Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-35555/USCOURTS-ca9-13-35555-0/pdf.json

Parties Involved:
Estate of Darroll Jackson
Appellee
Robert E. Henderson
Appellee
Hillsboro Garbage Disposal, Inc.
Appellee
Oregon Teamster Employers Trust
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

OREGON TEAMSTER EMPLOYERS 

TRUST,

Plaintiff-Appellant,

v.

HILLSBORO GARBAGE DISPOSAL,

INC.; ROBERT E. HENDERSON; ESTATE 

OF DARROLL JACKSON,

Defendants-Appellees.

No. 13-35555

D.C. No.

3:11-cv-01487-

ST

OPINION

Appeal from the United States District Court

for the District of Oregon

Michael H. Simon, District Judge, Presiding

Argued and Submitted

May 8, 2015–Portland, Oregon

Filed September 8, 2015

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 1 of 25
2 OTET .V HILLSBORO GARBAGE DISPOSAL

Before: William A. Fletcher and Andrew D. Hurwitz, 

Circuit Judges, and Michael M. Baylson,

* Senior District 

Judge.

Opinion by Judge Baylson;

Concurrence by Judge W. Fletcher

SUMMARY**

Employee Retirement Income Security Act

The panel affirmed the district court’s summary 

judgment in favor of Hillsboro Garbage Disposal in an 

action brought against a subscribing employer by a health 

and benefit plan that was governed by the Employee 

Retirement Income Security Act.

The plan provided health and welfare benefits to 

workers pursuant to a collective bargaining agreement 

between a union and the employer, Hillsboro Garbage 

Disposal. Non-bargaining unit workers were eligible to 

participate in the plan if they were bona fide employees of 

Hillsboro Garbage. Hillsboro Garbage, however, made 

 * The Honorable Michael M. Baylson, Senior District Judge for the 

U.S. District Court for the Eastern District of Pennsylvania, sitting by 

designation.

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

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

 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 2 of 25
OTET V. HILLSBORO GARBAGE DISPOSAL 3

unauthorized plan contributions on behalf of two workers 

who were employed by a separate company.

The panel held that the ERISA plan’s common law 

claims for breach of contract were preempted by ERISA 

because the claims “related to” the plan. Distinguishing 

Providence Health Plan v. McDowell, 385 F.3d 1168 (9th 

Cir. 2004), which allowed a contract claim to enforce a 

reimbursement provision on the basis that plan 

interpretation was not required, the panel stated that this 

case turned on whether the two workers were eligible plan 

participants, and thus required analysis of the ERISA plan 

terms. The panel rejected the argument that it must 

interpret ERISA to be consistent with the Labor 

Management Relations Act and ensure that the plan was 

not in violation of the LMRA due to the unauthorized 

contributions and benefits payments.

The panel affirmed the district court’s grant of 

summary judgment on the plan’s claims for specific 

performance and restitution under ERISA § 502(a)(3). The 

panel held that these claims were not authorized equitable 

claims under ERISA because specific performance is 

typically a legal remedy, and the reimbursement provision 

of the plan did not amount to an equitable lien by 

agreement.

Concurring, Judge W. Fletcher wrote that this case 

should be taken en banc to reverse McDowell because 

McDowell is contrary to ERISA’s enforcement scheme and 

broad preemption clause in allowing a contract claim to 

enforce the terms of an ERISA plan.

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 3 of 25
4 OTET .V HILLSBORO GARBAGE DISPOSAL

COUNSEL

Michael J. Morris (argued) and Linda J. Larkin, Bennett, 

Hartman, Morris & Kaplan, LLP, Portland, Oregon, for 

Plaintiff-Appellant.

Iris K. Tilley (argued) and Edwin A. Harnden, Barran 

Liebman LLP, Portland, Oregon, for DefendantsAppellants.

OPINION

BAYLSON, District Judge:

Oregon Teamster Employers Trust (“OTET”) appeals 

the grant of summary judgment in favor of Defendants 

Hillsboro Garbage Disposal, Inc. (“Hillsboro Garbage”), 

Robert Henderson (“Henderson”), and the Estate of Darrol 

Jackson (“Jackson”). The district court, adopting the 

findings of a magistrate judge, granted summary judgment 

in favor of Defendants on (1) OTET’s breach of contract 

claims because the court found those claims to be 

preempted by the Employee Retirement Income Security 

Act of 1974, 29 U.S.C. § 1001 et seq. (“ERISA”); and 

(2) OTET’s restitution and specific performance claims 

because the court concluded that those claims were not 

cognizable under ERISA as they sought legal—not 

equitable—relief.

The issues presented are:

1. Whether OTET, an Employer Health and 

Benefit Plan, governed by ERISA, can 

recover damages, on a breach of contract 

claim, against a business which received 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 4 of 25
OTET V. HILLSBORO GARBAGE DISPOSAL 5

health care benefits for two ineligible 

employees.

2. Whether OTET’s claims for restitution 

and specific performance are permitted.

3. Whether the district court abused its 

discretion in refusing to allow OTET to 

amend its complaint to allege fraud.

We affirm the district court’s judgment.

I. Facts & Procedural History

OTET is an Employer Health and Benefit Plan 

governed by ERISA. OTET provides health and welfare 

benefits to the employees whose employers have entered 

into collective bargaining agreements with Joint Council 

No. 37 of the International Brotherhood of Teamsters, 

Chauffeurs, Warehousemen & Helpers of America, and 

local union affiliates.

In September 2003, Hillsboro Garbage and Teamsters 

Local Union No. 305 (“Union”) entered into a collective

bargaining agreement (“CBA”) which made Hillsboro 

Garbage a subscriber to OTET, effective March 1, 2003, 

through February 28, 2007.1 The CBA was renewed in 

April 2007 through February 28, 2012.

 1 OTET is a self-funded plan which provides health and welfare 

benefits to bargaining unit (and, in some cases, non-bargaining unit) 

employees. OTET contracts with Regence Blue Cross (“Blue Cross”) 

to process and pay claims.

 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 5 of 25
6 OTET .V HILLSBORO GARBAGE DISPOSAL

Under the terms of the Subscription Agreements, 

Hillsboro Garbage and the Union agreed to be bound by the 

provisions of the Trust Agreement governing OTET, chose 

the Health & Welfare Plan F/W (“Plan”) for eligible 

employees and their dependents, and agreed that Hillsboro 

Garbage would be subject to periodic audits to detect 

unauthorized contributions.

The Trust Agreement also authorized OTET’s Trustees 

to enter into special agreements with Hillsboro Garbage 

under which OTET would provide health and welfare 

benefits for the company’s non-bargaining unit employees 

(the “NBU Agreements”). The NBU Agreements specify 

that only individuals with a bona fide employment 

relationship with Hillsboro Garbage are eligible to 

participate in OTET benefit plans.

Starting in 2003, OTET received contributions for 

health care benefits coverage for Henderson and Jackson, 

purportedly as employees of Hillsboro Garbage. In fact, 

Henderson and Jackson were not employed by Hillsboro 

Garbage, but by a separate company, RonJons Unlimited, 

Inc. (“RonJons”), which had common ownership with 

Hillsboro Garbage.

In 2006, an audit revealed that Hillsboro Garbage had 

made unauthorized contributions on behalf of Henderson 

and Jackson. OTET sent Hillsboro Garbage a letter on 

August 21, 2006, enclosing a copy of the 2006 audit, 

stating that the audit uncovered $70,000 in unauthorized 

contributions, and advising Hillsboro Garbage that it had 

six months to make a written refund request.

Following the 2006 audit, OTET continued to accept 

contributions from Hillsboro on behalf of Henderson and 

Jackson and to pay medical claims for their benefit. In 

2011, after another audit, OTET removed the two men 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 6 of 25
OTET V. HILLSBORO GARBAGE DISPOSAL 7

from the plan and filed this lawsuit seeking recovery of 

benefits paid in excess of the contributions received from 

Hillsboro Garbage on their behalf. Count I of OTET’s 

second amended complaint seeks restitution from all 

Defendants, Count II seeks specific performance against 

Hillsboro Garbage to repay the benefits wrongly paid, and 

Counts III and IV assert common law breach of contract 

claims against Hillsboro Garbage.

After discovery, OTET moved for partial summary 

judgment. The magistrate judge recommended that 

OTET’s motion be denied and that the district court instead 

grant summary judgment in favor of Defendants. The 

magistrate judge concluded that Counts III and IV of 

OTET’s second amended complaint, the common law 

breach of contract claims, were preempted by ERISA. The 

magistrate also concluded that the claims for legal 

restitution and specific performance were not cognizable 

under ERISA. After supplemental briefing and argument, 

the district judge approved the magistrate judge’s 

recommendation, granting summary judgment to 

Defendants and dismissing the case with prejudice.

II. The District Court Properly Dismissed Counts 

III and IV (Common Law Breach of Contract) as 

Preempted by ERISA

A. ERISA Preemption

The district court found OTET’s state law claims 

preempted by ERISA because they are “premised on the 

existence of an ERISA plan, and the existence of the plan is 

essential to the claim[s’] survival” and they have a 

“genuine impact . . . on a relationship governed by 

ERISA”—that between the plan and the employer. See 

Providence Health Plan v. McDowell, 385 F.3d 1168, 1172 

(9th Cir. 2004). We review de novo the question of 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 7 of 25
8 OTET .V HILLSBORO GARBAGE DISPOSAL

whether ERISA preempts state law. Carmona v. Carmona, 

603 F.3d 1041, 1050 (9th Cir. 2008).

Under 29 U.S.C. § 1144(a), ERISA’s provisions 

“supersede any and all State laws insofar as they . . . relate 

to any employee benefit plan described in section 1003(a) 

of this title and not exempt under section 1003(b) of this 

title.” A common law claim “relates to” an ERISA plan “if 

it has a connection with or reference to such a plan.” 

McDowell, 385 F.3d at 1172 (internal quotation marks 

omitted); see N.Y. State Conference of Blue Cross & Blue 

Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 656 

(1995). In determining whether a common law claim has 

“reference to” an ERISA plan, “the focus is whether the 

claim is premised on the existence of an ERISA plan, and 

whether the existence of the plan is essential to the claim’s 

survival.” McDowell, 385 F.3d at 1172. In evaluating 

whether a claim has a “connection with” an ERISA plan, 

we use a “relationship test” that focuses whether 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.” Paulsen 

v. CNF Inc., 559 F.3d 1061, 1082 (9th Cir. 2009).

OTET’s primary argument is that the district court’s 

preemption ruling is contrary to this court’s McDowell 

opinion. McDowell was a breach of contract action by a 

health insurer against two plan participants who were 

injured in an automobile accident, seeking reimbursement 

of benefits paid on the participants’ behalf out of a 

settlement in a tort action. 385 F.3d at 1170–71. The 

insurer alleged the participants breached both the 

reimbursement provision of the ERISA plan and separate 

agreements in which the participants directed their attorney 

to reimburse the insurer out of any third-party recovery. Id. 

at 1172. The district court concluded that ERISA 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 8 of 25
OTET V. HILLSBORO GARBAGE DISPOSAL 9

preempted the action and dismissed. Id. at 1171. We 

reversed, holding that the insurer’s “action for breach of 

contract does not have the requisite ‘connection with’ or 

‘reference to’ an ERISA plan” because the parties “are not 

disputing the correctness of the benefits paid,” but rather 

the insurer “is simply attempting, through contract law, to 

enforce the reimbursement provision[s]” in the plan and 

subsequent separate agreements. Id. at 1172. 

“Adjudication of its claim does not require interpreting the 

plan or dictate any sort of distribution of benefits.” Id.

The district court distinguished McDowell, finding that 

the key question in this case was the eligibility of 

Henderson and Jackson to participate in the OTET plan. 

OTET contends McDowell is controlling because 

adjudication of its breach of contract claims does not 

require an interpretation of the plan or any distribution of 

benefits. There is no need to interpret the plan, OTET 

argues, because there is no dispute that Henderson and 

Jackson were not employees of Hillsboro Garbage and or 

that RonJons never entered into a CBA with a labor 

organization specified in the plan’s Trust Agreement.

The district court properly rejected this argument. 

McDowell did not turn on whether the beneficiaries were 

eligible plan participants. Cf. Peralta v. Hispanic Bus., 

Inc., 419 F.3d 1064, 1069 (9th Cir. 2005) (distinguishing 

McDowell in a case involving whether an ERISA plan 

administrator breached its fiduciary duty by failing to 

timely provide notification of plan cancellation because 

“interpretation of ERISA law lies at the heart of the 

dispute”). Here, however, although analysis of the 

employment status of the two individuals and whether 

RonJons had entered the CBA is admittedly 

straightforward, analysis of the terms of the ERISA plan is 

nonetheless required. Moreover, OTET alleged in its 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 9 of 25
10 OTET .V HILLSBORO GARBAGE DISPOSAL

second amended complaint that Hillsboro Garbage 

breached the terms of the ERISA plan—not separate 

agreements. See Bui v. Am. Tel. & Tel. Co. Inc., 310 F.3d 

1143, 1152 (9th Cir. 2002) (holding ERISA preempted 

plaintiff’s breach of contract claims “because the contract 

allegedly breached is the ERISA plan itself”).

B. Potential Liability Under the Labor 

Management Relations Act

The Labor Management Relations Act (“LMRA”), 

29 U.S.C. § 186, bars employers from contributing to a 

trust fund on behalf of individuals who are not employees 

of the contributing employer. 29 U.S.C. § 186(c)(5); see 

also Davidian v. S. Cal. Meat Cutters Union & Food Emps. 

Benefit Fund, 859 F.2d 134, 135 (9th Cir. 1988). The 

LMRA also prohibits contributions by employers into 

employee trust funds made other than in conformity with 

the provisions of written agreements detailing the basis on 

which those payments are to be made. See Producers 

Dairy Delivery Co., Inc. v. W. Conference of Teamsters 

Pension Trust Fund, 654 F.2d 625, 627 (9th Cir. 1981). 

OTET argues that we must interpret ERISA to be 

consistent with the LMRA and ensure that OTET is not in 

violation of the LMRA. See Guthart v. White, 263 F.3d 

1099, 1103 (9th Cir. 2001) (noting that unless employee 

could point to a written agreement providing the basis on 

which his employer was to make payments to an ERISA 

fund, “it would be illegal for the fund to pay benefits” to 

him under the LMRA).2

 2 OTET expressly disclaims any argument that the LMRA preempts 

ERISA, and we would reject such an argument had it been advanced. 

 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 10 of 25
OTET V. HILLSBORO GARBAGE DISPOSAL 11

OTET’s assertion that the district court’s finding of 

preemption would subject it to LMRA liability is entirely 

speculative. “The dominant purpose of [§] 302 is to 

prevent employers from tampering with the loyalty of 

union officials and to prevent union officials from extorting 

tribute from employers.” Turner v. Local Union No. 302, 

604 F.2d 1219, 1227 (9th Cir. 1979). Congress intended 

§ 302 to target practices harmful to the collective 

bargaining process, including “bribery by employers during 

collective bargaining, extortion by employee 

representatives, and abuse of power by union officers who 

have sole control over welfare funds.” Toyota Landscaping 

Co., Inc. v. S. Cal. Dist. Council of Laborers, 11 F.3d 114, 

117–18 (9th Cir. 1993); see also Maxwell v. Lucky Constr. 

Co., Inc., 710 F.2d 1395, 1398 (9th Cir. 1983) (“The 

congressional objective in enacting § 302 was to inhibit 

corrupt practices in the administration of employee welfare 

funds established through the collective bargaining 

process.”). These objectives are plainly not implicated in 

this case.3

Moreover, to the extent that there is an LMRA 

violation, OTET bears at least some responsibility. OTET 

learned in 2006 that Hillsboro Garbage had allowed 

See Saridakis v. United Airlines, 166 F.3d 1272, 1276 (9th Cir. 1999) 

(“The preemption doctrine per se does not govern questions relating to 

the compatibility of two or more federal laws.”).

 3 Although we indicated in Guthart that an ERISA trust’s payments 

to an employee would be unlawful under the LMRA absent a written 

agreement, that case did not address “the availability of remedies 

under, or in light of” ERISA. 263 F.3d at 1102 n.3.

 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 11 of 25
12 OTET .V HILLSBORO GARBAGE DISPOSAL

Henderson and Jackson to enroll and had made 

contributions on their behalf, but OTET took no action to 

address the issue until after a second audit in 2010.4

III. The District Court Properly Dismissed Counts I 

and II

A. Restitution and Specific Performance Under 

ERISA § 502(a)(3)

Section 502(a)(3) of ERISA authorizes civil suits “by a 

participant, beneficiary, or fiduciary (A) to enjoin any act 

or practice which violates . . . the terms of the plan, or 

(B) to obtain other appropriate equitable relief (i) to redress 

such violations or (ii) to enforce any provisions of . . . the 

terms of the plan.” 29 U.S.C. § 1132(a)(3).

Great-West Life & Annuity Insurance Co. v. Knudson, 

534 U.S. 204 (2002), considered the scope of relief 

available under § 502(a)(3). After a car accident left 

Knudson quadriplegic, Great-West paid the majority of her 

medical expenses under an ERISA plan that contained a 

reimbursement provision giving the plan “‘a first lien upon 

any recovery, whether by settlement, judgment or 

otherwise,’ that the beneficiary receives from the third 

party” and made the beneficiary “personally liable to [the 

Plan] . . . up to the amount of the first lien” for failure to 

 4 To the extent that OTET complains that a finding of preemption 

would leave it without a remedy, the Supreme Court has made clear 

that ERISA preemption is appropriate even where ERISA would not 

provide a remedy for a state law complaint. See Pilot Life Ins. Co. v. 

Dedeaux, 481 U.S. 41, 54 (1987); Wise v. Verizon Commc’ns, Inc., 

600 F.3d 1180, 1190–91 (9th Cir. 2010).

 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 12 of 25
OTET V. HILLSBORO GARBAGE DISPOSAL 13

reimburse expenses. Id. at 207 (alterations in original). 

Knudson later received $650,000 in a settlement. Id. The 

settlement allocated the majority of the funds to attorneys’ 

fees and a special needs trust, but only the “portion of the 

settlement attributable to past medical expenses”—

$13,828.70—to reimburse the plan. Id. at 207–08. GreatWest sued to recover the full value of the benefits it paid. 

Id. at 208–09.

The Supreme Court rejected this claim. The Court 

explained that only “those categories of relief that were 

typically available in equity” are permitted under 

§ 502(a)(3), but Great-West sought, “in essence, to impose 

personal liability on respondents for a contractual 

obligation to pay money—relief that was not typically 

available in equity” but only in an action at law. Id. at 210 

(internal quotation marks omitted). The Court likewise 

rejected Great-West’s characterization of its claim as an 

equitable claim for restitution. See id. at 218. Because the 

settlement funds Great-West sought were not in Knudson’s 

possession, but instead had been distributed to a trust and to 

her attorney, the Court found “[t]he basis for petitioners’ 

claim” to be, at bottom, “that petitioners are contractually 

entitled to some funds for benefits that they conferred”; 

what they really sought was “imposition of personal 

liability for the benefits that they conferred upon 

respondents.” Id. at 214.

In Sereboff v. Mid Atlantic Medical Services, Inc., the 

Court “consider[ed] again the circumstances in which a 

fiduciary under [ERISA] may sue a beneficiary for 

reimbursement of medical expenses paid by the ERISA 

plan, when the beneficiary has recovered for its injuries 

from a third party.” 547 U.S. 356, 359 (2006). The 

Sereboffs had received a settlement stemming from a car 

accident. Id. at 360. They failed to reimburse Mid 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 13 of 25
14 OTET .V HILLSBORO GARBAGE DISPOSAL

Atlantic, their health insurer, for medical expenses it had 

paid, but, pursuant to stipulation, put that amount in an 

investment account while the parties litigated their dispute.

The Supreme Court held, in contrast to Knudson, that 

the relief “Mid Atlantic sought” was equitable because it 

was directed at “specifically identifiable funds . . . within 

the possession and control of the Sereboffs—that portion of 

the tort settlement due Mid Atlantic under the terms of the 

ERISA plan, set aside and preserved [in the Sereboffs’] 

investment accounts.” Id. at 362–63 (second alteration in 

original) (internal quotation marks omitted).

The Court characterized Mid Atlantic’s claim as 

indistinguishable from an “equitable lien by agreement,” 

which arises where two parties “contract to convey a 

specific object even before it is acquired,” making the 

defendant a trustee over the property after he or she obtains

it from a third party. Id. at 363–64 (internal quotation 

marks omitted). The Court thus found Mid Atlantic’s claim 

against the Sereboffs viable because it was based on a plan 

provision that “specifically identified a particular fund, 

distinct from the Sereboffs’ general assets,” as well as “a 

particular share of that fund to which Mid Atlantic was 

entitled.”5 Id. at 364.

 5 US Airways, Inc. v. McCutchen, 133 S. Ct. 1537 (2013), the most 

recent case in which the Supreme Court interpreted § 502(a)(3), is not 

relevant here because Defendants have not asserted any equitable 

defenses.

 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 14 of 25
OTET V. HILLSBORO GARBAGE DISPOSAL 15

B. Recent Ninth Circuit Precedent on Restitution 

and Specific Performance Under ERISA § 502(a)(3) 

Does Not Support OTET’s Argument

In Bilyeu v. Morgan Stanley Long Term Disability Plan, 

we vacated a district court judgment reimbursing a plan 

administrator’s overpayments of long-term disability 

benefits to a beneficiary because it did not constitute 

equitable relief under § 502(a)(3). 683 F.3d 1083, 1086 

(9th Cir. 2012). The plan required Bilyeu to “reimburse 

Unum [the plan administrator] for any overpayment arising 

from her receipt of disability payments from any other 

source.” Id. at 1087. After Bilyeu contested termination of 

her long-term disability benefits, Unum filed a 

counterclaim seeking reimbursement of allegedly overpaid 

benefits. Id. at 1087–88.

The district court awarded reimbursement, id. at 1088, 

but we reversed, holding that the district court had 

improperly awarded legal relief unavailable under ERISA, 

id. at 1096. We explained that Sereboff “establish[ed] at 

least three criteria for securing an equitable lien by 

agreement in an ERISA action”:

First, there must be a promise by the 

beneficiary to reimburse the fiduciary for 

benefits paid under the plan in the event of a 

recovery from a third party. Second, the 

reimbursement agreement must specifically 

identify a particular fund, distinct from the 

beneficiary’s general assets, from which the 

fiduciary will be reimbursed. Third, the 

funds specifically identified by the fiduciary 

must be within the possession and control of 

the beneficiary.

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 15 of 25
16 OTET .V HILLSBORO GARBAGE DISPOSAL

Id. at 1092–93 (alterations, citations, and internal quotation 

marks omitted).

Unum’s claim met the first element because Bilyeu had 

promised to reimburse the plan for any overpayment 

resulting from Social Security benefits she received. Id. at 

1093. But we found Unum’s argument that the claim met 

the second element “problematic” because the “overpaid 

disability benefits are not a particular fund, but a specific 

amount of money encompassed within a particular fund—

the long-term disability benefits Unum paid to Bilyeu.” Id. 

And, even if the overpaid benefits qualified as a “particular 

fund,” Unum had not established the funds were within 

Bilyeu’s “possession or control” because “Bilyeu ha[d] 

spent the overpaid benefits.” Id. at 1094. Moreover, we 

held that an equitable lien cannot “be enforced against 

general assets when the specifically identified property has 

been dissipated.” Id. at 1095. “Nothing in Sereboff

suggests that a fiduciary can enforce an equitable lien 

against a beneficiary’s general assets when specifically 

identified funds are no longer in a beneficiary’s 

possession.” Id.

In McDowell, we evaluated a claim for reimbursement 

of medical expenses pursuant to an ERISA plan’s 

reimbursement provision after the beneficiary received a 

settlement relating to injuries from an automobile accident. 

385 F.3d at 1170–71. Although the plan argued that relief 

was authorized under § 502(a)(3) because it had “term[ed 

its claim] an action in equity for specific performance,” we 

affirmed the district court’s dismissal of the plan’s claim 

for failure to state a claim. Id. at 1174. The plan was 

“simply attempting to enforce a contractual obligation for 

repayment,” and “such monetary reimbursement constitutes 

legal rather than equitable relief,” and not an allowable 

“constructive trust or equitable lien on particular property.” 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 16 of 25
OTET V. HILLSBORO GARBAGE DISPOSAL 17

Id. (internal quotation marks omitted); see also Honolulu 

Joint Apprenticeship & Training Comm. of United Ass’n 

Local Union No. 675 v. Foster, 332 F.3d 1234, 1236–38 

(9th Cir. 2003) (holding that a union could not sue a 

defendant who obtained a scholarship loan under 

§ 502(a)(3) for unjust enrichment after the defendant went 

to work for a non-union employer and failed to pay back 

the loan, contrary to the scholarship agreement).

C. Analysis

1. Specific Performance

In support of its specific performance claim, OTET 

relies on the statement in Sereboff that “ERISA provides 

for equitable remedies to enforce plan terms, so the fact 

that the action involves a breach of contract can hardly be 

enough to prove relief is not equitable.” 547 U.S. at 363. 

OTET also points out that the Supreme Court has, outside 

the ERISA context, explained that specific performance of 

reimbursement obligations “attempt[s] to give the plaintiff 

the very thing to which he was entitled,” and is therefore 

equitable relief. Bowen v. Massachusetts, 487 U.S. 879, 

895 (1988) (internal quotation marks omitted).

But OTET’s claim for “specific performance of the 

reimbursement provisions of the plan” is squarely 

foreclosed by Knudson and McDowell. Knudson held that 

specific performance is typically a legal remedy unless it is 

“sought to prevent future losses that either were 

incalculable or would be greater than the sum awarded.” 

534 U.S. at 211. The exception Sereboff carved out to this 

rule was for restitution sought from a particular fund (or 

“res”), not specific performance. Sereboff, 547 U.S. at 

362–63.

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 17 of 25
18 OTET .V HILLSBORO GARBAGE DISPOSAL

2. Restitution

OTET also characterizes the reimbursement provision 

of the plan as an equitable lien by agreement, allowing for 

recovery under Sereboff. See id. at 363–65. But OTET 

does not seek recovery from an identifiable res, as Sereboff

requires. See id. at 363 (requiring that equitable restitution 

be sought from a “particular fund”). As in Honolulu Joint 

Apprenticeship & Training Committee of United Ass’n 

Local Union No. 675 v. Foster, OTET wishes to recover 

from the general assets of Defendants’ funds that were 

never “actually transferred” to them—in this case funds 

paid directly to medical providers. 332 F.3d at 1238. 

Moreover, the plan’s reimbursement provision “specifically 

provides for the remedies sought,” which “reinforces the 

conclusion that this is essentially an action at law to remedy 

. . . breach of a legal obligation.” Id.

OTET likewise cannot meet the “three criteria for 

securing an equitable lien by agreement in an ERISA 

action” that we have interpreted Sereboff to require. See

Bilyeu, 683 F.3d at 1092–93. Although the plan contained 

“a promise by the beneficiary to reimburse” OTET, it did 

not “specifically identify a particular fund, distinct from the 

beneficiary’s general assets, from which the fiduciary will 

be reimbursed”—that is, there is no res from which OTET 

seeks recovery. See id. (alterations and internal quotation 

marks omitted). Moreover, even if the agreement 

specifically identified funds from which OTET could 

recover, the amounts it paid for the individual defendants’ 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 18 of 25
OTET V. HILLSBORO GARBAGE DISPOSAL 19

medical expenses are not in their “possession and control.”6 

See id. (internal quotation marks omitted).

IV. The District Court Did Not Abuse Its Discretion 

in Denying OTET the Right to File a Third Amended 

Complaint

OTET contends in its appeal that the district court 

abused its discretion in denying OTET leave to amend its 

complaint to allege fraud. We review the district court’s 

denial of leave to amend for abuse of discretion. Sharkey v. 

O’Neal, 778 F.3d 767, 774 (9th Cir. 2015).

OTET included a fraud count in its first amended 

complaint but voluntarily abandoned that claim when it 

filed the second amended complaint because it “believed” 

its “breach of contract claims were not preempted,” and 

thus the fraud claim “was superfluous.” Because OTET 

was given two opportunities to amend its complaint and 

unilaterally decided to eliminate the fraud count, it cannot 

 6 OTET’s argument that it is entitled to restitution of “ill-gotten 

gains” is similarly unavailing. Even if it were possible to obtain 

restitution of “ill-gotten gains” without identifying a specific res, which 

we doubt, it has not shown the funds were obtained through “fraud or 

wrongdoing.” Cement Masons Health & Welfare Trust Fund for N. 

Cal. v. Stone, 197 F.3d 1003, 1007 (9th Cir. 1999) (same). OTET 

voluntarily abandoned its fraud claim and concedes it knew Henderson 

and Jackson were not employees of Hillsboro Garbage for the entire 

time the benefits it paid on their behalf exceeded contributions made on 

their behalf. Moreover, a beneficiary’s contractual obligation to 

reimburse an ERISA trust “does not make money previously paid by 

[the trust] ‘ill-gotten gains’ subject to restitution within the meaning of 

§ 1132(a)(3).” Id.

 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 19 of 25
20 OTET .V HILLSBORO GARBAGE DISPOSAL

establish abuse of discretion in denying the motion to 

amend, as it does not contend that it acquired any new 

knowledge or that there was any misconduct by Defendants 

that caused it to omit the fraud claim from the second 

amended complaint. See Royal Ins. Co. of Am. v. Sw. 

Marine, 194 F.3d 1009, 1017 (9th Cir. 1999) (finding 

district court did not abuse its discretion denying leave to 

amend when the plaintiff had twice been given the 

opportunity to amend and the additional proposed 

amendment “did nothing more than reassert an old theory 

of liability based on previously-known facts”).

V. Conclusion

The judgment of the district court is AFFIRMED.

W. FLETCHER, Circuit Judge, concurring:

Oregon Teamster Employers Trust (“OTET”)’s primary 

argument on appeal is that the district court erred in 

concluding that its claim for breach of contract was 

preempted by ERISA. In particular, OTET argues that, like 

the trust in Providence Health Plan v. McDowell, 385 F.3d 

1168 (9th Cir. 2004), it is merely “attempting, through 

contract law,” to enforce a contractual provision that is 

incorporated into the ERISA plan. Id. at 1172. The panel 

opinion distinguishes McDowell on the ground that here, 

unlike in McDowell, “analysis of the terms of the ERISA 

plan is . . . required.” Op. at 9. I agree that McDowell can 

be distinguished from this case, but the distinction is 

narrow and unconvincing. I think the better course would 

be to take this case en banc to reverse McDowell. 

McDowell was wrong when it was decided and is wrong 

today.

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 20 of 25
OTET V. HILLSBORO GARBAGE DISPOSAL 21

As the panel opinion observes, ERISA has a broad 

preemption clause, “one of the broadest preemption clauses 

ever enacted by Congress.” Security Life Ins. Co. of 

America v. Meyling, 146 F.3d 1184, 1188 (9th Cir. 1998) 

(quoting Evans v. Safeco Life Ins. Co., 916 F.2d 1437, 1439 

(9th Cir. 1990)). ERISA “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 clause 

is broad because ERISA contains within itself a “carefully 

crafted and detailed enforcement scheme” that specifies in 

exacting detail just how an ERISA plan may be enforced. 

Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 

204, 209 (2002) (quoting Mertens v. Hewitt Assocs., 

508 U.S. 248, 254 (1993)); see 29 U.S.C. § 1132(a). Under 

the terms of that scheme, a plan fiduciary like OTET 

cannot sue for damages, even when it believes (as OTET 

does) that it has distributed benefits in violation of the plan. 

See Bilyeu v. Morgan Stanley Long Term Disability Plan, 

683 F.3d 1083, 1091 (9th Cir. 2012).

In McDowell, we invented an exception to this rule that 

circumvents both the enforcement scheme Congress created 

and the accompanying preemption clause. The plaintiff in 

McDowell was an ERISA health plan fiduciary that had 

paid over $30,000 in medical expenses arising out of a car 

accident between two plan participants and a third party. 

385 F.3d at 1170. The plan contained a reimbursement 

provision that required plan participants to remit the 

proceeds of any settlement to the fiduciary “up to the 

amount of benefits paid.” Id. When the participants, the 

McDowells, received a settlement from the driver of the 

other vehicle involved in the accident, the plan fiduciary 

sought to enforce the reimbursement provision. Id. at 1171. 

Because ERISA does not permit a plan fiduciary to sue for 

damages, the fiduciary filed a state-law breach of contract 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 21 of 25
22 OTET .V HILLSBORO GARBAGE DISPOSAL

suit, seeking damages for breach of the reimbursement 

clause of the plan. Id.

It is clear that a plan fiduciary has no remedy under 

ERISA in such a situation. An ERISA fiduciary cannot 

bring a damages suit to enforce an ERISA plan; it can sue 

only for equitable relief. See 29 U.S.C. § 1132(a)(3); 

Bilyeu, 683 F.3d at 1091. Nor can such a fiduciary bring a 

state-law breach of contract suit to enforce the terms of the 

ERISA plan, because such a suit would clearly “relate to 

an[] employee benefit plan” and thus be preempted. 

29 U.S.C. § 1144(a). But the panel in McDowell reached 

the opposite conclusion. It held that, because enforcing the 

reimbursement provision “does not require interpreting the 

plan or dictat[ing] any sort of distribution of benefits,” the 

fiduciary’s contract suit did not “relate to” the plan and was 

not preempted. McDowell, 385 F.3d at 1172. The 

fiduciary, the panel explained, was “simply attempting, 

through contract law, to enforce the reimbursement 

provision.” Id.

As then-Judge Thomas explained in his dissent from 

our failure to rehear McDowell en banc, the panel’s 

conclusion was clearly wrong. See id. at 1175 (Thomas, J., 

dissenting from the denial of rehearing en banc). The 

fiduciary in McDowell was not merely trying to use state 

contract law to enforce a term in an unrelated contract. It 

was, in the panel’s own words, “attempting, through 

contract law, to enforce the reimbursement provision . . . 

incorporated into the[] ERISA plan.” McDowell, 385 F.3d 

at 1172 (emphasis added). I do not see how it is possible to 

conclude, as the McDowell panel did, that a suit to enforce 

the terms of an ERISA plan does not “relate to” an ERISA 

plan.

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 22 of 25
OTET V. HILLSBORO GARBAGE DISPOSAL 23

McDowell and this case can be distinguished in two 

ways, but neither finds significant support in ERISA. The 

result in McDowell depends on the panel’s claim that 

“[a]djudication of [the fiduciary’s] claim does not require 

interpreting the plan or dictate any sort of distribution of 

benefits.” Id. In this case, by contrast, as the panel opinion 

explains, OTET’s breach of contract claim both requires 

interpreting the plan and turns on a provision that dictates 

the distribution of benefits. See Op. at 9. But the first 

distinction is entirely illusory, and the second is a 

distinction without a difference.

First, while it is true that OTET’s contract claim 

requires interpreting the terms of the ERISA plan, the 

fiduciary’s contract claim in McDowell did, too. The thrust 

of the fiduciary’s claim in McDowell was that the ERISA 

plan required participants to remit “the proceeds of any 

settlement” that they obtained from third parties, and that 

the McDowells, by refusing to do so, had breached the 

plain terms of the plan. 385 F.3d at 1170. To adjudicate 

the fiduciary’s claim, the district court would have been 

required to determine whether the withheld funds were, in 

fact, “proceeds” under the meaning of the ERISA plan. No 

one doubted that the funds were “proceeds,” just as no one 

doubts here that Henderson and Jackson were not 

employees. As the panel opinion observes, the fact that an 

interpretive exercise is de minimus does not mean that 

interpretation is not required. It is true, in other words, that 

OTET’s contract claim requires “interpreting the plan.” Id. 

at 1172. But the panel in McDowell was wrong to state that 

the contract claim in that case did not also require 

“interpreting the plan.”

The second distinction between this case and McDowell

is hardly more convincing. The McDowell panel concluded 

that the reimbursement claim in that case was not 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 23 of 25
24 OTET .V HILLSBORO GARBAGE DISPOSAL

preempted because the fiduciary was not attempting to 

enforce a provision that would “dictate any sort of 

distribution of benefits.” Id. at 1172. Here, by contrast, 

OTET is trying to enforce a provision that does implicate 

the payment of benefits. But I fail to see why this is a 

meaningful difference. It should not matter, if a litigant is 

attempting to enforce a provision in an employee benefits 

plan, whether the provision in question governs payments 

made from the trust to the participant (i.e., a benefits 

provision) or payments made from the participant to the 

trust (i.e., a reimbursement provision). Both are parts of 

the contract between the two parties. By arbitrarily 

deciding that a reimbursement provision may be enforced 

through a breach of contract damages suit, whereas a 

benefits provision may not, McDowell ignores the Supreme 

Court’s repeated instructions that we may not discard the 

explicit terms of an ERISA plan. See U.S. Airways, Inc. v. 

McCutchen, 133 S. Ct. 1537, 1548 (2013) (“The plan, in 

short, is at the center of ERISA.”).

As Judge Thomas’s dissent explained, the rule 

McDowell establishes is deeply problematic. Under 

McDowell, “insurers may sue plan participants for 

reimbursement based on provisions in the insurance 

contract, but . . . plan participants cannot file suits or 

counter-claims[] against insurers for breach of contract or 

bad faith in claim administration under the contract.” 

McDowell, 385 F.3d at 1176 (Thomas, J., dissenting from 

the denial of rehearing en banc). That is, while plan 

fiduciaries may bring state-law claims against plan 

participants to enforce their rights under an ERISA plan (at 

least if they seek to enforce a reimbursement provision), 

plan participants may not bring state-law claims against 

plan fiduciaries to enforce their contractual rights under the 

same plan. “The impact of this decision is to provide a 

special exemption for one party while handcuffing the 

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 24 of 25
OTET V. HILLSBORO GARBAGE DISPOSAL 25

other.” Id. at 1177. I do not believe that Congress intended 

this “harsh and anomalous” result. Id. at 1176.

I concur in the panel’s opinion because I agree that 

McDowell is narrowly distinguishable (if unconvincingly) 

from this case, and because we must distinguish McDowell

if McDowell remains the law and we are to reach the 

correct result in this case. But the underlying reality is that 

McDowell was wrongly decided. We should take the 

opportunity to rehear this case en banc and overrule 

McDowell.

 Case: 13-35555, 09/08/2015, ID: 9674021, DktEntry: 26-1, Page 25 of 25