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Moyle v. Liberty Mutual Retirement Benefit Plan

United States Court of Appeals, Ninth Circuit

August 18, 2016

Geoffrey Moyle, an individual, on behalf of themselves; Pauline Arwood, an individual, on behalf of themselves; Thomas Rollason, an individual, on behalf of themselves; Jeannie Sanders, an individual, on behalf of themselves, Plaintiffs-Appellants/ Cross-Appellees,
v.
Liberty Mutual Retirement Benefit Plan; Liberty Mutual Retirement Plan Retirement Board; Liberty Mutual Insurance Company, a Massachusetts company; Liberty Mutual Insurance Group Inc., a Massachusetts company, Defendants-Appellees/ Cross-Appellants.

          Argued and Submitted October 19, 2015 Pasadena, California

         Appeal from the United States District Court for the Southern District of California Gonzalo P. Curiel, District Judge, Presiding D.C. No. 3:10-cv-02179-GPC-MDD

          Matthew Butler (argued) and Michael Olinik, The Butler Firm, San Diego, California; Jack Winters Jr., Winters & Associates, San Diego, California; Craig Nicholas and Alex Tomasevic, Nicholas & Tomasevic, LLP, San Diego, California, for Plaintiffs-Appellants/Cross-Appellees.

          Ashley Abel (argued), Jackson Lewis P.C., Greenville, South Carolina, for Defendants-Appellees/Cross-Appellants.

          Before: Harry Pregerson and Consuelo M. Callahan, Circuit Judges and Stanley Allen Bastian, [*] District Judge.

         SUMMARY [**]

         Employee Retirement Income Security Act

         The panel affirmed in part and reversed in part the district court's summary judgment in favor of the defendants in a class action under the Employee Retirement Income Security Act.

         Plaintiffs alleged that their new employer, which purchased their former employer, told them that they would receive past service credit, under the new employer's retirement plan, for the time they worked with the former employer.

         The panel affirmed the district court's summary judgment on a claim for benefits under 29 U.S.C. § 1132(a)(1)(B). The panel held that the district court applied the correct abuse of discretion standard of review, and the plaintiffs were not entitled to past service credit under the plain terms of the retirement plan.

         The panel reversed the district court's summary judgment on plaintiffs' claim for equitable relief under § 1132(a)(3). Agreeing with the Eighth Circuit, the panel held that the plaintiffs were not barred from bringing simultaneous claims under § 1132(a)(1)(B) and § 1132(a)(3). Courts have interpreted Varity Corp. v. Howe, 516 U.S. 489 (1996), to mean that equitable relief under § 1132(a)(3) is not available if § 1132(a)(1)(B) provides an adequate remedy. But under CIGNA Corp. v. Amara, 131 S.Ct. 1866 (2011), § 1132(a)(3) authorizes equitable relief in the form of plan reformation, even if plaintiffs also claim relief under § 1132(a)(1)(B). The panel concluded that in light of Amara, prior Ninth Circuit case law to the contrary was no longer binding. The panel remanded for determinations of fact and equitable relief in the form of reformation and surcharge.

         The panel affirmed the district court's summary judgment on a claim that the new employer breached its fiduciary duty to disclose information about past service retirement credit in its Summary Plan Description. The panel held that the plaintiffs did not prove harm or detrimental reliance.

         On defendants' cross-appeal, the panel held that class certification was proper.

         ORDER

         The Opinion filed on May 20, 2016, is amended as follows: in the last sentence on page 5 of the Slip Opinion, the words "that the suit is not time-barred and" shall be deleted so that the sentence reads, "We also find that class certification was proper."

         Judges Pregerson, Callahan, and Bastian have voted to deny Defendants-Appellees' petition for panel rehearing. Judge Callahan has voted to deny Defendants-Appellees' petition for rehearing en banc, and Judges Pregerson and Bastian so recommend.

         The full court has been advised of the petition, and no judge of the court has requested a vote on the petition for rehearing en banc. Fed. R. App. P. 35. Defendants-Appellees' Petition for Rehearing or Rehearing En Banc is therefore DENIED, and no further petitions for rehearing will be accepted.

          OPINION

          PREGERSON, Circuit Judge:

         Appellants are former employees of Old Golden Eagle Insurance Company ("Golden Eagle"). Golden Eagle did not offer a retirement plan to its employees. When Liberty Mutual Insurance Company ("Liberty Mutual") purchased Golden Eagle through a conservatorship sale, Appellants became employees of Liberty Mutual. Appellants state that while the sale was underway, Liberty Mutual told Appellants that they would receive past service credit for the time they worked with Golden Eagle under Liberty Mutual's retirement plan. But, after Liberty Mutual purchased Golden Eagle, Liberty Mutual denied Appellants' claims for past service credit. Liberty Mutual argues that it never made any representation to Appellants that they would receive past service credit for their time with Golden Eagle. Liberty Mutual also argues that under the terms of the retirement plan, Appellants are entitled only to past service credit for purposes of eligibility, vesting, early retirement, and spousal benefits, and not for retirement benefits accrual.

         Appellants filed this class action against Liberty Mutual for violating the Employee Retirement Income Security Act ("ERISA"). At the district court, Appellants asserted four claims for relief: (1) Appellants are entitled to past service credit under the terms of the retirement plan, under 29 U.S.C. § 1132(a)(1)(B); (2) Appellants are entitled to equitable relief under 29 U.S.C. § 1132(a)(3); (3) Liberty Mutual violated its duty to provide Appellants with documents relevant to their claim; and (4) Liberty Mutual violated its duty to disclose information about past service retirement credit in its Summary Plan Descriptions. Appellants seek the equitable remedies of reformation and surcharge for both claims (2) and (4).

         The district court granted summary judgment in favor of Liberty Mutual on all four claims. Appellants appealed on claims (1), (2), and (4). Liberty Mutual cross-appealed, alleging that Appellants' suit is time-barred and that class certification was improper.

         We reverse the district court's ruling as to claim (2). Appellants can seek equitable relief under 29 U.S.C. § 1132(a)(3). We affirm the district court's ruling as to claims (1) and (4): Appellants are not entitled to past service credit under the plain terms of the retirement plan, and Appellants did not rely to their detriment on Liberty Mutual's failure to disclose information about past service credit in its Summary Plan Descriptions. We also find that class certification was proper.

         FACTUAL BACKGROUND

         I. Liberty Mutual's Bid for Golden Eagle

         On January 31, 1997, the California Department of Insurance placed Golden Eagle into conservatorship with the San Diego Superior Court. Seeing an opportunity to expand its insurance business, Liberty Mutual took an immediate interest in acquiring Golden Eagle, who had a large worker's compensation business.

         However, many Golden Eagle employees-worried that their jobs were in jeopardy-began to look for different employment opportunities. From January 1997 to the summer of that year, nearly fifty percent of Golden Eagle employees left the company, and their departure had already cost Golden Eagle about a half million dollars.

         In April 1997, Liberty Mutual was in a bidding war with American International Group, Inc. ("AIG") for the acquisition of Golden Eagle. To win the bidding war, Liberty Mutual needed to not only match AIG's bid, it also needed to add enhancements to secure the Conservation Court's approval. On April 6, 1997, Liberty Mutual submitted its enhanced bid, which included improved employee benefits such as a retirement plan, a benefit not offered by Golden Eagle. Including improved employee benefits for Golden Eagle's former employees served to benefit Liberty Mutual in two ways: by retaining Golden Eagle's employees, and by increasing the likelihood that the court would approve Liberty Mutual's bid.

         While the bid was going on, several Golden Eagle employees approached George Kaerth, Senior Vice President of Underwriting at Golden Eagle, and asked him if they would get past service credit for their time with Golden Eagle under Liberty Mutual's retirement benefits program. Kaerth, in turn, had about twenty conversations with David Long from Liberty Mutual, and about ten to twelve conversations with Tim Sweeney, also from Liberty Mutual, about the Liberty Mutual benefits package for Appellants. Kaerth repeatedly told Long and Sweeney that the Golden Eagle employees were confused about past service credit. Kaerth asked Long and Sweeney pointedly whether or not service with Golden Eagle would count under the Liberty Mutual benefits program, and, every time, Long and Sweeney separately responded that this issue was still under negotiation.

         On May 29, 1997, the Conservation Court held an evidentiary hearing to evaluate Liberty Mutual's and AIG's competing bids. Among the exhibits that Liberty Mutual submitted to the court, one exhibit expressly stated that the value that Liberty Mutual added was to "increase employee benefits (credit for prior year's of service and participation in the benefits plan)." Liberty Mutual also told the Conservation Court that Golden Eagle employees would have the rights that Liberty Mutual employees had with "X years of service." This representation was later repeatedly made to Golden Eagle employees.[1]

         Liberty Mutual's representations at the May 29 hearing were shared with Golden Eagle employees. At the time of the hearing, Golden Eagle employees preferred Liberty Mutual's proposal because it was perceived that Liberty Mutual would treat its employees better than AIG. On May 30, 1997, the Conservation Court approved Liberty Mutual's bid.

         II. Golden Eagle Transitions to Liberty Mutual

         Following the approval of Liberty Mutual's bid, Liberty Mutual drafted a Rehabilitation Agreement, which was meant to settle any outstanding claims with policyholders, creditors, and shareholders of Golden Eagle. Notably, Article 5 of the Rehabilitation Agreement states that Golden Eagle employees' past service credit would count for the purposes of eligibility, vesting, and early retirement subsidies under Liberty Mutual's retirement benefit plan, but past service credit would not be credited for the purpose of benefits accrual. The Rehabilitation Agreement is the only document that explicitly states that past service credit with Golden Eagle would not count for benefits accrual, and this language does not appear anywhere else during the time of transition or in any of the communications with Golden Eagle employees.

         Helen Sayles, Liberty Mutual's Senior Vice President of Human Resources and Administration, oversaw the development of Article 5 as well as all Summary Plan Descriptions ("SPD")[2]. Sayles testified that it was "important to be explicit at each agreement, including this one, what people got and what people didn't get."

         The Conservator in charge of the transition of Golden Eagle to Liberty Mutual was not required to send notification of the Rehabilitation Agreement to Golden Eagle employees. Liberty Mutual never provided a copy of the Rehabilitation Agreement to Golden Eagle employees.

         During August 1997, Liberty Mutual hosted a series of benefits enrollment meetings so that Golden Eagle employees could discuss and obtain information about the transition to Liberty Mutual. Liberty Mutual developed a uniform "Facilitator Guide" that presenters used as a script at these meetings to convey information about the terms and conditions of employee benefits, including retirement benefits. There was no mention in the Facilitator Guide that past service credit with Golden Eagle would not be credited for benefit accrual, or that benefit accrual would begin on the plan entry date of October 1, 1997.

         During the enrollment meetings, Liberty Mutual failed to indicate that there were any limitations to the treatment of past service credit. Paula Tonsky, who organized new hire orientations, testified that her understanding from attending some of these meetings was that "previous years with Golden Eagle would count towards . . . service with Liberty Mutual."

         Golden Eagle employees Geoffrey Moyle, Pauline Arwood, Thomas Rollason, and Jeannie Sanders also testified that this was their understanding after attending the meetings, as well as the understanding of other Golden Eagle employees. When asked if his understanding was that he would get past service credit for his time with Golden Eagle for all purposes under the Liberty Mutual retirement plan, Moyle stated, "I know that was my understanding, because everybody was quite happy after the meeting, that [sic] what they were going to receive." Similarly, Sanders testified, "[B]ecause of the meeting . . . we all were told that our years of service with Golden Eagle would be ...


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