Stephen Bafford v. Northrop Grumman Corp. ( 2021 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
STEPHEN H. BAFFORD; LAURA No. 20-55222
BAFFORD; EVELYN L. WILSON, on
their own behalves and on behalf of D.C. No.
a class of similarly situated 2:18-cv-10219-
participants and beneficiaries, ODW-E
Plaintiffs-Appellants,
v. OPINION
NORTHROP GRUMMAN
CORPORATION; ADMINISTRATIVE
COMMITTEE OF THE NORTHROP
GRUMMAN PENSION PLAN; ALIGHT
SOLUTIONS LLC, FKA Hewitt
Associates LLC,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Otis D. Wright II, District Judge, Presiding
Argued and Submitted February 11, 2021
Pasadena, California
Filed April 15, 2021
2 BAFFORD V. NORTHROP GRUMMAN
Before: DANNY J. BOGGS,* MILAN D. SMITH, JR.,
and MARY H. MURGUIA, Circuit Judges.
Opinion by Judge Milan D. Smith, Jr.
SUMMARY **
ERISA
The panel affirmed in part and vacated in part the district
court’s dismissal of an action brought by members of an
employee pension plan, alleging breach of fiduciary duty
under the Employee Retirement Income Security Act and
state-law professional negligence and negligent
misrepresentation claims.
Northrop Grumman, plan sponsor, delegated
administration of the plan to an Administrative Committee,
which in turn contracted with Hewitt, a company that
provided outside administrative services for the plan.
Plaintiffs requested statements showing what their monthly
pension benefit would be, using participant-entered
assumptions. The statements mailed to plaintiffs by Hewitt
grossly overestimated the benefits to which they would be
entitled.
Plaintiffs alleged that Hewitt, the Committee, and
Northrop had breached their fiduciary duties and that the
Committee had failed to provide ERISA-required benefit
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
BAFFORD V. NORTHROP GRUMMAN 3
information. Agreeing with the First Circuit, the panel held
that calculation of benefits pursuant to a formula is not a
fiduciary function, and so plaintiffs failed to state a claim for
breach of a fiduciary duty by any of the three defendants.
Furthermore, plaintiffs did not adequately plead that they
submitted written requests for pension benefit statements as
required to state a claim for violation of 29 U.S.C.
§ 1025(a)(1)(B)(ii). The panel therefore affirmed the
dismissal of plaintiffs’ ERISA claims. However, because
plaintiffs could plead facts adequate to allege that they made
written requests via an electronic writing, the panel directed
the district court to permit plaintiffs to file an amended
complaint.
Vacating in part, the panel held that plaintiffs’ state-law
professional negligence and negligent misrepresentation
claims were not preempted by ERISA because they did not
have a “reference to or connection with” an ERISA plan.
The panel remanded for further proceedings.
COUNSEL
Elizabeth Hopkins (argued) and Susan Meter, Kantor &
Kantor LLP, Northridge, California; Teresa S. Renaker,
Margo Hasselman Greenough, and Kirsten G. Scott,
Renaker Hasselman Scott LLP, San Francisco, California;
for Plaintiffs-Appellants.
Eileen R. Ridley (argued) and Jason Y. Wu, Foley & Lardner
LLP, San Francisco, California; Kimberly A. Klinsport and
Alyssa L. Tiche, Foley & Lardner LLP, Los Angeles,
California; for Defendant-Appellee Alight Solutions LLC.
4 BAFFORD V. NORTHROP GRUMMAN
Nancy G. Ross (argued), Richard E. Nowack, and Brett E.
Legner, Mayer Brown LLP, Chicago, Illinois; Alexander
Vitruk, Mayer Brown LLP, Los Angeles, California; for
Defendants-Appellees Northrop Grumman Corporation and
Administrative Committee of the Northrop Grumman
Pension Plan.
Norman Stein, Pension Rights Center, Washington, D.C.;
Jeffrey Lewis, Keller Rohrback LLP, Oakland, California;
for Amici Curiae Pension Rights Center and National
Employment Lawyers Association.
Stephen P. Lucke, Andrew Holly, Timothy Droske, and
Nicholas J. Bullard, Dorsey & Whitney LLP, Minneapolis,
Minnesota; Janet M. Jacobson, American Benefits Council,
Washington, D.C.; for Amicus Curiae American Benefits
Council.
OPINION
M. SMITH, Circuit Judge:
Northrop Grumman sponsored an employee pension
plan (Plan) that is subject to the requirements of the
Employee Retirement Income Security Act (ERISA).
Northrop delegated administration of the Plan to an
Administrative Committee (Committee), which in turn
contracted with Hewitt (now Alight Solutions), a company
that provided outside administrative services for the Plan.
One of Hewitt’s responsibilities was to generate statements
for Plan participants showing what their monthly pension
benefit would be when they retired, using participant-entered
assumptions. Plaintiffs Stephen Bafford and Evelyn Wilson
both requested these statements using an online platform
BAFFORD V. NORTHROP GRUMMAN 5
provided by Hewitt in the years leading up to their
retirement. Hewitt mailed the statements to Plaintiffs on
Northrop letterhead.
The statements mailed to Plaintiffs in response to their
online platform requests grossly overestimated the benefits
to which each plaintiff would be entitled. After Plaintiffs
retired and began collecting benefits in the amount the
statements predicted they would, Northrop sent them notices
that the statements generated by the online platform had
been incorrect. Instead of the approximately $2,000 and
$1,600 per month benefit Hewitt previously estimated,
Bafford and Wilson were only entitled to receive $807 and
$823 per month, respectively.
Bafford and Wilson sued. They alleged that Hewitt, the
Committee, and Northrop had breached their fiduciary duties
and that the Committee failed to provide ERISA-required
benefit information. In an alternative to their ERISA claims,
Plaintiffs asserted state-law professional negligence and
negligent misrepresentation claims against Hewitt. The
district court granted Defendants’ motion to dismiss, and
Plaintiffs appealed. We affirm in part, vacate in part, and
remand for further proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
The following facts are alleged in the complaint and
taken as true for the purposes of a motion to dismiss. Curtis
v. Irwin Indus., Inc., 913 F.3d 1146, 1151 (9th Cir. 2019).
Northrop sponsors the Northrop Grumman Retirement
Plan and the Grumman Pension Plan. Plaintiffs Stephen
Bafford and Evelyn Wilson, each of whom separated from
Northrop prior to July 2003 and later returned to work, were
entitled to retirement benefits based on their highest three
6 BAFFORD V. NORTHROP GRUMMAN
years of salary from their first period of employment. In the
years prior to retirement, but after their returns from their
earlier separations from Northrop, Plaintiffs requested
pension benefit estimates from time to time using the online
platform provided by Hewitt and inserting varying
hypothetical dates of retirement to see how their benefits
would change. The statements generated in response to
Plaintiffs’ use of the online platform were titled “Retirement
Plan Pension Estimate Calculation Statement,” and said,
“Here’s the pension estimate you requested. These amounts
are estimated benefits using your personal information on
file, the assumptions you entered . . . , and the current terms
of the Retirement Plan. Actual benefits payable to you may
vary from the amounts on this estimate.”
Indeed, the actual benefits payable did vary, because the
estimates generated through the online platform calculated
the anticipated benefit using Plaintiffs’ salaries during their
second period of employment, not the first period, as
required by the Plan. The benefit statements Bafford
received prior to his retirement indicated that he would
receive a retirement benefit of approximately $2,000 per
month. The benefit statements Wilson received prior to her
retirement indicated that she would receive a retirement
benefit of approximately $1,600 per month.
Both plaintiffs retired—Wilson in February 2014 and
Bafford in October 2016—and each began receiving
monthly retirement benefits in line with the statement
estimates. However, in 2016, during a transition to a
replacement recordkeeper, the errors in the calculation were
discovered. In December 2016, Bafford was informed that
his monthly retirement benefits would only be $807.89 per
month; in February 2017, Wilson was informed that her
monthly retirement benefits would be $823.93 per month,
BAFFORD V. NORTHROP GRUMMAN 7
and that she was required to repay over $35,000 of the
benefit she had already received.
Plaintiffs brought separate suits that were later
consolidated. Plaintiffs alleged that (1) Northrop, the
Committee, and Hewitt breached their fiduciary duties
pursuant to ERISA § 404(a), 29 U.S.C. § 1104(a); (2) the
Committee violated ERISA § 105, 29 U.S.C. § 1025, by
providing inaccurate pension benefit statements; (3) Hewitt
was liable for professional negligence; (4) Hewitt was liable
for negligent misrepresentation; and (5) Northrop, the
Committee, and Hewitt violated ERISA § 406(a), 29 U.S.C.
§ 1106(a), by Northrop and the Committee paying Hewitt for
recordkeeping services that were worthless. 1 The district
court dismissed Plaintiffs’ complaint for failure to state a
claim. Plaintiffs appealed. We have jurisdiction pursuant to
28 U.S.C. § 1291.
STANDARD OF REVIEW
“We review de novo a district court’s dismissal under
Rule 12(b)(6) of the Federal Rules of Civil Procedure.”
Curtis, 913 F.3d at 1151. On review, “[w]e accept all factual
allegations in the complaint as true and construe the
pleadings in the light most favorable to the nonmoving
party.” Id. (internal quotation marks omitted).
1
Plaintiffs did not appeal the district court’s dismissal of their claim
pursuant to 29 U.S.C. § 1106(a).
8 BAFFORD V. NORTHROP GRUMMAN
ANALYSIS
A.
An entity is a fiduciary under ERISA to the extent it has
or exercises any discretionary authority, control, or
responsibility in the management or administration of an
ERISA plan. 29 U.S.C. § 1002(21)(A)(i), (iii). An ERISA
fiduciary must discharge its duties “solely in the interest of
the participants and beneficiaries and for the exclusive
purpose of providing benefits to participants and their
beneficiaries; and defraying reasonable expenses of
administering the plan.” 29 U.S.C. § 1104(a)(1)(A) (cleaned
up). In doing so, a fiduciary must use “the care, skill,
prudence, and diligence under the circumstances then
prevailing that a prudent [person] acting in a like capacity
and familiar with such matters would use in the conduct of
an enterprise of a like character and with like aims.”
29 U.S.C. § 1104(a)(1)(B). To state a claim for breach of
fiduciary duty under ERISA, a plaintiff must allege that
(1) the defendant was a fiduciary; and (2) the defendant
breached a fiduciary duty; and (3) the plaintiff suffered
damages. See 29 U.S.C. § 1109(a); see also Mathews v.
Chevron Corp., 362 F.3d 1172, 1178 (9th Cir. 2004).
1.
Northrop and the Committee do not dispute that they are
named fiduciaries under the Plan. The question is whether
Plaintiffs adequately alleged that the Committee breached a
fiduciary duty to provide accurate benefit information,
and—tied to that—whether Northrop breached a fiduciary
duty to monitor the Committee’s performance.
The complaint alleges that Northrop and the Committee
“breached their fiduciary duties to Plaintiffs and the Class
BAFFORD V. NORTHROP GRUMMAN 9
members by . . . failing to ensure that they or their delegees
provided Plaintiffs with complete and accurate information
regarding the amount of the Northrop Plan benefit” based on
Hewitt’s erroneous calculations. The parties dispute
whether Hewitt was performing a fiduciary function.
“There are two types of fiduciaries under ERISA. First,
a party that is designated ‘in the plan instrument’ as a
fiduciary is a ‘named fiduciary.’” Depot, Inc. v. Caring for
Montanans, Inc., 915 F.3d 643, 653 (9th Cir. 2019) (quoting
29 U.S.C. § 1102(a)(2)). Second, a person who exercises
discretionary control over management or administration of
a plan is a “functional fiduciary.” Id. at 653–54 (citing
29 U.S.C. § 1002(21)(A)).
When a plaintiff seeks to hold a functional fiduciary
liable for breach of fiduciary duty, the plaintiff must allege
that the defendant was performing a fiduciary function
during the purported violation. In Pegram v. Herdrich,
530 U.S. 211 (2000), the Supreme Court wrote that ERISA
does not describe fiduciaries simply as
administrators of the plan, or managers or
advisers. Instead it defines an administrator,
for example, as a fiduciary only to the extent
that he acts in such a capacity in relation to a
plan. In every case charging breach of
ERISA fiduciary duty, then, the threshold
question is not whether the actions of some
person employed to provide services under a
plan adversely affected a plan beneficiary’s
interest, but whether that person was acting
as a fiduciary (that is, was performing a
fiduciary function) when taking the action
subject to complaint.
10 BAFFORD V. NORTHROP GRUMMAN
Id. at 225–26 (internal citation and quotation marks omitted).
However, the defendant in Pegram was alleged to be a
functional fiduciary, not a named fiduciary, so Pegram
theoretically left open the question of whether the same
“threshold question” applies when the defendant is a named
fiduciary.
In Depot, 915 F.3d at 654, we analyzed the alleged
fiduciary breach of a functional fiduciary using the Pegram
framework. However, neither the Supreme Court nor our
court has addressed the question of whether a named
fiduciary also must be performing a fiduciary function in
order to breach a fiduciary duty. See Acosta v. Brain,
910 F.3d 502, 518 (9th Cir. 2018) (writing that although the
threshold question is whether an employer is wearing his
“fiduciary hat,” the court lacked “basic information such as
whether [the defendant] was a named or functional
fiduciary”). Nor has our circuit decided whether calculating
benefit amounts pursuant to a pre-set formula is a fiduciary
function, such that failing to exercise due care in the course
of the calculation is a breach of fiduciary duty.
Drawing on Pegram, the First Circuit answered both
these questions, and held that calculation of a pension benefit
by a named fiduciary was not a fiduciary function in a case
very similar to this one. Livick v. Gillette Co., 524 F.3d 24(1st Cir. 2008). In Livick, Gillette’s human resources officer
and its online benefit estimator both overstated Livick’s
accrued pension benefit. Id. at 27. Livick was laid off from
Gillette and turned down another job in reliance on the
overstatement, but Gillette then corrected the overstatement.
Id. Livick sued Gillette under ERISA alleging a breach of
fiduciary duty. Id. at 27–28.
The First Circuit began with the proposition that “[a]
fiduciary named in an ERISA plan can undertake non-
BAFFORD V. NORTHROP GRUMMAN 11
fiduciary duties.” Id. at 29. In arriving at that conclusion,
the court consulted a Department of Labor interpretive
bulletin, 29 C.F.R. § 2509.75-8 (Cmt. D-2), and the court
found its reasoning persuasive. Livick, 524 F.3d at 29.
According to the bulletin, “calculation of benefits, and
preparation of reports concerning participants’ benefits are
ministerial functions, and a person who performs purely
ministerial functions within a framework of policies,
interpretations, rules, practices and procedures made by
other persons is not a fiduciary.” Id. (cleaned up).
Accordingly, because the named fiduciary in Livick was
performing a ministerial function, the alleged wrongs were
not breaches of a fiduciary duty. Id. The Fourth Circuit is
in accord with the proposition that a named fiduciary may
perform non-fiduciary functions. Dawson-Murdock v. Nat’l
Counseling Grp., Inc., 931 F.3d 269, 278 n.13 (4th Cir.
2019) (citing Pegram and Livick and stating that “there is no
liability for breach of fiduciary duty if the challenged
conduct of the plan administrator and named fiduciary is not
fiduciary in nature, as there can be no breach of a nonexistent
fiduciary duty.”).
In Sullivan-Mestecky v. Verizon Communications Inc.,
961 F.3d 91, 104 (2d Cir. 2020), the Second Circuit reached
a contrary conclusion. According to the Second Circuit,
“plan administrators ‘may perform a fiduciary function
through ministerial agents’ . . . even ‘without converting
those individual agents themselves into fiduciaries.’” Id.(quoting In re DeRogatis, 904 F.3d 174, 192 (2d Cir. 2018)).
Thus, the Sullivan-Mestecky court permitted a plaintiff to
maintain a suit for fiduciary breach against an employer
based on the imputed gross negligence of a third-party
ministerial benefits administrator. Id. Underlying the
Second Circuit’s reasoning in Sullivan-Mestecky were two
principles, taken from DeRogatis: (1) that entities “act as
12 BAFFORD V. NORTHROP GRUMMAN
fiduciaries when they communicate with plan members and
beneficiaries about plan benefits,” and (2) that these
communicative duties “encompass[] communications
conducted by issuing written plan materials like summary
plan descriptions, as well as through members’
individualized consultations with benefits counselors.”
DeRogatis, 904 F.3d at 192; see also Bowerman v. Wal-Mart
Stores, Inc., 226 F.3d 574, 591 (7th Cir. 2000). Thus, where
a third-party ministerial benefits administrator undertakes
these duties on a fiduciary’s behalf, the fiduciary cannot hide
behind that delegation to escape liability for fiduciary
breach. Sullivan-Mestecky, 961 F.3d at 104. In other words,
if a fiduciary delegates a fiduciary function to an entity that
normally performs a ministerial function, that entity’s
performance of a fiduciary function can still constitute a
breach of fiduciary duty, imputed to the delegating fiduciary.
Sullivan-Mestecky and other out-of-circuit precedent
Plaintiffs cite do not apply here because Plaintiffs do not
allege that Hewitt was “issuing written plan materials like
summary plan descriptions,” or providing “individualized
consultations with benefits counselors.” DeRogatis,
904 F.3d at 192. We agree that these activities are well-
established fiduciary functions. The touchstone of our
reasoning is that Hewitt’s calculation of participants’ future
pension benefit estimates was itself not the type of
communication with beneficiaries that is fiduciary in nature.
Northrop’s delegation of this duty to Hewitt is not the
operative fact that exempts Defendants from liability for a
fiduciary breach; the operative fact is that the function being
performed was not fiduciary in nature. Consistent with
Pegram, Livick, and Dawson-Murdock, we hold that the
alleged wrong must occur in connection with the
performance of a fiduciary function to be cognizable as a
breach of fiduciary duty. Furthermore, we agree with Livick
BAFFORD V. NORTHROP GRUMMAN 13
in finding the Department of Labor’s interpretive bulletin,
29 C.F.R. § 2509.75-8 (Cmt. D-2), persuasive. The
interpretive bulletin comports with the fundamental precept
that discretion is one of the central touchstones for a
fiduciary role. See Ariz. State Carpenters Pension Tr. Fund
v. Citibank, 125 F.3d 715, 722 (9th Cir. 1997). Calculating
a benefit within the framework of a policy set by another
entity does not involve the requisite discretion or control to
constitute a fiduciary function. Consequently, we hold that
Plaintiffs have not alleged that Hewitt was performing a
fiduciary function in miscalculating retirement benefits. As
a result, Northrop and the Committee did not breach a
fiduciary duty by failing to ensure that Hewitt correctly
calculated Plaintiffs’ benefits. We affirm the district court’s
dismissal of Plaintiffs’ fiduciary duty claims against
Northrop and the Committee.
2.
Plaintiffs’ complaint alleges that Hewitt was a fiduciary
because it exercised discretionary control, authority, or
responsibility for the Plan’s administration or management.
Specifically, Plaintiffs alleged that Hewitt “prepared
summaries of the Northrop Plan provisions” and, “[u]pon
information and belief,” used those summaries to calculate
pension benefit estimates. Consequently, Plaintiffs
conclude, Hewitt breached its fiduciary duty by “failing to
apply the Northrop Plan provisions in calculating
participants’ benefits and repeatedly providing Plaintiffs and
the Class members with inaccurate information regarding
the amounts of their pensions.”
This claim fails for the same reason that Plaintiffs’ claim
against Northrop and the Committee fails: calculation of
pension benefits is a ministerial function that does not have
a fiduciary duty attached to it. Thus, even if Hewitt were a
14 BAFFORD V. NORTHROP GRUMMAN
functional fiduciary with respect to some of its actions, it
would not have been acting as a fiduciary when performing
calculations according to the Plan formula. See Acosta,
910 F.3d at 517 (“ERISA requires that the fiduciary with two
hats wear only one at a time, and wear the fiduciary hat when
making fiduciary decisions.” (cleaned up)).
B.
ERISA requires the administrator of a defined benefit
plan to “furnish a pension benefit statement (i) at least once
every 3 years to each participant . . . , and (ii) to a participant
or beneficiary of the plan upon written request.” 29 U.S.C.
§ 1025(a)(1)(B). In the alternative to (i), the administrator
may provide “notice of the availability of the pension benefit
statement and the ways in which the participant may obtain
such statement” at least once a year. Id. § 1025(a)(3)(A).
The Committee’s escape from liability on the fiduciary
duty claim does not necessarily exonerate it from its other
statutory obligations. In Varity Corp. v. Howe, 516 U.S. 489(1996), after stating that the primary function of the fiduciary
duty is to constrain discretionary authority not covered by
other statutory provisions (such as § 1025(a)’s requirement
to furnish benefit statements), the Supreme Court wrote, “[i]f
the fiduciary duty applied to nothing more than activities
already controlled by other specific legal duties, it would
serve no purpose.” Id. at 504.
1.
Plaintiffs’ claim fails as to the first clause, (a)(1)(B)(i),
because the complaint includes no allegations showing that
the Committee failed to provide yearly notice of the
availability of the pension benefit statement, as allowed by
(a)(3)(A). Thus, taking Plaintiffs’ pleaded facts as true, the
BAFFORD V. NORTHROP GRUMMAN 15
Committee could still have complied with (a)(1)(B)(i) by
providing notice of the process for requesting a pension
benefit statement.
2.
Plaintiffs’ claim pursuant to the second clause,
(a)(1)(B)(ii), presents a more difficult question. The district
court held that Plaintiffs’ complaint failed to state a claim
because it did not adequately allege that Plaintiffs’ requests
for pension benefit statements were “written.” Although we
hold that use of an online platform to request a pension
benefit statement can satisfy the writing requirement for
29 U.S.C. § 1025(a)(1)(B)(ii), Plaintiffs’ pleaded allegations
in the complaint here are still insufficient because the
complaint does not allege that the online platform request
was “written.”
Thus far, no circuit has addressed whether a pension
benefit estimate request via an online portal is sufficient to
constitute a “written request” for purposes of § 1025(a). In
Christensen v. Qwest Pension Plan, 462 F.3d 913 (8th Cir.
2006), the Eighth Circuit considered whether a telephonic
request for a pension benefit statement was a “written
request.” Rejecting the plaintiff’s argument that his
telephone call was an “electronic recording” akin to a
writing under the Federal Rules of Evidence, the Eighth
Circuit held that the plaintiff was not entitled to statutory
penalties. Id. at 919. Because only a telephone call was at
issue, the court did not address “whether a participant’s use
of the e-mail alternative would be a request ‘in writing.’” Id.Several district courts in the Ninth Circuit have
considered whether online platform requests constitute
written requests under § 1025(a), and, based on the structure
of the statute, have ruled against plaintiffs who have argued
16 BAFFORD V. NORTHROP GRUMMAN
for that construction. See, e.g., Mabry v. ConocoPhillips
Co., No. 20-cv-00039-SLG, 2021 WL 189144, at *10–11
(D. Alaska Jan. 19, 2021); Wilson v. Bank of Am. Pension
Plan, No. 18-cv-07755-TSH, 2019 WL 2549044, at *3 (N.D.
Cal. June 20, 2019). As the district court noted in Mabry,
we “ha[ve] not addressed” this question. Mabry, 2021 WL
189144, at *10.
In this case, the district court was correct to the extent
that the bare allegation that Plaintiffs used an online platform
to request a pension benefit estimate does not satisfy the
“written request” requirement of § 1025(a). However, we
also conclude that the statute does not limit adequate
requests to only those written by hand on a piece of paper
and conveyed in the postal system. In other words, an
adequate electronic writing suffices.
Our reasoning is straightforward and relies on the
common understanding of the word “written.” “The
preeminent canon of statutory interpretation requires us to
presume that the legislature says in a statute what it means
and means in a statute what it says there. Thus, our inquiry
begins with the statutory text, and ends there as well if the
text is unambiguous.” Satterfield v. Simon & Schuster, Inc.,
569 F.3d 946, 951 (9th Cir. 2009) (cleaned up).
Black’s Law Dictionary defines a “writing” as “[a]ny
intentional recording of words in a visual form, whether in
handwriting, printing, typewriting, or any other tangible
form that may be viewed or heard with or without
mechanical aids.” Writing, Black’s Law Dictionary (11th
ed. 2019). We think it plainly true that a typed request for a
pension benefit statement qualifies as a written request under
the text of the statute.
BAFFORD V. NORTHROP GRUMMAN 17
We reject the notion that the subsections surrounding
§ 1025(a)(1)(B)(ii) support a different reading. The district
court in this case—and other district courts noted above—
looked to subsection (a)(2)(A)(iv). This subsection lists
acceptable delivery methods for the pension benefit
statement: “written, electronic, or other appropriate form[.]”
The contrast between the specification that the request must
be “written,” and the allowance for “written [or] electronic”
statement delivery is a distinction without a difference.
Nothing in the statute suggests that Congress intended to
disqualify typewritten requests for pension benefit
statements from triggering ERISA’s obligations. Moreover,
the two subsections address entirely different subjects: the
form of the request and the method of the statement’s
delivery. The two subsections are therefore not analogous
in a way that allows us to draw conclusions from the
electronic delivery option in one of them. We therefore
reject the contention that an online platform request for a
pension benefit statement can never trigger a plan
administrator’s statutory obligations pursuant to § 1025(a).
Such a narrow construction would be inconsistent with the
purpose of ERISA, which is “designed to promote the
interests of employees and their beneficiaries in employee
benefit plans.” See Shaw v. Delta Air Lines, Inc., 463 U.S.
85, 90 (1983).
Plaintiffs’ complaint did not include specific allegations
about the manner in which Plaintiffs submitted their request
for a pension benefit statement via the online platform. If
Plaintiffs’ complaint alleged facts which, if true, would show
Plaintiffs’ “intentional recording of words in a visual form”
that conveyed a request for a pension benefit statement, their
§ 1025(a)(1)(B)(ii) claim could survive. Writing, Black’s
Law Dictionary (11th ed. 2019). The complaint does not
specify which words—if any—Plaintiffs intentionally
18 BAFFORD V. NORTHROP GRUMMAN
recorded in a visual form, so we are not able to determine
whether those words are a sufficient request to trigger the
statutory obligations. Because the complaint lacks such
detail, the district court was correct to dismiss it without
prejudice on the ground that it did not allege a written
request.
C.
In an alternative to their ERISA claim against Hewitt,
Plaintiffs raise state-law professional negligence and
negligent misrepresentation claims. The district court
dismissed these claims on the ground that they are
preempted by ERISA.
ERISA preempts state-law causes of action that “relate
to any employee benefit plan.” Pilot Life Ins. Co. v.
Dedeaux, 481 U.S. 41, 45 (1987) (quoting 29 U.S.C.
§ 1144(a)). “The question whether a certain state action is
pre-empted by federal law is one of congressional intent.”
Id. (cleaned up). The Supreme Court has “observed in the
past that the express pre-emption provisions of ERISA are
deliberately expansive, and designed to establish pension
plan regulation as exclusively a federal concern.” Id. at 45–
46 (internal quotation marks omitted). “[A] state law relates
to a benefit plan[,] in the normal sense of the phrase, if it has
a connection with or reference to such a plan.” Id. at 47(internal quotation marks and citation omitted)).
1.
“To determine whether a law has a forbidden reference
to ERISA plans, we ask whether (1) the law acts
immediately and exclusively upon ERISA plans, or (2) the
existence of ERISA plans is essential to the law’s operation.”
Paulsen v. CNF, Inc., 559 F.3d 1061, 1082 (9th Cir. 2009)
BAFFORD V. NORTHROP GRUMMAN 19
(cleaned up). It is well-settled that “professional negligence
claims are based on common law negligence principles and
California Civil Code §§ 1708 and 1714(a). These laws do
not act ‘immediately and exclusively on ERISA plans, and
the existence of an ERISA plan is not essential to these laws’
operation.” Paulsen, 559 F.3d at 1082. Plaintiffs’
professional negligence claim is not preempted on this
ground; for the same reason, their negligent
misrepresentation claim is not preempted.
2.
We have “employed a ‘relationship test’ in analyzing
‘connection with’ preemption, under which a state law claim
is preempted when the claim bears on an ERISA-regulated
relationship, e.g., the relationship between plan and plan
member, between plan and employer, between employer and
employee.” Id. (quoting Providence Health Plan v.
McDowell, 385 F.3d 1168, 1172 (9th Cir. 2004)). In
Paulsen, we concluded that a professional negligence claim
against a third-party actuary was not preempted because the
claims did not bear on any of the three relationships
enumerated. Id. at 1083. We wrote:
At most[, the claims] might interfere with a
relationship between the plan and its third-
party service provider. . . . Although a state
law negligence claim such as this one might
encroach on an ERISA-regulated relationship
were it made against a plan sponsor, it does
not encroach on any actuary-participant
relationship governed by ERISA when
asserted against a non-fiduciary actuary.
Id. at 1083. Instead, “[t]he duty giving rise to the negligence
claim runs from a third-party actuary, i.e., a non-fiduciary
20 BAFFORD V. NORTHROP GRUMMAN
service provider, to the plan participants as intended third
party beneficiaries of the actuary’s service contract.” Id.
The broad congressional purpose underlying ERISA is
to protect the rights and interests of beneficiaries under
employer-sponsored plans. See Varity, 516 U.S. at 497, 515.
Because congressional intent is relevant to the preemption
analysis, it bears noting that there is no “ERISA-related
purpose that denial of a remedy would serve” in this
instance. Id. at 515. Holding both that Hewitt’s calculations
were not a fiduciary function and that state-law claims are
preempted would deprive Plaintiffs of a remedy for the
wrong they allege without examination of the merits of their
claim. Broadly, this would be inconsistent with ERISA’s
purpose.
The Paulsen reasoning applies with equal force here.
Plaintiffs’ claims against Hewitt do not bear on the
relationship between Plaintiffs and the Plan; between
Northrop, the Committee, and the Plan; or between
Plaintiffs, Northrop, and the Committee. 2 Consequently, the
state-law professional negligence claim does not have a
“connection with” an ERISA plan as the caselaw uses that
phrase, and ERISA does not preempt the cause of action.
2
The district court concluded that “but for the Plan, Plaintiffs’
entitlement to a pension benefit consistent with its terms and Hewitt’s
role in calculating benefits under the Plan, Plaintiffs would have no claim
against Hewitt. Here, unlike Paulsen, a relationship between ‘plan and
plan member’ is directly at issue.” The district court’s reasoning is
flawed. In this case, as in Paulsen, but for the ERISA plan, the third-
party would not have had any role to play. Paulsen, 559 F.3d at 1065(“In connection with the plan spinoff, [the employer] engaged the
actuarial services of [the third party] to value the benefit liabilities to be
transferred to the [employer-sponsored] plan.”). Paulsen therefore does
not meaningfully differ from the facts of this case.
BAFFORD V. NORTHROP GRUMMAN 21
Similarly, the state-law negligent misrepresentation claim
relates only to the relationship between Plaintiffs and
Hewitt; this claim is also not preempted under the
“connection with” prong.
Defendants’ briefs include attacks on the merits of the
state-law claims. Because the district court dismissed the
state-law claims based on ERISA preemption and did not
address the merits, the district court should consider these
arguments in the first instance on remand.
CONCLUSION
Calculation of benefits pursuant to a formula is not a
fiduciary function, so Plaintiffs failed to state a claim for
breach of a fiduciary duty by any of the three defendants.
Furthermore, Plaintiffs did not adequately plead that they
submitted written requests for pension benefit statements as
required to state a claim for violation of 29 U.S.C.
§ 1025(a)(1)(B)(ii). For these reasons, we affirm the district
court’s dismissal of Plaintiffs’ ERISA claims. However,
because Plaintiffs could plead facts adequate to allege they
made written requests, we direct the district court to permit
Plaintiffs to file an amended complaint. Finally, Plaintiffs’
state-law professional negligence and negligent
misrepresentation claims are not preempted by ERISA
because they do not have a “reference to or connection with”
an ERISA plan. We therefore vacate the district court’s
dismissal of Plaintiffs’ state-law claims, and we remand for
further proceedings consistent with this opinion. Each party
shall bear its own costs on appeal.
AFFIRMED IN PART, VACATED IN PART, AND
REMANDED.