The opinion
United States Court of Appeals,
Fifth Circuit.
No. 94-50089
Summary Calendar.
SELF-INSURANCE INSTITUTE OF AMERICA, INC., Plaintiff-Appellee,
v.
Claire KORIOTH, et al., Defendants-Appellants.
Sept. 15, 1994.
Appeal from the United States District Court for the Western
District of Texas.
Before SMITH, EMILIO M. GARZA and PARKER, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Claire Korioth, on behalf of the State of Texas, appeals an
award of back taxes and attorneys' fees and costs to Self-Insurance
Institute of America, Inc. ("SIIA"), stemming from the district
court's holding that TEX.INS.CODE art. 21.07-6 was preempted by the
Employee Retirement and Income Security Act of 1974, 29 U.S.C. §§
1001-1461 ("ERISA"). Concluding that the court correctly awarded
the back taxes but incorrectly assessed attorneys' fees and costs,
we affirm in part, reverse in part, and remand in part.
I.
The district court originally dismissed the case for want of
jurisdiction, but this court reversed and remanded for a review on
the merits. SIIA v. Korioth, 993 F.2d 479 (5th Cir.1993). On
remand, the district court granted SIIA's motion for summary
judgment as to the preemption issue and awarded SIIA back taxes and
attorneys' fees and costs. This appeal, as to the award only,
1
follows.
II.
We review a grant of summary judgment de novo. Thomas v.
Price, 975 F.2d 231, 235 (5th Cir.1992). Summary judgment is
appropriate where the record discloses "that there is no genuine
issue as to any material fact and that the moving party is entitled
to judgment as a matter of law." FED.R.CIV.P. 56(c). In reviewing
the summary judgment, we apply the same standard as did the
district court. Waltman v. International Paper Co., 875 F.2d 468,
474 (5th Cir.1989).
A.
Korioth first asserts that the Eleventh Amendment bars SIIA's
recovery for past taxes collected by the state under art. 21.07-6.
Without reaching the issue of whether the Eleventh Amendment is
applicable to an ERISA action, we assume arguendo that it is and
conclude that the recovery of back taxes is not a retrospective
monetary award and thus is not barred by the doctrine of Ex parte
Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908).
The Young fiction—that acts of state officials that are
contrary to federal law cannot have been authorized by the state
and therefore are not subject to Eleventh Amendment immunity—has
been interpreted by the Supreme Court so as not to allow
retroactive monetary relief against a state. See Pennhurst State
Sch. & Hosp. v. Halderman, 465 U.S. 89, 102-03, 104 S.Ct. 900, 909,
79 L.Ed.2d 67 (1984). The crucial inquiry is not the magnitude of
the impact of the ruling on the state's treasury, but whether the
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impact is a "necessary result of compliance with decrees which by
their terms were prospective in nature." Edelman v. Jordan, 415
U.S. 651, 668, 94 S.Ct. 1347, 1358, 39 L.Ed.2d 662 (1974); see
also Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287
(1970) (holding that where the termination of benefits paid to
welfare recipients without a hearing violated due process, the
ancillary effect of retrospective reimbursement was a necessary
result of compliance with a prospective decree).
The Court in Edelman reversed the award of retrospective
payments because it was a form of compensation for the slower
processing of public aid applications, amounting to an award of
damages against the state. Edelman, 415 U.S. at 668, 94 S.Ct. at
1358. "It is measured in terms of a monetary loss resulting from
a past breach of a legal duty on the part of the defendant state
officials"; equitable restitution of this sort is barred expressly
by the Eleventh Amendment. Id. Payment of funds "as a necessary
consequence of compliance in the future with a substantive
federal-question determination" is constitutional. Id.
We conclude that the refund of wrongly withheld tax dollars is
not an unconstitutional award of compensatory damages, but rather
a restoration of monies that is ancillary to the prospective relief
ordered by the court. See Association of Surrogates v. New York,
940 F.2d 766, 774 (2d Cir.1991), cert. denied, --- U.S. ----, 112
S.Ct. 936, 117 L.Ed.2d 107 (1992). "The State received monies from
the ERISA plans to which it was not entitled. The funds must be
returned." E-Systems, Inc. v. Pogue, 929 F.2d 1100, 1104 (5th
3
Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 585, 116 L.Ed.2d
610 (1991).
Korioth's citations to Milliken v. Bradley, 433 U.S. 267, 97
S.Ct. 2749, 53 L.Ed.2d 745 (1977), and Ford Motor Co. v. Department
of Treas., 323 U.S. 459, 65 S.Ct. 347, 89 L.Ed. 389 (1945), are
inapposite. First, the footnote from Milliken that Korioth quotes
does not support his analogy to Edelman. See Milliken, 433 U.S. at
290 n. 22, 97 S.Ct. at 2762 n. 22 ("In contrast to Edelman, there
was no money award here.... This case simply does not involve
individual citizens' conducting a raid on the state treasury for an
accrued liability."). We do not believe that the refund of
wrongfully held monies is tantamount to "a raid on the state
treasury"; rather, the injunction entered in this case "could not
instantaneously restore the victims of unlawful conduct to their
rightful condition." Milliken, 433 U.S. at 290 n. 21, 97 S.Ct. at
2762 n. 21. As such, the award of back taxes is appropriate.
Ford Motor Co. is inapplicable on procedural grounds. There,
the Court held the suit to be an action against the State of
Indiana, not against the collecting official as an individual. As
such, no Young question was involved, and the Court correctly
determined that the only litigable issue was whether the State had
consented to the suit. Ford Motor Co., 323 U.S. at 464, 65 S.Ct.
at 350-51. In contrast, Korioth has not contended that this is a
suit against the state; rather, the claim is "for the imposition
of personal liability on individual defendants for sums illegally
exacted." Id.
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In summary, assuming arguendo that the Eleventh Amendment
applies, we therefore hold that the district court's award of back
taxes to SIIA is not an unconstitutional retroactive monetary
damage assessed against the State of Texas. The action SIIA has
brought is an Ex parte Young action seeking the refund of
wrongfully withheld tax monies from the responsible individuals.
The refund of tax dollars is ancillary to the court's prospective
injunctive relief against the enforcement of TEX.INS.CODE art.
21.07-6 and thus is constitutional as assessed against the named
defendants.
B.
Korioth next contends that SIIA failed to offer any evidence
that its members administer only ERISA-governed plans, and the
court's order is, therefore, too broad. We agree with Korioth that
the Texas Commissioner of Insurance may enforce art. 21.07-6
"against third party administrators of non-ERISA governed insurance
plans, or against third party administrators of both ERISA and
non-ERISA governed plans in their capacity as administrators of
non-ERISA governed plans." NGS Am., Inc. v. Barnes, 998 F.2d 296,
300 (5th Cir.1993). Because the district court did not elicit this
information from SIIA and thus was unable to determine to what
extent any particular administrator would be exempt from state
regulation, we remand to the district court for further inquiry.
C.
Korioth also takes issue with SIIA's status as an
associational fiduciary under ERISA, 29 U.S.C. § 1132, and under
5
Texas law. This issue was addressed previously by this court, and
we refuse to revisit it in this appeal. See SIIA, 993 F.2d at 484-
85 ("This finding is buttressed by that fact that under Texas state
law SIIA's members are considered fiduciaries and, thus, expressly
enumerated under § 1132.... Therefore, SIIA is properly in a
position to represent its members in a representative capacity and
has standing to do so.").
Korioth's motion for reconsideration is not properly before
us in this appeal. As such, our prior holding that SIIA is an
associational fiduciary and has standing to sue on behalf of its
fiduciary members is binding on this appeal. To the extent,
however, that SIIA represents insurance plans that NGS Am., Inc. v.
Barnes does not exempt expressly from the auspices of art. 21.07-6,
SIIA does not have associational status to sue on behalf of those
plans.
III.
Korioth next challenges the district court's order requiring
him to pay SIIA's attorneys' fees and costs. Although Korioth does
not contest that 29 U.S.C. § 1132(g)(1) authorizes the district
court to assess attorneys' fees in ERISA actions brought by a
participant, beneficiary, or fiduciary, he alleges that SIIA is not
a fiduciary and thus is not one of the enumerated parties. We
agree and therefore reverse the award.
As Korioth points out, this court, in the previous appeal of
the jurisdictional and standing questions, held that SIIA could
maintain this suit under 28 U.S.C. § 1331 (original jurisdiction
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for district courts where actions arise under the Constitution,
laws, or treatises of the United States), notwithstanding the fact
that the suit was not authorized expressly by 29 U.S.C. § 1132 (an
ERISA provision conferring standing for participants,
beneficiaries, and fiduciaries only). SIIA, 993 F.2d at 481-84.
Furthermore, SIIA had sufficient associational standing to bring
suit because its members were expressly enumerated fiduciaries
under § 1132. Id. at 484-85. We did not say that SIIA itself was
an enumerated fiduciary, but only that its standing to sue derived
from its representative and associational capacity in relation to
its fiduciary members. Id.
Because the plain language of § 1132 authorizes the district
court to award attorneys' fees only where the suit is maintained by
a participant, beneficiary, or fiduciary, we refuse to expand the
plain meaning of § 1132 to include parties with associational
standing. We are particularly hesitant to read beyond the plain
language of a statute where the matter at issue is in direct
conflict with the prevailing common law—absent statutory language
to the contrary, the American Rule provides that each party is
responsible for its own attorneys' fees and costs. See Alyeska
Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 247, 95 S.Ct.
1612, 1616-17, 44 L.Ed.2d 141 (1975). Although we are aware that
each individual member could have brought suit on its own behalf
and that associational standing confers benefits by facilitating
joint action, we decline to read into § 1132 a provision that
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Congress did not see fit to express.1
We are not convinced by SIIA's argument in the alternative
that the Federal Declaratory Judgment Act, 28 U.S.C. § 2201,
authorizes the award of attorneys' fees. Although we agree that
the Act authorizes fees where applicable state law would otherwise
allow them, see Mercantile Nat'l Bank v. Bradford Trust Co., 850
F.2d 215, 218 (5th Cir.1988), we disagree with SIIA that Texas
Educ. Agency v. Leeper, 1994 WL 264969, --- S.W.2d ---- (Tex. June
15, 1994), authorizes the assessment of fees against the State.
See TEX.CIV.PRAC. & REM.CODE §§ 37.001, 37.009.
In Leeper, the court authorized the award of attorneys' fees
against municipalities,
insofar as [the Texas Uniform Declaratory Judgments Act
("DJA") ] defines "person" as including municipalities,
requires municipalities to be joined in actions involving the
validity of ordinances, and allows awards of attorneys fees
and costs without any indication of an intent to exempt
municipalities.... We conclude that by authorizing
declaratory judgment actions to construe the legislative
enactments of governmental entities and authorizing awards of
attorney fees, the DJA necessarily waives governmental
immunity for such awards.
1994 WL 264969, at *12-*13, --- S.W.2d at ---- - ----.
The Texas Supreme Court's decision to hold municipalities
liable for attorneys' fees apparently stems in part from the
specific enumeration of municipalities under § 37.001. Although
the Attorney General is required to be joined in actions that
1
See also, AIRCO Indus. Gases, Inc. v. Teamsters Pension
Trust Fund, 668 F.Supp. 893, 905 (D.Del.1987) (refusing to extend
§ 1132 to a plaintiff suing in its capacity as an employer, not
as a fiduciary), rev'd in part on other grounds, 850 F.2d 1028
(3d Cir.1988).
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challenge the constitutionality of statutes, TEX.CIV.PRAC. & REM.CODE
§§ 37.006, the state is not an enumerated party under § 37.001.
Furthermore, "[t]here is in § 37.009 nothing that even remotely
suggests a waiver of governmental immunity in suits brought under
the [DJA].... When such waivers are made, the Legislature does so
in relatively explicit terms." Texas Empl. Comm'n v. Camarena, 710
S.W.2d 665, 671 (Tex.App.—Austin 1986), rev'd on other grounds, 754
S.W.2d 149 (Tex.1988); see also Rodeheaver v. Steigerwald, 807
S.W.2d 790, 793 (Tex.App.—Houston [14th Dist.] 1991, writ denied)
("Attorney's fees are not recoverable against a governmental entity
under the [DJA]."), cert. denied, --- U.S. ----, 112 S.Ct. 1167,
117 L.Ed.2d 414 (1992).
Because the plain language of §§ 37.001 and 37.009 does not
include the state as a party against which attorneys' fees may be
levied, the Leeper court's decision does not extend to the state in
this action. We therefore reverse the award of attorneys' fees and
costs to SIIA.
IV.
We AFFIRM the district court's award of back taxes to SIIA but
REMAND for further consideration of the fiduciary status of SIIA's
associational members. We also REVERSE the assessment of
attorneys' fees and costs against Korioth.
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