unable to use this check.
-11-
obstinacy, the court deferred ruling on the motion and gave
Carroll one last chance. The court ordered Carroll to appear
for his deposition on March 15, 1993 and to produce the
requested documents at his deposition. In making this
ruling, the court explained to Carroll that he was required
to appear and answer questions in whatever capacity he
thought he was acting with respects to the pension plans.
(Supp. App. pp. 255-60). Carroll responded, "I don't know
what you mean by me[,]" and repeatedly protested that he was
not able to comply with discovery in his capacity as the
administrator of Plan I because he had been sued as an
individual. The court specifically instructed Carroll to
answer "whatever question is put to you" and to "have with
you all the documents that pertain to the pension plan. It
doesn't matter whether you are William Carroll, personally,
William Carroll, trustee, William Carroll, plan
administrator, you will appear with all the documents."
(Supp. App. pp. 260, 272). When Carroll protested, "I hear
the words, but I don't understand the meaning," the court
urged him to try, noting that, "[i]f you don't succeed, there
will be further sanctions against you Mr. Carroll." (Supp.
App. p. 273). The court further ordered Carroll to issue a
$2000 check to plaintiff's counsel without restrictions.
(Supp. App. p. 278).
-12-
On March 11, 1993, the district court issued a written
order embodying its oral orders from the previous day's
hearing. Carroll failed to appear for his deposition and did
not pay the $2000 sanction. On March 17, 1993, the PAC filed
a renewed motion to default Carroll and for further
sanctions. Carroll filed a response in which he indicated
that he agreed that a default was "the desired solution of
the moment" because he wanted to get this case before another
court. The court scheduled a hearing on the renewed motion
to default Carroll for April 27, 1992. In response to the
hearing notice, Carroll filed another rambling and prolix
document generally protesting his treatment in the district
court while announcing that he would not be attending the
hearing on the default motion. On April 27, 1993, the
district court defaulted Carroll under Fed. R. Civ. P. 37.
The court specifically found that Carroll willfully and
persistently refused to obey the court's orders, including
the August 14, 1992 order to produce documents, the March 10-
11, 1993 oral and written orders to appear for his
deposition, and the January 5, 1993 sanction order. (Supp.
App. pp. 285-86). The court also required plaintiff's
counsel to prepare a proposed judgment. On May 5, 1993, the
district court entered a judgment against Carroll on counts I
through V of the complaint. The judgment declared that the
PAC had the right to possession and control of the assets in
-13-
the account(s) of PGA in Plan I, and ordered Carroll, in
whatever capacity necessary, to forthwith direct the First
National Bank of Boston (the trustee of Plan I) to transfer
all assets in PGA's account(s) in Plan I to the Northern
Trust Company, the trustee of Plan III. The judgment also
required Carroll to provide plaintiff's counsel with a full
and complete accounting of the assets in PGA's account(s) in
Plan I and to personally pay plaintiff's costs under 29
U.S.C. 1132(g). (Supp. App. pp. 288-89). Carroll filed a
timely notice of appeal.13
Analysis
"Federal Rule 37 empowers a district court to make such
orders as 'are just' when a party fails to comply with a
discovery order, placing the court's handling of such matters
beyond appellate review when there has been no abuse of
discretion." Local Union No. 251 v. Town Line Sand & Gravel,
Inc., 511 F.2d 1198, 1199 (1st Cir. 1975). On this record,
13. Carroll filed a motion for reconsideration before he
filed his notice of appeal. The motion did not object to the
entry of the default per se. Rather, Carroll sought to
revise the substance of the judgment. On June 11, 1993, this
court ordered Carroll to show cause why this appeal should
not be dismissed for lack of jurisdiction given the
outstanding motion for reconsideration. In response, Carroll
filed a notice withdrawing his motion for reconsideration
with the district court. We allowed this appeal to proceed
and directed both parties to brief the jurisdictional issues.
Regrettably, neither party has done so. As we conclude that
Carroll is not entitled to relief on the merits, we need not
address the jurisdictional issues. See Norton v. Mathews,
427 U.S. 524, 530-32 (1976).
-14-
we have no hesitation in concluding that the district court
did not abuse its discretion in defaulting Carroll. In view
of Carroll's repeated violations of the court's orders to
produce documents and submit to a deposition, not to mention
his failure to pay the $2000 sanction, we think that the
district court exhibited extraordinary patience. The default
judgment was wholly justified.
On appeal, Carroll argues that the orders compelling
discovery were erroneous because they directed him to provide
information in his capacity as the administrator of Plan I
when he had only been sued in his individual capacity.
Carroll claims that this alleged technical defect in the
summons and complaint disabled him from responding to the
PAC's discovery efforts. He contends that the default
judgment sanctioned him for the conduct of a non-party - i.e.
- William J. Carroll, Administrator of Plan I, and therefore
is not "just" within the meaning of Fed. R. Civ. P. 37(b)(2).
Like the district court, we refuse to indulge in such
willful blindness. Carroll concedes that he is the
administrator of Plan I and the record discloses that he
possesses numerous documents responsive to the PAC's request
for production. Carroll's feigned inability to comply is
indicative of bad faith, which further justifies the default.
See Eisler v. Stritzler, 535 F.2d 148, 153 (1st Cir.
-15-
1976)(upholding default judgment where defendant acted in bad
faith throughout litigation).
Carroll also assails the default judgment under ERISA,
raising a host of arguments. He claims that the amendment to
Plan I which created Plan II is invalid, thus Plan II never
acquired a right to PGA's assets. Carroll further argues
that ERISA does not recognize mergers of pension plans,
therefore the merger of Plans II and III also is invalid and
the PAC has no right to PGA's assets as a result of the
merger, apart from the invalidity of Plan II. Carroll also
contends that the PAC lacks standing to sue because it is not
a "person" and therefore cannot be a fiduciary under 29
U.S.C. 1002(9) and 21(A). Each of these claims have been
waived by Carroll's accession to the default. "[A]n entry of
default against a defendant establishes the defendant's
liability." Goldman, Antonetti, Ferraiuo-Li, Axtmayer &
Hertell v. Medfit International, Inc., 982 F.2d 686, 693 (1st
Cir. 1993)(citations omitted). Insofar as these contentions
attack the liability finding, they come too late.
Carroll's remaining arguments are equally without merit,
and largely unintelligible. We particularly note that the
district judge did not abuse her discretion in denying
Carroll's multiple motions to disqualify her. It is well
established that "[p]rior adverse rulings alone cannot, of
course, be the basis for a motion to recuse." Panzardi-
-16-
Alvarez v. United States, 879 F.2d 975, 984 (1st Cir. 1989),
cert. denied, 493 U.S. 1082 (1990). Given Carroll's wholly
unjustified refusal to comply with the court's orders, no
appearance of bias arises from this record.
Judgment affirmed.
-17-
-18-