Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-05-07140/USCOURTS-caDC-05-07140-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

---

Notice: This opinion is subject to formal revision before publication in the

Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify the

Clerk of any formal errors in order that corrections may be made before the

bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 15, 2006 Decided December 15, 2006

No. 05-7140

MICHAEL STEWART AND ILENE BERGENFELD,

AS TRUSTEES OF THE PHILIP A. STEWART IRREVOCABLE

TRUST, ON BEHALF OF THEMSELVES AND ALL OTHER PERSONS

SIMILARLY SITUATED,

APPELLANTS

v.

NATIONAL EDUCATION ASSOCIATION AND

NATIONAL EDUCATION MEMBERS INSURANCE TRUST,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 02cv02014)

James M. Pietz argued the cause for appellants. With him

on the briefs were Philip Friedman, Michael P. Malakoff, Marc

A. Wites, and Alejandro Perez.

Leon Dayan argued the cause for appellees. With him on

USCA Case #05-7140 Document #1011400 Filed: 12/15/2006 Page 1 of 15
2

the brief were Douglas L. Greenfield and Karen M. Wahle.

Julia P. Clark entered an appearance.

Before: SENTELLE and ROGERS, Circuit Judges, and

SILBERMAN, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge ROGERS.

ROGERS, Circuit Judge: This case concerns a transfer of

money from the Prudential Life Insurance Company to the

National Education Association Members Insurance Trust

(“NEA Trust”) when Prudential converted from a mutual life

insurance company—where the insured mutually own the

company—into a stock life insurance company. On appeal from

the dismissal of the complaint pursuant to Federal Rule of Civil

Procedure 12(b)(6), the trustees of the estate of Philip A. Stewart

(“Stewart”) contend that he is entitled to benefit from the

demutualization. Stewart maintains that the district court erred

in ruling that the Employee Retirement Income Security Act of

1974 (“ERISA”), 29 U.S.C. § 1001 et seq., applied to the NEA

insurance benefit plan and, alternatively, that he failed to state

a cause of action under ERISA for benefits and for breach of

fiduciary duty. In view of the allegations in the amended

complaint, Stewart is estopped from arguing that ERISA does

not apply to the NEA insurance benefit plan. Further, Stewart

identifies no term of the Group Contract that entitles him to

receive the demutualization proceeds, which represent the

capitalization of future dividends, as a benefit. Additionally,

because Stewart does not allege that he was entitled to the

demutualization proceeds as a dividend, but only that no

provision in the Group Contract allowed the NEA Trust to take

control of the insureds’ alleged equity interest in the

demutualization proceeds, he cannot show that the NEA or NEA

Trust (collectively, “the NEA”) breached a fiduciary duty under

ERISA. Accordingly, we affirm.

USCA Case #05-7140 Document #1011400 Filed: 12/15/2006 Page 2 of 15
3

I.

The NEA is a national organization of education

professionals. In 1978, it established a Members Insurance Plan

(“Plan”) to operate voluntary programs providing benefits in the

event of a death, accident, sickness, disability, or other

occurrence affecting participants or their families, either through

self-funding the benefits or by buying group insurance policies.

At the same time, the NEA set up the NEA Trust to hold the

Plan’s assets. The Plan is governed by a “Plan Document” and

the Trust is governed by a “Trust Agreement.” The NEA Trust

entered into a group life insurance contract (“Group Contract”)

with Prudential to provide insurance to participating NEA

members (“Member-Insureds”). The Group Contract

incorporates a Group Insurance Certificate and MemberInsureds’ individual applications and provides that the NEA

Trust is the contract holder.

NEA members are eligible for life and accident insurance

coverage under the Group Contract, subject to approval by

Prudential. Under the terms of the Group Contract, Prudential

fixes the premium amount, which the Member-Insured pays to

the NEA Trust, which in turn makes a group payment (equal to

the sum of those premiums) to Prudential. Claims are submitted

directly to Prudential. In recognition of the ownership stake of

Prudential’s policyholders, the Group Contract further provides

that “Prudential will determine the share, if any, of its divisible

surplus allocable to the Group Contract as of each Contract

Anniversary.” At some point, Prudential maintained separate

accounts for each Member-Insured, crediting “Paid Up Life

Insurance” with a “Cash Surrender Value” to each account. The

Group Contract gave Member-Insureds the right to obtain an

individual insurance contract if the Group Contract was

terminated.

USCA Case #05-7140 Document #1011400 Filed: 12/15/2006 Page 3 of 15
4

In December 2000, Prudential approved a plan to convert

from mutual ownership to stock ownership. The reorganization

plan was approved by the State of New Jersey, where Prudential

is domiciled. See Plan of Reorganization of the Prudential Ins.

Co., Order No. A01-153 (N.J. Dep’t of Banking & Ins. Oct. 15,

2001), http://www.state.nj.us/dobi/a01_153.htm. When the

conversion occurred on December 13, 2001, Prudential’s mutual

insurance policies were converted to non-participating policies

in the name of the new stock company. At this time, Prudential

transferred to the NEA Trust $17 million in “demutualization

proceeds,” which Stewart describes as “the residual value of

Member-Insureds’ prior premium payments.” Appellants’ Br. at

8. The NEA Trust treated the demutualization proceeds as a

general Plan asset to be used for the benefit of all Plan

participants, regardless of whether they participated in the

Prudential Group Contract. Because the Plan’s documents did

not specifically refer to the treatment of demutualization

proceeds, the NEA amended the Plan Document to specify how

such a transfer of money was to be treated. 

Stewart sued the NEA in a putative class action on behalf

of other Member-Insureds in the same Prudential life insurance

program sponsored by the NEA. Stewart’s basic claim was that

the demutualization proceeds constituted the share of Prudential

attributable to premiums from Group Contract participants and

that the NEA Trust accordingly was required to distribute the

funds to the individual Member-Insureds or to segregate the

funds for their benefit. The NEA Trust had treated the funds as

Plan assets that could be used for the benefit of Plan members

not participating in the Group Contract. Stewart also claimed

that the demutualization terminated the preexisting policies,

triggering Member-Insureds’ privilege to convert their Group

Contract certificates to individual insurance contracts. In the

alternative, Stewart alleged claims under ERISA, federal

common law, and state law. Appended to the amended

USCA Case #05-7140 Document #1011400 Filed: 12/15/2006 Page 4 of 15
5

complaint were the Group Contract, the Group Insurance

Certificate, the Individual Contract Enrollment Form and

Certificates, the Plan Document with its 2002 amendment, and

the Trust Agreement. Upon the NEA’s motion, the district court

dismissed all of Stewart’s claims, ruling that ERISA applied and

preempted the six state-law claims and that Stewart failed to

state a claim under ERISA. Stewart v. Nat’l Educ. Ass’n, 404 F.

Supp. 2d 122 (D.D.C. 2005). Stewart appeals the dismissal of

the two ERISA and the state-law counts.

II.

ERISA sets out an “interlocking, interrelated, and

interdependent remedial scheme,” Mass. Mut. Life Ins. Co. v.

Russell, 473 U.S. 134, 146 (1985), for violations of its

substantive regulatory requirements relating to employee benefit

plans. When ERISA applies, it “supersede[s] any and all State

laws insofar as they may now or hereafter relate to any

employee benefit plan.” 29 U.S.C. § 1144(a). The district court

found that it was “factually undeniable that the Group Contract

and the Plan are ‘employee welfare benefit plans’ within the

meaning of ERISA” and that each of Stewart’s state-law causes

of action “relate[d] to” the plan such that they were preempted

by ERISA’s federal causes of action. Stewart, 404 F. Supp. 2d

at 137-39. On appeal, Stewart challenges whether his pleadings

require the conclusion that the Group Contract is an employee

benefit plan covered by ERISA. He does not challenge whether

the state-law causes of action “relate to” those plans. 

We review de novo both the district court’s statutory

interpretation, see Kaseman v. District of Columbia, 444 F.3d

637, 640 (D.C. Cir. 2006), and its dismissal of the complaint for

failure to state a cause of action, see Barr v. Clinton, 370 F.3d

1196, 1201 (D.C. Cir. 2004). Of course, a complaint should not

be dismissed unless the plaintiff can prove no set of facts that

USCA Case #05-7140 Document #1011400 Filed: 12/15/2006 Page 5 of 15
6

would entitle the plaintiff to relief, see Conley v. Gibson, 355

U.S. 41, 45-46 (1957), construing the complaint liberally in the

plaintiff’s favor with the benefit of all reasonable inferences

derived from the facts alleged, see Kowal v. MCI Commc’ns

Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). But the court need

not “accept legal conclusions cast in the form of factual

allegations.” Id. In determining whether a complaint states a

claim, the court may consider the facts alleged in the complaint,

documents attached thereto or incorporated therein, and matters

of which it may take judicial notice. See EEOC v. St. Francis

Xavier Parochial Sch., 117 F.3d 621, 624-25 (D.C. Cir. 1997).

ERISA “shall apply to any employee benefit plan if it is

established or maintained . . . by any employee organization or

organizations representing employees.” 29 U.S.C. § 1003(a).

“The terms ‘employee welfare benefit plan’ and ‘welfare plan’

mean any plan, fund, or program . . . established or . . .

maintained for the purpose of providing for its participants or

their beneficiaries, through the purchase of insurance or

otherwise . . . benefits in the event of sickness, accident,

disability, death or unemployment . . . .” Id. § 1002(1).

Stewart’s complaint, on its face, places the Plan, and the Group

Contract, within ERISA’s ambit. He alleges that the NEA is an

organization representing school teachers, that “the NEA

established the Members Insurance Plan” of which the Group

Contract is part, and that the NEA was “an administrator of the

Plan.” This ends the matter, as the district court concluded,

because Stewart has affirmatively pleaded the precise legal

conclusions he must avoid for coverage under ERISA and has

incorporated these allegations into each of his claims. Similarly,

because Stewart has pleaded the statutory requirements for an

“employee welfare benefit plan,” he is estopped from relying

upon the regulatory interpretations of that same term, see 29

C.F.R. § 2510.3-1(j).

USCA Case #05-7140 Document #1011400 Filed: 12/15/2006 Page 6 of 15
7

III.

Because ERISA applies, and thus preempts Stewart’s statelaw claims, all that remains of the complaint are two counts

alleging claims under ERISA.

A.

Count I of the complaint, styled a “Claim for Benefits,”

relies on the provision that permits a “participant or beneficiary”

to bring suit “to recover benefits due to him under the terms of

his plan, to enforce his rights under the terms of the plan, or to

clarify his rights to future benefits under the terms of the plan,”

29 U.S.C. § 1132(a)(1), or “to obtain other appropriate equitable

relief . . . to enforce . . . the terms of the plan,” id. § 1132(a)(3).

Stewart alleges that the NEA failed to segregate or transfer the

demutualization proceeds for the benefit of the MemberInsureds, and that it failed to provide him with “conversion

privileges,” i.e., the right to convert his participation in the

Group Contract into an individual contract upon

demutualization. In dismissing Count I, the district court relied

on the principle that a plaintiff bringing an ERISA claim “must

identify a specific plan term that confers the benefit in

question.” Stewart, 404 F. Supp. 2d at 130; see Clair v. Harris

Trust & Sav. Bank, 190 F.3d 495, 497 (7th Cir. 1999). On

appeal, Stewart contends that, viewed in the light most favorable

to him, the Plan documents render the demutualization proceeds

a benefit. Again, our review of the proper interpretation of

ERISA plans is de novo. Bd. of Trs. of the Hotel & Rest.

Employees Local 25 v. JPR, Inc., 136 F.3d 794, 798 (D.C. Cir.

1998).

Although Stewart must show that “the terms of his plan”

entitle him to a demutualization benefit, he does not principally

rely on a specific term but instead asserts that “[i]nherent in a

policy issued by a mutual company is the right to share in the

USCA Case #05-7140 Document #1011400 Filed: 12/15/2006 Page 7 of 15
8

1 By conceding that the NEA Trust is the contract holder,

Stewart distinguishes his case from Bank of New York v. Janowick,

Nos. 05-6390, 05-6456 (6th Cir. Nov. 22, 2006). In that case, the

Sixth Circuit concluded that the employee-beneficiaries of a defunct

ERISA plan had a superior claim to demutualization proceeds over the

successor corporation to the employer. The holding turned on who

became the contract holder of the annuities that were purchased as the

plan terminated. The court, forced to choose between the employer

and the employees, concluded that the employees were now the

contract holders. Id. Here, the Plan has survived to receive

Prudential’s demutualization proceeds and there is no question that the

NEA Trust remains the contract holder.

surplus of the company,” Appellants’ Br. at 23, and that

“[p]olicies of group insurance are well known to be obtained for

the benefit of the employees even though the employer, or in

this case the employee organization, is designated as a

policyholder,” id. at 24-25.1

 He does identify language in the

contract between the NEA Trust and Prudential establishing a

“participating contract” for which Prudential would “determine

the share, if any, of its divisible surplus allocable to the Group

Contract” on a periodic basis. In light of his structural

assumptions about mutual insurance contracts, Stewart contends

that “if a policy of insurance provides such a financial interest,

it is by definition a benefit.” Id. at 24. For this general principle,

Stewart refers the court to Ruocco v. Bateman, Eichler, Hill,

Richards, Inc., 903 F.2d 1232 (9th Cir. 1990), in which

employees who had paid the entire cost of premiums for a group

long-term disability policy were found entitled to the

demutualization proceeds. See id. at 1238. However, Ruocco

addresses a different question in a different context. As Stewart

admits, Ruocco did not involve a claim for benefits under

ERISA. Moreover, the case addressed whether the employer

itself—and not a plan—could appropriate demutualization

proceeds for its own benefit—and not for the benefit of plan

participants. See id. at 1235. While Ruocco lends support to the

USCA Case #05-7140 Document #1011400 Filed: 12/15/2006 Page 8 of 15
9

equitable notion that premium-paying participants deserve the

proceeds of demutualization more than the sponsoring employer,

it does not stand for the proposition that the premium-paying

employees are entitled to the surplus more than a plan on behalf

of all employees. Although it is possible that the insurance

policy language taken alone might imply some individual rights,

Stewart does not advance that theory and it is certainly not

plainly meritorious.

Alternatively, Stewart claims that the definition of

“benefit” in the Plan Document includes demutualization

proceeds. The Plan Document defines a benefit as “any amount

paid or payable to a participant or beneficiary in the event of

death, accident, sickness, disability, or other occurrence

affecting the participant or his family in accordance with the

terms of any insurance policy.” Stewart asks us to construe the

term “occurrence” in light of the purpose of the contract, see

Newmont Mines Ltd. v. Hanover Ins. Co., 784 F.2d 127, 136-37

(2d Cir. 1986), so that distributions in which Member-Insureds

participate in Plan surplus are included as benefits. The district

court found “occurrence” to reach only events that “physically

affect an insured.” Stewart, 404 F. Supp. 2d at 131-32. Stewart

insists that because all such physical occurrences are already

listed, the district court’s interpretation renders the catch-all

term meaningless.

More persuasively, we think, the NEA relies upon the

interpretive canon of ejusdem generis, which “limits general

terms which follow specific ones to matters similar to those

specified.” Cole v. Burns Int’l Sec. Servs., 105 F.3d 1465, 1471

(D.C. Cir. 1997) (internal quotation marks omitted); see also

Norton v. S. Utah Wilderness Alliance, 542 U.S. 55, 63 (2004).

The similar doctrine of noscitur a sociis teaches that a word is

known by the company it keeps. See Wash. State Dep’t of Soc.

& Health Servs. v. Guardianship Estate of Keffeler, 537 U.S.

USCA Case #05-7140 Document #1011400 Filed: 12/15/2006 Page 9 of 15
10

371, 372 (2003); Babbitt v. Sweet Home Chapter of

Communities for a Greater Or., 515 U.S. 687, 694 (1995).

Here, the demutualization of the company providing the

insurance contract is so obviously different in kind from the

other personal events listed in the definition—death, accident,

sickness, and disability—that it cannot be considered an

“occurrence” leading to a “benefit” under the terms of the Plan.

Although the district court’s limitation may well be too narrow

(as some people sensibly insure against the nonphysical

occurrence of unexpected unemployment), it was correct to

recognize that demutualization is simply different. The

demutualization proceeds that Prudential transferred represent

the capitalization of the stream of lost future dividends that were

themselves clearly allocable to the NEA Trust under § 12.1 of

the Plan Document. Notwithstanding Stewart’s appeal to his

inherent rights to mutual insurance company surplus, he cannot

escape the plain language in the Plan Document and Group

Contract that shows that he has not stated a claim for denial of

benefits under 29 U.S.C. § 1132(a)(1)(B) by alleging that he was

deprived of the demutualization proceeds.

Finally, Stewart contends that he lost the “benefit” of

converting his coverage under the Group Contract to an

individual insurance policy. The Group Insurance Certificate

states that a Member-Insured “may convert all or part of [his]

insurance . . . to an individual life insurance contract” if “[a]ll

term life insurance of the Group Contract . . . ends by

amendment or otherwise.” The Enrollment Certificate further

provides that a Member-Insured’s coverage “automatically

terminate[s]” when “the provisions of the Group Policy for the

insurance terminate.” Stewart maintains that the Group Contract

terminated when Prudential demutualized. Whether the Group

Contract terminated as a result of demutualization is a legal

conclusion that the court need not accept. See Taylor v. FDIC,

132 F.3d 753, 762 (D.C. Cir. 1997). 

USCA Case #05-7140 Document #1011400 Filed: 12/15/2006 Page 10 of 15
11

According to the NEA, although demutualization

extinguishes the membership rights of a policyholder (here, the

NEA Trust) of the mutual company, it does not affect, much less

terminate, the underlying insurance policy. Prudential’s

reorganization plan, as approved by New Jersey, stated that

“[d]emutualization will not have any adverse result on

policyholders’ premiums or benefits, cash values, policy

dividend eligibility or any of Prudential’s other guarantees and

obligations to policyholders under their policies.” Plan of

Reorganization of the Prudential Ins. Co., supra. Hence, there

is no basis for Stewart’s claim that his contract “terminated” as

a result of the demutualization and that he is therefore entitled

to convert to an individual insurance contract. 

Indeed, even under Stewart’s description of how

demutualization affected the Group Contract, the change is not

appropriately described as a “termination.” The Group Contract

was altered through “statutory amendment,” a procedure in the

Group Contract permitting “a change in the Group Contract . .

. automatically made to satisfy the requirements of any state or

federal law or regulation that applies to the Group Contract.”

On these terms, a statutory amendment represents only “a

change in the Group Contract,” not a “termination,” which

according to the Enrollment Certificate occurs only when “the

provisions of the Group Policy for the insurance terminate.” 

B.

Count II of the complaint alleges that the NEA owed a

fiduciary duty to the Member-Insureds and that it breached its

duty. Under ERISA, fiduciaries must 

discharge [their] duties with respect to a plan solely in

the interest of the participants and beneficiaries

and . . . for the exclusive purpose of . . . providing

benefits to participants and their beneficiaries; . . .

USCA Case #05-7140 Document #1011400 Filed: 12/15/2006 Page 11 of 15
12

with the care, skill, prudence, and diligence under the

circumstances then prevailing [of] a prudent man . . .

in accordance with the documents and instruments

governing the plan.

29 U.S.C. § 1104(a)(1). The parties agree that the NEA was a

fiduciary, so only the scope of the NEA’s duty remains to be

resolved. Stewart alleges that the NEA breached its duty by

failing to provide the conversion privilege, by failing to

segregate the demutualization proceeds for the benefit of

Member-Insureds, and by amending the Plan retroactively to

provide for the disposition of demutualization proceeds. Stewart

has no claim to the conversion privilege for the reasons already

discussed.

To support his claim that the NEA should have segregated

the demutualization proceeds for the exclusive benefit of

Member-Insureds, Stewart relies upon the common law of trusts,

which he claims should control in the absence of an affirmative

provision dealing with demutualization proceeds. Under the

common law, he suggests, a trustee is entitled to control of an

excessive res only if the settlor expressed an intent that the

trustee control the excess value. Otherwise, the money must be

returned to the settlor. This claim cannot succeed because the

NEA has properly treated the demutualization proceeds as a

Trust asset under the Plan Document.

The contents of the NEA Trust are defined by Section 1.9

of the Plan Document, which incorporates 

all the funds, assets, and properties, of whatever kind

and from wherever derived, held by the Trustees in

accordance with the Trust Agreement and this Plan,

including but not limited to, contributions, insurance

and reinsurance policies, insurance policy dividends

USCA Case #05-7140 Document #1011400 Filed: 12/15/2006 Page 12 of 15
13

and retrospective premium credits, . . . and all earnings

and additions to the trust fund. 

The demutualization benefit fits within this definition. First,

because the money was transferred to the NEA pursuant to its

role as policyholder of the Group Contract, these were funds

derived from an insurance policy. Second, because the list is

non-exhaustive, a demutualization payment should be treated in

the same manner as insurance policy dividends, which are

explicitly incorporated into the NEA Trust. 

The Plan Document further provides that any surplus funds

within the single, undifferentiated Trust Fund may be expended

without regard to whether the surplus is applied to a

benefit program which is the same as or different from

the benefit program which gave rise to the surplus or

whether the participants who receive any refund are

the same as or other than the participants who made

the contributions which gave rise to the surplus.

Thus, the Plan Document specifically contemplates the actions

of the trustees here, and Stewart can state no claim for relief

based on default provisions of trust law.

Stewart also claims support from an advisory opinion

issued by the Department of Labor’s Employee Benefits

Security Administration (“DOL”). In his view, Advisory

Opinion No. 2005-08A, Pens. Plan Guide (CCH) ¶ 19,990T

(2005), indicates that those who pay the premiums deserve a pro

rata share of the demutualization proceeds. See also DOL Op.

No. 2001-02A, Pens. Plan Guide (CCH) ¶ 19,988N (2001).

However, as the district court acknowledged, Stewart, 404 F.

Supp. 2d at 131, DOL has distinguished only between plan

assets and employer assets, not between plan assets and

USCA Case #05-7140 Document #1011400 Filed: 12/15/2006 Page 13 of 15
14

segregated plan assets.

The district court also relied upon Hughes Aircraft Co. v.

Jacobson, 525 U.S. 432, 442 (1999), for the proposition that

“surplus returns generated by employee contributions could be

applied to other employees in the plan who did not make such

contributions.” Stewart, 404 F. Supp. 2d at 133. That case

considered a contributory pension plan where employees were

entitled to a defined benefit. See Hughes Aircraft, 525 U.S. at

435 & n.1. When the plan assets quickly appreciated and

created a large surplus, the employer amended the plan to allow

some new employees to receive benefits out of the surplus

without contributing themselves. See id. at 436. In rejecting the

challenge to the employer’s actions, the Court emphasized the

difference between the defined-benefit plan it considered and a

defined-contribution plan, where each beneficiary has an

individual account and is entitled to the proceeds that develop

therefrom. See id. at 439-41. Here, the Group Contract deals

with insurance and not pensions, and hence the definedcontribution/defined-benefit distinction is not directly

applicable. However, it is relevant to the extent that MemberInsureds pay primarily for a defined set of life insurance benefits

and that the NEA Trust, rather than the Member-Insureds

individually, is entitled to surplus. Nonetheless, we need not

rely on Hughes Aircraft to resolve this claim in the NEA’s favor.

Finally, Stewart contends that he has stated a claim for

breach of fiduciary duty as to the NEA’s retroactive amendment

of the Plan Document. “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). Therefore,

there would not normally be any appropriate objection to the

NEA Trust’s decision to amend the definitions of “Trust Fund”

and “Surplus funds” to include demutualization proceeds

USCA Case #05-7140 Document #1011400 Filed: 12/15/2006 Page 14 of 15
15

specifically. But “an amendment to any ERISA plan may not

operate retroactively if that amendment deprives a beneficiary

of a vested benefit.” Member Servs. Life Ins. Co. v. Am. Nat’l

Bank & Trust Co. of Sapulpa, 130 F.3d 950, 954 (10th Cir.

1997). However, Stewart claims that his right to a pro rata share

of the proceeds vested when Prudential demutualized. He can

point to no provision in the Plan Document or Group Contract

under which Member-Insureds ever had a claim to

demutualization proceeds. Therefore, Count II fails to allege

facts that describe a retroactive amendment in breach of a

fiduciary duty.

Accordingly, we affirm the order of the district court

dismissing the complaint pursuant to Rule 12(b)(6) for failure to

state a claim.

USCA Case #05-7140 Document #1011400 Filed: 12/15/2006 Page 15 of 15