Court Opinion

ID: 3189587
Source: CourtListenerOpinion
Date Created: 2016-03-29 20:00:55.615024+00
Date Added: 2024-06-11T07:39:05.196506
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              MAR 29 2016

                                                                         MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                        U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

CHARLES GUENTHER,                                No. 14-15193

              Plaintiff - Appellant,             D.C. No. 5:11-cv-00380-EJD

 v.
                                                 MEMORANDUM*
LOCKHEED MARTIN CORPORATION
and LOCKHEED MARTIN
CORPORATION RETIREMENT PLAN
FOR CERTAIN SALARIED
EMPLOYEES,

              Defendants - Appellees.

                    Appeal from the United States District Court
                      for the Northern District of California
                    Edward J. Davila, District Judge, Presiding

                      Argued and Submitted February 9, 2016
                            San Francisco, California

Before: HAWKINS, W. FLETCHER, and MURGUIA, Circuit Judges.

      Charles Guenther appeals the district court’s grant of summary judgment to

Lockheed Martin Corporation (“Lockheed”) and the Lockheed Martin Corporation

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Salaried Employee Retirement Program (“the Plan”), a defined benefit plan, on

claims arising under the Employee Retirement Income Security Act of 1974

(“ERISA”), 29 U.S.C. § 1132. We affirm in part, vacate in part, and remand.

      We affirm the district court’s grant of summary judgment to Lockheed and

the Plan (collectively, “Defendants”) on Guenther’s claim under 29 U.S.C.

§ 1132(a)(1)(B). We review for abuse of discretion Lockheed’s determination that

Guenther was not entitled to benefits under the terms of the Plan. See Salomaa v.

Honda Long Term Disability Plan, 642 F.3d 666, 673 (9th Cir. 2011). Under this

standard, an ERISA plan administrator’s decision will be upheld if it was

“reasonable.” See id. at 675 (citing Conkright v. Frommert, 559 U.S. 506, 521

(2011)). If the Plan administrator has a conflict of interest or violated the

procedural requirements of ERISA, we use the same standard of review, but “judge

the reasonableness of the plan administrator skeptically.” Id.; see also Abatie v.

Alta Health & Life Ins. Co., 458 F.3d 955, 972 (9th Cir. 2006) (en banc).

      Here, the Plan amendment adopted in 2005 provided that “no person who is

re-employed by an Employing Company on or after January 1, 2006 shall become

an active Participant or earn Credited Service under the Plan with respect to any

period commencing with such reemployment.” Guenther was rehired by Lockheed

in September 2006. Applying “special skepticism” because of Lockheed’s conflict

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of interest and alleged procedural irregularities, we nevertheless conclude that it

was reasonable for Lockheed to interpret the terms of the Plan to preclude

Guenther from continuing to accrue credited service after his rehire.

      Guenther also asserts that Defendants breached their fiduciary duty to him

and seeks equitable relief to redress that breach under 29 U.S.C. § 1132(a)(3).1

The Supreme Court has recognized three types of equitable relief available under

§ 1132(a)(3): equitable estoppel, reformation, and surcharge. CIGNA Corp. v.

Amara, 563 U.S. 421, 440–42 (2011); see also Gabriel v. Alaska Elec. Pension

Fund, 773 F.3d 945, 955–58, 961–63 (9th Cir. 2014) (describing requirements for

equitable estoppel, reformation, and surcharge); Skinner v. Northrop Grumman

Ret. Plan B, 673 F.3d 1162, 1166–67 (9th Cir. 2012) (discussing reformation and

surcharge). The district court addressed only equitable estoppel, holding that

Guenther did not clearly allege equitable estoppel and denying his motion to

amend as untimely. In the alternative, the district court held that the equitable

estoppel claim failed because there was no misrepresentation and the Plan terms

      1
        See 29 U.S.C. § 1132(a)(3) (permitting participants and beneficiaries to
obtain “appropriate equitable relief” to redress ERISA violations); id. § 1104(a)(1)
(requiring ERISA fiduciary to discharge its duties “solely in the interest of the
participants and beneficiaries” and “for the exclusive purpose of . . . providing
benefits to participants and their beneficiaries”).

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were not ambiguous, as required for equitable estoppel under Ninth Circuit case

law.

       We disagree with the district court’s determination that Guenther failed to

allege facts supporting a breach of fiduciary duty claim under § 1132(a)(3). His

First Amended Complaint (FAC) alleged the following facts:

       When Lockheed recruited Guenther to return to the company in 2006, one of

Guenther’s “key conditions” of returning was that he continue to “receive the full

benefit of the company’s defined benefit retirement plan.” A Lockheed

representative promised him in writing that it would be possible to “bridge” his

prior service. Upon Guenther’s previous rehire at Lockheed in 1997, he had been

promised “bridging,” and the credited service he accrued during his subsequent

period of employment had been combined with his previous period of employment

to determine his overall credited service time under the Plan. Lockheed never

informed him until after he returned to Lockheed in 2006 that it meant something

different by “bridging” on this second occasion — i.e., that now, under its current

use of the term, “bridging” did not include accruing additional credited service

under the Plan. Nor did Lockheed inform him that it would place him on a

                                          4
different plan.2 Guenther left his job at Lawrence Livermore National Laboratories

and rejoined Lockheed in reliance on Lockheed’s promise, as he understood it, that

his employment would be “bridged” such that upon his new employment he would

accrue credited service under the Plan.

      These detailed allegations and the “bridging” letters from Lockheed attached

to the FAC were sufficient to put Defendants on notice that Guenther was accusing

them of misrepresenting his ability to accrue more credited service time under the

Plan. In fact, Defendants seemed to realize that Guenther was alleging a

misrepresentation, as they asserted an affirmative defense to equitable estoppel in

their answer.

      We also disagree with the district court’s conclusion that there was no

misrepresentation. That conclusion was premature in light of (1) the unchallenged

evidence that Guenther had received “bridging” in the way that he understood it

the last time he was rehired by Lockheed, and Defendants made no mention that

they were using a new defined contribution retirement plan and that the 2005 Plan

amendment barred the type of “bridging” Guenther expected; and (2) the lack of

      2
         Although not specifically alleged, the record shows that Lockheed also
failed to inform Guenther that the 2005 Plan amendment excluded rehires from
accruing credited service.

                                          5
opportunity for Guenther to conduct discovery into Defendants’ frame of mind

when they made that promise.

      However, we do agree with the district court’s final decision to grant

summary judgment as to equitable estoppel. Alleging and proving a material

misrepresentation by a fiduciary (a breach of fiduciary duty) is not necessarily

sufficient to obtain equitable relief under § 1132(a)(3). Additional criteria must be

met to obtain certain types of equitable relief. The district court correctly held that,

under long-standing Ninth Circuit case law, Guenther was not eligible for equitable

estoppel because the post-2005 Plan terms are unambiguous. See Greany v. W.

Farm Bureau Life Ins. Co., 973 F.2d 812, 822 (9th Cir. 1992) (equitable estoppel is

not available if it “would result in a payment of benefits that would be inconsistent

with the written plan”); see also Gabriel, 773 F.3d at 957 (requiring party seeking

estoppel to show “that the provisions of the plan at issue were ambiguous such that

reasonable persons could disagree as to their meaning or effect”). Thus, we affirm

the district court’s grant of summary judgment as to equitable estoppel.

      The district court did not discuss reformation or surcharge. Our intervening

issuance of Gabriel provides guidance on the availability of these remedies. Like

in Gabriel, reformation in this case is not available because it “would result in a

payment of benefits that would be inconsistent with the written plan.” Gabriel,

                                           6
773 F.3d at 962. On the other hand, Gabriel suggested that surcharge could be

available notwithstanding any conflict with the unambiguous terms of the plan.

See id. at 962–63 (vacating and remanding for the district court to consider

surcharge). Thus, we vacate the district court’s judgment on Guenther’s

§ 1132(a)(3) claim and remand for the district court to consider whether

Defendants breached a fiduciary duty and, if so, whether Guenther is entitled to

surcharge as a remedy. On remand, the court should allow discovery of evidence

relevant to these issues, including evidence outside the administrative record.

Jensen v. Solvay Chems., Inc., 520 F. Supp. 2d 1349, 1355 (D. Wyo. 2007)

(distinguishing § 1132(a)(1)(B) claims from § 1132(a)(3) claims and allowing

discovery outside the administrative record for the latter); see also Colaco v. ASIC

Advantage Simplified Pension Plan, 301 F.R.D. 431, 434–35 & n.27 (N.D. Cal.

2014) (citing Jensen and allowing discovery beyond administrative record in

connection with § 1132(a)(3) claim); Sconiers v. First Unum Life Ins. Co., 830 F.

Supp. 2d 772, 778 (N.D. Cal. 2011) (denying summary judgment as premature and

allowing discovery into § 1132(a)(3) claim).

      AFFIRMED in part; VACATED in part; and REMANDED with

instructions. Each party shall bear its own costs on appeal.

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