UNITED STATES COURT OF APPEALS for the Fifth Circuit
_____________________________________
No. 94-50089 _____________________________________
SELF-INSURANCE INSTITUTE OF AMERICA, INC.,
Plaintiff-Appellee,
VERSUS
CLAIRE KORIOTH, ET AL.,
Defendants-Appellants.
______________________________________________________
Appeals from the United States District Court for the Western District of Texas ______________________________________________________
(May 22, 1995)
ON PETITIONS FOR REHEARING (Opinion September 15, 5th Cir. 1994, 32 F.3d 175)
Before LAY,1 DUHÉ, and DeMOSS, Circuit Judges.
DUHÉ, Circuit Judge:
Defendants-Appellants, certain state officials of Texas, ask
that we reverse an award of back taxes and attorneys' fees against
them and in favor of Self-Insurance Institute of America (SIIA).
SIIA, an association whose members include self-insured ERISA plan
sponsors and third party administrators, sued to enjoin enforcement
of a maintenance tax on contract administrators of insurance plans
(Tex. Ins. Code art. 21.07-6 (West Supp. 1995)) against ERISA
plans, plan sponsors, and third-party administrators. The district
court held that ERISA preempted the state tax law, enjoined the
1 Circuit Judge of the 8th Circuit, sitting by designation. State Defendants from enforcing or threatening to enforce article
21.07-6 with respect to ERISA plans and ERISA administrators,
ordered a refund of taxes and fees paid by ERISA plans or
administrators under article 21.07-6, and awarded attorneys' fees.
Conceding the equitable relief, Defendants have appealed only the
refund order and attorneys' fee award. Upon cross-petitions for
rehearing, the panel withdrew its opinion. 44 F.3d 245 (5th Cir.
1995). On rehearing, we vacate both the refund order and the
attorneys' fee award.
I.
In an earlier appeal this Court determined that SIIA, as a
plaintiff seeking injunctive relief from state regulation on the
basis of federal preemption, has presented a federal question, and
that SIIA met requirements for associational standing to seek
injunctive and declaratory relief on behalf of its members. Self-
Insurance Inst. of Am. v. Korioth, 993 F.2d 479 (5th Cir. 1993).
In addition to enjoining Defendants from enforcing the state tax
law, the district court on remand ordered Defendants to refund
taxes and fees paid by SIIA members.2 Defendants challenge the
refund order as being improperly beyond the scope of the
associational standing approved for SIIA.
We agree. The panel of the first appeal approved SIIA's
associational standing noting, "[I]t is undeniable that SIIA's
2 The judgment appealed provides in part "that the Defendants must refund any taxes and/or fees paid by any self-funded ERISA plan, employer/sponsor of such a plan, or contract administrator of such a plan, as result of the attempted or threatened application of these articles of the Texas Insurance Code." 3 R. 564.
2 individual members need not participate in the litigation.
Therefore SIIA is properly in a position to represent its members
in a representative capacity and has standing to do so." Self-
Insurance, 993 F.2d at 484-85. Though an association may have
standing to seek "a declaration, injunction, or some other form of
prospective relief" on behalf of its members, it does not enjoy
standing to seek damages for monetary injuries peculiar to
individual members where the fact and extent of injury will require
individualized proof. Warth v. Seldin, 422 U.S. 490, 515-16
(1975).
As conceded by SIIA at oral argument, a refund cannot be
litigated without the individual participation of SIIA's members.3
In view of the State's continuing authority to tax non-ERISA
administration through article 21.07-6, each member of SIIA must
show the extent to which it administers ERISA-governed plans or
non-ERISA-governed insurance plans before a court could determine
refund eligibility and amount. See NGS Am., Inc. v. Barnes, 998
3 SIIA also conceded that state rather than federal proceedings are the proper forum for the members seeking refunds. It became apparent at argument that SIIA wants us to uphold the refund order, not because it desires to obtain a federal money judgment on remand, but because of dissatisfaction with the state remedy for obtaining a refund. With a federal order of refund, SIIA could threaten contempt if the State through dilatory tactics or burdensome requirements frustrates the members' attempts to obtain their refunds through the state administrative procedure. Texas provides an administrative remedy for an administrator seeking a refund but none of the members of SIIA have pursued it yet. In the present posture of this case, SIIA's concerns about the efficacy of Texas administrative procedures for refunds are not before us. We will not countenance SIIA's efforts to obtain a federal order of refund to use as a preemptive strike in state administrative proceedings.
3 F.2d 296, 300 (5th Cir. 1993) (affirming an injunction against
collection of the article 21.07-6 tax from third-party
administrators, but only in their capacities as administrators of
ERISA-governed plans; noting that Commissioner may enforce the tax
against third-party administrators in their capacity as
administrators of non-ERISA governed plans).
Though SIIA enjoys associational standing to seek injunctive
relief, we conclude that to obtain refund relief, each member of
SIIA who claims a refund must be a party. SIIA therefore has no
standing to claim a refund on its members' behalf. See Warth, 422
U.S. at 516; see also United Steelworkers of Am. v. University of
Ala., 599 F.2d 56, 59 (5th Cir. 1979) (recognizing Union's standing
to seek declaratory and injunctive relief, but no standing to seek
money damages on behalf of members where damages are not common to
entire membership nor shared by all in equal degree). We conclude
that the refund order exceeds the scope of SIIA's associational
standing and vacate the refund order.4
II.
In its motion for attorneys' fees, SIIA invoked an ERISA
provision for a fee award by an ERISA "participant, beneficiary, or
fiduciary." 29 U.S.C.A. § 1132(g)(1)(West 1985). Defendants argue
that the court erred in awarding attorneys' fees because it had
4 Defendants have also argued that the court erred by ordering the state Defendants to pay tax refunds at all because of the Eleventh Amendment sovereign immunity of states. With vacatur of the refund order, the judgment does not call for Defendants to pay money. We therefore do not reach the question whether the order of refund would offend the Eleventh Amendment.
4 previously found that SIIA was not an ERISA participant,
beneficiary, or fiduciary. We agree.
SIIA is not an entity enumerated in § 1132(g)(1); it had
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UNITED STATES COURT OF APPEALS for the Fifth Circuit
_____________________________________
No. 94-50089 _____________________________________
SELF-INSURANCE INSTITUTE OF AMERICA, INC.,
Plaintiff-Appellee,
VERSUS
CLAIRE KORIOTH, ET AL.,
Defendants-Appellants.
______________________________________________________
Appeals from the United States District Court for the Western District of Texas ______________________________________________________
(May 22, 1995)
ON PETITIONS FOR REHEARING (Opinion September 15, 5th Cir. 1994, 32 F.3d 175)
Before LAY,1 DUHÉ, and DeMOSS, Circuit Judges.
DUHÉ, Circuit Judge:
Defendants-Appellants, certain state officials of Texas, ask
that we reverse an award of back taxes and attorneys' fees against
them and in favor of Self-Insurance Institute of America (SIIA).
SIIA, an association whose members include self-insured ERISA plan
sponsors and third party administrators, sued to enjoin enforcement
of a maintenance tax on contract administrators of insurance plans
(Tex. Ins. Code art. 21.07-6 (West Supp. 1995)) against ERISA
plans, plan sponsors, and third-party administrators. The district
court held that ERISA preempted the state tax law, enjoined the
1 Circuit Judge of the 8th Circuit, sitting by designation. State Defendants from enforcing or threatening to enforce article
21.07-6 with respect to ERISA plans and ERISA administrators,
ordered a refund of taxes and fees paid by ERISA plans or
administrators under article 21.07-6, and awarded attorneys' fees.
Conceding the equitable relief, Defendants have appealed only the
refund order and attorneys' fee award. Upon cross-petitions for
rehearing, the panel withdrew its opinion. 44 F.3d 245 (5th Cir.
1995). On rehearing, we vacate both the refund order and the
attorneys' fee award.
I.
In an earlier appeal this Court determined that SIIA, as a
plaintiff seeking injunctive relief from state regulation on the
basis of federal preemption, has presented a federal question, and
that SIIA met requirements for associational standing to seek
injunctive and declaratory relief on behalf of its members. Self-
Insurance Inst. of Am. v. Korioth, 993 F.2d 479 (5th Cir. 1993).
In addition to enjoining Defendants from enforcing the state tax
law, the district court on remand ordered Defendants to refund
taxes and fees paid by SIIA members.2 Defendants challenge the
refund order as being improperly beyond the scope of the
associational standing approved for SIIA.
We agree. The panel of the first appeal approved SIIA's
associational standing noting, "[I]t is undeniable that SIIA's
2 The judgment appealed provides in part "that the Defendants must refund any taxes and/or fees paid by any self-funded ERISA plan, employer/sponsor of such a plan, or contract administrator of such a plan, as result of the attempted or threatened application of these articles of the Texas Insurance Code." 3 R. 564.
2 individual members need not participate in the litigation.
Therefore SIIA is properly in a position to represent its members
in a representative capacity and has standing to do so." Self-
Insurance, 993 F.2d at 484-85. Though an association may have
standing to seek "a declaration, injunction, or some other form of
prospective relief" on behalf of its members, it does not enjoy
standing to seek damages for monetary injuries peculiar to
individual members where the fact and extent of injury will require
individualized proof. Warth v. Seldin, 422 U.S. 490, 515-16
(1975).
As conceded by SIIA at oral argument, a refund cannot be
litigated without the individual participation of SIIA's members.3
In view of the State's continuing authority to tax non-ERISA
administration through article 21.07-6, each member of SIIA must
show the extent to which it administers ERISA-governed plans or
non-ERISA-governed insurance plans before a court could determine
refund eligibility and amount. See NGS Am., Inc. v. Barnes, 998
3 SIIA also conceded that state rather than federal proceedings are the proper forum for the members seeking refunds. It became apparent at argument that SIIA wants us to uphold the refund order, not because it desires to obtain a federal money judgment on remand, but because of dissatisfaction with the state remedy for obtaining a refund. With a federal order of refund, SIIA could threaten contempt if the State through dilatory tactics or burdensome requirements frustrates the members' attempts to obtain their refunds through the state administrative procedure. Texas provides an administrative remedy for an administrator seeking a refund but none of the members of SIIA have pursued it yet. In the present posture of this case, SIIA's concerns about the efficacy of Texas administrative procedures for refunds are not before us. We will not countenance SIIA's efforts to obtain a federal order of refund to use as a preemptive strike in state administrative proceedings.
3 F.2d 296, 300 (5th Cir. 1993) (affirming an injunction against
collection of the article 21.07-6 tax from third-party
administrators, but only in their capacities as administrators of
ERISA-governed plans; noting that Commissioner may enforce the tax
against third-party administrators in their capacity as
administrators of non-ERISA governed plans).
Though SIIA enjoys associational standing to seek injunctive
relief, we conclude that to obtain refund relief, each member of
SIIA who claims a refund must be a party. SIIA therefore has no
standing to claim a refund on its members' behalf. See Warth, 422
U.S. at 516; see also United Steelworkers of Am. v. University of
Ala., 599 F.2d 56, 59 (5th Cir. 1979) (recognizing Union's standing
to seek declaratory and injunctive relief, but no standing to seek
money damages on behalf of members where damages are not common to
entire membership nor shared by all in equal degree). We conclude
that the refund order exceeds the scope of SIIA's associational
standing and vacate the refund order.4
II.
In its motion for attorneys' fees, SIIA invoked an ERISA
provision for a fee award by an ERISA "participant, beneficiary, or
fiduciary." 29 U.S.C.A. § 1132(g)(1)(West 1985). Defendants argue
that the court erred in awarding attorneys' fees because it had
4 Defendants have also argued that the court erred by ordering the state Defendants to pay tax refunds at all because of the Eleventh Amendment sovereign immunity of states. With vacatur of the refund order, the judgment does not call for Defendants to pay money. We therefore do not reach the question whether the order of refund would offend the Eleventh Amendment.
4 previously found that SIIA was not an ERISA participant,
beneficiary, or fiduciary. We agree.
SIIA is not an entity enumerated in § 1132(g)(1); it had
associational standing only because its members were. See 3 R. 532
(district court's finding that SIIA not an enumerated entity);
Self-Insurance, 993 F.2d at 481-84 (finding federal question
jurisdiction notwithstanding fact that suit was not authorized by
ERISA § 1132(g)(1) conferring standing upon participants,
beneficiaries, and fiduciaries only); id. at 484 (upholding SIIA's
standing because its members were fiduciaries). Because the
statute authorizes attorneys' fees only in favor of the enumerated
entities, we will not expand the privilege to include a party with
associational standing. See Runyon v. McCrary, 427 U.S. 160, 185
(1976) (requiring "explicit Congressional authorization" to alter
the "American Rule" that attorneys' fees are not a recoverable cost
of litigation); Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421
U.S. 240, 247 (1975) (recognizing that some fee-shifting statute
must apply in order to alter the American Rule). ERISA does not
support a fee award in favor of SIIA.
SIIA alternatively argues that fees are authorized under the
Declaratory Judgment Act, 28 U.S.C.A. § 2201-02 (West 1994).
Section 2201, which authorizes federal courts to grant declaratory
relief, plainly does not grant a right to fees. Also, § 2202, the
provision authorizing "further necessary or proper relief"5 in a
5 28 U.S.C. § 2202 provides in full, "Further necessary or proper relief based on a declaratory judgment or decree may be granted, after reasonable notice and hearing, against any adverse party
5 declaratory action, does not provide statutory authority for an
award of attorneys' fees. Mercantile Nat'l Bank v. Bradford Trust
Co., 850 F.2d 215, 218 (5th Cir. 1988).
SIIA makes much of a statement in Mercantile that § 2202 does
not authorize a fee award "that would not otherwise be available
under state law in a diversity action." Id. SIIA contends that
this statement allows us to consider whether the Texas Declaratory
Judgment Act (DJA) would grant SIIA a right to fees. We disagree,
because the Texas DJA is inapplicable. Jurisdiction in this case
is under 28 U.S.C.A. § 1331 (West 1993) (federal question
jurisdiction), not diversity where state law applies. Mercantile
recognizes that a party may recover fees in a federal declaratory
judgment action where "controlling substantive law" permits such
recovery. Mercantile, 850 F.2d at 216, 217. The Texas DJA is
neither substantive nor controlling.
SIIA having failed to show its entitlement to fees under an
applicable fee-shifting statute, we vacate the award of attorneys'
fees in SIIA's favor.
III.
We vacate the refund order because SIIA's individual members'
entitlement to refunds involves questions beyond which SIIA was
granted standing to litigate. Because no statute authorizes a fee
award, we vacate the fee award as well. SIIA's additional request
for attorneys' fees in this appeal is denied.
VACATED; fee request DENIED.
whose rights have been determined by such judgment."