united states district court findings and … · (id. ,r 34-35.) brandon received a bill from his...

UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

PORTLAND DIVISION

DWAYNE BRANDON,

Plaintiff, V.

HEALTH NET HEALTH PLAN OF OREGON, INC.,

Defendant.

ACOSTA, Magistrate Judge:

Case No. 3:19-cv-00356-AC

FINDINGS AND RECOMMENDATION

Plaintiff Dwayne Brandon ("Brandon"), sues Defendant Health Net Health Plan of

Oregon, Inc. ("HNOR"), under the Employee Retirement Security Act of 1974 ("ERISA"),

codified at 29 U.S.C. §§ 1001 et seq. Brandon alleges HNOR breached its fiduciary duties

under ERISA, which resulted in damages totaling $71,868.03. HNOR moves to dismiss

Brandon's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). The court has

jurisdiction over this matter pursuant to 28 U.S.C. § 1331, 28 U.S.C. § 1337, and 29 U.S.C. §

1 - FINDINGS AND RECOMMENDATION

Case 3:19-cv-00356-AC Document 21 Filed 10/29/19 of 17

1132(e). Brandon has stated a claim for relief and the equitable remedy of surcharge, and the

court recommends that Defendant's motion be DENIED.

Background

The following facts are taken from Brandon's Complaint and are assumed to be true for

the purpose of reviewing the pending motion to dismiss. See Bell Atl. Corp. v. Twombly, 550

U.S. 544, 572 (2007) ("[A] judge ruling on a defendant's motion to dismiss a complaint must

accept as true all of the factual allegations contained in the complaint.") (internal quotation and

citation omitted).

Brandon was a participant in an employer-based group health plan ("the Plan") insured by

HNOR. (Compl., ECF No. 1, ,r 7.) As an employer-based group health plan, the Plan is

governed by ERISA. (Id. ,r 8.) HNOR both insures and administers benefits under the Plan.

(Id. ,r 9.) Brandon intended to obtain services from a healthcare provider that was designated as

"out-of-network" under the Plan. (Id. ,r 12.) HNOR provides participating employee groups

with a "Member Handbook," and there also exists a "Group Contract." (Id. ,r,r 10, 20.) It is

unclear whether HNOR provides a copy of the group contract to participants, or how participants

may access that document.

Before undergoing these services, on April 18, 2018, Brandon and his wife contacted

HNOR via the telephone number provided in HNOR's Member Handbook to determine their

financial responsibility for receiving the out-of-network services. (Id. ,r,r 10-11, 13.) During

the phone call with an HNOR representative, the Brandons asked whether they correctly

understood that the calendar year out-of-pocket maximum for the Plan was $4,000, which the

HNOR representative confirmed. (Id ,r,r 14-15.) The concept of an out-of-pocket maximum



was discussed several times during the phone call. (Id. ,r 16.) The Brandons told the HNOR

representative they were trying to determine the total amount that they would have to pay for his

out-of-network surge1y. (Id. ,r 17.) The HNOR representative also recited Plan language,

which included the term "maximum allowable amount." (Id. ,r 18.) The HNOR representative

did not explain what a maximum allowable amount was or how it might affect Brandon's bill.

(Id. ,r 25.) At the conclusion of the call, the Brandons believed the maximum possible bill

would be limited to the Plan's out-of-pocket maximum. (Id. ,r 26.) The Brandons did not

understand how the Plan's maximum allowable amount provision could affect the bill for

out-of-network services. (Id. ,r 27.)

The Member Handbook does not define "maximum allowable amount," but the Group

Contract does contain that definition. (Id. ,r,r 19, 21.) The Group Contract does not state a

dollar amount that is the maximum allowable amount for any kind of procedure, but states, "You

should contact the Customer Contact Center if you wish to confirm the covered expenses for any

treatment or procedure you are considering." (Id. ,r 22.) Brandon proceeded with his

out-of-network surgery because he believed that his financial exposure would be limited to the

out-of-pocket maximum. (Id. ,r 29-30.) Brandon underwent surgery on April 30, 2018, with a

resultinghospitalstaythroughMay4,2018. (Id. ,r 31.)

Brandon was charged a total of $107,382.64 for services associated with the surgery.

(Id. ,r 33.) HNOR paid or otherwise adjusted the bill by $34,924.93 and issued an Explanation

of Benefits ("EOB") stating that the "amount not allowed" for these services, in total, was

$70,541.99. (Id. ,r 34-35.) Brandon received a bill from his provider for $71,868.03, after

accounting for payments or adjustments by HNOR. (Id. ,r 37.)



On March 8, 2019, Brandon filed this lawsuit asserting breach of fiduciary duties under

ERISA. (Compl., ECF No. 1.) On May 20, 2019, HNOR moved to dismiss Brandon's

complaint. (Defs. Mot. Dismiss, ECF No. 6.) Brandon has filed a response to HNOR's

motion (ECF No. 9), and HNOR filed its reply in support of its motion to dismiss (ECF No. 12).

Legal Standards

I. Motion to Dismiss

Under Rule 12(b)(6), a party may move to dismiss a complaint for "failure to state a claim

upon which relief can be granted." FED. R. CIV. P. 12(b)(6). A court may dismiss "'based on

the lack of cognizable legal theory or the absence of sufficient facts alleged"' under a cognizable

legal theory. UMG Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006, 1014 (9th

Cir. 2013) (quoting Balistreri v. Pacifica Police Dept, 901 F.2d 696,699 (9th Cir. 1990)).

To survive a motion to dismiss, a complaint must contain sufficient factual matter,

accepted as true, to "state a claim to relief that is plausible on its face." Twombly, 550 U.S. at

570; see also CallerID4u, Inc. v. MCI Commc'ns Servs. Inc., 880 F.3d 1048, 1061 (9th Cir.

2018). "A claim has facial plausibility 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 (2009); Teixeira v. Cty. of Alameda, 873 F.3d 670, 678 (9th

Cir. 2017). The plausibility standard is not akin to a "probability requirement," but it asks for

more than a sheer possibility that a defendant has acted unlawfully. T·wombly, 550 U.S. at 556.

When a plaintiffs complaint pleads facts that are "merely consistent with" a defendant's liability,

the plaintiffs complaint "stops short of the line between possibility and plausibility of

'entitlement to relief."' Id at 557 (brackets omitted).



The court must accept as true the allegations in the complaint and construe them in favor

of the plaintiff. Teixeira, 873 F.3d at 678; see also Iqbal, 556 U.S. at 679; Kwan v. SanMedica

Int1, 854 F.3d 1088, 1096 (9th Cir. 2017). The pleading standard under Rule 8 "does not

reqmre 'detailed factual allegations,' but it demands more than an unadorned,

the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678 (quoting Twombly,

550 U.S. at 555); see also Fed. R. Civ. P. 8(a)(2). "A pleading that offers labels and conclusions

or a formulaic recitation of the elements of a cause of action will not do." Iqbal, 556 U.S. at 678

(internal citations omitted); Kwan, 854 F.3d at 1096. A complaint also does not suffice if it

tenders "naked assertion[s]" devoid of "further factual enhancement." Twombly, 550 U.S. at

557.

IL Preliminary Procedural Matter

In support of its motion to dismiss, HNOR submitted three documents, including excerpts

from a "Large Group ( 51 +) PPO and HD HP Plan Contract," a "Copayment and Coinsurance

Schedule," and excerpts from a "Member Handbook." (Deel. Jeffery Hem Supp. HNOR Mot.

Dismiss ("Hem Deel."), Exs. A, B, & C, ECF No. 13.) Upon request of the court, HNOR also

submitted the full "Large Group (51+) PPO and HDHP Plan Contract." (Supplemental. Deel.

Jeffery Hem Supp. HNOR Mot. Dismiss ("Sup. Hem Deel.") Ex. AA, ECF No. 16.)

Additionally, Brandon references to the "Member Handbook" and "Group Contract" in his

Complaint. (Compl., ECF No. 1.)

Generally, a court may not consider material beyond the complaint when deciding a Rule

12(b)(6) motion. FED. R. Crv. P. 12(d) (explaining that if court considers other materials, the

motion is converted into a motion for summary judgment under Rule 56); see Akhtar v. Mesa,



698 F.3d 1202, 1212 (9th Cir. 2012) (quoting Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir.

2007) (per curiam)). However, a court may consider materials beyond the pleadings in certain

circumstances without converting the Rule 12(b)(6) motion into a Rule 56 motion for summary

judgment under two exceptions: judicial notice and incorporation by reference. Khoja v.

Orexigen Therapeutics, Inc., 899 F.3d 988, 998 (9th Cir. 2018); Lee v. City of Los Angeles, 250

F.3d 668, 688 (9th Cir. 2001) (discussing that a court may take judicial notice of matters of

public record without converting a motion to dismiss into a motion for summary judgment).

Judicial notice under Federal Rule of Evidence 201 permits a court to take judicial notice of

undisputed facts in matters of public record. Khoja, 899 F.3d at 999. A court may not take

judicial notice of disputed facts contained in such public records. Id.

In contrast to judicial notice, the incorporation by reference doctrine "is a judicially

created doctrine that treats certain documents as though they are part of the complaint itself." Id.

This doctrine is designed to prevent plaintiffs from selectively referencing portions of documents

that support their claims, while omitting portions of those documents that weaken "or doom"

their claims. Id. The Ninth Circuit has extended this doctrine to consider evidence on which

the complaint "necessarily relies" if: "(l) the complaint refers to the document; (2) the document

is central to the plaintiffs claim; and (3) no party questions the authenticity of the copy attached

to the 12(b)(6) motion." Marder v. Lopez, 450 F.3d 445,448 (9th Cir. 2006); Coto Settlement v.

Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 2010). The Ninth Circuit urges courts to use caution

when drawing any inferences from documents incorporated by reference on a motion to dismiss.

Khoja, 899 F.3d at 1003 (noting that the incorporation by reference doctrine is designed to

prevent artful pleading by plaintiffs, "the doctrine is not a tool for defendants to short-circuit the



resolution of a well-pleaded claim.").

In his Complaint, Brandon repeatedly refers to the Member Handbook and Group

Contract, alleges that HNOR "owed a duty to convey complete, thorough, and accurate

information," and that HNOR breached its fiduciary duty "by failing to adequately respond to

Plaintiffs request for information." (Compl. at 6.) Therefore, the court finds that the Member

Handbook and Group Contract are integral to resolution of at least some of Brandon's claims.

Farino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998) (finding a group health plan document's

terms, coverage, and administration were essential to the complaint.); Daugherty v. Presidio

Networked Solutions Group, LLC, Case No. 3:18-cv-00298-AC, 2018 WL 7118184, at *3-4 (D.

Or. Nov. 27, 2018) (incorporating by reference an attachment and employment agreement); Coto

Settlement, 593 F.3d at 1038 (finding a billing agreement was integral to resolution of claims

alleged in complaint and agreement's authenticity was not challenged). Although HNOR has

submitted these documents, neither party challenges their authenticity.

Accordingly, the court considers the Member Handbook and Group Contract (Hem Deel.

Ex. C, ECF No. 13, Sup. Hem Deel. Ex. AA, ECF No. 16) under the incorporation by reference

doctrine. The court declines to judicially notice or incorporate by reference HNOR's remaining

exhibits submitted in ECF No. 13.

Discussion

I. Claim for Breach of ERISA Fiduciary Duty

Brandon has filed a single claim against HNOR for breach of fiduciary duty under

ERISA, 29 U.S.C. § 1132(a)(3). (Compl., ECF No. 1.) HNOR moves to dismiss the claim

alleging that Brandon has not pleaded facts that HNOR is an ERISA fiduciary, that it breached its



fiduciary duty, or that the relief Brandon seeks is proper equitable relief. (HNOR Mot. Dismiss,

ECF No. 6, at 2-3.)

ERISA sets minimum standards for retirement and other benefit plans in the private

sector to provide protection for individuals in these plans. One of these protections is that

certain persons1 involved in the management of these plans have a fiduciary duty to participants

and beneficiaries of the plans. ERISA also creates a private right of action, under 29 U.S.C. §

1132(a)(3), for participants or beneficiaries to "enjoin any act or practice which violates any

provision of this subchapter or the terms of the plan, or ... to obtain other appropriate equitable

relief ... to redress such violation or ... to enforce any provisions of this subchapter or the terms

of the plan[.]"

Two elements must be satisfied for a plaintiff to prevail on a breach of fiduciary duty

claim under ERISA: (1) the defendant is an ERISA fiduciary acting in its fiduciary capacity; and

(2) the defendant violated an ERISA-imposed fiduciary obligation. Mathews v. Chevron Corp.,

362 F.3d 1172, 1178 (9th Cir. 2004). Additionally, section ll 32(a)(3) only authorizes

"appropriate equitable relief' to redress violations of subchapter I of ERIS A or terms of the plan.

29 U.S.C. § 1132(a)(3) (2018).

A. HNOR is a Plan Fiduciary

ERISA provides two methods by which a person can be regarded as a fiduciary. A

person can be explicitly named as a fiduciary in a plan, 29 U.S.C. § 1102(a)(l), or a person can

become a "functional fiduciary" when "he exercises any discretionary authority or discretionary

1 "Person" is defined under ERISA as "an individual, partnership, joint venture, corporation, mutual company, joint-stock company, trust, estate, unincorporated organization, association or



control respecting management of such plan or exercises any authority or control respecting

management or disposition of its assets ... or discretionary responsibility in the administration of

such plan." 29 U.S.C. § 1002(21)(A) (2018). Regardless of whether a person could be

regarded as a named fiduciary or a functional fiduciary, that person will become a fiduciary "only

'to the extent' that he acts in such capacity in relation to a plan." Pegram v. Herdrich, 530 U.S.

211, 225-26 (2000). Put another way, some acts are fiduciary acts, while others are not. The

threshold question is if the person was "performing a fiduciary function when taking the action

subject to complaint." Id. at 226.

Here, Brandon has not pleaded facts to establish that HNOR is a named fiduciary of its

health plan. (Compl., ECF No. 1; Resp. to Mot. To Dismiss, ECF No. 9.) Brandon points out

that 29 U.S.C. § 1102(a)(l) requires that a plan have at least one named fiduciary, but,

interestingly, neither party identifies the Plan's named fiduciary. Brandon instead argues that

HNOR is a "functional fiduciary" within the meaning of 29 U.S.C. § 1002(21)(A). The court

agrees.

The definition of a "functional fiduciary" is broad yet limited to the extent that a person is

exercising discretionary control. Yeseta v. Baima, 837 F.2d 380, 385 (9th Cir. 1988). A person

exercising purely ministerial functions is not a fiduciary within the meaning of 29 U.S.C. §

1002(2l)(A). 29 C.F.R. § 2509.75-8 (2019). Brandon alleges, and for purposes of a motion to

dismiss is taken as true, that HNOR is the Plan administrator. ERlSA also requires that certain

information be communicated to participants and beneficiaries and "shall be sufficiently accurate

and comprehensive to reasonably apprise such participants and beneficiaries of their rights and

employee organization. 29 U.S.C. § 1002(9) (2018).



obligations under the plan." 29 U.S.C. § 1022 (2018).

HNOR, as an administrator of the Plan, has exercised discretionary control in how and

what information was disseminated to Plan participants, as the author of its Member Handbook

and Group Contract. HNOR argues that any communication it conveys about benefits to plan

participants is a ministerial function. While advising a participant of his rights and obligations

under a plan is a ministerial function, HNOR is responsible for the administration of the Plan

generally, which is the hallmark of a plan fiduciary. See King v. Blue Cross and Blue Shield of

Illinois, 871 F.3d 730, 745-46 (9th Cir. 2017).

HNOR principally relies on Monper v. Boeing Co., 104 F. Supp. 3d 1170 (W.D. Wash.

2015), for its contention that it is not a fiduciary when it is communicating with participants.

Monper is distinguishable because the individuals who had misinformed the plaintiffs were listed

as defendants, in addition to plan administrators. See Monper, 104 F. Supp. 3d at 1178-84.

The court dismissed the individual defendants but held that the corporate defendants were proper

fiduciary defendants, having been generally responsible for communications to plaintiffs. See

Id. at 1183-85. For HNOR to parse out a particular flavor of communication to one of its

participants as the limit of how it can or cannot be considered a fiduciary narrows the definition

of "functional fiduciaiy" too greatly.

Part of administering the Plan, a fiduciary act, is ensuring certain disclosures and

information reach Plan participants and beneficiaries. This responsibility is exercised within the

discretion of HNOR, and for that reason the court finds HNOR to be a fiduciary within the

meaning of 29 U.S.C. § 1002(21)(A).

B. HNOR Possibly Breached its Fiduciary Duty to Brandon



ERISA requires a fiduciary to "discharge his duties with respect to a plan solely in the

interest of the participants and beneficiaries[.]" 29 U.S.C. § 1104 (a)(l) (2018). Section 1104

also establishes a "prudent man" standard of care that fiduciaries discharge their duties "with the

care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man

acting in a like capacity and familiar with such matters would use in the conduct of an enterprise

of a like character and with like aims[.]" 29 U.S.C. § 1104 (a)(l)(B). "The duty of loyalty is

one of the common law trust principles that apply to ERISA fiduciaries, and it encompasses a

duty to disclose." King, 871 F.3d at 744 (quoting Washington v. Bert Bell/Pete Rozelle NFL

Ret. Plan, 504 F.3d 818, 823 (9th Cir. 2007)). "A fiduciary has an obligation to convey

complete and accurate information to the beneficiary's circumstance, even when a beneficiary

has not specifically asked for the information." Id. (quoting Barker v. Am. Mobile Pavver Corp.,

64 F.3d 1397, 1403 (9th Cir. 1995)). "[F]iduciaries breach their duties if they mislead plan

participants or misrepresent the terms or administration of a plan." Id.

HNOR correctly points out that the alleged misinformation at issue largely surrounds one

phone call between the Brandons and one of its customer service representatives. (Def. Mot.

Dismiss, at 5.) The customer service representative cannot reasonably be regarded as a plan

fiduciary (nor does either party assert this), and HNOR cannot be held liable for the customer

service representative's alleged misrepresentation solely on the basis of respondeat superior.

See Monper, 104 F. Supp. 3d at 1181 ("[T]he Ninth Circuit has plainly signaled that common

law theories, such as respondeat superior, are not to be imported into ERISA actions[.]")

However, fiduciaries would too easily escape their own liability if simply acting through an

employee was the only condition necessary to accomplish that escape.



The Seventh and D.C. Circuits have best articulated the contours of a fiduciary's

vicarious liability for an employee's failure to disclose material information. The central inquiry

is the completeness and accuracy of the materials a plan fiduciary provides. Where plan

materials are complete and unambiguous, then a plan fiduciary has fulfilled its duty to

"ameliorate the detrimental consequences of a ministerial employee's ... misinformation." Id.

at 1182. Conversely, supplying materials that are silent or ambiguous on a topic could expose a

fiduciary to liability for the misrepresentations of an employee. Kenseth v. Dean Health Plans,

Inc., 610 F.3d 452,472 (7th Cir. 2010).

HNOR relies on Schmidt v. Sheet Metal Workers' Nat'[ Pension Fund for its argument

that it cannot be held liable for the misstatements of its employee. 128 F.3d 541, 547-48 (7th

Cir. 1997). In Schmidt, the father of the plaintiff called the benefit fund and spoke to one of its

employees, inquiring how to designate the plaintiff as the sole beneficiary upon the father's

death. Id. at 544. The employee mistakenly sent the father the wrong form, and upon the

father's death, the benefit was split evenly between plaintiff and his sister in accordance with the

rules of the fund. Id. at 544-45. Participants of the plan also had received a booklet which

explained "the only proper way to designate a death benefit beneficiary is by filing the attached

beneficiary card with the participant's local union." Id. at 545-46. The booklet also stated the

procedure that would be followed if no card was on file. Id. at 546. The court held that where

the "Trustees provide complete and correct information to participants in both the Plan itself and

in the Plan Booklet only to have a ministerial employee make a negligent misrepresentation in

response to a single question from a single participant[,]" such an allegation could not support a

claim for breach of fiduciary duty. Id. at 547-48. The court also emphasized that the



"adequacy of the relevant disclosures in the written plan materials is an important consideration

in a circumstance ... where ... a[ n] ... agent subsequently provides erroneous information in a

response to a question[.]" Id. at 548 (emphasis added).

Kenseth, and cases like it, are more instructive on the question of when ambiguity in plan

materials can give rise to breach of fiduciary duty resulting from employee misstatements. In

Kenseth, the plaintiff had called a customer service representative to inquire if an upcoming

surgery would be covered. Kenseth, 610 F.3d at 459-60. The surgery was a follow-up to a

previous procedure to treat morbid obesity, which was not covered under the plan as a related

surgery to an excluded condition. Id. at 457-60. The court found that the plan documents did

not clearly explain whether or not the plaintiffs surgery would be covered, based on the

ambiguity of a treatment being "related to" an excluded condition. Id. at 474-75. Additionally,

the court noted that plan documents invited participants to call with questions, and that no

disclaimer was given that callers could not rely on the representations of the customer service

representatives. Id. at 456.

Similarly, in Eddy v. Colonial Life Ins. Co. of America, the plaintiff called and spoke with

a customer service representative seeking information about continuing soon-to-be canceled

group coverage or converting to an individual policy. 919 F.2d 747, 748-49 (D.C. Cir. 1990).

The plaintiff had asked about continuing coverage, which he could not do, but he could have

converted coverage to an individual plan. Id. at 479-50. The customer service representative

informed the plaintiff that he could not continue his policy but was silent about his ability to

convert the soon-to-be canceled policy to an individual policy. Id. In one of its documents, the

insurance company also invited participants to call with questions. Id. at 751. The court



reasoned that once the plaintiff "made clear his situation, [the insurance company] had a duty to

provide material information." Id. at 752. On the matter of the use of the word continue versus

convert the plaintiff had no "duty to try and try again until he received correct and complete

information." Id.

In the present case, the alleged facts are much more similar to Kenseth and Eddy than to

Schmidt. The crux of Brandon's claim is that he and his wife were misled by a customer service

representative about the limit of their maximum financial liability should they choose an

out-of-network (OON) provider. Brandon alleges, based on the Member Handbook and the

phone call, that it was unclear how a "maximum allowable amount" (MAA) provision could

affect his bill, and that he believed the most he could be liable for was the Plan's "out-of-pocket

maximum" totaling $4,000. The Member Handbook defines "out-of-pocket maximum" as

"[t]he most you pay during a policy period ... after which your health coverage begins to pay

100% of the allowed amount for covered services. This limit never includes your premium or

health care charges for services your health plan doesn't cover." (Hem Deel. ex. C.) The

Member Handbook also directs paiiicipants to "[r]efer to your Plan Contract . .. for the specific

benefits that come with your health plan[,]" and provides a customer contact center phone

number should participants have questions about the Plan or its benefits. (Id.)

The Group Contract does reference MAA2 in its "out-of-pocket maximum" definition,

and also states that "[y]ou are still responsible for OON billed charges that exceed MAA." (Sup.

Hem Deel. ex. AA.) The Group Contract also defines MAA, using approximately two pages to

do so, and notably states, "For more information on the determination of MAA, or for



information, services, and tools to help you further understand your potential financial

responsibilities for Out-of-Network Services and Supplies, please log on to www.healthnet.com

or contact our Customer Contact Center at the number on your member identification card." (Id.

(emphasis added).) A factfinder could reasonably find that the language in these materials lacks

the clarity required to "ameliorate the detrimental consequences of a ministerial employee's ...

misinformation." Monper, 104 F. Supp. 3d at 1182. A factfinder could also reasonably find

that calculation of MAA and a person's potential financial liability is sufficiently complex

enough that HNOR, again, invited participants to call their customer care center to "further

understand potential financial responsibilities," which is exactly what the Brandons were

attempting to do.

For the reasons stated above, the court finds that Brandon has pleaded facts that plausibly

states a claim that HNOR breached its fiduciary duty to Brandon.

C. Surcharge is an Available Remedy

Section 1132(a)(3) allows for "appropriate equitable relief' when a fiduciary has

breached its duty to a beneficiary. 29 U.S.C. § 1132(a)(3). Appropriate equitable relief are

those categories of relief that, traditionally speaking (when the bench was split) were typically

available in equity. CIGNA Corp. v. Amara, 563 U.S. 421, 439 (2011). Amara recognized

where a beneficiary has sued a plan fiduciary, before the merger of law and equity, the suit could

have been brought only in a court of equity. Id. Any remedies available to a court of equity

would have traditionally been considered an equitable remedy. Id. at 440. One of the remedies

available to a court of equity was "surcharge" in the form of monetary compensation for a loss

2 It only references the acronym and not the long form "maximum allowable amount."



resulting from a breach of duty. Id. at 442.

HNOR argues that because Brandon has asked for relief in the form of money damages,

the requested relief must be considered legal rather than equitable. While the court agrees that a

plaintiff cannot simply request money damages and call it a surcharge remedy, asldng for money

damages does not automatically equate to seeking a legal remedy. An "appropriate equitable

remedy" does have limits, or else the modifier "equitable" would have no meaning. At a

minimum, for surcharge to be an available remedy, the suit must (1) be a beneficiary against a

plan fiduciary; and (2) there must be actual harm resulting from the fiduciary's breach. Id. at

439, 444. While detrimental reliance is not strictly a condition to obtaining a surcharge remedy,

in some contexts it may be required for the relief to be appropriate within the meaning of §

l 132(a)(3). Id. at 444; see also Skinner v. Northrop Grumman Retirement Plan B, 673 F.3d

1162, 1167 (9th Cir. 2012) ("Appellants argue that the 'harm' of being deprived of their statutory

right to an accurate SPD is a compensable hmm, but we disagree. Appellants' interpretation

would render the advisory committee strictly liable for every mistake[.]").

In the present case, merely because Brandon has requested monetary relief does not

automatically render such relief as legal, and therefore inappropriate relief under § l 132(a)(3).

Surcharge is plainly a type of equitable relief, post-Amara, that the courts may allow. Brandon

has pleaded minimum facts which, if true, show a beneficiary-fiduciary relationship, and that he

suffered actual hmm caused by reliance on representations in plan materials and a phone call to

HNOR's customer care center. Whether Brandon reasonably relied on those representations or

the level of clarity involved in the materials and phone call are factual questions that are

inappropriate to decide on a motion to dismiss. Brandon has adequately pleaded that HNOR



breached its fiduciary duty to Brandon, and adequately pleaded a plausible claim for surcharge.

Conclusion

For the reasons stated above and after careful consideration of Plaintiffs Complaint in light

of the Rule 12(b)(6) standard, Defendants' Motion to Dismiss (ECF No. 6) should be DENIED.

Scheduling Order

The Findings and Recommendation will be referred to a district judge for review.

Objections, if any, are due within fourteen (14) days. If no objections are filed, then the

Findings and Recommendation will go under advisement on that date.

If objections are filed, then a response is due fourteen (14) days after being served with a

copy of the objections. When the response is due or filed, whichever date is earlier, the Findings

and Recommendation will go under advisement.

DATED this of October, 2019.


JOHNV. ACOSTA Unite.cl States Magistrate Judge

,j


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