Opinion ID: 4096417
Heading Depth: 2
Heading Rank: 1

Heading: Denial of Leave to Add ERISA Claims to Complaint

Text: Plaintiffs first argue that the district court erred in refusing on remand to allow them to add ERISA-based claims to the complaint. “We review the denial of a motion for leave to amend for abuse of discretion, except when the denial was due to futility, in which case we review de novo.” Orton v. Johnny’s Lunch Franchise, LLC, 668 F.3d 843, 850 (6th Cir. 2012). Addressing this claim requires an in-depth explanation of the litigation history of the ERISA claims. In opposing Defendants’ first motion to dismiss in 2011, Plaintiffs argued that their state-law claims were not preempted and, in the alternative, requested leave to amend to assert claims under § 1132(a)(1)(B) “in order to enforce the terms of the SRP and the Rabbi Trust.” Section 1132(a)(1)(B) of ERISA provides that a participant of an employee benefit plan may bring a civil action “to enforce his rights under the terms of the plan.” Plaintiffs did not specify the exact terms that Defendants violated. They also sought to add a claim under § 1132(a)(3)—which provides for “other appropriate equitable relief”3—seeking restitution of property held by Defendants and an accounting. The district court denied Plaintiffs’ request to amend, concluding that Plaintiffs could not bring a successful claim against Defendants under either section. Plaintiffs’ § 1132(a)(1)(B) claims would fail because “[m]uch of the alleged misconduct upon which the Plaintiffs’ claims are based is conduct that is specifically permitted or even mandated by the terms of the SRP and trust.” And Plaintiffs could not be given equitable relief under § 1132(a)(3) because their claims were legal in nature, having included “no allegation that the funds are in the possession of any defendant.” 3 ERISA contains three civil-enforcement provisions. In addition to the two discussed above, § 1132(a)(2) provides for enforcement of various fiduciary-duty requirements; top-hat plans are specifically exempt from these requirements, however, and Plaintiffs do not attempt to assert claims under this section. 6 Case No. 15-1443, Loffredo v. Daimler AG In that initial appeal, Plaintiffs argued for the first time that Defendants breached specific provisions of the Rabbi Trust document that could be enforced under § 1132(a)(1)(B). We held that the district court did not err because Plaintiffs “did not allege conduct of the [D]efendants that violated provisions of any trust document” in the district court and could not argue for the first time on appeal that specific provisions were violated. Loffredo, 500 F. App’x at 499–500 (Sutton, J., majority opinion). We further clarified that it “appear[ed] futile” for Plaintiffs to restate their state-law claims under § 1132(a)(1)(B) because, “[a]s the district court concluded, the Plan authorizes the administrators to purchase annuities on a selective basis.” Id. at 502 n.2 (Moore, J., majority opinion). As for § 1132(a)(3), we agreed with the district court that Plaintiffs could not assert a claim because they did not allege that Defendants “currently (and improperly) possess the assets dispersed from the [Rabbi Trust] or that they retain profits generated from that property.” Id. at 499 (Sutton, J., majority opinion) (citing Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 214, 214 n.2 (2002)). We then reversed the district court’s dismissal of Plaintiffs’ age-discrimination claim and remanded for further proceedings. On remand, Plaintiffs’ proposed first amended complaint alleged ERISA claims under § 1132(a)(1)(B) and 1132(a)(3), again arguing that Defendants violated specific terms of the Rabbi Trust—the same trust provisions that Plaintiffs had raised for the first time during the first appeal. Relying on its prior decision and our affirmance on appeal, the district court denied leave to file the proposed first amended complaint to assert ERISA-based claims. Defendants now cite the “law of the case” doctrine, which states that “when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.” Scott v. Churchill, 377 F.3d 565, 569–70 (6th Cir. 2004) (quoting Arizona v. California, 7 Case No. 15-1443, Loffredo v. Daimler AG 460 U.S. 605, 618 (1983)). Indeed, our prior opinion found that granting Plaintiffs leave to add the exact § 1132(a)(1)(B) allegations that they attempted to add on remand would be futile. See Loffredo, 500 F. App’x at 502 n.2 (Moore, J., majority opinion). And Plaintiffs’ proposed first amended complaint again failed to allege that Defendants currently and improperly possess the Rabbi Trust’s funds—which in 2012 we found fatal to any § 1132(a)(3) claim. See id. at 499 (Sutton, J., majority opinion). Instead, Plaintiffs continued to allege that the funds were removed from the Rabbi Trust to “improperly use[] for operational expenses of Chrysler LLC,” “to fund buyouts and other corporate obligations to certain executives,” and to protect the retirement benefits of actively employed SRP participants. Lacking reason to reverse our prior decision now, we conclude that the district court did not err in denying Plaintiffs leave to add ERISA claims on remand.