Albrecht v. Committee On Employee Benefits

• Decision Date: 10 February 2004
• Docket Number: No. 02-5325.,02-5325.
• Citation: 357 F.3d 62
• Parties: Anne K. ALBRECHT, et al., Appellants, v. COMMITTEE ON EMPLOYEE BENEFITS OF THE FEDERAL RESERVE EMPLOYEE BENEFITS SYSTEM, et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 62

357 F.3d 62

Anne K. ALBRECHT, et al., Appellants, v. COMMITTEE ON EMPLOYEE BENEFITS OF THE FEDERAL RESERVE EMPLOYEE BENEFITS SYSTEM, et al., Appellees.

No. 02-5325.

United States Court of Appeals, District of Columbia Circuit.

Argued November 21, 2003.

Decided February 10, 2004.

Appeal from the United States District Court for the District of Columbia (No. 00cv00317).

Philip J. McNutt argued the cause for appellants. With him on the briefs were Michael P. Bentzen, Nicholas Woodfield, Glenn A. Mitchell, and David U. Fierst.

Paul J. Ondrasik Jr. argued the cause for appellees. With him on the brief were Katherine H. Wheatley, Assistant General Counsel, Board of Governors of the Federal Reserve System, Morgan D. Hodgson, and Alice E. Loughran.

Before: GINSBURG, Chief Judge, and ROGERS and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge:

Claiming breach of fiduciary duty and unjust enrichment, employees of the Board of Governors of the Federal Reserve System seek the return of mandatory contributions that they made into a defined-benefit pension plan after actuaries determined the plan was well-funded. They also seek to terminate their obligation to make future contributions. The district court dismissed the claims for lack of jurisdiction and for failure to state a claim. We affirm.

I.

The Federal Reserve System, composed principally of the Board of Governors and the twelve regional Federal Reserve Banks, provides a retirement plan for all of its employees. The retirement package encompasses two distinct pension plans, the "Board Plan" — the one at issue in this case — and the "Bank Plan." Both are defined-benefit plans that, regardless of investment performance, entitle beneficiaries to fixed periodic payments upon retirement. The Board and regional Banks bear the risk of any funding deficiency: if the plans become underfunded, the employers must make up the difference and pay the promised benefits.

The difference between the two plans stems from a change in Social Security coverage of federal employees. Federal Reserve Board employees hired before January 1, 1984, pay no Social Security taxes and receive no Social Security benefits with respect to their employment with the Board. To cover the retirement needs of these employees, the Board of Governors created the Board Plan. As a condition of employment, employees hired before January 1, 1984, made mandatory payroll contributions into the Plan, set at seven percent of salary.

In 1983, Congress amended the Social Security Act to extend coverage to Board employees hired on or after January 1, 1984. See Social Security Amendments of 1983, Pub.L. No. 98-21, 97 Stat. 65 (1983). For these employees, and for all regional Bank employees, the Board created the Bank Plan. That Plan requires no employee contributions, but unlike employees covered by the Board Plan, those covered by the Bank Plan pay Social Security taxes and their retirement payments are adjusted to account for their Social Security benefits.

Appellants, a putative class of current and former Board employees hired before January 1, 1984, allege that for each of the past twenty years, the Board Plan actuary determined that the Plan had more than sufficient assets to satisfy liabilities, including both benefits and administrative expenses. According to appellants, retirement plan annual reports show that Board Plan assets were 132% of projected and accrued liabilities in 1984 and were 167% of such liabilities in 1994. Based on these actuarial estimates, the Board has not contributed to the Board Plan since 1985.

Citing these developments, appellants asked the Executive Secretary, the Plan's chief administrative officer, "for a refund or suspension of mandatory employee contributions." Letter from Comm. on Appeals, J.A. at 71. The Executive Secretary denied their request, and the Committee on Appeals, the entity charged with deciding disputes regarding the payment of benefits, affirmed. The Committee explained that because the claim involved not benefits, but rather a disagreement over the pension plan's design, neither the Executive Secretary nor the Committee on Appeals had authority to resolve the matter.

Appellants then filed suit in the U.S. District Court for the District of Columbia, seeking recovery of all contributions made since the actuary deemed the Board Plan sufficiently funded plus the investment return on those contributions. They also sought an injunction prohibiting the Board from requiring further payments into the pension plan. Appellants argued that by refusing to exercise their discretion to reduce mandatory contributions, the Board of Governors and the Committee on Employee Benefits (CEB), the Plan's administrator, breached their fiduciary duties to beneficiaries. Appellants also alleged that after the death of the last beneficiary, Board Plan surplus funds would revert to the Board or to the Bank Plan, thereby unjustly enriching the Board or the regional Banks. Appellants made several other claims, alleging breach of contract, unconstitutional taking, and age discrimination.

In the first of two opinions, the district court dismissed these last three claims, a dismissal that appellants do not challenge. See Albrecht v. Comm. on Employee Benefits of the Fed. Reserve Employee Benefits Sys., No. 00-317, slip op. at 9-12, 15-18 (D.D.C. Mar. 30, 2001). Finding that only the Board of Governors has authority to modify the mandatory contribution level, the court also dismissed the fiduciary duty claims against the CEB. Id. at 8. In the second opinion, the district court dismissed the remaining claims. See Albrecht v. Comm. on Employee Benefits of the Fed. Reserve Employee Benefits Sys., No. 00-317, slip op. at 16-17 (D.D.C. Sept. 17, 2002). The court determined that the Board enjoyed sovereign immunity, id. at 7-8, and that because appellants' fiduciary duty claim was essentially a breach of contract action, it could be brought only in the U.S. Court of Federal Claims under the Tucker Act, id. at 13. In the alternative, the district court held that appellants failed to state a claim for breach of fiduciary duty. Id. at 14-15. The court also dismissed the unjust enrichment claim, concluding that such a claim may not be brought where, as here, a contract governs the challenged conduct. Id. at 15-16. Finally, because the request for injunctive relief rested solely on the failed claims, the district court dismissed it as well. Id. at 17.

In this appeal, we must decide (1) whether the Board enjoys sovereign immunity against the breach of fiduciary duty claim, and if so, whether any statute waives that immunity, and (2) whether appellants properly stated a claim for unjust enrichment against the Board and the regional Banks. Reviewing the district court's decisions de novo, see Ass'n of Civilian Technicians, Inc. v. Fed. Labor Relations Auth., 283 F.3d 339, 341 (D.C.Cir. 2002) (de novo review of dismissal for lack of subject matter jurisdiction); Browning v. Clinton, 292 F.3d 235, 242 (D.C.Cir. 2002) (de novo review of dismissal for failure to state a claim), we consider each issue in turn.

II.

We begin with appellants' effort to escape the consequences of the district court's conclusion that the Board enjoys sovereign immunity. Despite naming the Board of Governors as a defendant, appellants insist that they sued not the Board of Governors, the governmental entity composed of seven individuals appointed by the President and confirmed by the Senate to formulate monetary policy, see 12 U.S.C. § 241 (2000), but rather a so-called "Plan Board" — a nongovernmental entity composed of those same seven individuals that has authority over the pension plan but performs no governmental functions. Setting aside that the Board Plan expressly identifies the Board of Governors as the entity with authority to modify the employee contribution level and that nothing in the Board Plan suggests the existence of an alternative "Plan Board," the Board points out that appellants never made this argument in the district court and that the claim is therefore waived. Conceding that their complaint nowhere refers to a "Plan Board," appellants urge us to consider this newly raised argument, asserting that we did so in similar circumstances in United States v. Rapone, 131 F.3d 188 (D.C.Cir. 1997). In that case, we decided that although the defendant failed to bring the relevant statute to the district court's attention, we would consider his argument that he was statutorily entitled to a jury trial, emphasizing that the defendant was "not attempting to raise the issue of a jury trial for the first time on appeal," but instead offering "new legal authority for the position that he repeatedly advanced before the district court — that he was entitled to have his case tried before a jury." Id. at 196. By contrast, appellants here present not new legal authority for an argument raised in the district court, but rather an entirely new argument — that the defendant is not the "Board of Governors" identified in the complaint. We thus agree with the Board that the argument is waived. See, e.g., District of Columbia v. Air Fla., Inc., 750 F.2d 1077, 1084 (D.C.Cir.1984).

Appellants also claim that the Committee on Employee Benefits is a proper defendant. According to appellants, the CEB has authority to modify the employee contribution level, and it breached its fiduciary duty by refusing to reduce required contributions. Although appellants did name the CEB in their complaint, we agree with the district court that only the Board possesses such authority. Section 7.1 of the Board Plan states: "The Board of Governors may increase or decrease the current seven percent (7%) required Mandatory Contribution upon sixty (60) days prior notice to Current Participants." Benefit Structure for Employees of the Bd. of Governors of the Fed. Reserve Sys. Hired Prior to ...