62 F.4th 517
9th Cir.2023Background
- RingCentral employees participated in an ERISA-governed welfare plan that joined the Tech Benefits Program (a MEWA) administered by Sequoia from 2013–2019.
- Sequoia selected insurers, negotiated costs, paid plan benefits from the MEWA trust, and received insurer-paid commissions (e.g., 6% on primary medical), paid separately by insurers.
- RingCentral—not Sequoia—retained broad discretion to set employee contribution amounts (subject to minimum employer-share requirements) and at times required no employee contribution.
- Plaintiffs (RingCentral employees) sued Sequoia for alleged ERISA fiduciary breaches: accepting commissions (kickbacks) and negotiating excessive administrative fees that purportedly raised premiums.
- Plaintiffs did not allege loss of promised benefits; they alleged higher out-of-pocket contributions and an equitable ownership interest in MEWA trust assets.
- The district court dismissed for lack of Article III standing; the Ninth Circuit affirmed, holding plaintiffs failed to plead injury, causation, or redressability and that Thole foreclosed their trust-based standing theory.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III: concrete out-of-pocket injury | Sequoia’s commissions/fees increased plan costs, causing plaintiffs to pay higher contributions | RingCentral—not Sequoia—sets employee contributions; no pleaded link tying contributions to Sequoia’s commissions | Plaintiffs failed to plead a concrete, particularized financial injury or factual causal chain to Sequoia’s conduct |
| Causation | Eliminating commissions would lower premiums and thus employee contributions | Any change in contributions is discretionary with RingCentral and not shown to depend on Sequoia’s fees | Causation not established; harms not fairly traceable to Sequoia |
| Redressability (direct disgorgement or plan recovery) | Court could impose constructive trust or require Sequoia reimburse the plan, which would result in participant refunds | Even if plan recovered funds, RingCentral could retain or reallocate them; plaintiffs plead no basis to expect remittal to participants | Redress speculative; Glanton controls—plan recovery would not likely inure to participants, so redressability fails |
| Trust-based/equitable-interest standing | Plaintiffs are beneficiaries of MEWA funds and thus have trust-based standing to sue for self-dealing | Thole and related precedents disallow trust-based standing where participants lack a beneficial property interest in plan assets | Trust-based standing rejected under Thole: plaintiffs lack the equitable/property interest needed for Article III standing |
Key Cases Cited
- Lujan v. Defs. of Wildlife, 504 U.S. 555 (standing requires injury in fact, causation, and redressability)
- Spokeo, Inc. v. Robins, 578 U.S. 330 (plaintiff must plead facts demonstrating each element of Article III standing)
- TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (redressability requires likely—not speculative—relief)
- Thole v. U.S. Bank N.A., 140 S. Ct. 1615 (ERISA participants lack trust-based standing absent a property interest in plan assets)
- Glanton ex rel. ALCOA Prescription Drug Plan v. AdvancePCS Inc., 465 F.3d 1123 (a plan’s recovery does not necessarily redress participants because employers control allocation)
- Ashcroft v. Iqbal, 556 U.S. 662 (complaint must plead plausible—not merely consistent—facts)
- LaRue v. DeWolff, Boberg & Assocs., Inc., 552 U.S. 248 (ERISA recognizes certain individual relief but does not create a general trust-based participant property interest)