Peralta v. Hispanic Business, Inc.

Decision Date18 August 2005
Docket NumberNo. 03-57000.,03-57000.
Citation419 F.3d 1064
PartiesCarmen PERALTA, Plaintiff-Appellant, v. HISPANIC BUSINESS, INC., Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

Ester R. Sorkin, Ball & Yorke, Ventura, CA, for the plaintiff-appellant.

Stephen E. Ronk, Christopher E. Hawk, Gordon & Rees, LLP, Los Angeles, CA, for the defendant-appellee.

Appeal from the United States District Court for the Central District of California; Cormac J. Carney, District Judge, Presiding. D.C. No. CV-03-00540-CJC.

Before: TROTT and W. FLETCHER, Circuit Judges, and RESTANI,* Judge.

RESTANI, Judge:

Carmen Peralta appeals the district court's grant of summary judgment in favor of her former employer, Hispanic Business, Inc. ("HBI"). Peralta alleges that HBI breached its fiduciary duty as an ERISA plan administrator by failing to inform her in a timely manner that her ERISA benefit plan for long-term disability insurance had been cancelled. The district court found that any state law claims were preempted by ERISA and that the remedy sought was not available under ERISA. On appeal, Peralta asserts that subject matter jurisdiction is lacking or, in the alternative, that an ERISA violation occurred and a remedy exists. We conclude that we have jurisdiction and affirm the grant of summary judgment in favor of defendant.

FACTS

In October 1998, Carmen Peralta began work as a special events manager for HBI, a publisher of business magazines. As part of an effort to enhance its benefits package, HBI introduced a new long-term disability insurance policy ("LTD policy"), effective January 1, 1999, at no cost to its employees, which automatically covered "all regular employees who work[ed] 30 or more hours per week." Letter from HBI (Dec. 28, 1998), ER at 101. The LTD policy was an employee benefits plan, as defined by ERISA, and Peralta was a beneficiary of the plan. In July 2000, Maureen Girouard, the then-Human Resources ("HR") Manager at HBI, wrote to the LTD policy carrier to cancel the policy.

On October 10, 2000, Peralta, while still employed at HBI, was involved in an automobile accident and suffered serious injuries. Believing that she was covered under HBI's LTD policy, Peralta attempted to make a claim for long-term disability benefits. But as the policy had already been cancelled, no benefits were paid.

At the time of Peralta's accident, June Wozny was HBI's HR manager. Wozny was in charge of the administration of HBI's employee benefits plan, and one of her projects was to take "a good hard look at the current benefit plan" and try to improve the benefits package, in an attempt to reduce HBI's high employee turnover. Wozny Dep. (July 29, 2003), ER at 48. During Wozny's investigation into the existing HBI benefits, she discovered, based on "a file, a printed material... E-mail or [something] in someone's handwriting, that [someone] had cancelled this long-term disability[policy]."1 Id. at 50. As a result, Wozny sent out an email, on October 18, 2000, informing all HBI employees that the LTD policy had been "cancelled inadvertently" in July 2000 "[b]ecause of some communication errors."2 Id. During her deposition, Wozny admitted that prior to these discoveries, based on a summary of HBI's employee benefit plans, she was under the assumption that HBI had an LTD in place. Peralta, who had been in the hospital since October 10, 2000, was initially not aware of Wozny's email. By the time she left the hospital at the end of October 2000, however, Peralta had learned of the cancellation of the LTD policy, which she later verified with the HR manager.

On October 4, 2002, Peralta filed suit in federal district court, alleging breach of fiduciary duty by HBI under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001, et seq.3 Peralta claimed that she had relied on HBI's LTD policy and, believing that she was already covered, did not purchase outside insurance. She further claimed that HBI had a fiduciary duty to "provide complete and accurate information about the status of the employee benefits plan," which included "providing notice of the discontinuation or suspension of coverage." Complaint (Oct. 4, 2002), ER at 2. According to Peralta, HBI violated its fiduciary duty to give adequate notice by intentionally concealing the fact that it had cancelled the LTD policy. Peralta sought either an order reinstating her LTD benefits, or, in the alternative, other orders that would provide substantive relief equivalent to the reinstatement of the LTD benefits.

On August 21, 2003, HBI moved for summary judgment on numerous grounds, including that (1) HBI provided adequate notice of the LTD policy cancellation, pursuant to ERISA's notice requirement, see 29 U.S.C. §§ 1022(a)-(b), 1024(b)(1) (2000); (2) Peralta's request for a reinstatement of LTD benefits or substantive relief equivalent to the reinstatement of benefits would be a compensatory monetary recovery not permitted under Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204, 210-11, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002), for a procedural ERISA breach; and (3) even if monetary recovery for a procedural ERISA breach were possible, it would not be available to Peralta because HBI committed no egregious action.4

On October 16, 2003, the district court granted summary judgment for HBI, concluding that no remedy was available. The court stated that "[p]ursuant to Great-West ... and its progeny, Plaintiff may not use the equitable enforcement mechanisms of ERISA to secure compensatory relief for HBI's alleged breach of fiduciary duty." Order Granting Def.'s Mot. For Summ. J. (Oct. 16, 2003), ER at 316. The court reasoned that because the LTD policy had been cancelled and was no longer in effect, Peralta's requested relief "must be compensatory in nature, and thus, outside the scope of the equitable enforcement mechanisms of ERISA 29 U.S.C. § 1132(a)(3)." Id. On October 29, 2003, the court ordered that the "Plaintiff take nothing and that the action be dismissed on the merits." Judgment (Oct. 29, 2003), ER at 319. Peralta now appeals.

DISCUSSION
I. Subject Matter Jurisdiction

The parties dispute whether subject matter jurisdiction exists. Although this issue was first presented to the district court at the hearing on the summary judgment motion, and not addressed in the district court's order, we must still determine whether federal jurisdiction exists. See Freeman v. Jacques Orthopaedic & Joint Implant Surgery Med. Group, Inc., 721 F.2d 654, 655 (9th Cir.1983) (explaining that "it is this court's duty to see to it that the [d]istrict [c]ourt's jurisdiction, defined and limited by statute, is not exceeded"). We review the existence of subject matter jurisdiction de novo. Millers Nat'l Ins. Co. v. Axel's Express, Inc., 851 F.2d 267, 269 (9th Cir.1988).

In civil cases, subject matter jurisdiction is generally conferred upon federal district courts either through diversity jurisdiction, 28 U.S.C. § 1332, or federal question jurisdiction, 28 U.S.C. § 1331. There is no diversity jurisdiction here because Peralta and HBI are both California citizens. The sole federal question in Peralta's complaint arises from her disability claims under ERISA, 29 U.S.C. § 1001, et seq., which preempts state law claims that "relate to" an employee benefit plan. See 29 U.S.C. § 1144(a).

The complaint filed in the district court makes quite clear that Peralta seeks remedies based on a breach of fiduciary duty by an administrator of an ERISA plan. There is no doubt, and the parties do not dispute, that the LTD policy at issue was an ERISA welfare benefit plan.5 There is also no doubt or dispute that HBI was an ERISA fiduciary.

In previous cases, while we have found no ERISA preemption with respect to certain claims that are only loosely related to ERISA, in none of those cases did an ERISA plan exist under which the plaintiff sought benefits based on a breach of fiduciary duty by the plan's administrator, as is the case here. For example, we have at times found insufficient relation to the benefit plan for preemption to attach. See, e.g., Winterrowd v. Am. Gen. Annuity Ins. Co., 321 F.3d 933, 937-39 (9th Cir.2003) (no ERISA preemption because there was no ERISA plan); Curtis v. Nevada Bonding Corp., 53 F.3d 1023, 1027-29 (9th Cir.1995) (no ERISA preemption because plaintiff never became eligible to receive benefits under the plan); Harris v. Provident Life & Accident Ins. Co., 26 F.3d 930, 933 (9th Cir.1994) (no ERISA jurisdiction because, at the time of filing suit, the former employee, was not a participant in employer's ERISA health care plan); Delaye v. Agripac, Inc., 39 F.3d 235, 238 (9th Cir.1994) (no ERISA jurisdiction because employment contract is not a plan governed by ERISA); Scott v. Gulf Oil Corp., 754 F.2d 1499, 1505-06 (9th Cir.1985) (no ERISA preemption of employees' prospective benefits claim based on the employer's failure to negotiate coverage with the successive employer, which prevented the existence of a plan).

Recently, in Providence Health Plan v. McDowell, 385 F.3d 1168 (9th Cir.2004), cert. denied, ___ U.S. ___, 125 S.Ct. 1726, 161 L.Ed.2d 602, and cert. denied, ___ U.S. ___, 125 S.Ct. 1735, 161 L.Ed.2d 602 (2005), we concluded that an ERISA provider's breach of contract claim against a participant for failure to reimburse it from a third-party settlement was not preempted by ERISA. 385 F.3d at 1171-73. The reimbursement claim in that case did not "relate to" the plan because adjudication of the claim required no interpretation of the plan, no distribution of benefits, and no dispute regarding any benefits previously paid. Id. at 1172 (explaining that when evaluating whether a claim "relates to" a plan governed by ERISA, "the focus is whether the claim is premised on the existence of an ERISA plan, and whether the existence of the plan is essential to the...

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