F OR P UBLICATION

UNITED STATES COURT OF AP P EALS F OR THE NINTH CIRCUIT

T H E D E P O T , I

N C .; U N I O N C L

U B B A R , I N C .; T R A I L H E A D , I

N C ., Plaintiffs-Appellants

,

v.

C A R I N G F O R M O

N T A N A N S , I N C ., F KA B lue Cross B lue Shield of Montana, I nc.; H E A L T H C A R E S E R V I C E S C O R

P O R A T I O N , D efendants-Appellees. No. 17-35597

D.C. No. 9:16-cv-00074-DL C

OPI NI ON

A ppeal from the United States District Court for the District of Montana Dana L . Christensen, Chief J udg e, Presiding

Arg u ed and Submitted December 7, 2018

Seattle, W a shing ton

F iled F ebruary

6, 2019

B efore: W illiam A. F letcher and J ay S. B y bee, Circuit J udg es, and L arry

A. B urns, * District J udg e.

Opinion by

J udg e B y bee

* T h e Ho n o rab le L arry A

. B u rn s, Un i ted S tates District J u d g e f o r th e So u th ern District o f

Calif o rn ia, sittin g b y

d esig n atio n

.T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 2

SUMMARY * *

Em ployee Retirem ent Incom e Security Act

The panel affirmed in part and reversed in part the district court’s dismissal of an action broug ht under ERI SA a nd Montana state law ag ainst health insurance companies a nd remanded for further proceeding s.

The companies marketed health insurance plans, branded “Chamber Choices,” to members of the Montana Chamber o f Commerce. Three small employ ers, Chamber members that provided their employ ees with healthcare coverag e under Chamber Choices plans, a lleg ed misrepresentations in the marketing of the plans.

A ffirming the district court’s dismissal of the ERI S A claims, the panel held that plaintiffs failed to state a claim for breach of fiduciary d

uty u nder 29 U.S.C. § 1132(a)(2) in defendants’ alleg ed charg ing of ex c e ssive premiums. T he panel held that, in secretly charg ing ex cessive p r emiums, defendants did not act a s fiduciaries of the plans because they did not ex e rcise discretion over p lan manag ement or control

over plan assets

. P l a i n t iffs also failed to state a c laim for equitable relief under § 1132(a)(3) for prohibited transactions in imposing unreasonable charg es for kickbacks a nd unrequest e d benefits because plaintiffs’ requested relief o f restitution or disg org ement was not equitable in nature.

** T h is su m m ary co n stitu

t es n o p art o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 3

The panel reversed the dismissal o f plaintiffs’ state-law claims, based on defendants’ alleg ed misrepresentations that the premiums charg ed reflected the a c tual medical premium

am o u n t

. The panel held that ERI SA did not ex pressly preempt the state-law claims because the claims did not have

a reference to o r an impermissible c o n nection with an ERI SA plan, and therefore d i d not “relate to” an ERI SA plan. The state-law claims also were not c o n flict-preempted by E RI SA. The panel nonetheless ag r eed wi t h the district court that plaintiffs’ alleg ations did not state w ith particularity the circumstances of the alleg ed fraud, a s required by F ederal Rule o f Civil Procedure 9(b). The panel therefore reversed the d ismissal wit h prejudice of the state-law claims so that plaintiffs c ould amend their comp l a i n t to state the fraud alleg ations with g reater particula r ity

. The panel n oted, however, that the district court was also free on remand to decline to ex ercise supplemental jurisdiction over the statelaw claims.

COUNSEL

Kenneth J

. H a lpern ( arg ued), Rachana A. Pathak, Dana Be r kowitz

, and Peter K. Stris, Stris & Maher L L P, L os Ang eles, C a lifornia; J ohn Morrison, Morrison Sherwood W ilson & Deola PL L P
, H elena, Montana; for PlaintiffsAppellants.

Anthony F

. Shelley (arg ued) and Theresa Gee, Miller & Chevalier Chartered, W ashing ton, D. C

. ; Michael David McL ean a

nd Stefan T. W all, W all M cL ean & Gallag her, PL L C, Helena, Montana; for Defendant-Appellee Caring for Montanans, I nc.T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 4

Stanley T. Kalecz y c (arg ued), M. Christy S. McCann, a nd Kimberly A. B eatty , B r o wning Kalecz y z B erry & Hoven P.C., Helena, Montana, for Defendant-Appellee Health Care Services Corporation.

OP INION

B YB EE, Circuit J udg e:

Plaintiffs are three small employ ers in Montana who a re members of the Montana Chamber of Comm e rc e

. Defendants a

re heal t h i nsurance companies that marketed fully insured he a l t h insurance plans to the Chamber’s members branded “Chamber Choi c e s .” F rom 2006 until 2014, plaintiffs provided their employ ees with healthcare
coverag e under Chamber Choices plans, and did so based on d e f e n d ants’ representations that the monthly premium s w o u l d reflect o n ly the cost of providing benefits. B ut a ccording to plaintiffs, these representations w ere false—defendants padded the p re m i u ms with hidden surcharg es, which they used to p ay kickback s t o t he Chamber and to buy unauthoriz ed insurance products.

Upon lea r ning of these surcharg es, plaintiffs filed suit
ag ainst defendants, asserting two claims under the Employ ee R e t irement I ncome Security A ct of 1974 (“ERI SA”), 29 U.S.C. § 1001 et seq. , as well as several state-law c laims based on defendants’ misrepresentations. The district court dismissed all of the claims, conc luding that plaintiffs failed
to state actionable claims under E RI SA while at the same time concluding tha t plaintiffs’ state-law claims a re preempte d by ERI SA. W e affirm the district court’sT H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 5

dismissal of plai n t i f

f s’ ERI SA claims, r everse the d ismissal of plaintiffs’ state-law claims, and remand.

I

. B ACKGROUND

A. Factual Background

Plaintiffs are three s m all businesses o p erating in Montana. 1 The D epot, I n c. is a steakhouse; Union Club B ar, I nc. is a bar; and Trail Head, I nc. is a sporting g oods retailer. During the period relevant to this lawsuit, p laintiffs were members of the Montana Chamber of Commerce. B lue Cross B lue Shield of Montan a ( “B CB SMT”)—an insurance
company that is n o w k n o w n as Caring for Montanans, I nc. (“CF M”)—marketed “full y -insured” g roup health insurance plans to the C h a mber’s employ er-members known a s “Chamber Choices.” Health Care S e rvice Corp. (“HCSC”) purchased the health insurance business of B CB SMT in J uly 2013 and marketed the Chamber Choices plans thereafter.

F rom 2006 to 2014, plaintiffs e n rolled in Chamber Choices plans and paid monthly premiums to defendants in

ex c h a ng e for health insurance coverag e for their employ ees. Coverag e for p l a intiffs’ employ ees h ing ed on plaintiffs
p a y ing the required monthly premiums. According t o plaintiffs, “ [ i] n the course of marketing Chamber Choices,” defendants represented that the premiums would be equal to the “ actual medical premium”—i.e., “the cost of p r o v iding insurance benefits to covered individuals plus administrative

1 B ecau se th is case co m es to u s on rev iew o f a m o tio n to d ism iss, w e

a c cep t as tru e th e f

actu al alleg atio n s i n th e o p erativ e co m plain t

. S e e Askin s v. U.S

. Dep ’t o

f Ho mela n d S

ec. , 8 9 9 F.3 d 1 0 3 5
, 1 0 3 8 (9 th Cir. 2 0 1 8 ).T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 6

costs” and “ [ not] f

or any purpose oth e r than to p ay f or the purchased health insurance coverag e.” Plaintiffs according ly relied on that representation in choosing to participate.

All parties ag r ee that each Chamber Choices p l an constituted an “employ ee w e l f are b enefit plan” subject to ERI SA. 29 U.S.C. § 1002(1); see Foss e n v. Blue Cross & Blue Shield of Mont., I

nc. , 6 60 F .3d 1102, 1109–10 (9th Cir. 2011)

. A ccording to the Member G uide for one of the Chamber Choices p l a n s 2 —which p rovides a summary o f benefits availa b l e to covered employ ees for the relevant
y ear—the employ ers (i.e., plaintiffs), not B CB SMT, were the named “plan administrator[ s] ” and fiduciaries under E RI SA. Defendants, however, performed most of the claim

m anag ement and administration duties. Plaintiffs’ rol e w a s limited to ded u c ting monthly premiums from their employ e es’ w ag es to send to defe n dants for coverag e a nd notify ing defendants if an employ ee l o s t elig ibility for
coverag e. T he Member G u i d e a lso purported to allow defendants to make c hang e s to the terms of the policy in the following modification provision:

[ B CB SMT] may make a dministr a t i v e c h a n g e s

or chang es in dues, terms o r B enefits in the Group Plan by g iving written notice to the Group a nd/or p urchasing pool member at least 60 day s in a dvance of the effective date of the chang es. Dues may not b e increased more

2 P lain tif f s in co rp o rated th e Mem

b er Gu id e b y ref

eren ce in t h eir

co m plain t. S ee Sa n to men n o v. Tra nsa merica Life In s. Co

. , 8 8 3 F.3 d 8 3 3
, 8 3 6 n .2 (9 th C ir. 2 0 1 8 ). A cco rd in g to p lain t if f s, th e Mem

b er G u id e is
rep resen tativ e o f

th e Ch am

b er Ch oices p l an s.T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 7

than once during a 12-month period, ex cept a s allowed by

Montana law.

The requirement that e n r o l lees receive 60 day s’ advance notice of modifications is consistent with federal and st a t e laws g over ning g roup health p lans, including plans not subject to ERI SA. S

e e 29 C.F .R. § 2590.715-2715(b) (requiring 60 d ay s’ advance notic e o f “any material modification

. . . in a

n y of the terms of the plan or coverag e”); Mont. Code A nn. § 3 3-22-10 7 ( 3 )(a) (requiring 60 day s’ advance notice of “a chang e i n r a t e s or a chang e in terms o r benefits”).

Plaintiffs alleg e that, w h i l e they subscribed to Chamber Choices plans, defendants u n lawfully padded the premiums with two surch a

r g e s w i thout plaintiffs’ knowledg e or consent. F irst, f rom 2 006 to 2 014, d e f

enda n t s s ecretly embedded a surcharg e into the premiums, which they used to pay kickbacks to the Chamber. These kickba c ks were desig n ed
to persuade the Chamber to continue to m a r k e t defendants’ plans to its members. Second, from 2008 to 2014, defendants secretly embedded a

n a dditional surcharg e into the premiums that defendants used t o p urchase “additional insurance products that [ plaintiffs] did n ot request o r authoriz e.” Plaintiffs further alleg e that defendants took efforts to conceal these surcharg es. B eg inning in 2 009, defe n dants b eg an “channeling the kickbacks to the Chamber throug h an insurance ag ent and c h anneling a s h a re of the [ surcharg es] into a ‘rate stabiliz a tion’ account.” And beg inning in 2012, defendants beg an “ making cry ptic notations that itemiz ed certain charg es on the bills” i n a n effort to “ reduce [ their] own leg al risk.”T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 8

I n F ebruary 2014, the Montana Commissioner o f Securities a

nd I nsurance f

ined B CB SMT $250,000 f or illeg al insurance practices under Monta na law, including billing in

ex c e ss of the actual medical premium and pay ing kickbacks
to the Chamber. See Mont. Code Ann. §§ 33-18-208, 33-18- 212. After the Commissioner’s finding s were publicly released in March 2014, a g roup of Chamber Choices participants filed a class action suit ag ainst defendants in state court alleg ing claims of breach of fi d u c i a r y duty

, breach o f contract, unfair and deceptive trade practices, and unjust enrichment. M

ark Ibsen, Inc. v. Caring for Montanans, Inc.
, 371 P.3d 446, 448 ( Mont. 2016). After defendants unsuccessfully tried to remove the c a s e to federal court, the
state trial court dismissed the l a w s uit, finding that the plaintiffs’ claims were based on statutory violations and that the relevant state statute did not provide a private rig ht o f action. Id. at 4 48–49. The Montana Supreme Court affirmed. Id. at 455.

B

. Procedural History

Plaintiffs filed this lawsuit in federal court in J une 2016. I n their orig inal complaint, plaintiffs raised two ERI SA

c l a i m s : a breach of fiduciary duty claim under 29 U.S. C

. § 1132(a)(2), and a proh i b i t ed interested-party transaction claim under 2 9 U.S.C. § 1 1 3 2 (a)(3). Plaintiffs also raised state-law claims for breach of contract, breach of fiduciary duty

, breach of t h e i mplied covenant of g ood faith and fair dealing

, neg lig ent misrepresentation, unjust enrichment, a nd unfair trade practices under the Montana Unfair Trade Practices and Consumer P r otection Act, Mont. Code Ann. § 30-14-101 e t seq.T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 9

The district court dismissed the orig inal co mplaint without prejudice. The court conc l uded that defendants did
not sat i s f y E RI SA’s d efinition of a “fiduciary ” for purposes

o f t he breach of fiduciary duty claim, and that plaint i ff s

were not seeking “ appropr i a t e equitable relief” as r equired for the prohibited transaction claim. T he c ourt also concluded that plaintiffs’ state-law claims were pr eempted by ERI SA because they constituted “alternative enforcement mechanisms” to the prohibited transaction claim.

Pl a i n t iffs filed their a mended complaint in March 2017. As before, plaintiffs assert two claims under ERI SA: a breach

o f f i d u ciary duty claim u nder 29 U.S.C. § 1132(a)(2), and a prohibited transaction c laim under 29 U.S.C. § 1132(a)(3). Plaintiffs also assert state-law claims for fraudulent inducement, constructive fraud, neg lig ent misrepresentation, unjust enrichment, and u nfair trade practices. The district
court dismissed all o f the claims, this time with pr e j u d i ce. The court concluded that plaintiffs fai l e d to remedy the defects in their ERI SA claims and that pla i n t i ffs’ state-law claims (including the new fraud c laims) were still p reempted by ERI SA. The court also concluded that pla i n t iffs’ alleg ations of fraud do not sa t i s f y the heig h tened pleading

r e q u irements under F ederal Rule of Civil Procedure 9(b ). Plaintiffs timely appealed, and we have jurisdiction pursuant to 28 U.S.C. § 1291.

I I

. STANDARD OF REVI EW

On appeal, plaintiffs c halle n ge the district court’s dismis s a l o f their ERI SA claims a s well as the dismissal o f their state-law claims. W e r e v iew de novo a district court’s order g ranting a motion to d ismiss for failure to state a claim under F ederal Rule of Civil Procedure 12(b)(6). S a ntomennoT H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 10

v. Transamerica Life Ins. Co.
, 883 F

. 3d 833, 836 (9th Cir

. 2018). To survive a motion to dismiss, the complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on i ts face.’” A shcroft v

. Iqbal

, 556 U.S. 662, 678 ( 2 0 09) ( quoting Bell Atl. Corp. v

. Twombly

, 550 U.S. 544, 57 0 ( 2 0 07)). We w ill thus “affirm

a dismissal for failure to state a claim where ther e i s n o cog niz able leg al theory or a n a b s ence of sufficient facts alleg ed to support a cog niz a b l e leg al theory .” Interpipe Contracting, Inc. v. Becerra
, 8 9 8 F .3d 879, 886 (9th Cir. 2018) (quoting L.A. Lakers, Inc. v. Fed. Ins. Co.
, 869 F .3d 795, 800 ( 9th Cir. 2017)). And althoug h “we accept as true all factual alleg ations,” we do n ot “accept as true alleg ations that are con c l usory

. ” In re NVIDIA Corp. Sec. Litig.
, 768 F .3d 1046, 1051 (9th Ci r

. 2014). Nor do we consider factual assert i o n s m ade for the f irst time on appeal, as “our review is limited t o t h e c ontents of the complaint.” Allen v

. City of Beverly Hills

, 911 F .2d 367, 372 (9th Cir. 1990); see A m g e n I n c. v. Harris
, 136 S. Ct. 758, 760 (2016) (per curiam).

W e also review de novo a dismissal for failure to satisfy F ederal Rule of Civil Procedure 9(b), which requires a party alleg ing fraud to “ s t a t e with particularity the circumstances constituting fraud.” W

P P Luxembourg Gamma Three Sarl v

. Spot Runner, Inc.
, 655 F .3d 1039, 1047 (9t h Cir. 2 011) (quoting F ed. R. Civ. P. 9(b)).

I I I . ERI SA CL AI MS

W e beg in with plaintiffs’ c laims under E RI SA.

“ C o n g r e ss enacted ERI SA to ‘protect the interests o f participants in employ ee benefit plans and their beneficiaries’ by setting out substantive reg ulatory requir e ments forT H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 11

employ e e b enefit plan s ” and “an integ rated sy stem o f procedures for enforcement.” Aetna Health I nc. v. D avil a , 542 U.S. 200, 208 (2004) (internal alterations o mitted) (first quoting 29 U.S.C. § 100 1 ( b ) ; then quoting Mass. Mut. Life Ins. Co. v. R ussell

, 473 U.S. 134, 147 (1985)). Relevant h ere, ERI SA’s enforcement scheme provides a cause of action
ag ainst plan fiduciaries f or b reach of their fi duciary duties, 29 U.S.C. § 1132(a)(2), and a c ause of action to remedy p lan

or ERI SA violations—including prohibited interested-party transactions—with “appropr i a te equitable relief,” id. § 1132(a)(3). Plaintiffs bring claims ag ainst defendants under both provisions. W e address each in turn.

A. Breach of Fiduciary Duty Claim

Plaintiffs claim that, by c o l l e cting and c oncealing the premium surcharg es, defendants b r e ached their fiduciary duties—including a duty “to act ‘solely in the interest of the participants and beneficiaries,’” Varity C o r p

. v. Howe
, 516 U.S. 489, 5 06 (1996) (quoting 2 9 U .S.C. § 1104(a)(1))— and are thus liable under 29 U.S.C. § 1132(a)(2). 3 B ut to breach a fiduciary duty

, one mus t b e a f i duciary

. And h ere, defendants were not acting as fiduciaries when taking the action subject to plai n tiffs’ c o mplaint. W e thus affirm the district cou r t ’s d ismissal of plaintiffs’ breach of fiduciary duty claim.

3 U n d er § 1 1 32 (a)(2 ), a p lan p articip an t, b en ef iciary

, o r f

id u ciary m ay b rin g “ [a ] civ il actio n

. . . f or ap p ro p riate relief u n d er [§ 1 1 0 9 ].” Sectio n 1 1 09 im

p o ses perso n al liab ility u po n “ [a]n y perso n w

h o is a f id u ciary w ith resp ect to a p lan

w h o b reach es an y

o f th e resp o n sib ilities,

o b lig atio n s, o r d u ties im

p o sed u p on f id u ciaries b y [ERISA ].” 2 9 U.S.C. § 1 1 0 9(a).T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 12

There are two ty

pes of fiduciaries under ERI SA. F irst, a party that is desig nated “in the plan instrument” as a fiduciary is a “named f

iduciary

. ” 29 U.S.C. § 1102(a)(2). Second, ERI SA provid es the following definition o f w hat is sometimes referred to as a “functional” fiduciary :

[ A] person is a fiduciary w ith respect to a plan
to the ex tent (i) he ex ercises a n y discretionary authori ty or discretionary control respecting
manag ement of such plan o r ex erc i s es any authority or control respecting manag ement o r dispositio n of its a ssets, (ii) he renders investment advice fo r a f ee or other compensation, direct or indirect, with respect to a ny money s o r other property of such plan,

or has any authority or r esponsibility to do so,

o r (iii) he has any discretionary authority o r d i s c r e t i o n a r y r e s p o n s i b i l i t y i n t h e administration of such plan.

Id. § 1002(21)(A); Santomenno
, 883 F .3d at 837. B ecause a person 4 is a fiduciary under this provision only “ to the ex tent” the person eng ag es in the list e d c o n d u c t, a person may be a fiduciary with respect to some actions but not others. Pegram

v. Herdrich

, 530 U.S. 211, 2 25–26 (2000) (quoting 29 U .S.C. § 1002(21)(A)); see Acosta v. Brain , 910 F .3d 502, 519 (9th C ir. 2018) ( “ [ W ] e must disting uish between a fidu c i a r y ‘acting in connection with its fiduciary responsibilities’ with
reg ard to the plan, as opposed to the same individual or entity ‘acting in its c orporate capacity .’ O n l y t h e former trig g ers fiduciary status; the latte r does not.” (internal citation

4 ERISA ’ s d ef

in itio n o f “ perso n ” in clu d es “ co rp o ratio n [s]” an d o th er

“ asso ciatio n [s].” 2 9 U.S.C. § 1 0 02 (9 ).T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 13

omitted)). The c entral question is “whether that person was

a c t i n g a s a fiduciary (that is, was performing a f iducia r y function) when ta k ing the action subject to complaint.” Pegram , 530 U.S. at 226.

Plaintiffs claim that defendants were acting as f iduciaries when charg ing ex cessive premiums base d on the functions descri b e d in subparag raph (i)—ex ercising discretion over plan manag ement and ex ercising a uthority over plan assets. 5 These provisions are distinct and therefore must be analy z ed separately

. See IT Corp. v. Gen. Am. Life Ins. Co. , 107 F .3d 1415, 1421 (9th Cir. 1997).

1. Discretion over Plan Manag ement

Plaintiffs first arg ue that, in secretly charg ing e x cessive premiums, defendants “ex ercise[ d]

. . . discretionary authority

or discretionary c ontrol respecting [ p l a n] manag ement.” 29 U.S.C. § 1 0 0 2(21)(A)(i). W e disag ree. I nsurance companies do not n o rmally ex ercise discretion o v e r p lan
manag ement when they neg o tiate at arm’s leng th to set rates

or collect premiums. That is because these neg otiations occur before the ag reement is ex e c u t e d

, at which point the insurer has no relationship to the p lan and thus no discretion o ver its
manag ement.

5 P lain tif f s d o n o t arg u e th at d ef

en d an ts acted as f

id u ciaries u n der 2 9 U.S.C. § 1 0 0 2 (2 1 )(A )(iii), w h ich p ro v id es th at a p erso n is a f i d u ciary
to th e ex ten t it “ h as an y d i scretio n ary au th o rity o r d iscretio n ary resp on s ib ility in th e ad m i n istratio n o f [th e] p lan .” In s u rers g en erally act in a f id u ciary cap acity u n d er th i s “ p la n a d m i n istratio n ” p ro v isio n w h en

m ak in g a d iscretio n ary d eterm in atio n ab o u t w h eth er a claim an t is en titled
to b en ef its. See Kin g v

. B l u e C

r o ss & Blu e S

h ield o f Ill.

, 8 7 1 F.3 d 7 3 0
, 7 4 5

– 4 6 (9 th

Cir. 2 0 1 7 ).T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 14

W e addressed a similar issue in S a ntomenno , holding that

a service p rovider—i.e., a company that manag ed a selffunded ERI SA plan a s a third-party administrator—“is not an ERI SA fiduciary when neg otiating its compensation w i th a prospective customer.” 883 F .3d a t 8 3 7. The service provider in that case performed several fun c tions for retirement plans, including the selection of various potential investments, and its compensation was set as a fix ed percentag e of the a s sets manag ed. Id. at 835–36. W e

ex p lained that “[ a] service provider is plainly not involved in plan manag ement when n eg o tiating its prospectiv e fees”; to the contrary , “at that stag e ‘discretionar y c o n t rol over p lan
manag ement lies with t h e trustee, who decides whether to ag ree to the service provider’s terms.’” Id. a t 838 (internal alterations omitte d ) (quoting Santomenno ex rel. John Hancock Tr. v. John Hancock Life I ns. Co. ( U.S.A.)

, 768 F .3d 284, 293 ( 3d Cir. 2014) ( “ John Hancock

”)). I n other words, “‘a service provider owes no f iduciary duty w i t h respect to the neg otiation o f its fee compensatio n ’ because ‘nothing prevent[ s] the trustees from rejecting the prov i d e r ’ s product

a nd selecting another service provider; the choice [ i ] s theirs.’” Id. (internal alterations omitted) (quoting John Hancock

, 768 F .3d at 295). And after t h e c ontract is

ex e c uted, the “service provider c a nnot be h e l d liable for

m e r e l y a c c e p t i n g p r e v i o u s l y b a r g a i n e d

- f o r f i x e d compensation” because “the plan administrator act[ s] as ‘a fiduciary only for purposes of administering the plan, not for
purposes of neg otiating or c o llecting its c ompensation.’” Id. at 840 (citations omitted).

The reasoning in Santomenno applies equ ally to r atesetting by insurance compa n i es. Premium rates, like fix ed compensation fees, a

re g e n e r a l ly neg otiated in “an arm’s leng th barg ain presumably g overned by competition in theT H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 15

marketplace,” Schulist v. Blue Cross of Iowa
, 717 F .2d 1127, 1132 (7th Cir. 1983), which mean s that the insurance
company is “free to neg otiate its [ rates] with an ey e to its
p r o f its,” Srein v. Soft D rink W orkers Union, Local 812
, 9 3 F .3 d 1 0 8 8
, 1096 (2d Cir. 1996). B ecause the potential purchaser of the insurance policy remains free to “reject[ ] the [ insurer’s] product a

nd se l e ct[ ] another,” the insurance
company “is plainly

not involved in plan manag ement when
neg otiati n g ” p r emium rates. S antomenno , 883 F

. 3d at 838 (quoting John Hancock

, 7 68 F .3d at 295); see a lso Cotton v

. Mass. Mut. Life Ins. Co.
, 402 F .3d 1267, 1278–79 (11th Cir. 2005 ) (“Simply urg ing the purchase of its p roducts does not make an insurance company an ERI SA fiduciary with respect to those products.” (citation omitted)).

That reasoning f

o r e c l o ses plaintiffs’ claim here. Plaintiffs concede that the terms of the insurance a greements in this case—including the premium amounts—were neg otiated at arm’s leng t h

. T he a g reements w ere thus “‘presumably
g overned by competition in the marketp lace’ that specified the premium rates.” Seaway F o od Town, Inc. v. Med. Mut. of Ohio

, 3 47 F .3d 610, 618 (6th Cir. 20 0 3 ) (quoting Schulist

, 717 F .2d at 1132). A n d t he alleg ed misconduct in this case—misrepresenting that the monthly premiums reflect ed only the actual medical p remium—occurred when the polic i e s w ere being marketed. I ndeed, plaintiffs alleg e that defenda n t s made these misrepresentations in an e ffort to “induce [ p] laintiffs to buy coverag e throug h Chamber Choices.” Althoug h plaintiffs may not h a ve known about the surcharg es when d e c i d ing to subscribe to Chamber Choices plans, the premium amounts were fully d i sclosed, a nd
p l a intiffs alway s r emained free to walk away and sel e ctT H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 16

another insurance company

. 6 D efendants ex e rcised no discretionary c ontrol over the plan’s manag e m e nt at that point.

Althoug h plaintiffs ag ree that insurance companies do not ordinarily act as fiduciaries when neg otiating p remium rates, they c laim that this is not an ordinary case. Rather, according
to plaintiffs, defendants possessed a n ability to ex ercise discretion over the plan b y vir tue of the modification provision in the Member Guide:

[ B C B S M T ] m a

y make administrative chang e s

or chang es in dues, terms or B e nefits in the Group Plan by g iving written n o tice to the Group a nd/or p urchasing pool member a t least 60 day s in advance of the effective date of the

c h ang es. Dues may n ot b e increased m o r e than o nce during a 1 2-month period, ex cept a s allowed by

Montana law.

Plaintiffs arg ue that this provision g ranted d efendants an unfair “ability to unilaterally amend plan terms” upon “mere notice to the beneficiaries” and therefore “subjected [ them] to ERI SA fiduciary

duties.”

Generally

, a “ company doe s n o t act in a fiduciary capacit y w h en deciding to amend

. . . a welfare benefits

6 Plain t if f s co n ten d th at, b ecau se th e su rch arg es w ere co n cealed , th e p rem i u m s w ere n o t “ d ef in i tiv ely calcu lab le an d n o n d iscretio n ary

co m pen satio n

. . . clearly set f o rth in a co n tract w ith th e f i d u ciary

em p l o y er.” S

an to men n o , 8 8 3 F.3 d at 8 4 1

. B u t th e p remiu ms w ere f u lly d isclo sed an d n eg o t iated ; th e f act th at def

en d an ts d id n o t d i s cl o se th e

co m po sitio n o f t

h e p rem i u m s (o r h o w t

h ey w ere sp en d in g th em ) d o es n o t

m ean th at d ef

en d an ts ex ercised d iscretio n in settin g th em

.T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 17

plan.” Curtiss-W

right Corp. v. Schoonejongen

, 514 U.S. 73, 78 ( 1995) (citation omitted). Set t ing that aside, the mere

ex istence of a discre t i o n a r y ability is insufficient to bestow f iduciary status if that discretion was not “ex ercise[ d ]

. ” 29 U

. S.C. § 1002(21)(A)(i). Even assuming plaintiffs’ contention that the mod i f

ication provision g ranted defendants the ability to unilaterally amend plan terms, plaintiffs do not adequate l y alleg e that defendants e ver ex ercised that discretio n , l et alone “when taking the action subject to complaint.” Pegram
, 530 U.S. at 226. I ndeed, plaintiffs concede that defendants “initially imposed the surcharg e s in

an arms-leng th neg otiation”—i.e

. , b efore the modification provision was effective. 7 T hus, even if defendants may have become fiduciaries “at some point a f t e r entering into the contracts, [ they ] plainly held n o such stat u s prior to the

ex e c ution of the contracts” when the p r emium amounts were neg otiated. Santomenno
, 883 F .3d at 839 (internal alterations omitted) (quoting F

.H. Krear & Co. v. Nineteen Named Trs.
, 810 F .2d 1250, 1259 (2d Cir. 1987)).

W e made this point in Santomenno

. There, the plaintiffs
arg ued that th e s e r vice provider “ was a fiduciary when

7 P lain tif f s p o in t to an alleg atio n in th e co m p lain t th at d efe n d an ts

“ ‘ im p o sed an d in creased ’ th e n o n

- prem iu m s u rch arg es ‘ w ith o u t p ro v id in g th e n otice req u ired b y co n tract.’ ” T h at co n clu so ry alleg atio n d o es n o t in d icat e t hat def

en d an ts ex ercised d iscretio n u n d er th e m o d if icatio n p ro v isio n

. No r w o u ld su ch an alleg atio n b e p lau sib le, b ecau se p lain tif f s ’ th eo ry is t h at t h e m o d if icatio n p ro v isio n g ran t ed d ef en d an ts d i scretio n to in crease p remiu ms , n o t “ n o n

- p rem iu m su rch arg es.” A n d if

, as p lain tif

f s alleg e, th ey “ h ad n o w ay to k n o w ” th at d ef

en d an t s w ere em

b ed d in g

su rch arg es in to th e p rem iu m am o u n ts, an y alleg ed in creases w o u ld h av e h ad t o occu r b ef

o re th e p rem i u m am o u n t s w e r e ag reed to

. Oth erw i se, a

m id

- y ear in crease in su

rch arg es w o u ld h av e led to a m id

- y ear in crease in
p rem i u m s , a f

act th at i s n o t alleg ed in th e co m p lain t an d th at w o u ld h av e b een q u ite o bv io u s to p lain t if f s h ad it o ccu rred

.T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 18

selecting the investment options because it retaine[ d] the rig ht
to delete or substitute the funds the employ er ha[ d ] selected for the Plan.” Id. at 8 39 n.5. W e disag ree d

, o b s e r v i ng that the plaintiffs failed to “alleg e that [the service provider] ever

ex e r cised its discretion.” Id. W e also noted that the service provider could “only alter investment options upon six

m o nths’ notice,” and that the contract “allow[ ed] th e employ e r opportunity to terminate the cont ra c t if displeased with any chang e.” Id. Simil arly

, we rejected the plaintiffs’ reliance on a contractual provis i on that allowed the service provider “to chang e [its fe e s ] u pon a dvance written notice,”

ex p laining that the “plaintiffs have not alleg ed that [ the service provid e r ] e v er chang ed its fees; indeed, if it did, the employ e r is free under the [ contract] to find another provider.” Id. at 839 n.4; see id. a t 8 4 1 n.8 (similar). The bottom line is that a party is a fiduciary only to the ex tent the party a c tually ex ercises the a lleg ed discretionary control o r authority over plan manag ement.

Seeking to overcome this conclusion, plaintiffs a rg u e that defendants did e x ercise discretion a f t er the contracts were

ex e c uted by virtue of their “decisio n t o c ontinue charg ing inflated amounts, when [they ] held c omplete and unilateral

a u t h o r i t y t o e l i m i n a t e t h o s e o v er c h a r ge s

. ” T h i s arg ument

— which condemns defendants for failing to

ex e r cise dis cretion under the very provision that plaintiffs denounce as u nfair—is unper s uasive. I n this contex t, a failure to ex ercise discretion does not amount to an ex ercise of discretion w ithin the mean i ng of § 1 002(21)(A)(i). See Santomenno
, 883 F .3d at 839 n.5. Once defendants ag reed to enter into a contract with p l a i n t iffs, defendants may have acquired fiduciary status with respect to some plan f unctions,

see, e.g. , King v

. B l u e Cross & Blue Shield of Ill.

, 871 F .3d 730, 745–46 (9th Cir. 2017), b u t any fiduciary statusT H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 19

defendants may h ave acquired did n o t compel defendants to reneg otiate the premium rates they had just ag reed to accept. Rather, defendants were “merely accepting p r e viously b arg ained-for” premiums, and the barg aining itself d id n o t g ive rise to f

iduciary st a t u s

. S

antomenno , 883 F

. 3d at 840 (citation omitted). 8 Thus, in a lleg edly charg ing and collecting

ex c e ssi v e premiums—which is “the action subject to complaint,” P egram , 530 U.S. at 226—defend a n t s were not

ex e r cising discretionary

authority over plan manag ement.

2. Control over Plan Assets

Plaintiffs separately a

r g ue that defendants acted a s fiduciaries because they “ex ercise[ d]

. . . authority or control respecting manag ement o r disposition of [ plan] assets.” 29 U.S.C. § 1 002(21)(A)(i). P l aintiffs contend that the premiums they paid to d efendants f o r insurance coverag e

were “plan a ssets” and that defendants w e re subject to fiduciary o blig ations w hen using them. B u t p l aintiffs’ premise is flawed. Premiums paid to an insurance company in return for coverag e under a fully insured insurance p olicy are not “plan assets.”

8 Def en d an t s ’ f ai l u re to ex ercise d iscretio n also sets th is case ap art f ro m th e cases cited b y p lain t if f s i n w h ich an in su

rer actu ally ex ercised d iscretio n t

h at h ad b een g ran ted in th e co n tract. S ee, e.g

. , Ed Min ia t, In c.

v. Glo b e Life In s. Grp

., In c. , 8 0 5 F.2 d 7 3 2 , 7 3 4 , 7 3 7

– 38 (7 th C ir. 19 8 6) (in s u rer “ u

n ilaterally an d w ith o u t j u stif i catio n an n o u n ced

. . . an ab an d o n m en t o f ex istin g po licy h o ld ers, b y red u cin g th e rate o f retu rn paid

o n acco u n t

. . . an d i n creasin g p rem iu m rates to t h e m ax im u m allo w ed b y th e p o licy ”); Ch i. Bd

. Op t io n s Exch

., In c. v. Co n n

. Gen

. L ife In s

. Co

. , 7 1 3 F.2 d 2 5 4
, 2 5 5
, 2 5 9

– 6 0 (7 th Cir. 1 98 3 ) (in su rer “ ex ercis[ed ]” its d iscretio n to m ak e a “ u n ilateral am en d m en t [to ] an an n u ity co n tract” f

ro m

w h ich th e p lain tif

f s co u ld n o t w ith d raw ). Here, th e p rem iu m s c h a r g ed

w ere b ased n o t o n d ef

en d a n t s ’ d iscretio n b u t in stead o n arm ’ s- len g th

n eg o tiatio n s

.T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 20

ERI SA defines “plan assets” to mean “plan as s e t s a s defined b y such reg ulations as the Secretary [ of L a bor] may prescri b e

. ” Id. § 1002(42). Althoug h the Secretary has not prescribed a comprehensive reg ulation defining “plan

ass e t s , ” 9 several circuits h ave followed the “consistent[ ] ” position of “[ t] he D epartment of L abor

. . . that ‘the assets o f

a plan g enerally are to be identified on the ba s i s o f ordinary notions of property rig h ts under non-ERI SA law.’” Gordon

v. CIGNA Corp.
, 890 F .3d 463
, 472 (4th Cir. 2018) (citing U.S. Dep’t of L a

bor, Advis o r y O p

. No. 93-14A, 1 993 W L 188473, at *4 (May 5, 1993)); accord Merrimon v. Unum Life Ins. Co. of Am.
, 7 5 8 F .3d 46, 56 (1st Cir. 2014); Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of Mich.

, 7 51 F .3d 740, 745 (6th Cir. 2014); Tussey v. A BB, Inc.
, 746 F .3d 327, 339 (8th Cir. 2014); E

d monson v. Lincoln Nat. Life Ins. Co.
, 725 F .3d 406, 427 (3d Cir. 2 013); Faber v. Metro. L i f e Ins. Co.
, 648 F .3d 98, 105–06 (2d Cir. 2011); I n re Luna
, 406 F .3d 1192, 1199 (10th Cir. 2005). W e ag ree with this weig ht of authority ; absent applicable regulatory g uidance, plan “assets” under 29 U.S.C. § 1002(A)(21)(i) are to be identified based on ordinary notions of property

rig hts. 1 0

9 A Dep ar t m en t o f L ab o r reg u latio n d ef in es “ assets o f th e plan ” to

“ i n clu d e am ou n ts

. . . th at a p articip an t o r b en ef iciary p ay s to an em

plo y er,

o r am o u n ts t

h at a particip an t h as w ith h eld f ro m h is w ag es b y an em

plo y er, f o r co n trib u tio n

. . . to th e p lan

, as o f th e earliest d ate on w h ich su ch

co n t r i b u t i o n s

. . . can reaso n ab ly be seg reg ated f ro m th e em

plo y er’ s g en eral assets.” 29 C.F.R. § 2 5 1 0 .3

- 1 0 2 (a)(1 ). A s ex p l ain ed b elo w , th is
reg u latio n is i n ap p l i c a b l e h ere b ecau se th e “ am o u n ts” p lain tif f s s eek to

reco v er are n o t am o u n t s t h a t w ere “ p a[id ] to an em p l o y er” b y p lan
p articip an ts b u t in stead am o u n t s p aid b y an e m

p l o y er to an in su

ran ce

co m pan y

.

10 A lth o u g h w e h av e ad o p t ed a “ fu n ctio n al d ef in itio n o f w

h at

co n stitu tes an ‘ a s s e t o f t h e plan ’ f or p u rp o ses o f [2 9 U.S.C. § 1 1 0 6 ],” Ka yes v. Pa c. Lu m b er Co

. , 5 1 F.3 d 1 4 4 9
, 1 4 6 6– 67 (9 th Cir. 1 99 5 ) (citin gT H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 21

Apply ing that principle here, w e c onclude that neither plaintiffs nor their employ ees had a property inter e s t in the premium pay

ments on c e they were paid to d e fendants. Plaintiffs paid the premiums to defendants in ex chang e for a contractual rig ht to r eceive a particular service—healthc a re coverag e under a Chamber C hoices plan. The premiums

were monthly fees that defendants c ollected as reve n u e for providing that service. Upon pay ing the premiums, plaintiffs had no “beneficial ownership interest” in them. Hi-Lex C o n t rols

, 751 F .3d at 745 (quoting U.S. D ep’t of L ab o r, Advisory Op. No. 92-24A, 1992 W L 337539, at *2 (Nov. 6, 1992)). I nstead, defendants were simply indebted to plaintiffs
to provide the ag reed-upon coverag e. Cf. Grupo Mexicano de Desarrollo, S.A. v

. A ll. Bond Fund, I nc. , 527 U.S. 308, 319–20 (1999) (“[ A] g eneral creditor

. . . ha[ s] no cog niz able in t e r e s t , either at law or in equity

, in the property of his debtor, a nd therefore [ may ] not interfere with the debtor’s use of that property .”).

Plaintiffs try to e quate the premiums paid to defendants with “participant contributions” made into a self-funded plan, which are g enerally deemed to be plan assets. Acosta v

. Pac. Enters.
, 950 F .2d 611, 620 & n.7 (9th Cir. 1991); see 29 C.F .R. § 2510.3-102(a)(1) ; Advisory Op. No. 92-24A, 1992 W L 337539, at *2. B ut plaintiffs elide the distinction between a self-funded p l an and a fully insured plan. Under

a “self-funded” p l a n , t he insurance c ompany “acts only as a third-party a dministrator; the e m p loy er is responsible for
pay ing claims [ o u t of the employ e e s’ c o n t ributions] a nd bearing the financial risk.” N. Cypress M ed. Ctr. Operating

Aco sta v. Pa c. En ters. , 9 5 0 F.2 d 6 1 1
, 6 2 0 (9 th Cir. 1 9 9 1 )), th at def in itio n

assu m es f id u ciary statu s an d is th u s n o t h elp f u l in d eterm in in g w

h eth er a p arty is in f act a f id u ciary u n d er 2 9 U.S.C. § 1 0 0 2 (A )(2 1 )(i).T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 22

C o

. , L td. v. A etna Life Ins. Co.
, 898 F .3d 461, 468 (5th C i r. 2018); see Gobeille v. Liberty Mut. Ins. Co.
, 136 S. Ct. 936, 941–42 (2016). Premiums paid under a self-funded plan a re therefore contributions f

rom employ ees earmarked and h eld in trust by the e mploy er for the employ ees’ later benefit. See Gordon , 890 F .3d at 472; Hi-Lex Controls , 751 F .3d at 747. These employ er-held contributions are therefore assets of the plan. See 2 9 C.F .R. § 2510.3-102(a)(1) (d e f i n i n g “assets o f the plan” to include amounts “that a p articipant or b eneficiary
pay s to an e mployer

. . . [ o r] that a participant has withheld from his wag es by an e m

ployer ” ( emphasis added)); A dvisory Op. No. 92-24A, 1992 W L 337539, a t * 2 ( describing “participant contributions” in the contex t of “ plans whose benefits are p aid as needed s o l e l y from the g eneral assets o f the employ er maintaining the plan”).

This case, however, does not involve a self-funded plan. I nstead, as plaintiffs alleg e, all of the plans sold b y defendants were “ f

ully -insured health i n surance policies.” Under a “fully insured” plan, the insurance company “acts a s

a direct insurer; it g uarantees a fi x e d m onthly p remium for 12 months a

nd bears the financial risk of pay ing claims.” N. Cypress Med. Ctr.
, 898 F .3d at 468. Premiums paid u nder a fully insured plan are not held in trust; rather, they are “fix ed fee[ s] ” paid in ex chang e f o r the insurance company “ass u m [ing ] the financial risk of providing the benefits promised.” Pegram
, 530 U.S. at 218–19. And as ex p lained above, once defendants collected those fees, neither plaintiffs

n o r their employ ees maintained a n y sort of p roperty inter e s t in them. According ly

, d efen d a n t s did not e x ercise controlT H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 23

over plan assets when charg ing or spending the alleg edly

ex c e ssive premiums. 1 1

B e cause defe ndants w ere not ex ercising a fiduciary function when taking “the a c t i o n subject to complaint,” Pegram
, 530 U.S. at 226, we affi r m the district court’s dismissal of pla i n t i ffs’ breach of fiduciary duty claim under 29 U.S.C. § 1132(a)(2).

B

. Prohibited Transaction Claim

Nex t , w e consider p laintiffs’ prohibited transaction c laim, for which they

purport to seek “appropriate e quitable relief” under 29 U.S.C. § 1132(a)(3). We conclude t hat the relief
p l aintiffs seek is not equitable and according ly affir m t h e district court’s dismissal of plaintiffs’ prohibited transaction claim.

Under ERI SA’s prohibited transaction provisions, “[ a] fiduciary with respect to a p lan shall not c a u se the p lan to eng ag e in a transaction” with “ a par t y in interest” for the “f u rnishing of

. . . services” if “more than reasonable compensation is paid therefor.” 2 9 U.S.C. §§ 1106(a)(1)(C),

11 In lig h t o f o u r h o ld i n g , w e ex p ress n o o p in io n o n th e d istrict co u rt’ s

co n clu sio n th at th e p rem iu m pay m en ts w ere n o t p lan assets p u rsu an t to ERISA ’ s “ g u aran teed b en ef it p o licy ” p ro v isio n , 2 9 U.S.C. § 1 1 0 1 (b )(2 ).T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 24

1108(b)(2). 1 2 E RI SA provides a cause of action for remedy ing prohibited transactions:

A c i v i l a ction may be broug ht

. . . by a participant, beneficiary

, or fiduciary (A) to enjoin any act or prac t i ce which violates any provisi o n o f [ ERI SA Title I ] or the terms o f the plan, or ( B ) to o btain other a p p r o p riate equitable relief ( i) to redress such violations

or (ii) to enfo r ce any provisions of [ ERI SA Title I ] or the terms of the plan.

Id. § 1132(a)(3). B ecause § 113 2 ( a ) (3) “makes no mention
at a ll of which parties may be proper defendants,” a party in interest—including a non-fiduciary third party —may b e sued under this provision for its participation in a p rohibited transaction. H

arris Tr. & Sav. Bank v

. Salomon Smith Barney, In c

. , 5 3 0 U.S. 238, 2 4 6, 249–51 (2000); see Landwehr v. DuPree
, 72 F

. 3d 726, 734 ( 9th Cir. 1995). A nd

even thoug h the plan fiduciary is the o n e who “ cause[ d ] the plan to eng ag e in [ the p rohibited] tr a nsaction,” 29 U .S.C. § 1106(a)(1), the “culpable fiduc i a r y ” may still bring suit
ag ainst “the arg uably less culpable” party in interest because “the purpose o f t h e action is to r e c over money or other

12 T h e tex t o f th ese sectio n s creates th e p ro h ib ited tran sactio n as f o llo w s: “ Ex cep t as p ro v id ed in sectio n 1 10 8

. . . [a] f i d u ciary w ith resp ect to a p l an sh all n o t cau se th e p lan to en g ag e in a t r a ns actio n , if h e k n o w s

o r sh o u ld k n o w t h at su ch tran sactio n co n stitu tes a d irect o r in d irect

. . . f u rn ish in g o f

. . . serv i ces

. . . b etw een t h e plan an d a p art y i n in terest.” 2 9 U.S.C. § 11 0 6 (a)(1 )(C). “ T h e p ro h ib itio n s p ro v id ed in sectio n 1 1 0 6 of th is title s h all n o t ap p ly t o

. . . [ c ] o n t r a ctin g o r m ak in g reaso n ab le

arran g em e n t s w i t h a p arty in in terest f o r

. . . serv ices n ecessary f o r th e estab lish m en t o r o p eratio n o f th e p la n , i f n o m o re th an reaso n ab le

co m pen satio n is p aid th eref

or.” Id

. § 1 1 08 (b )(2 ).T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 25

property for the [ plan beneficiaries]

, ” Harris Tr.
, 5 30 U.S. at 252 (quoting Restatement ( Second) of Trusts § 294 cmt. c , at 70 (1957)). 1 3 Thus, a plan fiduciary may (1) seek an injunction o r “other appropriate equitable relief” (2) ag ainst

a “party in i n terest” (3) f

or participating in a transaction for

s e r v ices for which “ more than reasonable c ompensation is paid.”

The parties and the district court all ag ree that the second and third components are satisfied in t h i s c a se. Each defendant is a “party in interest”—which ERI SA defines a s “a person p roviding services to [ a] plan,” 29 U .S.C. § 1002(14)(B )—because they provide underwriting a n d claim-adjudication services to the p lans. A nd the alleg ed conduct in this cas e— imposing u nreasonable charg es for kickbacks and unrequested benefits—is a rg uably a p rohibited transaction for “services” between plan fiduciari e s ( p laintiffs) and parties in interest (defendants) f o r which “more than reasonable compensation is paid.” Id. § § 1106(a)(1)(C), 1108(b)(2). B ecause a

n injunction is not a t i s s ue here, the only dispute is whether plaintiffs a r e s eeking “appropriate equitable relief” under § 1132(a)(3).

13 In H a rris Tru st , th e f

id u ciaries o f a p en sio n p lan su ed S alo m on Sm ith B arn ey (“ Salo m o n ”), a f irm th at p ro v id ed b ro k er- d ealer an d trad in g

serv ices to th e p l an

. 5 3 0 U.S. at 2 4 2

. W h ile th e p lan w as receiv in g th ese

serv ices, th e p lan also p u rch ased w o rth less in v estm en ts f ro m S alo m on at th e d irectio n of an in v e s tm en t m an ag er th at ex ercised “ discretio n o v er a p o rtio n of th e p lan ’ s assets” an d w as th eref o re also a p lan f

id u ciary

. Id

. at 2 4 2

– 4 3. T h e rem ain in g f id u ciaries s u ed Salo m o n u n d er § 11 3 2(a)(3 )

as a n o n -fi d u ciary p arty in in terest, co n ten d in g th at th e in v estm en t

m an ag er, actin g as a f

id u ciary , cau sed th e p lan t o en g ag e in a p ro h ib ited
tran sactio n b etw een th e p lan an d a party in in terest f o r th e sale o f p ro p erty in ex ch an g e f

o r p lan assets. Id

. at 2 4 3 (citin g 29 U.S.C. § 1 1 06 (a)(1 )(A ), (D)).T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 26

I n a series of decisions, the Supreme Court has ex p lained that the phrase “appropriate equitable relief” in § 1132(a)(3) “is limited to those categ ories of relief that were typically available in equity during the day s of the divided b e n ch (meaning

, the period b efore 1 9 38 w hen courts o f law a nd equity were separate).” Montanile v. Bd. of Trs. of N a t ’l Ele v a t or Indus. Health Benefit Plan

, 1 36 S. Ct. 651, 657 (2016) (internal quotation marks omitted); see US A irways, Inc. v. McCutchen

, 5 69 U.S. 8 8
, 9 4 –95 (2013); S ereboff v

. Mid Atl. Med

. S ervs., Inc.
, 547 U.S. 356, 361–62 ( 2 006); Gr eat-W est Life & Annuity Ins. Co. v. Knudson

, 534 U.S. 204, 210 (2002); M

ertens v. Hew i t t Assocs.
, 508 U.S. 248, 256 (1993). As a r esult, a plaintiff may not use § 1132(a)(3)
to seek any “form of legal relief,” such as “money damag es.” Great-W est , 534 U .S. at 210 (inter n a l alteration omitted) (quoting Mertens
, 508 U.S. at 255). To q ualify as “equitable relief,” both “(1) the b asis for the plaintiff’s claim and (2) the
nature of the underly ing remedies soug ht” must be equitable rather than leg al. Montanile

, 136 S. C t. a t 657 (internal alterations omitted) (quoting Sereboff

, 547 U.S. at 363).

Even if we assume that the basis f or plai n tiffs’ claim in this case is equitable, 1 4 the nature o f the underly ing remedies
soug h t by plaintiffs in their complaint is n o t equitable. Plaintiffs seek a judg ment to obtain money from d e fendants, and “[ a ] lmost invariably suits s e ek i n g

. . . to c ompel the defendant to pay a sum of money to the plaintiff are suits for

14 A lth o u g h w e are sk e p t i c al th at th e b asis f o r p l ain tif

f s ’ claim is
eq u itab l e, d ef

en d an ts d id n o t d i sp u t e th at issu e in th e d i strict co u rt an d raise it f or th e f irst t im e o n ap p eal. We th u s d o n o t ad d ress th at q u estio n

an d in stead ap p ly o u r “ ‘ g en eral ru le’ a g a i n s t en tertain in g arg u m en ts on ap p eal th at w ere n o t p resen ted o r dev elo p ed b ef o re th e district c o u r t .” Rich a r d s v. Ern st & Yo u n g

, LL P
, 7 4 4 F

. 3 d 1 0 7 2
, 1 07 5 (9 th Cir. 20 1 3) (citatio n o m itted ).T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 27

‘money d amag es’”—the “classic form of legal relief.” Great-W est , 534 U.S. a t 210 (citation and internal alteration omitted). A lthoug h plaintiffs attempt to characteriz e t he relief they s ee k a s equitable by labeling it “restitution” a nd “di s g org ement,” we must “look to the ‘substance of the remedy soug ht rather than the label placed on that remedy .’” Mathews v. Chevron Corp.
, 362 F .3d 11 7 2
, 1185 (9th Cir. 2004) ( citation and internal alteration omitted). W e conclude that, notwithstanding the labels, plaintiffs’ requested r elief is not equitable in nature.

1. Restitution

The restitut i on plaintiffs seek is not equitable. The Supreme Court has draw n a “fine d istinction b etween restitution at law a

nd restitution in e q

uity .” Gre a t

- W

e s t , 534 U .S. at 214. A plaintiff seeks “restitution at law ” when the plaintiff cannot “assert title or r ig ht to posse s s i o n o f particular property ” but instead seeks t o “impose personal liability on the defendant” as a means of “recovering money to pay for some benefit the defendant . . . received from [ the plaintiff] .” Id. at 213–14 (quot i n g 1 D an B

. Dobbs, Law of Remedie s § 4

. 2 ( 1), at 571 (2d ed. 1993) (“Dobbs”)). B y contrast, a plaintiff seeks “ restitution in equity
, ordinarily in the form of a constructive trust or an equitable lien, where
money or property identified as belong ing in g ood conscience
to the plaintiff [ c an] clearly be traced to parti c u lar funds o r property in the defendant’s possession.” Id

. at 213 ( citing 1 Dobbs § 4.3(1), at 587–88); see 2 Dobbs § 6.1(3), at 12–13.

The Court has illustrated this distinction in several cases involving ERI SA plans c lai m i n g e ntitlement to a settlement fund obtained by plan beneficiaries. I n Great-W est , the Court concluded that the plan was seeking legal restitution becauseT H E D E P O T V

. C A R I N G F O R M O N T A

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the specifically identified fund was n o t in the defendants’ possession. 5 3 4 U

. S. at 214. B y contrast, in Sereboff

, the Court c oncluded tha t t h e plan was seeking equitable restitution because the plan “soug ht ‘specifically identifiable’ funds that were ‘within t h e p o s s ession and control’” of the defendants—not r ecovery from the defendants’ “assets
g enerally

. ” 547 U. S

. a t 362–63 (citation o mitted). And in Montanile

, the Court faced the problem of a fund that, althoug h specifically identifie d a t one time, h ad been dissipated by the defendant on n ontraceable items, leaving the plan to seek recovery “out of the defendant’s g eneral assets.” 136 S. Ct. at 658. Observing the rule that equitable restitution
must seek to recover “ s p e cifically identified funds that remain in the d efendant’s p o s s e s s ion or

. . . traceable items that the defendant purchased with the funds ( e.g. , identifiable property like a car),” the Court held that seeking recovery out of “the d e fendant’s g eneral assets” due to dissipation o f the funds “on n o ntraceable items (like food or travel)” amounts to “a legal r emedy , not an equitable one.” Id.

I n this case, the district court concluded that the nature o f the remedy soug ht by plaintiffs i s n o t equitable, r easoning
t h at, under Montanile

, “a party c a nnot recover in e q u i t y unless the f

unds have been maintained in a seg reg ated

a c count.” Montanile

, however, concerned dissipation a nd
t r acing

, not seg reg ation. The Court noted this distinction in dicta, observing that at least in some instances, if a defendant “comming l[ es] a specifically identified fund

. . . w ith a different f

u n d

, ” the “comming ling allow[ s] the plaintiff to

recover the amount of the lien f rom the entire pot of money

. ” Montanile

, 136 S. Ct. at 661. And a s p laintiffs p oint out, we have, in a

nother contex t, permitted rec o v e ry out o f comming led funds under th e “lowest intermediate balance” doctrine, which “evolved from equitable principles of trusts”:T H E D E P O T V

. C A R I N G F O R M O N T A

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“W here a wrong doer ming les another’s
money with his o wn, from which comming led
account w ithdrawals a

re f rom time to time made, there is a presumption o f law that the

sums first withdrawn were money s of the tortfeasor.”

. . . I f the a mount on deposit is depleted below the a mou n t o f the trust, however, the amount withdrawn is treated a s lost, and subsequent deposits do not replenish the trus t

. T hus, the beneficiary is e ntitled to the lowest intermediate b alance between the date of the co m m ing ling and the date o f
pay ment.

In re R & T Roofing Structures & Commercial F raming, Inc.
, 887 F .2d 981, 987 (9th Cir. 1 9 89) (internal alterations omitted) ( quoting Republic Supply Co. v. Richfie l d O il Co.
, 79 F .2d 375, 378 (9th Cir. 1 935)); se e a l so Schuyler v

. Littlefield

, 232 U .S. 7 07, 710 (1914) (“[ W ] here one has deposited trust funds in his individual bank account, and the ming led fund is at any time wholly depleted, the trust fund is thereby dissipated, and cannot be treated as reappearing in

sums subsequently deposited to the cr e d i t o f the same account.”). Thus, pla i n t i f fs a rg ue, when a specific f

und is comming led w ith other funds in a g eneral account, restitution is available out of the g eneral account as long as the g eneral

a c c ount balance d oes not dip below the amount o f t h e wrong fully

held money

.

W e need not deci d e w h ether this proposition is correct because, even assum ing it is, “the facts and alleg ations supporting that p roposition [ do not] appear in [ plaintiffs’] complaint.” Amgen , 136 S. Ct. at 760. F irst, plaintiffs have
not identified a “specific fund” to w hich they are entitled. A sT H E D E P O T V

. C A R I N G F O R M O N T A

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Montanile ex plain s , “[ e] quitable r emedies ‘are, as a g eneral rule, directed ag ainst some specif i c t h i n g ,’” n ot “a sum o f
money g enerally .” 136 S. Ct. at 658 (citation o mitted). Plaintiffs, however, seek to recover n o t a specific thing but instead some unidentified portion o f t h e many premium
pay ments t h a t ex ceeded “reasonable compensation.” The premium surcharg es plaintiffs seek to recover “ never e x isted

as a d i s t i n c t o bject or fund”; rather, they reflect “a specific
amount of money encomp a s s e d within a particular f u n d”—the total premiums paid to defendants. B ilyeu v. Morgan Stanley Long Term Disability Plan , 683 F .3d 1083, 1093 (9th Cir. 2012). A nd even if the a m o u n t o f the overcharg es is measurable or otherw i s e identifiable, “[ i] t is the fund

, not its size
, that must be identifiable.” Cent. States, Se. & S w. Areas H

ealth & W elfare Fund v. First Agency, Inc.
, 756 F .3d 954, 960 (6th Cir. 2014); see Bil y e u , 6 8 3 F .3d at 1093 (disting uishing between a specific “amount of money ” and a specific “fund”). I ndeed, a judg ment in plaintiffs’ favor would h a ve no connection to any particular f und whatsoever. Defendants would simply be r equired to pay a certain amount of money , and they

could “satisfy

that oblig ation by dipping into any p o t” they

like. F irst Agency
, 756 F .3d at 960. That is restitution at law, not equity

. Second, the complaint never mentions the ex istence of a
g eneral account in which the ill-g otten funds (i.e., the premium surcharg es) were commin g led, such that the product of those funds would be traceable. Ag ain, Montanile is clear: “[ W ] here a pe r s on w rong fully disposed of the property o f another b u t t h e property c annot be traced into any product, the other c annot enforce a constructive trust or lien upon any part of the wrong doer’s property .” 136 S. Ct. at 659 (emphasis a nd internal alterations omitted) (quoting Restatement o f Restitution § 215(1), at 866 (1936)); see alsoT H E D E P O T V

. C A R I N G F O R M O N T A

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Georg e G

. Bo g e rt et al., The Law of Trusts and Trustees § 921 ( 2d rev. ed. 1995) (“B og er t ” ) ( ex plaining that restitution of “trust property or its product” is g enerally unavailable “where the proof of the b eneficiary -claimant merely shows the receipt o f t rust property by the defendant and makes no case as to its subsequent history or its ex istence
among the present assets of the defendant”).

Nor do plaintiffs alleg e that defendants’ account balance remained above the surcharg e amounts for purposes of their “lowest interme d i a t e b a l a n c e ” t h e o r y

. I n d ee d

, a “consequence of the lowest balance rule is that, unless there is ev i dence to show the amount of the low balance, the plaintiff may recover nothing at a ll, on the view that without such evidence, the pl a i n t iff’s funds have not been identified in the account.” 2 Dobbs § 6.1(4), at 22. Here, the g ravamen of plaintiffs’ complaint is that def e ndants spent the surcharg es on kickbacks and u nwanted insurance p roducts. That leaves plaintiffs t o s i m p ly declare in their briefs that it is “ a lmost inconceivable” that defendan t s d i d not place the surcharg es into a g eneral account b efore spending them, a nd that the g eneral account still ex ists tod a y such that the surcharg es would be traceable. B ut a s the complaint itself

ex p lains, B CB SMT has substa n t i a l l y r e o r g aniz ed, chang ed its

name to CF M, sold its health insurance b usiness, and at some p o i n t has donated or will donate its assets to public charity

. Thus, even if defendants placed surcharg es collected b etween 2006 and 2014 into a g eneral account, we certainly find it at least “co nceivable” that the account no long e r ex ists. B ecause “our review is limited to the contents of the compla i n t , ” A llen

, 911 F .2d at 372, we decline to entertain plaintiffs’ unpleaded theory on appeal.T H E D E P O T V

. C A R I N G F O R M O N T A

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2. Disg o rg ement

Plaintiffs also purport to seek disg org ement, wh i c h they define as a money

judg ment equivalent in value to ill-g otten assets that were dissipa t ed on non-traceable items. This characteriz ation of disg org ement—which runs headlong into Montanile ’s refusal to permit recovery of assets th a t have been dissipated “on nont r aceable items,” 136 S. Ct. at 658—is unavailing

. “Disg org ement” i s simply a f orm of “[ r] e stitution measured b y the defendant’s wro n gf u l g ain” rather than b y the plaintiff’s loss, and is o ften described as “ an ‘accounting for p rofits.’” Restatement (Third) of Restitution and Unjust Enrichment § 51 cmt. a, at 204 (2011); see Edmonson

, 725 F .3d at 419 (“[ D] isg org e ment and accounting for p rofits

are essentially the same r emedy .”); 1 Dobbs § 4.3(5), at 610 (“[ A] c counting for profits

. . . forces t he [ defendant] to disg org e g ains received from improper use of th e plaintiff’s
p r o p e rty or e ntitlements.”). And as the Supreme Court

ex p lained in Great-W

est , “ a n accounti n g f

or profits” is an additional remedy

—available when t h e plaintiff “is entitled
to a constructive trust o n particul ar p r o p erty held by the d efendant”—that allows the plaintiff to “recover profi t s produced by the defendant’s use of that property , even if [ the plaintiff] c annot identify a particular res containing the p rofits
soug h t to be recovered.” 534 U.S. at 214 n.2 (citing 1 D obbs §§ 4

. 3 ( 1 )

, 4.3(5), at 588, 608). That is also how the Court described “disg org e ment” in Harris Trust —a remedy available to recover the “proceeds” from dispos i n g o f particular p roperty as well as “profits derived” from the illicit

use of that property

. 530 U .S. at 250. Given the absence o fT H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 33

a n y particular property in this c a se, plaintiffs’ request f o r disg org e ment is not equitable in nature. 1 5

Plaintiffs try to erase t h is particularity requirement b y citing several trust law treatises that ex plain that t r u s t beneficiaries could sue a third-party transferee in a c o u r t o f equity to obtain a “money judg ment” w h e n t h e ill-g otten assets cannot be t r a c e d. See, e.g. , B og ert § 868; 4 Austin W a k e man Scott & W illiam F ranklin F r atcher, The Law of Trusts §§ 291.1, 291.2, at 78–79 (4th e d. 1989); Restatement (Second ) o f Trusts § 291 cmt. e, at 59. I ndeed, plaintiffs proclaim, courts of e q

uity had “ex c lusive jurisdiction” in this

c o n tex t, a

nd an “ e

x clusively equitable r emedy is, b y d e f i nition, a ty

pically e q u itable remedy .” B ut the Supre m e Court rejected this r easoning in M ertens , ex plaining that althoug h “courts o f equity had ex clusive j u r i s d iction over virtually all actions by beneficiaries fo r breach o f trust”—including actions for monetary relief “ a ga inst third
persons who knowing ly p a rt icipated in the trustee’s breach”—many of those actions soug ht what w e r e in effect “‘leg al remedies’ g ranted by an equi t y c o u r t.” 508 U.S. at

15 Un d er t rad itio n al ru les of eq u ity

, an acco u n tin g f o r p ro f its m ay b e

av ailab le in t

h e ab sen ce of a co n stru ctiv e t r u s t o v er sp ecif ically id en tif i ab le p ro p erty if t

h e d ef en d an t o w ed a f

id u ciary d u ty to th e p lain tif f

an d b reach e d th at d u ty

. See Pa rke v. First Relia n ce S ta n d a rd Life In s. Co

. , 3 6 8 F.3 d 9 9 9, 10 0 8

– 0 9 (8 th Cir. 2 0 04 ); cf. CIGNA Co rp

. v. Ama ra , 5 6 3 U.S. 4 2 1
, 44 1

– 4 2 (2 0 1 1 ) ( d e s crib i n g a “ su rch arg e,” w

h ich is an eq u itab l e rem ed y “ in t

h e f o rm o f m o n etary ‘ co m

pen satio n ’ f

o r a lo ss

resu ltin g f

ro m a tru stee’ s b reach o f d u ty , or to p rev en t th e tru s tee’ s u n j u st

en rich m en t” (cita t io n o m itted )). Bu t f id u ciary statu s is “ [t]h e i m p o rtan t in g red ien t.” 1 Do b b s § 4 .3 (5 ), at 6 1 1 n .1 6 ; see CIGNA
, 56 3 U.S. at 4 4 2 (“ [T ]h e f act th at th e def

en d an t

. . . i s an alo g o u s to a t ru stee m ak es a

c r i t i c al d if

f eren ce.”). A n d f

o r p u rp o ses o f p l ain tif f s’ p ro h ib ited
tran sactio n claim

, d ef

en d an ts are n o t f

id u ciaries bu t in stead n o n

- f i d u ciary th ird p arties.T H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 34

256. The phrase “equitable relief” in E RI SA does n ot mean “whate v e r relief a common-law court of equity could provide.” Id. at 257. Rather, it means relief t h at was

“ typically a vailable in equity (such as injunction, mandamus, and restitution, but not compensatory d amag e s).” Id. a t 256. And as ex plained a

bove, e quitable restitution (inclu d i n g its d i sg org ement variant) g enerally requires specificall y identifiable property

or its traceable proceeds.

Plaintiffs also point to Harris Trust
, b ut nothing in Harris Trust alters that conclusion. As the Court ex pla i n e d in that
case, beneficiaries can recover in equity from a third-party transferee only because “equity impresse[ d] a constructive
trust on the property ” upon its transfer. Harris Tr.
, 530 U.S.
at 250 (quoting Moo r e v

. Crawford

, 130 U.S. 1 22, 128 (1889)). A nd a “constructive trust . . . may be imposed only where the plaintiff’s funds are t h e mselves located a nd identified or where they are traced i n t o o ther f unds o r property .” 2 Dobbs § 6 .1(3), at 12–13 (fo o t n o t e s omitted). I ndeed, “the nature of the r elief” that the Court “described in H a r r i s Trust [ was] a c laim to specific property (or i t s proceeds) held by the defendant.” G r e a t

- W est , 534 U.S. at 215 ( emphasis added). B ecause plaintiffs have not identified
any specific p roperty from which proceeds or profits derived, they cannot recover the derivative remedy of disg org e ment.

I n sum, plaintiffs are not seeking “appropriat e equitable relief” u nder 29 U.S.C. § 1132(a)(3). W e thus affirm the district court’s dismissal of p laintiffs’ prohibited transaction claim.T H E D E P O T V

. C A R I N G F O R M O N T A

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I V. STATE-L A W CL AI MS

W e now turn to p l a i n t iffs’ claims under state law for fr a u d u l ent inducement, c onstructive fraud, n eg lig ent misrepresentation, unjust e nrichment, and unfair trade practices u nder the Montana Consumer Protection Act. Each of these c laims is based on d e f endants’ alleg ed misrepresentations to p laintiffs that the premiums c h a rg ed reflected the actual medical premium a mount. See generally Morrow v

. B a nk of Am., N.A.
, 3 24 P.3d 1167, 1180–85 (Mont. 2 014) (describing the elements of fraud, constructive fraud, neg lig ent misrepresentation, an d u n fair trade practices). T he d i strict court dismissed these claims a fter concludi n g that they are preempted by ERI SA a nd that plaintiffs’ fraud alleg ations a re not pled w i th sufficient particularity for purposes of F ederal Rule of Civil Procedure 9(b). Plaintiffs challeng e both conclusions.

A. Preemption

“[ T] wo strands of ERI SA preemption” are relevant here: (1) “ex press” preemption under 29 U.S.C. § 1144(a); a nd (2) “co n flict” preemption based on 29 U.S.C. § 1132(a). P a u lsen v. CNF Inc.
, 559 F .3d 1061, 1 081 (9th Cir. 200 9 ) (citation omitted). Addressing each strand, w e c onclude that ERI SA does not preempt plaintiffs’ state-law claims.

1. Ex press Preemption

ERI SA ex pressly preempts “any and a ll State laws insofar

as the y m a y n o w or hereafter r elate to any employ ee benefit plan.” 29 U.S.C. § 1144(a). The tex t of this provision—and in particular, th e phrase “relate to”—is broad. So b road, in f a c t, that the Supreme Court has rejected an “‘uncrit i c alT H E D E P O T V

. C A R I N G F O R M O N T A

N A N S 36

literalism’ in a

pply ing ” it g iven its p o t entially never-ending reach. Gobe i l l e , 1 36 S. Ct. at 943 (quoting N.Y

. State Conference o

f Blue Cro s s & Blue Shield Plans v. Travelers Ins. Co.
, 514 U.S. 645, 6 5 6 ( 1 995)). To provide some “workable standards” for determining the scope of § 1144(a), the Court has identified “two categ ories” of state-law c laims that “relate to” an ERI SA plan—claims that have a “reference to” an ERI SA plan, and claims that have “an impermissible ‘connection w ith’” an ERI SA plan. Id. (citations omitted);

see Or. Teamster Emp’rs Tr. v. H illsboro Garbage Disposal, Inc.
, 800 F .3d 1151, 1155 (9th C i r. 2015) (“A [ state] law claim ‘relates to’ an ERI SA plan ‘if it has a connection with or reference to such a plan.’” (citation o mitted)). These two categ ories o p er a t e separately

. See Cal. Div. of Labor S tandards Enf’t v. Dillingham Constr., N.A., Inc.
, 519 U

. S

. 316, 324–25 (1997).

W e first address the “ reference to” categ ory

. A state-law claim h as a “‘reference to’ an ERI SA plan” if it “is premised

on the ex istence of an ERI SA p lan” or if “the ex istence of the plan is essential to the claim’s survival.” Hillsboro Garbage

, 800 F

. 3 d at 1 1 5 5

– 5 6 (quoting Providence Health P lan v

. McDowell

, 385 F .3d 1 168, 1172 (9th Cir. 2004)). I n t his
case, plaintiffs’ state-law claims are not premised o r d e p e n d e n t on the ex istence of an ERI SA plan. I ndeed, a s

ex p l a ined above, the alleg ed misrepresentations occurred prior to any plan’s ex istence. W e thus have little d i ff i c u l t y concluding that plaintiffs’ state-law c laims do not have an impermissible “reference to” an ERI SA plan.

W e reach th e s ame conclusion with respect to the “connection with” prong

. A claim has “an impermissi b l e ‘connection with’” an ERI SA plan if it “‘g overns a c entral
matter of p lan administration’ or ‘interferes with n ationallyT H E D E P O T V

. C A R I N G F O R M O N T A

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u n i form plan administration,’” Gobeille

, 136 S. Ct. at 94 3 (internal al t eration omitted) (quoting Egelhoff v. Egelhoff

, 532 U.S. 141, 148 (2 001)), or if it “bears on an ERI SAreg ulated relationship,” Hillsboro G arbage

, 800 F .3d at 1155 (quoting Paulsen

, 559 F .3d at 1 082 )

. W e look to “the objectives of the ERI SA statute as a g u ide,” b earing in mind

a “‘starting presumption that Cong ress d[ id] not in t end to supplant’

. . . state laws reg ulating a subject of traditional

s t ate power” unless that power amounts to “ a d i r e ct

r eg ulation of a fundamental ERI SA function.” Gobeil l e , 136 S. Ct. at 943, 946 (quoting Travelers , 514 U.S. at 654).

Preventing “sellers of g oods and services, includ ing benefit plans, from misrepresenti n g t h e contents of their wares” is certainly an area of traditional state reg ulation that “is ‘quite remote from the are a s w i th which E RI SA is

e x p r es s l y c o n c e r n ed

— r e p o r t i n g , disclosure

, f i d u c i a r y

r e s p o nsibility

, and the like.’” W ilson v. Zoellner

, 114 F .3d 713, 720 (8th Cir. 1997) (quoting D ill i n gham

, 519 U .S. at 330); see Nat’l Sec. Sys., Inc. v. Iola

, 700 F .3d 65, 84–85 (3d Cir. 2012) (collecting cases h olding that ERI S A d oes not

ex p ressly preempt state-law claims a g a i n st an insurer “who makes fraudulent or misl e ad ing statements to induce participation in an E RI SA p lan”). Moreover, plaintiffs’ statelaw claims do not “bear[ ] on an ERI SA-reg ulated relationship.” Rutledge v. Seyfarth, S haw, F a irweather & Geralds on , 201 F .3d 1212, 1219 ( 9th Cir. 2000), amended

, 208 F .3d 1170 (9th Cir. 2000), abrogated in par t on other grounds b

y D a v i la

, 542 U.S. 200. Althoug h plaintiffs’ prohibited trans action claim involves an ERI SA-reg ulated relationship ( the relationship between a fiduciary a nd a party in interest), that relationshi p i s unrelated to plaintiffs’ statelaw claims, which f

ocus on the misrepresentations ma d e b y defendants while they were operating “just like any o t h erT H E D E P O T V

. C A R I N G F O R M O N T A

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commercial entity .” Paulsen

, 559 F .3d at 1083 (citation omitted).

D e fendants arg u e that our decision in Rutledge com p e l s

a c o ntrary conclusion. I n R utledge

, we concluded that ERI SA preempted a plan participant’s state- l aw c laims
ag ainst a law firm that alleg edly overcharg ed the p l a n for leg al services. 201 F .3d at 1 2 22. W e ex plained that “a core factor leading to the conclusion that a state law c laim is
p reempted is that the claim bears o n an ERI SA-reg u la t e d relationship,” i d. at 1 219, and one such “ERI SA-g overned relationship” is the r elationship b e tween plan participants a nd parties in interest “in the respect [ t] here at issue—ex c e s s i ve f e e s , ” id. at 1221–22 & n.12. W e thus held that “state-l a w claims ag ainst a non-fiduciary for prohibit e d t ransactions ‘relate to the administration of a plan covered by E R I S A
, ’”

a nd that the a lleg a tion of e x cessive fees in that case wa s a “prohibited transaction g overned by ERI SA.” Id. at 1221–22 (quoting Concha v

. London

, 62 F .3d 1493, 1 5 0 4 ( 9 t h Cir. 1995)).

This case differs from Rutledge

, however, because plaintiffs’ state-law claims are premised on defend an ts’

m i s r e p r e s e n t a t i o n s i n n e g o t i a t i o n s , n o t p r o h i b i t e d transactions. I ndeed, plaintiffs’ state-law claims could succeed even if the premiums that d e f e n d ants charg ed constit uted “reasonable compensation” under E RI SA, 29 U

. S

. C. § 1108(b)(2), because the claims alleg e that defendants misrepresented the composition of the premiums in a way that in d uced plaintiffs to subscribe to Chamber Cho i c e s plans. The a ctual a mount o f the p remiums—and

w hether that amount was “reasonable compensation” un d e r ERI SA—is irrelevant to p laintiffs’ state-law claims. And the

m i s r e p r e s e n t ations occurred, a t least initially

, before plaint i f f sT H E D E P O T V

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ever ag reed to subscribe to a plan. T h e c l a ims thus do not “bear[ ] on an ERI SA-reg ulated relationship,” Rutledge

, 201 F .3d at 1 219, because no such relationship ex isted when the misrepresentations were made. Plaintiffs’ sta t e

- l aw claims are according ly

not ex pressly

preempted by

ERI SA.

2. Conflict Preemption

I n addition to its ex press pree m p t i o n provision, ERI SA articulates “a c omprehensive c i v il enforcement scheme” in 29 U.S.C. § 1132(a) that is desig ned “to provid e a u niform
reg ulatory reg ime over employ ee benefit plans.” Davila

, 542 U.S. at 208 (quoting Pilot Life Ins. Co. v. Dedeaux , 481 U.S. 41, 5 4 (1987)). 1 6 As a result, “any st at e

- l a w c ause o f action that duplicates, supplements, or supplants the ERI SA ci v i l enforcement remedy c onflicts with the clear
cong ressional intent to make the ERI SA remedy ex clusive”

a nd is therefore barred b y conflict preemption. Id. a t 2 0 9

. Conflict preemption can bar a state-law c l a im “even if the elements of the state cause of action [ do] n o t precisely duplicate the elements of an ERI SA claim,” id. at 216, but a state-law claim is not preempted if i t re flects an “attempt to remedy [a] violation of a leg al duty independent of ERI SA,” id. at 214. State-law claims “are based on ‘other independent l e ga l d u ties’” when they “are in no way based on a n obli ga t i o n under an ERI SA plan” and “would ex ist whether

or n ot an ERI SA plan ex isted.” M arin Gen. Hosp. v. Modesto

16 T h e “ p o s sib le claim s” u n d er 2 9 U.S.C. § 1 1 3 2 (a) are “ (1 ) an actio n to reco v er b en ef

its d u e u n d er th e p lan ; (2 ) an actio n f o r b reach o f f

i d u ciary d u ties; an d (3 ) a su i t to en j o in v io latio n s o f ERIS A o r t h e [p ]lan

, o r to

o b tain o th er eq u itab le relief ” to red ress ERISA o r p lan v io l atio n s. Ba st v. Pru d en tia l In s. C

o

. of Am.
, 1 5 0 F.3 d 1 0 0 3, 1 0 08 (9 th Cir. 1 9 98 ) (in tern al citatio n s o m i tted ).T H E D E P O T V

. C A R I N G F O R M O N T A

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& Empire Traction Co.
, 581 F

. 3d 941, 950 ( 9 t h C i r

. 2 009) ( internal alteration omitted) (quoting D avila

, 542 U.S. at 210).

I n this case, the duties implicated in plaintiffs’ state- l a w claims do not derive from ERI SA; i ndeed, ERI SA does not purport to g overn neg otiations between insurance companies and em p l oy ers. Each of the state-law claims arises from defendants’ misrepresentatio ns and the effect they h ad on plaintiffs’ decisions to subscribe to Chamber Choices plans. Th e leg al duties at issue in these state-law claims a re independent of the duties imposed by ERI SA and would ex ist
reg ardless of whether a

n ERI SA p l an ex isted. See Cotton
, 402 F .3d at 1290 (finding no conflict preemption where the plaintiffs soug ht “damag es based on fraud in the sale o f in s u ra n c e policies”). Put in the terms used b y the district court, plaintiffs’ state-law c lai m s a re not “alternative enforcement mechanisms” to ERI SA claims because ERI SA d o es not have an enforcement mechanism that r eg u lates misrepresentations by insurance companies. Plaintiffs’ statelaw claims are thus not b arred by eit h e r ex press or conflict preemption.

B

. Rule 9(

b) Particularity

F ina l ly

, we turn to the district court’s conclusion that plaintiffs “have not met the heig htened pleadi n g standard required under F ederal Rule o f Civil Procedure 9 ( b ) as to their alleg ations of fraud.” Rule 9(b)’s particularityT H E D E P O T V

. C A R I N G F O R M O N T A

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require ment a

pplies to plaintiffs’ claims of fraudulent inducement and constructive fraud. 1 7

Under Rule 9(b), a part y “ alleg ing f raud or mistake

. . . must state with particularity the circumstances constitut i ng fraud or mistake.” F ed. R. Civ. P. 9 (b). To satisf y R u le 9(b)’s p articularity requirement, the complaint m ust include “an a ccount of the ‘time, place, and speci f i c content o f the false representations as well as the identities of the parties to the misrepresentations.’” Swartz v. KPMG LLP
, 476 F. 3d 756, 764 (9th Cir. 2007) ( p er c u r i a m ) (quoting E dwards v

. Mari n P a rk, Inc.
, 356 F .3d 1 058, 1066 (9th Cir. 2004)). I n other words, the plea d i n g “ must ‘identify the who, w hat, when, where, and how of the misconduct charg ed, as well a s what is f a l se or misleading about the p urportedly fraudulent statement, and why it is false.’” Salameh v. Tarsadia Hotel

, 726 F .3d 1124, 1133 (9th Cir. 2013) (quot i n g U nited States

ex rel. Cafasso v. Gen. Dynamics C4 S y s

. , I nc. , 637 F .3d 1047, 1055 (9th Cir. 2011)).

17 We d isag ree w ith plain tif f s’ assertio n th at Ru le 9 (b ) d o es n o t ap p ly
to th eir co n stru ctiv e f

rau d claim b ecau se Mo n tan a’ s v ersio n o f th e ru le

w o u ld n o t ap p ly in state co u rt. R u le 9 (b )’ s p articu larity req u irem e n t “ is

a f ed erally im

p o sed ru le” th at ap plies “ irresp ectiv e o f w h eth er th e

su b stan tiv e l aw a t i ss u e is state o r f ed eral.” K

ea rn s v. Fo rd M

o to r Co

. , 5 6 7 F.3 d 1 1 2 0
, 1 1 2 5 (9 t

h Cir. 2 0 09 ) (q u o tin g Vess v. Cib a-Geig y Co rp

. US A
, 3 1 7 F

. 3 d 1 0 9 7
, 1 1 0 2

– 0 3 (9 th C ir. 2 0 03 )); see id

. (rej ectin g th e arg u m en t “ th at Ru le 9 (b ) d o es n o t ap p l y to Calif o rn ia’ s co n su

m er p ro tectio n statu t es b e cau se Calif o rn ia co u rts h av e n o t ap p lied Ru l e 9 (b ) [to th o s e s tatu tes]”). State law is relev an t o n ly “ to d eterm in e w h eth er th e elem en ts o f f

rau d h av e b een p led s u f

f icien t ly to state a cau se o f actio n .” Id

. (q u o t in g Ve s s , 3 1 7 F

. 3 d at 1 1 0 3 ). A n d b ecau se p lain tif f s rely o n a

“ u n if ied co u rse of f

rau d u len t co n d u ct” a s th e b asis o f th e co n stru ctiv e f rau d claim

, th e claim is at a m in im u m “ g ro u n d ed in f

rau d ” an d th eref

ore

“ m u st satisf y th e particu larity req u irem en t o f R u le 9 (b ).” Vess
, 3 1 7 F.3 d at 1 1 0 3

– 04

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The complaint in t his c ase alleg es that defendants misrepresented the basis of the premiums they c harg e d. B ut the complaint lacks su f f i c i ent detail with respect to the “who,” “ when,” “where,” or “ how.” Plaintiffs vag uely a lleg e that defendants made these misrepresentations “[ i] n the

course of marketing ” th e p l a n s to plaintiffs over a period o f eig ht y e ars—from 2006 to 2014. Plaintiffs do not a lleg e the details of these misrepresentations, such as when defendants made them, where o r h o w defendants made them, to whom they were made, o r the specific contents o f the misrepr e sentations. 1 8 See Concha

, 62 F .3d at 1503 (“Rule 9(b) .

. . requires that plaintiffs specifically plead those facts surrounding a lleg ed acts of f raud to which they can reasonably b e ex pected to have access.”). W e therefore ag r ee with the district court that plaintiffs’ alleg ations do not state with particularity

the circumstances of the alleg ed fraud.

Nevertheless, because w e reverse the district c o urt’s conclusion that plaintiffs’ state-law claims are preempted, we

reverse the district court’s dismissal wit h p r e judice of the state-law claims so that plaintiffs may amend their complaint
to state the fraud alleg ations with g reat e r particularity

. See United States ex rel. Swoben v

. U n i t ed H ealthcare Ins. Co.
, 848 F .3d 1161, 1167 (9th Cir. 2016). W e note, however, that because we affirm the d ismissal of plaintiffs’ E RI SA claims, the district court is also free o n remand to decline to ex ercise supplemental jurisdiction over the state-law claims a nd allow plaintiffs t o b ring them in state court. See Sanford v

.

18 Def en d an ts also arg u e th at t h e co m p l a i n t im p erm issib l y lu m

p s to g eth er HCSC an d CFM as “ BCB S MT .” T h is arg u m en t lack s m erit. T h e co m p lain t sp ecif

ically ex p lain s th at “ BCB S MT ” ref ers to CFM f

or

co n d u ct o ccu rrin g b ef

ore J u ly 2 01 3
, an d to HCSC f o r co n d u ct o ccu rrin g af ter J u ly 2 01 3

.T H E D E P O T V

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MemberW

o rks, Inc.
, 6 2 5 F .3d 550, 561 (9th Cir. 2 010) (discussing supplemental jurisdiction under 28 U .S.C. § 1367(c)(3)).

V . CONCL USI ON

“[ R] educed to the siz e of a pea, this case is reall y a b o ut claims of f

raud and misrepr esentation in the sale o f some [ health] insurance policies.” Cotton
, 402 F .3d at 1279. ERI SA does not reg ulate such conduct, w h i c h means that plaintiffs’ ERI SA claims, and defendants’ ERI SA p r e e m p t ion defense, fail. W e according ly AF F IRM the dist rict court’s judg ment with r espect to p laintiffs’ ERI SA clai m s, REVERSE t h e d i strict court’s judg ment w ith r espect to plaintiffs’ state-l a w c laims, and REMAND for f urther proceeding s consistent with this opinion. Each par t y shall bear its own costs on appeal.

AF F IRMED IN P ART, REVERSED IN P ART, a nd REMANDED.