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Kuntz v. Reese

United States Court of Appeals, Ninth Circuit
Mar 31, 1986
785 F.2d 1410 (9th Cir. 1986)

Summary

holding that plaintiffs had no standing — even though they sought statutory damages — where ERISA plaintiffs were not eligible to receive a benefit, and were not likely to become eligible to receive a benefit, at the time that they filed the suit

Summary of this case from Crotty v. Cook

Opinion

No. 83-2151.

March 31, 1986.

R. Bradford Huss, Hall, Henry, Oliver McReavy, San Francisco, Cal., for plaintiffs-appellants.

Donn Dimichele, Brian C. Cuff, Ball, Hunt, Hart, Brown Baerwitz, Los Angeles, Cal., Richard B. Glickman, Rosenman, Colin, Freund, Lewis Cohen, San Francisco, Cal., for defendants-appellees.

On Petition for Rehearing and Suggestion of Appropriateness of Rehearing En Banc.

Before TANG and PREGERSON, Circuit Judges, and REAL, District Judge.

Hon. Manuel L. Real, Chief Judge, United States District Court for the Central District of California sitting by designation.


Shortly after we decided this case on May 13, 1985, see Kuntz v. Reese, 760 F.2d 926 (9th Cir. 1985), the Reese defendants petitioned our court to rehear this matter. The Reese defendants argue, among other things, that several persuasive authorities outside this circuit undermine the contention that the Kuntz plaintiffs had standing under the Employee Retirement Income Security Act (ERISA) of 1974, 29 U.S.C. § 1001-1381 (1982), to sue for breach of fiduciary duty and nondisclosure of pension plan documents.

The Reese defendants include Nat Reese, who is the pension plan administrator, Daniel Eget, Sammy Narens. Danat Investments, and five other companies.

The Kuntz plaintiffs include Richard Kuntz, Dan Caccavo, Jimmy Humes, John McCord, Gursewak Singh, and Duane White.

After carefully considering these authorities, we have now concluded that the Kuntz plaintiffs lack standing. We therefore grant the petition for rehearing, withdraw our previously-filed opinion, and affirm the district court's judgment, which dismissed the action below.

Interpreting this Court's decision in Freeman v. Jacques Orthopaedic Joint Implant Surgery Medical Group, Inc., 721 F.2d 654 (9th Cir. 1983), we held originally that ERISA §§ 502(a)(1)(A) 502(a)(2), 29 U.S.C. § 1132(a)(1)(A) 1132(a)(2), authorized the Kuntz plaintiffs to bring suit: that those provisions permit a "participant or beneficiary" to bring a civil action against the plan administrator to recover statutory damages for breach of fiduciary duty and for failure to disclose pertinent plan documents. We reasoned that the Kuntz plaintiffs were "participant[s]" within the meaning of ERISA § 3(7), 29 U.S.C. § 1002(7), which defines a participant as

any employee or former employee of an employer or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan.

In essence, we thought that plaintiffs with a claim for damages against the plan administrator were "participants" because the damage claim could be viewed as a "benefit of any type."

We are now persuaded that the Kuntz plaintiffs are not participants because, as former employees whose vested benefits under the plan have already been distributed in a lump sum, the Kuntz plaintiffs were not "eligible to receive a benefit," and were not likely to become eligible to receive a benefit, at the time that they filed the suit. Because, if successful, the plaintiffs' claim would result in a damage award, not in an increase of vested benefits, they are not plan participants. The Kuntz plaintiffs do not allege that their vested benefits were improperly computed, rather they allege breach of fiduciary duty or of a duty to disclose information about benefits, thus any recoverable damages would not be benefits from the plan.

Having decided a damage claim is not a plan benefit, we must also point out that the plaintiffs are not eligible for any other type of benefit either. The Kuntz plaintiffs are all former employees who have already received their vested benefits. There are no allegations of plans to return to work or to start accruing benefits once again under the pension plan. Indeed, the plan is now defunct. Former employees who have neither a reasonable expectation of returning to covered employment nor a colorable claim to vested benefits simply do not fit within the "may become eligible" language of § 1002(7). Saladino v. I.L.G.W.U. National Retirement Fund, 754 F.2d 473, 476 (2d Cir. 1985). In fact,

[t]o be a "participant" a person must have either a present or a future right to benefits under the pension or retirement plan. This excludes retirees who have accepted the payment of everything due them in a lump sum, because these erstwhile participants have already received the full extent of their benefits and are no longer eligible to receive future payments. Such retirees have no present or future right to Plan funds and the Plan no longer has any obligation to these individuals.

Joseph v. New Orleans Electrical Pension Retirement Plan, 754 F.2d 628, 630 (5th Cir.), cert. denied, ___ U.S. ___, 106 S.Ct. 526, 88 L.Ed.2d 458 (1985).

While we are still convinced that the purpose and policy of ERISA is to remedy hardships caused by inequitable treatment of workers by plan administrators, see H.R. Rep. No. 533, 93d Cong. 2d Sess., reprinted in 1974 U.S.Code Cong. Ad.News 4639, 4647, we are now persuaded that the agency charged with administering ERISA would not consider the Kuntz plaintiffs to be plan participants entitled to this solicitude. The Department of Labor has promulgated certain regulations pertaining to the administration of ERISA. These regulations specifically exclude from the definition of "participant" any person "to whom an insurance company has made an irrevocable commitment to pay all the benefits to which the individual is entitled under the plan." 29 C.F.R. § 2610.2 (1985); see Joseph, 754 F.2d at 630 (quoting Department of Labor regulation).

This regulation, of course, pertains to situations in which a pension plan purchases annuities for former plan beneficiaries and participants. Nonetheless, it is a persuasive interpretation of the statute. And because we must give substantial deference to an agency's interpretation of a statute within its administration, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 2782-83, 81 L.Ed.2d 694 (1984), we find the Department of Labor's interpretation persuasive.

Although the Kuntz plaintiffs initially persuaded us that they should have standing to litigate this matter, we are now convinced that their argument, if followed, would have the effect of converting claims of all types, whether colorable or not, into "potential benefits" within the meaning of ERISA. Because we do not believe that Congress intended this result, and because our reconsidered interpretation is consistent with previous authorities from our own court we now VACATE our previous decision, WITHDRAW our published opinion, and AFFIRM the district court's judgment, noting that the dismissal is without prejudice to state law claims the plaintiffs might pursue.

See, e.g., Scott v. Gulf Oil Corp., 754 F.2d 1499, 1505-06 (9th Cir. 1985); Freeman v. Jacques Orthopaedic Joint Implant Surgery Medical Group, Inc., 721 F.2d 654, 655-56 (9th Cir. 1983); Weiss v. Sheet Metal Workers No. 544 Pension Trust, 719 F.2d 302, 303-04 (9th Cir. 1983) (per curiam), cert. denied, 466 U.S. 972, 104 S.Ct. 2347, 82 L.Ed.2d 864 (1984); Hernandez v. Southern Nevada Culinary Bartenders Pension Trust, 662 F.2d 617, 621 (9th Cir. 1981).


I concur in the result now reached by the majority but adhere to the reasoning in my dissent, Kuntz v. Reese, 760 F.2d 926, 939 (9th Cir. 1985).


Summaries of

Kuntz v. Reese

United States Court of Appeals, Ninth Circuit
Mar 31, 1986
785 F.2d 1410 (9th Cir. 1986)

holding that plaintiffs had no standing — even though they sought statutory damages — where ERISA plaintiffs were not eligible to receive a benefit, and were not likely to become eligible to receive a benefit, at the time that they filed the suit

Summary of this case from Crotty v. Cook

finding plaintiffs were not plan participants "[b]ecause, if successful, the plaintiffs' claim would result in a damages award, not in an increase of vested benefit"

Summary of this case from Register v. Cameron Barkley Co.

finding plaintiffs were not plan participants "[b]ecause, if successful, the plaintiffs' claim would result in a damages award, not in an increase of vested benefit"

Summary of this case from In re AEP ERISA Litigation

finding plaintiffs were not plan participants "[b]ecause, if successful, the plaintiffs' claim would result in a damage award, not in an increase of vested benefits"

Summary of this case from Lalonde v. Textron, Inc. (D.R.I. 006)

In Kuntz, we held that a plaintiff who alleges that a former employer misrepresented the benefits due under a defined benefit ERISA plan does not have standing if that plaintiff already received all benefits that were due before filing suit and seeks only a damage award.

Summary of this case from Harris v. Amgen, Inc.

In Kuntz we held that plan participants and beneficiaries have no standing to seek monetary damages for breach of fiduciary duty after they receive their contractually defined and vested benefits from an ERISA plan.Id. at 1411-12.

Summary of this case from Amalgamated Clothing Tex. Wkrs. v. Murdock

In Kuntz, the plaintiffs alleged that plan fiduciaries had "lied about the amount of benefits that plaintiffs would get under the plan and failed to comply with ERISA requirements for disclosing pension plan documents."

Summary of this case from Amalgamated Clothing Tex. Wkrs. v. Murdock

In Kuntz, we decided that damages for breach of fiduciary duty are not "a benefit of any type from an employee benefit plan," within the meaning of ERISA § 3(7).

Summary of this case from Amalgamated Clothing Tex. Wkrs. v. Murdock

In Kuntz, we held that former plan participants and beneficiaries may not sue a fiduciary for damages after they receive their vested benefits under a plan.

Summary of this case from Amalgamated Clothing Tex. Wkrs. v. Murdock

In Kuntz v. Reese, 785 F.2d 1410, 1411 (9th Cir. 1986), the Ninth Circuit held that retirees who have withdrawn their full account balance in a lump-sum payment are no longer Plan "participants" under ERISA and lack standing to sue for damages.

Summary of this case from DeFazio v. Hollister, Inc.

In Kuntz the plaintiffs also had received the full amount of their vested benefits under the plan (even if not as it had been represented to them).

Summary of this case from Boeckman v. A.G. Edwards, Inc.

explaining that a claim for vested benefits confers standing to sue under ERISA, while a claim for damages does not

Summary of this case from Boeckman v. A.G. Edwards, Inc.

In Kuntz, the plaintiffs were former employees who had received lump sum distributions of their vested pension benefits prior to bringing suit under ERISA.

Summary of this case from Vaughn v. Bay Environmental Management Inc.

In Kuntz, the court found that the plaintiffs therein, whose vested benefits had been distributed in a lump sum, were no longer plan participants and as such, lacked standing to bring fiduciary breach and statutory damages claims.

Summary of this case from Perigo v. Hoffer

In Reese, the court determined that a group of former employees could not sue the employer for damages alleging breach of fiduciary duty and nondisclosure of pension documents.

Summary of this case from Clark v. Clark

In Kuntz, the court held that former employees who had already received their vested plan benefits were no longer plan participants.

Summary of this case from Bigger v. American Commercial Lines, Inc.

In Kuntz, the court noted that "plaintiffs do not allege that their benefits were improperly computed, rather they allege breach of fiduciary duty or of a duty to disclose information about benefits, thus any recoverable damages would not be benefits from the plan."

Summary of this case from Bigger v. American Commercial Lines, Inc.

In Kuntz, supra, the Ninth Circuit held that former employees could not sue a fiduciary after they had received their vested benefits under a plan.

Summary of this case from Butler v. Bank of California
Case details for

Kuntz v. Reese

Case Details

Full title:RICHARD P. KUNTZ, ET AL., PLAINTIFFS-APPELLANTS, v. NAT J. REESE, ET AL.…

Court:United States Court of Appeals, Ninth Circuit

Date published: Mar 31, 1986

Citations

785 F.2d 1410 (9th Cir. 1986)

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