Albrecht v. Committee on Employee Benefits of the Federal Reserve Employee Benefits System

Notice: This opinion is subject to formal revision before publication in the

Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify

the Clerk of any formal errors in order that corrections may be made

before the bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 21, 2003 Decided February 10, 2004

No. 02-5325

ANNE K. ALBRECHT, ET AL.,

APPELLANTS

v.

COMMITTEE ON EMPLOYEE BENEFITS OF THE

FEDERAL RESERVE EMPLOYEE BENEFITS SYSTEM, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 00cv00317)

Philip J. McNutt argued the cause for appellants. With

him on the briefs were Michael P. Bentzen, Nicholas Wood-

field, Glenn A. Mitchell, and David U. Fierst.

Paul J. Ondrasik Jr. argued the cause for appellees. With

him on the brief were Katherine H. Wheatley, Assistant

Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

2

General Counsel, Board of Governors of the Federal Reserve

System, Morgan D. Hodgson, and Alice E. Loughran.

Before: GINSBURG, Chief Judge, and ROGERS and TATEL,

Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge: Claiming breach of fiduciary duty

and unjust enrichment, employees of the Board of Governors

of the Federal Reserve System seek the return of mandatory

contributions that they made into a defined-benefit pension

plan after actuaries determined the plan was well-funded.

They also seek to terminate their obligation to make future

contributions. The district court dismissed the claims for

lack of jurisdiction and for failure to state a claim. We

affirm.

I.

The Federal Reserve System, composed principally of the

Board of Governors and the twelve regional Federal Reserve

Banks, provides a retirement plan for all of its employees.

The retirement package encompasses two distinct pension

plans, the ‘‘Board Plan’’—the one at issue in this case—and

the ‘‘Bank Plan.’’ Both are defined-benefit plans that, re-

gardless of investment performance, entitle beneficiaries to

fixed periodic payments upon retirement. The Board and

regional Banks bear the risk of any funding deficiency: if the

plans become underfunded, the employers must make up the

difference and pay the promised benefits.

The difference between the two plans stems from a change

in Social Security coverage of federal employees. Federal

Reserve Board employees hired before January 1, 1984, pay

no Social Security taxes and receive no Social Security bene-

fits with respect to their employment with the Board. To

cover the retirement needs of these employees, the Board of

Governors created the Board Plan. As a condition of employ-

ment, employees hired before January 1, 1984, made manda-

tory payroll contributions into the Plan, set at seven percent

of salary.

3

In 1983, Congress amended the Social Security Act to

extend coverage to Board employees hired on or after Janu-

ary 1, 1984. See Social Security Amendments of 1983, Pub.

L. No. 98–21, 97 Stat. 65 (1983). For these employees, and

for all regional Bank employees, the Board created the Bank

Plan. That Plan requires no employee contributions, but

unlike employees covered by the Board Plan, those covered

by the Bank Plan pay Social Security taxes and their retire-

ment payments are adjusted to account for their Social

Security benefits.

Appellants, a putative class of current and former Board

employees hired before January 1, 1984, allege that for each

of the past twenty years, the Board Plan actuary determined

that the Plan had more than sufficient assets to satisfy

liabilities, including both benefits and administrative ex-

penses. According to appellants, retirement plan annual

reports show that Board Plan assets were 132% of projected

and accrued liabilities in 1984 and were 167% of such liabili-

ties in 1994. Based on these actuarial estimates, the Board

has not contributed to the Board Plan since 1985.

Citing these developments, appellants asked the Executive

Secretary, the Plan’s chief administrative officer, ‘‘for a re-

fund or suspension of mandatory employee contributions.’’

Letter from Comm. on Appeals, J.A. at 71. The Executive

Secretary denied their request, and the Committee on Ap-

peals, the entity charged with deciding disputes regarding the

payment of benefits, affirmed. The Committee explained

that because the claim involved not benefits, but rather a

disagreement over the pension plan’s design, neither the

Executive Secretary nor the Committee on Appeals had

authority to resolve the matter.

Appellants then filed suit in the U.S. District Court for the

District of Columbia, seeking recovery of all contributions

made since the actuary deemed the Board Plan sufficiently

funded plus the investment return on those contributions.

They also sought an injunction prohibiting the Board from

requiring further payments into the pension plan. Appellants

argued that by refusing to exercise their discretion to reduce

4

mandatory contributions, the Board of Governors and the

Committee on Employee Benefits (CEB), the Plan’s adminis-

trator, breached their fiduciary duties to beneficiaries. Ap-

pellants also alleged that after the death of the last beneficia-

ry, Board Plan surplus funds would revert to the Board or to

the Bank Plan, thereby unjustly enriching the Board or the

regional Banks. Appellants made several other claims, alleg-

ing breach of contract, unconstitutional taking, and age dis-

crimination.

In the first of two opinions, the district court dismissed

these last three claims, a dismissal that appellants do not

challenge. See Albrecht v. Comm. on Employee Benefits of

the Fed. Reserve Employee Benefits Sys., No. 00–317, slip op.

at 9–12, 15–18 (D.D.C. Mar. 30, 2001). Finding that only the

Board of Governors has authority to modify the mandatory

contribution level, the court also dismissed the fiduciary duty

claims against the CEB. Id. at 8. In the second opinion, the

district court dismissed the remaining claims. See Albrecht v.

Comm. on Employee Benefits of the Fed. Reserve Employee

Benefits Sys., No. 00–317, slip op. at 16–17 (D.D.C. Sept. 17,

2002). The court determined that the Board enjoyed sover-

eign immunity, id. at 7–8, and that because appellants’ fidu-

ciary duty claim was essentially a breach of contract action, it

could be brought only in the U.S. Court of Federal Claims

under the Tucker Act, id. at 13. In the alternative, the

district court held that appellants failed to state a claim for

breach of fiduciary duty. Id. at 14–15. The court also

dismissed the unjust enrichment claim, concluding that such a

claim may not be brought where, as here, a contract governs

the challenged conduct. Id. at 15–16. Finally, because the

request for injunctive relief rested solely on the failed claims,

the district court dismissed it as well. Id. at 17.

In this appeal, we must decide (1) whether the Board

enjoys sovereign immunity against the breach of fiduciary

duty claim, and if so, whether any statute waives that immu-

nity, and (2) whether appellants properly stated a claim for

unjust enrichment against the Board and the regional Banks.

Reviewing the district court’s decisions de novo, see Ass’n of

Civilian Technicians, Inc. v. Fed. Labor Relations Auth., 283

5

F.3d 339, 341 (D.C. Cir. 2002) (de novo review of dismissal for

lack of subject matter jurisdiction); Browning v. Clinton, 292

F.3d 235, 242 (D.C. Cir. 2002) (de novo review of dismissal for

failure to state a claim), we consider each issue in turn.

II.

We begin with appellants’ effort to escape the consequences

of the district court’s conclusion that the Board enjoys sover-

eign immunity. Despite naming the Board of Governors as a

defendant, appellants insist that they sued not the Board of

Governors, the governmental entity composed of seven indi-

viduals appointed by the President and confirmed by the

Senate to formulate monetary policy, see 12 U.S.C. § 241

(2000), but rather a so-called ‘‘Plan Board’’—a non-

governmental entity composed of those same seven individu-

als that has authority over the pension plan but performs no

governmental functions. Setting aside that the Board Plan

expressly identifies the Board of Governors as the entity with

authority to modify the employee contribution level and that

nothing in the Board Plan suggests the existence of an

alternative ‘‘Plan Board,’’ the Board points out that appellants

never made this argument in the district court and that the

claim is therefore waived. Conceding that their complaint

nowhere refers to a ‘‘Plan Board,’’ appellants urge us to

consider this newly raised argument, asserting that we did so

in similar circumstances in United States v. Rapone, 131 F.3d

188 (D.C. Cir. 1997). In that case, we decided that although

the defendant failed to bring the relevant statute to the

district court’s attention, we would consider his argument

that he was statutorily entitled to a jury trial, emphasizing

that the defendant was ‘‘not attempting to raise the issue of a

jury trial for the first time on appeal,’’ but instead offering

‘‘new legal authority for the position that he repeatedly

advanced before the district court—that he was entitled to

have his case tried before a jury.’’ Id. at 196. By contrast,

appellants here present not new legal authority for an argu-

ment raised in the district court, but rather an entirely new

argument—that the defendant is not the ‘‘Board of Gover-

nors’’ identified in the complaint. We thus agree with the

Board that the argument is waived. See, e.g., District of

6

Columbia v. Air Fla., Inc., 750 F.2d 1077, 1084 (D.C. Cir.

1984).

Appellants also claim that the Committee on Employee

Benefits is a proper defendant. According to appellants, the

CEB has authority to modify the employee contribution level,

and it breached its fiduciary duty by refusing to reduce

required contributions. Although appellants did name the

CEB in their complaint, we agree with the district court that

only the Board possesses such authority. Section 7.1 of the

Board Plan states: ‘‘The Board of Governors may increase or

decrease the current seven percent (7%) required Mandatory

Contribution upon sixty (60) days prior notice to Current

Participants.’’ Benefit Structure for Employees of the Bd. of

Governors of the Fed. Reserve Sys. Hired Prior to January 1,

1984, J.A. at 115. Appellants point to a provision in the

Federal Reserve System’s retirement plan, which covers both

the Board and the Bank Plans, that arguably suggests the

CEB has authority to change the employee contribution level.

See Ret. Plan for Employees of the Fed. Reserve Sys., J.A. at

55 (‘‘The Committee [on Employee Benefits] shall from time

to time adopt a rate or rates of contribution for all benefits

and other expenses for all members TTT and the Board of

Governors shall TTT make contributions to the PlanTTTT’’).

But the retirement plan expressly states that its provisions do

not govern if they conflict with the Board Plan, id., and

section 8.1(b) of the Board Plan expressly denies the CEB

such authority: the CEB has ‘‘no power to add to, subtract

from or modify any of the terms of the [Board Plan],’’ Benefit

Structure for Employees of the Bd. of Governors, J.A. at 121.

Despite this clear prohibition against the CEB modifying

pension plan terms, appellants argue that the very existence

of the Committee on Appeals demonstrates that the Board’s

authority to adjust contribution levels is not exclusive. This

argument rests on appellants’ mischaracterization of the

Committee on Appeals’s rejection of their claim. Although

the Committee concluded that the Board’s refusal to termi-

nate employee contributions was neither unfair nor unreason-

able, before reaching that conclusion the Committee made

clear—in language appellants fail to cite—that it rejected the

7

appeal because the issue was beyond its authority. See

Letter from Comm. on Appeals, J.A. at 71 (noting that the

claim was not ‘‘a matter for this Committee’’ and that ‘‘the

claim appeal procedure [was] the wrong mechanism to resolve

this matter’’). Contrary to appellants’ assertion, therefore,

the Board’s authority to modify the employee contribution

level is exclusive.

Having concluded that as to appellants’ breach of fiduciary

duty claim, the Board of Governors is the only proper defen-

dant, we turn to the question of the Board’s sovereign immu-

nity. Neither party disputes the Board’s status as a ‘‘NAFI,’’

a nonappropriated fund instrumentality that receives no fund-

ing through congressional appropriations. See United States

v. Hopkins, 427 U.S. 123, 125 n.2 (1976). Although the

Supreme Court has never held that NAFIs, as instrumentali-

ties of the United States government, necessarily enjoy sover-

eign immunity, it has established that where NAFIs are

‘‘arms of the government deemed by it essential for the

performance of governmental functions’’ and ‘‘share in fulfill-

ing the duties entrusted to [the federal government],’’ they

‘‘partake of whatever immunities it may have under the

[C]onstitution and federal statutes.’’ Standard Oil Co. of Cal.

v. Johnson, 316 U.S. 481, 485 (1942). More generally, we

have concluded that ‘‘[f]ederal agencies or instrumentalities

performing federal functions always fall on the ‘sovereign’

side of [the] fault line; that is why they possess immunity

that requires waiver.’’ Auction Co. of Am. v. FDIC, 132 F.3d

746, 752 (D.C. Cir. 1997).

Applying this standard, we have no doubt that the Board of

Governors enjoys sovereign immunity in this case. See Re-

search Triangle Inst. v. Bd. of Governors of the Fed. Reserve

Sys., 132 F.3d 985, 987–88 (4th Cir. 1997) (holding that the

Board of Governors enjoys sovereign immunity against a

contract action). An integral part of the federal government,

the Board conducts monetary policy, regulates banking insti-

tutions, and maintains the stability of the nation’s financial

system. See 12 U.S.C. § 248 (2000 & Supp. III 2003).

Moreover, the statute that empowers the Board authorizes it

to retain employees ‘‘necessary to conduct the business of the

8

[B]oard’’ and to fix their ‘‘salaries and fees.’’ Id. § 248(l ).

Thus, when the Board establishes its employees’ compensa-

tion package, including the terms of their pension plan, it acts

under statutory authority in furtherance of its governmental

functions. Therefore, at least with regard to the existence of

sovereign immunity, appellants’ claim against the Board is

little different from a claim against the United States. The

question, then, is whether any statute waives that immunity.

Appellants insist that they may proceed with their claim

because it falls within the Administrative Procedure Act’s

waiver of sovereign immunity for ‘‘action[s] in a court of the

United States seeking relief other than money damages and

stating a claim that an agency TTT acted or failed to act in an

official capacity.’’ 5 U.S.C. § 702 (2000). But even for claims

that are not for money damages, the APA confers no ‘‘author-

ity to grant relief if any other statute that grants consent to

suit expressly or impliedly forbids the relief which is sought.’’

Id. The Tucker Act is one such statute. See 28 U.S.C.

§ 1491 (2000). It states that ‘‘[t]he United States Court of

Federal Claims shall have jurisdiction to render judgment

upon any claim against the United States founded TTT upon

any express or implied contract with the United StatesTTTT’’

Id. § 1491(a)(1). We have held that the Tucker Act ‘‘impli-

edly forbids—in APA terms—not only district court awards

of money damages, which the Claims Court may grant, but

also injunctive relief, which the Claims Court may not.’’

Transohio Sav. Bank v. Dir., Office of Thrift Supervision,

967 F.2d 598, 609 (D.C. Cir. 1992). We have therefore held

that the APA does not waive sovereign immunity for contract

actions brought against the government in a federal district

court. Id. Accordingly, the district court lacks jurisdiction if

appellants’ breach of fiduciary duty claim is essentially a

contract action.

Turning, then, to that question—whether appellants’ claim

sounds in contract—we consider both ‘‘the source of the

rights upon which the plaintiff bases its claims’’ and ‘‘the type

of relief sought (or appropriate).’’ Megapulse, Inc. v. Lewis,

672 F.2d 959, 968 (D.C. Cir. 1982). According to appellants,

their rights derive not from contract, i.e., the Board Plan, but

9

from the Trust document and from the common law. We

disagree.

The Trust document requires the Trustee, Chase Manhat-

tan Bank, to safeguard plan assets from misuse and requires

the CEB to ensure benefit payments in accordance with the

pension plan. See Ret. Plan for Employees of the Fed.

Reserve Sys. Trust Agreement, J.A. at 185. The Trust says

nothing at all about either the Board’s responsibilities or the

level of employee contribution—the issues at stake in this

case. Appellants’ argument that their rights derive from the

common law also fails. Where a challenged action does not

implicate a trustee’s duties, the common law of trusts cannot

apply. See Hurd v. Ill. Bell Tel. Co., 136 F. Supp. 125, 135

(N.D. Ill. 1955), aff’d 234 F.2d 942 (7th Cir. 1956) (‘‘[T]he

court is unable to follow the plaintiffs’ reasoning by which

they transform the creator of the trust into the trustee. If

misconduct were charged against Bankers Trust, the law of

trusts would be relevant. But the plaintiffs’ rights in relation

to the Bell System defendants are contractual.’’). Just so

here. The Board’s refusal to modify the employee contribu-

tion level involves only the Board’s role as employer and

creator of the pension plan; it implicates neither the authori-

ty of the CEB or the Trustee, nor any fiduciary duties they

may have.

The only remaining source from which a fiduciary duty

could arise is the pension plan. Courts have long held that

employees participating in a retirement plan not governed by

the Employee Retirement Income Security Act, 29 U.S.C.

§§ 1001–461, enter into a contractual relationship with their

employer. See, e.g., Firestone Tire & Rubber Co. v. Bruch,

489 U.S. 101, 112 (1989) (‘‘Actions challenging an employer’s

denial of benefits before the enactment of ERISA were

governed by principles of contract law.’’). Indeed, appellants

themselves expressly pled that the Board Plan created a

contractual relationship. See Pls. Am. Compl. ¶ 128 (‘‘The

Board of Governors and the Committee [on Employee Bene-

fits] entered into a contract for the benefit of employees of

the Board of Governors hired prior to January 1, 1984TTTT’’);

id. ¶ 130 (‘‘Pursuant to said contract, the Board of Governors

10

and the Committee have required and continue to require

Plaintiffs to contribute seven percent (7.00%) of their wages

to the Board Plan.’’). Although carefully avoiding any refer-

ence to a contract claim in this court, appellants nonetheless

cast their arguments in essentially contractual terms. Specif-

ically, appellants’ counsel maintained at oral argument that

the Board breached a fiduciary duty when it refused to

exercise its discretion under section 7.1 of the Board Plan to

cease requiring mandatory contributions. According to coun-

sel, that refusal conflicts with section 10.2 of the Board Plan,

which he claimed requires the Board to use all funds exclu-

sively for beneficiaries. Not only does this assertion amount

to still another serious misrepresentation—counsel failed to

mention section 10.2’s last phrase which makes it clear that

the Board’s ‘‘exclusive benefit’’ obligation applies only ‘‘prior

to the satisfaction of all liabilities’’ to employees—but coun-

sel’s reliance on the Board Plan provisions demonstrates that

appellants’ claim does in fact sound in contract. This is also

clear from the remedy appellants seek, for it is the terms of

the Board Plan that will determine whether the relief

sought—recovery of past contributions and termination of

future payments—is available. See Megapulse, 672 F.2d at

968.

Although we continue to ‘‘[reject the view] TTT that any

case requiring some reference to or incorporation of a con-

tract is necessarily on the contract and therefore directly

within the Tucker Act,’’ id. at 967–68, appellants’ claim turns

entirely on the terms of a contract, i.e., the Board Plan. We

therefore agree with the district court that the Tucker Act

deprives it of jurisdiction over appellants’ breach of fiduciary

duty claim. See, e.g., Woodbury v. United States, 313 F.2d

291, 296 (9th Cir. 1963) (finding that although the plaintiffs

alleged a breach of fiduciary duty by a government agency,

the action was ‘‘essentially for breach of a contractual under-

taking,’’ and therefore covered by the Tucker Act).

III.

Appellants’ unjust enrichment claim against the Board and

the regional Banks requires little discussion. As we indicat-

11

ed, their claim against the Board rests on the terms of the

Board Plan, and ‘‘there can be no claim for unjust enrichment

when an express contract exists between the parties.’’ Schiff

v. Am. Ass’n of Retired Persons, 697 A.2d 1193, 1194 (D.C.

1997); cf. United States ex rel. Modern Elec., Inc. v. Ideal

Elec. Sec. Co., 81 F.3d 240, 247 (D.C. Cir. 1996) (‘‘Unjust

enrichment TTT rests on a contract implied in law, that is, on

the principle of quasi-contract. This TTT form of recovery is

possible in the absence of any contract, actual or implied in

fact.’’). As to the claim against the regional Banks, we need

not decide whether there is, as the Board insists, a contract

between appellants and the regional Banks that would pre-

clude the claim. Because nothing in the Board Plan requires

the Board either to terminate employee contributions or to

make refunds to employees should the Plan have a surplus,

any ‘‘enrichment’’ the Banks would enjoy if the Bank Plan

receives surplus funds could not possibly be unjust. We

therefore agree with the district court that appellants failed

to state a claim for unjust enrichment.

IV.

By suing to require the Board to terminate future pay-

ments and to refund past contributions in excess of amounts

required to fund the Board Plan, appellants, in effect, seek to

change the terms under which they accepted employment

with the Board of Governors. This court has no authority to

grant such relief.

The judgment of the district court is affirmed.

So ordered.