“The language ‘based upon, arising from, or in any way related to’ is sweeping in scope; the phrase ‘arising from’ requires only but- for causation (not proximate causation), and the phrase ‘in any way related to’ seems to permit an even looser connection between a claim.”
How later courts described this case
- “The language ‘based upon, arising from, or in any way related to’ is sweeping in scope; the phrase ‘arising from’ requires only but- for causation (not proximate causation), and the phrase ‘in any way related to’ seems to permit an even looser connection between a claim.”
Written by the judges who cited it.
The opinion
PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________________
No. 24-1102
_______________________
TWIN CITY FIRE INSURANCE CO.
v.
GLENN O. HAWBAKER, INC.; DANIEL HAWBAKER;
PATRICK HAWBAKER; D. MICHAEL HAWBAKER,
Appellants
_______________________
On Appeal from the United States District Court
for the Middle District of Pennsylvania
District Court No. 4:22-cv-01485
Chief District Judge: Honorable Matthew W. Brann
__________________________
Submitted Under Third Circuit L.A.R. 34.1(a)
September 20, 2024
Before: RESTREPO, McKEE, and SMITH, Circuit Judges
(Filed: October 3, 2024)
Lauren Anthony
Jonathan H. Rudd
McNees Wallace & Nurick
100 Pine Street
P.O. Box 1166
Harrisburg, PA 17101
Counsel for Appellants
Robert L. Ebby
Ronald P. Schiller
Hangley Aronchick Segal Pudlin & Schiller
One Logan Square
18th & Cherry Streets, 27th Floor
Philadelphia, PA 19103
Counsel for Appellee
__________________________
OPINION OF THE COURT
__________________________
SMITH, Circuit Judge.
Over the course of several years, Glenn O. Hawbaker,
Inc. (“GOH”), carried out an unlawful scheme that involved,
inter alia, underpaying some of its employees. When two
class-action lawsuits against GOH followed, the company
sought coverage under an insurance policy that it held with
Twin City Fire Insurance Company (“Twin City”). But Twin
City denied coverage and initiated this case, asking the District
2
Court to declare that Twin City did not have a duty to provide
coverage. GOH and its Board of Directors (collectively
referred to as “Appellants”) responded by raising
counterclaims that alleged a breach of contract and asked the
District Court to declare that certain claims in those class
actions were indeed covered under the policy.
In August 2023, the District Court granted Twin City’s
motion to dismiss Appellants’ counterclaims. And in
December 2023, the District Court granted Twin City’s motion
for judgment on the pleadings with respect to its request for a
declaratory judgment. In reaching those decisions, the District
Court concluded that the claims in question were not covered
under the policy because they fell within a policy exclusion that
applies to claims that are “based upon, aris[e] from, or [are] in
any way related to any . . . Wage and Hour Violation.” App.
at 105A (boldface type omitted). Appellants challenge both of
those decisions in this appeal. For the reasons that follow, the
District Court correctly concluded that the claims in question
are not covered under the policy. Accordingly, we will affirm
the District Court’s judgment.
I. Background
GOH is a Pennsylvania corporation whose work
includes construction and paving for “both private and public
sector customers.”1 Many of GOH’s jobs have been public-
works projects that are governed by the Pennsylvania
Prevailing Wage Act (“PWA”), 43 Pa. Stat. §§ 165-1–165-17,
1
Glenn O. Hawbaker, Inc., https://www.goh-inc.com (last
visited Oct. 2, 2024).
3
and/or the Davis-Bacon Act (“DBA”), 40 U.S.C. §§ 3141-48.
“A contract is subject to the [PWA] if it is for a
public[-]work[s] project in excess of $25,000.” W. Chester
Univ. of Pa. v. Browne, 71 A.3d 1064, 1068 (Pa. Commw. Ct.
2013). The DBA, meanwhile, applies to a public-works
project where the amount of federal funding is greater than
$2,000. 40 U.S.C. § 3142(a); United States ex rel. Int’l Bhd.
of Elec. Workers Loc. Union No. 98 v. Fairfield Co., 5 F.4th
315, 323 n.1 (3d Cir. 2021) [hereinafter IBEW Loc. No. 98].
These statutes require a company awarded a qualifying public-
works contract to pay a prevailing minimum wage (“prevailing
wage”) to its employees for their work on that project. See
Commonwealth v. Goodco Mech., Inc., 291 A.3d 378, 387 (Pa.
Super. Ct. 2023) (discussing the PWA); IBEW Loc. No. 98, 5
F.4th at 323 (discussing the DBA).2 The prevailing wage
comprises (1) an hourly base rate of pay, and (2) fringe
benefits, which can include, inter alia, employer contributions
to the employees’ pension or health-insurance fund. See W.
Chester Univ. of Pa., 71 A.3d at 1068-69 (discussing the
PWA); Amaya v. Power Design, Inc., 833 F.3d 440, 443 & n.3
(4th Cir. 2016) (discussing the DBA).
2
The prevailing-wage rates vary by locality and are set by
Pennsylvania’s Department of Labor and Industry (in the case
of the PWA), Goodco Mech., Inc., 291 A.3d at 387, or the
federal Department of Labor (in the case of the DBA), IBEW
Loc. No. 98, 5 F.4th at 323.
4
A. GOH’s unlawful scheme and the class-action
lawsuits that followed
In 2021, “the Pennsylvania Office of Attorney General
(OAG) filed a criminal complaint against [GOH], charging
[GOH] with four counts of theft by failure to make required
disposition of funds received in violation of [18 Pa. Cons. Stat.
Ann. § 3927(a)].” Glenn O. Hawbaker, Inc. v. Dep’t of
Transp., 304 A.3d 1067, 1070 (Pa. 2023). Those charges
stemmed from allegations that, from 2015 to 2018, GOH
repeatedly violated the PWA and DBA by misappropriating
about $20.7 million in fringe-benefit payments owed to its
prevailing-wage employees. A few months after the criminal
complaint issued, GOH and the OAG entered into a written
plea agreement. As part of that agreement, GOH agreed to
plead no contest to the four charges and pay about $20.7
million in restitution to the victims.
Not surprisingly, in the months after the OAG brought
the criminal charges against GOH, two follow-on, class-action
complaints were filed by victims of GOH’s misappropriation.
The class-action complaint filed first in time was King v. Glenn
O. Hawbaker, Inc., brought in the Court of Common Pleas for
Centre County, Pennsylvania. It named only GOH as a
defendant. Next came Packer v. Glenn O. Hawbaker, Inc.,
filed in the U.S. District Court for the Middle District of
Pennsylvania. In this case, the putative class named not only
GOH, but also GOH’s Board of Directors and the Plan
Administrator of GOH’s retirement plan.
The two class-action complaints included lengthy,
substantially similar background sections detailing GOH’s
5
scheme to misappropriate its prevailing-wage employees’
fringe benefits. As a general matter, that scheme had two
components. First, “[i]nstead of putting all of the prevailing
wage workers’ retirement benefit funds into the account[s] of
the worker[s] who actually earned [them], GOH stole that
money and used it to pay for all GOH’s employees’,
executives’, and owners’ retirement benefits.” App. at 244A
(King complaint) (emphasis added); see id. at 292A (Packer
complaint). GOH did so by putting “that money into one big,
unallocated account,” and then, “[j]ust prior to the end of the
first quarter of the following year, . . . spread[ing] out [that
money] across all GOH employees’, executives’, and owners’
retirement accounts.” Id. at 243A, 291A. Second, GOH paid
only a fraction of the required amount of health and welfare
benefits to its prevailing-wage employees, “stealing the rest to
pay for the health and welfare benefits of . . . [its] non-
prevailing[-]wage employees and executives.” Id. at 245A,
292A. It is further alleged that GOH hid its underfunding of
prevailing-wage employees’ health and welfare benefits “by
reporting to government agencies that it was paying well in
excess of what was required by law, using an hourly health and
welfare figure that was based on grossly inflated costs and
nonqualifying expenses.” Id. at 245A, 292A-93A.
Based on GOH’s scheme, the King complaint raised the
following claims: (1) breach of contract for not timely paying
its prevailing-wage employees all the wages and benefits they
had earned; (2) breach of contract for misappropriating
retirement accounts; and (3) violating Pennsylvania’s Wage
6
Payment and Collection Law, 43 Pa. Stat. §§ 260.1–260.13.3
The breach-of-contract claim for misappropriating retirement
accounts was undergirded by an allegation that GOH’s failure
to timely deposit the correct amount into the accounts of its
prevailing-wage employees “deprived and continues to deprive
[them] of interest, earnings and investment returns that
otherwise would have been received in the absence of [GOH’s]
scheme and breach of contract.” App. at 258A-59A.
As for the Packer complaint, that pleading raised the
following claims under the Employee Retirement Income
Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461:
(1) GOH and the Plan Administrator breached their fiduciary
duties by, inter alia, making untimely and incorrect
contributions to the prevailing-wage employees’ 401(k)
3
As the District Court noted, the King complaint also raised,
in the alternative, “quasi-contractual claims for restitution and
unjust enrichment.” Twin City Fire Ins. Co. v. Glenn O.
Hawbaker, Inc., No. 4:22-cv-01485, 2023 WL 5652011, at *2
n.15 (M.D. Pa. Aug. 31, 2023); see Khawaja v. RE/MAX
Cent., 151 A.3d 626, 633 (Pa. Super. Ct. 2016) (“A claim
sounding in breach of contract may be pleaded alternatively
with a claim of unjust enrichment if the claims are raised in
separate counts of a complaint.”); see also Wilson Area Sch.
Dist. v. Skepton, 895 A.2d 1250, 1254 (Pa. 2006) (“[T]he
doctrine of unjust enrichment contemplates that ‘[a] person
who has been unjustly enriched at the expense of another must
make restitution to the other.’” (second alteration in original)
(quoting Binns v. First Nat’l Bank of Cal., Pa., 80 A.2d 768,
775 (Pa. 1951))).
7
accounts; and (2) GOH and the Board of Directors breached
their fiduciary duties by not monitoring the Plan Administrator
to ensure that the Plan Administrator was adequately
performing its duties.
B. GOH’s insurance policy with Twin City
Faced with the two class-action lawsuits, GOH sought
coverage under an insurance policy (“the Policy”) that it held
with Twin City. As discussed below, the relevant provisions
of the Policy are set forth in two sections — (1) the “Common
Terms and Conditions” (“CTC”) that generally apply under the
Policy, and (2) the pertinent coverage section, titled “Fiduciary
Liability Coverage Part” (“FLC”).
Under the CTC, Twin City generally bears the “duty to
defend Claims covered under the Policy, even if such Claim[s]
[are] groundless, false or fraudulent.” App. at 86A (boldface
type omitted). However, that duty is not triggered with respect
to claims that “involve allegations, in whole or in part, of a
Wage and Hour Violation.” Id. (boldface type omitted). The
Policy defines “Wage and Hour Violation” as
any actual or alleged violation of the duties and
responsibilities that are imposed upon an Insured
by any federal, state or local law or regulation
anywhere in the world, including but not limited
to the Fair Labor Standards Act [“FLSA”] or any
similar law (except the Equal Pay Act), which
govern wage, hour and payroll practices. Such
practices include but are not limited to: (1) the
calculation and payment of wages, overtime
8
wages, minimum wages and prevailing wage
rates; (2) the calculation and payment[] of
benefits; (3) the classification of any person or
organization for wage and hour purposes;
(4) reimbursing business expenses; (5) the use of
child labor; or (6) garnishments, withholdings
and other deductions from wages.
Id. at 83A-84A (boldface type omitted).
Under the FLC, “[t]he Insurer shall pay Loss on behalf
of the Insureds resulting from a Fiduciary Claim first made
against the Insureds . . . for a Wrongful Act by the Insureds or
by any person for whose Wrongful Acts the Insureds are
legally responsible.” Id. at 101A (boldface type omitted).4
4
“Insureds” include any “Insured Entity,” “Insured Person,” or
“Insured Plan.” App. at 104A (boldface type omitted).
“Insured Person” means any “Manager,” “Employee,” or
“natural person who was, is or shall become trustee of an
Insured Plan, or the member of any committee which oversees
the administration or investments of an Insured Plan, while in
such person’s capacity as a trustee or committee member.” Id.
at 103A (boldface type omitted). “Wrongful Act” is defined,
in pertinent part, as “any actual or alleged”:
(1) error, misstatement, misleading statement,
act, omission, neglect or breach of duty
constituting a violation of any responsibilities,
obligations or duties imposed upon fiduciaries of
an Insured Plan by ERISA or any similar law;
9
However, certain situations are specifically excluded from that
coverage provision. One of those situations is when the Loss
is “in connection with any Claim based upon, arising from, or
in any way related to any . . . Wage and Hour Violation.” Id.
at 105A (emphasis added and boldface type omitted). Under
the Policy, “Loss means Defense Costs and Damages.” Id. at
82A (boldface type omitted).
C. The District Court proceedings
GOH, contending the Policy covered the two class-
action lawsuits, asked Twin City to fulfill its duty to defend.
Twin City refused, denied coverage, and then initiated a
lawsuit in the District Court against Appellants (GOH and its
Board of Directors). Twin City’s amended complaint, which
is the operative pleading here, sought a declaratory judgment
that “Twin City does not have a duty to provide any coverage,
including any defense, in connection with the [two class
actions in question].” Id. at 72A. Appellants’ answer to that
pleading included counterclaims, which alleged a breach of
contract and asked the District Court to declare “that there are
claims asserted in the King Class Action and/or the Packer
. . . (4) error, misstatement, misleading
statement, act, omission, neglect or breach of
duty . . . in the administration of an Insured Plan;
. . . or (6) matter claimed against an Insured due
to such Insured acting in the capacity of a
fiduciary of an Insured Plan.
Id. at 104A-05A (boldface type omitted).
10
Class Action against [Appellants] that are covered pursuant to
the terms of the . . . Policy.” Id. at 357A.
1. District Court’s August 2023 decision
dismissing Appellants’ counterclaims
Twin City moved to dismiss Appellants’ counterclaims
pursuant to Federal Rule of Civil Procedure 12(b)(6).
Appellants opposed that motion, arguing that neither Count 2
in the King complaint (the breach-of-contract claim for
misappropriating retirement accounts), nor the two ERISA
counts in the Packer complaint fell within the Policy’s
exclusions pertaining to Wage and Hour Violations.5 The
District Court subsequently held oral argument on Twin City’s
motion. Thereafter, in August 2023, the District Court issued
a thorough 31-page opinion and an accompanying order
granting that motion.
As mentioned earlier, Twin City does not have a duty to
defend covered claims if they “involve allegations, in whole or
in part, of a Wage and Hour Violation.” Id. at 86A (boldface
type omitted). Furthermore, a claim is not covered — that is,
Twin City does not have a duty to pay “Loss” (defense costs
and damages) — if that claim is “based upon, aris[es] from, or
[is] in any way related to any . . . Wage and Hour Violation.”
5
GOH acknowledged that Counts 1 and 3 in the King
complaint “involve claims for wage and hour violations.”
App. at 383A. Although the King complaint was not brought
against GOH’s Board of Directors, they, too, acknowledged
that this complaint “does include claims for wages.” Id. at
429A.
11
Id. at 105A (emphasis added and boldface type omitted).
Although the District Court determined that a violation of
ERISA “or any similar law” does not fall within the definition
of “Wage and Hour Violation,” see Twin City Fire Ins. Co. v.
Glenn O. Hawbaker, Inc., No. 4:22-cv-01485, 2023 WL
5652011, at *8 (M.D. Pa. Aug. 31, 2023) [hereinafter Twin
City I], that court concluded that the two Packer claims and
Count 2 of the King complaint (collectively referred to as “the
Disputed Claims”) are not covered claims because they “arise
out of other violations that are unambiguously Wage and Hour
Violations, such as the failure to pay wages,” id. at *12; see id.
at *10 (stating that “Pennsylvania law is well settled that
‘arising out of’ requires [only] ‘but for’ causation”).
2. District Court’s December 2023
decision granting judgment on the
pleadings in favor of Twin City
After the District Court issued its August 2023 decision,
Twin City moved for judgment on the pleadings with respect
to its declaratory-judgment claim. Appellants opposed that
motion and moved for reconsideration of the District Court’s
August 2023 decision. In December 2023, the District Court
granted Twin City’s motion, denied Appellants’
reconsideration motion as moot,6 and directed the District
6
The District Court noted Appellants’ acknowledgement “that,
‘[s]hould th[at] Court reject all of GOH’s arguments opposing
the motion for judgment on the pleadings and enter judgment
in favor of Twin City on Twin City’s affirmative claims . . .
there would be nothing for the Court to reconsider.’” Twin
City Fire Ins. Co. v. Glenn O. Hawbaker, Inc., No. 4:22-cv-
12
Court Clerk to close the case. In doing so, the District Court
rejected Appellants’ argument “that there are claims for which
they seek coverage that are not related to the alleged scheme to
underpay prevailing[-]wage employees.” Twin City Fire Ins.
Co. v. Glenn O. Hawbaker, Inc., No. 4:22-cv-01485, 2023 WL
8791175, at *2 (M.D. Pa. Dec. 19, 2023) [hereinafter Twin
City II]; see id. at *3.
Appellants then timely filed this appeal, seeking review
of the District Court’s August 2023 and December 2023
decisions.
II. Jurisdiction and Standard of Review
The District Court had diversity jurisdiction over this
case, see 28 U.S.C. § 1332(a)(1),7 and we have appellate
jurisdiction pursuant to 28 U.S.C. § 1291.
A motion for judgment on the pleadings is analyzed
under the same standard as a motion to dismiss filed pursuant
01485, 2023 WL 8791175, at *4 n.38 (M.D. Pa. Dec. 19, 2023)
(first alteration and ellipsis in original) (quoting Appellants’
reply in support of their motion for reconsideration).
7
There is complete diversity amongst the parties (Twin City is
a citizen of Connecticut and Indiana, and none of Appellants is
a citizen of either of those states), and the matter in controversy
is greater than $75,000. Although Appellants assert that the
District Court also had jurisdiction pursuant to the Declaratory
Judgment Act, 28 U.S.C. § 2201, they are mistaken. See Allen
v. DeBello, 861 F.3d 433, 444 (3d Cir. 2017) (“The
13
to Rule 12(b)(6). Vitamin Energy, LLC v. Evanston Ins. Co.,
22 F.4th 386, 392 n.6 (3d Cir. 2022). In reviewing either
motion, a district court must accept as true the well-pleaded
allegations in the pleading of the non-moving party and draw
all reasonable inferences in that party’s favor. See Zimmerman
v. Corbett, 873 F.3d 414, 417-18 (3d Cir. 2017) (addressing a
motion for judgment on the pleadings); McTernan v. City of
York, 577 F.3d 521, 526 (3d Cir. 2009) (addressing a motion
to dismiss). “We exercise plenary review over rulings on
motions to dismiss, and over rulings on motions for judgments
on the pleadings.” In re Majestic Star Casino, LLC, 716 F.3d
736, 747 (3d Cir. 2013) (citations omitted).8
Declaratory Judgment Act does not . . . provide an independent
basis for subject-matter jurisdiction; it merely defines a
remedy.”).
8
The District Court’s denial of Appellants’ motion to
reconsider the dismissal of their counterclaims is mentioned
only in passing in Appellants’ opening brief. As a result, we
deem any challenge to that ruling forfeited. See Geness v. Cox,
902 F.3d 344, 355 (3d Cir. 2018) (“[I]t is ‘well settled that a
passing reference to an issue will not suffice to bring that issue
before this court.’” (quoting Kach v. Hose, 589 F.3d 626, 642
(3d Cir. 2009))). But even if we were to determine that they
have indeed preserved a challenge to that ruling, we would
conclude that they have not demonstrated that reconsideration
was warranted. See generally Lazaridis v. Wehmer, 591 F.3d
666, 669 (3d Cir. 2010) (per curiam) (indicating that a motion
for reconsideration has merit only if the movant shows that
14
III. Discussion
A. Standards for determining whether an
insurance claim is covered
The District Court stated, and the parties agree, that
Pennsylvania’s substantive law governs in this diversity
action.9 Under Pennsylvania law, “[a] court’s first step in a
declaratory judgment action concerning insurance coverage is
to determine the scope of the policy’s coverage.” Gen.
Accident Ins. Co. of Am. v. Allen, 692 A.2d 1089, 1095 (Pa.
1997) [hereinafter Allen]. In making that determination, “[t]he
(1) there has been “an intervening change in controlling law,”
(2) there is new evidence that bears on the district court’s
underlying decision, or (3) there is a “need to correct clear error
of law or prevent manifest injustice”). In view of all this, we
need not address Twin City’s argument that Appellants’
motion for reconsideration was untimely.
9
We see no reason for another state’s law to apply. The Policy
does not contain a choice-of-law provision, and there is
nothing in Pennsylvania’s choice-of-law principles that points
to applying another state’s substantive law in this case. See
McDonald v. Whitewater Challengers, Inc., 116 A.3d 99, 106-
07 (Pa. Super. Ct. 2015) (discussing Pennsylvania’s choice-of-
law framework in contract cases); see also SodexoMAGIC,
LLC v. Drexel Univ., 24 F.4th 183, 204 (3d Cir. 2022) (“In
exercising diversity jurisdiction, a federal court employs the
choice-of-law principles of its forum state to determine which
substantive law governs . . . .”).
15
policy must be read as a whole and construed in accordance
with the plain meaning of terms.” Am. Auto. Ins. Co. v.
Murray, 658 F.3d 311, 320 (3d Cir. 2011) (applying
Pennsylvania law). “[I]f possible, a court should interpret the
policy so as to avoid ambiguities and give effect to all of its
provisions.” Id. at 321 (quoting Med. Protective Co. v.
Watkins, 198 F.3d 100, 103 (3d Cir. 1999)). That said, “if the
contract’s [provisions] are reasonably susceptible to more than
one interpretation, then they must be regarded as ambiguous.”
Id. An ambiguous provision “must be construed against the
insurer and in favor of the insured.” Id. (quoting Med.
Protective Co., 198 F.3d at 104).
Once a court determines the scope of coverage, it then
“examine[s] the complaint in the underlying action to ascertain
if it triggers coverage.” Allen, 692 A.2d at 1095. “Whether a
claim is ‘potentially covered is answered by comparing the
four corners of the insurance contract to the four corners of the
complaint.’” Erie Ins. Exch. v. Moore, 228 A.3d 258, 265 (Pa.
2020) (quoting Am. & Foreign Ins. Co. v. Jerry’s Sport Ctr.,
Inc., 2 A.3d 526, 541 (Pa. 2010)). “[I]f any doubt or ambiguity
exists, it must be resolved in favor of coverage.” Id.
B. The District Court correctly concluded that
the Disputed Claims are not covered under
the Policy
Recall that the CTC defines “Wage and Hour Violation”
as “any actual or alleged violation of the duties and
responsibilities that are imposed upon an Insured by any
federal, state or local law or regulation . . . , including but not
limited to the [FLSA] or any similar law (except the Equal Pay
16
Act), which govern wage, hour and payroll practices.” App. at
83A (boldface type omitted). Although such “practices” are
defined to include, inter alia, “the calculation and payment[] of
benefits,” id. at 84A, that part of the definition seems to be in
tension with the FLC, which generally covers violations of
ERISA — a statute that established a regulatory scheme
governing employee benefits, see Estate of Kensinger v. URL
Pharma, Inc., 674 F.3d 131, 135 (3d Cir. 2012).
The District Court recognized this tension, see Twin
City I, 2023 WL 5652011, at *12 (agreeing with Appellants
“that the definition of Wage and Hour Violation conflicts with
the Policy’s Fiduciary Liability coverage”), and it determined
that the definition of “Wage and Hour Violation” does not
include “alleged violations of ERISA or any similar law,” id.
at *8. In doing so, the District Court did not explicitly state
that it was construing an ambiguous provision in favor of the
insured. However, it appears that the District Court was indeed
construing the definition of Wage and Hour Violation in that
manner. Neither Appellants nor Twin City objects to that
construction on appeal, and we see no reason to interpret the
Policy differently.
Because (1) the definition of Wage and Hour Violation
does not include violations of ERISA or a similar law, and
(2) the Disputed Claims alleged violations of ERISA or a
similar law, the CTC’s Wage-and-Hour-Violation exception to
Twin City’s duty to defend does not apply to those claims. But
that does not end the matter. For Twin City’s duty to defend
to be triggered, the claims in question must be covered under
the Policy. And whether those claims are covered is
determined by looking to the FLC, which provides coverage
17
for “Fiduciary Claims,” see App. at 102A-03A (defining that
term), so long as those claims are not “based upon, aris[e] from,
or [are] in any way related to any . . . Wage and Hour
Violation,” id. at 105A (boldface type omitted). The pivotal
question we confront, then, is whether the Disputed Claims are
based upon, arise from, or are in any way related to a Wage and
Hour Violation.
Both the Packer and King complaints detailed at length
GOH’s scheme to underpay its prevailing-wage employees by,
in essence, distributing the fringe-benefit portion of their
prevailing wages to all GOH employees. These allegations of
wage underpayment undergird Counts 1 and 3 of the King
complaint (hereinafter “the King Wage Claims”),10 and
Appellants have conceded that those two counts “involve
claims for wage and hour violations.” Id. at 383A; see
Appellants’ Opening Br. 24; Appellants’ Reply Br. 12.
Nevertheless, Appellants have argued that the King Wage
Claims are entirely separate from the Disputed Claims, for the
latter “go[] to the ‘timing’ of the contribution made to the
employees’ individual retirement accounts.” App. at 462A.
The District Court rejected this argument, stating that “[t]he
10
See App. at 257A (alleging that GOH “breached its contract
with Plaintiff and the Class by not paying them timely for all
wages and fringe benefits earned, owed and promised on jobs
covered by the PWA or the DBA”) (Count 1); id. at 261A
(alleging that GOH violated Pennsylvania’s Wage Payment
and Collection Law by “willfully fail[ing] to pay timely all
wages and fringe benefits earned by and owed to Plaintiff and
the Class”) (Count 3).
18
Underlying Class Actions do not allege separate schemes of
untimely payments in which one is entirely unrelated to the
alleged scheme of underpayments.” Twin City II, 2023 WL
8791175, at *3; see id. (“[T]he scheme of untimely benefits
payments was part and parcel of the scheme to underpay
employees.”).
We agree with the District Court. The language “based
upon, arising from, or in any way related to” is sweeping in
scope; the phrase “arising from” requires only but-for
causation (not proximate causation),11 and the phrase “in any
way related to” seems to permit an even looser connection
between a claim and a Wage and Hour Violation. See USA
Gymnastics v. Liberty Ins. Underwriters, Inc., 27 F.4th 499,
524 (7th Cir. 2022) (per curiam) (stating that the phrase “‘in
any way related to’ cannot be limited to just causal
relationships in [the] policy”); see also HR Acquisition I Corp.
11
“The phrase ‘arising out of,’ when used in a Pennsylvania
insurance exclusion, unambiguously requires ‘but for’
causation.” Gen. Refractories Co. v. First State Ins. Co., 855
F.3d 152, 155 (3d Cir. 2017) (emphasis added); see id. at 159-
60 (collecting cases from the Pennsylvania state courts).
Although the exclusion here uses the phrase “arising from,”
neither the District Court nor any of the parties have taken the
position that the two phrases are distinguishable, and we see no
semantic reason to distinguish them. See Spirtas Co. v. Fed.
Ins. Co., 521 F.3d 833, 836 (8th Cir. 2008) (“[I]n the insurance
context[,] courts appear to be unanimous in interpreting the
phrase ‘arising out of’ synonymously with the term ‘arising
from’ . . . .” (collecting cases)).
19
v. Twin City Fire Ins. Co., 547 F.3d 1309, 1316 (11th Cir.
2008) (indicating that the phrase “in any way related to” sets a
“low standard”). GOH’s alleged scheme involved funneling
retirement funds owed to prevailing-wage employees into “one
big, unallocated account,” App. at 243A, 291A, and then later,
in an untimely fashion, distributing those funds to all GOH
employees. We cannot conclude that the first part of that
scheme (the underpayment of GOH’s prevailing-wage
employees’ wages) was unrelated to the second part (the
untimely disbursement of funds to all GOH employees).
C. Appellants’ various arguments attacking the
District Court’s judgment are unpersuasive
Appellants, in support of their argument that the
Disputed Claims are entirely separate from a Wage and Hour
Violation, point to “significant differences in legal theories,”
Appellants’ Opening Br. 23; see, e.g., id. at 24 (attempting to
distinguish the Disputed Claims by describing them as “classic
fiduciary liability claims”), and stress that the Disputed Claims
are not seeking (and cannot seek) to recover lost wages. But
these points do not control the analysis; rather, what matters is
whether the factual allegations undergirding the Disputed
Claims are in some way related to an alleged Wage and Hour
Violation. See Mut. Benefit Ins. Co. v. Haver, 725 A.2d 743,
745 (Pa. 1999) (“[T]he particular cause of action that a
complainant pleads is not determinative of whether coverage
has been triggered. Instead[,] it is necessary to look at the
factual allegations contained in the complaint.”). Appellants
also emphasize that some of the class members were overpaid
(to the extent that those employees’ claims hinged on the
timing, rather than the amount, of the retirement
20
disbursements). But that distinction does not control either.
As the District Court explained in its opinion granting Twin
City’s motion for judgment on the pleadings, “the scheme of
untimely benefits payments was part and parcel of the scheme
to underpay employees. That the scheme may have impacted
certain individuals differently, or perhaps even benefited
certain individuals, is not relevant to the inquiry.” Twin City
II, 2023 WL 8791175, at *3. We have found no authority that
contradicts that reasoning.
Although Appellants cite two cases in support of their
position that the Disputed Claims should be treated separately
from any Wage and Hour Violation, neither is on point. In one
case, Perdue Farms, Inc. v. Travelers Cas. & Sur. Co. of Am.,
448 F.3d 252 (4th Cir. 2006), the district court determined that
the insurer had a duty to indemnify the insured for both covered
claims (ERISA claims) and non-covered claims (wage and
hour claims) because the latter were “reasonably related” to the
former. Id. at 259. The Fourth Circuit reversed, but it did so
having concluded that Maryland law’s “reasonably related”
rule did not apply in the indemnification context. Id. at 260-
61. Accordingly, while Perdue Farms might show, as a general
matter, “that it is possible to separate non-covered wage and
hour claims from covered fiduciary liability claims,”
Appellants’ Opening Br. 37, that decision does not bear on the
pertinent question here: whether, under the Policy’s exclusion
provision, the Disputed Claims are “in any way related to” a
Wage and Hour Violation.
The other case cited by Appellants is Dobson v. Twin
City Fire Ins. Co., 590 F. App’x 687 (9th Cir. 2015) (per
curiam). There, in a short, non-precedential opinion, the Ninth
21
Circuit concluded that a breach-of-fiduciary-duty claim was
covered under the insurance policy in question, while certain
other claims were not. Id. at 688. Although Appellants argue
that Dobson supports “the general idea that it is possible to
separate covered fiduciary claims from other, non-covered
claims in underlying actions when making a coverage
determination,” Appellants’ Opening Br. 38, it contains no
analysis that might bear on the critical question of whether the
Disputed Claims are “in any way related to” a Wage and Hour
Violation.
Appellants also attack the District Court’s application
of the Policy’s “in any way related to” language, arguing that
“the District Court endorsed a relatedness inquiry with . . . the
potential for virtually any claim in any suit to be deemed
related to another.” Id. at 34; see id. at 48 (“[T]he District
Court interpreted the Policy in such a way that the Wage and
Hour Violation exclusion effectively swallows the affirmative
grant of coverage for ERISA claims as set forth in the [FLC]
. . . .”). But nothing in the District Court’s analysis suggests
that it endorsed such an all-encompassing relatedness analysis.
Rather, the District Court simply concluded that the
underpayment-of-wages part of GOH’s scheme was related to
the untimely-disbursement-of-retirement-contributions part of
the scheme. See, e.g., Twin City II, 2023 WL 8791175, at *3.
That conclusion hardly suggests that the Wage-and-Hour-
Violation exclusion would foreclose coverage on every ERISA
or similar claim. Furthermore, contrary to Appellants’
assertion, the District Court’s interpretation of the Policy does
22
not render the FLC’s coverage of ERISA claims and similar
claims illusory.12
Appellants also argue that the dismissal of its
counterclaims and the grant of judgment on the pleadings in
favor of Twin City were improper because “there are factual
issues that need to be resolved before a final coverage
determination can be made.” Appellants’ Opening Br. 38.
More specifically, Appellants assert that there are unresolved
12
Although the scope of the exclusion in this case is
undoubtedly broad, see supra pp. 19-20, one can readily think
of examples of fiduciary claims that would not fall within it.
Consider a scenario where a retirement fund’s plan
administrator invested the correct amounts on the employees’
behalf but allegedly did so in a way that enabled the plan
administrator to profit from those investments. Or a scenario
where the plan administrator, in investing the correct amounts,
allegedly failed to act with reasonable care to diversify the
employees’ investments. These scenarios, which involve
ERISA claims, see Edmonson v. Lincoln Nat’l Life Ins. Co.,
725 F.3d 406, 415 (3d Cir. 2013) (“ERISA’s duty of loyalty
bars a fiduciary from profiting even if no loss to the plan
occurs.”); Berkelhammer v. ADP TotalSource Grp., Inc., 74
F.4th 115, 117 n.1 (3d Cir. 2023) (noting that, under ERISA, a
fiduciary must “act[] with reasonable care to diversify
investments”), would not be “based on, aris[e] from, or [be]
any way related to” a Wage and Hour Violation (recall that the
definition of “Wage and Hour Violation,” construed in the
insured’s favor, does not include a violation of ERISA or a
similar law, see supra p. 17).
23
factual issues regarding (1) “the ‘relative legal exposure’ to
GOH from covered and non-covered claims,” id. at 39,
(2) what relief is being sought in Packer, and (3) differences
amongst the various class members (particularly, the fact that
some employees were overpaid). But none of these factual
issues need be resolved to decide the case before us.13 First,
since none of the claims in the King and Packer actions are
covered under the Policy (because each claim either involves a
Wage and Hour Violation or is in some way related to a Wage
and Hour Violation), there is no need to apportion liability
between covered and non-covered claims. See Twin City I,
2023 WL 5652011, at *11 (“[T]he relative exposure between
the fiduciary liability claims and the wage and hour claims is
irrelevant; none of the claims are covered so 100% of the legal
exposure is for uncovered claims.”). Second, the relief being
sought in Packer does not control the coverage analysis; as
mentioned earlier, what matters is whether the factual
allegations undergirding the Packer claims are in some way
related to a Wage and Hour Violation. See supra p. 20. And
third, as the District Court explained, “[t]hat [GOH’s] scheme
may have impacted certain individuals differently, or perhaps
13
“[T]o the extent there are undetermined facts that might
impact on coverage, the insurer has a duty to defend until the
‘claim is narrowed to one patently outside the policy
coverage,’ for example through discovery.” Erie Ins. Exch.,
228 A.3d at 265 (quoting Mace v. Atl. Refin. Mktg. Corp., 785
A.2d 491, 500 (Pa. 2001) (Saylor, J., dissenting)). But that
duty to defend was not triggered in this case, for the factual
issues cited by Appellants do not affect the coverage
determination.
24
even benefited certain individuals, is not relevant to the
[coverage] inquiry.” Twin City II, 2023 WL 8791175, at *3.
None of the other arguments presented in Appellants’
briefing is persuasive. For example, although Appellants
correctly note that an insurer has a duty to defend a claim that
is even potentially covered by the insurance policy in question,
see Erie Ins. Exch., 228 A.3d at 265 (explaining that an
insurer’s duty to defend “is triggered ‘if the factual allegations
of the complaint on its face encompass an injury that is actually
or potentially within the scope of the policy’” (emphasis
omitted) (quoting Babcock & Wilcox Co. v. Am. Nuclear
Insurers, 131 A.3d 445, 456 (Pa. 2015))), none of the Disputed
Claims is potentially covered. Indeed, as indicated above,
these claims are clearly excluded from coverage because they
are at least in some way related to a Wage and Hour Violation.
Nor is there merit to Appellants’ argument that “the District
Court essentially ignored the law on construing ambiguities
against the drafter by giving Twin City the benefit of its
ambiguous language.” Appellants’ Opening Br. 46. As
discussed earlier, the District Court construed the definition of
“Wage and Hour Violation” in Appellants’ favor (by
interpreting that provision so that it did not include alleged
violations of ERISA or any similar law), and we see no other
ambiguity in the relevant provisions of the Policy.
IV. Conclusion
For the foregoing reasons, we will affirm the judgment
of the District Court.
25