NOT FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUI T PETAR MRKONJIC,

Plaintiff

- Appellant,

v. DELTA FAMILY

- CARE AND SURVIVORSHIP PLAN, an ERISA plan; et al., Defendants

- Appellees. No. 16

- 56335 D.C. No. 2:15

- cv - 02255

- JAK

- JC
MEMORANDUM *

PETAR MRKONJIC,

Plaintiff

- Appellee,

v. DELTA FAMILY

- CARE AND SURVIVORSHIP PLAN, an ERISA plan; et al., Defendants

- Appellants, and DOES, 1

- 10, inclusive,

Defendant. No. 16

- 56487 D.C. No. 2:15

- cv - 02255

- JAK

- JC

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36

- 3. 

# FILED
JUN 15 2018 MOLLY C. DWYER, CLER K U.S. COURT OF APPEAL S2 Appeal from the United States District Court for the Central District of California John A. Kronstadt, District Judge, Presiding Argued and Submitted February 14, 2018

Pasadena, California Before: BERZON and BYBEE, Circuit Judges, and WOODCOCK, ** District Judge. This case presents three questions spanning two district court litigations: the proper interpretation of the judgment in the first case, whether an ERISA plan administrator abused its discretion on remand from the district court in implementing that judgment, and whether Mrkonjic is entitle d to equitable relief. We conclude that the plan administrator misinterpreted the judgment, that it abused its discretion in departing from its normal practice for calculating benefits, and that in any event, the plan administrator may be equitably estopp ed from collecting overpayments caused by its mistakes. The parties are familiar with the facts and the proceedings, and we will not state them except as necessary to explain our decision. 1. Petar Mrkonjic, a former employee of Delta Air Lines, Inc., brin gs this appeal as the latest stage of a complicated employee benefits plan dispute that

** The Honorable John A. Woodcock, Jr., United States District Judge for the D istrict of Maine, sitting by designation.3

traces its origin to a work injury he sustained in December 2003. The first improper denial of Mrkonjic’s various claims for benefits occurred in 2005, and contro versies between Mrkonjic and Delta’s plans persisted for the next thirteen years, including eight years of litigation. Pursuant to the Delta Family

- Care Disability & Survivorship Plan (“D&S Plan”), long

- term disability (“LTD”) benefits are typically offset by any benefits a participant receives from: (1) the Delta Retirement Plan, (2) Social Securi ty disability, and (3) workers’ comp ensation. Mrkonjic opted to receive early retirement benefits from the Retirement Plan because the Plans wrongfully denied the LTD benefits he sought from the D&S Plan. Later , the Committee deemed him eligible for LTD benefits but subject ed him to a v ar iety of offsets including the ret irement benefits he had received. Having been declared eligible for LTD benefits, Mrkonjic tried to rescind his early retirement election but was not permitted to do so

. Mrkonjic’s first lawsuit ( Mrkonjic I

) resulted in a judgment that, among other things, ordered rescission of his early retirement election, required the Committee to recalculate certain offsets, and mandated that the Retirement Plan transfer monies from the D&S Plan Trust to the Retirement Plan Trust. O n remand , the Committee interpreted the judgment to require reimburseme nt to the Retirement Plan Trust of all Mrkonjic’s retirement benefits,4

and also to require adding up all potentially offsetab le outside benefits and subtracting that sum from the gross LTD benefits due Mrkonjic. This recalculation resulted in a substantial amount the D&S Plan owed the Retirement Plan, and the Committee sought to recover this amount by withholding Mrkonjic’s LTD monthly benefits. Mrkon jic challenge s the Committee’s in terpretation of the judgment on two grounds

. First, he disputes the Committee’s view that the judgment required that he reimburse to the Retirement Plan all the benefits the Retirement Plan paid him. Second, h e argue s that because the judgment gave no sp ecific instructions on how the calculation of offsets wa s to be done, it should have been done the way offsets are normally calculated under the D&S Plan

. Mrkonjic moved to reopen Mrkonjic I , but the district court, with a new judge presiding, denied the motion. Mrkonjic filed a second case in the district court ( Mrkonjic II ) making similar arguments. The district court rejected Mrkonjic’s claims. This appeal followed. 2. De novo is the proper standard of review for questions of law , such as the proper interpretation of a judgment. See United States v. Lang , 149 F.3d 1044, 1046 (9th Cir. 1998). This Court reviews the Committee’s decisions on remand for abuse of discretion , because the Plans assign discretionary authority to the Committee to dete rmine benefits eligibility and construe the Plans’ terms. See5

Standard Ins. Co. v. Morrison , 584 F.3d 83 7, 840 (9th Cir. 2009). At the same time , when an employer controls the pla n
— rendering the entity determining eligibility and the entity paying benefi ts one and the same

— the resultant “conflict of interest is relevant to how a court conducts abuse of discretion review

. ” Abatie v. Alta Health & Life Ins. Co. , 458 F.3d 955, 965 (9th Cir. 2006). The result is that the abuse of discretion standard becomes less deferential, and this Court reviews t he Committee’s decisions with “different levels of skepticism on account of conflicts of interest

. ” Salomaa v. Honda Long Term Disability Plan , 642 F.3d 666, 674 (9th Cir. 2011); Metro

. Life Ins. Co. v. Glenn , 55 4 U.S. 105, 111 (2008); Lang v. Long

- Term Disability Plan of Sponsor Applied Remote Tech., Inc. , 125 F.3d 794, 797 (9th Cir. 1997). Here, Delta appointed the Committee and funds the D&S Plan. A n added degree of skepticism is appropriate. Salomaa , 642 F.3 d at 674. 3. The operative language from the Mrkonjic I judgment is: On remand, the recalculation of offsets must eliminate any offset for the receipt of benefits under the Delta Retirement Plan . . . The amount of the offset for Plaintiff’s Delta Ret irement Plan benefits that is eliminated shall not be paid to Plaintiff, but shall be transferred from the applicable Trust for the Delta Family

- Care Disability & Survivorship Plan to the applicable Trust for the Delta Retirement Plan. Contrary to the Plans’ assertion, this language does not require that Mrkonjic
re imburse the Retirement Plan for a ll benefits he received before the district court granted rescission of h is early retirement election. The plain language speaks to6

transfers of funds

—

representing offsets eliminated from Mrkonjic’s LTD benefit

— from the D&S Plan to the Retirement Plan. But the judgment does not mandate that the transferred amount equal all retirement benefits Mrkonjic had received . Nor does the Mrkon jic I judgment say that the money must come from Mrkonjic. The plain language of the judgment merely requires transfer from one plan to the other. 4. “When interpreting an ambiguous prior judgment, the reviewing court
s hould construe a judgment so as t o give effect to the intention of the issuing court. Where the judgment is ambiguous or fails to express the rulings with clarity, the entire record before the issuing court and the findings of fact may be referenced in determining what was decided.” Rui z v. Snohomish Cnty. Pub. Util

. Dist. No. 1 , 824 F.3d 1161, 1167 (9th Cir. 2016) (quoting Muckleshoot Tribe v. Lummi Indian Tribe , 141 F.3d 1355, 1359 (9th Cir. 1998)). The Mrkonjic I summary judgment orders shed light on the intention behind the judgment

. 5. T he order denying the Plans’ motion for summary judgment stated : “[Mrkonjic] is entitled to rescind his early retirement election and to be reinstated subject to appropriate reimbursement and/or offsets of benefits already paid.” The word “appropr iate” implies that certain reimbursements and/or offsets might be inappropriate. 6. The order on Mrkonjic’s motion for summary judgment reads :7

In determining that Plaintiff should be entitled to rescind his early retirement election, the Court clarifie d that any rescission of his retirement would be “subject to appropriate reimbursement and/or offsets of benefits already paid.” (1/3/13 Order at 15.) Some offsets were contemplated by both the ’94 Plan and the ’04 Plan, so allowing him both to keep the benefits he received initially and to demand a second set of benefits would provide Mrkonjic with an improper double payment. ( Id. ) Accordingly, and because the Court has already addressed the issue, Plaintiff’s request that the set

- off provision be deeme d entirely unenforceable must be rejected. This order clarifies that Mrkonjic was responsible for reimbursing some retirement money but does not address the amount to be reimbursed or how the reimbursement was to take place. The summary judgment order also provides : “Finally, in order to render a total monetary award as to the disability offsets, the Court would necessarily be required to determine how much [Mrkonjic] has already rece ived in retirement benefits.” But again t he order does not clarify how the t otal amount

— once ascertained

— would figure into a proper LTD recalculation. Finally, the summary judgment order states : The Parties have been unable to agree on a proper method for dealing with some of the more limited benefits he has actually received over the past ten years: whether, and how much, they should be offset against the total now owed him . . . . [T] his Court is not the proper forum to make such a decision in the first instance . . . . [T] he precise amount of benefits due to Mrko njic is a factual determination related to the implementation of an ERISA plan . . . . In our view, this language makes clear that the district court did not direct the Plans8

to make a particular calculation; rather, it ordered the Plans to calculate bene fits in accordance with the Plan provisions. In short, contrary to the Plans’ interpretation, this cumulative language establishes that the remand order did not require that Mrkonjic reimburse to the Retirement Plan all retirement benefits he had receiv ed

. In our view, the Plans’ conclusion that the judgment in Mrkonjic I required them to treat Mrkonjic in a way different than they would normally do under the D&S Plan was unreasonable and constituted an abuse of discretion. 7. The Plans’ misinterpreta tion came at a price for Mrkonjic. On remand, the Plans recalculated Mrkonjic’s LTD benefits in a way that varied from their standard calculation method. Normally, for a given month, the Plans subtract all applicable offsets from the LTD benefit. If the offsets exceed the benefit, the claimant receives nothing but does not owe excess offsets back to the Plans. The Plans concede that they calculated Mrkonjic’s LTD benefits inconsistently with their normal method. Having concluded that the Mrkonjic I jud gment did not require the Plans to vary from their typical calculation method or to reclaim all Retirement Plan benefits paid to Mrkonjic as a full credit and withhold the total from future LTD benefits, we turn to the question of remedy. 8. Mrkonjic wound up in federal court in the first place because the Plans improper ly refused to approve his LTD app lication. Mrkonjic was forced to elect9

early retirement solely because the Plans wrongfully denied his LTD benefits. None of these issues would have a risen but for the Plans’ error. After rectifying that error, the Plans compounded it. The Plans refused to allow Mrkonjic to rescind his retirement. In this context, because the situation was unique and caused by the Plans, the Plans should have impleme nted the Mrkonjic I judgment so as to leave Mrkonjic no worse off from their mistakes. Instead they accumulated offsets and collected an overage, treating him more poorly than other beneficiaries. 9. We remand the matter to the district court to consider the appropriate remedy in light of our holding that the Plans could not require reimbursement of the portion of retirement benefits that exceeded Mrkonjic’s monthly LTD benefit amount, and thus should not have withheld Mrkonjic’s LTD benefits once his retirement election was rescinded to achieve the reimbursement. The district court should consider whether to remand the matter to the Plans. If the district court elects to remand to the Plans, its remand order should be sufficiently specific so th at there is no room for doubt as to what precisely the Plans must do. Alternatively, the district court may wish to exercise its power of equitable relief and fashion an order to cut the Gordian knot of this long

- litigated matter. 10. We dismiss as m oot the Plans’ repayment period argument. REVERSE D.Mrk

onjic v . De lta Family -C

are and Surv iv orship Plan , Nos. 16-56335, 16-56487 (Fe brua ry 14, 2018 - Pa sa d e na ) B YB EE, C irc uit Judge , c onc u rring in the judgm e nt: I a gre e with the m a

jority tha t this c a se should be re m a nde d to the distric t
c ourt. Howe ve r, I disa gre e with the prim a ry re a soning tha

t the Pla ns a nd the ir C om m itte e a buse d the ir disc re t ion in re quiring M rkonjic , a s pa rt of his “ unre tire m e nt,” to re im

burse the R e tire m e nt Pla

n for the full a

m o unt of e a rly

re tire m e nt pe nsion be ne fits he ha d re c e ive d. The C om m itte e did not “ va

ry ” its

m e thod of c a l c ula ting be ne fits be twe e n the 2007 a n d 2014 le tte rs; ra

t he r, e a c h le tte r re fle c ts a

diffe re nt obje c tive

. W he n the C om

m itte e wrote to M rkonjic in 2007 to inform him tha t he wa s
e ligible for re troa c tive LTD be ne fits, he wa s re c e iving m onthly pe nsion pa

y m e nts, Soc ia l Se c urity

Disa bility (“ SSD” ), a n d worke rs c o m pe nsa tion (c olle c tive ly

“ offse ts” ). Unde r the Disa bility Pla n’ s te rm s, the se offse ts ha d to be de duc te d from his gross a m ount of LTD be ne fits— a pe rc e n ta ge of M rkonjic ’ s pre re tire m e nt sa la

ry

— i n orde r to c a lc ula te his ne t LTD be n e fits. This ty

pe of offse t
m e c ha nism pre ve nts a

n e m p loy e e from

re c ove ring m ore tha

n his tota l possible LTD be ne fits from

c om b ine d inc om e sourc e s a

nd thus from

be i ng give n a

n inc e ntive not to re turn to work. B ut a n e m ploy e e doe s not owe the Disa bility Pla n
m one y whe n his offse ts e

x c e e d his gross LTD be ne fits; he is sim ply owe d no 

# F IL ED
J UN 15 2018 M OLLY C. DW Y E R, CLERK U. S. CO URT O F APPEALSm onthly

disburse m e nt by

the Disability

Plan . The re fore , only

whe n M rkonjic ’ s offse ts tota le d to le

ss than his gross LTD be ne fits— i.e ., a fte r the m onthly worke rsc om pe nsa tion a lloc a tion wa s e x pe nde d— wa s he e ntitle d to a m onthly disburse m e nt from

the Disa bility Pla n. This c a lc ula tion, howe ve r, sa y s nothing a

bout the C om

m itte e ’ s c a lc ula tions

a fte r the Mrk

onjic I judgm e n t, whic h re quire d the C om m itte e to a llow M rkonjic to

“ re sc ind [his] re t ire m e nt e l e c tion a nd pe rm it him , a t a future da te , to re tire , c onsiste n t with the te rm s of the De lta R e tire m e nt Pla

n . . . .” In orde r to
a c c om plish this unorthodox obje c tive , funds ne c e s sa rily ha d to be tra

nsfe rre d be twe e n the R e tire m e nt a nd Disa bility Pla ns; the form e r Pla n ha d, for se ve ra l y e a rs, be e n pa

y ing him be n e fits tha

t should ha

v e c om e from

the la tte r Pla n. Thus, in orde r to re turn e ve ry thing to squa re one , a s if M rkonjic ha d ne v e r be e n forc e d to
e le c t e a rly re tire m e n t, two things ne e de d to oc c ur: (1) the Disa bility Pla n ha d to pa y him re troa c tive be ne fits a

nd (2) M rkonjic ha d to re im b urse the R e tire m e nt Pla

n using the se funds. Inde e d, this is wha

t the Mrk o njic I judgm e n t dire c ts. In gra nting a re m a nd for the c a lc ula tion of re troa c tive LTD be ne fits, the judgm e nt orde rs tha t “ t he
re c a lc ula tion of [LTD] offse t s m ust e lim ina te a ny

offse t for the re c e ipt of be ne fits unde r the De lta

R e tire m e nt Pla

n” and tha t this offse t

“ sha ll not be pa id to 2[M rkonjic ] , but sha ll be tra nsfe rre d from

the a pplic a b le Trust for the [Disa

bility ] Pla n to the a pplic a ble Trust for the De lta

R e tire m e nt Pla

n.” The judgm e nt thus a c hie ve s M rkonjic ’ s unre tire m e nt in two ste ps. First, it dire c ts the Disa

bility Pla n to c a lc ula te his ne t LTD be n e fits a s if he ne ve r e le c te d
e a rly re tire m e nt— i.e ., by

de duc ting only

his SSD a

nd worke rs-c o m

pe nsa tion offse ts from

his gross LTD be ne fits. B e c a use the re would not ha

v e be e n a pe nsion pa y m e nt to offse t if the C o m m itte e ha d

c orre c tly pa id M rkonjic LTD be ne fits from 2004 onwa

rds, this c a lc ula tion m irrors e xa c tly wha t his LTD be ne fits should ha ve be e n. The se c ond ste p the n re im burse s the R e tire m e nt Pla n by tra nsfe rring the disre ga rde d pe n sion-pa

y m e nt offse ts ba c k

to the R e tire m e nt Pla

n. Ultim a te ly , the s e c a lc ula tions a

re pre c i se ly

wha t the C om

m itte e ’ s 2014 le t te r re fle c ts. It should ha

ve c om e a t no surprise tha t M rkonjic ultim a te l y

owe d the R e tire m e nt Pla

n a re im burse m e nt. He re c e ive d ne a rly twic e a s m

u c h in pe nsion pa y m e nts ove r the y e a

rs from the R e tire m e n t Pla

n tha n he would ha

ve re c e ive d in
c om bine d ne t LTD be ne fits tha t only de duc te d SSD a n d

worke rs c om

pe nsa t ion. M ore o ve r, the C om

m itte e illustra

te d the se c a lc u la tions in its sum m a ry -judgm e nt
m otion during Mrk

onjic I a nd wa

rne d M rkonjic tha

t he would e nd up owing the R e tire m e nt Pla

n m o ne y if he sought to unre tire . And a s the m a jority

a c knowle dge s, the Mrk

onjic I c ourt “ c la

rifie d tha t a n y re sc ission of [M rkonjic ’ s] 3re tire m e nt would be ‘ subje c t to appropriate re imburse me nt and/or offse ts of be ne fits alre ady

paid. ’ ” The c ourt, howe ve r, re m a nde d to the C o m

m itte e in orde r for it “ to de te rm ine how m uc h [M rkonjic ] ha [d] a lre a dy re c e ive d in re tire m e nt be ne fits.” Ac c ordingly , whe n the re c ord a nd proc e dura l history

a re c o nside re d a s a whole , it is e vide n t tha

t the 2007 a

nd 2014 le tte rs re fle c t inc om pa ra ble
c a lc ula t ions. The re is thus no ba sis for c onc luding tha t the C om m i tte e a buse d its disc re tion. None the le ss, I a gre e with the m a jority tha t this c a se should be re m a nde d in orde r for the distric t c ourt to c onside r a pply ing a n e q uita ble re m e dy . It wa s the C om m itte e ’ s inc orre c t inte rpre ta tion of its own Disa bility Pla n tha t forc e d M rkonjic to opt for e a rly

re tire m e nt. As a

re sult, he wa s se t to re c e ive little -to-no
m onthly LTD disburse m e n t s whe n the C om m itte e fina l ly

offe re d him re troa c tive be ne fits thre e y e a rs la

te r. He a lso ha d no a

ve nue for e ve r qua l ify ing for a full
re tire m e nt a

nd thus re c e iving highe r pe nsion pa y m e nts. M rkonjic the re fore initia te d two diffe re nt fe d e ra l a c tions in orde r to pla c e him se lf in the position he would ha ve be e n in fourte e n y e a rs a go, but for the C om m itte e ’ s e rrone ous de nia l of LTD be n e fits. M rkonjic ha s c onsiste n tly a rgue d ove r the y e a rs tha t the se c i rc um sta

nc e s 4justify

the a pplic a tion of e quity

to pre ve nt the C om

m itte e a nd Pla

ns from
re c o uping the ir ove rpa y m e nts. He ha s supporte d this c onte ntion with re le va nt
a uthoritie s tha

t ne i the r distric t c ourt a ddre sse d. I would the re fore re m a nd this c a s e only for the purpose of a llowing the Mrk onjic II c ourt to c o nside r in the first insta nc e whe the r a n e quita

ble re m e dy

is wa rra n te d.

5