United States Court of Appeals

For the First Circuit

No. 13-2128
DENISE MERRIMON and BOBBY S. MOWERY,
Plaintiffs, Appellees,
v.
UNUM LIFE INSURANCE COMPANY OF AMERICA,
Defendant, Appellant.

No. 13-2168
DENISE MERRIMON and BOBBY S. MOWERY,
Plaintiffs, Appellants,
v.
UNUM LIFE INSURANCE COMPANY OF AMERICA,
Defendant, Appellee.
______________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Nancy Torresen, U.S. District Judge]

Before
Torruella and Selya, Circuit Judges,
and McAuliffe,* District Judge.

Of the District of New Hampshire, sitting by designation.

Donald R. Frederico, with whom Catherine R. Connors, Byrne J.

Decker, Gavin G. McCarthy, and Pierce Atwood LLP were on brief, for
defendant.
James F. Jorden, Waldemar J. Pflepsen, Jr., Michael A.
Valerio, Ben V. Seessel, John C. Pitblado, Jorden Burt LLP, and
Lisa Tate on brief for American Council of Life Insurers, amicus
curiae.
Jeremy P. Blumenfeld, Morgan, Lewis & Bockius LLP, J. Michael
Weston, and Lederer Weston Craig on brief for Defense Research
Institute, amicus curiae.
John C. Bell, Jr., with whom Lee W. Brigham, Bell & Brigham,
Stuart T. Rossman, Arielle Cohen, National Consumer Law Center, M.
Scott Barrett, and Barrett Wylie LLC were on brief, for plaintiffs.

July 2, 2014

SELYA, Circuit Judge.

In 1974, Congress enacted the

Employee Retirement Income Security Act (ERISA).

Pub. L. No. 93-

406, 88 Stat. 829, codified as amended at 29 U.S.C. 1001-1461.

One of ERISA's principal goals is to afford appropriate protection
to

employees

and

their

beneficiaries

with

respect

administration of employee welfare benefit plans.

to

the

See Nachman

Corp. v. Pension Benefit Guar. Corp., 446 U.S. 359, 361-62 (1980).
As is true of virtually any prophylactic statute, interpretive
questions lurk at the margins. This class action, which arises out
of an insurer's redemption of claims on ERISA-regulated life
insurance policies through the establishment of retained asset
accounts (RAAs), spawns such questions.
Here, the plaintiffs challenge the insurer's use of RAAs
as a method of paying life insurance benefits in the ERISA context.
They presented the district court with two basic questions. First,
did the insurer's method of paying death benefits in the form of
RAAs constitute self-dealing in plan assets in violation of ERISA
section 406(b)?

Second, did this redemption method offend the

insurer's duty of loyalty toward the class of beneficiaries in

violation of ERISA section 404(a)? The district court answered the
first question in favor of the insurer and the second in favor of
the plaintiff class.

It proceeded to award class-wide relief

totaling more than $12,000,000.

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Both sides appeal. We agree with the district court that

the insurer's use of RAAs in the circumstances of this case did not
constitute self-dealing in plan assets. We disagree, however, with
the district court's answer to the second query and hold that the
insurer's use of RAAs did not breach any duty of loyalty owed by
the insurer to the plaintiff class. Accordingly, we affirm in part
and reverse in part.
I.

BACKGROUND
We briefly rehearse the relevant facts, which are largely

undisputed.

Readers who hunger for more exegetic detail may

consult the district court's fulsome rescript.

See Merrimon v.

Unum Life Ins. Co., 845 F. Supp. 2d 310, 312-15 (D. Me. 2012).
The plaintiffs, Denise Merrimon and Bobby S. Mowery,
represent a class of beneficiaries of ERISA-regulated employee
welfare benefit plans funded by certain guaranteed-benefit group
life insurance policies that the defendant, Unum Life Insurance
Company of America (the insurer), issued.1

In 2007, each named

plaintiff submitted a claim for life insurance benefits.

After

reviewing the submissions, the insurer approved the claims.

The insurer redeemed the claims by establishing, through
a contractor, accounts for the named plaintiffs at State Street
Bank and credited to each plaintiff's account the full amount of

Although the decedents' employers were the named

administrators of the plans, each of them delegated to the insurer
discretionary authority to make claim determinations.
-4-

the benefits owed: $51,000 to Merrimon and $62,300 to Mowery.

the

same

time,

plaintiffs,
accounts.

the

along

insurer

with

mailed

books

informational

of

materials

drafts

At

to

the

regarding

the

The drafts empowered the plaintiffs to withdraw all or

any part of the corpus of the RAAs; provided, however, that each
withdrawal was in an amount not less than $250.
In short order, the plaintiffs fully liquidated their
RAAs and the accounts were closed.

During the time that funds

remained in their RAAs, however, the insurer retained the credited

funds in its general account and paid the plaintiffs interest at a
rate of one percent (substantially less, the plaintiffs allege,
than the return the insurer earned on its portfolio).
The closing of the RAAs did not end the matter.

In

October of 2010, the plaintiffs filed a putative class action

complaint in the United States District Court for the District of
Maine.

Their complaint alleged that the insurer's method of

redeeming their claims violated ERISA sections 404(a) and 406(b),

29 U.S.C. 1104(a), 1106(b), and sought "appropriate equitable
relief" under 29 U.S.C. 1132(a)(3).2

Following discovery, the

parties cross-moved for summary judgment and the plaintiffs moved

for class certification.

The district court granted partial

summary judgment in favor of the insurer on the plaintiffs' section

The complaint also advanced supplemental claims under Maine

law. The district court dismissed those claims, and the plaintiffs
have not attempted to renew them on appeal.
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406(b) claims and granted partial summary judgment in favor of the

plaintiffs on their section 404(a) claims.

See Merrimon, 845 F.

Supp. 2d at 327-28. The court then certified the plaintiff class.

See id.

The insurer moved to reconsider the adverse summary

judgment and class certification rulings, but the district court

doubled down: it both denied the motion and struck it as untimely.
A bench trial ensued to determine the appropriate measure
of relief based on the district court's determination (on partial
summary judgment) that the insurer had violated section 404(a).
When all was said and done, the court awarded the plaintiff class
monetary relief in excess of $12,000,000 (exclusive of prejudgment
interest).

Neither side was overjoyed, and these cross-appeals

followed.
II.

JURISDICTION
The

insurer

argues,

albeit

conclusorily,

that

the

plaintiffs lack constitutional standing to pursue their claims.

One of the amici helpfully develops the argument in significantly
greater detail. Although these circumstances might ordinarily give
rise to questions of waiver, see, e.g., United States v. Zannino,
895 F.2d 1, 17 (1st Cir. 1990) (explaining that issues briefed in
a perfunctory manner are normally deemed abandoned); Lane v. First
Nat'l Bank, 871 F.2d 166, 175 (1st Cir. 1989) (explaining that a
court will usually disregard issues raised only by amici and not by
parties), no such obstacle exists here. The presence or absence of

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constitutional standing implicates a federal court's subject-matter

jurisdiction.

When

an

issue

implicates

subject-matter

jurisdiction, a federal court is obliged to resolve that issue even

if the parties have neither briefed nor argued it.

See Arizonans

for Official English v. Arizona, 520 U.S. 43, 73 (1997); In re Sony

BMG Music Entm't, 564 F.3d 1, 3 (1st Cir. 2009).
The Constitution carefully confines the power of the
federal courts to deciding cases and controversies.

See U.S.

Const. art. III, 2; Hollingsworth v. Perry, 133 S. Ct. 2652, 2661

(2013).

"A

case

or

controversy

exists

only

when

the

party

soliciting federal court jurisdiction (normally, the plaintiff)

demonstrates

'such

personal

stake

in

the

outcome

of

the

controversy as to assure that concrete adverseness which sharpens

the

presentation

depends.'"

of

issues

upon

which

the

court

so

largely

Katz v. Pershing, LLC, 672 F.3d 64, 71 (1st Cir. 2012)

(quoting Baker v. Carr, 369 U.S. 186, 204 (1962)); see Muskrat v.
United States, 219 U.S. 346, 361-62 (1911).

In order to make such

a showing, "a plaintiff must establish each part of a familiar

triad: injury, causation, and redressability."

Katz, 672 F.3d at

71 (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61

(1992)).
The pivotal question here involves the injury in fact
requirement.

The best argument for the absence of constitutional

standing is the notion that the plaintiffs did not suffer any

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demonstrable financial loss as a result of the insurer's alleged

transgressions and, therefore, did not sustain any injury in fact.
Put another way, the argument is that because the plaintiffs
received everything to which they were entitled under the ERISA
plans, they suffered no actual harm.
This argument is substantial.

When confronted with

essentially the same question, the Second Circuit bypassed it and

asserted jurisdiction on other grounds.

See Faber v. Metro. Life

Ins. Co., 648 F.3d 98, 102-03 (2d Cir. 2011).

The Third Circuit

rejected the argument in a divided opinion.

See Edmonson v.

Lincoln Nat'l Life Ins. Co., 725 F.3d 406, 415-17 (3d Cir. 2013),
cert. denied, 134 S. Ct. 2291 (2014); id. at 429-33 (Jordan, J.,
dissenting).

After

careful

perscrutation,

we

hold

that

the

plaintiffs have constitutional standing.

An injury in fact is defined as "an invasion of a legally
protected interest which is (a) concrete and particularized; and
(b) actual or imminent, not conjectural or hypothetical."
504

U.S.

at

560

(footnote

quotation marks omitted).

omitted)

(internal

Lujan,

citations

and

But in order to establish standing, a

plaintiff does not need to show that her rights have actually been
abridged: such a requirement "would conflate the issue of standing
with the merits of the suit."

Aurora Loan Servs., Inc. v.

Craddieth, 442 F.3d 1018, 1024 (7th Cir. 2006).

Instead, a

plaintiff need only show that she has "a colorable claim to such a

-8-

right."

Id. (emphasis omitted).

The evaluation of whether such a

showing has been made must take into account the role of Congress.
After all, Congress has the power to define "the status of legally
cognizable injuries."

Katz, 672 F.3d at 75.

These principles are dispositive here.

Congress has

mandated ERISA fiduciaries to abide by certain strictures and has

granted

ERISA

beneficiaries

corresponding

violations of those strictures.

See

rights

to

sue

for

29 U.S.C. 1132(a)(3)

(authorizing beneficiaries to sue "to obtain . . . appropriate

equitable relief" in order "to redress . . . violations" of ERISA).
An ERISA beneficiary thus has a legally cognizable right to have
her plan fiduciaries perform those duties that ERISA mandates.
We hasten to add a caveat.

It is common ground that

Congress cannot confer standing beyond the scope of Article III.

See Summers v. Earth Island Inst., 555 U.S. 488, 497 (2009) ("[T]he
requirement of injury in fact is a hard floor of Article III
jurisdiction that cannot be removed by statute.").

This means, of

course, that an insurer's violation of an ERISA-imposed fiduciary

duty

does

not

necessarily

confer

standing

on

all

plan

beneficiaries: a beneficiary must show that the alleged violation

has

worked

some

"personal

and

tangible

harm"

to

her.

Hollingsworth, 133 S. Ct. at 2661.

Here, however, the plaintiffs make colorable claims that
they have suffered just such a harm. They contend that the insurer

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has wrongfully retained and misused their assets.

If proven, this

would constitute a tangible harm even if no economic loss results.

See, e.g., Restatement (Third) of Restitution and Unjust Enrichment
3 reporter's note a (2011) ("[T]here can be restitution of
wrongful

gain

interference

in

with

cases

where

protected

the

plaintiff

interests

but

no

has

suffered

measurable

an

loss

whatsoever."); see also CIGNA Corp. v. Amara, 131 S. Ct. 1866, 1881
(2011). In addition, the injury although common to a potentially
wide class of beneficiaries is particularized to the plaintiffs,
each of whom claims that the insurer wrongfully retained his or her
assets.
The Supreme Court has "often said that history and
tradition offer a meaningful guide to the types of cases that
Article III empowers federal courts to consider."

Sprint Commc'ns

Co. v. APCC Servs., Inc., 554 U.S. 269, 274 (2008). Although ERISA
is of relatively recent origin, its administration is informed by
the common law of trusts.
496 (1996).

See Varity Corp. v. Howe, 516 U.S. 489,

Historically, courts have asserted jurisdiction over

cases against a trustee "even though the trust itself ha[d]

suffered no loss."

George G. Bogert et al., Law of Trusts and

Trustees 861 (2013) (citing Mosser v. Darrow, 341 U.S. 267, 27273 (1951); Magruder v. Drury, 235 U.S. 106, 120 (1914)); see also
Restatement (Third) of Restitution and Unjust Enrichment 3
reporter's note a (2011).

A holding here that the plaintiffs have

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satisfied the requirements for constitutional standing would be

entirely consistent with this historical practice.
To say more about the issue of constitutional standing
would be to paint the lily.

We hold that the plaintiffs have

asserted colorable and cognizable claims of injuries in fact.

Nothing more is needed here, from a jurisdictional standpoint, to
wrap the plaintiffs in the cloak of constitutional standing.3
III.

THE MERITS
The district court made two pertinent liability rulings

at the summary judgment stage.

One of these is challenged by the

plaintiffs and the other by the insurer. We review both rulings de

See Kouvchinov v. Parametric Tech. Corp., 537 F.3d 62, 66

novo.

(1st Cir. 2008). Before addressing these rulings, however, we must

resolve a threshold issue: whether deference is due to the relevant
views of the United States Department of Labor (DOL).

We start

there.

In its opening brief, the insurer suggests that the

plaintiffs lack statutory standing under ERISA. Statutory standing
is, of course, different than constitutional standing. See Katz,
672 F.3d at 75; Graden v. Conexant Sys. Inc., 496 F.3d 291, 295 (3d
Cir. 2007).
One way in which the two concepts differ is that
arguments based on statutory standing, unlike arguments based on
constitutional standing, are waivable. See, e.g., Bilyeu v. Morgan
Stanley Long Term Disab. Plan, 683 F.3d 1083, 1090 (9th Cir. 2012),
Any possible defect in
cert. denied, 133 S. Ct. 1242 (2013).
statutory standing has been waived in this case because the issue
was not raised below.
See Teamsters Union, Local No. 59 v.
Superline Transp. Co., 953 F.2d 17, 21 (1st Cir. 1992) ("If any
principle is settled in this circuit, it is that, absent the most
extraordinary circumstances, legal theories not raised squarely in
the lower court cannot be broached for the first time on appeal.").
-11-

A.

The DOL Guidance.

The Second Circuit, puzzling over essentially the same

riddle that confronts us today, asked the DOL to provide its
interpretation

of

how

the

relevant

ERISA

provisions

affect

insurers' decisions to use RAAs as a method of claim redemption.

See Faber, 648 F.3d at 102.
page amicus brief.

The DOL responded by submitting a 16-

See Secretary of Labor's Amicus Curiae Letter

Brief in Response to the Court's Invitation (the DOL Guidance),

Faber, 648 F.3d at 98 (No. 09-4901).

In it, the DOL, after

sedulous analysis, made it crystal clear that an insurer discharges

its fiduciary duties under ERISA by furnishing a beneficiary
unfettered access to an RAA in accordance with plan terms and does
not retain plan assets by holding and managing the funds that back
the RAA.
The insurer, citing Skidmore v. Swift & Co., 323 U.S.
134, 140 (1944), exhorts us to defer to the DOL Guidance.
plaintiffs

demur,

arguing

that

the

DOL

Guidance

was

The

hastily

prepared and is inconsistent with other authority.

It is important to note that the DOL "shares enforcement
responsibility for ERISA."

John Hancock Mut. Life Ins. Co. v.

Harris Trust & Sav. Bank, 510 U.S. 86, 107 n.14 (1993) (citing 29
U.S.C. 1204(a)).

This responsibility paves the way for but

does not require a finding that some deference is due to the

DOL's views.

An agency's interpretation of a statute that it

-12-

administers may warrant judicial deference, depending on the degree

to

which

the

authoritative.

agency's

exposition

of

the

issue

is

deemed

See United States v. Mead Corp., 533 U.S. 218, 228

(2001).
While agencies are generally presumed to have particular
expertise with respect to the statutes that they administer,
agencies

speak

in

variety

of

ways.

As

result,

authoritativeness often depends, at least in part, on context. For

example, when an agency speaks with the force of law, as through a
binding regulation, its interpretation of ambiguous provisions of
a statute that falls within its purview is due judicial deference
as long as that interpretation is reasonable.

See id. at 229-30;

Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S.
837, 842-45 (1984).
But when an agency speaks with something less than the
force of law, its interpretations are entitled to deference "only
to the extent that those interpretations have the 'power to
persuade.'"

Christensen v. Harris Cnty., 529 U.S. 576, 587 (2000)

(quoting Skidmore, 323 U.S. at 140).

That is the situation here.

We must, therefore, dig deeper.

To gauge persuasiveness, an inquiring court should look
to a "mix of factors" that "either contributes to or detracts from
the power of an agency's interpretation to persuade."
Leavitt, 552 F.3d 75, 81 (1st Cir. 2009).

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Doe v.

Those factors include

"the thoroughness evident in [the agency's] consideration, the

validity

of

its

interpretation]

reasoning,

with

earlier

[and
and

the]
later

consistency

[of

pronouncements."

its
Id.

(alterations in original) (quoting Skidmore, 323 U.S. at 140).

"[T]he most salient of the factors that inform an assessment of
persuasiveness [is] the validity of the agency's reasoning."

Id.

at 82.
We appraise the DOL Guidance with these factors in mind.
In doing so, we are acutely aware that if this inquiry is to have
any real utility, it must involve something more than merely
determining whether the agency's views comport with the court's
independent interpretation of the relevant statutory provisions.
See id. at 80-81.

If the relevant factors tilt in favor of giving

weight to the agency's views, it would be an exercise in vanity for

a court to disregard those views.
The DOL Guidance is plainly well-reasoned.
Doe,

"the

agency

has

consulted

appropriate

Here, as in

sources,

employed

sensible heuristic tools, and adequately substantiated its ultimate

conclusion."

Id. at 82.

The meticulous nature of the agency's

statement of its views, coupled with the logic of its position,

combine to lend the DOL Guidance credibility.
To be sure, the DOL Guidance was not forged through a
transparent and structured process, nor was it tempered in the
crucible of public comment.

Such accouterments would have given

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added heft to the DOL Guidance but none of them is a condition

precedent to deference.

See Sun Capital Partners III, LP. v. New

Eng. Teamsters & Trucking Indus. Pension Fund, 724 F.3d 129, 140-41
(1st Cir. 2013), cert. denied, 134 S. Ct. 1492 (2014); Conn. Office
of Prot. & Advocacy for Pers. with Disabs. v. Hartford Bd. of
Educ., 464 F.3d 229, 239-40 (2d Cir. 2006) (Sotomayor, J.).
Persuasiveness (or the lack of it) depends on the totality of the
relevant factors.
So,

too,

the

fact

that

the

relatively recent vintage is not fatal.

DOL's

position

is

of

While the longstanding

nature of an agency interpretation may constitute an added reason

for deference, see Lapine v. Town of Wellesley, 304 F.3d 90, 106
(1st

Cir.

2002),

new

interpretations

particularly

new

interpretations addressing questions not previously posed to the

agency can be convincing, see, e.g., Conn. Office of Prot. &
Advocacy, 464 F.3d at 244; In re New Times Sec. Servs., Inc., 371
F.3d 68, 81-83 (2d Cir. 2004).
In

the

last

analysis,

we

are

satisfied

that

the

considerations of process and duration stressed by the plaintiffs

are insufficient to sully the well-reasoned DOL Guidance.

The

amicus brief filed by the DOL bears the hallmarks of reliability.

There is no good reason to dismiss it, especially since the agency
was not a party to the litigation in which the amicus brief was
filed but articulated its views only in response to the Second

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Circuit's direct request.

See Conn. Office of Prot. & Advocacy,

464 F.3d at 236, 239-40. Taking into account the scrupulousness of

the DOL Guidance, its analytic rigor, and its crafting of a set of
clear and easily applied rules that are consistent with ERISA's
structure, text, and purpose, we conclude that the DOL Guidance is
deserving of some weight.

See Martin v. OSHRC, 499 U.S. 144, 157

(1991).
B.
The

plaintiffs'

Section 406(b).
remaining

contention

is

that

the

insurer's method of redeeming life insurance policies by paying

death benefits in the form of RAAs constituted self-dealing in plan
assets in violation of ERISA section 406(b).

ERISA section 406(b)

prohibits a plan fiduciary from "deal[ing] with the assets of the

plan in [its] own interest or for [its] own account."

29 U.S.C.

1106(b)(1). The plaintiffs assert that the insurer violated this

prohibition

on

self-dealing

in

plan

assets

investing RAA funds for its own enrichment.

by

retaining

and

The district court

rejected this assertion, see Merrimon, 845 F. Supp. 2d at 319, and

so do we.
ERISA nowhere contains a comprehensive definition of what
constitutes "plan assets."

See Harris Trust, 510 U.S. at 89.

In

an effort to fill this void, the DOL consistently has stated that
"the assets of a plan generally are to be identified on the basis
of ordinary notions of property rights under non-ERISA law."

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U.S.

Dep't of Labor, Advisory Op. No. 93-14A, 1993 WL 188473, at *4 (May

5, 1993).

Several of our sister circuits have adopted this

formulation. See, e.g., Edmonson, 725 F.3d at 427; Faber, 648 F.3d
at 105-06; Kalda v. Sioux Valley Physician Partners, Inc., 481 F.3d
639, 647 (8th Cir. 2007); In re Luna, 406 F.3d 1192, 1199 (10th
Cir. 2005).

We too find this formulation persuasive.

The plaintiffs concede that, prior to the creation of an

RAA, funds held in the insurer's general account are not plan
assets.

That is because
[i]n the case of a plan to which a guaranteed
benefit policy is issued by an insurer, the
assets of such plan shall be deemed to include
such policy, but shall not, solely by reason
of the issuance of such policy, be deemed to
include any assets of such insurer.

29 U.S.C. 1101(b)(2).
The

plaintiffs

nonetheless

posit

that

when

death

benefit accrues and is redeemed by means of the establishment of an

RAA, the RAA funds become plan assets if those funds are retained
in the insurer's general account.

As a corollary, they posit that

those retained funds remain plan assets until the RAA is fully
liquidated.
This argument lacks force.

There is no basis, either in

the case law or in common sense, for the proposition that funds
held in an insurer's general account are somehow transmogrified
into plan assets when they are credited to a beneficiary's account.

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Indeed, the DOL Guidance to which a modicum of respect is owed

indicates exactly the opposite.

See DOL Guidance at 7.

We add, more generally, that ordinary notions of property

rights counsel strongly against the plaintiffs' proposition. It is
the beneficiary, not the plan itself, who has acquired an ownership
interest in the assets backing the RAA.
428; Faber, 648 F.3d at 106.

See Edmonson, 725 F.3d at

Unless the plan documents clearly

evince a contrary intent and here they do not a beneficiary's

assets are not plan assets.
The decision in Mogel v. Unum Life Insurance Co., 547
F.3d 23, 26 (1st Cir. 2008), is not at odds with the conclusion
that the monies retained by the insurer are not plan assets. Mogel
involved

plan

that

contained

beneficiaries in a lump sum.

specific

See id. at 25.

directive

to

pay

The insurer ignored

this specific directive and sought instead to redeem claims through

the establishment of RAAs. See id.

As has been widely recognized,

this particularized policy provision explains this court's holding

that the insurer, which had not paid the policy proceeds in a
manner permitted by the plan documents, had violated its fiduciary
duties.

See Edmonson, 725 F.3d at 428; Faber, 648 F.3d at 106-07;

DOL Guidance at 13-14.

Thus, neither the holding in Mogel nor its

broadly cast language is binding precedent for purposes of this

materially different case.

See Mun'y of San Juan v. Rullan, 318

F.3d 26, 28 n.3 (1st Cir. 2003) (explaining that "[d]icta comprises

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observations in a judicial opinion . . . that are 'not essential'

to the determination of the legal questions then before the court,"
and that dicta "have no binding effect in subsequent proceedings").
As a fallback, the plaintiffs invite us to adopt the
Ninth Circuit's functional approach to determining which assets are
plan assets.
Cir. 1991).

See Acosta v. Pac. Enters., 950 F.2d 611, 620 (9th

The functional approach looks to "whether the item in

question may be used to the benefit (financial or otherwise) of the

fiduciary at the expense of plan participants or beneficiaries" as
a means of ascertaining whether the item is a plan asset.

Id.

Although courts occasionally have found this approach useful, we

have never endorsed it.

Nor do we need to explore its possible

utility today: while the functional approach might be of some

assistance

in

doubtful

cases,

the

assets

with

which

we

are

concerned the funds backing the RAAs fall squarely within the
compass of section 401(b)(2) prior to the establishment of an RAA,
and they are not governed by ERISA subsequent thereto.

As the DOL

Guidance makes manifest, those funds are simply not plan assets.
The plaintiffs have one final shot in their sling.

They

say that even if the court below appropriately determined that the
retained funds were not plan assets, its ultimate conclusion that
the

insurer

incorrect.

did

not

offend

section

406(b)

was

nevertheless

This is so, the plaintiffs' thesis runs, because the

life insurance policies themselves were plan assets and the insurer

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exercised control respecting the management of the policies when it

established the RAAs, retained and invested the RAA funds to its
own behoof, and decided how much of the investment profit to keep
and how much to pay in interest.
The insurer's first line of defense is that this claim
was waived because it was not proffered below.

The plaintiffs'

disavowal points only to a single paragraph in their complaint.

Standing alone, this solitary paragraph is too thin a reed by which
to exorcize the evils of waiver.

We explain briefly.

"Even an issue raised in the complaint but ignored at

summary judgment may be deemed waived.

If a party fails to assert

a legal reason why summary judgment should not be granted, that

ground is waived and cannot be considered or raised on appeal."
Grenier v. Cyanamid Plastics, Inc., 70 F.3d 667, 678 (1st Cir.
1995) (internal quotation marks omitted).
happened here.

That is precisely what

After filing their complaint, the plaintiffs did

nothing to develop this particular claim, and the summary judgment

papers disclose no development of it.

The claim is, therefore,

waived.
This brings us to the end of the road.

We hold that the

funds backing the plaintiffs' RAAs were not, and never became, plan
assets.

Consequently, the court below did not err in holding that

there was no showing of self-dealing sufficient to ground a section

406(b) claim.

-20-

C.

Section 404(a).

ERISA section 404(a) provides, with certain reservations

not relevant here, that "a fiduciary shall discharge his duties
with respect to a plan solely in the interest of the participants
and beneficiaries."

29 U.S.C. 1104(a)(1).

Relatedly, ERISA

stipulates that
a "person is a fiduciary with respect to a
plan,"
and
therefore
subject
to
ERISA
fiduciary duties, "to the extent" that he or
she "exercises any discretionary authority or
discretionary control respecting management"
of the plan, or "has any discretionary
authority or discretionary responsibility in
the administration" of the plan.
Varity, 516 U.S. at 498 (quoting 29 U.S.C. 1002(21)(A)).

The

crux of the plaintiffs' section 404(a) claims is that the insurer

acted as a fiduciary when setting the RAA interest rate and that it
did not set the rate solely in the interest of the beneficiaries.
The district court found this claim persuasive.

The

court premised its conclusion that the insurer was acting as a

fiduciary

on

the

insurer's

retention

of

discretion

both

"to

determine the interest rates and other features accruing to [the

RAAs]" and "to award itself the business of administering the
Plaintiffs'
accounts.

RAAs"

while

retaining

the

assets

Merrimon, 845 F. Supp. 2d at 319-20.

backing

these

With this premise

in place, the court concluded that the insurer, as a fiduciary,

"managed the RAAs to optimize its own earnings and not to optimize
the beneficiaries' earnings."

Id. at 320.
-21-

It granted partial

summary judgment holding the insurer liable under ERISA section

404(a).

See id.
The

holding.

insurer

mounts

formidable

challenge

to

this

The centerpiece of its challenge is the assertion that,

by establishing the RAAs in accordance with the plan documents, the

insurer fully discharged its fiduciary duties.

Consequently, the

subsequent relationship between the insurer and the beneficiary was

in the nature of a debtor-creditor relationship, governed not by
ERISA but by state law.

In other words, when the insurer invested

the retained funds and paid interest to the beneficiaries, it was

not acting as an ERISA fiduciary.
The insurer's position makes sense, and it is bulwarked
by relevant authority.

To begin, the DOL has stated explicitly

that a life insurer discharges its fiduciary duties when it redeems

a death-benefit claim through the establishment of an RAA as long
as that method of redemption is called for by the plan documents.
See DOL Guidance at 11.
view.

We owe a measure of deference to this

See supra Part III(A).

appropriate

because

the

only

This deference is especially

two

courts

of

appeals

to

have

addressed the issue subsequent to the DOL's statement of its views

have reached the same conclusion.

See Edmonson, 725 F.3d at 424-

26; Faber, 648 F.3d at 104-05.

The

plaintiffs

beseech

us

not

to

follow

these

authorities. Their variegated arguments sound two related themes.

-22-

First, they assert that the insurer continued to act as a fiduciary

even after it established the RAAs because it continued to hold the
policy proceeds in its general account.

Second, they assert that

the insurer acted as a fiduciary in setting the interest rate

because the plan documents stipulated no specific interest rate.
We treat these arguments separately.
1.
hope

of

Retention of Policy Proceeds.

contradiction

that

sponsors

of

It is clear beyond
ERISA

plans

have

considerable latitude in plan design, including the establishment

of methods for paying benefits. See Faber, 648 F.3d at 104 (citing
Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 444 (1999)); see
also Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995).
When ERISA deals with the payment of benefits, the term benefit
"denotes the money to which a person is entitled under an ERISA
plan."

Evans v. Akers, 534 F.3d 65, 70 (1st Cir. 2008) (internal

quotation marks omitted).

Although fiduciary duties do encompass

some acts connected to the distribution of plan benefits, see

Mogel, 547 F.3d at 27, such fiduciary duties relate principally to
ensuring

that

monies

owed

to

beneficiaries

are

disbursed

in

accordance with the terms of the plan.

In this instance, each of the plans provides that the
insurer will, upon proof of claim, pay the death benefit owed by
"mak[ing]

available

to

the

beneficiary

-23-

retained

asset

account"(emphasis in original).4

Each plan describes an RAA as "an

interest bearing account established through an intermediary bank."

The insurer followed this protocol precisely: it made available to
each plaintiff an interest-bearing RAA established through an
intermediary bank, which was credited with the full amount of the
death benefit owed.

No more was exigible to carry out the terms of

the plans.
Once the insurer fulfilled these requirements, its duties
as an ERISA fiduciary ceased.

See Edmonson, 725 F.3d at 425-26;

Faber, 648 F.3d at 105; DOL Guidance at 11.

There is simply no

basis for concluding that ERISA-imposed fiduciary duties remained

velivolant after that point. Cf. LaRocca v. Borden, Inc., 276 F.3d
22, 30 (1st Cir. 2002) (explaining that the purpose of ERISA is "to
protect contractually defined benefits").
that

the

insurer

had

to

the

Any further obligation

beneficiaries

straightforward creditor-debtor relationship."

"constituted

Faber, 648 F.3d at

105; accord Edmonson, 725 F.3d at 426; DOL Guidance at 10-11.

The plaintiffs labor to dull the force of this reasoning.
They start by asseverating that the establishment of an RAA does
not constitute payment of benefits.

But this asseveration rests

chiefly on our decision in Mogel, 547 F.3d at 26; and as we already

have explained, Mogel is inapposite here.

See supra Part III(B).

The plans except death benefits totaling less than $10,000.

That exception is not relevant here.
-24-

The plaintiffs also asseverate that, under general trust

principles, "[e]ven when a trust terminates, the trustee's powers
and duties continue until the trustee delivers the trust property
to the persons entitled to it."

Plaintiffs' Br. at 66.

Here,

however, the insurer paid the death benefits that were owed by
delivering to the beneficiaries an instrument (the RAA) required by
the terms of the plans. Under the plans, that delivery constituted
delivery in full of the policy proceeds to the person(s) entitled
to those proceeds.

Therefore, the general trust principles relied

on by the plaintiffs do not support their claim.

This

analysis

also

explains

why

the

plaintiffs'

insistence that the insurer had to obtain the plaintiffs' informed

consent before it invested the retained funds is without merit.
This argument, too, is based on general trust principles; and the
simple answer to it is that the insurer was not acting as a

-25-

fiduciary when it invested the retained funds.5

See Edmonson, 725

F.3d at 426.
2.

Setting of Interest Rate.

theme sounded by the plaintiffs.

This leaves the second

They contend that because the

insurer retained discretion to set the interest rate to be paid on

the RAAs, rate-setting was a fiduciary act, which the insurer did
not carry out solely in the interest of the beneficiaries.

Cf. 29

U.S.C. 1002(21)(A) (defining a plan fiduciary in terms of

discretion).

The

plaintiffs'

reach

exceeds

their

grasp.

Discretionary acts trigger fiduciary duties under ERISA only when

and to the extent that they relate to plan management or plan
assets.

See id.; see also Varity, 516 U.S. at 498; Livick v.

Gillette

Co.,

524

F.3d

24,

29

(1st

Cir.

2008).

In

the

circumstances of this case, the setting of the interest rate did

not

relate

to

plan

management

but,

rather,

related

to

the

The plaintiffs launch an array of other plaints based on DOL

statements. These statements deal, inter alia, with the practice
of fiduciaries "earn[ing] interest from the 'float' that occurs
between the time a benefits check is issued and the time it is
cashed by the beneficiary," Plaintiffs' Br. at 69 (citing U.S.
Dep't of Labor, Field Assistance Bull. 2002-3, 2002 WL 34717725, at
*2-3 (Nov. 5, 2002); U.S. Dep't of Labor, Advisory Op. No. 92-24A,
1993 WL 349627, at *1-2 (Sept. 13, 1993)), and with fiduciaries who
"provide[] record-keeping and related services to a defined
contribution plan," id. at 70 (citing U.S. Dep't of Labor, Advisory
Op. No. 2013-03A, 2013 WL 3546834, at *3-4 (July 3, 2013)). These
DOL statements are at best tenuously connected to the circumstances
at hand. Thus, they cannot trump the on-point views expressed in
the DOL Guidance. Cf. United States v. Nascimento, 491 F.3d 25, 41
(1st Cir. 2007) (adopting authority "more directly on point");
United States v. Palmer, 946 F.2d 97, 99 (9th Cir. 1991) (similar).
-26-

management of the RAAs.

The RAAs were not plan assets, see Faber,

725 F.3d at 106, and the setting of an interest rate for use in
connection with the RAAs thus did not implicate any ERISA-related
fiduciary duty, see Edmonson, 725 F.3d at 424 n.14; cf. DOL
Guidance at 8 (indicating that the determination of whether the
discretionary setting of an interest rate implicates ERISA depends
in significant part on whether the interest-earning assets are plan
assets).
This conclusion follows inexorably from our holding that
the establishment of an RAA constitutes payment under the terms of
the plans.

When the insurer redeems a death benefit that is due a

beneficiary by establishing an RAA, no other or further ERISArelated fiduciary duties attach. Thus, the insurer's setting of an
interest rate for the RAAs does not implicate ERISA; rather, its
setting of the interest rate must be viewed as part of the
management of the RAAs, governed by state law.6

See Edmonson, 725

F.3d at 425-26; Faber, 648 F.3d at 104-05; DOL Guidance at 11.

The Supreme Court's decision in Varity, loudly bruited by
the plaintiffs, does not demand a contrary result.

There, the

Court was confronted with an employer that lied to its employees

about the effect of a pending corporate reorganization on their

We are mindful that the district court characterized what

happened here as the insurer "award[ing] itself the business of
administering the Plaintiffs' RAAs." Merrimon, 845 F. Supp. 2d at
319. But this characterization is inapropos; the insurer did no
more than carry out the express terms of the plans.
-27-

benefits.

See Varity, 516 U.S. at 493-94.

One issue was whether

the employer, in communicating with its work force, was acting as

an ERISA plan administrator or an employer.

See id. at 498.

In

holding that the employer was acting in the former capacity, the
Court noted that "[t]here is more to plan (or trust) administration
than simply complying with the specific duties imposed by the plan
documents or statutory regime."

Id. at 504.

Like barnacles clinging to the hull of a sinking ship,

the plaintiffs cling to these words.

Their reliance is mislaid.

Varity, which involved a plan administrator that "significantly and

deliberately misled the beneficiaries," id. at 492, is plainly
distinguishable.

The

Court's

acknowledgment

that

plan

administrator may have extra-textual fiduciary duties that are

implicated in such parlous circumstances does not mean that those
duties are implicated here.

Varity held that plan administration

"includes the activities that are ordinary and natural means of

achieving the objective of the plan," whether or not spelled out in
the plan.

Id. (internal quotation marks omitted).

The objective

of each of the plans at issue here was the delivery of a guaranteed

death benefit to the beneficiary, and the delivery of the benefit
through the establishment of an RAA fulfilled that objective.

No

other or further fiduciary duties attached.

Let us be perfectly clear.
desirability,

fairness,

or

social

-28-

This case is not about the

utility

of

retained

asset

accounts.

It is, rather, about the boundaries of ERISA.

The

plaintiffs attempt to invoke ERISA to attack practices that fall

outside the compass of the ERISA statute.

Consequently, they are

not entitled to relief.

IV.

CONCLUSION
We need go no further.7

The plaintiffs have not made out

their claims that the insurer breached any of its ERISA-related

fiduciary duties.

Thus, we affirm the district court's order of

partial summary judgment in favor of the insurer with respect to

ERISA section 406(b) and reverse the district court's order of
partial summary judgment in favor of the plaintiffs with respect to
section 404(a).

Accordingly, the trial (which was devoted to

potential relief) was a nullity and the resultant judgment must be

vacated.

To conclude the matter, we remand to the district court

with instructions to enter judgment in favor of the insurer.

All

parties shall bear their own costs.

So Ordered.

Inasmuch as we have resolved the liability issues adversely

to the plaintiffs, the other issues that have been briefed and
argued in connection with these appeals fall by the wayside.
Without exception, those issues relate to relief, and we have
determined that the plaintiffs are not entitled to any relief.
-29-