Jack Leeson v. Transamerica Disability Income

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JACK C. LEESON, 

Plaintiff-Appellant, No. 10-35380

v.

 D.C. No.

2:04-cv-00471-RSM

TRANSAMERICA DISABILITY INCOME

PLAN, OPINION

Defendant-Appellee.



Appeal from the United States District Court

for the Western District of Washington

Ricardo S. Martinez, District Judge, Presiding

Submitted January 23, 2012*

Filed January 23, 2012

Before: Betty B. Fletcher, M. Margaret McKeown, and

Richard A. Paez, Circuit Judges.

Opinion by Judge Paez

*The panel unanimously concludes this case is suitable for decision

without oral argument. See Fed. R. App. P. 34(a)(2).

633

636 LEESON v. TRANSAMERICA DISABILITY

COUNSEL

Steven Krafchick, Krafchick Law Firm, Seattle, Washington,

for the appellant.

David Levin, Drinker Biddle & Reath LLP, Washington, DC,

for the appellee.

OPINION

PAEZ, Circuit Judge:

Plaintiff Jack Leeson (“Leeson”), a former employee of

Defendant Transamerica Corporation (“Transamerica”), filed

this action under the Employee Retirement Income Security

Act (“ERISA”), 29 U.S.C. § 1101, et seq., to challenge the

termination of his long-term disability benefits. The district

court, applying an abuse of discretion standard of review,

upheld the Transamerica Corporation Disability Income

Plan’s decision to terminate his benefits. Leeson appealed. In

a prior disposition, we reversed the district court’s grant of

summary judgment to Transamerica and remanded with

instructions to the district court to apply a de novo standard

of review in determining whether Transamerica properly ter-

minated Leeson’s benefits. Leeson v. Transamerica Disability

Income Plan, 279 F. App’x 563 (9th Cir. 2008).

On remand, Transamerica filed a motion to dismiss Lee-

son’s action for lack of subject matter jurisdiction on the

ground that Leeson did not have statutory standing as a plan

participant to file suit under ERISA. Leeson, on the other

hand, argued that he was a plan participant because he was

employed at Transamerica at the time he applied for benefits.

Leeson also stressed that Transamerica approved his claim

and, in fact, paid him benefits for four years. The district

court, relying on Curtis v. Nevada Bonding Corp., 53 F.3d

LEESON v. TRANSAMERICA DISABILITY 637

1023 (9th Cir. 1995), concluded that Leeson was not a plan

participant and granted Transamerica’s motion to dismiss.

The district court concluded that because Leeson lacked

standing to pursue an ERISA claim, there was no federal sub-

ject matter jurisdiction. Leeson again timely appealed.

In this appeal, Leeson argues that the district court errone-

ously relied on our prior holding in Curtis to dismiss the case

for lack of subject matter jurisdiction. In Curtis, we held that

a district court lacked jurisdiction to consider an ERISA claim

where a former employee “had neither a reasonable expecta-

tion of returning to covered employment nor a colorable claim

to vested benefits.” Id. at 1027. Relying on a more recent

decision, Vaughn v. Bay Environmental Management, Inc.,

Leeson contends that, under ERISA, a “dismissal for lack of

statutory standing is properly viewed as a dismissal for failure

to state a claim rather than a dismissal for lack of subject mat-

ter jurisdiction.” 567 F.3d 1021, 1024 (9th Cir. 2009). Leeson

therefore argues that because he alleged a colorable claim for

benefits, the district court had subject matter jurisdiction to

address the merits of his case on remand.

For the reasons explained below, we agree with Leeson that

Vaughn controls. Whether Leeson is a participant for pur-

poses of ERISA is a substantive element of his claim, not a

prerequisite for subject matter jurisdiction. As the Supreme

Court has instructed, “when Congress does not rank a statu-

tory limitation on coverage as jurisdictional, courts should

treat the restriction as nonjurisdictional in character.”

Arbaugh v. Y & H Corp., 546 U.S. 500, 516 (2006). To the

extent our prior cases—including Curtis—hold otherwise,

they have “no precedential effect” because they are precisely

the type of “drive-by jurisdictional rulings” the Supreme

Court has since rejected. Id. at 511 (quoting Steel Co. v. Citi-

zens for a Better Env’t, 523 U.S. 83, 91 (1998)). We therefore

vacate the dismissal and remand for further proceedings.

638 LEESON v. TRANSAMERICA DISABILITY

I

Leeson is a former employee of Transamerica. While

employed there, he participated in Transamerica’s long-term

disability (“LTD”) income plans. The Basic Plan, known as

the Transamerica Corporation Disability Income Plan (“Basic

Plan”), provided benefits based on a participant’s pre-

disability annual earnings up to $150,000. A second plan,

known as the Transamerica Corporation Class 2 Long Term

Disability Coverage Supplemental Plan (“Supplemental

Plan”),1 provided benefits on eligible pre-disability annual

earnings over $150,000.

Leeson began working as a Regional Pension Manager for

Transamerica in 1983. In December 1993, Leeson was in an

automobile accident that resulted in injury to his neck and

caused him to suffer severe headaches. Leeson continued to

work until June 1996, at which time he took a leave of

absence due to his deteriorating physical condition. Shortly

thereafter, Leeson timely applied for LTD benefits under both

the Basic and Supplemental Plans.

On April 1, 1997, Prudential Insurance Company of Amer-

ica (“Prudential”), as Claims Administrator, determined that

Leeson was eligible for LTD benefits2 and approved his appli-

cation subject to “continuing evaluation of his claim.”3 Pru-

1

The Basic Plan provided LTD benefits of 70 percent of the first

$150,000 of eligible pre-disability annual earnings. The Supplemental

Plan provided benefits on eligible pre-disability annual earnings over

$150,000. Leeson’s last eligible salary was $221,648.40, an amount which

qualified him for benefits under the Supplemental Plan as well as the

Basic Plan.

2

After Leeson filed this case, Prudential, as Plan Administrator for the

Supplemental Plan, settled Leeson’s dispute over the allegedly improper

termination of his Supplemental Plan benefits. As a result of this settle-

ment, Leeson dismissed his claims against Prudential. Accordingly, unless

otherwise noted, all further references to “long-term disability benefits,”

“LTD plan,” or “LTD benefits” refer to the Basic Plan.

3

At the time Leeson applied for benefits, Transamerica was the Plan

Administrator for the Basic Plan. Prudential, however, was the Claims

LEESON v. TRANSAMERICA DISABILITY 639

dential paid Leeson LTD benefits until July 2, 2001, when it

determined that he was no longer disabled within the meaning

of the LTD plan.4 In terminating Leeson’s benefits, Prudential

determined that the medical evidence no longer supported

Leeson’s claim that he suffered from a physical impairment

that prevented him from returning to work. Prudential further

concluded that, although Leeson may have suffered from an

impairment that resulted from a psychological condition, the

maximum benefits available for a mental impairment limita-

tion had been exhausted.

Leeson appealed Prudential’s decision to terminate his

LTD benefits. Leeson disputed Prudential’s interpretation of

the medical evidence and requested that Prudential reinstate

his benefits. In a letter dated October 19, 2001, Prudential

affirmed its decision to terminate Leeson’s benefits. The letter

explained that Leeson’s benefits were terminated because of

the 24-month mental disorder limitation and because the med-

ical evidence did not show that Leeson suffered from a physi-

cal disability that prevented him from working.

In February 2002, Leeson filed a second administrative

appeal with the AEGON Committee, which had replaced

Transamerica as the Plan Administrator.5 Subsequently, on

Administrator. As Claims Administrator, Prudential made initial eligibility

determinations, including review of first level appeals from the denial of

benefits. If Prudential’s appeals unit upheld the denial of benefits, the

employee could appeal to the Transamerica Corporation Benefits Admin-

istration Committee.

4

As we noted in our prior disposition, although Prudential determined

that Leeson was no longer eligible for benefits under the Basic Plan, its

termination letter quoted the definition of disability from the Supplemental

Plan, not the Basic Plan. See Leeson, 279 F. App’x at 565.

5

In 1999, AEGON USA, Inc., acquired Transamerica. As a result of this

acquisition, the AEGON Committee replaced Transamerica as Plan

Administrator. The AEGON Committee also assumed responsibility for

second level appeals from the denial of benefits.

640 LEESON v. TRANSAMERICA DISABILITY

June 19, 2002, the AEGON Committee denied Leeson’s

appeal on the ground that he “d[id] not meet the definition of

disability under the Plan that is applicable after the first 24

months of disability.”

One year later, in August 2003, Leeson filed a second

appeal with the AEGON Committee. The Committee denied

this appeal, explaining that its June 19, 2002, decision was

final. Having pursued his administrative remedies, Leeson

filed this action pursuant to 29 U.S.C. § 1132(a)(1)(B) and

invoked federal court jurisdiction pursuant to 29 U.S.C.

§ 1132(e)(1).6

Ruling on cross-motions for summary judgment, the district

court granted Transamerica’s motion on the ground that the

termination of benefits did not constitute an abuse of discre-

tion. In its ruling, the district court concluded that Transamer-

ica did not breach its fiduciary duty under the then-existing

standard recognized in Atwood v. Newmont Gold Co., 45 F.3d

1317 (9th Cir. 1995), when it provided Leeson with a copy of

the 1997 Restatement Plan that was in effect at the time Lee-

son’s benefits were terminated, rather than the version of the

plan in effect at the time Leeson became disabled and applied

for benefits. The district court further concluded that Leeson

received a full and fair administrative review, and that there

was substantial evidence to support the determination that

“[Leeson’s] disability resulted from a mental condition.”

6

In his complaint, Leeson named Transamerica Corporation Disability

Income Plan, Prudential Insurance Company of America, and AEGON

Long Term Disability Plan as defendants. As a result of the settlement of

Leeson’s claim regarding benefits under the Supplemental Plan, Leeson

dismissed Prudential as a defendant. Because Leeson was never a partici-

pant in the AEGON Plan, Leeson dismissed the AEGON Plan as a defen-

dant. The only remaining defendant is the Transamerica Disability Income

Plan. Although the final administrative decision was made by the AEGON

Committee, the parties do not dispute that Transamerica Disability Income

Plan is the proper defendant.

LEESON v. TRANSAMERICA DISABILITY 641

As noted above, Leeson appealed. In Leeson’s first appeal,

we held that, under our then-recent decision in Abatie v. Alta

Health & Life Insurance Co., 458 F.3d 955 (9th Cir. 2006)

(en banc), the district court erred in reviewing for abuse of

discretion the decision to terminate Leeson’s benefits. We

remanded the case for further consideration under a de novo

standard of review to determine whether Leeson was disabled

under the terms of the 1997 Restatement Plan.7 Leeson, 279

F. App’x at 567.

Transamerica never asserted in the administrative process,

in the original district court proceeding, or in the prior appeal

that Leeson was not a plan participant within the meaning of

29 U.S.C. § 1002(7). After our remand, however, Transamer-

ica filed a Federal Rule of Civil Procedure 12(h)(3) motion to

dismiss for lack of subject matter jurisdiction on the ground

that Leeson did not qualify as a plan participant, and therefore

lacked statutory standing to sue under ERISA. In support of

its argument, Transamerica explained that after the remand,

its newly retained counsel located relevant plan documents8

that governed Leeson’s eligibility for benefits. Under these

LTD plan documents, Transamerica argued that Leeson was

not a plan participant because he was on an unpaid leave of

absence when he applied for benefits. Citing to the 1997

Restatement Plan, Transamerica argued that Section 3.3.4

expressly provided that “if an Eligible Employee is on an

unpaid leave of absence, his or her status as a Long-Term Par-

ticipant shall be suspended and he or she shall be ineligible

for Long-Term Disability Benefits.” Recognizing that it had

7

Because Leeson was entitled to de novo review of the decision to ter-

minate his benefits, we instructed the district court to reconsider Leeson’s

request to conduct discovery. Leeson, 279 F. App’x at 566-67. We also

directed that “[i]n the absence of record evidence that Leeson’s rights had

vested under a prior plan, the Plan in effect when his claim was denied—

the so-called 1997 Plan—governs his claim for benefits.” Id. at 565 (cita-

tions omitted).

8

Following our remand, Transamerica produced the 1988 and 1996

Summary Plan Descriptions, and the 1993 Restatement Plan.

642 LEESON v. TRANSAMERICA DISABILITY

not previously raised this standing issue, Transamerica argued

that because the issue ultimately related to the district court’s

subject matter jurisdiction it could, under Rule 12(h)(3), raise

the issue at any time. As noted above, Transamerica relied on

our decision in Curtis to support its argument.

In opposing Transamerica’s motion, Leeson submitted a

series of three declarations, the second and third of which cor-

rected typographical errors in the first declaration. In these

declarations, Leeson declared that at the time he applied for

LTD benefits, he was not on a leave of absence. In response

to Transamerica’s motion challenging the propriety of the

later filed declarations, the district court struck them. As for

the original declaration, the district court found that it was

“self-serving” because it was made on “information and belief

rather than personal knowledge,” and was not signed under

penalty of perjury. The district court ultimately concluded that

Leeson’s “self-serving declaration [did] not provide cogniza-

ble evidence that [he] was not on unpaid leave” when he

applied for benefits.9

With this ruling, the district court found that Leeson was

not a plan participant under 29 U.S.C. § 1132(a)(1)(B),10 and

therefore lacked statutory standing to pursue an ERISA claim.

Accordingly, the district court granted Transamerica’s motion

to dismiss. In so ruling, the district court relied on Curtis to

further conclude that because Leeson lacked statutory stand-

ing, federal court subject matter jurisdiction did not exist.

Leeson timely appealed.

9

In light of our disposition, we need not decide whether the district

court erred in striking any of Leeson’s declarations.

10

29 U.S.C. § 1132(a)(1)(B) provides:

(a) Persons empowered to bring a civil action. A civil action may

be brought —

(1) by a participant or beneficiary —

(B) to recover benefits due to him under the terms of his plan, to

enforce his rights under the terms of the plan, or to clarify his

rights to future benefits under the terms of the plan . . . .

LEESON v. TRANSAMERICA DISABILITY 643

II

We review de novo a dismissal for lack of subject matter

jurisdiction. United States ex rel. Newsham v. Lockheed Mis-

siles & Space Co., 190 F.3d 963, 968 (9th Cir. 1999). We also

review de novo the district court’s interpretation of ERISA.

See Spink v. Lockheed Corp., 125 F.3d 1257, 1260 (9th Cir.

1997).

III

[1] Leeson, who filed this action pursuant to 29 U.S.C.

§ 1132(a)(1)(B), alleges that he was a participant in the Trans-

america LTD plan and that federal jurisdiction existed under

29 U.S.C. § 1132(e)(1).11 Transamerica contends that the dis-

trict court lacked subject matter jurisdiction because Leeson

was not a plan participant as required by § 1132(a)(1)(B). As

Transamerica correctly notes, the Supreme Court has

explained that “[t]he express grant of federal jurisdiction in

ERISA is limited to suits brought by certain parties . . . .”

Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463

U.S. 1, 21 (1983) (concluding that the district court lacked

subject matter jurisdiction over a lawsuit brought by state tax

authorities for a declaratory judgment involving an ERISA-

covered employee benefit plan). Participants are among those

parties expressly entitled to bring suit under ERISA. 29

U.S.C. § 1132(a)(1)(B). Thus, the question presented in this

appeal is whether the challenge to Leeson’s status as a plan

participant implicates federal court subject matter jurisdiction,

11

29 U.S.C. § 1132(e)(1) provides:

(e) Jurisdiction

(1) Except for actions under subsection (a)(1)(B) of this section,

the district courts of the United States shall have exclusive juris-

diction of civil actions under this subchapter brought by the Sec-

retary or by a participant, beneficiary, [or] fiduciary. . . . State

courts of competent jurisdiction and district courts of the United

States shall have concurrent jurisdiction of actions under para-

graphs (1)(B) and (7) of subsection (a) of this section.

644 LEESON v. TRANSAMERICA DISABILITY

or the substantive adequacy of Leeson’s claim. Our prior case

law has undoubtedly contributed to the conflation of these

two distinct concepts. This appeal provides us with an oppor-

tunity, in light of the Supreme Court’s decision in Arbaugh,

to clarify that Vaughn sets forth the correct rule.

We begin by recognizing that federal courts have broad

adjudicatory authority over “all civil actions arising under the

Constitution, laws, or treaties of the United States.” 28 U.S.C.

§ 1331. Because of this extensive power, jurisdictional dis-

missals in actions predicated on federal questions are “excep-

tional.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039

(9th Cir. 2004) (quoting Sun Valley Gasoline, Inc. v. Ernst

Enters., Inc., 711 F.2d 138, 140 (9th Cir. 1983)). In Bell v.

Hood, one of the seminal decisions addressing the contours of

subject matter jurisdiction, the Supreme Court held that a

claim alleged to arise under federal law should not be dis-

missed for lack of subject matter jurisdiction if “the right of

the petitioners to recover under their complaint will be sus-

tained if the Constitution and laws of the United States are

given one construction and will be defeated if they are given

another.” 327 U.S. 678, 685 (1946). Consequently, a federal

court may dismiss a federal question claim for lack of subject

matter jurisdiction only if: (1) “the alleged claim under the

Constitution or federal statutes clearly appears to be immate-

rial and made solely for the purpose of obtaining jurisdic-

tion”; or (2) “such a claim is wholly insubstantial and

frivolous.” Id. at 682-83.

Although seemingly clear in theory, our analysis of subject

matter jurisdiction has been substantially more complicated in

practice. Strictly speaking, “subject-matter jurisdiction” con-

cerns “the courts’ statutory or constitutional power to adjudi-

cate” cases. Steel Co., 523 U.S. at 89; see also Henderson ex

rel. Henderson v. Shinseki, ___ U.S. ___, 131 S. Ct. 1197,

1202 (2011) (“[U]rg[ing] that a rule should not be referred to

as jurisdictional unless it governs a court’s adjudicatory

capacity, that is, its subject-matter or personal jurisdiction.”).

LEESON v. TRANSAMERICA DISABILITY 645

The Supreme Court, however, has observed that the term

“ ‘[j]urisdiction’ . . . ‘is a word of many, too many, mean-

ings.’ ” Arbaugh, 546 U.S. at 510 (quoting Steel Co., 523 U.S.

at 90). According to the Court, federal courts have “some-

times been profligate in [their] use of the term.” Id. Indeed,

we “have sometimes mischaracterized claim-processing rules

or elements of a cause of action as jurisdictional limitations,

particularly when that characterization was not central to the

case, and thus did not require close analysis.” Reed Elsevier,

Inc. v. Muchnick, ___ U.S. ___, 130 S. Ct. 1237, 1243-44

(2010). These cases, which the Supreme Court has referred to

as “drive-by jurisdictional rulings” due to their cursory analy-

sis, have “no precedential effect.” Arbaugh, 546 U.S. at 511

(quoting Steel Co., 523 U.S. at 91).

Acknowledging the muddled state of the case law, the

Supreme Court in Arbaugh squarely addressed the lack of

precision used by federal courts in analyzing the “subject-

matter jurisdiction/ingredient-of-claim-for-relief dichotomy.”12

Id. at 511. After the trial court entered judgment on a jury ver-

dict in favor of an employee in an action involving Title VII

of the Civil Rights Act of 1964, the employer brought a

motion challenging subject matter jurisdiction. Id. at 503-04.

Although the trial court noted the waste of judicial resources

caused by the delay in asserting such a challenge, the trial

court dismissed the action because it concluded that Title

VII’s 15-employee requirement was a jurisdictional prerequi-

site. Id. at 504. The Supreme Court reversed, holding that

12

This is a significant distinction with dispositive consequences. Subject

matter jurisdiction “can never be forfeited or waived” and federal courts

have a continuing “independent obligation to determine whether subject-

matter jurisdiction exists . . . .” Arbaugh, 546 U.S. at 514 (internal quota-

tion marks and citation omitted). Whereas a trial judge may resolve factual

disputes related to subject matter jurisdiction, a trier of fact is responsible

for resolving contested facts concerning an essential element of a claim.

Id. Additionally, “when a federal court concludes that it lacks subject-

matter jurisdiction, the court must dismiss the complaint in its entirety[,]”

including pendant state law claims. Id.

646 LEESON v. TRANSAMERICA DISABILITY

Title VII’s employee numerosity limitation is not a jurisdic-

tional requirement; therefore, it cannot be raised defensively

in a post-trial motion. Id. The Court reasoned that the limita-

tion related to the substantive adequacy of a Title VII claim

because “the 15-employee threshold appears in a separate pro-

vision that ‘does not speak in jurisdictional terms or refer in

any way to the jurisdiction of the district courts.’ ” Id. at 515

(quoting Zipes v. Trans World Airlines, Inc., 455 U.S. 385,

394 (1982)). The Court articulated a bright line rule:

If the Legislature clearly states that a threshold limi-

tation on a statute’s scope shall count as jurisdic-

tional, then courts and litigants will be duly

instructed and will not be left to wrestle with the

issue . . . [b]ut when Congress does not rank a statu-

tory limitation on coverage as jurisdictional, courts

should treat the restriction as nonjurisdictional in

character.

Id. at 515-16 (footnote omitted).

In Reed Elsevier, the Supreme Court further examined the

scope of federal court subject matter jurisdiction, this time

with respect to the Copyright Act. The Court concluded that

§ 411(a) of the Copyright Act, which requires copyright regis-

tration of original works of authorship, “is a precondition to

filing a claim that does not restrict a federal court’s subject

matter jurisdiction.” 130 S. Ct. at 1241. In so holding, the

Supreme Court applied the same approach that it followed in

Arbaugh. The Court explained that § 411’s registration

requirement “is not clearly labeled jurisdictional, is not

located in a jurisdiction-granting provision, and admits of

congressionally authorized exceptions.” Id. at 1247. There-

fore, it is properly construed as a claim-processing rule.

The Supreme Court again endeavored to clarify the distinc-

tion between jurisdictional prerequisites and claim-processing

rules in Shinseki. There, the Court held that a 120-day dead-

LEESON v. TRANSAMERICA DISABILITY 647

line for filing a notice of appeal with the Court of Appeals for

Veterans’ Claims does not have “jurisdictional” conse-

quences. Shinseki, 131 S. Ct. at 1200. The Court concluded

that the relevant provision “does not speak in jurisdictional

terms,” the provision is located in a completely separate sub-

chapter entitled “Procedure,” and construing the provision to

restrict veterans’ benefits is inconsistent with the pro-veteran

administrative scheme. Id. at 1204-06.

With the benefit of recent Supreme Court precedent, we

examined the scope of federal court subject matter jurisdiction

arising from claims involving the Individuals with Disabilities

Education Act (“IDEA”). Payne v. Peninsula Sch. Dist., 653

F.3d 863 (9th Cir. 2011) (en banc). Because the plaintiffs had

not first sought relief through an administrative due process

proceeding, the district court dismissed their IDEA claims for

lack of subject matter jurisdiction. Id. at 866. Overturning our

previous cases to the contrary, we held that the IDEA’s

exhaustion requirement is an affirmative defense, not a juris-

dictional requirement. Id. at 870-71. Three factors —derived

from recent Supreme Court cases—guided our analysis. First,

the provision “is not clearly labeled jurisdictional.” Id. at 870

(quoting Reed Elsevier, 130 S. Ct. at 1247). Second, it “is not

located in a jurisdiction-granting provision.” Id. at 870-71

(quoting Reed Elsevier, 130 S. Ct. at 1247). Finally, no other

reasons necessitated that the provision be construed as juris-

dictional. Id. at 870.

With that framework in mind, we return to the federal stat-

ute currently before us. ERISA authorizes a participant or

beneficiary to initiate a civil action in state or federal court to

recover benefits, enforce his or her rights, or clarify his or her

rights under the terms of an ERISA plan. 29 U.S.C.

§§ 1132(a)(1)(B), (e)(1). A separate section entitled “Defini-

tions” provides that:

[t]he term “participant” means any employee or for-

mer employee of an employer, or any member or

648 LEESON v. TRANSAMERICA DISABILITY

former member of an employee organization, who is

or may become eligible to receive a benefit of any

type from an employee benefit plan which covers

employees of such employer or members of such

organization, or whose beneficiaries may be eligible

to receive any such benefit.

29 U.S.C. § 1002(7). The Supreme Court has interpreted

§ 1002(7) to include a former employee who has “a colorable

claim that . . . she will prevail in a suit for benefits.” Firestone

Tire & Rubber Co. v. Bruch, 489 U.S. 101, 117 (1989).

Because federal jurisdiction existed in Firestone Tire, the

Court did not have occasion to explore the contours of partici-

pant status and ERISA subject matter jurisdiction.

[2] In Vaughn, a former employee alleged that he was enti-

tled to lost benefits caused by his employer’s breach of the

fiduciary duty to invest prudently the assets of a defined con-

tribution pension plan. 567 F.3d at 1023. Vaughn’s employer

argued that Vaughn lacked statutory standing because he had

failed to allege sufficient facts to satisfy ERISA’s definition

of the term “participant.” Id. at 1024. The district court dis-

missed the action for lack of subject matter jurisdiction. Id.

On appeal, we held that “a dismissal for lack of statutory

standing is properly viewed as a dismissal for failure to state

a claim rather than a dismissal for lack of subject matter juris-

diction.” Id. In so holding, we relied on two cases from our

sister circuits that addressed the issue. See id. (citing Lanfear

v. Home Depot, Inc., 536 F.3d 1217, 1221-22 (11th Cir. 2008)

(concluding that statutory standing under ERISA involves the

merits of the action, not subject matter jurisdiction) and

Harzewski v. Guidant Corp., 489 F.3d 799, 803-04 (7th Cir.

2007) (“Except in extreme cases . . . , the question whether

an ERISA plaintiff is a ‘participant’ entitled to recover bene-

fits under the Act should be treated as a question of statutory

interpretation fundamental to the merits of the suit rather than

a question of the plaintiff’s right to bring the suit.”)).

LEESON v. TRANSAMERICA DISABILITY 649

[3] In Harris v. Amgen, Inc., former employees of Amgen,

Inc. initiated an action against Amgen, Inc.’s directors and

officers for breach of their fiduciary duties in the operation of

two ERISA retirement plans. 573 F.3d 728, 731 (9th Cir.

2009). The district court concluded that one of the employees

lacked statutory standing as a plan participant because he had

withdrawn his assets from the plan. Id. Citing Vaughn, we

again reiterated that whether a plaintiff has statutory standing

in an ERISA action is a merits-based determination, not a

subject matter jurisdiction issue. Id. at 732 n.3.

[4] After surveying recent Supreme Court precedent and

examining the relevant provision, we conclude that Vaughn

and its progeny reached the correct outcome. We recognize

that several of our cases prior to Vaughn treated participant

status as a prerequisite to subject matter jurisdiction. See

Freeman v. Jacques Orthopaedic & Joint Implant Surgery

Med. Grp., Inc., 721 F.2d 654, 655-56 (9th Cir. 1983) (hold-

ing that the district court lacked subject matter jurisdiction

because the plaintiff was not a participant in the plan as

defined in § 1002(7)); Harris v. Provident Life Accident Ins.

Co., 26 F.3d 930, 934 (9th Cir. 1994) (concluding that “a fed-

eral court has no jurisdiction to hear a civil action under

ERISA that is brought by a person who is not a ‘participant,

beneficiary, or fiduciary.’ ” (quoting Franchise Tax Bd., 463

U.S. at 27)); Curtis, 53 F.3d at 1027 (holding that “a plain-

tiff’s standing under section 1132(a)(1) is a prerequisite to

ERISA jurisdiction.”). Applying the approach set forth in

Arbaugh, however, we conclude that these cases failed to ade-

quately consider the “critical difference[s] between true juris-

dictional conditions and nonjurisdictional limitations on

causes of action . . . .” Reed Elsevier, 130 S. Ct. at 1244

(internal quotation marks and citations omitted) (alteration in

original). In deciding these cases, our court did not have the

benefit of the Supreme Court’s clarification on the proper

scope of jurisdictional rulings as articulated in Shinseki, Reed

Elsevier, and Arbaugh. Accordingly, in light of Vaughn, they

650 LEESON v. TRANSAMERICA DISABILITY

represent the type of “drive-by jurisdictional rulings” that lack

any precedential weight. Arbaugh, 546 U.S. at 511.

First, the only limitation to invoking federal court jurisdic-

tion under § 1132(a)(1)(B) relates to the categories of individ-

uals entitled to initiate a civil action in state or federal court.

Franchise Tax Bd., 463 U.S. at 21. As explained above, par-

ticipants are among those parties authorized to bring suit

under ERISA. 29 U.S.C. § 1132(a)(1)(B). Like Title VII’s

employee numerosity requirement, the definition of “partici-

pant” “appears in a separate provision that ‘does not speak in

jurisdictional terms or refer in any way to the jurisdiction of

the district courts.’ ” Arbaugh, 546 U.S. at 515 (quoting

Zipes, 455 U.S. at 394). Section 1002(7) serves to identify

those plaintiffs who may be entitled to relief, not to limit the

authority of federal courts to adjudicate claims under ERISA.

Second, nothing in the jurisdiction-conferring provision

requires that a plaintiff must assert anything more than a col-

orable claim that he or she is a participant in order to assert

a claim under ERISA. Our earlier cases imported an addi-

tional requirement—that a plaintiff must also actually prove

that he or she is a participant to obtain access to federal court.

In light of Arbaugh, however, “we are reluctant to infer such

a restriction where Congress has not made it explicit.” Payne,

653 F.3d at 870.

[5] Finally, we can discern no other reason for importing

§ 1002(7)’s definitions into ERISA’s jurisdiction-conferring

provisions. To conclude otherwise would contravene clearly

established precedent. Bell, 327 U.S. at 685 (explaining that

“the right of the petitioners to recover under their complaint

will be sustained if the Constitution and laws of the United

States are given one construction and will be defeated if they

are given another.”). If the district court concludes that Lee-

son is a plan participant, he may be entitled to relief. If, on the

other hand, the district court concludes that Leeson is not a

plan participant, his claim fails. See 29 U.S.C.

LEESON v. TRANSAMERICA DISABILITY 651

§ 1132(a)(1)(B). Because Leeson’s ERISA claim rises and

falls on the district court’s determination of participant status,

the construction of the term “participant” involves a merits-

based determination, even if it results in a dismissal. As a

result, he has a “right” to bring suit in federal court. Bell, 327

U.S. at 685.

[6] We recognize that this conclusion requires us to over-

rule our prior statements to the contrary. This is appropriate

because the current case falls within one of our exceptions to

the general rule that a three-judge panel may not overrule a

prior three-judge panel opinion. Miller v. Gammie, 335 F.3d

889, 899 (9th Cir. 2003) (en banc). We have held:

that in circumstances . . . where the reasoning or the-

ory of our prior circuit authority is clearly irreconcil-

able with the reasoning or theory of intervening

higher authority, a three-judge panel should consider

itself bound by the later and controlling authority,

and should reject the prior circuit opinion as having

been effectively overruled.

Id. at 893. We have also specifically noted that drive-by juris-

dictional rulings lack precedential force. See Gospel Missions

of Am. v. City of Los Angeles, 328 F.3d 548, 554 (9th Cir.

2003) (“[W]e would not give precedential effect to a ‘drive-

by’ jurisdictional determination by our or a higher court . . . .”

(quoting Steel Co., 523 U.S. at 91)); Bell v. Bonneville Power

Admin., 340 F.3d 945, 952 (9th Cir. 2003) (“‘[D]rive-by juris-

dictional rulings’ are not precedential.” (quoting Steel Co.,

523 U.S. at 91)). In light of the above discussion, intervening

Supreme Court precedent compels us to conclude that partici-

pant status is an element of an ERISA claim, not a jurisdic-

tional limitation. Therefore, the reasoning applied in Arbaugh,

Reed Elsevier, and Shinseki requires us to overrule Freeman,

Harris v. Provident Life Accident Insurance Co., and Curtis,

to the extent that they held that participant status as defined

652 LEESON v. TRANSAMERICA DISABILITY

in § 1002(7) is a prerequisite to federal court subject matter

jurisdiction.

[7] Accordingly, we conclude that the district court errone-

ously dismissed Leeson’s case for lack of subject matter juris-

diction. By asserting a colorable claim that he is a plan

participant, Leeson has satisfied the threshold for establishing

federal court subject matter jurisdiction. The issue of partici-

pant status goes to the merits of his claim and not to the sub-

ject matter jurisdiction of the district court. In this context, the

district court should not have attempted to resolve the issue of

participant status when ruling on Transamerica’s motion to

dismiss under Rule 12(h)(3). Rather, because Leeson’s partic-

ipant status relates to the merits of his claim, the district court

should have addressed it at the summary judgment stage or at

trial.

IV

On remand, as we directed in our prior disposition, unless

the district court determines that another plan applies, it shall

apply the 1997 Restatement Plan. Further, if the district court

determines that Leeson was a plan participant, it shall comply

with our prior mandate and review de novo whether Trans-

america improperly terminated Leeson’s LTD benefits under

the 1997 Restatement Plan (or other governing plan, as deter-

mined by the district court). In light of the limited nature of

our holding, Leeson is not foreclosed from raising the equita-

ble principles of estoppel and waiver to bar Transamerica’s

challenge to his eligibility as a plan participant. Leeson is

likewise free to argue that Transamerica is foreclosed from

raising an entirely new eligibility argument, when it failed to

do so in the administrative process. We express no views on

the merits of any of these issues.

VACATED and REMANDED.

Leeson shall recover his costs on appeal.