FOR PUBLICATION UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
REYNOLDS METALS CO.,
No. 98-55096
Plaintiff-Appellant,
D.C. No.
v.
CV-97-06153 SVW
ROBERT ELLIS,
OPINION
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
Stephen V. Wilson, District Judge, Presiding
Argued and Submitted September 13, 1999--Pasadena, California
Filed February 10, 2000
Before: Betty B. Fletcher and Harry Pregerson,
Circuit Judges, and Charles R. Weiner, 1
Senior District Judge.
Opinion by Judge B. Fletcher
_________________________________________________________________
1 Charles R. Weiner, Senior United States District Judge for the
Eastern District of Pennsylvania, sitting by
designation.
COUNSEL Edward A. Scallet, LeBoeuf, Lamb, Green
& MacRae, Washington, D.C., for the plaintiff-appellant.
James B.
Kropff, Girardi & Keese, Los Angeles, California, for the
defendant-appellee.
_________________________________________________________________
OPINION B. FLETCHER, Circuit Judge:
Reynolds Metals Company seeks reimbursement for
payments it made to Robert Ellis because Ellis received a third party
settlement from an accident in which he was injured.
We have previously held,
in FMC Medical Plan v. Owens, 122 F.3d 1258, 1262 (9th Cir. 1997), that
actions brought by fiduciaries under the Employee Retirement Income
Security Act of 1974 ("ERISA") against beneficiaries to enforce
reimbursement clauses (also known as "subrogation " clauses) contained
in ERISA plans should be dismissed. This case is controlled by Owens.
Therefore, we affirm the district court's dismissal of this action.
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Robert Ellis, the defendant, was an
employee of Reynolds Metals Company ("Reynolds Metals") and a beneficiary in
its group medical plan. Ellis was involved in an auto accident in 1994 and
was seriously injured. In the aftermath of the accident, the plan paid "no
less than $561,145.21" in benefits to
Ellis and his health care
providers. The plan contains a contractual reimbursement provision which
states: "If the Plans paid for health care services, supplies or treatment
and you receive payment from a third party, you must reimburse the Plans, but
not more than the amount of the third-party payment you received." The plan
further specifies that reimbursement is required whether payments received
are partly or entirely "for health care expenses as the result of a legal
settlement or other action arising from an accident, injury or
illness." Sometime in 1997, Ellis settled a claim against the
third parties responsible for the accident, receiving an amount in excess
of the benefits paid to him by the plan. Since that time, he has refused to
reimburse Reynolds Metals for any of the benefits paid to him. On August
15, 1997, Reynolds Metals filed suit in federal district court seeking to
enforce the contractual reimbursement provision pursuant to ERISA S
502(a)(3), 29 U.S.C. S 1132(a)(3). In lieu of answering the complaint, Ellis
made a motion to dismiss the action and the district court granted the
motion. [1] ERISA provides for a federal cause of action for civil claims
aimed at enforcing the provisions of an ERISA plan. See 29 U.S.C. S
1132(e)(1). In order to make such a claim, however, a plaintiff must fall
within one of ERISA's nine specific civil enforcement provisions, each of
which details who may bring suit and what remedies are available. See 29
U.S.C. S 1132(a)(1)-(9). Reynolds Metals invokes the third of the
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nine categories, which provides that a
civil action may be brought: (3) by a participant,
beneficiary, or fiduciary (A) to enjoin any act or
practice which violates any provi- sion 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 provi- sions of this
subchapter or the terms of the plan; 29 U.S.C. S 1132(a)(3). [2] To
prevail, Reynolds Metals must demonstrate (1) that it is an ERISA fiduciary,
and (2) that it is seeking equitable, rather than legal, relief. See
Administrative Comm. v. Gauf, 188 F.3d 767, 770 (7th Cir. 1999); Owens, 122
F.3d at 1260. [3] Because there is no serious dispute regarding the
status of Reynolds Metals as a fiduciary, the sole issue is whether the
relief the plaintiff seeks -- namely, reimbursement under the contractual
reimbursement provisions of the ERISA plan -- is properly characterized as
"equitable" within the meaning of S 1132(a)(3). In Owens, FMC, an ERISA
fiduciary, brought suit against Jeffrey Owens, an FMC employee and
beneficiary of the ERISA plan, to enforce a contractual reimbursement
provi- sion. Owens was injured in an automobile accident. As a result of
the accident, FMC paid benefits to Owens totaling roughly $50,000. Owens
subsequently settled his claim against the driver of the other car for
$100,000. The FMC plan included a contractual reimbursement provision. Prior
to paying benefits, FMC also required that Owens sign an addi- tional
agreement restating his reimbursement obligation. This obligation
notwithstanding, Owens refused to reimburse FMC for the benefits he had
received. FMC brought suit in federal court seeking to obtain "equitable
reimbursement. " Owens, 122 F.3d at 1259.
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In Owens, we concluded that the relief FMC sought was not
equitable within the meaning of S 1132(a)(3). See id. at 1262. In reaching
this conclusion, we rejected several alterna- tive interpretations of the
remedy FMC sought. The opinion begins by rejecting the notion that the remedy
sought was equivalent to the equitable remedy of subrogation, noting
that FMC was not "stepping into the shoes" of its beneficiary in an effort
to proceed directly against the third-party tortfeasor. See id. at 1260. The
opinion next distinguishes the requested reimbursement remedy from
restitution, explaining that resti- tution requires the showing of fraud or
wrong-doing. See id. at 1261. Owens, in contrast, had rightfully received the
bene- fits to which he was entitled. Finally, we rejected the confla- tion
of reimbursement with the remedy of constructive trust. See id. A
constructive trust remedy is appropriate only where there has been a breach
of fiduciary duty and an "ill-gotten" gain, neither of which is present in
the typical action seeking contractual reimbursement. [4] Reynolds Metals
admits that its appeal is effectively indistinguishable from Owens in that it
is an effort by an ERISA fiduciary to enforce contractual reimbursement
provi- sions against beneficiaries. While it is true that the
plaintiff here couched its remedial prayers in equitable language, it
is clear that a court must look "to the substance of the remedy sought, .
. . rather than the label placed on that remedy." Id. at 1261 (quoting
Watkins v. Westinghouse Hanford Co., 12 F.3d 1517, 1528 n.5 (9th Cir. 1993));
see also Mertens v. Hewitt Associates, 508 U.S. 248, 255 (1993) ("Although
they often dance around the word, what petitioners in fact seek is nothing
other than compensatory damages . . . ."). We declined "to extend the
interpretation of section 1132(a)(3) to include a claim for reimbursement."
Owens, 122 F.3d at
1262.2 _________________________________________________________________ 2
Owens rests its dismissal on the lack of subject matter jurisdiction. But see
Cement Masons Health and Welfare Trust Fund for Northern Califor- nia v.
Stone, 197 F.3d 1003, 1008 (9th Cir. 1999) (reaffirming the substan- tive
holding in Owens but dismissing on the merits rather than on subject matter
jurisdiction). For our purposes, in evaluating the substantive hold- ing of
Owens requiring the dismissal of reimbursement claims for third party
settlements under ERISA, the dismissal could be based either on lack of
subject matter jurisdiction or on the merits.
1598
The existence of such controlling Ninth Circuit
precedent should end the matter. See Roundy v. Commissioner, 122 F.3d 835,
837 (9th Cir. 1997) ("A three-judge panel is bound by a prior judgment of
this court unless the case is taken en banc and the prior decision is
overruled."). However, Reynolds Metals contends that Owens was wrongly
decided and urges the panel to call for an initial hearing en banc. See Ninth
Cir- cuit General Rule 5.2.b. Reynolds Metals contends that Owens directly
conflicts with both Supreme Court and Ninth Circuit authority.
Taking their lead from the Eleventh Circuit, Reynolds Metals attacks Owens
as based on an "unduly narrow reading of Mertens." Blue Cross & Blue
Shield v. Alabama, 138 F.3d 1347, 1353 n.5 (11th Cir. 1998). In Mertens, the
question was whether ERISA authorizes suits for money damages against
nonfidu- ciaries who knowingly participate in a fiduciary's breach
of duty. The parties focused on the propriety of the relief, rather than
the availability of an action under ERISA against a non- fiduciary, leading
the Supreme Court to limit its attention to the phrase "other appropriate
equitable relief " in S 1132(a)(3). See Mertens, 508 U.S. at 254-55. The
Court concluded that "equitable relief" in the context of S 1132(a)(3) must
be understood to mean "those categories of relief that were typically
available in equity (such as injunction, mandamus, and restitution, but not
compensatory damages)." Id. at 256 (emphasis in original). The panel in
Owens relied heavily on Mertens, and there is not a conflict between the two
opinions. Reynolds Metals sug- gests that Owens conflicts with Mertens
because Owens bars all claims for monetary relief under S 1132(a)(3).
This badly mischaracterizes the Owens opinion -- the opinion accepts,
as does Mertens, that restitution and constructive trust remedies may be
appropriate under S 1132(a)(3), provided some fraud or wrong-doing is shown.
See Owens, 122 F.3d at 1261. Reynolds Metals also suggests that Owens
conflicts with Verity Corp. v. Howe, 516 U.S. 489 (1996). In Verity,
the
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Supreme Court held that S
1132(a)(3) supports a cause of action for individual beneficiaries who allege
that a plan fidu- ciary made material misrepresentations about their
benefits. Reynolds Metals views this holding as amounting to
an endorsement of tort damages under S 1132(a)(3) and abrogat- ing the
narrow reading of Mertens adopted by our court in Owens. This argument is
meritless. The remedy the Supreme Court endorsed in Verity was reinstatement,
a traditionally equitable one. See id. at 495 (monetary relief not at
issue). Moreover, given that the beneficiaries' action was premised on a
breach of fiduciary duty, Verity involved a circumstance where fraud and
"ill-gotten" gain figured prominently. Reynolds Metals also claims that Owens
represents an intra-circuit split with two other Ninth Circuit
authorities. This is not the case. The first decision Reynolds Metals
relies on, Chitkin v. Lincoln Nat'l Life Ins. Co., 1993 WL 484720 (9th
Cir. Nov. 24, 1993), is an unpublished memorandum dis- position, and thus is
not binding precedent.3 The second opin- ion relied upon by Reynolds Metals,
Pacificare, Inc. v. Martin, 34 F.3d 834 (9th Cir. 1994), also creates no
intra-circuit conflict. Although Pacificare involved a
contractual reimbursement provision, we never reached the question
of whether reimbursement was an "equitable" remedy under S 1132(a)(3). See
id. at 838 ("Thus far, Pacificare has not pur- sued a claim for equitable
relief under section 1132(a)(3), and neither party has developed the
arguments to support or reject such a claim.").
[5] In summary, Reynolds
Metals has failed to demonstrate that Owens conflicts with any binding
Supreme Court or Ninth Circuit authority. This undercuts its claim that an
initial hearing en banc is necessary.
_________________________________________________________________ 3
The fact that the memorandum disposition was published as an appendix to
the district court's opinion on remand does not transform the disposition
into binding precedent.
1600
[6] This case is controlled by Owens, which holds that actions by ERISA
fiduciaries seeking to enforce an ERISA plan's contractual reimbursement
provisions do not fall within S 1132(a)(3). Therefore, we affirm the district
court's dismissal of Reynolds Metals' action. AFFIRMED.
1601