Warmenhoven v. NetApp, Inc., No. 19-16960 (9th Cir. 2021)
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Plaintiff and six other retired executives sued NetApp and the Plan, alleging that terminating the Plan violated the Employee Retirement Income Security Act (ERISA) because they had been promised lifetime benefits. The complaint alleged two distinct ERISA claims: (1) a direct claim for benefits under 29 U.S.C. 1132(a)(1)(B); and (2) an alternate claim for equitable relief under section 1132(a)(3) to redress NetApp's alleged misrepresentations that the Plan would provide lifetime benefits. After the district court granted summary judgment in favor of NetApp, only plaintiff appealed.
The Ninth Circuit affirmed the district court's judgment as to plaintiff's section 1132(a)(1)(B) claim, rejecting plaintiff's contention that NetApp's promises in the PowerPoints created an ERISA plan with lifetime benefits. Furthermore, by deliberately choosing to stand on his flawed argument that the PowerPoints created a vested ERISA plan without there being any written instrument, and by declining to argue in the alternative that he could prevail even if section 1102(b) applied, plaintiff has affirmatively waived any argument under the proper legal standard that the PowerPoints were written instruments. The panel explained that that waiver conclusively defeats his section 1132(a)(1)(B) claim because, under Cinelli v. Sec. Pac. Corp., 61 F.3d 1437, 1441 (9th Cir. 1995), he bears the burden to prove that a specific written instrument vested lifetime benefits.
The panel vacated the judgment as to plaintiff's section 1132(a)(3) claim, disagreeing with the district court's conclusion that no reasonable factfinder could find that NetApp committed a remediable wrong. Rather, the panel concluded that plaintiff's fiduciary duty claim survives summary judgment on the remediable wrong issue, because there is a genuine dispute of material fact as to whether NetApp incorrectly represented to Plan participants that the Plan provided lifetime health insurance benefits. Accordingly, the panel remanded the issue for further proceedings.
Court Description: ERISA. The panel affirmed in part and vacated in part the district court’s summary judgment in favor of defendants on retired executives’ claims that termination of the NetApp Executive Medical Retirement Plan violated ERISA because they had been promised lifetime benefits. Only one plaintiff appealed. The panel affirmed the district court’s judgment as to plaintiff’s direct claim for benefits under 29 U.S.C. § 1132(a)(1)(B). The panel held that the default rule under ERISA is that employers may freely terminate welfare benefit plans. The panel concluded that PowerPoint presentations summarizing the Plan for participating executives did not override the default rule, where certificates of insurance coverage included provisions granting NetApp the authority to terminate benefits under the Plan at any time. The panel held that the PowerPoint presentations were not Plan documents because they did not qualify as written instruments under 29 U.S.C. § 1102(b), and they therefore could not vest lifetime benefits. The panel vacated the judgment as to plaintiff’s alternative claim for equitable relief under 29 U.S.C. § 1132(a)(3) and remanded for further proceedings on that claim. Plaintiff alleged that, if the Plan did not grant him vested lifetime benefits, then NetApp misrepresented the nature of the Plan in the PowerPoints, in violation of the fiduciary duties it owed as a Plan administrator. The panel WARMENHOVEN V. NETAPP 3 held that the district court erred in in granting summary judgment on the ground that NetApp did not commit a remediable wrong under 29 U.S.C. § 1104(a)(1) by failing to discharge its duties with respect to the Plan solely in the interest of the participants and beneficiaries. Disagreeing with the Seventh Circuit, the panel held that there is no intentional deceit requirement under § 1104(a)(1). The panel further held that the district court erred in concluding that the fiduciary duty claim failed because plaintiff could have examined the certificates of insurance to dispel any misunderstanding arising from the PowerPoints. The panel concluded that plaintiff did not forfeit any argument on the remedy prong of his claim for equitable relief, an issue not reached by the district court.
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