Lebahn v. Nat'l Farmers Union Unif. Pension Plan

828 F.3d 1180

Trent Lebahn; Wendy Lebahn, Plaintiffs–Appellants

v.National Farmers Union Uniform Pension Plan; Pension Committee of the National Farmers Union Uniform Pension Plan; National Farmers Union Pension Consultants, Defendants–Appellees.

No. 15–3201

United States Court of Appeals, Tenth Circuit.

July 11, 2016

Randall K. Rathbun, Depew Gillen Rathbun & McInteer, LC, Wichita, Kansas, for Plaintiffs–Appellants.

Jessica L. Skladzien, Lewis Brisbois Bisgaard & Smith, Wichita, Kansas (Alan L. Rupe, Lewis Brisbois Bisgaard & Smith, Wichita, Kansas, on the brief), for Defendants–Appellees.

Before HOLMES, MURPHY, and BACHARACH, Circuit Judges.

BACHARACH, Circuit Judge.

This appeal involves claims under the Employee Retirement Income Security Act of 1974, commonly known as ERISA. Invoking ERISA, Mr. Trent Lebahn and his wife claim that a pension-plan consultant breached a fiduciary duty by misstating the amount of the monthly pension payments that Mr. Lebahn would receive if he were to retire. But under ERISA, the plan consultant could be considered a fiduciary only if she exercised discretionary authority over the plan's administration. On appeal, we ask: Does a consultant exercise discretionary authority in administering the plan simply by making a calculation of benefits at the request of a plan participant? We conclude that a consultant does not exercise discretionary authority under these circumstances.

I. The plan consultant's computation error resulted in Mr. Lebahn's premature retirement, prompting Mr. Lebahn to sue.

Hoping to retire, Mr. Lebahn contacted Ms. Eloise Owens, a consultant hired by his company's pension plan, to ask what his monthly pension payment would be. Ms. Owens told Mr. Lebahn that if he retired soon, he would be entitled to $8,444.18 per month. At Mr. Lebahn's request, Ms. Owens checked her calculations and assured Mr. Lebahn that the figure she had quoted was correct. Mr. Lebahn then retired and soon began receiving monthly checks of $8,444.18.

But Ms. Owens' calculations proved to be too good to be true. Shortly after Mr. Lebahn retired, a representative of the pension plan contacted Mr. Lebahn and told him that he was being overpaid by almost $5,000 per month. A pension-plan attorney then told Mr. Lebahn that he would need to return over $43,000 in overpayments that he had already received. Unable to retire on his true pension benefit of $3,653.78 per month, Mr. Lebahn tried to go back to work, but he was unable to find a suitable job.

Mr. Lebahn and his wife then sued under ERISA.¹ The Lebahns alleged that in incorrectly representing Mr. Lebahn's benefits and failing to pay Mr. Lebahn in accordance with those representations, the pension plan, the pension committee, and “National Farmers Union Pension Consultants” incurred ERISA liability under theories of breach of fiduciary duty and equitable estoppel. On the defendants' motion, the district court dismissed the complaint for failure to state a valid claim. The Lebahns appeal this dismissal, and we affirm.

II. We affirm the dismissal of the Lebahns' claims for breach of fiduciary duty and equitable estoppel.

On appeal, the Lebahns challenge the dismissal of their claims for breach of fiduciary duty and equitable estoppel. We reject each challenge.

We first address the Lebahns' claim for breach of fiduciary duty. For this claim, the Lebahns must show that the defendants were ERISA fiduciaries. Although Ms. Owens is not named as a defendant, the Lebahns argue that she was a fiduciary of the plan, rendering the named defendants liable for Ms. Owens' breach of her fiduciary duty.² The district court rejected this position on the ground that Ms. Owens had not acted as an ERISA fiduciary when calculating pension benefits. We agree: Because Ms. Owens lacked discretionary authority in administering the pension plan, she lacked fiduciary status. And in the absence of fiduciary status of the wrongdoer, the claim for breach of fiduciary duty was properly dismissed.

The Lebahns' claim of equitable estoppel was also properly dismissed. In dismissing this claim, the district court reasoned that the Lebahns had failed to plead facts satisfying two of the five elements of equitable estoppel: awareness of the true facts and justifiable reliance. On appeal, the Lebahns do not challenge the district court's conclusion that they failed to adequately plead justifiable reliance. Because the Lebahns fail to challenge one of the grounds relied on by the district court, we affirm the dismissal of the equitable estoppel claim.

III. Our review of the dismissal is de novo.

We review de novo a dismissal under Federal Rule of Civil Procedure 12(b)(6), applying the same legal standard used by the district court. Mocek v. City of Albuquerque , 813 F.3d 912, 921 (10th Cir.2015). Under that standard, we inquire whether the complaint contains factual allegations that “state a claim to relief that is plausible on its face.” Khalik v. United Air Lines , 671 F.3d 1188, 1190 (10th Cir.2012) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). It is not enough for the plaintiff to plead “labels and conclusions” or to provide “a formulaic recitation of the elements of a cause of action.” Khalik , 671 F.3d at 1190-91 (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ).³

IV. The Lebahns failed to plead facts showing that Ms. Owens was a plan fiduciary.

The Lebahns argue that Ms. Owens was a plan fiduciary under ERISA. We disagree.

A. ERISA's definition of a functional fiduciary requires discretionary authority or discretionary responsibility over plan administration.

To plead a breach of fiduciary duty, the Lebahns must adequately allege fiduciary status of the wrongdoer. ERISA § 409, 29 U.S.C. § 1109(a) (rendering personally liable “[a]ny person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter”). In their complaint, the Lebahns alleged that Ms. Owens was responsible for calculating and reporting pension benefits. That responsibility, the Lebahns argue, is sufficient to characterize Ms. Owens as a plan fiduciary under ERISA. We disagree. In our view, calculating and reporting pension benefits, without more, does not establish fiduciary status under ERISA.

There are two types of ERISA fiduciaries: named fiduciaries and functional fiduciaries. 29 U.S.C. § 1102(a) (named fiduciaries); 29 U.S.C. § 1002(21)(A) (functional fiduciaries). The Lebahns invoke only the functional-fiduciary provision.

Although the functional-fiduciary provision prescribes three means of becoming a functional fiduciary, the Lebahns focus on only one of these⁴ : “[A] person is a fiduciary with respect to a plan to the extent ... he has any discretionary authority or discretionary responsibility in the administration of such plan.” 29 U.S.C. § 1002(21)(A).⁵ Under this provision, fiduciary status requires authority or responsibility that is discretionary, which entails “the freedom to decide what should be done in a particular situation.” “Discretion,” New Oxford American Dictionary (3d ed. 2010). In our view, conducting a routine computation, as required by one's job, does not inherently require discretion. See Schmidt v. Sheet Metal Workers' Natl. Pension Fund , 128 F.3d 541, 546-47 (7th Cir.1997) (holding that an employee who sent the wrong form to a pension beneficiary, causing the beneficiary to forfeit his pension benefits, was not a fiduciary because the employee's tasks were “ministerial”).

The Department of Labor has expressed the same view in two interpretive bulletins discussing the functional-fiduciary provision, § 1002(21)(A).

In 29 C.F.R. § 2509.75–8, the Department of Labor noted that a person who performs administrative functions, such as calculating benefits, does not automatically have discretionary authority and does not become a fiduciary without something more:

Only persons who perform one or more of the functions described in [§ 1002(21)(A) ] with respect to an employee benefit plan are fiduciaries. Therefore, a person who performs purely ministerial functions such as the types described above [which include “calculation of benefits” and “[p]rocessing of claims”] for an employee benefit plan within a framework of policies, interpretations, rules, practices and procedures made by other persons is not a fiduciary because such person does not have discretionary authority or discretionary control respecting management of the plan, does not exercise any authority or control respecting management or disposition of the assets of the plan, and does not render investment advice with respect to any money or other property of the plan and has no authority or responsibility to do so.

29 C.F.R. § 2509.75–8 at D–2.

Similarly, in 29 C.F.R. § 2509.75–5, the Department of Labor interpreted the functional-fiduciary provision to exclude from fiduciary status persons who

• provide legal, accounting, actuarial, or consulting services but

• lack discretionary authority and do not offer investment advice to the plan.

29 C.F.R. § 2509.75–5 at D–1.

In these two interpretive bulletins, the Department of Labor expressed the view that typical consulting services—which would include the calculation of pension benefits—are not per se discretionary.

The Lebahns dispute this reading of the statute, arguing that one can become a fiduciary by conveying information about plan benefits to a plan beneficiary. But the statutory provision at issue restricts fiduciary status to acts involving authority or responsibility to engage in a discretionary act of plan administration. See 29 U.S.C. §...