Bafford v. Northrop Grumman Corp., No. 20-55222 (9th Cir. 2021)
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Plaintiffs filed suit alleging that Hewitt, the Committee, and Northrop had breached their fiduciary duties and that the Committee failed to provide required Employee Retirement Income Security Act (ERISA) benefit information. In the alternative, plaintiffs asserted state-law professional negligence and negligent misrepresentation claims against Hewitt. Plaintiffs' claims stemmed from statements mailed by Hewitt that grossly overestimated the benefits to which each plaintiff would be entitled. The district court granted defendants' motion to dismiss.
The Ninth Circuit affirmed the district court's dismissal of plaintiffs' fiduciary duty claims against Northrop and the Committee, concluding that Northrop and the Committee did not breach a fiduciary duty by failing to ensure that Hewitt correctly calculated plaintiffs' benefits. The panel agreed with the First Circuit and held that calculation of pension benefits is a ministerial function that does not have a fiduciary duty attached to it. Likewise, plaintiffs' claim that Hewitt breached its fiduciary duties failed. The panel also concluded that plaintiffs did not adequately plead that they submitted written requests for pension benefit statements as required to state a claim for violation of 29 U.S.C. 1025(a)(1)(B)(ii). However, because plaintiffs could plead facts adequate to allege they made written requests, the panel directed the district court to permit plaintiffs to file an amended complaint. Finally, the panel concluded that state-law professional negligence and negligent misrepresentation claims are not preempted by ERISA because they do not have a "reference to or connection with" an ERISA plan. Accordingly, the panel vacated the dismissal of the state-law claims and remanded for further proceedings.
Court Description: ERISA. The panel affirmed in part and vacated in part the district court’s dismissal of an action brought by members of an employee pension plan, alleging breach of fiduciary duty under the Employee Retirement Income Security Act and state-law professional negligence and negligent misrepresentation claims. Northrop Grumman, plan sponsor, delegated administration of the plan to an Administrative Committee, which in turn contracted with Hewitt, a company that provided outside administrative services for the plan. Plaintiffs requested statements showing what their monthly pension benefit would be, using participant-entered assumptions. The statements mailed to plaintiffs by Hewitt grossly overestimated the benefits to which they would be entitled. Plaintiffs alleged that Hewitt, the Committee, and Northrop had breached their fiduciary duties and that the Committee had failed to provide ERISA-required benefit BAFFORD V. NORTHROP GRUMMAN 3 information. Agreeing with the First Circuit, the panel held that calculation of benefits pursuant to a formula is not a fiduciary function, and so plaintiffs failed to state a claim for breach of a fiduciary duty by any of the three defendants. Furthermore, plaintiffs did not adequately plead that they submitted written requests for pension benefit statements as required to state a claim for violation of 29 U.S.C. § 1025(a)(1)(B)(ii). The panel therefore affirmed the dismissal of plaintiffs’ ERISA claims. However, because plaintiffs could plead facts adequate to allege that they made written requests via an electronic writing, the panel directed the district court to permit plaintiffs to file an amended complaint. Vacating in part, the panel held that plaintiffs’ state-law professional negligence and negligent misrepresentation claims were not preempted by ERISA because they did not have a “reference to or connection with” an ERISA plan. The panel remanded for further proceedings.
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