Gabriel v. AEPF

The availability of the equitable remedy of a surcharge is dependent on whether the pleading party adequately proves harm and causation, not reliance, as a result of a breach of fiduciary duty.

Gregory R. Gabriel appeals the dismissal of his claim against the Alaska Electrical Pension Fund (“the Fund”) for denying him his monthly pension under the Alaska Electrical Pension Plan (“the Plan”), which Gabriel claims is a breach of fiduciary duty. According to the Plan, those who have completed ten or more years of electrical industry work may become eligible for pension benefits upon retirement under the Plan. While the Fund found that Gabriel has been an employee of several different electrical companies, Gabriel was an owner of one of the electrical companies, which does not make his service there eligible for pension benefits under the Plan. Gabriel still applied for benefits and received benefits for over three years, of benefits that he had not earned. On appeal, the Ninth Circuit reviewed Gabriel’s claim in order to determine whether there was any issue of material fact at issue, and agreed with the district court’s ruling that Gabriel failed to state a genuine issue of material fact for equitable relief. Additionally, the panel rejected Gabriel’s claim that the Fund violated any procedural requirements of the Employee Retirement Income Security Act of 1974. Therefore, the panel decided that deference should be given to the Fund and denied Gabriel’s benefits. However, the panel found that a “surcharge” may still be an appropriate form of equitable relief which may be granted to Gabriel. According to CIGNA Corp. v. Amara, in order for this relief to be granted, Gabriel will need to show “harm and causation, not detrimental reliance” with regard to the breach of trust by the fiduciary. Accordingly, the case was remanded for consideration of the availability of a surcharge, and whether Gabriel has pled a case that may be remedied. AFFIRMED IN PART and VACATED AND REMANDED IN PART.