Randal E. McCULLOUGH, Appellant, v. AEGON USA, INC.; AEGON USA Inc. Board of Directors; Patrick S. Baird; James A. Beardsworth; Kirk W. Buese; Tom A. Schlossberg; Arthur C. Schneider; Mary Taiber; James R. Trefz; Does 1-20; Diversified Investment Advisors, Inc.; Transamerica Financial Life Insurance Company; Transamerica Investment Management, LLC; Transamerica Life Insurance Company; Transamerica Occidental Life Insurance Company; Marilyn Carp; Dan Kolsrud; James Halfpap; Jill Anderson; Jeff Rosen; Martha McConell; Steve Albritton; Mark Mullin; James McArdle; Diаne Meiners; Daniel Fox; Investment Committee; Trustee of the Plan, Appellees.
No. 08-1952
United States Court of Appeals, Eighth Circuit
Nov. 3, 2009
585 F.3d 1082
Submitted: Dec. 12, 2008.
American Benefits Council, Amicus on Behalf of Appellee.
Gregory Y. Porter, argued, Washington, DC, Kay M. Johansen, Cedar Rapids, IA, on the brief, for appellant.
Gary S. Tell, argued, Robert N. Eccles, Adam Hellman, Theresa Gee, on the brief, Washington, DC, for appellee.
Before BYE and COLLOTON, Circuit Judges, and GOLDBERG,1 Judge.
Randal McCullough, a participant in a defined-benefit pension plan sponsored and administered by AEGON USA, Inc. (“AEGON“), brought suit under section 502(a)(2) of the Employee Retirement Income Security Act of 1974 (“ERISA“),
I.
As a result of his former employment with one of AEGON‘s subsidiaries, McCullough is a participant in the AEGON USA, Inc. Pension Plan (“the Plan“), which is sponsored and administered by AEGON and covered by ERISA. The Plan is a defined-benefit plan, which provides participants fixed periodic payments upon retirement from a general pool of plan assets. See Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 439-41 (1999).
In October 2005, McCullough filed this action against AEGON and various other defendants in the United States District Court for the Central District of California. In his first amended complaint, McCullough alleged that the defendants breached their fiduciary duties under ERISA. See
McCullough sought a refund to the Plan of “all fees paid to AEGON Subsidiaries and Affiliates by the Plan[], including disgorgement of profits,” as well as “equitable restitution and other appropriate equitable monetary relief.” He also sought an injunction against defendants prohibiting “further violations of their ERISA fiduciary responsibilities, obligations, and duties,” and any other appropriate equitable relief, “including the permanent removal of the Defendants from any positions of trust with respect to the Plan[ ] and the appointment of independent fiduciaries to administer the Plan[ ].”
AEGON successfully requested transfer of the case to the Northern District of Iowa, and then moved for partial summary judgment. The parties agreed that at the time McCullough filed his complaint, and at all times from 2001 to 2006, the Plan was “substantially overfunded,” according to actuarial valuation reports of the Plan‘s assets and liabilities. The parties also agreed that Plan never failed to pay benefits owed to participants оr beneficiaries, and that AEGON had no intention to terminate the Plan. In light of these facts, AEGON argued that under Harley, 284 F.3d 901, McCullough lacked standing to
II.
ERISA provides that the Secretary of Labor and participants, beneficiaries, and fiduciaries of an employee benefit plan may bring an action “for appropriate relief under section 1109 of this title.”
In Harley, this court concluded that
On appeal, this court affirmed the district court‘s grant of summary judgment for the defendants. With respect to the failure-to-investigate and failure-to-monitor claims, the court held that
McCullough, like the Harley plaintiffs, brought this action under
McCullough also asserts a claim that the defendants were liable to the Plan under
McCullough makes two principal arguments why Harley does not preclude his action. First, although acknowledging that Harley was decided on statutory grounds, he argues that the Supreme Court‘s intervening decision regarding Article III standing in Sprint Communications Co. v. APCC Services, Inc., 554 U.S. 269, 128 S.Ct. 2531, 171 L.Ed.2d 424 (2008), undermines Harley. A limited exception to the prior panel rule permits us to revisit an opinion of a prior panel if an intervening Supreme Court decision is inсonsistent with the prior opinion. Young v. Hayes, 218 F.3d 850, 853 (8th Cir. 2000). McCullough argues that Sprint is such an intervening decision.
In Sprint, the Supreme Court held that “an assignee of a legal claim for money owed has standing to pursue that claim in federal court, even when the assignee has promised to remit the proceeds of the litigation to the assignor.” 128 S.Ct. at 2533. The Court found the “history and precedent” of allowing assignees to bring suit, particularly the “strong tradition... of suits by assignees for collection,” to be “well nigh conclusive” in deciding the case, id. at 2541-42 (internal quotation omitted), but alsо held that assignees “satisfy the Article III standing requirements articulated in more modern decisions of [the] Court.” Id. at 2542. In considering whether the assignees suffered an injury in fact, the Court acknowledged that the assignees “did not originally suffer any injury,” but explained that the assignors “assigned their claims to the [assignees] lock, stock, and barrel.” Id.
Sprint also relied on the Court‘s prior decision in Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000), which held that a relator possesses standing to bring a qui tam action under the False Claims Act “because the Act ‘effect[s] a partial assignment of the Gоvernment‘s damages claim’ and that assignment of the ‘United States’ injury in fact suffices to confer standing on [the relator].‘” Sprint, 128 S.Ct. at 2542 (quoting Vermont Agency, 529 U.S. at 773, 774,
McCullough contends that after Sprint, there is no constitutional concern with interpreting
We are not convinced that Sprint sweeps as broadly as McCullough suggests. Sprint and Vermont Agency both involved plaintiffs who were assigned claims by parties who were originally injured. See Sprint, 128 S.Ct. at 2542; Vermont Agency, 529 U.S. at 773, 120 S.Ct. 1858. Sprint also relied on the historical recognition of an assignee‘s ability to sue, 128 S.Ct. at 2536-42, and Vermont Agency relied on the “long tradition of qui tam actions.” 529 U.S. at 775, 120 S.Ct. 1858. Here, however, there is neither a long history of recognizing suits by ERISA plan participants to sue on behalf of a plan, see Harley, 284 F.3d at 907, nor any assignment by the Plan to McCullough to sue on its behalf. Nor does McCullough assert that
McCullough suggests instead that Congress assignеd a claim of one private party (the ERISA plan) to another private party (a participant in the plan). This court in Harley was reluctant to ascribe that intention to Congress, believing that such an interpretation of
There is another reason why Sprint does not compel us to disregard Harley. The statutory holding of Harley did not rest solely on constitutional avoidance. The court also reasoned that allowing participants in an overfunded plan to bring an action under
McCullough‘s second bid to avoid circuit precedent is based on a factual distinction between this case and Harley. He contends that because this action seeks to enjoin ongoing and future violations of ERISA, rather than just to recover losses to a plan from a single investment transaction that allegedly violated ERISA, he should be permitted to bring suit under
Harley addressed only claims for monetary relief, and McCullough also seeks injunctive relief under
The balаnce of McCullough‘s brief is a frontal assault on the reasoning of Harley. He contends that Harley takes too narrow a view of a plan participant‘s injuries, misapplies the Supreme Court‘s standing jurisprudence, e.g., Gollust v. Mendell, 501 U.S. 115, 125-27 (1991), and undermines the enforcement mechanism created by Congress in ERISA. These points echo arguments raised by the Secretary of Labor in support of a petition for rehearing en banc in Harley. Whatever the merit of these contentions, they challenge the decision of a prior panel, and must therefore be addressed to the court en banc.
* * *
The judgment of the district court is affirmed.
I believe the Supreme Court‘s recent decision in Sprint Communications Co. v. APCC Services, Inc., 554 U.S. 269, 128 S.Ct. 2531, 171 L.Ed.2d 424 (2008), compels us to reach a different result in this case than the result reached in Harley v. Minnesota Mining & Manufacturing Co., 284 F.3d 901 (8th Cir. 2002). I therefore respectfully dissent.
“Although one panel of this court ordinarily cannot overrule another panel, this rule does not apply when the earlier panel decision is cast into doubt by a decision of the Supreme Court.” Patterson v. Tenet Healthcare, Inc., 113 F.3d 832, 838 (8th Cir. 1997). In order to disregard Harley, we must “explicitly identify the error or changed circumstances and explain why a different result is justified.” Jacobs v. Lockhart, 9 F.3d 36, 38 (8th Cir. 1993). For the reasons discussed below, I believe Sprint requires us to disregard Harley.
The majority concludes Sprint does not compel us to disregard Harley because the lattеr turned on statutory grounds, rather than on Article III standing, and the statutory holding in Harley remains intact after Sprint. The notion Harley turns on a statutory holding is dubious at best. Although Harley purported to avoid the standing issue by interpreting the statute in a way which prohibits participants or beneficiaries from bringing suit to recover for a loss suffered by the plan, the statute plainly and unambiguously permits such an action. See
Remarkably absent from Harley is any discussion of the statutory language it purports to interpret in order to avoid the constitutional standing concerns. In this case, the majority‘s discussion of Harley‘s statutory holding consists of a single sentence speculating about the textual basis for the holding. See Ante at 1084 (recognizing Harley does not identify the textual basis for its holding and merely “presum[ing]” what it might be). As a consequence, both decisions seem to rest on a free-floating statutory interpretation untethered to any actual statutory construct. The resolution of McCullough‘s ability to sue to recover for a loss suffered by the plan necessarily requires us to address his Article III standing, and Sprint casts considerable doubt on the standing principles addressed in Harley.
The majority also suggests Harley‘s “statutory holding” rests on its conclusion which allows plan participants to sue on behalf of the plan would not advance ERISA‘s primary purpose of protecting individual pension rights, becаuse it would subject a plan and its fiduciaries to costly litigation. Id. at 1087. The majority also relies upon this aspect of Harley to avoid addressing Sprint‘s discussion of Article III standing. This second aspect of Harley‘s “statutory holding,” however, is also cast into doubt directly by the Supreme Court, which has recognized the very purpose for allowing beneficiaries and fiduciaries to sue on behalf of the plan under
Harley held plan participants and beneficiaries cannot rely upon a loss suffered by a fully-funded defined benefit plan to establish Article III standing to bring suit
Harley focused on whether the plan participants or beneficiaries themselves suffered a concrete injury and concluded “the limits on judicial power imposed by Article III counsel against permitting participants or beneficiaries who have suffered no injury in fact from suing to enforce ERISA fiduciary duties on behalf of the Plan.” 284 F.3d at 906. Thus, even though Harley recognized the defined benеfit plan itself suffered an injury, id. at 905, the court concluded participants and beneficiaries lacked Article III standing because they themselves did not suffer a concrete injury.
Sprint addressed the question whether one party‘s concrete injury confers Article III standing on a second party who has the right to prosecute the former‘s claim pursuant to a contractual assignment. In that context, the Supreme Court indicated the assignors’ concrete injury is the focus for purposes of Article III standing, not whether the assignees suffered an injury. See Sprint, 128 S.Ct. at 2542 (recognizing “an assignee can sue based on his assignor‘s injuries.“). Indeed, Sprint went one step further by indicating the party with the right to prosecute the claim has Article III standing despite the lack of any right to the recovery. See id. (“[Our] inquiry focuses, as it should, on whether the injury that a plaintiff alleges is likely to be redressed through the litigation—not on what the plaintiff ultimately intends to do with the money he recovers.“). As the dissenters noted, the mаjority separated “the right to recover from the right to prosecute a claim,” 128 S.Ct. at 2551 (Roberts, C.J., dissenting), and recognized Article III standing for the party holding the right-to-prosecute “strand” of standing. Id.
Thus, Sprint indicates when A possesses the right to prosecute a claim on B‘s behalf, A has constitutional standing to bring a claim arising from B‘s injuries; that is, our inquiry in determining the presence of a concrete injury focuses on B‘s injury, not A‘s. If there is no legally significant difference between the party prosecuting the claim in Sprint (the assignees) and the party prosecuting the claim in Harley (the plan participants), Sprint necessarily casts doubt on Harley‘s failure to focus on the plan‘s concrete injury for standing purposes.
A notable difference between the Harley plan participants and the Sprint assignees is that the former obtained their right to prosecute the plan‘s claim pursuant to statute, while the latter obtained their right to prosecute the assignors’ claims pursuant to contract. In Sprint, the Supreme Court discussed in detail the “history and tradition” of allowing an assignee to prosecute an assignor‘s claim. See id. at 2535-41. Admittedly, there is no similar history and tradition of allowing ERISA plan participants tо prosecute a fully-funded defined benefit plan‘s claim. But the Supreme Court also noted “there is considerable, more recent authority showing that an assignee for collection may properly sue on the assigned claim in federal court.” Id. at 2541. One of the “more recent”
In Vermont Agency, the Supreme Court addressed the standing of a party with the statutory right to prosecute a qui tam action on behalf of the government under the False Claims Act4 and hеld it was the government‘s concrete injury which conferred standing on the relator. 529 U.S. at 774, 120 S.Ct. 1858. The Court noted the False Claims Act effects a “partial assignment of the Government‘s damages claim,” id. at 773, 120 S.Ct. 1858, and referred to the relator as “the statutorily designated agent of the United States,” id. at 772. Sprint subsequently clarified the key in Vermont Agency was the “partial assignment”5 giving the relator the right to prosecute the claim, not the right to share in the recovery, because in Sprint the assignees still had standing despite the fact that any recovery would inure only to the benefit of the аssignors. See Sprint, 128 S.Ct. at 2542 (discussing Vermont Agency).
Reading Sprint and Vermont Agency together, there is no legally significant difference between the assignees in Sprint and the plan participants here or in Harley. Although an assignee‘s right to prosecute another‘s claim derives from contract, while an ERISA plan participant‘s right to prosecute a plan‘s claim derives from statute, in both instances the Supreme Court clearly instructs us as to the standing of the party with the right to prosecute the claim turns not on whether they themselves suffered an injury, but on whether the party holding the right-to-recover “strаnd” has a concrete injury which can be redressed by the lawsuit. In Sprint it did not matter that the assignees would not retain any of the recovery from the lawsuit. Likewise, here, it is irrelevant as to McCullough not being entitled to any recovery from the lawsuit. Applying Sprint and Vermont Agency to this case, then, McCullough has Article III standing to bring a claim arising from the Plan‘s injuries so long as he possesses the right to prosecute the Plan‘s claim pursuant to
The only remaining question, then, for purposes of constitutional standing in this case, is to determine whether
The Supreme Court has already answered the question whether McCullough can sue on his own behalf under
Harley distinguished Vermont Agency on the grounds that “the qui tam statute partially assigned the government‘s claim to the private qui tam relator; here, on the other hand,
Because Harley would compеl a result opposite the one we reach when applying Sprint and Vermont Agency, the Supreme Court‘s decisions necessarily cast doubt on Harley. Under Sprint and Vermont Agency, McCullough‘s Article III standing to sue under
I respectfully dissent.