Merrimon v. Unum Life Insurance Company, 1st Cir. (2014)

7/26/2019 Merrimon v. Unum Life Insurance Company, 1st Cir. (2014)

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United States Court of AppealsFor the First Circuit

No. 13- 2128

DENI SE MERRI MON and BOBBY S. MOWERY,

Pl ai nt i f f s , Appel l ees ,

v.

UNUM LI FE I NSURANCE COMPANY OF AMERI CA,

Def endant , Appel l ant .

No. 13- 2168

DENI SE MERRI MON and BOBBY S. MOWERY,

Pl ai nt i f f s , Appel l ant s ,

v.

UNUM LI FE I NSURANCE COMPANY OF AMERI CA,

Def endant , Appel l ee.

______________

APPEALS FROM THE UNI TED STATES DI STRI CT COURTFOR THE DI STRI CT OF MAI NE

[ Hon. Nancy Tor r esen, U. S. Di st r i ct J udge]

Bef or e

Tor r uel l a and Sel ya, Ci r cui t J udges,and McAul i f f e, * Di st r i ct J udge.

*Of t he Di st r i ct of New Hampshi r e, si t t i ng by desi gnat i on.


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Donal d R. Fr eder i co, wi t h whomCat her i ne R. Connor s, Byrne J .Decker , Gavi n G. McCart hy, and Pi erce At wood LLP were on br i ef , f ordef endant .

J ames F. J or den, Wal demar J . Pf l epsen, J r . , Mi chael A.Val er i o, Ben V. Seessel , J ohn C. Pi t bl ado, J or den Bur t LLP, andLi sa Tat e on br i ef f or Amer i can Counci l of Li f e I nsur er s, ami cus

cur i ae.J er emy P. Bl umenf el d, Mor gan, Lewi s & Bocki us LLP, J . Mi chael

West on, and Lederer West on Cr ai g on br i ef f or Def ense ResearchI nst i t ut e, ami cus cur i ae.

J ohn C. Bel l , J r . , wi t h whomLee W. Br i gham, Bel l & Br i gham,St uart T. Rossman, Ar i el l e Cohen, Nat i onal Consumer Law Cent er , M.Scot t Bar r et t , and Bar r et t Wyl i e LLC wer e on br i ef , f or pl ai nt i f f s.

J ul y 2, 2014


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SELYA, Circuit Judge. I n 1974, Congr ess enacted t he

Empl oyee Ret i r ement I ncome Secur i t y Act ( ERI SA) . Pub. L. No. 93-

406, 88 St at . 829, codi f i ed as amended at 29 U. S. C. 1001- 1461.

One of ERI SA' s pr i nci pal goal s i s t o af f or d appr opr i at e pr ot ect i on

t o empl oyees and t hei r benef i ci ar i es wi t h r espect t o t he

admi ni st r at i on of empl oyee wel f are benef i t pl ans. See Nachman

Cor p. v. Pensi on Benef i t Guar . Cor p. , 446 U. S. 359, 361- 62 ( 1980) .

As i s t r ue of vi r t ual l y any pr ophyl acti c stat ut e, i nt er pr et i ve

quest i ons l ur k at t he mar gi ns. Thi s cl ass act i on, whi ch ar i ses out

of an i nsur er ' s r edempt i on of cl ai ms on ERI SA- r egul at ed l i f e

i nsur ance pol i ci es t hr ough t he est abl i shment of r et ai ned asset

account s ( RAAs) , spawns such quest i ons.

Her e, t he pl ai nt i f f s chal l enge t he i nsur er ' s use of RAAs

as a met hod of payi ng l i f e i nsur ance benef i t s i n t he ERI SA cont ext .

They present ed t he di st r i ct cour t wi t h t wo basi c quest i ons. Fi r st ,

di d t he i nsur er ' s met hod of payi ng deat h benef i t s i n t he f or m of

RAAs const i t ut e sel f - deal i ng i n pl an asset s i n vi ol at i on of ERI SA

sect i on 406( b) ? Second, di d t hi s redempt i on met hod of f end t he

i nsur er ' s dut y of l oyal t y t owar d t he cl ass of benef i ci ar i es i n

vi ol at i on of ERI SA sect i on 404( a) ? The di st r i ct cour t answer ed t he

f i r st quest i on i n f avor of t he i nsur er and t he second i n f avor of

t he pl ai nt i f f cl ass. I t pr oceeded t o awar d cl ass- wi de r el i ef

t otal i ng more than $12, 000, 000.

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Bot h si des appeal . We agr ee wi t h t he di st r i ct cour t t hat

t he i nsur er ' s use of RAAs i n t he ci r cumst ances of t hi s case di d not

const i t ut e sel f - deal i ng i n pl an asset s. We di sagr ee, however , wi t h

t he di st r i ct cour t ' s answer t o t he second quer y and hol d t hat t he

i nsurer ' s use of RAAs di d not br each any dut y of l oyal t y owed by

t he i nsur er t o t he pl ai nt i f f cl ass. Accor di ngl y, we af f i r mi n par t

and r ever se i n par t .

I. BACKGROUND

We br i ef l y r ehear se t he r el evant f act s, whi ch ar e l ar gel y

undi sput ed. Readers who hunger f or more exeget i c det ai l may

consul t t he di st r i ct cour t ' s f ul some r escr i pt . See Mer r i mon v.

Unum Li f e I ns. Co. , 845 F. Supp. 2d 310, 312- 15 ( D. Me. 2012) .

The pl ai nt i f f s, Deni se Mer r i mon and Bobby S. Mower y,

r epr esent a cl ass of benef i ci ar i es of ERI SA- r egul at ed empl oyee

wel f ar e benef i t pl ans f unded by cer t ai n guar ant eedbenef i t gr oup

l i f e i nsur ance pol i ci es t hat t he def endant , Unum Li f e I nsur ance

Company of Amer i ca ( t he i nsurer ) , i ssued. 1 I n 2007, each named

pl ai nt i f f submi t t ed a cl ai m f or l i f e i nsur ance benef i t s . Af t er

r evi ewi ng t he submi ssi ons, t he i nsurer appr oved t he cl ai ms.

The i nsur er r edeemed t he cl ai ms by est abl i shi ng, t hrough

a cont r act or , account s f or t he named pl ai nt i f f s at St at e St r eet

Bank and cr edi t ed t o each pl ai nt i f f ' s account t he f ul l amount of

1 Al t hough the decedents' empl oyer s were t he namedadmi ni st r at or s of t he pl ans, each of t hemdel egat ed t o the i nsur erdi scr et i onar y aut hor i t y t o make cl ai m det er mi nat i ons.

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t he benef i t s owed: $51, 000 t o Mer r i mon and $62, 300 t o Mowery. At

t he same t i me, t he i nsur er mai l ed books of dr af t s t o the

pl ai nt i f f s, al ong wi t h i nf or mat i onal mat er i al s r egar di ng t he

account s. The dr af t s empower ed t he pl ai nt i f f s t o wi t hdr aw al l or

any par t of t he cor pus of t he RAAs; pr ovi ded, however , t hat each

wi t hdr awal was i n an amount not l ess t han $250.

I n shor t or der , t he pl ai nt i f f s f ul l y l i qui dat ed t hei r

RAAs and t he account s were cl osed. Dur i ng t he t i me t hat f unds

r emai ned i n t hei r RAAs, however , t he i nsur er r et ai ned t he cr edi t ed

f unds i n i t s gener al account and pai d t he pl ai nt i f f s i nt er est at a

r at e of one per cent ( subst ant i al l y l ess, t he pl ai nt i f f s al l ege,

t han t he r et ur n t he i nsur er ear ned on i t s por t f ol i o) .

The cl osi ng of t he RAAs di d not end t he mat t er . I n

October of 2010, t he pl ai nt i f f s f i l ed a put at i ve cl ass act i on

compl ai nt i n t he Uni t ed St at es Di st r i ct Cour t f or t he Di st r i ct of

Mai ne. Thei r compl ai nt al l eged t hat t he i nsur er ' s met hod of

r edeemi ng t hei r cl ai ms vi ol at ed ERI SA sect i ons 404( a) and 406( b) ,

29 U. S. C. 1104( a) , 1106( b) , and sought "appr opr i at e equi t abl e

r el i ef " under 29 U. S. C. 1132( a) ( 3) . 2 Fol l owi ng di scover y, t he

part i es cr oss- moved f or summary j udgment and t he pl ai nt i f f s moved

f or cl ass cer t i f i cat i on. The di st r i ct cour t gr ant ed par t i al

summar y j udgment i n f avor of t he i nsur er on t he pl ai nt i f f s' sect i on

2 The compl ai nt al so advanced suppl ement al cl ai ms under Mai nel aw. The di st r i ct cour t di smi ssed t hose cl ai ms, and t he pl ai nt i f f shave not at t empt ed t o r enew t hem on appeal .

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406( b) cl ai ms and gr ant ed part i al summary j udgment i n f avor of t he

pl ai nt i f f s on t hei r sect i on 404( a) cl ai ms. See Mer r i mon, 845 F.

Supp. 2d at 327- 28. The cour t t hen cer t i f i ed t he pl ai nt i f f cl ass.

See i d. The i nsur er moved t o r econsi der t he adver se summary

j udgment and cl ass cer t i f i cat i on r ul i ngs, but t he di st r i ct cour t

doubl ed down: i t bot h deni ed t he mot i on and st r uck i t as unt i mel y.

A bench t r i al ensued t o determi ne the appr opr i ate measure

of r el i ef based on t he di st r i ct cour t ' s det er mi nat i on ( on par t i al

summar y j udgment ) t hat t he i nsurer had vi ol at ed sect i on 404( a) .

When al l was sai d and done, t he cour t awar ded t he pl ai nt i f f cl ass

monet ar y rel i ef i n excess of $12, 000, 000 ( excl usi ve of pr ej udgment

i nt er est ) . Nei t her si de was over j oyed, and t hese cr oss- appeal s

f ol l owed.

II. JURISDICTION

The i nsur er ar gues, al bei t concl usor i l y, t hat t he

pl ai nt i f f s l ack const i t ut i onal st andi ng t o pur sue t hei r cl ai ms.

One of t he ami ci hel pf ul l y devel ops t he ar gument i n si gni f i cant l y

gr eat er det ai l . Al t hough t hese ci r cumst ances mi ght or di nar i l y gi ve

r i se t o quest i ons of wai ver , see, e. g. , Uni t ed St at es v. Zanni no,

895 F. 2d 1, 17 ( 1st Ci r . 1990) ( expl ai ni ng t hat i ssues br i ef ed i n

a per f unct ory manner are normal l y deemed abandoned) ; Lane v. Fi r st

Nat ' l Bank, 871 F. 2d 166, 175 ( 1st Ci r . 1989) ( expl ai ni ng t hat a

cour t wi l l usual l y di sr egar d i ssues r ai sed onl y by ami ci and not by

par t i es) , no such obst acl e exi st s her e. The pr esence or absence of

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const i t ut i onal st andi ng i mpl i cat es a f eder al cour t ' s subj ect - mat t er

j ur i sdi ct i on. When an i ssue i mpl i cat es subj ect - mat t er

j ur i sdi ct i on, a f eder al cour t i s obl i ged t o r esol ve t hat i ssue even

i f t he par t i es have nei t her bri ef ed nor argued i t . See Ar i zonans

f or Of f i ci al Engl i sh v. Ar i zona, 520 U. S. 43, 73 ( 1997) ; I n r e Sony

BMG Musi c Ent m' t , 564 F. 3d 1, 3 ( 1st Ci r . 2009) .

The Const i t ut i on car ef ul l y conf i nes t he power of t he

f eder al cour t s t o deci di ng cases and cont r over si es. See U. S.

Const . ar t . I I I , 2; Hol l i ngswor t h v. Per r y, 133 S. Ct . 2652, 2661

( 2013) . "A case or cont r over sy exi st s onl y when t he par t y

sol i ci t i ng f eder al cour t j ur i sdi ct i on ( nor mal l y, t he pl ai nt i f f )

demonst r ates ' such a personal st ake i n t he out come of t he

cont r oversy as t o assure t hat concr ete adver seness whi ch shar pens

t he pr esent at i on of i ssues upon whi ch t he cour t so l ar gel y

depends. ' " Kat z v. Per shi ng, LLC, 672 F. 3d 64, 71 ( 1st Ci r . 2012)

( quot i ng Baker v. Car r , 369 U. S. 186, 204 ( 1962) ) ; see Muskr at v.

Uni t ed St at es, 219 U. S. 346, 361- 62 ( 1911) . I n or der t o make such

a showi ng, "a pl ai nt i f f must est abl i sh each par t of a f ami l i ar

t r i ad: i nj ur y, causat i on, and r edr essabi l i t y. " Kat z, 672 F. 3d at

71 ( ci t i ng Luj an v. Def ender s of Wi l dl i f e, 504 U. S. 555, 560- 61

( 1992) ) .

The pi vot al quest i on her e i nvol ves t he i nj ury i n f act

r equi r ement . The best ar gument f or t he absence of const i t ut i onal

st andi ng i s t he not i on t hat t he pl ai nt i f f s di d not suf f er any

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demonst r abl e f i nanci al l oss as a r esul t of t he i nsur er ' s al l eged

t r ansgr essi ons and, t her ef or e, di d not sust ai n any i nj ur y i n f act .

Put anot her way, t he ar gument i s t hat because t he pl ai nt i f f s

r ecei ved ever ythi ng t o whi ch t hey wer e ent i t l ed under t he ERI SA

pl ans, t hey suf f er ed no act ual har m.

Thi s ar gument i s subst ant i al . When conf r onted wi t h

essent i al l y t he same quest i on, t he Second Ci r cui t bypassed i t and

asser t ed j ur i sdi ct i on on ot her gr ounds. See Faber v. Met r o. Li f e

I ns. Co. , 648 F. 3d 98, 102- 03 ( 2d Ci r . 2011) . The Thi r d Ci r cui t

r ej ected t he argument i n a di vi ded opi ni on. See Edmonson v.

Li ncol n Nat ' l Li f e I ns. Co. , 725 F. 3d 406, 415- 17 ( 3d Ci r . 2013) ,

cer t . deni ed, 134 S. Ct . 2291 ( 2014) ; i d. at 429- 33 ( J or dan, J . ,

di ssent i ng) . Af t er car ef ul per scrut at i on, we hol d t hat t he

pl ai nt i f f s have const i t ut i onal st andi ng.

An i nj ur y i n f act i s def i ned as "an i nvasi on of a l egal l y

pr ot ect ed i nt er est whi ch i s ( a) concret e and par t i cul ar i zed; and

( b) act ual or i mmi nent , not conj ect ur al or hypot het i cal . " Luj an,

504 U. S. at 560 ( f oot not e omi t t ed) ( i nt er nal ci t at i ons and

quot at i on mar ks omi t t ed) . But i n or der t o est abl i sh st andi ng, a

pl ai nt i f f does not need t o show t hat her r i ght s have act ual l y been

abr i dged: such a requi r ement "woul d conf l at e t he i ssue of st andi ng

wi t h t he mer i t s of t he sui t . " Aur or a Loan Ser vs. , I nc. v.

Cr addi et h, 442 F. 3d 1018, 1024 ( 7t h Ci r . 2006) . I nst ead, a

pl ai nt i f f need onl y show t hat she has "a col or abl e cl ai m t o such a

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r i ght . " I d. ( emphasi s omi t t ed) . The eval uat i on of whet her such a

showi ng has been made must t ake i nt o account t he rol e of Congr ess.

Af t er al l , Congr ess has t he power t o def i ne "t he st at us of l egal l y

cogni zabl e i nj ur i es. " Kat z, 672 F. 3d at 75.

These pr i nci pl es ar e di sposi t i ve her e. Congress has

mandat ed ERI SA f i duci ar i es t o abi de by cer t ai n st r i ct ur es and has

gr ant ed ERI SA benef i ci ar i es corr espondi ng r i ght s t o sue f or

vi ol at i ons of t hose st r i ct ur es. See 29 U. S. C. 1132( a) ( 3)

( aut hor i zi ng benef i ci ar i es t o sue "t o obt ai n . . . appr opr i at e

equi t abl e r el i ef " i n or der "t o r edr ess . . . vi ol at i ons" of ERI SA) .

An ERI SA benef i ci ar y t hus has a l egal l y cogni zabl e r i ght t o have

her pl an f i duci ar i es per f or m t hose dut i es t hat ERI SA mandat es.

We hast en t o add a caveat . I t i s common ground t hat

Congr ess cannot conf er st andi ng beyond t he scope of Ar t i cl e I I I .

See Summer s v. Ear t h I sl and I nst . , 555 U. S. 488, 497 ( 2009) ( " [ T] he

r equi r ement of i nj ur y i n f act i s a har d f l oor of Ar t i cl e I I I

j ur i sdi ct i on t hat cannot be r emoved by st at ut e. " ) . Thi s means, of

cour se, t hat an i nsur er ' s vi ol at i on of an ERI SA- i mposed f i duci ar y

dut y does not necessar i l y conf er st andi ng on al l pl an

benef i ci ar i es: a benef i ci ar y must show t hat t he al l eged vi ol at i on

has worked some "personal and t angi bl e harm" t o her .

Hol l i ngswor t h, 133 S. Ct . at 2661.

Her e, however , t he pl ai nt i f f s make col or abl e cl ai ms t hat

t hey have suf f er ed j ust such a har m. They cont end t hat t he i nsurer

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has wr ongf ul l y r et ai ned and mi sused t hei r asset s. I f pr oven, t hi s

woul d const i t ut e a t angi bl e har meven i f no economi c l oss r esul t s.

See, e. g. , Rest at ement ( Thi r d) of Rest i t ut i on and Unj ust Enr i chment

3 r epor t er ' s not e a ( 2011) ( " [ T] her e can be r est i t ut i on of

wr ongf ul gai n i n cases wher e t he pl ai nt i f f has suf f er ed an

i nt er f er ence wi t h pr ot ect ed i nt er est s but no measur abl e l oss

whatsoever . " ) ; see al so CI GNA Corp. v. Amara, 131 S. Ct . 1866, 1881

( 2011) . I n addi t i on, t he i nj ur y al t hough common t o a pot ent i al l y

wi de cl ass of benef i ci ar i es i s par t i cul ar i zed t o t he pl ai nt i f f s,

each of whomcl ai ms t hat t he i nsur er wr ongf ul l y ret ai ned hi s or her

asset s.

The Supreme Cour t has "of t en sai d t hat hi st or y and

t r adi t i on of f er a meani ngf ul gui de t o t he types of cases t hat

Ar t i cl e I I I empower s f eder al cour t s t o consi der . " Spr i nt Commc' ns

Co. v. APCC Ser vs. , I nc. , 554 U. S. 269, 274 ( 2008) . Al t hough ERI SA

i s of r el at i vel y r ecent or i gi n, i t s admi ni st r at i on i s i nf or med by

t he common l aw of t r ust s. See Var i t y Corp. v. Howe, 516 U. S. 489,

496 ( 1996) . Hi st or i cal l y, cour t s have asser t ed j ur i sdi ct i on over

cases agai nst a t r ust ee "even t hough t he t r ust i t sel f ha[ d]

suf f er ed no l oss. " Geor ge G. Boger t et al . , Law of Tr ust s and

Tr ust ees 861 ( 2013) ( ci t i ng Mosser v. Dar r ow, 341 U. S. 267, 272-

73 ( 1951) ; Magr uder v. Dr ur y, 235 U. S. 106, 120 ( 1914) ) ; see al so

Rest at ement ( Thi r d) of Rest i t ut i on and Unj ust Enr i chment 3

r epor t er ' s not e a ( 2011) . A hol di ng her e t hat t he pl ai nt i f f s have

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sat i sf i ed t he r equi r ement s f or const i t ut i onal st andi ng woul d be

ent i r el y consi st ent wi t h t hi s hi st or i cal pr acti ce.

To say mor e about t he i ssue of const i t ut i onal st andi ng

woul d be t o pai nt t he l i l y. We hol d t hat t he pl ai nt i f f s have

asser t ed col or abl e and cogni zabl e cl ai ms of i nj ur i es i n f act .

Not hi ng mor e i s needed her e, f r om a j ur i sdi ct i onal st andpoi nt , t o

wr ap t he pl ai nt i f f s i n t he cl oak of const i t ut i onal st andi ng. 3

III. THE MERITS

The di st r i ct cour t made t wo per t i nent l i abi l i t y r ul i ngs

at t he summary j udgment st age. One of t hese i s chal l enged by t he

pl ai nt i f f s and t he ot her by t he i nsur er . We r evi ew bot h r ul i ngs de

novo. See Kouvchi nov v. Par amet r i c Tech. Corp. , 537 F. 3d 62, 66

( 1st Ci r . 2008) . Bef or e addr essi ng t hese r ul i ngs, however , we must

r esol ve a t hr eshol d i ssue: whet her def er ence i s due to t he rel evant

vi ews of t he Uni t ed St ates Depart ment of Labor ( DOL) . We st ar t

t her e.

3 I n i t s openi ng br i ef , t he i nsur er suggest s t hat t hepl ai nt i f f s l ack st at ut or y st andi ng under ERI SA. St at ut or y st andi ngi s, of cour se, di f f er ent t han const i t ut i onal st andi ng. See Kat z,672 F. 3d at 75; Gr aden v. Conexant Sys. I nc. , 496 F. 3d 291, 295 ( 3dCi r . 2007) . One way i n whi ch t he t wo concept s di f f er i s t hatargument s based on st atut ory st andi ng, unl i ke ar gument s based onconst i t ut i onal st andi ng, ar e wai vabl e. See, e. g. , Bi l yeu v. Mor ganSt anl ey Long Ter mDi sab. Pl an, 683 F. 3d 1083, 1090 ( 9t h Ci r . 2012) ,

cer t . deni ed, 133 S. Ct . 1242 ( 2013) . Any possi bl e def ect i nst at ut or y st andi ng has been wai ved i n t hi s case because t he i ssuewas not r ai sed bel ow. See Teamst ers Uni on, Local No. 59 v.Super l i ne Tr ansp. Co. , 953 F. 2d 17, 21 ( 1st Ci r . 1992) ( " I f anypr i nci pl e i s set t l ed i n t hi s ci r cui t , i t i s t hat , absent t he mostext r aor di nar y ci r cumst ances, l egal t heor i es not r ai sed squar el y i nt he l ower cour t cannot be br oached f or t he f i r st t i me on appeal . " ) .

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A. The DOL Guidance.

The Second Ci r cui t , puzzl i ng over essent i al l y t he same

r i ddl e t hat conf r ont s us t oday, asked t he DOL t o pr ovi de i t s

i nt er pr et at i on of how t he r el evant ERI SA pr ovi si ons af f ect

i nsur er s' deci si ons t o use RAAs as a met hod of cl ai m r edempt i on.

See Faber , 648 F. 3d at 102. The DOL responded by submi t t i ng a 16-

page ami cus br i ef . See Secr et ar y of Labor ' s Ami cus Cur i ae Let t er

Br i ef i n Response t o t he Cour t ' s I nvi t at i on ( t he DOL Gui dance) ,

Faber , 648 F. 3d at 98 ( No. 09- 4901) . I n i t , t he DOL, af t er

sedul ous anal ysi s, made i t cr yst al cl ear t hat an i nsur er di schar ges

i t s f i duci ar y dut i es under ERI SA by f ur ni shi ng a benef i ci ar y

unf et t ered access t o an RAA i n accordance wi t h pl an t erms and does

not r etai n pl an asset s by hol di ng and managi ng t he f unds t hat back

t he RAA.

The i nsur er , ci t i ng Ski dmor e v. Swi f t & Co. , 323 U. S.

134, 140 ( 1944) , exhort s us t o def er t o t he DOL Gui dance. The

pl ai nt i f f s demur , ar gui ng t hat t he DOL Gui dance was hast i l y

pr epar ed and i s i nconsi st ent wi t h ot her aut hor i t y.

I t i s i mpor t ant t o not e that t he DOL "shar es enf or cement

r esponsi bi l i t y f or ERI SA. " J ohn Hancock Mut . Li f e I ns. Co. v.

Har r i s Tr ust & Sav. Bank, 510 U. S. 86, 107 n. 14 ( 1993) ( ci t i ng 29

U. S. C. 1204( a) ) . Thi s responsi bi l i t y paves the way f or but

does not r equi r e a f i ndi ng t hat some def er ence i s due to t he

DOL' s vi ews. An agency' s i nt er pr et at i on of a st at ut e t hat i t

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admi ni st ers may war r ant j udi ci al def er ence, dependi ng on the degr ee

t o whi ch t he agency' s exposi t i on of t he i ssue i s deemed

aut hor i t at i ve. See Uni t ed St at es v. Mead Cor p. , 533 U. S. 218, 228

( 2001) .

Whi l e agenci es ar e gener al l y pr esumed to have par t i cul ar

exper t i se wi t h r espect t o t he st at ut es t hat t hey admi ni st er ,

agenci es speak i n a var i et y of ways. As a r esul t ,

aut hor i t at i veness of t en depends, at l east i n par t , on cont ext . For

exampl e, when an agency speaks wi t h t he f orce of l aw, as t hr ough a

bi ndi ng r egul at i on, i t s i nt er pr et at i on of ambi guous pr ovi si ons of

a st at ut e t hat f al l s wi t hi n i t s pur vi ew i s due j udi ci al def er ence

as l ong as t hat i nt er pr et at i on i s r easonabl e. See i d. at 229- 30;

Chevr on U. S. A. I nc. v. Nat ur al Res. Def . Counci l , I nc. , 467 U. S.

837, 842- 45 ( 1984) .

But when an agency speaks wi t h somet hi ng l ess t han t he

f or ce of l aw, i t s i nt er pr et at i ons ar e ent i t l ed t o def er ence "onl y

t o the ext ent t hat t hose i nt er pr et at i ons have t he ' power t o

per suade. ' " Chr i st ensen v. Har r i s Cnt y. , 529 U. S. 576, 587 ( 2000)

( quot i ng Ski dmor e, 323 U. S. at 140) . That i s t he si t uat i on her e.

We must , t heref ore, di g deeper .

To gauge per suasi veness , an i nqui r i ng cour t shoul d l ook

t o a "mi x of f actor s" t hat "ei t her cont r i but es t o or det r act s f r om

t he power of an agency' s i nt er pr et at i on t o per suade. " Doe v.

Leavi t t , 552 F. 3d 75, 81 ( 1st Ci r . 2009) . Those f act or s i ncl ude

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" t he thor oughness evi dent i n [ t he agency' s] consi der at i on, t he

val i di t y of i t s r easoni ng, [ and t he] consi st ency [ of i t s

i nt er pr et at i on] wi t h ear l i er and l at er pr onouncement s. " I d.

( al t er at i ons i n or i gi nal ) ( quot i ng Ski dmor e, 323 U. S. at 140) .

" [ T] he most sal i ent of t he f act or s t hat i nf or m an assessment of

per suasi veness [ i s] t he val i di t y of t he agency' s reasoni ng. " I d.

at 82.

We appr ai se t he DOL Gui dance wi t h t hese f act ors i n mi nd.

I n doi ng so, we ar e acut el y awar e t hat i f t hi s i nqui r y i s t o have

any r eal ut i l i t y, i t must i nvol ve somet hi ng mor e t han mer el y

determi ni ng whether t he agency' s vi ews comport wi t h t he cour t ' s

i ndependent i nt er pr et at i on of t he r el evant st at ut or y pr ovi si ons.

See i d. at 80- 81. I f t he r el evant f actor s t i l t i n f avor of gi vi ng

wei ght t o t he agency' s vi ews, i t woul d be an exer ci se i n vani t y f or

a cour t t o di sr egar d t hose vi ews.

The DOL Gui dance i s pl ai nl y wel l - r easoned. Her e, as i n

Doe, " t he agency has consul t ed appr opr i ate sour ces, empl oyed

sensi bl e heur i st i c t ool s, and adequat el y subst ant i at ed i t s ul t i mat e

concl usi on. " I d. at 82. The met i cul ous nat ur e of t he agency' s

st at ement of i t s vi ews, coupl ed wi t h t he l ogi c of i t s posi t i on,

combi ne t o l end t he DOL Gui dance credi bi l i t y.

To be sure, t he DOL Gui dance was not f or ged t hrough a

t r anspar ent and st r uct ur ed pr ocess, nor was i t t emper ed i n the

cr uci bl e of publ i c comment . Such accout erment s woul d have gi ven

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added hef t t o the DOL Gui dance but none of t hem i s a condi t i on

pr ecedent t o def er ence. See Sun Capi t al Par t ner s I I I , LP. v. New

Eng. Teamst ers & Trucki ng I ndus. Pensi on Fund, 724 F. 3d 129, 140- 41

( 1st Ci r . 2013) , cer t . deni ed, 134 S. Ct . 1492 ( 2014) ; Conn. Of f i ce

of Pr ot . & Advocacy f or Per s. wi t h Di sabs. v. Har t f or d Bd. of

Educ. , 464 F. 3d 229, 239- 40 ( 2d Ci r . 2006) ( Sot omayor , J . ) .

Per suasi veness ( or t he l ack of i t ) depends on t he t ot al i t y of t he

r el evant f actor s.

So, t oo, t he f act t hat t he DOL' s posi t i on i s of

r el at i vel y r ecent vi nt age i s not f at al . Whi l e t he l ongst andi ng

nat ur e of an agency i nt er pr et at i on may const i t ut e an added reason

f or def er ence, see Lapi ne v. Town of Wel l esl ey, 304 F. 3d 90, 106

( 1st Ci r . 2002) , new i nt er pr et at i ons par t i cul ar l y new

i nt er pr et at i ons addr essi ng quest i ons not pr evi ousl y posed t o t he

agency can be convi nci ng, see, e. g. , Conn. Of f i ce of Pr ot . &

Advocacy, 464 F. 3d at 244; I n r e New Ti mes Sec. Ser vs. , I nc. , 371

F. 3d 68, 81- 83 ( 2d Ci r . 2004) .

I n t he l ast anal ysi s, we ar e sat i sf i ed t hat t he

consi der at i ons of pr ocess and dur at i on st r essed by t he pl ai nt i f f s

ar e i nsuf f i ci ent t o sul l y t he wel l - r easoned DOL Gui dance. The

ami cus br i ef f i l ed by t he DOL bear s t he hal l mar ks of r el i abi l i t y.

Ther e i s no good r eason t o di smi ss i t , especi al l y si nce t he agency

was not a par t y t o t he l i t i gat i on i n whi ch t he ami cus br i ef was

f i l ed but ar t i cul at ed i t s vi ews onl y i n r esponse t o t he Second

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Ci r cui t ' s di r ect r equest . See Conn. Of f i ce of Pr ot . & Advocacy,

464 F. 3d at 236, 239- 40. Taki ng i nt o account t he scr upul ousness of

t he DOL Gui dance, i t s anal yt i c r i gor , and i t s cr af t i ng of a set of

cl ear and easi l y appl i ed r ul es t hat ar e consi st ent wi t h ERI SA' s

st r uct ur e, t ext , and pur pose, we concl ude t hat t he DOL Gui dance i s

deservi ng of some wei ght . See Mar t i n v. OSHRC, 499 U. S. 144, 157

( 1991) .

B. Section 406(b).

The pl ai nt i f f s' r emai ni ng cont ent i on i s t hat t he

i nsur er ' s met hod of r edeemi ng l i f e i nsur ance pol i ci es by payi ng

deat h benef i t s i n t he f or mof RAAs const i t ut ed sel f - deal i ng i n pl an

asset s i n vi ol at i on of ERI SA sect i on 406( b) . ERI SA sect i on 406( b)

pr ohi bi t s a pl an f i duci ar y f r om "deal [ i ng] wi t h t he asset s of t he

pl an i n [ i t s] own i nt er est or f or [ i t s] own account . " 29 U. S. C.

1106( b) ( 1) . The pl ai nt i f f s asser t t hat t he i nsur er vi ol at ed t hi s

pr ohi bi t i on on sel f - deal i ng i n pl an asset s by r et ai ni ng and

i nvest i ng RAA f unds f or i t s own enr i chment . The di st r i ct cour t

r ej ect ed t hi s asser t i on, see Mer r i mon, 845 F. Supp. 2d at 319, and

so do we.

ERI SA nowhere cont ai ns a compr ehensi ve def i ni t i on of what

const i t ut es "pl an asset s. " See Har r i s Tr ust , 510 U. S. at 89. I n

an ef f or t t o f i l l t hi s voi d, t he DOL consi st ent l y has st at ed t hat

" t he assets of a pl an gener al l y ar e t o be i dent i f i ed on t he basi s

of or di nar y not i ons of pr oper t y r i ght s under non- ERI SA l aw. " U. S.

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Dep' t of Labor , Advi sor y Op. No. 93- 14A, 1993 WL 188473, at *4 ( May

5, 1993) . Sever al of our si st er ci r cui t s have adopt ed t hi s

f or mul at i on. See, e. g. , Edmonson, 725 F. 3d at 427; Faber , 648 F. 3d

at 105- 06; Kal da v. Si oux Val l ey Physi ci an Par t ner s, I nc. , 481 F. 3d

639, 647 ( 8t h Ci r . 2007) ; I n r e Luna, 406 F. 3d 1192, 1199 ( 10t h

Ci r . 2005) . We t oo f i nd t hi s f or mul at i on per suasi ve.

The pl ai nt i f f s concede t hat , pr i or t o t he cr eat i on of an

RAA, f unds hel d i n t he i nsur er ' s gener al account ar e not pl an

asset s. That i s because

[ i ] n t he case of a pl an t o whi ch a guar ant eedbenef i t pol i cy i s i ssued by an i nsur er , t heasset s of such pl an shal l be deemed t o i ncl udesuch pol i cy, but shal l not , sol el y by r easonof t he i ssuance of such pol i cy, be deemed t oi ncl ude any asset s of such i nsur er .

29 U. S. C. 1101( b) ( 2) .

The pl ai nt i f f s nonethel ess posi t t hat when a deat h

benef i t accr ues and i s r edeemed by means of t he est abl i shment of anRAA, t he RAA f unds become pl an asset s i f t hose f unds ar e retai ned

i n t he i nsur er ' s gener al account . As a cor ol l ar y, t hey posi t t hat

t hose r et ai ned f unds r emai n pl an assets unt i l t he RAA i s f ul l y

l i qui dat ed.

Thi s ar gument l acks f or ce. Ther e i s no basi s, ei t her i n

t he case l aw or i n common sense, f or t he pr oposi t i on t hat f unds

hel d i n an i nsurer ' s gener al account ar e somehow t r ansmogr i f i ed

i nt o pl an asset s when t hey ar e cr edi t ed t o a benef i ci ar y' s account .

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I ndeed, t he DOL Gui dance t o whi ch a modi cumof r espect i s owed

i ndi cat es exact l y t he opposi t e. See DOL Gui dance at 7.

We add, mor e gener al l y, t hat or di nar y not i ons of pr oper t y

r i ght s counsel str ongl y agai nst t he pl ai nt i f f s ' pr oposi t i on. I t i s

t he benef i ci ar y, not t he pl an i t sel f , who has acqui r ed an owner shi p

i nt erest i n t he asset s backi ng t he RAA. See Edmonson, 725 F. 3d at

428; Faber , 648 F. 3d at 106. Unl ess t he pl an document s cl ear l y

evi nce a cont r ar y i nt ent and her e t hey do not a benef i ci ar y' s

asset s are not pl an asset s.

The deci si on i n Mogel v. Unum Li f e I nsur ance Co. , 547

F. 3d 23, 26 ( 1st Ci r . 2008) , i s not at odds wi t h t he concl usi on

t hat t he moni es r et ai ned by t he i nsurer ar e not pl an assets. Mogel

i nvol ved a pl an t hat cont ai ned a speci f i c di r ect i ve t o pay

benef i ci ar i es i n a l ump sum. See i d. at 25. The i nsur er i gnor ed

t hi s speci f i c di r ect i ve and sought i nst ead t o r edeemcl ai ms t hr ough

t he est abl i shment of RAAs. See i d. As has been wi del y r ecogni zed,

t hi s par t i cul ar i zed pol i cy pr ovi si on expl ai ns t hi s cour t ' s hol di ng

t hat t he i nsur er , whi ch had not pai d t he pol i cy pr oceeds i n a

manner per mi t t ed by the pl an document s, had vi ol at ed i t s f i duci ar y

dut i es. See Edmonson, 725 F. 3d at 428; Faber , 648 F. 3d at 106- 07;

DOL Gui dance at 13- 14. Thus, nei t her t he hol di ng i n Mogel nor i t s

br oadl y cast l anguage i s bi ndi ng pr ecedent f or pur poses of t hi s

mat er i al l y di f f er ent case. See Mun' y of San J uan v. Rul l an, 318

F. 3d 26, 28 n. 3 ( 1st Ci r . 2003) ( expl ai ni ng t hat "[ d] i ct a compr i ses

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obser vat i ons i n a j udi ci al opi ni on . . . t hat ar e ' not essent i al '

t o the det er mi nat i on of t he l egal quest i ons t hen bef or e t he cour t , "

and that di ct a "have no bi ndi ng ef f ect i n subsequent pr oceedi ngs" ) .

As a f al l back, t he pl ai nt i f f s i nvi t e us t o adopt t he

Ni nt h Ci r cui t ' s f unct i onal appr oach t o det er mi ni ng whi ch asset s are

pl an asset s. See Acost a v. Pac. Ent er s. , 950 F. 2d 611, 620 ( 9t h

Ci r . 1991) . The f unct i onal appr oach l ooks t o "whet her t he i t em i n

quest i on may be used t o t he benef i t ( f i nanci al or ot her wi se) of t he

f i duci ar y at t he expense of pl an par t i ci pant s or benef i ci ar i es" as

a means of ascer t ai ni ng whet her t he i t em i s a pl an asset . I d.

Al t hough cour t s occasi onal l y have f ound t hi s appr oach usef ul , we

have never endorsed i t . Nor do we need t o expl or e i t s possi bl e

ut i l i t y t oday: whi l e t he f unct i onal appr oach mi ght be of some

assi st ance i n doubt f ul cases, t he asset s wi t h whi ch we ar e

concer ned t he f unds backi ng t he RAAs f al l squar el y wi t hi n t he

compass of sect i on 401( b) ( 2) pr i or t o t he est abl i shment of an RAA,

and t hey are not governed by ERI SA subsequent t her et o. As t he DOL

Gui dance makes mani f est , t hose f unds ar e si mpl y not pl an asset s.

The pl ai nt i f f s have one f i nal shot i n t hei r sl i ng. They

say t hat even i f t he cour t bel ow appr opr i at el y det er mi ned t hat t he

r et ai ned f unds wer e not pl an asset s, i t s ul t i mat e concl usi on t hat

t he i nsur er di d not of f end sect i on 406( b) was never t hel ess

i ncor r ect. Thi s i s so, t he pl ai nt i f f s' t hesi s r uns, because t he

l i f e i nsur ance pol i ci es t hemsel ves wer e pl an asset s and t he i nsur er

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exer ci sed cont r ol r espect i ng t he management of t he pol i ci es when i t

est abl i shed t he RAAs, r et ai ned and i nvest ed t he RAA f unds t o i t s

own behoof , and deci ded how much of t he i nvest ment pr of i t t o keep

and how much t o pay i n i nt erest .

The i nsur er ' s f i r st l i ne of def ense i s t hat t hi s cl ai m

was wai ved because i t was not pr of f er ed bel ow. The pl ai nt i f f s'

di savowal poi nt s onl y to a si ngl e par agr aph i n t hei r compl ai nt .

St andi ng al one, t hi s sol i t ar y par agr aph i s t oo t hi n a r eed by whi ch

t o exor ci ze t he evi l s of wai ver . We expl ai n br i ef l y.

"Even an i ssue r ai sed i n t he compl ai nt but i gnor ed at

summary j udgment may be deemed wai ved. I f a par t y f ai l s t o asser t

a l egal r eason why summary j udgment shoul d not be grant ed, t hat

gr ound i s wai ved and cannot be consi dered or r ai sed on appeal . "

Gr eni er v. Cyanami d Pl ast i cs, I nc. , 70 F. 3d 667, 678 ( 1st Ci r .

1995) ( i nt er nal quot at i on mar ks omi t t ed) . That i s pr eci sel y what

happened her e. Af t er f i l i ng t hei r compl ai nt , t he pl ai nt i f f s di d

nothi ng t o devel op t hi s par t i cul ar cl ai m, and t he summary j udgment

paper s di scl ose no devel opment of i t . The cl ai m i s, t her ef or e,

wai ved.

Thi s br i ngs us t o t he end of t he r oad. We hol d t hat t he

f unds backi ng t he pl ai nt i f f s' RAAs wer e not , and never became, pl an

asset s. Consequent l y, t he cour t bel ow di d not er r i n hol di ng t hat

t her e was no showi ng of sel f - deal i ng suf f i ci ent t o gr ound a sect i on

406( b) cl ai m.

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C. Section 404(a).

ERI SA sect i on 404( a) pr ovi des, wi t h cer t ai n r eser vat i ons

not r el evant her e, t hat "a f i duci ar y shal l di schar ge hi s dut i es

wi t h r espect t o a pl an sol el y i n t he i nt er est of t he par t i ci pant s

and benef i ci ar i es. " 29 U. S. C. 1104( a) ( 1) . Rel at edl y, ERI SA

st i pul at es t hat

a "per son i s a f i duci ar y wi t h r espect t o apl an, " and t her ef or e subj ect t o ERI SAf i duci ar y dut i es, "t o t he ext ent " t hat he orshe "exer ci ses any di scr et i onar y aut hor i t y ordi scr et i onar y cont r ol r espect i ng management "of t he pl an, or "has any di scr et i onar yaut hor i t y or di scr et i onar y r esponsi bi l i t y i nt he admi ni st r at i on" of t he pl an.

Var i t y, 516 U. S. at 498 ( quot i ng 29 U. S. C. 1002( 21) ( A) ) . The

crux of t he pl ai nt i f f s' sect i on 404( a) cl ai ms i s t hat t he i nsur er

act ed as a f i duci ar y when set t i ng t he RAA i nt er est r at e and t hat i t

di d not set t he r at e sol el y i n t he i nt er est of t he benef i ci ar i es.

The di st r i ct cour t f ound t hi s cl ai m per suasi ve. The

cour t pr emi sed i t s concl usi on t hat t he i nsur er was act i ng as a

f i duci ar y on t he i nsur er ' s r et ent i on of di scret i on bot h "t o

det er mi ne the i nt er est r at es and ot her f eat ur es accr ui ng t o [ t he

RAAs] " and " t o awar d i t sel f t he busi ness of admi ni st er i ng t he

Pl ai nt i f f s' RAAs" whi l e r et ai ni ng t he asset s backi ng t hese

account s. Mer r i mon, 845 F. Supp. 2d at 319- 20. Wi t h t hi s pr emi se

i n pl ace, t he cour t concl uded t hat t he i nsur er , as a f i duci ar y,

"managed t he RAAs t o opt i mi ze i t s own ear ni ngs and not t o opt i mi ze

t he benef i ci ar i es' ear ni ngs. " I d. at 320. I t gr ant ed par t i al

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summary j udgment hol di ng t he i nsurer l i abl e under ERI SA sect i on

404( a) . See i d.

The i nsur er mount s a f or mi dabl e chal l enge t o t hi s

hol di ng. The cent er pi ece of i t s chal l enge i s the asser t i on t hat ,

by est abl i shi ng t he RAAs i n accor dance wi t h t he pl an document s, t he

i nsur er f ul l y di schar ged i t s f i duci ar y dut i es. Consequent l y, t he

subsequent r el at i onshi p bet ween t he i nsurer and t he benef i ci ar y was

i n t he nat ur e of a debt or - cr edi t or r el at i onshi p, gover ned not by

ERI SA but by st at e l aw. I n ot her words, when t he i nsurer i nvest ed

t he r et ai ned f unds and pai d i nt er est t o t he benef i ci ar i es, i t was

not act i ng as an ERI SA f i duci ar y.

The i nsur er ' s posi t i on makes sense, and i t i s bul war ked

by r el evant aut hor i t y. To begi n, t he DOL has st at ed expl i ci t l y

t hat a l i f e i nsur er di schar ges i t s f i duci ar y dut i es when i t r edeems

a deat h- benef i t cl ai m t hr ough t he est abl i shment of an RAA as l ong

as t hat met hod of r edempt i on i s cal l ed f or by t he pl an document s.

See DOL Gui dance at 11. We owe a measur e of def er ence t o t hi s

vi ew. See supr a Par t I I I ( A) . Thi s def er ence i s especi al l y

appr opr i at e because t he onl y t wo cour t s of appeal s t o have

addr essed the i ssue subsequent t o t he DOL' s st at ement of i t s vi ews

have r eached t he same concl usi on. See Edmonson, 725 F. 3d at 424-

26; Faber , 648 F. 3d at 104- 05.

The pl ai nt i f f s beseech us not t o f ol l ow t hese

aut hor i t i es. Thei r var i egat ed ar gument s sound t wo r el at ed t hemes.

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Fi r st , t hey asser t t hat t he i nsur er cont i nued t o act as a f i duci ar y

even af t er i t est abl i shed t he RAAs because i t cont i nued t o hol d t he

pol i cy pr oceeds i n i t s gener al account . Second, t hey asser t t hat

t he i nsur er acted as a f i duci ar y i n set t i ng t he i nt er est r at e

because t he pl an document s st i pul at ed no speci f i c i nt er est r at e.

We t r eat t hese argument s separatel y.

1. Retention of Policy Proceeds. I t i s cl ear beyond

hope of cont r adi ct i on t hat sponsors of ERI SA pl ans have

consi der abl e l at i t ude i n pl an desi gn, i ncl udi ng t he est abl i shment

of met hods f or payi ng benef i t s. See Faber , 648 F. 3d at 104 ( ci t i ng

Hughes Ai r cr af t Co. v. J acobson, 525 U. S. 432, 444 ( 1999) ) ; see

al so Cur t i ss- Wr i ght Cor p. v. Schoonej ongen, 514 U. S. 73, 78 ( 1995) .

When ERI SA deal s wi t h t he payment of benef i t s, t he t er m benef i t

"denotes t he money t o whi ch a person i s ent i t l ed under an ERI SA

pl an. " Evans v. Aker s, 534 F. 3d 65, 70 ( 1st Ci r . 2008) ( i nt er nal

quot at i on mar ks omi t t ed) . Al t hough f i duci ar y dut i es do encompass

some act s connect ed t o t he di st r i but i on of pl an benef i t s, see

Mogel , 547 F. 3d at 27, such f i duci ar y dut i es r el at e pr i nci pal l y t o

ensur i ng t hat moni es owed t o benef i ci ar i es are di sbur sed i n

accor dance wi t h t he t erms of t he pl an.

I n t hi s i nst ance, each of t he pl ans pr ovi des t hat t he

i nsur er wi l l , upon pr oof of cl ai m, pay the deat h benef i t owed by

"mak[ i ng] avai l abl e t o t he benef i ci ar y a retained asset

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account"( emphasi s i n or i gi nal ) . 4 Each pl an descr i bes an RAA as "an

i nt er est bear i ng account est abl i shed t hr ough an i nt er medi ar y bank. "

The i nsur er f ol l owed t hi s prot ocol preci sel y: i t made avai l abl e t o

each pl ai nt i f f an i nt er est - bear i ng RAA est abl i shed t hr ough an

i nt er medi ar y bank, whi ch was cr edi t ed wi t h t he f ul l amount of t he

deat h benef i t owed. No more was exi gi bl e t o car r y out t he t erms of

t he pl ans.

Once t he i nsur er f ul f i l l ed t hese r equi r ement s, i t s dut i es

as an ERI SA f i duci ary ceased. See Edmonson, 725 F. 3d at 425- 26;

Faber , 648 F. 3d at 105; DOL Gui dance at 11. There i s si mpl y no

basi s f or concl udi ng t hat ERI SA- i mposed f i duci ar y dut i es r emai ned

vel i vol ant af t er t hat poi nt . Cf . LaRocca v. Bor den, I nc. , 276 F. 3d

22, 30 ( 1st Ci r . 2002) ( expl ai ni ng t hat t he pur pose of ERI SA i s " t o

pr ot ect cont r actual l y def i ned benef i t s") . Any f ur t her obl i gat i on

t hat t he i nsur er had t o t he benef i ci ar i es "const i t ut ed a

st r ai ght f or war d credi t or - debt or r el at i onshi p. " Faber , 648 F. 3d at

105; accor d Edmonson, 725 F. 3d at 426; DOL Gui dance at 10- 11.

The pl ai nt i f f s l abor t o dul l t he f or ce of t hi s r easoni ng.

They st ar t by asseverat i ng t hat t he est abl i shment of an RAA does

not const i t ut e payment of benef i t s. But t hi s assever at i on r est s

chi ef l y on our deci si on i n Mogel , 547 F. 3d at 26; and as we al r eady

have expl ai ned, Mogel i s i napposi t e her e. See supr a Par t I I I ( B) .

4 The pl ans except deat h benef i t s t ot al i ng l ess t han $10, 000.That except i on i s not r el evant her e.

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The pl ai nt i f f s al so asseverat e t hat , under general t r ust

pr i nci pl es, " [ e] ven when a t r ust t er mi nat es, t he t r ust ee' s power s

and dut i es cont i nue unt i l t he t r ust ee del i ver s t he t r ust pr oper t y

t o t he per sons ent i t l ed t o i t . " Pl ai nt i f f s' Br . at 66. Her e,

however , t he i nsurer pai d t he deat h benef i t s t hat were owed by

del i ver i ng t o t he benef i ci ar i es an i nst r ument ( t he RAA) r equi r ed by

t he t er ms of t he pl ans. Under t he pl ans, t hat del i ver y const i t ut ed

del i ver y i n f ul l of t he pol i cy pr oceeds t o t he per son( s) ent i t l ed

t o t hose pr oceeds. Ther ef or e, t he gener al t r ust pr i nci pl es r el i ed

on by the pl ai nt i f f s do not suppor t t hei r cl ai m.

Thi s anal ysi s al so expl ai ns why t he pl ai nt i f f s'

i nsi st ence t hat t he i nsur er had t o obt ai n t he pl ai nt i f f s' i nf or med

consent bef or e i t i nvest ed t he r et ai ned f unds i s wi t hout mer i t .

Thi s ar gument , t oo, i s based on gener al t r ust pr i nci pl es; and t he

si mpl e answer t o i t i s t hat t he i nsur er was not act i ng as a

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f i duci ar y when i t i nvest ed t he r et ai ned f unds. 5 See Edmonson, 725

F. 3d at 426.

2. Setting of Interest Rate. Thi s l eaves t he second

t heme sounded by t he pl ai nt i f f s. They cont end t hat because t he

i nsur er r et ai ned di scr et i on t o set t he i nt er est r at e t o be pai d on

t he RAAs, r at e- set t i ng was a f i duci ar y act , whi ch t he i nsur er di d

not car r y out sol el y i n t he i nt er est of t he benef i ci ar i es. Cf . 29

U. S. C. 1002( 21) ( A) ( def i ni ng a pl an f i duci ar y i n t er ms of

di scret i on) . The pl ai nt i f f s' r each exceeds t hei r gr asp.

Di scr et i onar y act s t r i gger f i duci ar y dut i es under ERI SA onl y when

and t o the ext ent t hat t hey r el ate t o pl an management or pl an

asset s. See i d. ; see al so Var i t y, 516 U. S. at 498; Li vi ck v.

Gi l l et t e Co. , 524 F. 3d 24, 29 ( 1st Ci r . 2008) . I n t he

ci r cumst ances of t hi s case, t he set t i ng of t he i nt er est r at e di d

not r el at e to pl an management but , r at her , r el at ed t o the

5 The pl ai nt i f f s l aunch an ar r ay of ot her pl ai nt s based on DOLst at ement s. These st at ement s deal , i nt er al i a, wi t h t he pr act i ceof f i duci ar i es "ear n[ i ng] i nt er est f r om t he ' f l oat ' t hat occur sbet ween t he t i me a benef i t s check i s i ssued and t he t i me i t i scashed by the benef i ci ar y, " Pl ai nt i f f s' Br . at 69 ( ci t i ng U. S.Dep' t of Labor , Fi el d Assi st ance Bul l . 2002- 3, 2002 WL 34717725, at*2- 3 ( Nov. 5, 2002) ; U. S. Dep' t of Labor , Advi sory Op. No. 92- 24A,1993 WL 349627, at *1- 2 ( Sept . 13, 1993) ) , and wi t h f i duci ar i es who"pr ovi de[ ] r ecor d- keepi ng and r el at ed ser vi ces t o a def i ned

cont r i but i on pl an, " i d. at 70 ( ci t i ng U. S. Dep' t of Labor , Advi sor yOp. No. 2013- 03A, 2013 WL 3546834, at *3- 4 ( J ul y 3, 2013) ) . TheseDOL st atement s are at best t enuousl y connect ed t o t he ci r cumst ancesat hand. Thus, t hey cannot t r ump t he on- poi nt vi ews expr essed i nt he DOL Gui dance. Cf . Uni t ed St ates v. Nasci ment o, 491 F. 3d 25, 41( 1st Ci r . 2007) ( adopt i ng aut hor i t y "mor e di r ect l y on poi nt ") ;Uni t ed St at es v. Pal mer , 946 F. 2d 97, 99 ( 9t h Ci r . 1991) ( si mi l ar ) .

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management of t he RAAs. The RAAs were not pl an asset s, see Faber ,

725 F. 3d at 106, and t he set t i ng of an i nt er est r at e f or use i n

connect i on wi t h t he RAAs t hus di d not i mpl i cat e any ERI SA- r el at ed

f i duci ar y dut y, see Edmonson, 725 F. 3d at 424 n. 14; cf . DOL

Gui dance at 8 ( i ndi cat i ng t hat t he det er mi nat i on of whet her t he

di scr et i onar y set t i ng of an i nt er est r at e i mpl i cat es ERI SA depends

i n si gni f i cant par t on whet her t he i nt er est - ear ni ng asset s ar e pl an

assets).

Thi s concl usi on f ol l ows i nexor abl y f r omour hol di ng t hat

t he est abl i shment of an RAA const i t ut es payment under t he t erms of

t he pl ans. When t he i nsurer r edeems a deat h benef i t t hat i s due a

benef i ci ar y by est abl i shi ng an RAA, no ot her or f ur t her ERI SA-

r el at ed f i duci ar y dut i es at t ach. Thus, t he i nsur er ' s set t i ng of an

i nt er est r at e f or t he RAAs does not i mpl i cat e ERI SA; r at her , i t s

set t i ng of t he i nt er est r at e must be vi ewed as par t of t he

management of t he RAAs, gover ned by st at e l aw. 6 See Edmonson, 725

F. 3d at 425- 26; Faber , 648 F. 3d at 104- 05; DOL Gui dance at 11.

The Supreme Cour t ' s deci si on i n Var i t y, l oudl y brui t ed by

t he pl ai nt i f f s, does not demand a cont r ar y r esul t . Ther e, t he

Cour t was conf r ont ed wi t h an empl oyer t hat l i ed t o i t s empl oyees

about t he ef f ect of a pendi ng cor por at e r eor gani zat i on on t hei r

6 We ar e mi ndf ul t hat t he di st r i ct cour t char act er i zed whathappened her e as t he i nsur er "awar d[ i ng] i t sel f t he busi ness ofadmi ni st er i ng t he Pl ai nt i f f s' RAAs. " Mer r i mon, 845 F. Supp. 2d at319. But t hi s char act er i zat i on i s i napr opos; t he i nsur er di d nomore than car r y out t he expr ess t erms of t he pl ans.

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benef i t s. See Var i t y, 516 U. S. at 493- 94. One i ssue was whet her

t he empl oyer , i n communi cat i ng wi t h i t s wor k f or ce, was act i ng as

an ERI SA pl an admi ni st r at or or an empl oyer . See i d. at 498. I n

hol di ng t hat t he empl oyer was act i ng i n t he f or mer capaci t y, t he

Cour t not ed t hat "[ t ] her e i s mor e t o pl an ( or t r ust ) admi ni st r at i on

t han si mpl y compl yi ng wi t h t he speci f i c dut i es i mposed by the pl an

document s or st at ut or y r egi me. " I d. at 504.

Li ke bar nacl es cl i ngi ng t o t he hul l of a si nki ng shi p,

t he pl ai nt i f f s cl i ng t o t hese wor ds. Thei r r el i ance i s mi sl ai d.

Var i t y, whi ch i nvol ved a pl an admi ni st r at or t hat "si gni f i cant l y and

del i ber at el y mi sl ed t he benef i ci ar i es, " i d. at 492, i s pl ai nl y

di st i ngui shabl e. The Cour t ' s acknowl edgment t hat a pl an

admi ni st r at or may have ext r a- t ext ual f i duci ar y dut i es t hat ar e

i mpl i cated i n such par l ous ci r cumst ances does not mean t hat t hose

dut i es ar e i mpl i cat ed her e. Var i t y hel d t hat pl an admi ni st r at i on

" i ncl udes t he act i vi t i es t hat ar e or di nar y and nat ur al means of

achi evi ng t he obj ect i ve of t he pl an, " whet her or not spel l ed out i n

t he pl an. I d. ( i nt er nal quot at i on mar ks omi t t ed) . The obj ect i ve

of each of t he pl ans at i ssue her e was t he del i ver y of a guar ant eed

deat h benef i t t o t he benef i ci ar y, and t he del i ver y of t he benef i t

t hr ough t he est abl i shment of an RAA f ul f i l l ed t hat obj ect i ve. No

ot her or f ur t her f i duci ar y dut i es at t ached.

Let us be per f ect l y cl ear . Thi s case i s not about t he

des i rabi l i t y, f ai rness, or soci al ut i l i t y of ret ai ned asset

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account s. I t i s, r at her , about t he boundar i es of ERI SA. The

pl ai nt i f f s at t empt t o i nvoke ERI SA t o at t ack pr act i ces t hat f al l

out si de t he compass of t he ERI SA st at ut e. Consequent l y, t hey ar e

not ent i t l ed t o r el i ef .

IV. CONCLUSION

We need go no f ur t her . 7 The pl ai nt i f f s have not made out

t hei r cl ai ms t hat t he i nsur er br eached any of i t s ERI SA- r el at ed

f i duci ar y dut i es. Thus, we af f i r m t he di st r i ct cour t ' s or der of

par t i al summar y j udgment i n f avor of t he i nsur er wi t h r espect t o

ERI SA sect i on 406( b) and r ever se t he di st r i ct cour t ' s or der of

par t i al summar y j udgment i n f avor of t he pl ai nt i f f s wi t h r espect t o

sect i on 404( a) . Accor di ngl y, t he t r i al ( whi ch was devot ed t o

pot ent i al r el i ef ) was a nul l i t y and t he r esul t ant j udgment must be

vacat ed. To concl ude t he mat t er , we r emand t o t he di st r i ct cour t

wi t h i nst r uct i ons t o ent er j udgment i n f avor of t he i nsur er . Al l

par t i es shal l bear t hei r own cost s.

So Ordered.

7 I nasmuch as we have r esol ved t he l i abi l i t y i ssues adver sel yt o t he pl ai nt i f f s, t he ot her i ssues t hat have been br i ef ed andar gued i n connect i on wi t h t hese appeal s f al l by t he waysi de.Wi t hout except i on, t hose i ssues r el at e t o r el i ef , and we havedet er mi ned t hat t he pl ai nt i f f s ar e not ent i t l ed t o any r el i ef .

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Merrimon v. Unum Life Insurance Company, 1st Cir. (2014)

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Transcript of Merrimon v. Unum Life Insurance Company, 1st Cir. (2014)