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Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MITCHELL SGRO, 

Plaintiff-Appellant, No. 06-55916

v. D.C. No.

DANONE WATERS OF NORTH  CV-05-05110-R

AMERICA, INC.; METROPOLITAN LIFE OPINION INSURANCE COMPANY,

Defendants-Appellees. 

Appeal from the United States District Court

for the Central District of California

Manuel L. Real, District Judge, Presiding

Argued and Submitted

February 6, 2008—Pasadena, California

Filed July 2, 2008

Before: Alex Kozinski, Chief Judge,

Diarmuid F. O’Scannlain and William A. Fletcher,

Circuit Judges.

Opinion by Chief Judge Kozinski

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COUNSEL

Gary S. Soter, Clifford H. Pearson and Daniel L. Warshaw,

Pearson, Soter, Warshaw & Penny, LLP, Sherman Oaks, California, for the plaintiff-appellant. 

Gail E. Cohen, Andrew S. Williams and Misty A. Murray,

Barger & Wolen LLP, Los Angeles, California, for the

defendants-appellees. 

OPINION

KOZINSKI, Chief Judge: 

We consider a variety of procedural issues that relate to

Employee Retirement Income Security Act (ERISA) claims,

including whether an ERISA plan must reimburse its beneficiaries for the cost of photocopying medical records. 

Facts

Mitchell Sgro worked for defendant Danone Waters until

he became disabled, at which point he applied for disability

benefits from MetLife, the company that makes benefits

determinations for Danone Waters’s ERISA plan. But,

according to Sgro, MetLife refused to consider his claim

because he didn’t provide copies of his medical records. Sgro

objected to paying for photocopying the records and

demanded that MetLife do so, but MetLife refused. Sgro

eventually paid $412 for the copies, and MetLife thereupon

considered and denied his claim. Sgro then asked for copies

of all of MetLife’s documents pertaining to his claim. MetLife

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complied with this request in part, but Sgro claims the company held back the notes kept by its claims personnel. 

Sgro sued MetLife and Danone Waters in federal court,

seeking unpaid benefits, reimbursement of his copying costs,

an injunction ordering defendants to pay such costs in the

future and statutory penalties for defendants’ failure to turn

over the notes kept by MetLife’s personnel. Sgro asserted

causes of action under state and federal law. The district court

dismissed his state-law claims with prejudice, and his federal

claims without prejudice. The parties have since settled

Sgro’s claim for unpaid disability benefits, but Sgro appeals

the dismissal of his other claims. 

Analysis

[1] 1. Sgro claims that Danone Waters’s disability benefits plan isn’t governed by ERISA because it falls within the

“safe harbor” created by 29 C.F.R. § 2510.3-1(j). For Sgro to

prevail on this point, he would have to prove that the plan

meets four separate requirements of the regulation, including

that the employer make “[n]o contributions” to the plan. Id.

§ 2510.3-1(j)(1).1 Sgro does allege that Danone Waters pays

1Defendants point out that the plan documents refute Sgro’s claim; if

the documents are correct, then the plan doesn’t meet some of the regulation’s requirements. We’re allowed to consider the plan documents, even

on a motion to dismiss, because Sgro refers to them in his complaint.

Branch v. Tunnell, 14 F.3d 449, 453-54 (9th Cir. 1994), overruled on

other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119,

1127 (9th Cir. 2002). However, where the parties disagree as to whether

the plan documents accurately reflect the terms of the plan as it was actually implemented, consideration of such documents does not resolve the

relevant issues in the context of a motion to dismiss. See Zavora v. Paul

Revere Life Ins. Co., 145 F.3d 1118, 1122 (9th Cir. 1998) (whether a plan

is governed by ERISA is a question for the trier of fact). Sgro here alleges

that the plan documents do not accurately reflect the plan as implemented

as to all but the regulation’s requirement that Danone Waters make “[n]o

contributions” to the plan. For purposes of the motion to dismiss, we have

to assume that Sgro is right about this. 

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none of the plan’s supplemental “buy-up” benefits, which

employees may purchase to augment the “core” benefits. But,

even if true, this wouldn’t bring the plan within the safe harbor. So long as Danone Waters pays for some benefits,

ERISA applies to the whole plan, even if employees pay

entirely for other benefits. See Glass v. United of Omaha Life

Ins. Co., 33 F.3d 1341, 1345 (11th Cir. 1994); see also Crull

v. GEM Ins. Co., 58 F.3d 1386, 1390 (9th Cir. 1995) (“[A]n

employer’s payment of a portion of the insurance premium

[is] a significant factor for determining the existence of an

ERISA plan.”). 

[2] We therefore affirm the district court’s dismissal of

Sgro’s state-law claims. But the district court abused its discretion when it dismissed these claims with prejudice. On

remand, Sgro may amend his complaint; if he is able to allege

in good faith that Danone Waters pays nothing, he would then

be entitled to discovery as to whether the safe harbor applies.

If the trier of fact ultimately determines that the plan isn’t

governed by ERISA, then the district court must reconsider

Sgro’s state-law claims. 

[3] 2. Sgro claims that a California insurance regulation

requires defendants to reimburse him for the cost of copying

the medical records that MetLife requested. Cal. Code Regs.

tit. 10, § 2695.11(g) (implementing Cal. Ins. Code

§ 10123.131). But if the plan is governed by ERISA, then section 1144 of that statute preempts the California regulation.

Section 1144 preempts “any and all State laws insofar as they

may now or hereafter relate to any employee benefit plan,” 29

U.S.C. § 1144(a), unless those laws “regulate[ ] insurance,”

id. § 1144(b)(2)(A). There’s no dispute that the California

regulation does “relate” to this “employee benefit plan.” The

closer question is whether the regulation is saved from preemption because it “regulates insurance.” 

[4] In Kentucky Association of Health Plans, Inc. v. Miller,

538 U.S. 329 (2003), the Supreme Court held that a state law

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“regulates insurance”—and is therefore saved from ERISA

preemption under section 1144—if the law is “specifically

directed toward” the insurance industry and “substantially

affect[s] the risk pooling arrangement between the insurer and

the insured.” Id. at 342.2 The California regulation certainly

meets the first part of this test because it is “specifically

directed toward” the insurance industry; by its very terms the

regulation pertains only to “insurers.” 

[5] The more difficult issue is whether the California regulation also “substantially affect[s] the risk pooling arrangement between the insurer and the insured.” We conclude it

does not. The regulation doesn’t require insurers to insure

against additional risks. Cf. Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 730, 758 (1985) (state law that

requires health insurers to insure against mental health problems “regulates insurance”). Nor does the regulation require

insurers to offer their insureds additional benefits in the event

that the insureds take ill. Cf. Kentucky Ass’n, 538 U.S. at 338

(state law that requires health insurers to permit their insureds

to see “any willing provider” in the state “regulates insurance”). Nor does the regulation substantially affect the likelihood that a disputed claim will ultimately be deemed valid.

Cf. Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 361

(2002) (state law requiring HMOs to offer participants the

option of having an independent physician review a denial of

coverage “regulates insurance”); UNUM Life Ins. Co. of Am.

v. Ward, 526 U.S. 358, 364 (1999) (state law requiring insurers to accept late-filed claims unless the delay prejudiced

them “regulates insurance”). 

[6] There is one way that the California regulation could

2The parties rely on older Supreme Court cases that apply interpretations of the McCarran-Ferguson Act. But the Kentucky Association Court

expressly disapproved any reliance on the McCarran-Ferguson criteria, so

we do not consider them. Kentucky Ass’n, 538 U.S. at 341 (making a

“clean break from the McCarran-Ferguson factors”). 

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affect insurers’ risks: By requiring insurers to pay copying

costs, the regulation does make it slightly easier for insureds

to file claims. If that causes more insureds to file claims, and

if some of those additional claims are meritorious, then the

regulation will cause insurers to pay more benefits than they

otherwise would absent the regulation. But this possibility is

too remote and speculative to “substantially” affect the risk

pooling arrangement between insurers and their insureds.

Kentucky Ass’n, 538 U.S. at 342. Few, if any, claimants will

forgo a meritorious claim because of the relatively small

expense of copying—so few, in fact, that they are unlikely to

substantially affect the risk pool. 

[7] 3. Sgro also claims that defendants violated ERISA’s

regulation on “claims procedures,” 29 C.F.R. § 2560.503-1. If

the plan is governed by ERISA, see p. 8057 supra, the regulation forbids defendants from “unduly inhibit[ing] or hamper-

[ing]” beneficiaries from claiming benefits. Id. § 2560.503-

1(b)(3). In particular, the regulation forbids defendants from

“requir[ing] payment of a fee or costs as a condition to making a claim.” Id. 

[8] But Sgro’s copying expenses weren’t a “condition” of

making his claim. The plan merely required Sgro to provide

documentation, which is quite different from “condition[ing]”

his application on a payment. A “condition” is something

that’s required of every application; the cost of providing documents, by contrast, depends on decisions made by the beneficiary and could be zero in some cases. For example, if Sgro

had copies of the documents on hand at the time he applied

for benefits, he could have submitted those copies; or, if his

doctors were willing to make copies for him for free, he could

have submitted those. In either case, he would have avoided

any additional cost. So photocopying costs weren’t a “condition” for Sgro to make a claim. 

[9] Sgro’s reading of the regulation would require plan

administrators to pay for a number of other expenses that are

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typically borne by beneficiaries. To apply for benefits, a

claimant must spend time putting together his application or

pay someone else to do so; he may require additional medical

tests; if he doesn’t speak English, he’ll need a translator; he

may need postage to mail in his application. All these are

costs incurred in claiming benefits, but none is a “condition”

of making a claim. Nothing in this regulation forbids defendants from requiring Sgro to provide, at his own expense, the

documents needed to prove his disability. We therefore affirm

the dismissal of Sgro’s claim that defendants violated this regulation. 

[10] 4. Sgro also claims that he asked defendants for a

“complete copy of [his] claim file” and that defendants didn’t

fully comply with the request. In particular, Sgro alleges that

MetLife held back “claim activity records or investigation

notes” kept by MetLife’s “claims personnel.” Sgro argues that

MetLife’s failure to provide these documents violated ERISA

regulations, which require that 

a claimant shall be provided, upon request and free

of charge, reasonable access to, and copies of, all

documents, records, and other information relevant

to the claimant’s claim for benefits. 

29 C.F.R. § 2560.503-1(h)(2)(iii). The documents that

MetLife is alleged to have held back are “relevant,” and thus

covered by this regulation, because they were “generated in

the course of making the benefit determination.” Id.

§ 2560.503-1(m)(8)(ii). ERISA’s remedies provision gives

Sgro a cause of action to sue a plan “administrator” who

doesn’t comply with a “request for . . . information.” 29

U.S.C. § 1132(c)(1). 

[11] But there are two defendants here, and Sgro’s complaint doesn’t say which one he asked for the records. See

First Amend. Compl. ¶ 24. That matters because a defendant

can’t be liable unless it received a request. See 29 U.S.C.

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§ 1132(c)(1). As for Danone Waters, Sgro’s lawyer told the

district court that he requested the records from that company

but that his letter came back to him stamped “undeliverable

as addressed.” It’s not at all clear whose fault that was. So it

seems possible for Sgro to amend his complaint to state a

claim against Danone Waters. On remand, Sgro shall be given

leave to amend his complaint to allege that he requested these

documents from Danone Waters, if he can do so in good faith.

[12] As for Danone Waters’s co-defendant, MetLife, the

district court properly dismissed the claim. Even if Sgro did

ask MetLife for the records, that company can’t be liable

under section 1132(c)(1). That section only gives Sgro a remedy against the plan “administrator,” and MetLife isn’t the

plan administrator—Danone Waters is. This is our court’s

longstanding interpretation of section 1132(c)(1), which we

first set out in Moran v. Aetna Life Insurance Co., 872 F.2d

296, 299-300 (9th Cir. 1989). 

[13] The federal regulation was amended after we decided

Moran, and Sgro argues that the amendments overruled

Moran’s interpretation of section 1132(c)(1). See Nat’l Cable

& Telecomm. Ass’n v. Brand X Internet Servs., 545 U.S. 967,

982 (2005). But nothing in the amendments to the regulation

broadened the meaning of the word “administrator” in section

1132(c)(1) to include additional parties. The amendments

merely broadened administrators’ duties: Administrators must

now turn over, on request, the documents “generated in the

course of making the benefit determination.” See 65 Fed. Reg.

70246, 70271 (Nov. 21, 2000). Where, as here, a third party

makes the benefit determination, the administrator may not

have the needed documents on hand, so it will have to get

them from the third party. But nothing in the amendments

purports to make that third party directly liable to beneficiaries as if it were itself an “administrator.” We therefore

remain bound by Moran: Sgro can only sue the plan’s “administrator,” Danone Waters. The contrary holding of DeLeon

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v. Bristol-Myers Squibb Co. Long Term Disability Plan, 203

F. Supp. 2d 1181, 1194-96 (D. Or. 2002), is overruled. 

5. Sgro seeks to represent a class of similarly situated

beneficiaries and asks for an injunction requiring defendants

to pay the class’s copying expenses. But, as described above,

Sgro hasn’t alleged facts that remove the plan from ERISA

pursuant to the safe harbor, see pp. 8057-58 supra, and

ERISA doesn’t require defendants to pay copying costs, see

pp. 8060-61 supra. Sgro therefore isn’t entitled to a class certification hearing or to an injunction. If, on remand, the district court determines that the plan isn’t governed by ERISA,

then it will have to reconsider these questions. 

* * *

We affirm the dismissal of Sgro’s claim that defendants

violated 29 C.F.R. § 2560.503-1, and the dismissal of Sgro’s

claim against MetLife under section 1132(c)(1) for failing to

turn over the documents he requested. We also affirm the dismissal without prejudice of Sgro’s section 1132(c)(1) claim

against Danone Waters. We affirm the dismissal of Sgro’s

state-law claims, but vacate the dismissal with prejudice. We

remand for proceedings consistent with this opinion. All outstanding motions are denied as moot. 

AFFIRMED in part, VACATED in part and

REMANDED. No costs. 

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