Daniel Warmenhoven v. Netapp, Inc. ( 2021 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DANIEL WARMENHOVEN, No. 19-16960
Plaintiff-Appellant,
D.C. No.
v. 5:17-cv-02990-
BLF
NETAPP, INC.; NETAPP EXECUTIVE
MEDICAL RETIREMENT PLAN,
Defendants-Appellees. OPINION
Appeal from the United States District Court
for the Northern District of California
Beth Labson Freeman, District Judge, Presiding
Argued and Submitted February 10, 2021
San Francisco, California
Filed September 13, 2021
Before: Morgan Christen and Bridget S. Bade, Circuit
Judges, and Gary Feinerman, * District Judge.
Opinion by Judge Feinerman
*
The Honorable Gary Feinerman, United States District Judge for
the Northern District of Illinois, sitting by designation.
2 WARMENHOVEN V. NETAPP
SUMMARY **
ERISA
The panel affirmed in part and vacated in part the district
court’s summary judgment in favor of defendants on retired
executives’ claims that termination of the NetApp Executive
Medical Retirement Plan violated ERISA because they had
been promised lifetime benefits.
Only one plaintiff appealed. The panel affirmed the
district court’s judgment as to plaintiff’s direct claim for
benefits under 29 U.S.C. § 1132(a)(1)(B). The panel held
that the default rule under ERISA is that employers may
freely terminate welfare benefit plans. The panel concluded
that PowerPoint presentations summarizing the Plan for
participating executives did not override the default rule,
where certificates of insurance coverage included provisions
granting NetApp the authority to terminate benefits under
the Plan at any time. The panel held that the PowerPoint
presentations were not Plan documents because they did not
qualify as written instruments under 29 U.S.C. § 1102(b),
and they therefore could not vest lifetime benefits.
The panel vacated the judgment as to plaintiff’s
alternative claim for equitable relief under 29 U.S.C.
§ 1132(a)(3) and remanded for further proceedings on that
claim. Plaintiff alleged that, if the Plan did not grant him
vested lifetime benefits, then NetApp misrepresented the
nature of the Plan in the PowerPoints, in violation of the
fiduciary duties it owed as a Plan administrator. The panel
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
WARMENHOVEN V. NETAPP 3
held that the district court erred in in granting summary
judgment on the ground that NetApp did not commit a
remediable wrong under 29 U.S.C. § 1104(a)(1) by failing
to discharge its duties with respect to the Plan solely in the
interest of the participants and beneficiaries. Disagreeing
with the Seventh Circuit, the panel held that there is no
intentional deceit requirement under § 1104(a)(1). The
panel further held that the district court erred in concluding
that the fiduciary duty claim failed because plaintiff could
have examined the certificates of insurance to dispel any
misunderstanding arising from the PowerPoints. The panel
concluded that plaintiff did not forfeit any argument on the
remedy prong of his claim for equitable relief, an issue not
reached by the district court.
COUNSEL
J. Phillip Martin (argued) and Eric C. Kastner, Kastner Kim
LLP, Mountain View, California; Robert L. Rusky, San
Francisco, California; for Plaintiff-Appellant.
Laurie J. Hepler (argued), Greines Martin Stein & Richland
LLP, San Francisco, California; Clarissa A. Kang and Angel
L. Garrett, Trucker Huss, San Francisco, California; for
Defendants-Appellees.
4 WARMENHOVEN V. NETAPP
OPINION
FEINERMAN, District Judge:
In 2005, NetApp, Inc. created the NetApp Executive
Medical Retirement Plan, an employee welfare benefit plan
governed by the Employee Retirement Income Security Act
of 1974 (“ERISA”), 29 U.S.C. §§ 1001–1461, to provide
health insurance benefits to its retired senior executives. In
2016, NetApp implemented a phased termination of the
Plan. Daniel Warmenhoven and six other retired executives
sued NetApp and the Plan (together, “NetApp”), alleging
that terminating the Plan violated ERISA because they had
been promised lifetime benefits. The suit asserted two
distinct ERISA claims: (1) a direct claim for benefits under
§ 1132(a)(1)(B); and (2) an alternate claim for equitable
relief under § 1132(a)(3) to redress NetApp’s alleged
misrepresentations that the Plan would provide lifetime
benefits. The district court granted summary judgment to
NetApp on both claims.
Only Warmenhoven appeals. We have jurisdiction
pursuant to 28 U.S.C. § 1291. We affirm the district court’s
judgment as to Warmenhoven’s § 1132(a)(1)(B) claim,
vacate the judgment as to his § 1132(a)(3) claim, and remand
for further proceedings on the § 1132(a)(3) claim.
Background
I. The Plan’s Creation and Termination
Warmenhoven was NetApp’s Chief Executive Officer
from 1994 to 2009 and, after stepping down as CEO, served
as Executive Chairman of NetApp’s Board of Directors until
2014, formally retiring in April 2015. In 2003, at the request
of another senior NetApp executive, Warmenhoven asked
WARMENHOVEN V. NETAPP 5
the company’s Human Resources department to explore the
creation of an executive retiree health plan. After extensive
consideration, the Board’s Compensation Committee
adopted the Plan effective May 2005.
Some ten years later, in November 2015, the
Compensation Committee decided to close the Plan to any
new participants and to explore alternatives to the Plan for
existing participants. At that time, nine executives and
eighteen dependents were receiving health insurance
benefits under the Plan. The parties’ dispute over what
motivated the Compensation Committee’s decision—
NetApp asserts that the Plan’s increasing costs made the
benefit unsustainable at a time when it was laying off
thousands of employees, while Warmenhoven charges that
NetApp’s rationale was pretextual—is immaterial to this
appeal.
In April 2016, the Compensation Committee decided to
terminate the Plan. Under a new “Amended and Restated
Plan,” NetApp would reimburse participating retirees like
Warmenhoven for the cost of purchasing health insurance
themselves from 2017 through 2019, and then pay them a
lump sum at the Plan’s termination on December 31, 2019.
NetApp management met with the retirees to inform them of
the Amended Plan, and the retirees expressed their
disapproval. Despite the opposition from retirees, NetApp
went forward with the Amended Plan, giving formal notice
to Warmenhoven by letter dated November 16, 2016. The
Amended Plan took effect on January 1, 2017.
II. Documentation of the Plan’s Terms
As discussed below, the default rule under ERISA is that
employers may freely terminate welfare benefit plans like
the Plan. See 29 U.S.C. § 1051(1) (exempting welfare
6 WARMENHOVEN V. NETAPP
benefit plans from ERISA’s vesting provisions).
Warmenhoven filed this suit on the view that NetApp had
promised him that the health insurance benefits offered
under the Plan would last for his lifetime, overriding the
default rule that welfare benefits do not vest.
To support his view, Warmenhoven relies primarily on a
series of PowerPoint presentations that summarized the Plan
for participating executives. Although at least seven
versions of the PowerPoint were created over the years,
Warmenhoven personally saw only two.
The first was an April 2005 PowerPoint created by
NetApp Human Resources to describe the Plan to NetApp
management, including Warmenhoven in his role as CEO.
The PowerPoint stated that the Plan would provide medical
coverage to “a defined group of retiring executives as a fully-
insured plan.” It also stated that any company acquiring
NetApp would be required to provide an equivalent plan “for
the lives of the eligible employees.” NetApp does not
dispute that, as the PowerPoint suggested, it intended as of
April 2005 to maintain the health insurance benefit for the
participants’ lifetimes.
The second version of the PowerPoint that
Warmenhoven saw was a March 2014 version prepared
shortly before his retirement. That version stated that the
“Executive Medical Retirement Plan [was] adopted by
[NetApp] as a method to retain a defined group of senior
executives.” In more explicit terms than the April 2005
version, the March 2014 version promised that the “Plan
provides medical benefits for the retiree’s lifetime” and that
“[n]o retiree contributions [are] required.”
As further support for his view that he had been promised
lifetime benefits, Warmenhoven points to NetApp’s public
WARMENHOVEN V. NETAPP 7
disclosures in filings with the Securities and Exchange
Commission (“SEC”). Like the PowerPoints, NetApp’s
SEC disclosures stated that the Plan would provide lifetime
healthcare benefits to participants. For instance, a 2016
disclosure stated that “[c]overage continues through the
duration of the lifetime of the retiree or the retiree’s spouse,
whichever is longer.” The record does not contain evidence
that Warmenhoven personally reviewed the SEC filings, but
the filings do show that, as late as April 2016, NetApp was
telling the public that it intended to cover its retired
executives’ healthcare for their lifetimes.
NetApp focuses attention on a third category of
documents: the certificates of coverage prepared by the
health insurance companies with which NetApp contracted
to administer the Plan. NetApp hired Cigna to administer
the Plan at its inception in 2005. Cigna composed a separate
certificate for each year it administered the Plan, from 2005
to 2012. In 2013, NetApp replaced Cigna with
UnitedHealthcare (“UHC”), and UHC composed certificates
for the Plan from 2013 to 2016. As with the April 2005 and
March 2014 PowerPoints, Warmenhoven personally
received a copy of the 2015 UHC certificate.
The certificates of coverage primarily concerned the
details, which are not pertinent here, of health coverage for
the calendar year in question. The important provisions for
present purposes addressed Plan administration: how
coverage was paid for, who managed the Plan, and who had
the authority to alter the Plan’s terms. See 29 U.S.C.
§ 1102(b) (requiring that an ERISA plan’s written
instrument disclose this information). For example, the 2005
Cigna and 2015 UHC certificates each included a section
devoted to those disclosures, titled “ERISA Required
8 WARMENHOVEN V. NETAPP
Information” in the Cigna certificate and “ERISA
Statement” in the UHC certificate.
Notably, each certificate of coverage included at least
one provision granting NetApp the authority to terminate
benefits under the Plan at any time—directly contradicting
the PowerPoints’ promises of lifetime benefits. For
example, the ERISA disclosure in the 2005 Cigna certificate
stated:
The Employer as Plan Sponsor reserves the
right to, at any time, change or terminate
benefits under the Plan, to change or
terminate the eligibility of classes of
employees to be covered by the Plan, to
amend or eliminate any other plan term or
condition, and to terminate the whole plan or
any part of it.
The 2015 UHC certificate likewise stated: “Your employer,
as the Plan Sponsor, has the right to amend or terminate this
Plan at any time.”
III. Procedural History
Warmenhoven and six other retired executives filed this
lawsuit in May 2017, bringing two claims under ERISA.
The first claim alleged that the PowerPoints operated to vest
lifetime benefits and sought recovery of those benefits
directly under § 1132(a)(1)(B). The second claim, brought
in the alternative to the first, arose under § 1132(a)(3), which
allows suits for equitable relief to redress ERISA violations.
The plaintiffs alleged that, if the Plan did not grant them
vested lifetime benefits, then NetApp had misrepresented the
nature of the Plan, in violation of the fiduciary duties it owed
them as a plan administrator under § 1104(a)(1). Under the
WARMENHOVEN V. NETAPP 9
second claim, the plaintiffs sought several forms of equitable
relief: an injunction ordering continued benefits, reformation
of the plan documents, estoppel, and surcharge.
After conducting discovery, the parties cross-moved for
summary judgment. The district court granted NetApp’s
motion, denied the plaintiffs’ motion, and entered judgment
for NetApp. Gomo v. NetApp, Inc., No. 17-cv-022990-BLF,
2019 WL 4346581, at *13 (N.D. Cal. Sept. 12, 2019). As to
the § 1132(a)(1)(B) claim, the district court held that the
PowerPoints were not “plan documents,” and therefore that
their language could not vest lifetime benefits. Id. at *5–6.
Instead, the court held, the certificates of coverage were the
controlling plan documents, and they allowed free
amendment of the Plan. Id. at *7–9. As to the § 1132(a)(3)
claim, the court held that NetApp had committed no breach
of fiduciary duty because it had no intent to deceive and
because the plaintiffs could have examined the certificates
of coverage to dispel any misunderstanding arising from the
PowerPoints. Id. at *11–13.
Six of the seven plaintiffs timely appealed. After a
mediation conference, we granted the motions of five
plaintiffs to dismiss their appeals. Warmenhoven, the sole
remaining appellant, seeks reversal only of the grant of
summary judgment to NetApp, not the denial of his
summary judgment motion.
Discussion
I. Claim for Benefits Under § 1132(a)(1)(B)
Section 1132(a)(1)(B) “provides a right of action for plan
participants or beneficiaries ‘to recover benefits due . . .
under the terms of [a] plan, to enforce [ ] rights under the
terms of the plan, or to clarify [ ] rights to future benefits
10 WARMENHOVEN V. NETAPP
under the terms of the plan.’” Doe v. CVS Pharmacy, Inc.,
982 F.3d 1204, 1213 (9th Cir. 2020) (alterations in original)
(quoting 29 U.S.C. § 1132(a)(1)(B)), cert. granted, — S. Ct.
—, 2021 WL 2742790 (July 2, 2021). The plaintiff bears the
burden of proof on a § 1132(a)(1)(B) claim. See Muniz v.
Amec Constr. Mgmt., Inc., 623 F.3d 1290, 1294 (9th Cir.
2010).
To avoid summary judgment on his § 1132(a)(1)(B)
claim, Warmenhoven had to present evidence of a specific
plan document that vested lifetime benefits. The Plan was a
“welfare plan,” which ERISA defines to include “any plan,
fund, or program . . . maintained for the purpose of providing
. . . medical, surgical, or hospital care or benefits.”
29 U.S.C. § 1002(1). As noted, the default rule under
ERISA provides that welfare plans do not vest and can be
amended at any time: “Employers or other plan sponsors are
generally free under ERISA, for any reason at any time, to
adopt, modify, or terminate welfare plans.” Curtiss-Wright
Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995); see
29 U.S.C. § 1051(1) (providing that ERISA’s vesting
provisions “apply to any employee benefit plan . . . other
than . . . an employee welfare benefit plan”). A plan may
override this default rule, but only if it does so expressly in
a plan document: “A contractual agreement for vesting of
benefits must be found in the plan documents.” Cinelli v.
Sec. Pac. Corp., 61 F.3d 1437, 1441 (9th Cir. 1995); accord,
e.g., Gable v. Sweetheart Cup Co., 35 F.3d 851, 855 (4th Cir.
1994) (“[A]ny participant’s right to a fixed level of lifetime
benefits must be ‘found in the plan documents and must be
stated in clear and express language.’”) (quoting Wise v. El
Paso Nat. Gas Co., 986 F.2d 929, 937 (5th Cir. 1993)).
“Plan document” is a term of art under ERISA. It does
not mean any writing related to a plan; rather, it means the
WARMENHOVEN V. NETAPP 11
formal “written instrument” that ERISA requires for each
employee benefit plan. 29 U.S.C. § 1102(a)(1) (“Every
employee benefit plan shall be established and maintained
pursuant to a written instrument.”); see Rhea v. Alan Ritchey,
Inc. Welfare Benefit Plan, 858 F.3d 340, 344 (5th Cir. 2017)
(“Courts often refer to written instruments as ‘plan
documents.’”). To qualify as a written instrument, a
document must satisfy the four requirements of § 1102(b);
specifically, the document must “(1) provide a policy and a
method for funding the plan, (2) describe a procedure for
plan operation and administration, (3) provide a procedure
for amending the plan, and (4) specify a basis for payments
to and from the plan.” Cinelli, 61 F.3d at 1441 (quoting
Watkins v. Westinghouse Hanford Co., 12 F.3d 1517, 1523
n.1 (9th Cir. 1993)) (citing 29 U.S.C. § 1102(b)). In a more
generic sense, the term “plan document” at times is used to
refer to the summary plan description (“SPD”), a less formal
document intended to give participants essential information
about their plan. See 29 U.S.C. §§ 1022, 1024(b) (requiring
the plan administrator to furnish plan participants and
beneficiaries with an SPD containing certain categories of
information); Prichard v. Metro. Life Ins. Co., 783 F.3d
1166, 1169 (9th Cir. 2015) (“[P]articularly in the context of
health plans, the SPD is sometimes argued to be the plan;
that is, to serve simultaneously as the governing plan
document.”). No party contends that any of the documents
at issue here functioned as an SPD for the Plan, so there is
no need to consider how the presence of an SPD among
those documents would affect the outcome of this appeal.
To avoid confusion, we will use the term “written
instrument”—the term used in ERISA—to refer to the
formal plan document required by § 1102(a)(1). See
Prichard, 783 F.3d at 1169 (distinguishing the SPD from the
“formal plan document” required under § 1102(a)(1)).
12 WARMENHOVEN V. NETAPP
Warmenhoven submits that the PowerPoint
presentations were plan documents that could and did vest
lifetime healthcare benefits. He does not argue, however,
that the PowerPoints met the criteria for a written instrument
under § 1102(b). Instead, he argues that NetApp’s promises
in the PowerPoints created an ERISA plan with lifetime
benefits. To support that proposition, Warmenhoven relies
on decisions such as Donovan v. Dillingham, 688 F.2d 1367(11th Cir. 1982), Scott v. Gulf Oil Corp., 754 F.2d 1499 (9th
Cir. 1985), and Golden Gate Restaurant Ass’n v. City and
County of San Francisco, 546 F.3d 639 (9th Cir. 2008).
Warmenhoven’s argument is unpersuasive. As we
explained in Cinelli, the line of cases he invokes governs
“instances where a formal plan is absent and the question
remains whether a de facto plan has been created.” 61 F.3d
at 1443. In Scott, for instance, the plaintiffs alleged that their
employer made oral and written promises of severance pay.
754 F.2d at 1501. We concluded that such informal
commitments to provide benefits could create an ERISA-
governed plan in circumstances where there is no written
instrument, lest “employers . . . escape ERISA’s coverage
merely by failing to comply with its requirements.” Id. at
1503; see also Donovan, 688 F.2d at 1373 (holding that a
plan exists, whether “pursuant to a writing or not,” where “a
reasonable person could ascertain the intended benefits,
beneficiaries, source of financing, and procedures for
receiving benefits”). However, in situations where the plan
sponsor has prepared a written instrument, that line of
decisions has no application. See Golden Gate Rest. Ass’n,
546 F.3d at 652 (“All of the cases applying the Donovan
criteria address the question whether an informal, or de
facto, ERISA plan has been established, and all involve
some type of unwritten or informal promise made by an
employer to its employees.”).
WARMENHOVEN V. NETAPP 13
Given the limited reach of the decisions he invokes,
Warmenhoven must be understood as arguing that there was
no ERISA-compliant written instrument for the Plan, and
therefore that NetApp should be held to the less formal
promises it made in the PowerPoints to provide lifetime
health insurance benefits. Cinelli forecloses that theory by
holding that only a written instrument satisfying the
requirements of § 1102(b)—and not some other document—
can vest lifetime benefits.
In Cinelli, an insurance policy certificate stated that the
policy was terminable at any time, but a company board
resolution stated that the benefit was fully vested. 61 F.3d
at 1440–41. We noted that it was “clear that an insurance
policy may constitute the ‘written instrument’ of an ERISA
plan,” and asked whether the board resolution was “also a
plan document.” Id. at 1441. We held that the board
resolution was “not a plan document” because it did not meet
the criteria for a written instrument set forth in § 1102(b).
Id. at 1441–42, 1444. And because the resolution was not a
written instrument, it was “extrinsic evidence” that could
“not be used to alter the written terms of the plan,” which
provided that the life insurance benefit was terminable at any
time. Id. at 1444.
The upshot of Cinelli is that only a written instrument
satisfying the § 1102(b) criteria can vest lifetime benefits.
And we have since reaffirmed Cinelli’s teaching that the
§ 1102(b) criteria, and only those criteria, govern which
writings qualify as written instruments. See Mull ex rel. Mull
v. Motion Picture Indus. Health Plan, 865 F.3d 1207, 1209
(9th Cir. 2017) (examining the § 1102(b) criteria to
determine which documents were the written instrument);
accord, e.g., Rhea, 858 F.3d at 344 (holding that an SPD can
qualify as a written instrument if it meets the § 1102(b)
14 WARMENHOVEN V. NETAPP
criteria); Gable, 35 F.3d at 857 (applying § 1102(b) in
holding that a schedule promising lifetime benefits was not
a written instrument).
Ignoring these precedents, Warmenhoven does not argue
that the PowerPoints met the four requirements for “plan
documents” under § 1102(b). Indeed, he argues that the
district court “fundamentally misconstrued ERISA’s
governing principles” in “relying on . . . § 1102(b)” to
determine whether the PowerPoints were plan documents.
As we have explained, the district court correctly looked to
§ 1102(b) to determine whether the PowerPoints were
written instruments and thus whether they could vest lifetime
benefits. By deliberately choosing to stand on his flawed
argument that the PowerPoints created a vested ERISA plan
without there being any written instrument, and by declining
to argue in the alternative that he could prevail even if
§ 1102(b) applied, Warmenhoven has affirmatively waived
any argument under the proper legal standard that the
PowerPoints were written instruments. See Freedom From
Religion Found., Inc. v. Chino Valley Unified Sch. Dist. Bd.
of Educ., 896 F.3d 1132, 1152 (9th Cir. 2018) (per curiam)
(“It is well established that an appellant’s failure to argue an
issue in the opening brief, much less on appeal more
generally, waives that issue . . . .”); Alvarez v. Lopez,
835 F.3d 1024, 1028 (9th Cir. 2016) (finding an “intentional
waiver” where the appellant “deliberately steered” the court
away from an issue, thereby “preclud[ing] us from raising
[the issue] sua sponte”). That waiver conclusively defeats
his § 1132(a)(1)(B) claim because, under Cinelli, he bears
WARMENHOVEN V. NETAPP 15
the burden to prove that a specific written instrument vested
lifetime benefits. 1
II. Claim for Breach of Fiduciary Duty Under
§ 1132(a)(3)
Warmenhoven’s second claim alleges in the alternative
that, if the PowerPoint presentations did not vest lifetime
benefits, he is entitled under § 1132(a)(3) to equitable relief
to remedy NetApp’s misrepresentations that the Plan’s
health benefits were permanent. Section 1132(a)(3)
provides:
A civil action may be brought . . . (3) by a
participant . . . (B) to obtain other appropriate
1
Warmenhoven does not raise, and therefore has forfeited, any
argument that the PowerPoint presentations and the certificates of
coverage combined to form a written instrument under § 1102. See
Maloney v. T3Media, Inc., 853 F.3d 1004, 1019 (9th Cir. 2017) (holding
that arguments that are not presented in appellate briefs are forfeited).
We addressed a somewhat analogous argument in Mull. There,
participants in a health care plan sought a declaration that the plan could
not enforce against them recoupment provisions found only in the SPD
but not in the plan’s trust agreement. 865 F.3d at 1209. We held that
because the trust agreement met only three of the four § 1102(b) criteria,
it could not qualify on its own as the plan’s written instrument. Id. But
because the SPD met the remaining criterion, we held that “the two
documents together constitute[d] a plan,” id. at 1209–10, and therefore
that the SPD’s recoupment provisions were enforceable, id. at 1210–11.
Here, even if Warmenhoven had made an argument based on Mull, it
would have failed on the merits because the district court correctly held
that the certificates of coverage—which, as noted, expressly stated that
the Plan could be terminated at any time—by themselves qualified as the
Plan’s written instrument under § 1102. See Prichard, 783 F.3d at 1171
(holding that an insurance certificate was a plan’s written instrument).
Accordingly, there was no gap for the PowerPoint presentations to fill,
meaning that the PowerPoints did not form part of a written instrument
that could vest lifetime benefits.
16 WARMENHOVEN V. NETAPP
equitable relief (i) to redress [any act or
practice which violates any provision of Title
I of ERISA or the terms of the plan] or (ii) to
enforce any provisions of [Title I] or the
terms of the plan.
29 U.S.C. § 1132(a)(3). A § 1132(a)(3) claim has two
elements: “(1) that there is a remediable wrong, i.e., that the
plaintiff seeks relief to redress a violation of ERISA or the
terms of a plan; and (2) that the relief sought is appropriate
equitable relief.” Gabriel v. Alaska Elec. Pension Fund,
773 F.3d 945, 954 (9th Cir. 2014) (internal quotation marks
and citations omitted). The district court limited its analysis
to the first prong, granting NetApp summary judgment on
the ground that no reasonable factfinder could find that
NetApp committed a remediable wrong. 2019 WL 4346581,
at *11–13. We disagree with the district court’s conclusion
on that issue and therefore vacate its grant of summary
judgment to NetApp.
A. Remediable Wrong
Warmenhoven’s theory of remediable wrong is that
NetApp, a plan fiduciary, misrepresented the Plan’s terms by
promising in the PowerPoints that the Plan provided lifetime
benefits even though the written instrument included no such
guarantee. Warmenhoven argues that NetApp thus violated
§ 1104(a)(1), which provides that “a fiduciary shall
discharge his duties with respect to a plan solely in the
interest of the participants and beneficiaries . . . .” 29 U.S.C.
§ 1104(a)(1).
As we have held, “fiduciaries breach their duties if they
mislead plan participants or misrepresent the terms or
administration of a plan.” Barker v. Am. Mobil Power Corp.,
64 F.3d 1397, 1403 (9th Cir. 1995) (per curiam). For
WARMENHOVEN V. NETAPP 17
example, in Varity Corp. v. Howe, 516 U.S. 489 (1996), a
corporation spun off failing divisions into a new company
and, despite knowing that the new company would likely
fail, induced employees to transfer their benefits to the new
company through false promises that the benefits would
remain secure. Id. at 493–94. The Supreme Court held that
the corporation’s conduct violated its fiduciary duties as a
plan fiduciary, reasoning that “[t]o participate knowingly
and significantly in deceiving a plan’s beneficiaries in order
to save the employer money at the beneficiaries’ expense is
not to act ‘solely in the interest of the participants and
beneficiaries.’” Id. at 506 (quoting 29 U.S.C. § 1104(a)(1)).
In Varity, unlike here, the plan fiduciary intended to
mislead plan participants to the fiduciary’s benefit and the
participants’ detriment. That distinction grounded the
district court’s holding here that NetApp had committed no
remediable wrong: “An employer’s honest statements of
present intention to provide benefits at a particular level do
not give rise to liability for breach of fiduciary duties, simply
because the employer later changes the benefits.” Gomo,
2019 WL 4346581, at *12.
To support its holding, the district court relied heavily on
Frahm v. Equitable Life Assurance Society of the United
States, 137 F.3d 955, 960 (7th Cir. 1998), which held that
Varity recognizes a § 1104(a)(1) fiduciary duty claim only
in cases involving intentional deceit. The defendant in
Frahm changed its retiree health plan to require retirees to
bear more costs, and the retirees argued that the company
had previously promised in oral statements and letters not to
do so. Id. at 956–57. The Seventh Circuit held that such
informal promises could not give rise to liability under
§ 1104(a)(1) unless the fiduciary “set out to deceive or
disadvantage plan participants.” Id. at 960. In so holding,
18 WARMENHOVEN V. NETAPP
the Seventh Circuit relied on an analogy to tort law, noting
that an estoppel defense or fraud claim requires “lies” where
the speaker “actually had a different intention” than
expressed. Id. at 961.
Our circuit’s law holds otherwise. As a general matter,
we have rejected the use of tort law to ground the § 1104(a)
fiduciary duty, reasoning that the duty finds its roots in trust
law, not tort law. See King v. Blue Cross & Blue Shield of
Ill., 871 F.3d 730, 744 (9th Cir. 2017) (“The duty of loyalty
is one of the common law trust principles that apply to
ERISA fiduciaries, and it encompasses a duty to disclose.”
(quoting Washington v. Bert Bell/Pete Rozelle NFL Ret.
Plan, 504 F.3d 818, 823 (9th Cir. 2007))); Mathews v.
Chevron Corp., 362 F.3d 1172, 1183 (9th Cir. 2004) (“We
fail to see the logic in transplanting the element of scienter
from the tort of deceit into a statutory ERISA claim with
roots in the law of fiduciaries and trusts.”). Our approach
aligns with the Supreme Court’s understanding of ERISA
fiduciary duties. See Varity, 516 U.S. at 496 (“[W]e
recognize that [ERISA’s] fiduciary duties draw much of
their content from the common law of trusts, the law that
governed most benefit plans before ERISA’s enactment.”).
More to the point, we expressly rejected in Mathews the
analogy to fraud that the Seventh Circuit found compelling
in Frahm. The employer in Mathews argued that “the
plaintiffs must show scienter as they would if they were
suing under the common law cause of action for deceit,” that
is, “knowledge or belief on the part of the defendant that the
representation is false.” 362 F.3d at 1183 (alteration
omitted). Such evidence of knowing deceit is what the
district court demanded of Warmenhoven here: “Plaintiffs
have not submitted any evidence, and none appears in the
record, suggesting that NetApp did not intend to provide
WARMENHOVEN V. NETAPP 19
lifetime medical benefits under the Plan when it was
adopted.” Gomo, 2019 WL 4346581, at *12. Yet, as we
explained in Mathews, “[i]n articulating Ninth Circuit law in
this area, we have followed a line of cases from our sister
circuits that does not require a showing of intent.” 362 F.3d
at 1183.
In James v. Pirelli Armstrong Tire Corp., 305 F.3d 439(6th Cir. 2002), one of the out-of-circuit cases we approved
in Mathews, company management made repeated oral
promises that, if employees took early retirement, their
health benefits would continue unchanged “during
retirement” and “during their lifetimes.” Id. at 443–44. But
in fact, the plan documents allowed amendments to the
health benefit plan, and, after the plaintiff employees retired,
the company raised the costs to them of securing health
benefits. Id. at 442, 444–45. The Sixth Circuit held that the
company thereby breached its fiduciary duty under
§ 1104(a)(1). Id. at 448, 455. In so holding, the court
rejected any scienter requirement: “A fiduciary breaches his
duty by providing plan participants with materially
misleading information, regardless of whether the
fiduciary’s statements or omissions were made negligently
or intentionally.” Id. at 449 (quotation marks omitted). And
the court held that the company breached its fiduciary duty
by “provid[ing], on its own initiative, materially misleading
and inaccurate information about the plan benefits.” Id.
at 455.
Returning to our precedents, the health care plan in King
denied coverage for a substantial medical bill on the ground
that the participant had reached her lifetime cap on benefits.
871 F.3d at 737–38. We held that the participant had a viable
fiduciary duty claim, explaining that although the plan
documents could be interpreted to impose a lifetime benefit
20 WARMENHOVEN V. NETAPP
cap, id. at 734–36, the documents’ lack of clarity on that
point violated the employer’s and the plan’s fiduciary duties
of disclosure, id. at 745. In support, we observed that
“[f]iduciaries breach their duties [under § 1104(a)] if they
mislead plan participants or misrepresent the terms or
administration of a plan,” id. at 744 (quoting Barker, 64 F.3d
at 1403), and that the employer and the plan had failed “to
‘provide sufficiently detailed information’ about whether the
lifetime benefit maximum applied,” id. at 745 (quoting Farr
v. U.S. W. Commc’ns, Inc., 151 F.3d 908, 915 (9th Cir.
1998)). Nowhere did King suggest that the defendants
harbored an intent to deceive plan participants or that such
intent was required to find a breach of fiduciary duty.
Under our circuit’s precedents, then, Warmenhoven’s
fiduciary duty claim survives summary judgment on the
remediable wrong issue, as there is a genuine dispute of
material fact as to whether NetApp incorrectly represented
to Plan participants that the Plan provided lifetime health
insurance benefits. A reasonable factfinder easily could read
the PowerPoints to convey a promise of lifetime benefits.
Yet NetApp had not memorialized that promise in any plan
document, and in fact the certificates of coverage said the
opposite. Our circuit law does not immunize NetApp from
liability for its false promises simply because it harbored no
ill will or intent to deceive. A reasonable factfinder could
conclude that NetApp failed “to convey complete and
accurate information material to [Warmenhoven’s]
circumstance,” Barker, 64 F.3d at 1403, and thus find a
violation of § 1104(a)(1) and a remediable wrong under
§ 1132(a)(3).
The district court also held that Warmenhoven’s
fiduciary duty claim failed because he could have examined
the certificates of coverage—which provided that the Plan
WARMENHOVEN V. NETAPP 21
could be terminated at any time—to dispel any
misunderstanding arising from the PowerPoints. In Pirelli,
the Sixth Circuit rejected the notion that “a reservation of
rights provision in the plan” automatically insulates the
employer from liability under § 1104(a)(1) if the employer
provides “false or inaccurate information about the future
benefits of a plan.” 305 F.3d at 455.
The district court read our decision in Pisciotta v.
Teledyne Industries, Inc., 91 F.3d 1326 (9th Cir. 1996), to
hold otherwise, citing it for the proposition that “a
reservation of rights contained in the Plan document is
effective if the document was available for review.” Gomo,
2019 WL 4346581, at *12 (citing Pisciotta, 91 F.3d at 1331).
But Pisciotta did not so hold as to a fiduciary duty claim
under § 1132(a)(3), as we addressed in that case only a direct
claim for benefits under § 1132(a)(1)(B). 91 F.3d at 1329–
31. In fact, when the plaintiffs in Pisciotta filed suit, our pre-
Varity circuit precedent did not permit § 1132(a)(3) claims
for individual relief by participants harmed by alleged
breaches of fiduciary duty. See Williams v. Caterpillar, Inc.,
944 F.2d 658, 665 (9th Cir. 1991) (holding that “a
fiduciary’s duty under ERISA runs to the plan as a whole
and not to the individual beneficiary”), abrogated in part by
Varity, 516 U.S. 489.
In sum, that NetApp lacked an intent to deceive and that
Warmenhoven could have reviewed the certificates of
coverage do not necessarily defeat his § 1132(a)(3) claim
based on NetApp’s misrepresentations in the PowerPoints.
To be clear, we do not pronounce on the ultimate question of
whether Warmenhoven will succeed, as certain aspects of
that claim may remain unresolved. On remand, NetApp may
press that issue or any other non-waived defenses it might
have, and we do not prejudge the result.
22 WARMENHOVEN V. NETAPP
B. Appropriate Equitable Relief
After holding that no reasonable factfinder could
conclude that Warmenhoven suffered a remediable wrong,
the district court declined to address whether he would be
entitled to appropriate equitable relief to redress any such
wrong. 2019 WL 4346581, at *13. Warmenhoven’s initial
brief does not address the remedy prong, either. NetApp
argues that Warmenhoven thereby forfeited any argument
that the district court’s treatment of the remediable wrong
prong prejudiced him, requiring that summary judgment on
the § 1132(a)(3) claim be affirmed.
We rejected a materially identical argument in Rodriguez
v. Hayes, 591 F.3d 1105 (9th Cir. 2010), and do so again
here. The appellees in Rodriguez argued for affirmance of
the district court’s judgment on a ground not reached by the
district court and contended that the appellant had waived
any opposition to that argument by not anticipating it in his
initial brief. Id. at 1118 & n.6. We disposed of the appellees’
“groundless” contention in a footnote:
We have previously held that the failure of a
party in its opening brief to challenge an
alternate ground for a district court’s ruling
given by the district court waives that
challenge. . . . Petitioner does not waive a
challenge to any ground for [the district
court’s ruling] in its opening brief on appeal
that was not relied on in the district court’s
order.
Id. at 1118 n.6. NetApp is thus wrong to suggest that an
appellant must address all possible alternate grounds for
affirmance—even those not ruled upon by the district
court—in an opening brief.
WARMENHOVEN V. NETAPP 23
Beyond forfeiture, the parties do not discuss the merits
of the remedy prong. In CIGNA Corp. v. Amara, 563 U.S.
421 (2011), the Supreme Court identified three traditional
equitable remedies available under § 1132(a)(3):
reformation, equitable estoppel, and surcharge. Id. at 440–
42. Especially because the parties do not address the issue
on appeal, the proper course is to allow the district court to
consider in the first instance the merits of NetApp’s
argument for summary judgment based on the remedy
prong. See ASSE Int’l, Inc. v. Kerry, 803 F.3d 1059, 1079
(9th Cir. 2015) (“[T]he issue . . . was not fully briefed, and
as it also has not been passed upon in the first instance by
the district court, we decline to reach the issue.”);
Reinkemeyer v. SAFECO Ins. Co. of Am., 166 F.3d 982, 985
(9th Cir. 1999) (“We decline to address the issue because it
was not reached by the district court and was not fully
briefed by the parties.”).
Conclusion
The district court’s judgment is AFFIRMED IN PART
as to Warmenhoven’s § 1132(a)(1)(B) claim, and
VACATED IN PART as to his § 1132(a)(3) claim. The
case is REMANDED to the district court for further
proceedings consistent with this opinion.