Gabriel v. Alaska Electrical Pension Fund, et al., No. 12-35458 (9th Cir. 2014)
Annotate this CasePlaintiff appealed the district court's dismissal of his claims against the Fund and others under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. For over three years, the Fund paid plaintiff monthly pension benefits he had not earned. This case arose from the events that occurred after the Fund discovered the error. The court concluded that it was bound by its own precedent, which correctly identifies surcharge as including only unjust enrichment and losses to the trust estate; the district court properly concluded that plaintiff was not entitled to relief based on estoppel as a matter of law; equitable remedies were not available to plaintiff where the order plaintiff sought necessarily would require violating the terms of the Plan by deeming an ineligible person to be eligible for pension benefits; and the surcharge remedy plaintiff sought would not restore the trust estate, but rather would wrongfully deplete it by paying him benefits he is not eligible to receive under the Plan. Accordingly, the court affirmed the district court's grant of summary judgment in favor of defendants on plaintiff's breach of fiduciary and co-fiduciary duty claims under section 1132(a)(3). The court rejected plaintiff's argument that the Fund failed to comply with ERISA procedural requirements, or that it waived its determination that plaintiff never vested. Therefore, the court affirmed the district court's deference to the Fund's denial of benefits.
Court Description: Employee Retirement Income Security Act. The panel affirmed the district court’s summary judgment in favor of Alaska Electrical Pension Fund and other defendants on claims (1) that the Fund abused its discretion in denying the plaintiff benefits under the Alaska Electrical Pension Plan and (2) that he was entitled to equitable relief under ERISA. For over three years, the Fund paid the plaintiff monthly pension benefits he had not earned. When it rediscovered an earlier determination that the plaintiff had never met the Plan’s vesting requirements, it terminated his benefits. The panel affirmed the district court’s summary judgment on the plaintiff’s claim that the defendants violated their fiduciary duties under ERISA or the terms of the Plan and that he therefore was entitled to “appropriate equitable relief” under 29 U.S.C. § 1132(a)(3). The panel held that the plaintiff was not entitled to an order equitably estopping the Fund from relying on its corrected records that showed his actual years of service because he failed to show that a letter informing him that he would receive a pension was an interpretation of ambiguous language in the Plan, rather than a mere mistake in assessing his entitlement to benefits, and he also failed to show that he was ignorant of the true facts. The panel held that the plaintiff was not entitled to the equitable remedy of reformation based on mistake under trust or contract law principles because he failed to demonstrate that a mistake of fact or law affected the terms of the Plan. He also was not entitled to reformation based on fraud. The panel held that the plaintiff was not entitled to the equitable remedy of surcharge, to receive an amount equal to the benefits he would have received if he had been a participant with the hours erroneously reflected in the Fund’s records when he applied for benefits, because he did not show that the defendants were unjustly enriched by their alleged breaches of fiduciary duty. In addition, the surcharge remedy the plaintiff sought would not restore the trust estate, but rather would wrongfully deplete it by paying benefits he was not eligible to receive under the Plan. The panel also affirmed the district court’s summary judgment on the plaintiff’s claim that the defendants erred in denying him benefits on the ground that he was non-vested. The panel rejected the plaintiff’s argument that the Fund waived this rationale for denying him benefits by not timely raising it. Judge Berzon concurred and dissented. She dissented from Part II(B)(3) of the majority opinion because the plaintiff might be entitled to an equitable remedy similar to surcharge. She wrote that the majority disregarded Supreme Court guidance in CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011), and created a conflict with recent decisions of the Fourth, Fifth, and Seventh Circuits regarding the scope of the “surcharge” remedy. Judge Berzon concurred in the remainder of the majority opinion.
The court issued a subsequent related opinion or order on December 16, 2014.
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