Guenther v. Lockheed Martin Corp.

• Decision Date: 25 August 2020
• Docket Number: Nos. 17-16984,18-15823,s. 17-16984
• Citation: 972 F.3d 1043
• Parties: Charles GUENTHER, Plaintiff-Appellant, v. LOCKHEED MARTIN CORPORATION; Lockheed Martin Corporation Retirement Plan for Certain Salaried Employees, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

972 F.3d 1043

Charles GUENTHER, Plaintiff-Appellant,

v.LOCKHEED MARTIN CORPORATION; Lockheed Martin Corporation Retirement Plan for Certain Salaried Employees, Defendants-Appellees.

Nos. 17-16984

18-15823

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 11, 2019

Submission Vacated June 13, 2019

Resubmitted August 18, 2020 San Francisco, California

Filed August 25, 2020

Andrew F. Pierce (argued), Pierce & Shearer LLP, Redwood City, California, for Plaintiff-Appellant.

Clarissa A. Kang (argued), R. Bradford Huss, and Dylan D. Rudolph, Trucker Huss APC, San Francisco, California, for Defendants-Appellees.

Stephanie B. Bitto (argued), Trial Attorney; Thomas Tso, Counsel for Appellate and Special Litigation; G. William Scott, Associate Solicitor for Plan Benefits Security; Kate S. O'Scannlain, Solicitor of Labor; Office of the Solicitor, United States Department of Labor, Washington, D.C.; for Amicus Curiae United States Secretary of Labor.

Before: Ronald M. Gould, Sandra S. Ikuta, and Ryan D. Nelson, Circuit Judges.

R. NELSON, Circuit Judge:

This appeal arises from a fiduciary's alleged breach of its duty to make accurate representations to a beneficiary under the Employee Retirement Income Security Act of 1974 ("ERISA"). Specifically, we determine whether the beneficiary had actual knowledge of the alleged breach and failed to bring suit within the statute of limitations prescribed under ERISA. Because the record establishes that the beneficiary had actual knowledge of the alleged breach and failed to bring suit within the required three-year period, we hold his claim is time-barred.

I

Appellant Charles Guenther began working for Lockheed Martin Corporation ("LMC") in 1983. From 1983 to 1991, he was an active participant in the company's retirement plan (the "Plan"), a defined benefit pension plan. He left LMC in 1991, but returned to work for the company again in 1997 and was able to "bridge" his previously accrued service credit under the Plan with his new service credit—meaning that upon starting his new term of employment with LMC, he was credited for his prior eight years of accumulated service under the Plan and could resume where he left off—in accordance with the Plan provisions in effect at the time.¹

In 2001, Guenther left LMC for the second time, having accrued approximately 11.5 years of credited service under the Plan. While Guenther was employed elsewhere, the Plan was amended in 2005 (the "Plan Amendment"). The Plan Amendment provided that "no person who is re-employed by [LMC] on or after January 1, 2006 shall become an active Participant or earn Credited Service under the Plan with respect to any period commencing with such reemployment." Under the Plan Amendment, therefore, returning LMC employees hired after January 1, 2006, could participate in a different retirement plan—the Capital Accumulation Plan ("CAP")—but could not participate in or resume accruing additional credited service under the Plan.

In 2006, Guenther began negotiations with an LMC human resources representative to return to work for the company. Prior to interviewing with LMC, Guenther heard a "rumor" that the company "was going to be changing around their [retirement] plan." This was an important issue for Guenther. So during the negotiations that followed, he made clear that one of his "key conditions" of returning was that his "prior service be bridged so that he could receive the full benefit of the company's defined benefit retirement plan." The LMC representative indicated it was possible to bridge his prior service with his proposed new service, as Guenther had done when he previously returned to LMC in 1997, and provided him a form entitled "Application for Bridging of Prior Service," which Guenther submitted to LMC on July 17, 2006. The bridging form stated in part: "If your request is approved, the date you submit this application is the effective date that your current period of service will bridge with your prior service." On July 25, 2006, LMC Pension Plan Operations replied to his bridging request form in a letter (the "July Letter"), stating in relevant part:

Since you were vested in a pension benefit provided by the Lockheed Martin Corporation Retirement Plan for Certain Salaried Employees, your prior periods of Lockheed/Lockheed Martin service will be bridged with your proposed current Lockheed Martin service.

According to Guenther, this was the only communication from LMC that he believed told him he would be accruing ongoing credited service in the Plan. No other retirement plan (including CAP) was brought to his attention at that time. The next month, Guenther terminated his then-existing employment, and then rejoined LMC in September.

After rejoining LMC, Guenther received a November 7, 2006 letter (the "November Letter") from LMC Pension Plan Operations which stated, in part, the following:

Since you were vested in a pension benefit provided by the Lockheed Martin Corporation Retirement Plan for Certain Salaried Employees, your prior periods of Lockheed/Lockheed Martin service will be bridged with your current Lockheed Martin service. Consequently, your accrued benefit under the Capital Accumulation Plan has immediately become vested because the combined total of your Lockheed Martin controlled group service exceeds five years.

It should be noted that because you are not currently participating in a Lockheed Martin defined benefit pension plan, you are not entitled to a pension benefit from Lockheed Martin for your current period of service.

Guenther was "surprise[d]" by this letter because he believed it contradicted LMC's assurance in the July Letter that he could bridge his prior service under the Plan. Guenther had checked his account numerous times online after he started at LMC in September to see whether he had begun accumulating time for his pension. No accumulated time was ever indicated. He stopped checking his account online once he received the November Letter.

Soon after receiving the November Letter, he contacted LMC's Employment Service Center ("ESC") to ask about the status of his pension, but was told the bridging issue was handled by CitiStreet, LMC's employer benefits service provider. CitiStreet then instructed him to contact ESC, which he did again, but "got the run around." In late November, after several more calls, Guenther asked to speak with someone at LMC's Human Relations office, but the person he was referred to was not there and did not return his calls. In December, Guenther visited a different Human Relations office and showed the program HR Representative the July and November Letters and asked for an explanation. The HR Representative thanked him for bringing the matter to her attention but never followed up. The record does not indicate that Guenther had any further communication with LMC regarding his pension plan for more than three years.

In 2009, Guenther spoke with another LMC employee who was hired several months before him. That employee indicated that he, like Guenther, had received a similar letter promising bridging but was later informed that his credited service under the Plan would not bridge. After speaking with his manager, Guenther contacted the ESC again in March 2010 but received no information regarding the specifics of his plan. However, the ESC did discuss information from a Plan Amendment provision with him, stating that employees "[n]ewly or rehired on or after January 1, 2006 will not participate in [the] defined pension benefit plan." He later asked the legal department for a point of contact but was again told to contact HR.

Guenther never received additional credited service for his third period of employment with LMC, leaving his years of credited service at 11.5. Guenther was never given a plan summary or any other indication that he could appeal the issue to anyone other than those he had already contacted.

On November 8, 2010, Guenther filed his complaint ("FAC") against LMC alleging breach of contract and ERISA claims to recover benefits, and the case was removed to federal court. The district court dismissed his breach of contract claim and granted summary judgment on the ERISA claim in favor of LMC. On appeal, we affirmed the district court's determination, but remanded the case because Guenther alleged sufficient facts to raise a previously unasserted ERISA claim against LMC for breach of fiduciary duty under Section 1132(a)(3). Guenther v. Lockheed Martin Corp ., 646 F. App'x 567, 570 (9th Cir. 2016) (unpublished) (remanding to consider "whether [LMC] breached a fiduciary duty and, if so, whether Guenther is entitled to surcharge as a remedy").

On remand, Guenther filed a Second Amended Complaint ("SAC") pursuing the Section 1132(a)(3) claim for equitable relief in the form of surcharge—that is, monetary recovery for losses resulting from a fiduciary breach. See CIGNA Corp. v. Amara , 563 U.S. 421, 440–42, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011) (recognizing equitable estoppel, reformation, and surcharge as the three types of equitable relief available under Section 1132(a)(3)). Guenther alleged LMC breached its fiduciary duty "to make accurate and correct representations concerning [Guenther's] ability to obtain additional service credit under the Plan after rehire." Specifically, he alleged LMC misrepresented the Plan by inducing him (and allegedly others) to return to work for LMC by "granting" his pre-hire bridging application while failing to disclose to him that the Plan Amendment barred him from bridging his additional credited service. LMC raised an affirmative defense that his claim was barred by the statute of limitations governing breach of fiduciary duty.

The district court granted LMC's motion for summary judgment, finding Guenther's claim barred by the statute of limitations. The court found that Guenther obtained "actual knowledge" of the breach when he received the November Letter from LMC, more than three years...