Court Opinion

ID: 4014574
Source: CourtListenerOpinion
Date Created: 2016-07-11 16:01:00.168283+00
Date Added: 2024-06-11T14:29:29.864528
License: Public Domain

FILED
                                                         United States Court of Appeals
                                 PUBLISH                         Tenth Circuit

               UNITED STATES COURT OF APPEALS                   July 11, 2016

                                                            Elisabeth A. Shumaker
                      FOR THE TENTH CIRCUIT                     Clerk of Court
                    _________________________________

TRENT LEBAHN; WENDY
LEBAHN,

      Plaintiffs - Appellants,

v.                                              No. 15-3201

NATIONAL FARMERS UNION
UNIFORM PENSION PLAN;
PENSION COMMITTEE OF THE
NATIONAL FARMERS UNION
UNIFORM PENSION PLAN;
NATIONAL FARMERS UNION
PENSION CONSULTANTS,

      Defendants - Appellees.
                   _________________________________

             Appeal from the United States District Court
                      for the District of Kansas
                (D.C. No. 6:15-CV-01065-MLB-KGG)
                  _________________________________

Randall K. Rathbun, Depew Gillen Rathbun & McInteer, LC, Wichita,
Kansas, for Plaintiffs-Appellants.

Jessica L. Skladzien, Lewis Brisbois Bisgaard & Smith, Wichita, Kansas
(Alan L. Rupe, Lewis Brisbois Bisgaard & Smith, Wichita, Kansas, on the
brief), for Defendants-Appellees.
                     _________________________________

Before HOLMES, MURPHY, and BACHARACH, Circuit Judges.
                _________________________________

BACHARACH, Circuit Judge.
               _________________________________
     This appeal involves claims under the Employee Retirement Income

Security Act of 1974, commonly known as ERISA. Invoking ERISA, Mr.

Trent Lebahn and his wife claim that a pension-plan consultant breached a

fiduciary duty by misstating the amount of the monthly pension payments

that Mr. Lebahn would receive if he were to retire. But under ERISA, the

plan consultant could be considered a fiduciary only if she exercised

discretionary authority over the plan’s administration. On appeal, we ask:

Does a consultant exercise discretionary authority in administering the

plan simply by making a calculation of benefits at the request of a plan

participant? We conclude that a consultant does not exercise discretionary

authority under these circumstances.

I.   The plan consultant’s computation error resulted in Mr. Lebahn’s
     premature retirement, prompting Mr. Lebahn to sue.

     Hoping to retire, Mr. Lebahn contacted Ms. Eloise Owens, a

consultant hired by his company’s pension plan, to ask what his monthly

pension payment would be. Ms. Owens told Mr. Lebahn that if he retired

soon, he would be entitled to $8,444.18 per month. At Mr. Lebahn’s

request, Ms. Owens checked her calculations and assured Mr. Lebahn that

the figure she had quoted was correct. Mr. Lebahn then retired and soon

began receiving monthly checks of $8,444.18.

     But Ms. Owens’ calculations proved to be too good to be true.

Shortly after Mr. Lebahn retired, a representative of the pension plan

                                       2
contacted Mr. Lebahn and told him that he was being overpaid by almost

$5,000 per month. A pension-plan attorney then told Mr. Lebahn that he

would need to return over $43,000 in overpayments that he had already

received. Unable to retire on his true pension benefit of $3,653.78 per

month, Mr. Lebahn tried to go back to work, but he was unable to find a

suitable job.

      Mr. Lebahn and his wife then sued under ERISA. 1 The Lebahns

alleged that in incorrectly representing Mr. Lebahn’s benefits and failing

to pay Mr. Lebahn in accordance with those representations, the pension

plan, the pension committee, and “National Farmers Union Pension

Consultants” incurred ERISA liability under theories of breach of fiduciary

duty and equitable estoppel. On the defendants’ motion, the district court

dismissed the complaint for failure to state a valid claim. The Lebahns

appeal this dismissal, and we affirm.

II.   We affirm the dismissal of the Lebahns’ claims for breach of
      fiduciary duty and equitable estoppel.

      On appeal, the Lebahns challenge the dismissal of their claims for

breach of fiduciary duty and equitable estoppel. We reject each challenge.

      We first address the Lebahns’ claim for breach of fiduciary duty. For

this claim, the Lebahns must show that the defendants were ERISA

1
      Mr. Lebahn had earlier sued Ms. Owens for negligent
misrepresentation. That suit was dismissed based on preemption, and we
affirmed the dismissal. Lebahn v. Owens, 813 F.3d 1300, 1302 (10th Cir.
2016).
                                        3
fiduciaries. Although Ms. Owens is not named as a defendant, the Lebahns

argue that she was a fiduciary of the plan, rendering the named defendants

liable for Ms. Owens’ breach of her fiduciary duty. 2 The district court

rejected this position on the ground that Ms. Owens had not acted as an

ERISA fiduciary when calculating pension benefits. We agree: Because

Ms. Owens lacked discretionary authority in administering the pension

plan, she lacked fiduciary status. And in the absence of fiduciary status of

the wrongdoer, the claim for breach of fiduciary duty was properly

dismissed.

      The Lebahns’ claim of equitable estoppel was also properly

dismissed. In dismissing this claim, the district court reasoned that the

Lebahns had failed to plead facts satisfying two of the five elements of

equitable estoppel: awareness of the true facts and justifiable reliance. On

appeal, the Lebahns do not challenge the district court’s conclusion that

they failed to adequately plead justifiable reliance. Because the Lebahns

fail to challenge one of the grounds relied on by the district court, we

affirm the dismissal of the equitable estoppel claim.

2
       The three defendants are the National Farmers Union Uniform
Pension Plan, the Pension Committee of the National Farmers Uniform
Pension Plan, and the National Farmers Union Pension Consultants. But in
suing these entities, the Lebahns rely solely on Ms. Owens’ miscalculation
of pension benefits. Because we conclude that Ms. Owens was not a plan
fiduciary, we need not decide whether her fiduciary status could support
liability of the three named defendants.

                                      4
III.   Our review of the dismissal is de novo.

       We review de novo a dismissal under Federal Rule of Civil Procedure

12(b)(6), applying the same legal standard used by the district court.

Mocek v. City of Albuquerque, 813 F.3d 912, 921 (10th Cir. 2015). Under

that standard, we inquire whether the complaint contains factual

allegations that “state a claim to relief that is plausible on its face.” Khalik

v. United Air Lines, 671 F.3d 1188, 1190 (10th Cir. 2012) (quoting Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially

plausible “when the plaintiff pleads factual content that allows the court to

draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). It is not

enough for the plaintiff to plead “labels and conclusions” or to provide “a

formulaic recitation of the elements of a cause of action.” Khalik, 671 F.3d

at 1190-91 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

(2007)). 3

3
      Notwithstanding the Lebahns’ protestations to the contrary, there is
no special rule limiting dismissal of ERISA claims under Rule 12(b)(6).
See, e.g., Moffett v. Halliburton Energy Servs., Inc., 291 F.3d 1227, 1231,
1233 (10th Cir. 2002) (applying generally applicable pleading standards in
reviewing the dismissal of an ERISA claim for breach of fiduciary duty).

                                       5
IV.   The Lebahns failed to plead facts showing that Ms. Owens was a
      plan fiduciary.

      The Lebahns argue that Ms. Owens was a plan fiduciary under

ERISA. We disagree.

      A.   ERISA’s definition of a functional fiduciary requires
           discretionary authority or discretionary responsibility over
           plan administration.

      To plead a breach of fiduciary duty, the Lebahns must adequately

allege fiduciary status of the wrongdoer. ERISA § 409, 29 U.S.C.

§ 1109(a) (rendering personally liable “[a]ny person who is a fiduciary

with respect to a plan who breaches any of the responsibilities, obligations,

or duties imposed upon fiduciaries by this subchapter”). In their complaint,

the Lebahns alleged that Ms. Owens was responsible for calculating and

reporting pension benefits. That responsibility, the Lebahns argue, is

sufficient to characterize Ms. Owens as a plan fiduciary under ERISA. We

disagree. In our view, calculating and reporting pension benefits, without

more, does not establish fiduciary status under ERISA.

      There are two types of ERISA fiduciaries: named fiduciaries and

functional fiduciaries. 29 U.S.C. § 1102(a) (named fiduciaries); 29 U.S.C.

§ 1002(21)(A) (functional fiduciaries). The Lebahns invoke only the

functional-fiduciary provision.

      Although the functional-fiduciary provision prescribes three means

of becoming a functional fiduciary, the Lebahns focus on only one of

                                      6
these 4: “[A] person is a fiduciary with respect to a plan to the extent . . . he

has any discretionary authority or discretionary responsibility in the

administration of such plan.” 29 U.S.C. § 1002(21)(A). 5 Under this

provision, fiduciary status requires authority or responsibility that is

discretionary, which entails “the freedom to decide what should be done in

a particular situation.” “Discretion,” New Oxford American Dictionary (3d

ed. 2010). In our view, conducting a routine computation, as required by

one’s job, does not inherently require discretion. See Schmidt v. Sheet

Metal Workers’ Natl. Pension Fund, 128 F.3d 541, 546-47 (7th Cir. 1997)

(holding that an employee who sent the wrong form to a pension

beneficiary, causing the beneficiary to forfeit his pension benefits, was not

a fiduciary because the employee’s tasks were “ministerial”).

      The Department of Labor has expressed the same view in two

interpretive bulletins discussing the functional-fiduciary provision,

§ 1002(21)(A).

      In 29 C.F.R. § 2509.75–8, the Department of Labor noted that a

person who performs administrative functions, such as calculating benefits,

4
       The other two means involve (1) providing investment advice and
(2) having discretionary authority or control over management of the plan
or its assets. 29 U.S.C. § 1002(21)(A)(i)-(ii). The Lebahns do not rely on
these two means of becoming a functional fiduciary.
5
      The defendants argue that the Lebahns forfeited any argument based
on this statutory provision. Because we conclude that Ms. Owens’ actions
did not fall within this functional-fiduciary definition, we need not address
the defendants’ forfeiture argument.
                                        7
does not automatically have discretionary authority and does not become a

fiduciary without something more:

     Only persons who perform one or more of the functions
     described in [§ 1002(21)(A)] with respect to an employee
     benefit plan are fiduciaries. Therefore, a person who performs
     purely ministerial functions such as the types described above
     [which include “calculation of benefits” and “[p]rocessing of
     claims”] for an employee benefit plan within a framework of
     policies, interpretations, rules, practices and procedures made
     by other persons is not a fiduciary because such person does
     not have discretionary authority or discretionary control
     respecting management of the plan, does not exercise any
     authority or control respecting management or disposition of
     the assets of the plan, and does not render investment advice
     with respect to any money or other property of the plan and has
     no authority or responsibility to do so.

29 C.F.R. § 2509.75–8 at D-2.

     Similarly, in 29 C.F.R. § 2509.75–5, the Department of Labor

interpreted the functional-fiduciary provision to exclude from fiduciary

status persons who

          provide legal, accounting, actuarial, or consulting services but

          lack discretionary authority and do not offer investment advice
           to the plan.

29 C.F.R. § 2509.75–5 at D-1.

     In these two interpretive bulletins, the Department of Labor

expressed the view that typical consulting services—which would include

the calculation of pension benefits—are not per se discretionary.

     The Lebahns dispute this reading of the statute, arguing that one can

become a fiduciary by conveying information about plan benefits to a plan

                                     8
beneficiary. But the statutory provision at issue restricts fiduciary status to

acts involving authority or responsibility to engage in a discretionary act

of plan administration. See 29 U.S.C. § 1002(21)(A). The interpretative

bulletins apply this provision in a common-sense way, concluding that the

calculation and reporting of benefits based on preset formulas do not

involve acts of discretion. 6

      To support their position, the Lebahns rely on Varity Corp. v. Howe,

516 U.S. 489 (1996), and Moore v. Lafayette Life Insurance Co., 458 F.3d
416 (6th Cir. 2006). But these opinions have no bearing here, for neither

opinion involves an assertion of fiduciary status based on discretionary

authority or responsibility over plan administration.

      Varity concerned an ERISA suit for breach of fiduciary duty that had

been initiated by employees participating in their employer’s welfare

benefit plan. Varity, 516 U.S. at 492. The Supreme Court held that the

employer was acting as an ERISA fiduciary under § 1002(21)(A)(iii) when

the employer misled the employees about their likely future benefits under

the plan. Id. at 503.

      But in Varity, the Court was not concerned with the meaning of the

term “discretionary.” Instead, the Court was addressing whether the

6
       The parties do not argue that the statute is ambiguous, but we would
regard the Department of Labor’s interpretive bulletins as persuasive even
if the statute were ambiguous. See Skidmore v. Swift & Co., 323 U.S. 134,
140 (1944).

                                       9
defendant’s actions involved “plan administration.” Id. at 502-05. The

Court apparently assumed that the employer had discretionary authority, a

safe assumption in light of the facts. The employer had called a special

meeting of the employee-beneficiaries and conveyed to them false

information about a new subsidiary’s prospects to entice employees to

transfer to the new subsidiary. Id. at 493-94. The meeting was intended to

effectuate an administrative change initiated by the employer. And unlike

Ms. Owens, the employer in Varity was not calculating future plan benefits

according to a formula. Instead, the employer was predicting future

business and pension performance, an undertaking that involves

considerable decision-making. Id. As a result, Varity does not affect our

inquiry into whether Ms. Owens’ duties involved discretionary authority.

     The Lebahns also rely on the Sixth Circuit’s opinion in Moore v.

Lafayette Life Insurance Co., which held that “providing plan participants

with materially misleading information” constitutes a breach of fiduciary

duty. 458 F.3d 417, 432 (6th Cir. 2006); see also Drennan v. Gen. Motors

Corp., 977 F.2d 246, 251 (6th Cir. 1992) (stating, in the context of

discussing a fiduciary’s duties, that furnishing misleading information to

plan participants “will support a claim for a breach of fiduciary duty”

(quoting Berlin v. Mich. Bell Tel. Co., 858 F.2d 1154, 1163 (6th Cir.

1988))). But we are not called upon to decide whether a breach of duty

                                     10
took place. Instead, we must determine whether Ms. Owens could be

regarded as a fiduciary. Moore does not bear on this determination.

        The Sixth Circuit did address fiduciary status in Sprague v. General

Motors Corp., 133 F.3d 388 (6th Cir. 1998) (en banc). There, the Sixth

Circuit remarked that under Varity, an employer “may have acted in a

fiduciary capacity when it explained its retirement program to the early

retirees.” 133 F.3d at 405. But the discussion of the employer’s fiduciary

status constituted dicta because the court ultimately dismissed the case on

the separate ground that the employer had not breached a fiduciary duty,

even assuming that such a duty existed. Id. at 405-06. We therefore cannot

say that the Sixth Circuit has adopted a different view of Varity than we do

here.

        Some courts have interpreted Sixth Circuit case law to expand

ERISA’s functional-fiduciary provision to encompass persons who lack

discretionary authority. See Van Loo v. Cajun Operating Co., 64 F. Supp.
3d 1007, 1017-18 (E.D. Mich. 2014); Weaver v. Prudential Ins. Co. of Am.,

No. 3:10-CV-438, 2011 WL 4833574, at *7 (M.D. Tenn. Oct. 12, 2011).

But we do not regard these opinions as persuasive because their approach

would stretch the definition of “fiduciary” beyond any meaningful

boundaries.

        Rather than follow the lead of those courts, we rely on the plain

meaning of the terms “fiduciary” and “discretionary authority [or] . . .

                                       11
responsibility.” See 29 U.S.C. § 1002(21)(A). In doing so, we share the

view of the Department of Labor that calculating benefits at a participant’s

request does not involve discretionary authority or responsibility over plan

administration.

      B.     The Lebahns failed to plead that Ms. Owens had
             discretionary authority or discretionary responsibility.

      Taken as true, the Lebahns’ allegations establish only that Ms.

Owens was responsible for calculating pension benefits. But merely

calculating benefits, without more, does not establish fiduciary status

under ERISA. Thus, the facts alleged by the Lebahns are insufficient for

liability.

      The complaint contains a number of allegations regarding Ms.

Owens’ authorities and responsibilities:

            “The Pension Consultants were supposed to determine benefits,
             qualification and other certifications of benefits.” Appellants’
             App’x at 4.

            “Mr. Lebahn contacted Eloise Owens, who at the time was the
             pension consultant for the National Farmers Union Uniform
             Pension Plan . . . . The Plan has the authority to manage the
             plan and, in accordance with that authority, hired Ms. Owens
             and her company to determine benefits, qualifications and other
             certifications of benefits. As a pension consultant, Ms. Owens
             was acting as a functional fiduciary. Ms. Owens indicated that
             she would make the appropriate calculation and let Lebahn
             know what his monthly benefits would be. Mr. Lebahn had to
             contact the pension consultant because the plan was too
             complicated to determine the benefits without the aid of a
             consultant.” Id.

                                      12
          “According to the [sic] Ms. Owens, upon early retirement,
           Lebahn would be entitled to monthly benefits in the amount of
           $8444.18. Ms. Owens sent written confirmation of this benefit
           calculation.” Id. at 5.

          “In response to Mr. Lebahn’s concerns, Ms. Owens verified her
           numbers and indicated that the actuaries were low and were
           missing something.” Id. at 6.

          “In response to [his] application, Mr. Lebahn received a letter
           from the Pension Consultant for the National Farmers Union
           Uniform Pension Plan on June 15, 2012, advising him that his
           pension payment for his retirement beginning on July 1, 2012
           would be $8445.39 per month. The pension consultant . . . was
           acting as a fiduciary and agent of the Plan and informed Mr.
           Lebahn on the amount he would receive if retiring.” Id.

     Even if these allegations are true, they would not establish that Ms.

Owens had discretionary authority or responsibility as required by

§ 1002(A)(21)(iii). The Lebahns have pleaded only that Ms. Owens

responded to Mr. Lebahn’s request by calculating his pension-plan

benefits, informing him of the results, and verifying the calculations in

response to Mr. Lebahn’s stated concerns. These allegations assert only

that Ms. Owens was responsible for calculating pension benefits and

communicating these calculations to plan participants. But that

responsibility does not establish fiduciary status under ERISA. And

nowhere do the Lebahns otherwise plead or argue that Ms. Owens had any

additional authority or responsibility delegated by the plan. Therefore, we

affirm the dismissal of the Lebahns’ claim for breach of fiduciary duty.

                                     13
V.    The Lebahns failed to adequately plead equitable estoppel.

      The Lebahns’ second claim is for equitable estoppel. The district

court dismissed this claim, and we affirm this ruling because the Lebahns

do not challenge both of the independent grounds on which the district

court based its dismissal.

      A plan beneficiary may seek “appropriate equitable relief” to redress

ERISA violations or enforce ERISA provisions. See ERISA § 502(a)(3), 29

U.S.C. § 1132(a)(3). It is well established that equitable estoppel is a form

of equitable relief available under ERISA § 502(a)(3). See Jensen v. Solvay

Chems., Inc., 721 F.3d 1180, 1185 (10th Cir. 2013).

      Although we have not definitively identified the elements of an

ERISA claim of equitable estoppel, the parties assume that we should

apply the elements stated in our unpublished opinion, Palmer v.

Metropolitan Life Insurance Co., 415 F. App’x 913 (10th Cir. 2011).

Therefore, we assume without deciding that Palmer correctly sets out the

elements of an ERISA equitable estoppel claim.

      Two of these elements are

           awareness of the true facts by the party to be estopped and

           reliance that is detrimental and justifiable. 7

7
      Palmer lists five elements of an ERISA claim for equitable estoppel:

      1) conduct or language amounting to a representation of
      material fact; 2) awareness of the true facts by the party to be
                                       14
The district court held that the Lebahns had not adequately alleged either

of these elements. On appeal, the Lebahns challenge the district court’s

holding with respect to one of these elements (awareness of the true facts

by the party to be estopped) but not with respect to the other element

(justifiable reliance by the party seeking estoppel). 8

      When a district court dismisses a claim on two or more independent

grounds, the appellant must challenge each of those grounds. Bones v.

Honeywell Int’l, Inc., 366 F.3d 869, 877 (10th Cir. 2004). But the Lebahns

have not challenged the district court’s ruling on the element of justifiable

      estopped; 3) an intention on the part of the party to be estopped
      that the representation be acted on, or conduct toward the party
      asserting the estoppel such that the latter has a right to believe
      that the former’s conduct is so intended; 4) unawareness of the
      true facts by the party asserting the estoppel; and
      5) detrimental and justifiable reliance by the party asserting
      estoppel on the representation.

Palmer v. Metro. Life Ins. Co., 415 F. App’x 913, 920 (10th Cir. 2011)
(quoting Armistead v. Vernitron Corp., 944 F.2d 1287, 1298 (6th Cir.
1991)). Additionally, the Supreme Court has held that “when a court
exercises its authority under § 502(a)(3) to impose a remedy equivalent to
estoppel, a showing of detrimental reliance must be made.” CIGNA Corp.
v. Amara, 563 U.S. 421, 443 (2011).
8
      At oral argument, the Lebahns’ counsel argued that it was
inappropriate to resolve the justifiable reliance issue on a motion to
dismiss. Oral Argument at 6:46-7:24, Lebahn v. Nat’l Farmers Union Unif.
Pension Plan, No. 15-3201 (10th Cir. May 3, 2016). But the Lebahns did
not make this argument in their appellate briefs. As a result, this argument
is waived. See Fed. Ins. Co. v. Tri-State Ins. Co., 157 F.3d 800, 805 (10th
Cir. 1998) (“Issues raised for the first time at oral argument are considered
waived.”).

                                       15
reliance. Thus, even if we were to adopt the Lebahns’ position on the

second element (awareness of the true facts by the party to be estopped),

the Lebahns have given us no basis to disturb the district court’s ruling on

the first element, that there was no justifiable reliance. In these

circumstances, we must affirm. See id.; see also Starkey ex rel. AB v.

Boulder Cty. Soc. Servs., 569 F.3d 1244, 1252 (10th Cir. 2009) (“When an

appellant does not challenge a district court’s alternate ground for its

ruling, we may affirm the ruling.”).

      In their reply brief, the Lebahns state that the district court’s

dismissal order omitted any “discussion of [the justifiable-reliance]

element.” Appellants’ Reply Br. at 9. But as the Lebahns’ counsel

conceded at oral argument, this statement is incorrect. In its order, the

district court expressly considered whether Mr. Lebahn’s reliance was

justified:

      Moreover, plaintiffs have not set forth sufficient facts which
      would support a finding that their reliance on Owens’ statement
      was justifiable in light of the fact that the complaint states that
      Lebahn “questioned the validity of [Owens’] numbers as the
      monthly benefits Owens had calculated was substantially
      greater than the annual statements he had been receiving each
      year.” (Doc. 1 at 3). In addition, the Plan unambiguously states
      the formula to calculate pension benefits. See Palmer, 415 Fed.
      App’x at 921 (no justifiable reliance when Plan documents
      unambiguously set forth Plan terms).

Appellants’ App’x at 240-41.

                                       16
      Because the Lebahns have not challenged this part of the ruling, we

affirm the dismissal of the equitable estoppel claim.

VI.   Conclusion

      We affirm.

                                     17