Cgi Technologies and Solutions v. Rhonda Rose
683 F.3d 1113
9th Cir.2012Background
- Rose injured in 2003 car crash; CGI administers employee Plan with subrogation/reimbursement clause
- Plan requires full reimbursement to CGI from third-party recoveries, disclaims common fund and no attorney-fee sharing, even if Rose not made whole
- Rose and NLE obtained $376,906.84 from third-party and underinsured motorist claim, about 21.44% of total damages
- CGI paid about $32,000 in medical expenses; CGI seeks full reimbursement plus allocation of NLE’s fees
- District court (1) dismissed NLE from §502(a)(3) action; (2) awarded CGI full reimbursement; (3) ruled CGI owed proportional share of NLE’s fees; this is cross-appeal by CGI and Rose
- Court vacates and remands to consider traditional equitable defenses and determine proper relief under §502(a)(3)
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NLE may be a defendant under §502(a)(3) | CGI/tree Harris Trust allows action against non-signatory third parties | NLE not signatory to Plan, Gentner controls | No unlawful transaction by NLE; cannot be defendant under §502(a)(3) |
| Whether full Plan-reimbursement term is ‘appropriate equitable relief’ despite equitable defenses | Plan terms mandate full reimbursement; defense not needed | Traditional defenses (make-whole, common fund) should limit relief | Court may consider equitable defenses; plan terms not controlling to foreclose relief under §502(a)(3) |
| Whether the district court erred by denying consideration of make-whole/common fund defenses while honoring plan terms | Equitable principles should limit recovery | Contractual terms should be applied as written | District court may apply traditional equitable defenses; not bound by contract alone on §502(a)(3) relief |
| What is the proper scope of ‘appropriate equitable relief’ on remand | Full reimbursement would unjustly enrich the Plan given finite recovery | Full reimbursement consistent with Plan would honor the contract | Remand to fashion relief consistent with equity, potentially reducing Plan recovery and/or assigning fees appropriately |
| Whether NLE’s fees should be allocated to CGI’s recovery | Fees are tied to recovery of third-party funds | Fees should be allocated per contract terms | To be determined on remand with equitable considerations |
Key Cases Cited
- Harris Trust & Savings Bank v. Salomon Smith Barney, 530 U.S. 238 (U.S. (2000)) (limits of §502(a)(3) and recoveries against nonfiduciaries; restitution theory)
- Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356 (U.S. (2006)) (equitable lien by agreement; necessity of ‘appropriate equitable relief’)
- Knudson v. Love, 534 U.S. 204 (U.S. (2002)) (limits of equitable relief; difference between legal and equitable remedies)
- Amara v. CIGNA Corp., 131 S. Ct. 1866 (U.S. (2011)) (district courts may reform plan terms; equitable powers broad)
- McCutchen (U.S. Airways v. McCutchen), 663 F.3d 671 (3d Cir. (2011)) (Third Circuit on appropriate equitable relief and plan terms)
- Barnes v. Indep. Auto. Dealers Ass’n of Cal. Health & Welfare Benefit Plan, 64 F.3d 1389 (9th Cir. (1995)) (make-whole doctrine and subrogation nuances in ERISA)
- Bombardier Aerospace Employee Welfare Benefits Plan v. Ferrer, Poirot and Wansbrough, 354 F.3d 348 (5th Cir. (2003)) (attorney-held disputed funds; common fund considerations)