Lee v. Verizon Commc'ns, Inc.

• Decision Date: 15 September 2016
• Docket Number: No. 14-10553,14-10553
• Citation: 837 F.3d 523
• Parties: William Lee, Individually, and as Representatives of plan participants and plan beneficiaries of the Verizon Management Pension Plan; Joanne McPartlin, Individually, and as Representatives of plan participants and plan beneficiaries of the Verizon Management Pension Plan; Edward Pundt, Plaintiffs-Appellants v. Verizon Communications, Incorporated; Verizon Corporate Services Group, Incorporated; Verizon Employee Benefits Committee; Verizon Investment Management Corporation; Verizon Management Pension Plan, Defendants-Appellees
• Court: U.S. Court of Appeals — Fifth Circuit

837 F.3d 523

William Lee, Individually, and as Representatives of plan participants and plan beneficiaries of the Verizon Management Pension Plan; Joanne McPartlin, Individually, and as Representatives of plan participants and plan beneficiaries of the Verizon Management Pension Plan; Edward Pundt, Plaintiffs-Appellants

v.Verizon Communications, Incorporated; Verizon Corporate Services Group, Incorporated; Verizon Employee Benefits Committee; Verizon Investment Management Corporation; Verizon Management Pension Plan, Defendants-Appellees

No. 14-10553

United States Court of Appeals, Fifth Circuit.

September 15, 2016

Curtis L. Kennedy, Denver, CO, Robert E. Goodman, Jr., Esq., Kilgore & Kilgore, P.L.L.C., Dallas, TX, Karen L. Handorf, Esq., Michelle C. Yau, Cohen Milstein Sellers & Toll, P.L.L.C., Washington, DC, for Plaintiffs-Appellants.

Christian James Pistilli, Thomas Leon Cubbage, III, Jeffrey George Huvelle, Covington & Burling, L.L.P., Washington, DC, for Defendants-Appellees.

Before BENAVIDES, SOUTHWICK, and COSTA, Circuit Judges.

ON REMAND FROM THE UNITED STATES SUPREME COURT

FORTUNATO P. BENAVIDES, Circuit Judge:

This court previously affirmed the dismissal of Plaintiffs-Appellants' claims against Defendants-Appellees for violations of The Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 –1461 (“ERISA”). See Lee v. Verizon Commc'ns, Inc. , 623 Fed.Appx. 132, 134 (5th Cir. 2015) (unpublished). Our affirmance was driven, in part, by the determination that Plaintiff-Appellant Edward Pundt (“Pundt”), representative of one of the two certified classes of Verizon pension-plan participants, lacked Article III standing to sue for purported fiduciary misconduct pursuant to ERISA § 409(a), 29 U.S.C. § 1109(a). Id. at 147. Specifically, we held that “standing for defined-benefit plan participants requires imminent risk of default by the plan, such that the participant's benefits are adversely affected,” and we noted that Pundt failed to “allege the realization of risks which would create a likelihood of direct injury to participants' benefits” in this case. Id. at 148–49. We thus concluded that any direct harm to Pundt was “too speculative to support standing.” Id. at 149. We also rejected Pundt's argument that “he directly suffered constitutionally cognizable injury through invasion of his ... statutory rights [under ERISA] to proper [p]lan management,” concluding that standing based on invasion of a statutory right must still “aris[e] from de facto injury, which is not alleged by a breach of fiduciary duty.” Id.

Pundt filed a petition for writ of certiorari in the United States Supreme Court. The Supreme Court subsequently decided Spokeo, Inc. v. Robins , –––U.S. ––––, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016), which clarified the relationship between concrete harm and statutory violations for purposes of assessing Article III standing. After deciding Spokeo, the Supreme Court granted Pundt's petition for writ of certiorari, vacated our judgment in this case, and remanded the case to this court for further consideration in light of Spokeo. Pundt v. Verizon Commc'ns, Inc. , ––– U.S. ––––, 136 S.Ct. 2448, 195 L.Ed.2d 260 (2016). We requested and received supplemental briefing from both sides regarding the impact of Spokeo.

There is only one narrow question for us to consider on remand: namely, whether Spokeo affects our previous conclusion that a plaintiff's bare allegation of incursion on the purported statutory right to “proper plan management” under ERISA is insufficient to meet the injury-in-fact prong of Article III standing. We believe this conclusion remains as valid in light of Spokeo as it was before Spokeo was decided.

The Supreme Court reaffirmed in Spokeo that violation of a procedural right granted by statute may in some circumstances be a sufficiently concrete, albeit intangible, harm to constitute injury-in-fact without an allegation of “any additional harm beyond the one Congress has identified.” 136 S.Ct. at 1549. However, the Supreme Court also took care to note that “Congress'[s] role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Id. Rather, “Article III standing requires a concrete injury even in the context of a statutory violation.” Id. Put differently, the deprivation of a right created by statute must be accompanied by “some concrete interest that is affected by the deprivation.” Id. (quoting Summers v. Earth Island Inst. , 555 U.S. 488, 496, 129 S.Ct. 1142, 173 L.Ed.2d 1 (2009) ). Thus, Spokeo recognizes that at minimum, a “concrete” intangible injury based on a statutory violation must constitute a “risk of real harm” to the plaintiff. Id.

Spokeo maps surprisingly well onto the present case: in Spokeo, the Supreme Court held that a bare allegation of a Fair Credit Reporting Act violation based on inaccurate reporting of consumer information was insufficient to establish injury-in-fact, as “not all inaccuracies cause harm or present any material risk of harm.” Id. at 1550. In the same way, we recognized in this case that Pundt's allegation of an “invasion of [a] statutory right[ ] to proper [p]lan management” under ERISA was not alone sufficient to create standing where there was no allegation of a real risk that Pundt's defined-benefit-plan payments would be affected. In short, because Pundt's “concrete interest” in the plan—his right to payment—was not alleged to be at risk from the purported statutory deprivation, Pundt had not suffered an injury that was sufficiently “concrete” to confer standing. We declined to hold that the mere allegation of fiduciary misconduct in violation of ERISA, divorced from any allegation of risk to defined-benefit-plan participants' actual benefits, could constitute de facto injury sufficient to establish constitutional standing.

Pundt argues on remand that Spokeo requires consideration of historical practice in determining whether an intangible harm constitutes injury-in-fact, Id. at 1549, and thus this court should find that Pundt has standing based on common-law trust principles. However, Spokeo 's recognition of history as an important consideration in Article III standing analysis is not new. Indeed, the Supreme Court has “often said that history and tradition offer a meaningful guide to the types of cases that Article III empowers federal courts to consider.” Sprint Commc'ns Co., L.P. v. APCC Servs., Inc. , 554 U.S. 269, 274, 128 S.Ct. 2531, 171 L.Ed.2d 424 (2008). In other words, the Supreme Court's view that history can provide a useful metric for identifying intangible harms was “often” invoked prior to Spokeo, yet Pundt failed to raise his trust-law theory in the district court and did not press it in his opening brief to this court beyond making a passing reference to “historical authorities.” Spokeo thus gives us no occasion to revisit an issue that Pundt did not adequately raise and that Spokeo did not affect, and we reject Pundt's statutory-injury argument for the same reason we identified in our original opinion: a de facto injury is not alleged by reference to fiduciary misconduct under ERISA alone. See David v. Alphin , 704 F.3d 327, 336–37 (4th Cir. 2013) (rejecting trust-law argument and concluding that defined-benefit-plan participants lacked Article III standing to sue based solely on deprivation of statutory right).

Pundt also contends that the judgment of Congress supports finding standing in this case, as Congress's expressed concern in enacting ERISA was to protect “the interests of participants in employee benefit plans....” 29 U.S.C. § 1001(b). As we explained in our original opinion, however, a defined-benefit-plan participant's “interest[ ]” in the plan is his “nonforfeitable right only to” the “defined level of benefits” established under the plan. Hughes Aircraft Co. v. Jacobson , 525 U.S. 432, 440, 119 S.Ct. 755, 142 L.Ed.2d 881 (1999). We once again decline to “conflat[e] the concepts of statutory and constitutional standing” by holding that incursion on a statutorily-conferred interest in “proper plan management” is sufficient in itself to establish Article III standing. Lee , 623 Fed.Appx. at 149. A bare allegation of improper defined-benefit-plan management under ERISA, without concomitant allegations that any defined benefits are even potentially at risk, does not meet the dictates of Article III; concluding otherwise would vitiate the Supreme Court's explicit pronouncement that “Article III standing requires a concrete injury even in the context of a statutory violation.” Spokeo , at 1549 ; see also Kendall v. Emps. Ret. Plan of Avon Prods. , 561 F.3d 112, 120 (2d Cir. 2009) (“The statute does impose a general fiduciary duty to comply with ERISA, but it does not confer a right to every plan participant to sue the plan fiduciary for alleged ERISA violations without a showing that they were injured by the alleged breach of the duty.”), abrogated in part on other grounds as recognized in Am. Psychiatric Ass'n v. Anthem Health Plans, Inc. , 821 F.3d 352, 359 (2d Cir. 2016) ; Fletcher v. Convergex Grp. LLC , 164 F. Supp. 3d 588, 591, No. 13–CV–9150, 2016 WL 690889, at *3 (S.D.N.Y Feb. 17, 2016) (noting that Kendall “firmly rejected [the] argument that defendants' violation of their statutory duties under ERISA is in and of itself an injury in fact to [the plaintiff]”).

Having addressed the only issue that is even arguably implicated by Spokeo, we need not consider the remaining arguments raised by Pundt on remand. To the extent Pundt advances a distinct theory of standing based on the pursuit of injunctive relief, that argument has been waived. See United States v. McRae , 795 F.3d 471, 479 (5th Cir. 2015) (“[A]n argument not raised at the district court or in the appellant's opening brief is waived....”...