Hormel Foods Corporation Hourly Employees' Pension Plan v. Perez

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6 UNITED STATES DISTRICT COURT

7 EASTERN DISTRICT OF CALIFORNIA

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9 HORMEL FOODS CORPORATION Case No. 1:22-cv-00879-JLT-EPG

HOURLY EMPLOYEES’ PENSION

10 PLAN, et al.,

11 Plaintiffs, FINDINGS AND RECOMMENDATIONS,

RECOMMENDING THAT (1) HORMEL’S

12 v. MOTION FOR DEFAULT JUDGMENT BE

DENIED; (2) PLAINTIFFS’ BILL OF COSTS

13 MARIE E. PEREZ, BE TERMINATED AS MOOT; AND (3) THIS

ACTION BE DISMISSED

14 Defendant.

(ECF Nos. 14, 18, 19, 25)

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OBJECTIONS, IF ANY, DUE WITHIN 14

16 DAYS

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I. INTRODUCTION

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Plaintiffs Hormel Foods Corporation Hourly Employees’ Pension Plan (the Plan) and

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Hormel Foods Corporation (Hormel) filed this action on July 15, 2022, against Defendant Marie

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E. Perez. (ECF No. 1). Asserting jurisdiction under the Employee Retirement Income Security

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Act of 1974 (ERISA), 29 U.S.C. §§ 1001, et seq., Plaintiffs seek to recover money mistakenly

22 paid to Defendant, who shares the same name as a Hormel employee.

23 The matter is now before the Court on Hormel’s motion for default judgment.1 Because

24 the facts alleged do not establish a claim under the ERISA statute at issue, the Court will

25 recommend that the motion for default judgment be denied, that Plaintiffs’ accompanying bill of

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1 As explained below, although both Plaintiffs initially moved for default judgment, only Hormel seeks

28 default judgment now.

1 costs be denied as moot, and that the action be dismissed.2

2 II. BACKGROUND

3 The complaint alleges original jurisdiction over this matter under 28 U.S.C. § 1331

4 because this action purportedly falls under ERISA. See also 29 U.S.C. § 1132(e)(1) (generally

providing for federal jurisdiction in ERISA cases). The Plan was established in 1956 and was

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amended in 2020 to include a Lump Sum Widow Program, which gave eligible participants the

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right to receive a lump sum payment or an immediate annuity of their vested accrued benefits. To

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receive a lump sum payment, a participant had to make a written election on a form.

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In June 2020, Hormel sent the form to former employees who were deemed eligible

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participants. “Due to an administrative error, Hormel inadvertently sent the [f]orm to Defendant

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at 1110 Kaweah St., Hanford, CA 93230. . . . Hormel should have sent the Form to a different

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Marie. E. Perez, who worked at the Hormel plant in Fremont, California.” (ECF No. 1, p. 3).

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That form contained an election to “receive [a] lump sum payment of $20,115.77 in September

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2020 . . . in cash.” (ECF No. 1, at p. 153). The form also stated, “By signing this form and

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inserting the last four digits of my Social Security Number in the space provided, I certify that I

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am the person named above, that the information in Section 2 of this form is correct and that I

16 have elected to . . . receive my benefit under the Plan as a lump sum payment.” (ECF No. 1, at p.

17 154). Defendant signed the form, including the last four digits of her social security number and

18 telephone number, and returned the form to Hormel.

19 After receiving the returned form, Hormel mailed a check to Defendant for $15,690.30

20 ($20,115.77 minus federal and state taxes), and on about October 15, 2020, Defendant cashed it at

21 a check cashing company called Cash 1.

22 Eventually, Hormel discovered that it sent the money to the wrong “Marie Perez” and

23 asked Defendant to return the money. According to the complaint, Defendant told a Hormel

employee “that she thought the Check was for something else and that she should cash it, but did

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not explain what she meant by that.” (Id. at 4). Defendant placed some or all of the Plan’s assets

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2 The motion has been referred to the undersigned pursuant to 28 U.S.C. § 636 and Local Rule 302(c)(19)

27 because a motion for default judgment is considered a dispositive matter that requires the issuance of

findings and recommendations. See Livingston v. Art.com, Inc., No. 3:13-CV-03748-CRB, 2015 WL

28 4307808, at *2 (N.D. Cal. July 15, 2015).

1 in a bank account. Defendant has not returned any of the funds, leading Plaintiffs to file this

2 action.

3 Plaintiffs’ complaint asserts two causes of action under ERISA: (1) a claim under 29

4 U.S.C. § 1132(a)(3) for equitable relief; and (2) a claim under § 1132(a)(2) for breach of fiduciary

duty. As for relief, the complaint seeks a constructive trust and equitable lien on the $15,690.30;

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an equitable accounting of all funds received; “equitable restitution, and the disgorgement, return,

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and recoupment of the $15,690.30 mistaken payment . . . as well as any gains earned through the

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use of such sums”; and costs. (Id. at 6).

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Although Defendant appeared at a conference early in the case, and the parties tried to

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settle the matter, Defendant has since failed to respond to the complaint or participate in this case,

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leading Plaintiffs to seek and obtain a clerk’s entry of default under Federal Rule of Civil

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Procedure 55(a). (ECF Nos. 8 - 12).

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On March 28, 2023, the Court set a deadline for Plaintiffs to move for default judgment

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under Rule 55(b)(2), advising Plaintiffs of the basic requirements of such a motion, such as

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establishing subject-matter jurisdiction and the existence of a claim, and emphasizing the

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importance of providing developed argument and citation it the motion. (ECF No. 13). Plaintiffs

16 filed their motion for default judgment on April 28, 2023, but generally failed to offer developed

17 supporting argument. (ECF No. 14). Accordingly, the Court gave Plaintiffs the opportunity to file

18 a supplement. (ECF No. 15). After being granted an extension of time, Plaintiffs filed a

19 supplemental memorandum on May 31, 2023. (ECF No. 18).

20 The Court held a hearing on June 16, 2023, where counsel for Plaintiffs appeared. (ECF

21 No. 21). Based on questions raised at the hearing, the Court granted Plaintiffs leave to file a

22 second supplement. (ECF No. 22). After being granted an extension of time, Plaintiffs filed a

23 second supplemental memorandum on July 21, 2023. (ECF No. 25).

Plaintiffs filed a certificate of service for both the motion and supplements; however,

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Defendant has filed no response to any of these filings. (ECF Nos. 14, 18, 25); see Local Rule

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230(c) (providing 14 days for an opposition brief to be filed).

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1 III. LEGAL STANDARDS

2 When a party applies to the Court for a default judgment under Rule 55(b)(2), the Court

3 may hold a hearing to conduct an accounting, determine damages, establish the truth of

4 allegations by evidence, or investigate any other matter. Additionally, the Court may rely on

evidence submitted in support of the motion. See Millner v. Woods, No. 1:16-CV-01209-SAB-

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PC, 2017 WL 6016681, at *3 (E.D. Cal. Dec. 5, 2017) (“The court has discretion to determine

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whether evidence to support a claim for damages [in a motion for default judgment] should be

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presented at a hearing, or alternatively, whether a review of detailed affidavits and documentary

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evidence is sufficient.”).

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In reviewing a motion for default judgment, the Court must undertake an in-depth analysis

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to make sure that default judgment is properly entered. See Eitel v. McCool, 782 F.2d 1470, 1471

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(9th Cir. 1986) (noting seven factors that courts may consider before exercising discretion to enter

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default judgment). While well-pleaded factual allegations, except those related to damages, are

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accepted as true, “necessary facts not contained in the pleadings, and claims which are legally

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insufficient, are not established by default.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261,

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1267 (9th Cir. 1992); TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987)

16 (noting that, factual allegations, “except those related to the amount of damages,” are accepted as

17 true).

18 IV. ANALYSIS

19 A. Scope of Motion for Default Judgment

20 As an initial matter, the Court notes that the scope of the motion for default judgment has

21 narrowed through Plaintiffs’ supplemental briefing. As discussed above, both Plaintiffs—the Plan

22 and Hormel—initiated this case. (ECF No. 1). Moreover, both Plaintiffs initially moved for

23 default judgment. However, the second supplement states that only Hormel is currently seeking

default judgment. (ECF No. 25, p. 3, n.1 – “The Plan was also named as a separate Plaintiff in

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case there were any ambiguities about the proper party. But Hormel is the party seeking this

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default judgment under ERISA § 502(a)(2).”).

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Similarly, the complaint and motion for default judgment initially sought relief on two

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claims: (1) a 29 U.S.C. § 1132(a)(3) claim for equitable relief; and (2) a § 1132(a)(2) claim for

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1 breach of fiduciary duty. (ECF No. 1, pp. 5-6; ECF No. 14-1, p. 10). But Plaintiffs’ second

2 supplement states that Hormel is now only seeking default judgment on its claim for breach of

3 fiduciary duty under § 1132(a)(2), also known as a § 502(a)(2) claim.3 (ECF No. 25, p. 2, 6 –

4 “For the purposes of it default motion and to simplify matters, Hormel is only seeking a default

judgment on its claim under ERISA § 502(a)(2).” “Hormel emphasizes that it is not currently

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seeking a default judgment on its separate and distinct claim under ERISA § 502(a)(3).”).

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Accordingly, the Court will limit its review to Hormel’s claim for breach of fiduciary duty

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under § 1132(a)(2).

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B. ERISA Generally

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ERISA “subjects to federal regulation plans providing employees with fringe benefits.

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ERISA is a comprehensive statute designed to promote the interests of employees and their

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beneficiaries in employee benefit plans.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983).

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ERISA “induc[es] employers to offer benefits by assuring a predictable set of liabilities, under

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uniform standards of primary conduct and a uniform regime of ultimate remedial orders and

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awards when a violation has occurred.” Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 379

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(2002). And “the detailed provisions of § 502(a) set forth a comprehensive civil enforcement

16 scheme” for ERISA claims. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54 (1987).

17 ERISA provides for certain causes of actions related to employee plans but not actions

18 outside of the terms of the statute:

19 Courts may not “infer [additional] causes of action in the ERISA context, since

that statute’s carefully crafted and detailed enforcement scheme provides ‘strong

20 evidence that Congress did not intend to authorize other remedies that it simply

forgot to incorporate expressly.’” Mertens v. Hewitt Assocs., 508 U.S. 248, 254,

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113 S.Ct. 2063, 124 L.Ed.2d 161 (1993) (quoting Mass. Mut. Life Ins. Co. v.

22 Russell, 473 U.S. 134, 146-47, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985)). Under

ERISA, the issue is not whether the statute bars a particular cause of action, but

23 rather “whether the statute affirmatively authorizes such a suit.” Id. at 255 n. 5,

113 S.Ct. 2063.

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Gabriel v. Alaska Elec. Pension Fund, 773 F.3d 945, 953-54 (9th Cir. 2014); Pilot Life Ins. Co.,

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481 U.S. at 54 (“The deliberate care with which ERISA’s civil enforcement remedies were

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drafted and the balancing of policies embodied in its choice of remedies argue strongly for the

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3 See Farr v. U.S. W. Commc’ns, Inc., 151 F.3d 908, 916 n.5 (9th Cir. 1998), amended, 179 F.3d 1252 (9th

28 Cir. 1999) (noting that § 502(a)(2) of ERISA is codified at 29 U.S.C. § 1132(a)(2)).

1 conclusion that ERISA’s civil enforcement remedies were intended to be exclusive.”).

2 As noted above, there are a variety of considerations before entering a default judgment.

3 See Eitel, 782 F.2d at 1471. Here, the Court finds two factors—the merits of Hormel’s substantive

4 claim and the sufficiency of its complaint—dispositive. Essentially, these “factors require [a]

plaintiff to state a claim on which plaintiff can recover.” OL USA LLC v. TTS Int’l LLC, No. 2:21-

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CV-1541 WBS DB, 2022 WL 2208527, at *2 (E.D. Cal. June 21, 2022), report and

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recommendation adopted, (2022 WL 4450658 (E.D. Cal. Sept. 23, 2022).

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C. Breach of Fiduciary Duty – § 1132(a)(2)

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Section 1132(a)(2) provides for a cause of action “by the Secretary, or by a participant,

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beneficiary or fiduciary for appropriate relief under section 1109 of this title.” In turn, § 1109(a)

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provides as follows:

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Any person who is a fiduciary with respect to a plan who breaches any of the

12 responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter

shall be personally liable to make good to such plan any losses to the plan resulting

13 from each such breach, and to restore to such plan any profits of such fiduciary

which have been made through use of assets of the plan by the fiduciary, and shall

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be subject to such other equitable or remedial relief as the court may deem

15 appropriate, including removal of such fiduciary. A fiduciary may also be removed

for a violation of section 1111 of this title.

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29 U.S.C. § 1109(a).

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Hormel contends that Defendant is a fiduciary with respect to the Plan who breached a

18 responsibility, obligation or duty imposed upon fiduciaries by returning the form and keeping the

19 money deposited in her account. The Court thus examines whether Defendant qualified as a

20 fiduciary with respect to the Plan.

21 ERISA defines a fiduciary as follows:

22 Except as otherwise provided in subparagraph (B), a person is a fiduciary with

respect to a plan to the extent (i) he exercises any discretionary authority or

23 discretionary control respecting management of such plan or exercises any

authority or control respecting management or disposition of its assets . . . .

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29 U.S.C. § 1002(21)(A)(i) (emphasis added).4 Furthermore, the Supreme Court has explained

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26 4 Additionally under ERISA, a person can also be a “named fiduciary,” i.e., “a fiduciary who is named in

the plan instrument, or who, pursuant to a procedure specified in the plan, is identified as a fiduciary (A)

27 by a person who is an employer or employee organization with respect to the plan or (B) by such an

employer and such an employee organization acting jointly.” 29 U.S.C. § 1102(a)(2). Hormel does not

28 assert that Defendant is a named fiduciary.

1 that, “ERISA . . . defines ‘fiduciary’ not in terms of formal trusteeship, but in functional terms of

2 control and authority over the plan, see 29 U.S.C. § 1002(21)(A).” Mertens, 508 U.S. at 262. “In

3 every case charging breach of ERISA fiduciary duty, then, the threshold question is not whether

4 the actions of some person . . . adversely affected a plan beneficiary’s interest, but whether that

person was acting as a fiduciary (that is, was performing a fiduciary function) when taking the

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action subject to complaint.” Pegram v. Herdrich, 530 U.S. 211, 226 (2000).

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Here, Defendant was not an employee of Hormel. She was never designated as a fiduciary

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to the Plan. She was not informed of any responsibilities, obligations, or duties imposed upon her

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by the Plan. She did not have control over any assets in the plan. The form sent to her did not

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indicate that she was a fiduciary, inform her of any duties related to the Plan, or ask her to

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undertake any responsibilities by returning the form. On the contrary, it asked her to certify that

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“I am not currently employed by Hormel Foods or an affiliate of Hormel Foods.” (ECF No. 1, at

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p. 154).

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Hormel argues that Defendant nevertheless qualifies as a fiduciary under the Plan because

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she returned the form and kept the payment. In determining whether such actions render

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Defendant a fiduciary under the plan, the Court begins with a case containing relatively similar

16 factual circumstances, Cent. States, Se. & Sw. Areas Pension Fund v. Rodriguez, No. 18-CV-

17 7226, 2021 WL 131419 (N.D. Ill. Jan. 14, 2021). In that case, the plaintiffs were an ERISA

18 pension fund and a trustee of the plan. Id. at *1. The defendant was the widow of a plan

19 participant. Id. at *2. Importantly, because the marriage between defendant and the plan

20 participant occurred after the plan participant’s retirement, defendant was “not eligible to elect

21 surviving-spouse benefits under the Plan.” Id. Moreover, both the plan participant and the

22 defendant were informed of this in July 2014. Id. Accordingly, when the plan participant died, his

23 eligibility for pension benefits under the plan ceased. Id. Before his death, these benefits were

deposited directly in the plan participant’s account, where defendant was a joint account holder,

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with defendant becoming an owner of the account after the plan participant’s death. Id. Although

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the plan participant died in May 2016, the fund did not receive notice of his death until January

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2017, by which time it had deposited an extra $14,704.56 into the account. Id. Ultimately, the

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fund demanded that defendant return the overpayment, but she declined to do so. Id.

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1 Among other claims, plaintiffs brought a claim under § 1132(a)(2), alleging that the

2 defendant was “a fiduciary under ERISA by virtue of her ‘possession of assets, which in equity

3 and good conscience are property of the plan.”’ Id. at *5. Plaintiffs’ theory was “that once the

4 Fund mistakenly deposited money into the Account, defendant exercised control over the

disposition of those assets.” Id.

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In declining to grant summary judgment on this claim, even though defendant offered no

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opposition, the Court stated as follows:

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First, the Supreme Court has said that ERISA “fiduciary duties draw much of their

8 content from the common law of trusts,” such that “the law of trusts often will

inform, but will not necessarily determine the outcome of, an effort to interpret

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ERISA’s fiduciary duties.” Varity Corp. v. Howe, 516 U.S. 489, 496-97 (1996). A

10 basic principle of trust law is that a person “who has not accepted the office cannot

be compelled to act as trustee.” Restatement (Third) of Trusts § 35, comment a

11 (2012). It would be strange, then, for plaintiffs to be able to make a third party an

ERISA fiduciary, with all its attendant duties and liabilities, merely by mistakenly

12 depositing money into an account of which the third party is an owner. But see

International Painters and Allied Trades Industry Pension Fund v. Aragones, 643

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F. Supp.2d 1329, 1337 (M.D. Fla. 2008) (granting default judgment against

14 defendant who, while not having agreed to be a fiduciary, had agreed to receive

only 60 payments before collecting 130 payments, such that “[i]dentifying

15 Defendant as a fiduciary” was “more than a ‘theoretical contrivance.’ ”).

16 Second, plaintiffs’ theory assumes the money, once deposited into the Account,

remains plan assets. Plaintiffs have not shown that assumption is correct as a

17 matter of law. Cf. Hecker v. Deere & Co., 556 F.3d 575, 584 (7th Cir. 2009) (once

assets were “transferred to one of the Fidelity entities, they become Fidelity's

18 assets—again, not the assets of the Plans.”); People ex rel. Russell v. Farmers’

State & Sav. Bank of Grant Park, 338 Ill. 134, 137 (Ill. 1930) (“As a rule, when

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money is deposited in a bank, title to such money passes to the bank. The bank

20 becomes the debtor of the depositor to the extent of the deposit, and to that extent

the depositor becomes of the creditor of the bank.”).

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Finally, even if the Court assumes, without deciding, that the deposits remained

22 plan assets, plaintiffs have not put forth facts establishing as a matter of law that

defendant exercised control over the management or disposition of those assets.

23 Plaintiffs have put forth no evidence as to what happened to those funds after

plaintiffs deposited them into the Account. Plaintiffs have put forth evidence that

24 defendant was “an” owner of the account, but they do not say whether defendant

was the only owner. Furthermore, plaintiffs have also put forth evidence that the

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Account was frozen as of January 23, 2017; but, by whom and for how long the

26 Account was frozen, the plaintiffs do not say. A reasonable inference of a frozen

account is that defendant did not have control over it.

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For these reasons, plaintiffs have not shown that they are entitled to judgment as a

28 matter of law on any ERISA claim, and the motion for summary judgment as to

1 the ERISA claims is denied.

2 Id. at *5-6.

3 The Court finds this discussion persuasive here, especially the conclusion that a defendant

4 does not become a fiduciary under the statute simply by retaining funds mistakenly deposited in

her account. As in Cent. States, Se. & Sw. Areas Pension Fund, Defendant has no direct

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connection to the Plan and did not affirmatively accept the duties and liabilities of being an

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ERISA fiduciary.

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Additionally, the Ninth Circuit has cited approvingly caselaw noting “that fiduciary status

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should not be imposed unless the individual is ‘clearly aware of his status as a fiduciary.”’ Bos v.

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Bd. of Trustees, 795 F.3d 1006, 1011 (9th Cir. 2015) (quoting ITPE Pension Fund v. Hall, 334

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F.3d 1011, 1015, (11th Cir. 2003)). Here, Hormel does not allege that Defendant thought she was

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acting as a fiduciary of the Plan. Nowhere does Hormel allege that Defendant was informed that

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she was a fiduciary or was undertaking any responsibilities of a fiduciary. Nor does the form sent

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by Hormel and returned by Defendant contain any such information.

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The Court also looks to Ninth Circuit case law holding that merely receiving plan funds

15 does not make one a fiduciary. See IT Corp. v. Gen. Am. Life Ins. Co., 107 F.3d 1415, 1422 (9th

16 Cir. 1997) (“Authority over a plan’s money is not the same thing as being a depository of the

17 money. If the plan’s money is deposited in a bank, that does not ipso facto make the bank a

18 fiduciary.”). Rather, a purpose of ERISA is to ensure “that people who have practical control

19 over an ERISA plan’s money have fiduciary responsibility to the plan’s beneficiaries.” Id. at 1421

20 (emphasis added). Here, Defendant did not have practical control over the Plan’s money. Instead,

21 she returned a form that offered a payment and kept that payment.

22 In their briefing, Hormel does not address this caselaw. Indeed, Hormel does not cite to

any cases in the Ninth Circuit on the question of whether Defendant is a fiduciary. In support of

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their position on this issue, Hormel relies on the following out-of-circuit district court cases. (ECF

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No. 25, p. 4).

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The first is Brantley v. Pepsi Bottling Grp., Inc., 718 F. Supp. 2d 903 (E.D. Tenn. 2010).

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In that case, the plaintiff was a former employee of the defendant and a participant in a long-term

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disability plan. Id. at 907. Plaintiff signed an agreement promising to reimburse the plan if he

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1 received payments from a source outside the plan for the same illness or injury that the plan paid

2 him benefits for. Id. at 907-908. Plaintiff eventually received workers’ compensation benefits for

3 injuries that gave rise to his claim under the plan. Id. at 908. After learning about plaintiff

4 receiving workers’ compensation benefits, a defendant claims administrator reduced plaintiff’s

plan benefits to offset the amount plaintiff had received through workers’ compensation. Id. at

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909. Defendants counterclaimed for breach of fiduciary duty against plaintiff under § 1132(a)(2).

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In granting summary judgment in defendants’ favor on this claim, the Court concluded that “[t]he

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overpayment made by the LTD Plan to plaintiff is undoubtedly a plan asset” and “[t]o the extent

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that plaintiff continues to hold the overpayment for his own benefit, and has refused to return that

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overpayment to the LTD Plan, plaintiff is in breach of his fiduciary duty to the LTD Plan.” Id. at

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915.

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The second case is Health Care Serv. Corp. v. TAP Pharm. Prod., Inc., 274 F. Supp. 2d

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807 (E.D. Tex. 2003). In that case, the plaintiff was an administrator of an employer sponsored

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benefits plan and claimed that defendant drug companies, whom it contracted with, engaged in a

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pattern of overcharging and encouraging the over-prescription of a certain drug. Id. at 810, 813.

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Although plaintiff purported to bring only state law claims, defendants removed the case to

16 federal court alleging preemption by ERISA. Id. at 810-11. In agreeing that the claims were

17 preempted, the Court concluded that by allegedly inflating prices of a drug and being unjustly

18 enriched by retaining the profits, “defendants kept and exercised control over the disposition of

19 plan assets that they are alleged to have wrongfully obtained.” Id. at 813.

20 The last case is Int’l Painters & Allied Trades Indus. Pension Fund v. Aragones, 643 F.

21 Supp. 2d 1329 (M.D. Fla. 2008). In that case, the plaintiffs were an employee benefit plan and a

22 fiduciary. Id. at 1332. The defendant “was the assigned beneficiary of the monthly pension

23 benefits of [her husband] under this Plan.” Id. After the death of her husband, plaintiff was

notified that she was entitled to receive a remaining number of payments through April 1996. Id.

24

However, due to a purported administrative error, defendant kept receiving payments. Id. The

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plan tried to recover the overpayments, but defendant did not respond to its request. Id. Raising a

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claim under § 1132(a)(2), “Plaintiffs argue[d] that because Defendant exercised complete control

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over Plan funds erroneously deposited into her account, she breached her fiduciary duty by failing

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1 to safeguard the assets for the benefit of the fund and other participants or beneficiaries and

2 deliver them to the Plan when demanded to do so.” Id. at 1334. Although noting that such a

3 theory was not clearly established, the Court ultimately found that defendant could be considered

4 a fiduciary given that she had given “written consent to receive only sixty benefit payments in the

event of her husband’s untimely death, as well as the Plan’s notice to her after her husband's

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death of her right to benefits only through April 1996 and the fact of Defendant’s refusal to return

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the funds upon notice of the overpayment error.” Id. at 1337.

7

As an initial matter, the Court emphasizes that it is not bound by any of these out-of-

8

circuit district court cases. See Yong v. I.N.S., 208 F.3d 1116, 1119 n.2 (9th Cir. 2000) (“[O]nce a

9

federal circuit court issues a decision, the district courts within that circuit are bound to follow it

10

and have no authority to await a ruling by the Supreme Court before applying the circuit court’s

11

decision as binding authority. . . .”).

12

Even so, all of these cases involve alleged wrongdoing by someone with some established

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relationship to a plan: (1) a former employee and participant in a long-term disability who signed

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an agreement promising to reimburse the plan if he received certain payments from a source

15

outside the plan; (2) a drug company who entered into a contract with a plan administrator; and

16 (3) a beneficiary of a plan who was forewarned that a certain number of payments were owed but

17 continued to accept additional unwarranted payments. None of these cases involved the unusual

18 situation before the Court—the mistaken payment of Plan benefits to a third party who had no

19 connection to an ERISA plan but signed a form to receive such payments that was intended for

20 someone else with the same name. 5

21 Notably, in one of the cases relied upon by Hormel, Int’l Painters & Allied Trades Indus.

22 Pension Fund v. Aragones, the Court explained that “not every beneficiary becomes a fiduciary

23 of the plan after receiving and retaining an overpayment or other plan asset to which the

24

5 Hormel cited a fourth case in a footnote in its second supplement, Carpenters Pension & Annuity Plan of

25 Philadelphia & Vicinity v. Grosso, No. CIV.A. 07-5013, 2009 WL 2431340 (E.D. Pa. Aug. 6, 2009), but

offered no developed argument about how it applies here. (ECF No. 18, p. 15, n.1). That case concerned a

26 plan beneficiary who wrongfully retained payments to which he was not entitled. Id. at *1-3. The Court

found that his misrepresentations to the plan in order to receive benefits he was not entitled to made him a

27 fiduciary for purposes of § 1132(a)(2). Id. at *6. For the reasons discussed elsewhere, the Court finds this

case materially distinguishable based on the beneficiary’s established relationship with the plan that

28 suggested he understood his fiduciary responsibilities.

1 beneficiary is not entitled.” 643 F. Supp. 2d at 1331. Moreover, the Court acknowledged the

2 above language from Hall (which the Ninth Circuit cited in Bos) that one cannot become a

3 fiduciary unless she is clearly aware of her status as a fiduciary. Id. at 1336. Further, it quoted

4 another case concluding that, “[b]efore fiduciary duty is imposed on an officer, he must have

notice, either through clear contractual language or clear, shared intent of the parties.” Id.

5

(quoting Int'l Union of Painters & Allied Trades Dist. Council No. 78 Health & Welfare Fund v.

6

Argyros, No. 8:05–cv1661–T–24TGW, 2007 WL 1577840 (M.D. Fla. May 31, 2007)). While the

7

Court ultimately determined that the defendant in that case could be considered a fiduciary, it was

8

because of evidence of specific consent and notification, which is not present in the case before

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this Court:

10

Here, nothing in the submitted Plan language clarifies Defendant’s obligations or

11 responsibilities to the Plan in these circumstances. However, Plaintiffs proffer

Defendant's written consent to receive only sixty benefit payments in the event of

12 her husband’s untimely death, as well as the Plan’s notice to her after her

husband’s death of her right to benefits only through April 1996 and the fact of

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Defendant’s refusal to return the funds upon notice of the overpayment error. At a

14 minimum, such was sufficient to notify Defendant that any of the Plan’s monies

received after April 1996 were not hers and reason enough for her to know that she

15 was responsible to the fund and its participants to return the overpayments.

Identifying Defendant as a fiduciary in these circumstances is more than a

16 “theoretical contrivance.”

17 Id. at 1337.

18 Based on this law, the Court finds that, even assuming all allegations in the complaint as

19 true, Defendant was not a fiduciary to the Plan. Thus, Hormel has failed to state a claim under

20 § 1132(a)(2).

21 V. CONCLUSION AND RECOMMENDATIONS

22 Based on the foregoing, IT IS RECOMMENDED as follows:

1. Hormel’s motion for default judgment (ECF Nos. 14, 18, 25) be denied.

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2. Plaintiffs’ bill of costs (ECF No. 19) be terminated as moot.

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3. This case be dismissed for failure to state a claim.

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4. The Clerk of Court be directed to close this case.

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1 These findings and recommendations will be submitted to the United States District Judge

2 | assigned to the case, pursuant to the provisions of Title 28 U.S.C. § 636(b)(1). Within fourteen

3 | (14) days after being served with these findings and recommendations, Plaintiffs may file written

4 | objections with the Court. The document should be captioned “Objections to Magistrate Judge’s

5 | Findings and Recommendations.” Plaintiffs are advised that failure to file objections within the

6 specified time may result in the waiver of rights on appeal. Wilkerson v. Wheeler, 772 F.3d 834,

7 838-39 (9th Cir. 2014) (citing Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991)).

8 IT IS SO ORDERED.

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19 | Dated: _ October 11, 2023 [leo hey □

UNITED STATES MAGISTRATE JUDGE

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