ERISA-Ninth Circuit Holds That The Plaintiff Is Not Entitled To Plan Benefits Based On Claim For Equitable Relief

In Gabriel v. Alaska Electric Pension Fund, No. 12-35458 (9th Cir. 2014), for over three years, a defendant, Alaska Electric Pension Fund (the “Fund”), paid plaintiff Gabriel monthly pension benefits he had not earned. This case arises from the events that occurred after the Fund discovered this error.

In short, the Fund determined that Gabriel did not have enough service to vest in pension benefits payable by the plan underlying the Fund. The Fund terminated Gabriel’s benefit payments, and threatened to seek reimbursement for $81,033 in benefits Gabriel had previously received. In response, Gabriel brought an ERISA action in district court against the Fund and others. In his complaint, Gabriel brought claims for recovery of benefits and clarification of rights to future benefits under ERISA section 502(a)(1)(B) and breach of the fiduciary duties under ERISA section 502(a)(3). The district court granted summary judgment to the defendants on all of Gabriel’s claims, and Gabriel appeals.

In analyzing the case, the Ninth Circuit Court of Appeals (the “Court”) considered Gabriel’s argument that the defendants violated their fiduciary duties under ERISA (or the terms of the Plan) for which he is entitled to “appropriate equitable relief” under section 502(a)(3). The Court identified , and rejected Gabriel’s claim as to, the three available types of equitable relief:

(1) equitable estoppel, providing no relief because the Fund did not interpret ambiguous plan language, but rather made a mistake in paying benefits, and Gabriel was not ignorant of the true facts (i.e., that he was not vested);

(2) reformation of the plan, providing no relief because Gabriel could not establish that a mistake of fact or law affected the plan’s or Fund’s terms or that any fraud was involved; and
(3) surcharge, providing no relief because Gabriel did not claim that any of the fiduciaries were unjustly enriched, rather, they discontinued a benefit to which Gabriel was not entitled, and Gabriel is not seeking a monetary award to recoup losses.

As to Gabriel’s claim under section 502(a)(1)(B), the Court said that Gabriel argues that the Fund waived the rationale that it was denying him benefits because he was not vested. The Court reject this argument, finding that the Fund met all procedural requirements in stopping the benefits, and otherwise did nothing to waive its determination that it needed to stop the benefits because Gabriel was not vested.

The Court concluded that Gabriel cannot demonstrate that he is entitled to any of the equitable remedies available under section 502(a)(3), or that the Fund waived its argument that he never vested. Therefore, the Court affirmed the district court’s grant of summary judgment in favor of the defendants.

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