Jamal Kifafi v. Hilton Hotel Retirement Plan

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 21, 2012 Decided December 14, 2012

No. 11-7113

JAMAL J. KIFAFI, INDIVIDUALLY, AND ON BEHALF OF ALL

OTHERS SIMILARLY SITUATED,

APPELLEE

v.

HILTON HOTELS RETIREMENT PLAN, ET AL.,

APPELLANTS

Consolidated with 11-7151

Appeals from the United States District Court

for the District of Columbia

(No. 1:98-cv-01517)

Thomas C. Rice argued the cause for appellants-cross

appellees. With him on the briefs were Andrew M. Lacy and

Jonathan K. Youngwood.

Stephen R. Bruce argued the cause for appellee-cross

appellant. With him on the briefs was Allison C. Pienta.

Before: SENTELLE, Chief Judge, BROWN and

KAVANAUGH, Circuit Judges.

2

Opinion for the Court filed by Circuit Judge BROWN.

BROWN, Circuit Judge: In the late 1990s, Jamal Kifafi, an

erstwhile Hilton employee and participant in Hilton’s

retirement plan (“Plan”), noticed a problem with the benefits

calculation on his statement of benefits. Concluding the Plan

violated the Employee Retirement Income Security Act

(“ERISA”) in a number of ways, he sued. Now, almost fifteen

years and twelve district court opinions later, we join the fray

and force the parties a little closer to final resolution of their

dispute. The district court found that the Plan was

impermissibly backloaded and that Hilton failed to calculate

participants’ vesting credit properly, and it imposed relief

accordingly. We affirm because the district court’s handling

of the case was well within its discretion.

I

ERISA guarantees neither a particular benefit nor a

particular method for calculating the benefit. Alessi v.

Raybestos-Manhattan, Inc., 451 U.S. 504, 511–12 (1981). Yet

employers do not have carte blanche.

ERISA defines the universe of permissible benefit-

accrual rates by requiring defined benefit plans to satisfy

one—and only one—of three rules designed to prevent

backloading, which occurs when a plan awards benefits to

employees in later years of service at a rate disproportionately

higher than the rate for employees in earlier years of service.

See 29 U.S.C. § 1054; H.R. REP. NO. 93-807, at 21 (1974),

reprinted in 1974 U.S.C.C.A.N. 4670, 4688 (defining

“backloading”). The three rules contained in this anti-

backloading provision are known as the 3% rule, the

fractional rule, and the 133 1/3% rule. The 3% rule

“prescribes a minimum percentage of the total retirement

3

benefit that must be accrued in any given year.” Alessi, 451

U.S. at 512 n.9. The fractional rule is “essentially a pro rata

rule under which in any given year, the employee’s accrued

benefit is proportionate to the number of years of service as

compared with the number of total years of service

appropriate to the normal retirement age.” Id. The 133 1/3%

rule, meanwhile, “permits the use of any accrual formula as

long as the accrual rate for a given year of service does not

vary beyond a specified percentage from the accrual rate of

any other year under the plan.” Id. Specifically, the “rate of

benefit accrual in any future year may not be more than one-

third greater than the rate in the current year.” Lonecke v.

Citigroup Pension Plan, 584 F.3d 457, 464 (2d Cir. 2009).

ERISA circumscribes pension plans in other ways as

well, such as by setting minimum vesting standards. Where

accrual relates to “the amount of the benefit to which the

employee is entitled,” vesting relates to when an employee

has a right to the accrued benefit. Holt v. Winpisinger, 811

F.2d 1532, 1536 (D.C. Cir. 1987) (quoting Stewart v. Nat’l

Shopmen Pension Fund, 730 F.2d 1552, 1562 (D.C. Cir.

1984)) (internal quotation marks omitted). Benefit accrual and

vesting are not coextensive concepts, so an employee might

“earn credit toward vesting without accumulating any pension

benefits.” Id. at 1537. Because vesting is tied to length of

employment, this would happen if an employee works

without participating in the plan (“nonparticipating service”),

although the benefits do not actually vest until the employee

begins participating in the plan. ERISA generally requires

employers to count all of an employee’s years of service when

calculating vesting credit, including years completed before

the employee began participating in the plan. See 29 U.S.C.

§ 1053; Holt, 811 F.2d at 1536–37.

4

This appeal implicates both rules.1 In his complaint,

Kifafi alleged that the Plan’s benefit accrual formula was

impermissibly backloaded and that Hilton, the Plan sponsor

and administrator, violated both ERISA and the Plan by

failing to credit certain years of service when calculating

employees’ vesting credit.

Unfortunately, the parties were not content to let the

district court decide (relatively) straightforward issues of law.

Instead, as the district court later put it, they “shifted their

burden to the Court to determine which facts are in dispute

between the parties” and they “repeatedly shifted their

arguments such that the Court has consistently been presented

with moving targets.” Kifafi v. Hilton Hotels Ret. Plan, 616 F.

Supp. 2d 7, 22 (D.D.C. 2009) (“Kifafi I”). This included

changing the facts of the case.

Before Kifafi filed suit,2 the Plan calculated normal

retirement benefits as a function of participants’

compensation and years of service, less the participant’s

“integrated benefits,” that is, benefits payable to that

participant under another pension plan or government-

sponsored system to which Hilton contributed (including half

of the participant’s social security benefits). This calculation

guaranteed, at a minimum, 2% of the participant’s average

monthly compensation multiplied by the participant’s years of

service up to twenty-five years, plus 0.5% of the average

1

Facts are set out at greater length in the district court’s

opinions. See, e.g., Kifafi v. Hilton Hotels Ret. Plan, 616 F. Supp.

2d 7 (D.D.C. 2009). We recite only those facts relevant to this

appeal.

2

The Plan underwent a number of amendments before Kifafi

filed suit, but we do not differentiate among them because the last

amendment before Kifafi filed suit that is reflected in the record

applied retroactively.

5

monthly compensation for each year after twenty-five years,

minus the integrated benefits offset. The Plan also included

the following language in a separate article titled “Limitation

on Benefits and Payments”: “The method of computing a

Participant’s accrued benefit under the provisions of Article

IV is intended to satisfy the requirements of the 133-1/3 rule

provided in Section 411(b)(1)(B) of the [Internal Revenue]

Code.”

After Kifafi moved for class certification (but before the

district court ruled on the motion), Hilton amended the Plan

(“1999 Plan”) to eliminate “any controversy regarding the

proriety [sic] of the rate of benefit accruals under the Plan.”

The 1999 Plan modified the benefit accrual formula using a

“greater of” approach: Plan participants would receive the

greater of the benefit determined under the old Plan or the

benefit determined under the 1999 Plan’s modified accrual

formula, which, as the IRS subsequently determined, satisfied

the fractional rule. The 1999 Plan also made two other

retroactive changes: first, it decreased the relevant percentage

of employees’ average monthly compensation during the first

twenty-five years of service from 2% to 1.33%; and second, it

increased the social security offset.

The district court ultimately certified Kifafi’s proposed

“benefit-accrual class” for the backloading claim—all former

and current Hilton employees whose pension benefits “have

been, or will be, reduced” because of the backloading—but

not Kifafi’s proposed class for the vesting claim. Four years

later, after the parties completed discovery, Kifafi renewed his

motion to certify the vesting claim and sought to include as

class representatives three class members he hoped would

cure any deficiencies in the original class certification motion.

This time, the court granted the certification motion (though it

denied the motion to intervene), certifying for class treatment

6

Kifafi’s claim that Hilton “failed to credit employees with

years of union service for vesting purposes.” The court

ultimately granted summary judgment to Kifafi on both

claims and, eventually, ordered Hilton (1) to amend the Plan’s

benefit accrual formula by capping the social security offset,

thereby bringing the Plan into retroactive compliance with the

133 1/3% rule, and (2) to administer a claim procedure for

crediting participants’ years of union service for vesting

purposes. Both parties appealed.

II

As an initial matter, Hilton claims the 1999 Plan mooted

Kifafi’s backloading claim, an argument this Court assesses

de novo. Del Monte Fresh Produce Co. v. United States, 570

F.3d 316, 321 (D.C. Cir. 2009).3 As most of the issues in this

case presuppose a live controversy over the backloading

claims, Hilton’s victory on this point would resolve those

other issues quite tidily. Unfortunately for Hilton, its

arguments do not persuade us. See Honeywell Int’l, Inc. v.

NRC, 628 F.3d 568, 576 (D.C. Cir. 2010) (explaining that the

party asserting mootness carries a “heavy burden”).

3

By pegging mootness determinations to an abuse of discretion

standard, Kifafi oversimplifies the relationship between mootness

and equitable relief. Mootness and its various exceptions implicate

a court’s jurisdiction. Initiative & Referendum Inst. v. U.S. Postal

Serv., 685 F.3d 1066, 1074 (D.C. Cir. 2012). There is, however, a

doctrine of “prudential mootness” under which a court may dismiss

a case in equity despite concluding the case is not in fact moot. See,

e.g., Penthouse Int’l, Ltd. v. Meese, 939 F.2d 1011, 1019–20 (D.C.

Cir. 1991) (explaining that prudential mootness doctrine allows

courts to refrain from exercising equitable authority). Vesting the

district court with discretion to dismiss a case on grounds of

prudential mootness does not alter the standard of review for

determinations of constitutional mootness.

7

Mootness doctrine “limits federal courts to deciding

actual, ongoing controversies.” Am. Bar Ass’n v. FTC, 636

F.3d 641, 645 (D.C. Cir. 2011) (internal quotation marks

omitted). A case is moot when the court’s decision “will

neither presently affect the parties’ rights nor have a more-

than-speculative chance of affecting them in the future.” Id.

(internal quotation marks omitted). Accordingly, a court must

dismiss a properly-brought case if it is subsequently rendered

moot. Honeywell Int’l, 628 F.3d at 576. Hilton marshals three

arguments to show that happened here: the district court relied

on bad law, the 1999 Plan did not violate ERISA’s “anti-

cutback” provision, and the backloading was eliminated and

would not likely recur.

There are problems with each argument, but at bottom,

the issue comes down to whether a party can deprive a court

of jurisdiction with a wave of its hand.4 It cannot, no matter

how contritely it apologizes for the conduct giving rise to the

litigation. “It is well settled that the voluntary cessation of

allegedly unlawful conduct does not moot a case in which the

legality of that conduct is challenged.” Christian Legal Soc’y

Chapter of the Univ. of California, Hastings Coll. of the Law

v. Martinez, 130 S. Ct. 2971, 3009 n.3 (2010) (Alito, J.,

dissenting). A defendant’s voluntary cessation of allegedly

unlawful conduct moots a case only if (1) “there is no

reasonable expectation . . . that the alleged violation will

4

Hilton’s attempt to undermine the legal support for the district

court’s finding of non-mootness improperly shifts Hilton’s burden

of showing mootness onto the district court: knocking down an

argument disputing mootness does little to prove the case is moot.

And the 1999 Plan’s compliance with the anti-cutback provision

has only contingent relevance to the mootness analysis, a

completely separate inquiry: compliance with the anti-cutback

provision is not sufficient to moot a case.

8

recur,” and (2) “interim relief or events have completely and

irrevocably eradicated the effects of the alleged violation.”

Am. Bar Ass’n, 636 F.3d at 648 (quoting HARRY T. EDWARDS

& LINDA A. ELLIOTT, FEDERAL STANDARDS OF REVIEW—

REVIEW OF DISTRICT COURT DECISIONS AND AGENCY

ACTIONS 114–15 (2007)) (internal quotation marks omitted).

Hilton’s argument that the backloading will not recur

boils down to its promise not to violate the anti-backloading

provision. See Hilton Br. at 50–51 (arguing it would be

“illogical,” “irrational,” and “absurd” to further violate the

anti-backloading provision because doing so would subject

Hilton to further litigation and might entail adverse tax

consequences). This is insufficient. See United States v.

Concentrated Phosphate Export Ass’n, 393 U.S. 199, 203

(1968) (finding insufficient “appellees’ own statement that it

would be uneconomical for them to engage in [the challenged

activity]”). And even were it sufficient, Hilton has given us

little reason to think its intentions are a good predictor of

reality. When amending the Plan in 1999, for instance, Hilton

flatly asserted its belief “that the Plan satisfied ERISA’s

benefit accrual requirements even without the amendment.”

See also Kifafi I, 616 F. Supp. 2d at 28 (noting that Hilton

“has insisted upon the legality of the challenged practices”).

As the district court concluded—and Hilton now concedes—

this assessment was wrong. Hilton may have made its

erroneous statements in good faith, but that does little to

reassure us that it is “absolutely clear” the backloading could

not reasonably be expected to recur. Friends of the Earth, Inc.

v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 189

(2000). This is a complicated area of law in which even the

best-intentioned actors may yet do wrong.

Because Hilton cannot meet its burden of showing there

is no reasonable likelihood of future backloading, we need not

9

determine whether the 1999 Plan eradicated the effects of the

backloading. Hilton’s inability to show the first scuttles all

need for the second. See Cnty. of L.A. v. Davis, 440 U.S. 625,

631 (1979).

III

The parties challenge the district court’s remedy and

class certification from a number of angles. We review the

district court’s class certification decisions and its remedial

decisions for abuse of discretion. See, e.g., Garcia v. Johanns,

444 F.3d 625, 631 (D.C. Cir. 2006); SEC v. Banner Fund

Int’l, 211 F.3d 602, 616 (D.C. Cir. 2000). To determine if the

district court applied the wrong legal standard or otherwise

“misapprehended the underlying substantive law,” Brayton v.

Office of the U.S. Trade Representative, 641 F.3d 521, 524

(D.C. Cir. 2011) (quoting Kickapoo Tribe of Indians of the

Kickapoo Reservation in Kan. v. Babbitt, 43 F.3d 1491, 1497

(D.C. Cir. 1995)) (internal quotation marks omitted), we

consider whether the court “failed to consider a relevant

factor” or “relied on an improper factor,” as well as whether

“the reasons given reasonably support the conclusion.” Peyton

v. DiMario, 287 F.3d 1121, 1126 (D.C. Cir. 2002).

A

Hilton first challenges the district court’s general

remedial approach to the backloading claim. In granting

Kifafi summary judgment on the issue, the district court relied

on the pre-1999 Plan’s statement of intent and Hilton’s

representation of compliance with the 133 1/3% rule to the

court and the IRS. Stating that Hilton was “required to

comply with the accrual method it expressly selected,” the

court concluded that “the Plan’s participants are entitled to

receive the benefits they would have accrued had the Plan

10

complied with the 133 1/3% rule.” Kifafi I, 616 F. Supp. 2d at

24. It therefore directed the parties to discuss, “at a minimum,

the methodolog[y] that should be used to . . . provide

members of the ‘benefit-accrual class’ with the benefits they

would have accrued under the Plan’s initial benefit accrual

formula, amended only to bring it into compliance with the

133 1/3% rule.” Hilton now argues that requiring the Plan to

comply with the 133 1/3% rule in particular, rather than the

anti-backloading provision generally, was an abuse of

discretion. We disagree.

Whether a plan satisfies the anti-backloading provision—

and which anti-backloading rule it satisfies—turns on the

nature of the plan. In other words, the terms of the plan will or

will not be amenable to analysis under any given rule as a

matter of fact. See, e.g., Tomlinson v. El Paso Corp., 653 F.3d

1281, 1290 (10th Cir. 2011) (noting party concession the plan

“must qualify under the ‘133 1/3 percent’ test if it qualifies at

all”); Hurlic v. S. Cal. Gas Co., 539 F.3d 1024, 1033 n.4 (9th

Cir. 2008) (disclaiming need to consider plan’s ability to

satisfy fractional or 3% rules because plan satisfies the

133 1/3% rule); Carollo v. Cement & Concrete Workers Dist.

Council Pension Plan, 964 F. Supp. 677, 681 (E.D.N.Y.

1997) (noting party agreement that “the 133 1/3% Rule is the

only standard the Plan is capable of satisfying”). A plan must

be measured not against the anti-backloading rule it says it is

following, but against ERISA’s general provision for plans to

satisfy any one of the three anti-backloading rules. As Hilton

points out, it would be absurd to find a plan that in fact

satisfies one of the anti-backloading rules to be backloaded

because it “intends” to comply with a different rule.

Such is not the case here because the Plan did not satisfy

any of the anti-backloading rules, but that does not change the

fact that the Plan’s statement of intent is irrelevant to the

11

backloading analysis. The 133 1/3% rule delimits only a

range of possibility; to comply, plans must still set out the

benefit accrual rate. See 29 U.S.C. § 1102(b)(4); Kennedy v.

Plan Adm’r for DuPont Sav. & Inv. Plan, 555 U.S. 285, 300

(2009); Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73,

83 (1995). And once a plan sets out an accrual rate, the rate is

directly testable against the various anti-backloading rules.

Kifafi’s claim that statements of intent are “clearly”

enforceable terms therefore overstates the analogy between

ERISA plans and contracts where intent is relevant either

under the substantive law or to clarify ambiguity. See, e.g., In

re Palmdale Hills Prop., LLC, 457 B.R. 29, 44–45 (B.A.P.

9th Cir. 2011) (invoking language of intent in order to

determine parties’ intent). Certainly, no one has claimed the

accrual formula is ambiguous.

But this does not mean the district court abused its

discretion. Once the court determined the Plan violated

ERISA, it entered the world of equity. See 29 U.S.C.

§ 1132(a)(3); CIGNA Corp. v. Amara, 131 S. Ct. 1866, 1875,

1879–80 (2011) (concluding that 29 U.S.C. § 1132(a)(3)

authorized district court’s reformation of plan and injunction

requiring the plan to pay corresponding benefits). And

Hilton’s premise that a plan’s prospective compliance with

ERISA’s anti-backloading mandate circumscribes a court’s

remedial options in the face of past violations cannot be

sustained. We see no reason why the court’s remedy need be a

perfect reflection of the legal violations supporting the

remedy; the district court exercised a discretion informed by

much more than just the ERISA violation. See Cobell v.

Salazar, 573 F.3d 808, 813 (D.C. Cir. 2009); Sheaffer v.

Warehouse Emps. Union, Local No. 730, 408 F.2d 204, 206–

12

07 (D.C. Cir. 1969). Hilton misses this distinction.5 No doubt

a plan may alter its accrual formula to comply with a different

anti-backloading rule than the one it had hitherto complied

with (assuming it does not violate ERISA in other ways); the

IRS accordingly concluded the 1999 Plan satisfied the

fractional rule, even though the pre-1999 Plan had failed to

satisfy any of the anti-backloading rules. But the standard for

prospective compliance does not ipso facto establish the

adequacy of a retroactive amendment or court-imposed relief.

To reduce the district court’s remedy to nothing more than a

demand that Hilton comply with any of the anti-backloading

rules would—like evaluating a movie by analyzing a single

frame—ignore too much.

First, the parties did not make things easy for the district

court. After Kifafi filed suit, for example, Hilton amended the

Plan into compliance with the anti-backloading provision,

simultaneously making two changes to the benefit accrual

formula unfavorable to Plan participants, and over the next

few years, Hilton amended the Plan additional times in

response to Kifafi’s various legal claims. This, in addition to

freezing the Plan’s benefit accruals in 1996, which Kifafi’s

actuarial expert explained had a material impact on the Plan’s

ability to comply with the various anti-backloading rules. The

court expressed its frustration when, in its summary judgment

opinion, it referred to the parties’ arguments as “moving

5

For this reason, Hilton’s reliance on Lonecke and Revenue

Ruling 2008-7 is misplaced. Neither says anything about retroactive

amendments; they purport to deal only with prospective

compliance. See, e.g., Lonecke, 584 F.3d at 465, 469 (upholding

plan granting participants sufficient additional benefits to comply

with the fractional rule “upon the termination of the period of

employment” if the rate of benefits accrual failed the 133 1/3%

rule, and explaining that the fractional rule explicitly ties the

accrued benefit to the employee’s separation from employment).

13

targets.” Kifafi I, 616 F. Supp. 2d at 22. In short, more than a

decade passed after Kifafi filed suit before the district court

granted summary judgment, what the court referred to as “an

extraordinary amount of judicial time.”

Second, Hilton represented its compliance with the

133 1/3% rule to Kifafi, the IRS, and the district court. We do

not, as Hilton charges, think this constitutes the predicate for

estoppel. Rather, this suggests the Plan was more amenable to

analysis under the 133 1/3% rule than under the fractional or

3% rules. See, e.g., Carrabba v. Randalls Food Mkts., Inc.,

145 F. Supp. 2d 763, 773 (N.D. Tex. 2000) (requiring plan

without accrual rate to satisfy 133 1/3% rule, which, the court

concluded, “most appropriately recognizes the objectives of

the [plan] in an ERISA context,” based on the actual

progression of benefits), aff’d, 252 F.3d 721 (5th Cir. 2001)

(per curiam) (calling the district court opinion “conscientious”

and “well-reasoned”). Indeed, as Kifafi’s actuarial expert

attested in an affidavit, “The progression of the Plan’s

existing accrual rates lends itself to compliance with [the

133 1/3%] rule.”

Read in this context, we understand the district court’s

remedial order to be an attempt to pin Hilton down, denying it

the opportunity to avoid the consequences of its ERISA

violations. The district court certainly used language

suggesting it thought that as a matter of law Hilton could not

comply with any anti-backloading rule other than the

133 1/3% rule. But like the court’s reliance on the statement

of intent, most such statements occurred in the context of the

court’s conclusion that the original Plan was backloaded

under any of the anti-backloading rules. The court also stated,

in the context of rejecting Hilton’s mootness argument, that

Plan participants are entitled to what they would have

received had the Plan complied with the 133 1/3% rule. But it

14

continued: “If this were not so, Hilton and all other employers

that have unlawfully backloaded benefit accruals could

simply ‘amend away’ their ERISA violations.” Kifafi I, 616 F.

Supp. 2d at 25. And as it emphasized in a later proceeding,

the 1999 Plan’s compliance with the fractional rule came at

the expense of “substantial modifications to the benefits that

would be paid to participants.” Kifafi v. Hilton Hotels Ret.

Plan, 736 F. Supp. 2d 64, 73 (D.D.C. 2010) (“Kifafi II”). This

was enough to support its remedy. See, e.g., Shahriar v. Smith

& Wollensky Rest. Grp., Inc., 659 F.3d 234, 251–52 (2d Cir.

2011); In re Grand Jury Investigation, 545 F.3d 21, 26 (1st

Cir. 2008). Just as an employer would not remedy its failure

to pay overtime by “retroactively revising the base rate of pay

down from $10 per hour to $6.50 per hour and offering to

multiply the reduced rate by the required ‘time and one-half,’”

Kifafi Br. at 36, the district court did not abuse its discretion

by requiring Hilton to provide a remedy it considered

meaningful. See, e.g., Hecht Co. v. Bowles, 321 U.S. 321, 329

(1944) (tying the injunctive process to deterrence); H.R. REP.

101-386, at 433 (1989) (Conf. Rep.), reprinted in 1989

U.S.C.C.A.N. 3018, 3036 (stating congressional intent that

courts fashion remedies for ERISA violations “that not only

protect participants and beneficiaries but deter violations of

the law as well”).

B

Hilton next invokes the statute of limitations to argue the

district court should have dismissed the claims of Plan

participants who received benefits more than three years

before Kifafi filed this suit. Although ERISA is not entirely

silent with respect to statutes of limitations, see, e.g., 29

U.S.C. § 1113, there is no applicable limitations period for the

type of claims Kifafi brought. See Kifafi I, 616 F. Supp. 2d at

35 (noting Kifafi brought his class claims under 29 U.S.C.

15

§ 1132). We accordingly apply “the most closely analogous

statute of limitations from the state in which the court sits.”

Connors v. Hallmark & Son Coal Co., 935 F.2d 336, 341

(D.C. Cir. 1991). Fortunately, the parties agree on the

appropriate limitations period (three years), as well as the

appropriate standard for determining when the limitations

period begins (the discovery rule). They disagree, however,

about whether the district court properly applied these

principles. We think it did.6

Statutes of limitations ordinarily begin running when “the

factual and legal prerequisites for filing suit are in place.”

Norwest Bank Minn. Nat’l Ass’n v. FDIC, 312 F.3d 447, 451

(D.C. Cir. 2002). It will not always be obvious when this

happens. In such cases, and absent a contrary congressional

directive, this Court applies the discovery rule, which

provides that the statute of limitations begins when the

plaintiff “discovers, or with due diligence should have

discovered,” the injury supporting the legal claim. Connors,

935 F.2d at 341, 343.

Hilton’s sole argument is that its payment of backloaded

benefits to Plan participants amounted to a repudiation of the

participants’ right to additional benefits, the implication being

6

It is irrelevant whether we review Hilton’s statute of

limitations argument de novo or for abuse of discretion: Hilton

loses either way. Ordinarily, a district court’s application of a

statute of limitations demands de novo review. See Jung v. Mundy,

Holt & Mance, P.C., 372 F.3d 429, 432 (D.C. Cir. 2004). Here,

though, the statute of limitations issue might be conceived as a

piece of the district court’s class certification decision, see Kifafi I,

616 F. Supp. 2d at 37 (“[T]he Court finds that modification of the

class definitions to exclude claims based on the statute of

limitations is unnecessary and inappropriate.”), a decision entrusted

to its discretion.

16

that the participants should have discovered from these

payments that their benefits were backloaded. Courts have

indeed held that repudiation can trigger ERISA’s statute of

limitations if it is clear and made known to the plan

beneficiary. See, e.g., Thompson v. Ret. Plan for Emps. of S.C.

Johnson & Son, Inc., 651 F.3d 600, 604 (7th Cir. 2011);

Miller v. Fortis Benefits Ins. Co., 475 F.3d 516, 520–21 (3d

Cir. 2007); Davenport v. Harry N. Abrams, Inc., 249 F.3d

130, 134–35 (2d Cir. 2001); Union Pac. R. Co. v. Beckham,

138 F.3d 325, 330 (8th Cir. 1998); see also Connors, 935

F.2d at 342 (noting consistency of discovery rule and “time of

injury” rule). But the requirement that the repudiation be clear

and made known to the plan beneficiaries is not an idle one.

Whether repudiation may trigger the limitations period

depends on what the prospective plaintiff should have

understood from the miscalculated benefit payments. Where

the miscalculated benefits comprise a single lump-sum

payment, it might make sense to hold plan participants

responsible for their failure to notice the miscalculation,

although we do not decide the issue. See Thompson, 651 F.3d

at 606 (holding that receipt of lump-sum distribution served

as an “unequivocal repudiation of any entitlement to benefits

beyond the account balance” because it was clear that “no

additional benefits would be forthcoming”). The same might

be true for miscalculated periodic payments. See Miller, 475

F.3d at 521–22 (explaining that beneficiaries ordinarily

should know if a benefit award is improperly low). But if so,

the miscalculation must still be such that the beneficiary

should recognize it. See id. at 523 (“[T]he need for Miller to

be vigilant was triggered only when his receipt of benefits

alerted him that his award had been miscalculated.”). Miller

involved “a simple calculation of sixty percent of [the

beneficiary’s] salary,” id. at 522, and if one thing in this case

is clear, it is that Hilton’s miscalculation was anything but

simple. To catch the backloading, Plan participants would

17

have needed to apply complex law to complex facts. If Hilton

itself admits the Plan “did not appear to be backloaded,” it

makes no sense to ask the participants to navigate the

complexity of ERISA’s anti-backloading provision

immediately upon receipt of their first benefits payment. They

are the parties least likely “to have a clear understanding of

the terms of the pension plan and their application to [the]

case.” Novella v. Westchester Cnty., 661 F.3d 128, 146 (2d

Cir. 2011).

C

Having failed to circumscribe the scope of the district

court’s remedy by excluding participants who received

benefits more than three years before Kifafi filed suit, Hilton

tries to contain the remedial fallout by challenging the district

court’s determination that the Plan’s retroactive compliance

with the 133 1/3% rule should apply to participants who

separated from service before the controversial statement of

intent was added to the Plan in 1994 (with retroactive effect).

This argument also fails. The district court determined that the

Plan had never complied with the anti-backloading provision

and that the benefits accrual formula did not substantially

change in 1994, findings Hilton does not challenge. If the

Plan violated the anti-backloading provision after 1994, and it

violated the anti-backloading provision essentially the same

way before 1994, then we see no reason to distinguish

between pre- and post-1994 separation dates, particularly

given our conclusion that the statement of intent is irrelevant

to the backloading violation.

D

Kifafi, in turn, argues the district court improperly

accepted Hilton’s theory that participants can “outgrow” the

18

backloading merely by participating in the Plan for a

sufficiently long period of time. As Kifafi puts it,

if a plan offers a $5 per month per year of

participation rate of accrual for years 1-7, and a $10

per month rate of accrual in years 8-25, the 133%

rule is violated in years 1-7, no matter how much

longer the participant works, e.g., whether the

participant works one more year or 18 more years. A

participant who works for 25 years, and has 18 years

at the $10 rate, does not ‘grow out’ of the

backloading violation because his or her accruals for

years 1-7 continue to be only $5 per month per year

of participation.

Kifafi Br. at 56–57. According to Kifafi, the district court

should have increased the early-year accrual rates without

touching the later-year accrual rates. Translated into his

hypothetical plan, this would mean offering a $7.50 rate of

accrual for the first seven years while leaving everything else

about the plan unchanged. We disagree.

Backloading is nothing more than the improper allocation

of benefit accrual rates; the concept does not necessarily say

anything about the amount of benefits participants ultimately

accrue. Fixing a backloaded plan might entail increased

benefits, but it need not. A participant in Kifafi’s hypothetical

plan, for instance, accrues $2,580 after twenty-five years of

service. Amending the plan to comply with the 133 1/3% rule

by offering $7.50 each month for the first seven years, as

Kifafi suggests, would yield participants an additional $210

after twenty-five years of service. But the plan could satisfy

the 133 1/3% rule while still yielding only $2,580; this would

happen if, say, the plan offered $8 per month rate of accrual in

the first seven years and (approximately) $8.83 in the next

19

eighteen, or if it offered $8.60 every month for all twenty-five

years. The district court did not abuse its discretion when it

chose which of these counterfactual accrual formulas the

backloading remedy should track.7 As Revenue Ruling 2008-

7, 2008-7 I.R.B. 419, explains, if a plan becomes backloaded

because of a decreased interest crediting rate, the plan could

be amended into compliance with ERISA by increasing “the

hypothetical pay credits at the earlier ages,” reducing the

credits at the higher ages, or a combination of both.

According to Kifafi, IRS regulations prohibit the district

court’s “average rate of accrual” methodology. See Treas.

Reg. § 1.411(b)-1(b)(2)(iii) (Example 3) (explaining that a

plan under which a participant accrues benefits at the rate of

2% for each of the first five years, 1% for each of the next

five years, and 1.5% for every year thereafter violates the

133 1/3% rule because 1.5% is more than 133 1/3% of 1%).

This is beside the point. The regulations purport to address

base compliance with the anti-backloading provision; we now

deal only with the remedy for an undisputedly backloaded

formula. Though there may be situations where the proper

remedy for backloading involves additional benefits, this is

not one of them. See Kifafi II, 736 F. Supp. 2d at 72 (finding

that over time, some participants in fact recovered from any

benefits deficiency they may have initially suffered). Given

that the benefit-accrual class is limited to “employees whose

benefits ‘have been, or will be, reduced’” because of the

backloading, id., and that the Plan could have yielded the

7

Kifafi implicitly concedes this when, in his reply brief, he

notes—in contrast to his initial claim that a participant in the

hypothetical plan does not outgrow the backloading violation by

working for the full twenty-five years—that the effects of

backloading are eliminated “if a participant has worked long

enough . . . to earn the Plan’s full ‘normal retirement benefit’ as

described in ERISA § 204(b)(1)(B).”

20

same amount of total benefits to participants while complying

with the anti-backloading provision, the district court’s refusal

to apply its remedy to employees whose benefits were not

reduced by the backloading—to penalize Hilton for the fact of

the backloading—is far from an abuse of discretion. See

Mertens v. Hewitt Assocs., 508 U.S. 248, 257 n.7 (1993)

(noting that punitive damages were not a “major issue” when

ERISA was enacted). Equitable relief—the only kind of relief

at issue here—may very well mean “something less than all

relief.” Id. at 258 n.8.

E

Finally, Kifafi challenges the district court’s approach to

his union service vesting claim. The court found that Hilton

violated the Plan’s vesting provisions by failing to credit

employees’ years of union service, and it molded its remedial

relief around the contours of that finding. Kifafi complains

this contravenes both ERISA and the Plan itself. His argument

goes like this: because both ERISA and the Plan require

crediting all nonparticipating service and, under the Plan,

union membership is not the only type of nonparticipating

service,8 the district court erred by addressing Hilton’s failure

to count years of union service but not its failure to count

years of nonunion nonparticipating service, either in its class

certification decision or its remedial order. This is an

impractical approach, he continues, because Hilton failed to

8

We again ignore the chronology of the various Plan

amendments. Kifafi’s complaint alleged failure to count his 1985

union service, and the district court responded by broadly finding

that “Hilton failed to properly credit union service for vesting

purposes.” Hilton likewise discusses the Plan’s vesting provisions

in present tense. Since no one has differentiated among the different

Plan amendments’ treatment of the issue in a meaningful way, we

will not be the first to do so.

21

maintain any records about employees’ union service, so

participants end up bearing the burden of proving uncredited

union service years after the fact when the district court could

have avoided this by broadening its perspective to encompass

Hilton’s general failure to count nonparticipating service.

We reject Kifafi’s arguments. The district court’s

approach to Kifafi’s vesting claim is not just a matter of law;

it reflects the parties’ respective actions throughout the

litigation and effected the court’s determination about how

best to manage the shape-shifter shackled to the parties’

dispute. In this light, we see no abuse of discretion.

To start, the court could reasonably have concluded that

Kifafi was best able to represent a class limited to union

participation. As Kifafi’s original complaint made evident, his

claim to representative status on the nonparticipating service

issue derived from his “service as a union employee prior to

1985.” The complaint thus listed as one of the two legal

questions “common to the members of the class and subclass”

whether Hilton may “fail to credit years in unionized

employment with Hilton,” and it mentioned only union

service in the relevant complaint count. Kifafi subsequently

amended the complaint, expanding the scope of the proposed

class to include Hilton employees who “have not been

credited with all years of service with Hilton, including years

in unionized employment,” but he continued to suggest that

his claim remained tied to union service. For example, when

describing the nature of the case at the beginning of the

complaint, he alleged that Hilton “violated ERISA by not

crediting his years of union service,” and in his claim for

relief, he alleged only that Hilton “violated the Retirement

Plan by not counting years of service in union employment.”

22

In his renewed motion to certify the class,9 Kifafi asserted that

“the common legal thread that binds the class is Hilton’s

failure to count all years of service,” but he did little else to

advance that broader argument. Though referring generally to

nonparticipating service and citing Hilton’s admission that it

failed also to credit certain nonparticipating service other than

union service, the motion otherwise focused on union service,

tying general nonparticipating-service references to union

service. Indeed, the motion’s list of “individuals whose union

or other non-participating service was not counted for

vesting” included only three individuals, each listed for his or

her uncredited years of union service; and the three class

members Kifafi sought to include as class representatives

likewise asserted that their uncredited years consisted of

union service. Even if it would have been reasonable to

certify a broader nonparticipating service class, the district

court’s actual certification decision was no less reasonable.

The same is true of its later refusals to expand the certified

subclass. See, e.g., Kifafi I, 616 F. Supp. 2d at 30 n.18; Kifafi

II, 736 F. Supp. 2d at 74.

Kifafi cites two cases where a court of appeals found an

abuse of discretion in the district court’s class certification.

Abrams v. Communications Workers of America, 59 F.3d

1373 (D.C. Cir. 1995), involved a challenge to the adequacy

of a union’s notice of the non-union members’ right to object

to paying dues. We reversed the district court’s refusal to

certify a class of all nonmember employees—including both

employees who had objected and employees who merely

might object—explaining that every employee had an interest

9

We conflate two versions of Kifafi’s renewed motion because

our discussion, like its object, traverses a period of time. In

actuality, the district court denied Kifafi’s first renewed motion

without prejudice, asking Kifafi to rebrief the issue.

23

in adequate notice because “the union must provide notice in

advance of an employee’s decision to object.” Id. at 1378.

And in Green v. Ferrell, 664 F.2d 1292 (5th Cir. 1982), the

Fifth Circuit required the district court to broaden the class of

convicted prisoners to include pretrial detainees because

“those rights and the conditions of confinement that impact

upon those two groups at the same county jail facility are

sufficiently common to warrant contemporaneous

consideration in a single judicial proceeding under the

circumstances present here.” Id. at 1295. Yet in both cases,

the excluded group of proposed class members necessarily

belonged to the included group: a challenge to notice

procedures affects anyone who ought to receive that notice; a

challenge to jail conditions affects anyone who is or will be

held in that jail. Here, by contrast, Hilton’s alleged failure to

count nonunion nonparticipating service potentially affects

individuals other than those affected by its failure to count

union service. That Hilton apparently treated union service as

a mere subset of nonparticipating service, ignoring both

entirely, does not mean it could not have counted one but not

the other. The extent to which Hilton treated the two groups

of employees the same is a question of fact, as is whether

Hilton’s alleged blanket policy affected any employees for

reasons unrelated to union service. And where changed jail

conditions or notice procedures necessarily provide relief for

all potential class members regardless of their identities, this

case involves detailed actuarial determinations and

individualized remedies.

Rather than agreeing with Kifafi’s argument, then, we

commend the district court for its exemplary work on this

case. The court managed and reasonably disposed of this

litigation—juggling a voluminous record and ably balancing

competing considerations—despite shouldering much of the

burden that should have been carried by counsel, and despite

24

facing arguments it characterized as “moving targets.” Along

the way, the district court fashioned a remedy that hewed

closely to its class certification decision—and that makes

sense. Indeed, the court had promised as much when it stated

at the summary judgment phase that “[i]n resolving the

parties’ claims, the Court shall not allow Kifafi to expand his

Amended Complaint.” Kifafi I, 616 F. Supp. 2d at 23. Once it

limited the scope of the dispute, the district court could quite

reasonably restrict relief to those parameters. See Aviation

Consumer Action Project v. Washburn, 535 F.2d 101, 108

(D.C. Cir. 1976).

For similar reasons, we reject Kifafi’s assertion that the

claim procedure ordered by the district court was “completely

unnecessary” and improperly shifts the burden onto the

plaintiff class. The district court considered using

nonparticipating service as a proxy for union service because

Hilton’s records were incomplete, but it rejected the idea in

order to prevent Kifafi from using the procedure to evade the

court’s class certification decision. The court instead required

Hilton to fund and administer a claim procedure open to all

participants whose vesting status turns on nonparticipating

service. As part of this, the district court not only required

Hilton to provide Kifafi information submitted by claimants

so Kifafi can challenge Hilton’s claim-process decisions, but

it expressly permitted Hilton to credit all nonparticipating

service if it wants to avoid the administrative costs incident to

its mandated record searches and the claim procedure. This

seems both fair and reasonable. While it is unfortunate for the

burden to fall on innocent parties rather than the employer

who failed to perform its statutory duties, that is not enough to

turn the district court’s otherwise-competent performance into

an abuse of discretion.

25

IV

For the reasons stated, the district court’s orders are

Affirmed.