Echague v. Metropolitan Life Insurance Company et al
Filing
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ORDER DENYING 142 MOTION TO ALTER JUDGMENT OR FOR RELIEF FROM JUDGMENT by Hon. William H. Orrick. (jmdS, COURT STAFF) (Filed on 8/22/2014)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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ERNIE ECHAGUE,
Case No. 12-cv-00640-WHO
Plaintiff,
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v.
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METROPOLITAN LIFE INSURANCE
COMPANY, et al.,
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United States District Court
Northern District of California
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ORDER DENYING MOTION TO
ALTER JUDGMENT OR FOR RELIEF
FROM JUDGMENT
Defendants.
Re: Dkt. No. 142
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BACKGROUND
Defendant TriNet Group, Inc. seeks relief from the June 2, 2014 Judgment, determining
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that TriNet breached its fiduciary duty to plaintiff, is liable under E.R.I.S.A. (29 U.S.C. §
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1132(a)(3)) based on the doctrine of equitable surcharge, and owes plaintiff the face value of his
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deceased wife’s life insurance policies. Docket Nos. 135, 137. It argues that judgment must be
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altered in light of Ninth Circuit’s June 6, 2014 decision in Gabriel v. Alaska Elec. Pension Fund,
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755 F.3d 647 (9th Cir. June 6, 2014). But because Gabriel is not settled law in the Ninth Circuit
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and it is distinguishable on its facts, TriNet’s motion is DENIED.
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LEGAL STANDARD
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A motion to alter or amend a judgment under Federal Rule of Civil Procedure 59(e) should
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be granted when the district court: (1) is presented with newly discovered evidence; (2) committed
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clear error or the initial decision was manifestly unjust; or (3) if there is an intervening change in
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the controlling law. In re Syncor ERISA Litigation, 516 F.3d 1095, 1100 (9th Cir.2008) (citation
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omitted). Similarly, Rule 60(b) of the Federal Rules of Civil Procedure provides for
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reconsideration of a court order where one or more of the following is shown: (1) mistake,
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inadvertence, surprise or excusable neglect; (2) newly discovered evidence that by due diligence
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could not have been discovered before the court’s decision; (3) fraud by the adverse party; (4)
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voiding of the judgment; (5) satisfaction of the judgment; (6) any other reason justifying relief.
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See Fed.R.Civ.P. 60(b); School Dist. 1J v. ACandS Inc., 5 F.3d 1255, 1263 (9th Cir.1993).
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Although couched in broad terms, subparagraph (6) requires a showing that the grounds justifying
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relief are extraordinary. Twentieth Century–Fox Film Corp. v. Dunnahoo, 637 F.2d 1338, 1341
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(9th Cir.1981).
DISCUSSION
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As an initial matter, Gabriel is not settled law in the Ninth Circuit as it is not yet final.
See, e,g., Carver v. Lehman, 558 F.3d 869, 879 & n.6 (9th Cir. 2009) (“No opinion of this circuit
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becomes final until the mandate issues” and recognizing that reliance on a non-final decision is a
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United States District Court
Northern District of California
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“gamble”); United States v. Ruiz, 935 F.2d 1033 (9th Cir. 1991) (while a petition for rehearing
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pending, decision “was not yet fixed as settled Ninth Circuit law”). A petition for rehearing or
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rehearing en banc has been requested. The panel opinion was issued over a strong dissent. The
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Department of Labor and other amici contend, among other arguments, that the panel’s decision is
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in conflict with other Courts of Appeals. Those factors caution against relying on Gabriel as
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settled law.
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But if Gabriel represents settled law in the Ninth Circuit, it is sufficiently distinguishable
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that this Court need not amend its judgment. Critical to the Gabriel’s panel’s decision that
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equitable surcharge was not appropriate under principles of trust law was that Mr. Gabriel was not
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entitled to trust benefits under the plan at issue. Gabriel, 755 F.3d at 665 (“the defendants merely
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prevented Gabriel from receiving benefits that he was not entitled to receive under the Plan”). As
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a result, the Gabriel panel found that any recovery by Gabriel would “wrongfully deplete” the
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trust (pension plan) and reduce the amount available for other eligible beneficiaries. Id. Here,
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however, Carol Echague was a beneficiary under the Plan and entitled to benefits but for the
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breach of fiduciary duty by TriNet. Moreover, payment to plaintiff here would not deplete the
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trust or harm any other participants in MetLife life insurance policies.
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Relatedly, there is a significant distinction between the classic trust at issue in Gabriel – a
pension plan – and the life insurance policies at issue in this case. Strict application of the
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Gabriel’s holding regarding equitable surcharge makes sense in the context of a pension plan,
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especially where payments for breaches of fiduciary duty to non-beneficiaries would result in a
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depletion of the trust. It does not apply here, where TriNet was the Plan Administrator who
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breached its fiduciary duties but MetLife is the Claims Administrator and funder of the insurance
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policies at issue. The surcharge against TriNet will not harm any trust (or life insurance fund) or
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current beneficiary under the Plan but will put plaintiff back where he would have been had TriNet
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not breached its duty. Cf. Gabriel, 755 F3d at 665 (the “‘beneficiary can pursue the remedy that
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will put the beneficiary in the position he or she would have attained but for the trustee’s breach.’”
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(quoting Skinner v. Northrop Grumman Ret. Plan B, 673 F.3d 1162, 1166 (9th Cir. 2012)).
This leads to yet another important distinction between Gabriel and this case. In Gabriel,
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United States District Court
Northern District of California
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there was no determination that a trustee had breached a fiduciary duty. Indeed, the Court found
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that by refusing to pay Gabriel benefits he was not entitled to receive under the plan, the trustee
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“appropriately discharged the fiduciaries’ duty to act ‘solely in the interest of the participants and
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beneficiaries,’ the individuals eligible to receive such benefits from the Fund. 29 U.S.C. §
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1104(a)(1).” Id. Here, TriNet breached an important duty – the duty to provide full and accurate
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information to a beneficiary in response to very specific questions about her benefits. TriNet does
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not challenge the Court’s determination on that issue, although it asks the Court to wipe that
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determination from the record. Motion at 9 (“Specifically, TriNet requests that the Order be
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modified to find that the equitable remedy of surcharge is not available, thereby obviating the need
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to address the alleged breaches of fiduciary duty, and enter judgment in favor of TriNet.”).
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Moreover, in Gabriel the panel noted that the plan had given accurate, clear notice to
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Gabriel that he was not eligible for benefits. Id. at 652. No clear notice of the termination of
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Carol Echague’s life insurance benefits was provided in this case. Finally, unlike in Gabriel
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where there was no harm to a true beneficiary of the plan, TriNet’s breached caused a significant
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harm to Carol Echague and her estate.
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CONCLUSION
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For the foregoing reasons, the Court DENIES TriNet’s motion to alter, amend or
reconsider the judgment entered in plaintiff’s favor. Docket Nos. 135, 137.
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IT IS SO ORDERED.
Dated: August 22, 2014
______________________________________
WILLIAM H. ORRICK
United States District Judge
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United States District Court
Northern District of California
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