970 F.3d 1224
9th Cir.2020Background
- Juan Castillo was an ERISA long-term disability (LTD) beneficiary under a MetLife-administered plan; after a pension was rolled into an IRA, MetLife reduced and withheld LTD payments and sought recoupment.
- Castillo administratively appealed; MetLife reversed in July 2018, resumed payments, and paid some withheld benefits.
- Castillo sued under ERISA § 1132(a)(3) for breach of fiduciary duty, seeking a surcharge against MetLife measured by attorney’s fees he incurred during the administrative appeal.
- MetLife moved to dismiss, arguing Castillo failed to state a fiduciary breach and that § 1132(a)(3) does not authorize awards of administrative attorney’s fees.
- The district court dismissed on the fee-ground; Castillo appealed. The Ninth Circuit reviewed de novo and affirmed, holding § 1132(a)(3) does not authorize attorney’s fees for the administrative phase.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ERISA § 1132(a)(3) authorizes awarding attorney’s fees incurred during the administrative phase of an ERISA claim | Castillo: § 1132(a)(3) allows equitable surcharge and make-whole relief, which may include administrative attorney’s fees | MetLife: Fees for administrative proceedings are not authorized; § 1132(g) covers fees in civil actions and Cann forbids administrative-fee awards because they would undermine plan stability | The Ninth Circuit held § 1132(a)(3) does not authorize attorney’s fees incurred during the administrative phase and affirmed dismissal |
Key Cases Cited
- Cann v. Carpenters’ Pension Tr. Fund for N. Cal., 989 F.2d 313 (9th Cir. 1993) (administrative-phase attorney’s fees are not recoverable under ERISA fee-shifting; awards could undermine plan stability)
- Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010) (fee award under § 1132(g) requires some degree of success on the merits)
- Varity Corp. v. Howe, 516 U.S. 489 (1996) (§ 1132(a)(3) provides a safety‑net for equitable relief for individual beneficiaries)
- CIGNA Corp. v. Amara, 563 U.S. 421 (2011) (surcharge is a traditional equitable remedy to make beneficiaries whole)
- McElwaine v. US West, Inc., 176 F.3d 1167 (9th Cir. 1999) (reiterating limits on recovering administrative-phase fees)
- Ruckelshaus v. Sierra Club, 463 U.S. 680 (1983) (standards for fee awards informing § 1132(g) jurisprudence)
- Peter v. Nantkwest, Inc., 140 S. Ct. 365 (2019) (Congress must give a specific and explicit indication to overcome the American Rule on fee‑shifting)