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Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

FOSTER RICH,

Plaintiff-Appellant,

v.

RALPH W. SHRADER; JOSEPH

E. GARNER; BOOZ ALLEN

HAMILTON, INC.,

Defendants-Appellees.

No. 14-55484

D.C. No.

3:09-CV-652-AJB-BGS

OPINION

Appeal from the United States District Court

for the Southern District of California

Anthony J. Battaglia, District Judge, Presiding

Argued and Submitted March 7, 2016

Pasadena, California

Filed May 24, 2016

Before: Richard R. Clifton and Sandra S. Ikuta, Circuit

Judges, and Frederic Block, District Judge.*

Opinion by Judge Block

* The Honorable Frederic Block, Senior United States District Judge for

the Eastern District of New York, sitting by designation.

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2 RICH V. SHRADER

SUMMARY**

Employee Retirement Income Security Act

The panel affirmed the district court’s judgment in favor

of the defendants on claims under ERISA and California state

law, arising from an employment dispute.

Affirming the district court’s summary judgment, the

panel held that a claim for breach of an employment contract

was barred by the four-year statute of limitations, Cal. Civ.

Proc. Code § 337. The district court did not abuse its

discretion in denying the plaintiff a third opportunity to

amend his complaint.

Affirming the dismissal of ERISA claims, and agreeing

with other circuits, the panel held that the employer’s stock

rights plan did not qualify as an employee pension benefit

plan subject to ERISA under 29 U.S.C. § 1002(2)(A) because

its primarypurpose was not to provide deferred compensation

or other retirement benefits.

COUNSEL

Gregory A. Davis (argued), George Brandon, and Gregory T.

Saetrum, Squire Patton Boggs LLP, Phoenix, Arizona, for

Plaintiff-Appellant.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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RICH V. SHRADER 3

J. Scott Ballenger (argued), Everett C. Johnson, Jr., J.

Christian Word, and Sarah A. Greenfield, Latham & Watkins

LLP, Washington, D.C., for Defendants-Appellees.

OPINION

BLOCK, District Judge:

Foster Rich appeals the district court’s dismissal of his

breach-of-contract and Employee Retirement Income

SecurityAct (“ERISA”) claims against Booz Allen Hamilton,

Inc. (“BAH”), Ralph Shrader, and Joseph Garner, and its

denial of his motion for leave to amend the complaint. We

affirm and write principally to address the proper standard for

evaluatingwhat qualifies as an employee pension benefit plan

under ERISA.

I

Rich began working for BAH in 1987. On September 4,

2003, Rich’s performance was evaluated by BAH. 

Ultimately, Rich’s evaluation resulted in a recommendation

that he begin the process of voluntary retirement.1

1 The details of Rich’s evaluation and the evaluation process are

contained in sealed exhibits. Although that information would be relevant

if Rich’s claims were evaluated on the merits, it is not necessary for us to

recount it here because our review of Rich’s claims related to the

evaluation process does not go beyond evaluating whether Rich filed his

claimwithin the statute oflimitations and whether the district court abused

its discretion in denying Rich leave to amend.

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4 RICH V. SHRADER

On September 30, 2003, Rich discussed his evaluation

and the recommendation that he retire with a BAH senior vice

president. Rich was surprised by the recommendation, but

facing the choice of retiring or risking termination, Rich

retired from BAH on March 31, 2005.

Throughout his employment, Rich participated in BAH’s

Stock Rights Plan (“SRP”). The SRP operated in the

following manner: BAH granted eligible employees the right

to purchase BAH stock “at such times . . . in such amounts

and to such [employees]” as determined in the “sole

discretion” of the BAH Board of Directors. The receiving

employee was required to exercise the stock rights within

sixty days of the grant by, among other things, purchasing ten

percent of the stock rights. On June 15 of each subsequent

year, the employee would have the opportunity to purchase

another ten percent of the initial grant of stock rights. In the

event the employee failed to exercise the rights within sixty

days of the initial grant or each June 15, “all unexercised

rights that such [employee] may have . . . [would] be

forfeited.” Although SRP participants were “expected to hold

their shares until they leave the firm,” they were “not

precluded from selling paid-up stock back to the Firm at any

time.” Shares earned through the SRP increased in value ten

percent annually. In the event an SRP participant ceased

being an employee of BAH “by virtue of retirement,

disability, or death,” BAH had the right to repurchase that

employee’s shares within twenty-four months after the end of

his or her employment.

By the time of his retirement, Rich had accumulated

30,500 shares of BAH stock. On March 31, 2007, BAH

exercised its right to repurchase all of Rich’s shares for

$4,507,900, or $147.80 per share.

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RICH V. SHRADER 5

In July 2008, BAH sold a portion of its business to The

Carlyle Group (the “Carlyle Transaction”). Shareholders of

BAH stock received $763 per share. Because Rich was no

longer a BAH shareholder, he did not receive any

compensation from the Carlyle transaction.

On April 1, 2009, Rich filed his original complaint in the

district court against BAH and several individual defendants. 

He alleged RICO violations, securities fraud, breach of

contract, and other claims. Seven months later, the district

court granted Rich leave to file an amended complaint. The

defendants moved to dismiss the first amended complaint,

which the district court granted with prejudice with respect to

some claims, without prejudice to the breach-of-contract

claim and others, and granted Rich another opportunity to

amend his complaint. Rich’s second amended complaint

added causes of action under ERISA related to the SRP.

The defendants again moved to dismiss, which the district

court granted with respect to Rich’s RICO, securities fraud,

and ERISA claims. Regarding the ERISA claims, the district

court determined that the SRP was not an employee pension

plan and thus was not covered by the statute. With respect to

the breach-of-contract claim, the district court noted that the

alleged breach occurred over four years prior—the relevant

statutory period—but the second amended complaint alleged

facts that could allow tolling of the statute of limitations

under the delayed-discovery rule.

Following the completion of discovery, the defendants

moved for summary judgment on the breach-of-contract

claim. Rich argued the claim was not time-barred regardless

of whether the delayed-discovery rule applied because he was

actually asserting a wrongful-termination claim, which under

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6 RICH V. SHRADER

California law accrues on the plaintiff’s last date of

employment. The district court rejected this “complete

about-face,” and granted summary judgment to the

defendants because the breach-of-contract claim was timebarred. The district court subsequently denied Rich’s request

to amend the complaint.

II

We have jurisdiction under 28 U.S.C. § 1291. We review

de novo the district court’s determinations that (1) Rich’s

breach-of-contract claim is time barred, Hernandez v.

Spacelabs Med., Inc., 343 F.3d 1107, 1112 (9th Cir. 2003),

and (2) Rich’s ERISA claims fail because the SRP is not

covered by the statutory scheme. Paulsen v. CNF Inc.,

559 F.3d 1061, 1071 (9th Cir. 2009). The district court’s

denial of Rich’s motion for leave to amend the complaint is

reviewed for abuse of discretion. Chinatown Neighborhood

Ass’n v. Harris, 794 F.3d 1136, 1141 (9th Cir. 2015).

A

Under California law, a breach of a written contract must

be brought within four years of the date of the alleged breach. 

Cal. Civ. Proc. Code § 337; Spear v. Cal. State Auto Ass’n,

2 Cal. 4th 1035, 1042 (1992).

The district court held that Rich’s breach-of-contract

claim accrued in September 2003,2 when BAH conducted the

assessment of Rich’s performance that allegedly violated

2

 It is not necessary to determine the exact date in September 2003 the

breach occurred, because any date of that month would be outside the

limitations period.

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RICH V. SHRADER 7

Rich’s employment contract. Because Rich did not file his

original complaint until April 1, 2009, the district court

considered the breach-of-contract claim untimely.

Rich argues that the statute of limitations should run from

his last date of employment, March 31, 2005.3 The Supreme

Court of California has made clear that when an employee

alleges breach of contract based on a wrongful termination,

the statute of limitations runs from the employee’s last date

of employment. Mullins v. Rockwell Int’l Corp., 15 Cal. 4th

731, 741 (1997); Romano v. Rockwell Int’l, Inc., 14 Cal. 4th

479, 491 (1996).

Here, however, Rich’s second amended complaint alleges

that under the terms of his employment contract, “BAH was

obligated to provide Rich with an assessment of his

performance that was based upon and consistent with the

opinion and recommendation of numerous co-workers,” and

“BAH breached the employment contract by failing to

perform its obligation to provide Rich with an Assessment

Review.” Unlike the plaintiffs in Mullins and Romano, Rich

does not allege that he was wrongfully terminated in breach

of his employment contract. Cf. Mullins, 15 Cal. 4th at 738

(“Mullins alleged that he was constructively discharged in

breach of an implied contract.”); Romano, 14 Cal. 4th at 488

(“[P]laintiff contends that [the] termination of his

employment . . . violated the terms of an implied contract.”).

3 Cesar Chavez Day was celebrated in California on March 31, 2009. 

Cal Civ. Proc. Code § 135; Cal. Gov’t Code § 6700(a)(6). Therefore, all

filings due by March 31, 2009, were timely if filed by April 1, 2009. Fed.

R. Civ. P. 6(a)(1)(C), (6)(c).

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8 RICH V. SHRADER

Moreover, Rich alleges that due to his negative review,

his reputation was tarnished with both clients and colleagues,

which left him no choice but to take the recommendation to

retire. As a result of retiring he was unable to participate in

the lucrative Carlyle Transaction. Rich’s second amended

complaint specified that these damages are “consequential”

and stem from BAH’s breach “by performing the faulty

assessment process.”

Accordingly, Rich’s cause of action accrued in September

2003 and the filing of his complaint was untimely. Rich’s

breach-of-contract claim is time barred.

B

Although Rich’s claim is time barred, he asserts the

district court abused its discretion by denying him leave to

amend his complaint to properly fashion it as a wrongful

termination claim. He argues that it is well established that

“[a]n amendment should be allowed where the factual

situation is not changed even though a different theory of

recovery is presented.” Heay v. Phillips, 201 F.2d 220, 222

(9th Cir. 1952) (alteration in original). Indeed, the underlying

facts of the complaint would have been unchanged had the

district court granted Rich leave to amend.

However, when the district court has already afforded a

plaintiff an opportunity to amend the complaint, it has “wide

discretion in granting or refusing leave to amend after the

first amendment, and only upon gross abuse will [its] rulings

be disturbed.” Id.; see also Allen v. City of Beverly Hills,

911 F.2d 367, 373 (9th Cir. 1990) (“The district court’s

discretion to deny leave to amend is particularly broad where

plaintiff has previously amended the complaint.”). Rich has

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RICH V. SHRADER 9

already been afforded two opportunities to amend and is

unable to show that the district court’s order constitutes

“gross abuse.” Heay, 201 F.2d at 222.

In the first place, Rich’s desire to recast his breach-ofcontract claim in terms of wrongful termination appeared for

the first time in his opposition to the defendants’ motion for

summary judgment—after almost five years of

litigation—and when it was likely apparent to Rich that the

delayed-discovery rule would not apply to his claim. Cf. Mir

v. Fosburg, 646 F.2d 342, 347 (9th Cir. 1980) (“[T]he

dismissal of plaintiff’s amended complaint came after several

years of proceedings. At some point, a partymay not respond

to an adverse ruling by claiming that another theory not

previously advanced provides a possible grounds for relief

and should be considered.”). Moreover, Rich has known all

of the underlying facts and theories he now wishes to allege

since the commencement of the litigation. Cf. Kaplan v.

Rose, 49 F.3d 1363, 1370 (9th Cir. 1994) (“[L]ate

amendments to assert new theories are not reviewed

favorably when the facts and the theory have been known to

the party seeking amendment since the inception of the cause

of action.” (alteration in original)).

While Rich did cite Mullinsin his opposition papers to the

defendants’ motion to dismiss in February 2011, the district

court made clear in its order denying the motion in part that

without the delayed-discovery rule Rich’s claim would be

time-barred because it accrued in September 2003. To the

extent Rich believed the district court misinterpreted his

breach-of-contract claim, he could have requested the

opportunity to amend his complaint at that time. However,

his motion for reconsideration of that order failed to mention

the issue. Instead, he waited until January 2014, after years

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10 RICH V. SHRADER

of discovery and a grant of summary judgment for the

defendants, to request leave to amend his complaint again.

The district court did not abuse its discretion by denying

Rich a third opportunity to amend his complaint.

C

ERISA coverage extends to employee pension benefit

plans. A plan qualifies as an employee pension benefit plan

if “by its express terms or as a result of surrounding

circumstances such plan . . . (i) provides retirement income to

employees, or (ii) results in a deferral of income by

employees for periods extending to the termination of

covered employment or beyond.” 29 U.S.C. § 1002(2)(A).

While what qualifies under § 1002(2)(A) appears to be a

matter of first impression in this circuit, we agree with our

sister circuits that have determined that the paramount

consideration is whether the primary purpose of the plan is to

provide deferred compensation or other retirement benefits. 

See Murphy v. Inexco Oil Co., 611 F.2d 570, 575 (5th Cir.

1980) (“The words ‘provides retirement income’ patently

refer only to plans designed for the purpose of paying

retirement income whether as a result of their express terms

or surrounding circumstances.”); see also Oatway v. Am. Int’l

Grp., Inc., 325 F.3d 184, 188–89 (3d Cir. 2003) (holding a

plan was not an ERISA plan “because its purpose was to

operate as an incentive and bonus program, and not as a

means to defer compensation or provide retirement

benefits”); Emmenegger v. Bull Moose Tube Co., 197 F.3d

929, 931–34 (8th Cir. 1999) (focusing throughout its analysis

on the “purpose” of the defendant company’s stock plan).

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RICH V. SHRADER 11

The main purpose of the SRP was not to provide

retirement or systematically deferred income. The SRP states

that its purpose is “to provide incentives for [BAH] Officers

to continue to serve as employees of the Company and its

subsidiaries.” A July 1995 memorandum to BAH partners

explained: “[T]he stock program’s purpose is to provide for

the Firm’s capital needs. Stock is not intended to be—and is

not viewed by the Board as in fact being—an alternate form

of compensation.” This is consistent with BAH’s stated

philosophy and objectives regarding the SRP: “Stock is the

single vehicle that provides for the orderly transition of

ownership of [BAH] from one generation of Officers to the

next,” “[t]he long-term capital needs of [BAH] will be

provided for by the Officers,” and “[BAH] will not use other

sources to fund long-term capital requirements.” With

respect to retirement income, BAH communicated to partners

that the SRP “should not be viewed principally as an estatebuilding vehicle since equity returns will be modest. 

Liquidation of stock at retirement is a return of capital rather

than a source of retirement income.”

Rich attempts to establish that the SRP is a retirement

plan by citing to a 2003 memorandum in which BAH’s Chief

Financial Officer stated: “The primary purpose of the stock

program is to provide capital to the firm. The secondary

purpose is to provide a wealth creation vehicle for the

partners.” But this memorandum does not help Rich. First,

it further shows that the primary purpose of the SRP is not to

provide retirement income or the deferral of compensation. 

Second, the memorandum—whichwas an explanation to SRP

participants why BAH planned to reduce SRP stock

distribution—demonstrates the breadth of discretion BAH

enjoyed to alter the benefits distributed under the SRP. 

Indeed, under the terms of the SRP, BAH’s Board of

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12 RICH V. SHRADER

Directors held “sole discretion” to “grant Stock Rights in

such amounts and to such Officers as it determines.” BAH’s

discretion further weighs against ERISA coverage. See

Oatway, 325 F.3d at 189 (“Oatway’s stock options were

discretionary, given in recognition of special service, and

awarded in addition to his regular compensation.” (citing

Murphy, 611 F.2d at 575–76)).

Rich also argues that the fact that SRP participants could

hold their shares until the end of employment is “sufficient to

establish ERISA coverage.” He points to a recent Fifth

Circuit opinion in which the court determined that a plan was

covered by ERISA when employees had the “option to defer

receipt of a portion of their compensation to be earned.” 

Tolbert v. RBC Capital Mkts. Corp., 758 F.3d 619, 625 (5th

Cir. 2014) (internal quotation marks omitted). But the

Tolbert court did not rely on that fact alone. See id. at

625–26. The plan in that case was referred to by the

defendant companyas a “deferred compensation plan” and its

main purpose was to allow for the deferral of compensation. 

Id. at 626. Here, unlike in Tolbert, the SRP was never

referred to by BAH as a deferred compensation plan, and its

primary purpose, as discussed above, was not the deferral of

compensation. Moreover, the mere possibility that income

can be deferred does not mandate ERISA coverage. See, e.g.,

Emmenegger, 197 F.3d at 933 (“Though the PSP’s vesting

requirement could result in the deferral of a portion of any

earned incentive until a participant’s termination or

retirement, . . . such a deferral would only occur by

happenstance. In fact, the stated purpose of the vesting

requirement reinforces our conclusion that the PSP is a nonERISA bonus plan.”).

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RICH V. SHRADER 13

Accordingly, because the SRP was not designed or

intended to provide retirement or deferred income, it is not

covered by ERISA.4

III

The judgment of the district court is

AFFIRMED.

4 Rich appears to assert additionally that the district court abused its

discretion by denying him leave to amend his complaint to bolster his

ERISA claims, but this argument has no merit. As is discussed at length

above, the district court has broad discretion to deny leave to amend a

complaint when leave has already once been given. Even though Rich did

not bring his ERISA claims until his second amended complaint, he was

afforded two opportunities to amend his original complaint.

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