Charles Guenther v. Lockheed Martin Corporation

FILED
NOT FOR PUBLICATION MAR 29 2016
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CHARLES GUENTHER, No. 14-15193
Plaintiff - Appellant, D.C. No. 5:11-cv-00380-EJD
v.
MEMORANDUM*
LOCKHEED MARTIN CORPORATION
and LOCKHEED MARTIN
CORPORATION RETIREMENT PLAN
FOR CERTAIN SALARIED
EMPLOYEES,
Defendants - Appellees.
Appeal from the United States District Court
for the Northern District of California
Edward J. Davila, District Judge, Presiding
Argued and Submitted February 9, 2016
San Francisco, California
Before: HAWKINS, W. FLETCHER, and MURGUIA, Circuit Judges.
Charles Guenther appeals the district court’s grant of summary judgment to
Lockheed Martin Corporation (“Lockheed”) and the Lockheed Martin Corporation
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Salaried Employee Retirement Program (“the Plan”), a defined benefit plan, on
claims arising under the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1132. We affirm in part, vacate in part, and remand.
We affirm the district court’s grant of summary judgment to Lockheed and
the Plan (collectively, “Defendants”) on Guenther’s claim under 29 U.S.C.
§ 1132(a)(1)(B). We review for abuse of discretion Lockheed’s determination that
Guenther was not entitled to benefits under the terms of the Plan. See Salomaa v.
Honda Long Term Disability Plan, 642 F.3d 666, 673 (9th Cir. 2011). Under this
standard, an ERISA plan administrator’s decision will be upheld if it was
“reasonable.” See id. at 675 (citing Conkright v. Frommert, 559 U.S. 506, 521
(2011)). If the Plan administrator has a conflict of interest or violated the
procedural requirements of ERISA, we use the same standard of review, but “judge
the reasonableness of the plan administrator skeptically.” Id.; see also Abatie v.
Alta Health & Life Ins. Co., 458 F.3d 955, 972 (9th Cir. 2006) (en banc).
Here, the Plan amendment adopted in 2005 provided that “no person who is
re-employed by an Employing Company on or after January 1, 2006 shall become
an active Participant or earn Credited Service under the Plan with respect to any
period commencing with such reemployment.” Guenther was rehired by Lockheed
in September 2006. Applying “special skepticism” because of Lockheed’s conflict
2
of interest and alleged procedural irregularities, we nevertheless conclude that it
was reasonable for Lockheed to interpret the terms of the Plan to preclude
Guenther from continuing to accrue credited service after his rehire.
Guenther also asserts that Defendants breached their fiduciary duty to him
and seeks equitable relief to redress that breach under 29 U.S.C. § 1132(a)(3).1
The Supreme Court has recognized three types of equitable relief available under
§ 1132(a)(3): equitable estoppel, reformation, and surcharge. CIGNA Corp. v.
Amara, 563 U.S. 421, 440–42 (2011); see also Gabriel v. Alaska Elec. Pension
Fund, 773 F.3d 945, 955–58, 961–63 (9th Cir. 2014) (describing requirements for
equitable estoppel, reformation, and surcharge); Skinner v. Northrop Grumman
Ret. Plan B, 673 F.3d 1162, 1166–67 (9th Cir. 2012) (discussing reformation and
surcharge). The district court addressed only equitable estoppel, holding that
Guenther did not clearly allege equitable estoppel and denying his motion to
amend as untimely. In the alternative, the district court held that the equitable
estoppel claim failed because there was no misrepresentation and the Plan terms
1
See 29 U.S.C. § 1132(a)(3) (permitting participants and beneficiaries to
obtain “appropriate equitable relief” to redress ERISA violations); id. § 1104(a)(1)
(requiring ERISA fiduciary to 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”).
3
were not ambiguous, as required for equitable estoppel under Ninth Circuit case
law.
We disagree with the district court’s determination that Guenther failed to
allege facts supporting a breach of fiduciary duty claim under § 1132(a)(3). His
First Amended Complaint (FAC) alleged the following facts:
When Lockheed recruited Guenther to return to the company in 2006, one of
Guenther’s “key conditions” of returning was that he continue to “receive the full
benefit of the company’s defined benefit retirement plan.” A Lockheed
representative promised him in writing that it would be possible to “bridge” his
prior service. Upon Guenther’s previous rehire at Lockheed in 1997, he had been
promised “bridging,” and the credited service he accrued during his subsequent
period of employment had been combined with his previous period of employment
to determine his overall credited service time under the Plan. Lockheed never
informed him until after he returned to Lockheed in 2006 that it meant something
different by “bridging” on this second occasion — i.e., that now, under its current
use of the term, “bridging” did not include accruing additional credited service
under the Plan. Nor did Lockheed inform him that it would place him on a
4
different plan.2 Guenther left his job at Lawrence Livermore National Laboratories
and rejoined Lockheed in reliance on Lockheed’s promise, as he understood it, that
his employment would be “bridged” such that upon his new employment he would
accrue credited service under the Plan.
These detailed allegations and the “bridging” letters from Lockheed attached
to the FAC were sufficient to put Defendants on notice that Guenther was accusing
them of misrepresenting his ability to accrue more credited service time under the
Plan. In fact, Defendants seemed to realize that Guenther was alleging a
misrepresentation, as they asserted an affirmative defense to equitable estoppel in
their answer.
We also disagree with the district court’s conclusion that there was no
misrepresentation. That conclusion was premature in light of (1) the unchallenged
evidence that Guenther had received “bridging” in the way that he understood it
the last time he was rehired by Lockheed, and Defendants made no mention that
they were using a new defined contribution retirement plan and that the 2005 Plan
amendment barred the type of “bridging” Guenther expected; and (2) the lack of
2
Although not specifically alleged, the record shows that Lockheed also
failed to inform Guenther that the 2005 Plan amendment excluded rehires from
accruing credited service.
5
opportunity for Guenther to conduct discovery into Defendants’ frame of mind
when they made that promise.
However, we do agree with the district court’s final decision to grant
summary judgment as to equitable estoppel. Alleging and proving a material
misrepresentation by a fiduciary (a breach of fiduciary duty) is not necessarily
sufficient to obtain equitable relief under § 1132(a)(3). Additional criteria must be
met to obtain certain types of equitable relief. The district court correctly held that,
under long-standing Ninth Circuit case law, Guenther was not eligible for equitable
estoppel because the post-2005 Plan terms are unambiguous. See Greany v. W.
Farm Bureau Life Ins. Co., 973 F.2d 812, 822 (9th Cir. 1992) (equitable estoppel is
not available if it “would result in a payment of benefits that would be inconsistent
with the written plan”); see also Gabriel, 773 F.3d at 957 (requiring party seeking
estoppel to show “that the provisions of the plan at issue were ambiguous such that
reasonable persons could disagree as to their meaning or effect”). Thus, we affirm
the district court’s grant of summary judgment as to equitable estoppel.
The district court did not discuss reformation or surcharge. Our intervening
issuance of Gabriel provides guidance on the availability of these remedies. Like
in Gabriel, reformation in this case is not available because it “would result in a
payment of benefits that would be inconsistent with the written plan.” Gabriel,
6
773 F.3d at 962. On the other hand, Gabriel suggested that surcharge could be
available notwithstanding any conflict with the unambiguous terms of the plan.
See id. at 962–63 (vacating and remanding for the district court to consider
surcharge). Thus, we vacate the district court’s judgment on Guenther’s
§ 1132(a)(3) claim and remand for the district court to consider whether
Defendants breached a fiduciary duty and, if so, whether Guenther is entitled to
surcharge as a remedy. On remand, the court should allow discovery of evidence
relevant to these issues, including evidence outside the administrative record.
Jensen v. Solvay Chems., Inc., 520 F. Supp. 2d 1349, 1355 (D. Wyo. 2007)
(distinguishing § 1132(a)(1)(B) claims from § 1132(a)(3) claims and allowing
discovery outside the administrative record for the latter); see also Colaco v. ASIC
Advantage Simplified Pension Plan, 301 F.R.D. 431, 434–35 & n.27 (N.D. Cal.
2014) (citing Jensen and allowing discovery beyond administrative record in
connection with § 1132(a)(3) claim); Sconiers v. First Unum Life Ins. Co., 830 F.
Supp. 2d 772, 778 (N.D. Cal. 2011) (denying summary judgment as premature and
allowing discovery into § 1132(a)(3) claim).
AFFIRMED in part; VACATED in part; and REMANDED with
instructions. Each party shall bear its own costs on appeal.
7