NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUN 2 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
IRINA MORRIS, No. 21-56169
Plaintiff-Appellant, D.C. No. 8:20-cv-00821-SB-GJS v.
AETNA LIFE INSURANCE COMPANY; MEMORANDUM* DOES, 1 through 10, inclusive,
Defendants-Appellees.
Appeal from the United States District Court for the Central District of California Stanley Blumenfeld, Jr., District Judge, Presiding
Argued and Submitted November 15, 2022 Pasadena, California
Before: WARDLAW and W. FLETCHER, Circuit Judges, and KORMAN,** District Judge.
Irina Morris appeals the district court’s judgment denying her claim that
Aetna Life Insurance Company (Aetna) breached its fiduciary duty under
§ 502(a)(3) of the Employment Retirement Income Security Act, 29 U.S.C.
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Edward R. Korman, United States District Judge for the Eastern District of New York, sitting by designation. §§ 1001, et seq. (ERISA).1 Morris argues that the district court incorrectly
concluded that Bafford v. Northrop Grumman Corp., 994 F.3d 1020 (9th Cir.
2021) forecloses her fiduciary breach claim and that the court erred in its analysis
of her potential remedies.
Following a bench trial, the district court’s conclusions of law—such as the
appropriate legal standard under ERISA—are reviewed de novo, and its findings of
fact are reviewed for clear error. Heavenly Hana LLC v. Hotel Union & Hotel
Indus. of Haw. Pension Plan, 891 F.3d 839, 844 (9th Cir. 2018). Exercising
jurisdiction under 28 U.S.C. § 1291, we reverse.
The district court erred in concluding that Bafford forecloses Morris’s claim
for fiduciary breach. To bring a successful claim for breach of fiduciary duty
under ERISA, the plaintiff must establish “(1) the defendant was a fiduciary; []
(2) the defendant breached a fiduciary duty; and (3) the plaintiff suffered
damages.” Bafford, 994 F.3d at 1026 (citing 29 U.S.C. § 1109(a)). Moreover, “the
alleged wrong must occur in connection with the performance of a fiduciary
function to be cognizable as a breach of fiduciary duty.” Id. at 1028. Thus, the
“threshold question” in cases involving fiduciary breach is whether the fiduciary
“was performing a fiduciary function[] when taking the action subject to
1 Although Morris filed a motion for reconsideration of the district court’s judgment, she appeals only the judgment. In addition, she declined to appeal her claim under ERISA § 502(a)(1)(B).
2 complaint.” Pegram v. Herdrich, 530 U.S. 211, 226 (2000).
In Bafford, we held that a third-party administrator “[c]alculating a benefit
within the framework of a policy set by another entity does not involve the
requisite discretion or control to constitute a fiduciary function.” 994 F.3d at 1028;
see also Livick v. Gillette Co., 524 F.3d 24, 29 (1st Cir. 2008); Lebahn v. Nat’l
Farmers Union Unif. Pension Plan, 828 F.3d 1180, 1185–86 (10th Cir. 2016). We
explained that the mailed, auto-generated statements the third-party administrator
sent to the Bafford plaintiffs were not discretionary acts comparable to other “well-
established fiduciary functions,” such as “issuing written plan materials like
summary plan descriptions” or providing “individualized consultations with
benefits counselors.” Bafford, 994 F.3d at 1028 (quoting In re DeRogatis, 904
F.3d 174, 192 (2d Cir. 2018)).
Here, Aetna’s actions as Morris’s named fiduciary lie well within the
category of “well-established fiduciary functions.” Id. Aetna provided Morris
with “individualized consultations with benefits counselors.” Id. In contrast to
Bafford’s use of an online mechanism to calculate benefits, id. at 1025, Aetna
ability specialists, team leaders, and customer service representatives consulted
with Morris by phone about her benefit amount numerous times; Aetna’s Long
Term Disability Benefit Manager sent letters Aetna knew Morris would share with
lenders as proof of her benefits; and Aetna communicated with Morris’s financial
3 institutions to verify her benefit amount. “[C]onveying information about the
likely future of plan benefits” through benefits counselors amounts to a fiduciary
act. Varity Corp v. Howe, 516 U.S. 489, 502 (1996); see also Bafford, 994 F.3d at
1027–28 (citing with approval Sullivan-Mestecky v. Verizon Comms. Inc., 961 F.3d
91, 104 (2d Cir. 2020)); Mathews v. Chevron Corp., 362 F.3d 1172, 1179 (9th Cir.
2004).
In addition, Aetna exercised discretion when it gathered her earnings
information, and interpreted the Plan’s terms to determine which benefits and
deductions applied. See Aetna Health Inc. v. Davila, 542 U.S. 200, 220 (2004)
(explaining that ERISA “strongly suggests that the ultimate decisionmaker in a
plan regarding an award of benefits must be a fiduciary and must be acting as a
fiduciary when determining a participant’s or beneficiary’s claim”). And it
exercised discretion when it decided—despite having knowledge that Morris had
relied on the stated benefit amount to make important financial decisions—to
immediately and aggressively collect the overpayment amount after nine years had
passed, going as far as to entirely suspend Morris’s benefits. “Any control over
disposition of plan money makes the person who has the control a fiduciary.” IT
Corp. v. Gen. Am. Life Ins. Co., 107 F.3d 1415, 1421 (9th Cir. 1997) (internal
quotation marks omitted). Although the terms of the Plan permit Aetna to collect
any overpayment amount, Aetna was not required to recoup the overpayment at all,
4 much less in the manner it did that put Morris in dire financial straits.
Aetna argues that the “action subject to complaint,” Pegram, 530 U.S. at
226, was the miscalculation, which is not a fiduciary function under Bafford. See
Bafford, 994 F.3d at 1028 (“[E]ven if Hewitt were a functional fiduciary with
respect to some of its actions, it would not have been acting as a fiduciary when
performing calculations according to the Plan formula.”). But this misreads
Bafford’s holding. Even assuming Aetna’s initial mathematical calculation is not
discretionary, its subsequent actions—which were central to Morris’s injury—
were. In fact, Morris specifically called Aetna to confirm her benefit amount
because she “d[idn’t] want to owe [Aetna] anything if an error was made.” She
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUN 2 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
IRINA MORRIS, No. 21-56169
Plaintiff-Appellant, D.C. No. 8:20-cv-00821-SB-GJS v.
AETNA LIFE INSURANCE COMPANY; MEMORANDUM* DOES, 1 through 10, inclusive,
Defendants-Appellees.
Appeal from the United States District Court for the Central District of California Stanley Blumenfeld, Jr., District Judge, Presiding
Argued and Submitted November 15, 2022 Pasadena, California
Before: WARDLAW and W. FLETCHER, Circuit Judges, and KORMAN,** District Judge.
Irina Morris appeals the district court’s judgment denying her claim that
Aetna Life Insurance Company (Aetna) breached its fiduciary duty under
§ 502(a)(3) of the Employment Retirement Income Security Act, 29 U.S.C.
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Edward R. Korman, United States District Judge for the Eastern District of New York, sitting by designation. §§ 1001, et seq. (ERISA).1 Morris argues that the district court incorrectly
concluded that Bafford v. Northrop Grumman Corp., 994 F.3d 1020 (9th Cir.
2021) forecloses her fiduciary breach claim and that the court erred in its analysis
of her potential remedies.
Following a bench trial, the district court’s conclusions of law—such as the
appropriate legal standard under ERISA—are reviewed de novo, and its findings of
fact are reviewed for clear error. Heavenly Hana LLC v. Hotel Union & Hotel
Indus. of Haw. Pension Plan, 891 F.3d 839, 844 (9th Cir. 2018). Exercising
jurisdiction under 28 U.S.C. § 1291, we reverse.
The district court erred in concluding that Bafford forecloses Morris’s claim
for fiduciary breach. To bring a successful claim for breach of fiduciary duty
under ERISA, the plaintiff must establish “(1) the defendant was a fiduciary; []
(2) the defendant breached a fiduciary duty; and (3) the plaintiff suffered
damages.” Bafford, 994 F.3d at 1026 (citing 29 U.S.C. § 1109(a)). Moreover, “the
alleged wrong must occur in connection with the performance of a fiduciary
function to be cognizable as a breach of fiduciary duty.” Id. at 1028. Thus, the
“threshold question” in cases involving fiduciary breach is whether the fiduciary
“was performing a fiduciary function[] when taking the action subject to
1 Although Morris filed a motion for reconsideration of the district court’s judgment, she appeals only the judgment. In addition, she declined to appeal her claim under ERISA § 502(a)(1)(B).
2 complaint.” Pegram v. Herdrich, 530 U.S. 211, 226 (2000).
In Bafford, we held that a third-party administrator “[c]alculating a benefit
within the framework of a policy set by another entity does not involve the
requisite discretion or control to constitute a fiduciary function.” 994 F.3d at 1028;
see also Livick v. Gillette Co., 524 F.3d 24, 29 (1st Cir. 2008); Lebahn v. Nat’l
Farmers Union Unif. Pension Plan, 828 F.3d 1180, 1185–86 (10th Cir. 2016). We
explained that the mailed, auto-generated statements the third-party administrator
sent to the Bafford plaintiffs were not discretionary acts comparable to other “well-
established fiduciary functions,” such as “issuing written plan materials like
summary plan descriptions” or providing “individualized consultations with
benefits counselors.” Bafford, 994 F.3d at 1028 (quoting In re DeRogatis, 904
F.3d 174, 192 (2d Cir. 2018)).
Here, Aetna’s actions as Morris’s named fiduciary lie well within the
category of “well-established fiduciary functions.” Id. Aetna provided Morris
with “individualized consultations with benefits counselors.” Id. In contrast to
Bafford’s use of an online mechanism to calculate benefits, id. at 1025, Aetna
ability specialists, team leaders, and customer service representatives consulted
with Morris by phone about her benefit amount numerous times; Aetna’s Long
Term Disability Benefit Manager sent letters Aetna knew Morris would share with
lenders as proof of her benefits; and Aetna communicated with Morris’s financial
3 institutions to verify her benefit amount. “[C]onveying information about the
likely future of plan benefits” through benefits counselors amounts to a fiduciary
act. Varity Corp v. Howe, 516 U.S. 489, 502 (1996); see also Bafford, 994 F.3d at
1027–28 (citing with approval Sullivan-Mestecky v. Verizon Comms. Inc., 961 F.3d
91, 104 (2d Cir. 2020)); Mathews v. Chevron Corp., 362 F.3d 1172, 1179 (9th Cir.
2004).
In addition, Aetna exercised discretion when it gathered her earnings
information, and interpreted the Plan’s terms to determine which benefits and
deductions applied. See Aetna Health Inc. v. Davila, 542 U.S. 200, 220 (2004)
(explaining that ERISA “strongly suggests that the ultimate decisionmaker in a
plan regarding an award of benefits must be a fiduciary and must be acting as a
fiduciary when determining a participant’s or beneficiary’s claim”). And it
exercised discretion when it decided—despite having knowledge that Morris had
relied on the stated benefit amount to make important financial decisions—to
immediately and aggressively collect the overpayment amount after nine years had
passed, going as far as to entirely suspend Morris’s benefits. “Any control over
disposition of plan money makes the person who has the control a fiduciary.” IT
Corp. v. Gen. Am. Life Ins. Co., 107 F.3d 1415, 1421 (9th Cir. 1997) (internal
quotation marks omitted). Although the terms of the Plan permit Aetna to collect
any overpayment amount, Aetna was not required to recoup the overpayment at all,
4 much less in the manner it did that put Morris in dire financial straits.
Aetna argues that the “action subject to complaint,” Pegram, 530 U.S. at
226, was the miscalculation, which is not a fiduciary function under Bafford. See
Bafford, 994 F.3d at 1028 (“[E]ven if Hewitt were a functional fiduciary with
respect to some of its actions, it would not have been acting as a fiduciary when
performing calculations according to the Plan formula.”). But this misreads
Bafford’s holding. Even assuming Aetna’s initial mathematical calculation is not
discretionary, its subsequent actions—which were central to Morris’s injury—
were. In fact, Morris specifically called Aetna to confirm her benefit amount
because she “d[idn’t] want to owe [Aetna] anything if an error was made.” She
then communicated with Aetna for nearly a month to determine whether it had
applied the correct offset amount, after which a Senior LTD Claim Analyst sent
her a letter confirming the $4,113.17 figure.
Had any Aetna representative taken any step to actually verify the validity of
the benefits amount it repeatedly communicated, Aetna could have avoided any
overpayment, much less the catastrophic amount that resulted. Instead, Aetna
repeatedly affirmed the erroneous benefit amount directly to Morris and her
lenders for almost a decade, permitting Morris to take out mortgages, obtain
mortgage refinancing, negotiate a divorce settlement, and pay taxes, all on the
basis that she was entitled to a higher income. Much more than “a clerical
5 employee typ[ing] an erroneous code onto a computer screen,” IT Corp., 107 F.3d
at 1420, the extent of Aetna’s involvement in Morris’s financial life distinguishes
her case from the ministerial calculation error addressed in Bafford. Accordingly,
Aetna was performing a fiduciary function in its communications with and
representations to Morris.2
REVERSED and REMANDED.
2 We remand for consideration of whether Aetna breached its fiduciary duty to Morris, given that Aetna performed a fiduciary function. See Planned Parenthood of Greater Wash. & N. Idaho v. U.S. Dep’t of Health & Human Servs., 946 F.3d 1100, 1110 (9th Cir. 2020) (“In general, an appellate court does not decide issues that the trial court did not decide.”). And because that issue remains unresolved, we do not reach the question whether the district court erred when it found that she was not entitled to estoppel or waiver, or when it failed to adjudicate her surcharge and reformation claims.