646 F. App'x 567
9th Cir.2016Background
- Charles Guenther was rehired by Lockheed in September 2006 after leaving another employer; he alleges Lockheed promised in writing that his prior service would be “bridged” so he would continue to accrue credited service under Lockheed’s defined-benefit Plan.
- Lockheed adopted a 2005 Plan amendment stating that employees rehired on or after January 1, 2006 shall not become active participants or earn credited service for periods commencing with such reemployment.
- Guenther sued under ERISA, seeking benefits under 29 U.S.C. § 1132(a)(1)(B) and equitable relief for breach of fiduciary duty under 29 U.S.C. § 1132(a)(3) (equitable estoppel, reformation, surcharge).
- The district court granted summary judgment to Lockheed and the Plan on the § 1132(a)(1)(B) claim and denied leave to amend/deny equitable estoppel, concluding no misrepresentation and that the Plan language was unambiguous.
- The Ninth Circuit affirmed summary judgment on the benefits claim, applying abuse-of-discretion review (with heightened skepticism for conflict of interest) and finding Lockheed’s interpretation reasonable.
- The Ninth Circuit vacated and remanded as to the § 1132(a)(3) fiduciary claim: it held Guenther adequately pleaded a breach (misrepresentation) and that surcharge might be available even if the written plan is unambiguous, so the district court must consider breach and surcharge and allow discovery beyond the administrative record.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Guenther is entitled to benefits under § 1132(a)(1)(B) after rehire | Guenther contends Lockheed promised bridging that would allow accrual of credited service after rehire | Lockheed argues the 2005 amendment bars accrual for rehires on/after Jan 1, 2006, so no benefits due | Affirmed: Court applied abuse-of-discretion (with special skepticism) and found Lockheed’s interpretation reasonable |
| Whether equitable estoppel under § 1132(a)(3) bars enforcement of the 2005 amendment | Guenther says Lockheed misrepresented bridging and he relied to his detriment | Lockheed says plan terms are unambiguous and estoppel cannot override written plan | Affirmed (as to estoppel): estoppel unavailable because plan language is clear and estoppel would conflict with written plan |
| Whether Guenther adequately pleaded a breach of fiduciary duty under § 1132(a)(3) | Guenther alleges written promissory bridging, prior consistent practice, and reliance — constituting a fiduciary misrepresentation | Lockheed implicitly disputed misrepresentation and relied on plan amendment and different plan treatment | Reversed (pleading): Ninth Circuit found the FAC sufficiently alleged misrepresentation and factual dispute precluding dismissal |
| Appropriate equitable remedy (reformation or surcharge) | Guenther seeks equitable relief to remedy the fiduciary breach | Lockheed argues relief cannot conflict with the written plan and reformation would be improper | Mixed: Reformation not allowed (would conflict with written plan); surcharge may be available — remanded for district court to consider surcharge and allow discovery |
Key Cases Cited
- Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666 (9th Cir. 2011) (abuse-of-discretion standard for plan administrator decisions)
- Conkright v. Frommert, 559 U.S. 506 (U.S. 2010) (deference to plan administrators under abuse-of-discretion review)
- Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955 (9th Cir. 2006) (treatment of administrator conflict of interest in abuse-of-discretion review)
- CIGNA Corp. v. Amara, 563 U.S. 421 (U.S. 2011) (equitable remedies under § 1132(a)(3): estoppel, reformation, surcharge framework)
- Gabriel v. Alaska Elec. Pension Fund, 773 F.3d 945 (9th Cir. 2014) (availability of reformation and surcharge; estoppel requires plan ambiguity)
- Greany v. W. Farm Bureau Life Ins. Co., 973 F.2d 812 (9th Cir. 1992) (equitable estoppel not available where it would conflict with an unambiguous written plan)