Cyr v. Reliance Standard

Filing

Filed opinion (ALEX KOZINSKI, MARY M. SCHROEDER, STEPHEN R. REINHARDT, SIDNEY R. THOMAS, BARRY G. SILVERMAN, RAYMOND C. FISHER, MARSHA S. BERZON, RICHARD R. CLIFTON, JAY S. BYBEE, MILAN D. SMITH, JR. and N. RANDY SMITH) (Judge RRC authoring). We agreed to hear this case en banc in order to reconsider our precedent as to which parties may be sued as defendants in actions for benefits under 29 U.S.C. 1132(a)(1)(B), part of the Employee Retirement Income Security Act, better known as ERISA. Some of our previous decisions have indicated that only a benefit plan itself or the plan administrator of a benefit plan covered under ERISA is a proper defendant in a lawsuit under that provision. We conclude that the statute does not support that limitation, however, and that an entity other than the plan itself or the plan administrator may be sued under that statute in appropriate circumstances. We overrule our prior decisions to the contrary. To apply that decision and to resolve other issues raised in this appeal, we transfer the case back to the three-judge panel to which this case was previously assigned. (See opinion for full text). Implementing this conclusion in this case and resolving the other issues raised in this appeal does not require the participation of this en banc panel. The case is therefore transferred back to the previously assigned three-judge panel for further consideration and action consistent with this opinion. TRANSFERRED TO PREVIOUSLY ASSIGNED THREE-JUDGE PANEL. [7793507] [07-56869, 08-55234]

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT



LAURA A. CYR,
Plaintiff-Appellee,
v.
RELIANCE STANDARD LIFE
INSURANCE COMPANY, an Illinois
corporation,
Defendant-Appellant.



No. 07-56869
D.C. No.
CV-06-01585-DDP




LAURA A. CYR,
Plaintiff-Appellee,
v.
RELIANCE STANDARD LIFE
INSURANCE COMPANY, an Illinois
corporation,
Defendant-Appellant,
and
CHANNEL TECHNOLOGIES, INC.
GROUP LONG TERM DISABILITY
INSURANCE PROGRAM, an employee
benefit plan; CHANNEL
TECHNOLOGIES, INC., in its capacity
as Administrator of the Channel
Technologies Inc. Group Long
Term Disability Program,
Defendants.



No. 08-55234
D.C. No.
CV-06-01585-DDP
OPINION



Appeal from the United States District Court
for the Central District of California
Dean D. Pregerson, District Judge, Presiding
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CYR v. RELIANCE STANDARD LIFE

Argued and Submitted
March 22, 2011—San Francisco, California
Filed June 22, 2011
Before: Alex Kozinski, Chief Judge, Mary M. Schroeder,
Stephen Reinhardt, Sidney R. Thomas, Barry G. Silverman,
Raymond C. Fisher, Marsha S. Berzon, Richard R. Clifton,
Jay S. Bybee, Milan D. Smith, Jr., and N.R. Smith,
Circuit Judges.
Opinion by Judge Clifton

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CYR v. RELIANCE STANDARD LIFE

COUNSEL
Michael B. Bernacchi (argued) and Keiko J. Kojima, Burke,
Williams & Sorensen, LLP, Los Angeles, California, for
defendant-appellant Reliance Standard Life Insurance Co.
Joseph A. Garofolo (argued), San Francisco, California, and
Joseph A. Creitz, San Francisco, California, for plaintiffappellee Laura A. Cyr.
Stacey E. Elias (argued), Trial Attorney, Gregory F. Jacob,
Solicitor of Labor, Timothy D. Hauser, Associate Solicitor,
Elizabeth Hopkins, Counsel, Department of Labor, Washington, DC, for amicus curiae Secretary of Labor.

OPINION
CLIFTON, Circuit Judge:
We agreed to hear this case en banc in order to reconsider
our precedent as to which parties may be sued as defendants
in actions for benefits under 29 U.S.C. § 1132(a)(1)(B), part
of the Employee Retirement Income Security Act, better
known as ERISA. Some of our previous decisions have indicated that only a benefit plan itself or the plan administrator
of a benefit plan covered under ERISA is a proper defendant
in a lawsuit under that provision. We conclude that the statute
does not support that limitation, however, and that an entity
other than the plan itself or the plan administrator may be
sued under that statute in appropriate circumstances. We overrule our prior decisions to the contrary. To apply that decision
and to resolve other issues raised in this appeal, we transfer
the case back to the three-judge panel to which this case was
previously assigned.
I.

Background

Plaintiff Laura Cyr was employed by Channel Technologies, Inc. (“CTI”). CTI provided its employees with long term

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disability benefits under a program insured by defendant Reliance Standard Life Insurance Company (“Reliance”). Reliance effectively controlled the decision whether to honor or
to deny a claim under the program. Reliance was not identified as the plan administrator, however.
Cyr was terminated from her position as a vice president of
CTI in October 2000. She immediately filed a claim for long
term disability benefits based on a back condition. Reliance
approved the payment of benefits based on Cyr’s salary of
$85,000 and paid those benefits thereafter.
The following year Cyr filed a civil suit against CTI alleging gender discrimination based on unequal pay. She contended that prior to her termination, her annual salary had
been approximately half the annual salary of male employees
of the company performing work of equal skill, effort, and
responsibility. Cyr and CTI eventually entered into a settlement agreement under which her salary was retroactively
adjusted to $155,000, effective one week prior to her termination date. An attorney for Cyr contacted a representative of
Reliance to ask whether Reliance would increase Cyr’s benefits based on this retroactive salary adjustment. Reliance
acknowledged that its representative indicated that Cyr’s
additional benefits would be paid if the adjustment in salary
was bona fide. Thereafter, however, Reliance declined to pay
benefits in an increased amount based upon the higher salary
figure. Cyr communicated with Reliance on several occasions
to seek payment of the increased benefits and provided information supporting her request, including information that had
been requested by Reliance’s representative. Reliance did not
respond, apparently because the claim file was lost, but Reliance never paid the increased benefits.
Cyr filed this action to pursue her claim for increased benefits. She asserted three claims. The first was a claim under 29
U.S.C. § 1132(a)(1)(B), against Reliance, the CTI Group
Long Term Disability Benefit Program (the “Plan”), and CTI

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as the plan administrator for the Plan. Cyr’s second claim,
against Reliance and the Plan, was that those defendants were
equitably estopped from denying the increased benefits. The
third claim, against Reliance, was for breach of fiduciary
duty. Defendants denied the claims.
Reliance brought a motion for summary judgment. The district court granted the motion as to Cyr’s ERISA statutory
claim, concluding that under our court’s decisions, only the
plan or plan administrator could be held liable under the statute. Thus, a third-party insurer like Reliance was not a proper
defendant for such a claim.
The district court later changed its mind in response to the
parties’ supplemental briefing and ultimately entered summary judgment on the ERISA claim in favor of Cyr. The district court concluded that our caselaw “left room for suits
against insurers so long as they are functioning as the plan
administrator,” a description the court held applied to Reliance. The district court also held that because Reliance had
lost the entire administrative record, most of its defenses were
waived and most of the evidence that Reliance sought to
introduce would not be considered. The court later awarded
Cyr attorneys’ fees in the amount of $384,052, costs, and prejudgment interest at a set rate from a specified date.
Reliance filed a timely notice of appeal. In addition to arguing that it was not a proper defendant for a claim under section 1132(a)(1)(B), Reliance presented a number of additional
arguments, which we do not address.
Cyr petitioned for an initial hearing en banc, under Rule
35(b)(1)(B) of the Federal Rules of Appellate Procedure. The
Secretary of Labor filed an amicus brief in support of Cyr’s
petition. No judge requested a vote to hear the case initially
en banc, however, so the request was denied and the case was
assigned to a panel of three judges, which heard oral argument in October 2009.

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Following that argument but prior to any decision by the
three-judge panel, we revisited the question of whether the
case should be considered by the court en banc. After obtaining supplemental briefs from the parties on that subject, we
agreed, upon the vote of a majority of nonrecused active
judges, to hear the case en banc.
Prior to oral argument before the en banc panel, we ordered
the parties to “limit their discussion to whether appellant is a
proper defendant in a suit for benefits under 29 U.S.C.
§ 1132(a)(1)(B) even though it isn’t a plan or a plan administrator.”
II.

Discussion

[1] The specific statute involved in this action, 29 U.S.C.
§ 1132(a)(1)(B), provides that:
A civil action may be brought . . . by a participant
or beneficiary . . . to recover benefits due to him
under the terms of his plan, to enforce his rights
under the terms of the plan, or to clarify his rights to
future benefits under the terms of the plan.
As a participant in the Plan, Cyr is authorized under this provision to bring a civil action to recover benefits and to enforce
and clarify her rights under the Plan. By its terms,
§ 1132(a)(1)(B) does not appear to limit which parties may be
proper defendants in that civil action. Nor has the Secretary
of Labor promulgated a regulation setting out such limits.
This provision falls within a section of the ERISA statute
entitled “Civil enforcement.” 29 U.S.C. § 1132. Subsection
1132(a) bears the heading “Persons empowered to bring a
civil action.” Viewed as a whole, § 1132(a) appears to provide
a comprehensive listing of which parties can bring which
types of civil actions under ERISA. It contains ten numbered
subsections, one of which, § 1132(a)(1), has two subparts, (A)

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and (B). Those individual subsections and subparts identify
eleven kinds of actions, and each subsection clearly identifies
who can bring a lawsuit under that subsection. Section
1132(a)(2), for example, provides that an action may be
brought by the Secretary of Labor or by a participant, beneficiary, or fiduciary of a particular plan for relief under 29
U.S.C. § 1109, which establishes liability for breach of fiduciary duty. There are no limits stated anywhere in § 1132(a)
about who can be sued, however.
The Supreme Court addressed the question of who can be
sued under a different subsection of § 1132(a), specifically
§ 1132(a)(3), in Harris Trust & Savings Bank v. Salomon
Smith Barney, Inc., 530 U.S. 238 (2000). That subsection
authorized a civil action “by a participant, beneficiary, or
fiduciary (A) to enjoin any act or practice which violates any
provision of this subchapter or the terms of the plan, or (B)
to obtain other appropriate equitable relief (i) to redress such
violations or (ii) to enforce any provisions of this subchapter
or the terms of the plan.” 29 U.S.C. § 1132(a)(3). Fiduciaries
of a pension trust covered by ERISA sued Salomon Smith
Barney, a broker-dealer that was not a fiduciary of the trust,
for allegedly having caused the trust to enter into a transaction
prohibited by another section of ERISA. Salomon argued that
it was not a proper defendant, but the Supreme Court disagreed and held in an unanimous opinion that Salomon was
subject to suit under § 1132(a)(3). Id. at 254.
Harris Trust presented a more complicated question than
our case does. Salomon was alleged to be liable for engaging
in a transaction prohibited by another section of ERISA, 29
U.S.C. § 1106(a)(1)(A). By its terms, § 1106(a) only imposed
a duty on a fiduciary, and Salomon was not a fiduciary of the
pension trust. Most of the discussion in that opinion pertained
to whether a non-fiduciary could nonetheless be held liable
under § 1132(a)(3), and the Court concluded that it could.
[2] What matters for our purposes is that the Court rejected
the suggestion that there was a limitation contained within

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§ 1132(a)(3) itself on who could be a proper defendant in a
lawsuit under that subsection. In so holding, the Court
observed that:
[Section 1132(a)(3)] makes no mention at all of
which parties may be proper defendants—the focus,
instead, is on redressing the “act or practice which
violates any provision of [ERISA Title I].” 29 U.S.C.
§ 1132(a)(3) (emphasis added). Other provisions of
ERISA, by contrast, do expressly address who may
be a defendant. See, e.g., § 409(a), 29 U.S.C.
§ 1109(a) (stating that “[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 shall be personally liable” (emphasis added)); § 502(l), 29 U.S.C.
§ 1132(l) (authorizing imposition of civil penalties
only against a “fiduciary” who violates part 4 of
Title I or “any other person” who knowingly participates in such a violation). And § 502(a) itself demonstrates Congress’ care in delineating the universe
of plaintiffs who may bring certain civil actions. See,
e.g., § 502(a)(3), 29 U.S.C. § 1132(a)(3) (“A civil
action may be brought . . . by a participant, beneficiary, or fiduciary . . .” (emphasis added));
§ 502(a)(5), 29 U.S.C. § 1132(a)(5) (“A civil action
may be brought . . . by the Secretary . . .” (emphasis
added)).
Id. at 246-47.
[3] In short, the Court did not find a limit in § 1132(a)(3)
as to who could be sued. We see no reason to read a limitation
into § 1132(a)(1)(B) that the Supreme Court did not perceive
in § 1132(a)(3).
[4] Our conclusion that potential defendants in actions
brought under § 1132(a)(1)(B) should not be limited to plans

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and plan administrators is supported by a related section of
the statute. Section 1132(d)(2) provides that “[a]ny money
judgment under this subchapter against an employee benefit
plan shall be enforceable only against the plan as an entity
and shall not be enforceable against any other person unless
liability against such person is established in his individual
capacity under this subchapter.” The “unless” clause necessarily indicates that parties other than plans can be sued for
money damages under other provisions of ERISA, such as
§ 1132(a)(1)(B), as long as that party’s individual liability is
established.
[5] It is not enough to identify a plan administrator as a
potential defendant, in addition to the plan itself. A plan
administrator under ERISA has certain defined responsibilities involving reporting, disclosure, filing, and notice. See 29
U.S.C. §§ 1021, 1024, 1132(c), 1166. But the plan administrator can be an entity that has no authority to resolve benefit
claims or any responsibility to pay them. In this case, for
example, CTI was identified as the plan administrator, but it
had nothing to do with denying Cyr’s claim for increased benefits. Reliance denied Cyr’s request for increased benefits
even though, as the plan insurer, it was responsible for paying
legitimate benefits claims. Reliance is, therefore, a logical
defendant for an action by Cyr to recover benefits due to her
under the terms of the plan and to enforce her rights under the
terms of the plan, which is precisely the civil action authorized by § 1132(a)(1)(B).
III.

Conclusion

[6] We conclude, therefore, that potential liability under 29
U.S.C. § 1132(a)(1)(B) is not limited to a benefits plan or the
plan administrator. Reliance is a proper defendant in a lawsuit
brought by Cyr under that statute. Any statements or suggestions to the contrary in our prior decisions, including Ford v.
MCI Communications Corp. Health & Welfare Plan, 399
F.3d 1076, 1081 (9th Cir. 2005); Everhart v. Allmerica Finan-

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cial Life Insurance Co., 275 F.3d 751, 756 (9th Cir. 2001);
Spain v. Aetna Life Insurance Co., 13 F.3d 310, 312 (9th Cir.
1993); and Gelardi v. Pertec Computer Corp., 761 F.2d 1323
(9th Cir. 1985), are overruled.
Implementing this conclusion in this case and resolving the
other issues raised in this appeal does not require the participation of this en banc panel. The case is therefore transferred
back to the previously assigned three-judge panel for further
consideration and action consistent with this opinion.
TRANSFERRED TO PREVIOUSLY
THREE-JUDGE PANEL.

ASSIGNED