Appeal from the United States District Court for the Western District of Washington Ricardo S. Martinez, District Judge, Presiding D.C. No. 2:10-cv-00298-RSM, D.C. No. 2:10-cv-00298-RSM
The opinion of the court was delivered by: Gould, Circuit Judge:
Argued and Submitted February 9, 2012-Seattle, Washington
Before: Mary M. Schroeder and Ronald M. Gould, Circuit Judges, and Ralph R. Beistline, Chief District Judge.*fn1
Opinion by Judge Gould; Concurrence by Judge Shcroeder; Dissent by Chief District Judge Beistline
Rhonda Rose ("Rose") appeals the district court's grant of partial summary judgment in favor of CGI Technologies and Solutions, Inc. ("CGI") in its action seeking "appropriate equitable relief" under § 502(a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. CGI appeals the district court's grant of partial summary judgment in favor of Rose's counsel and co-defendant, Nelson Langer Engle, PLLC ("NLE"), dismissing NLE from the action. CGI also appeals the district court's grant of proportional fees and costs to NLE, deducted from CGI's recovery from Rose. We affirm in part and reverse in part, remanding the matter to the district court for further proceedings consistent with our decision.
Rose was employed by CGI which provides to its employees and their dependents a self-funded welfare benefits plan ("the Plan") governed by ERISA. The Plan includes a subrogation and reimbursement clause that expressly: (1) gives to CGI the right to full reimbursement for medical expenses paid on behalf of the beneficiary from any funds recovered by the beneficiary from a third party tortfeasor, (2) exempts CGI from responsibility for attorneys' fees paid in any such recovery, expressly disclaiming the application of the common fund doctrine; and (3) requires full reimbursement to CGI regardless of whether the beneficiary is made whole by the recovery.
In 2003, Rose was seriously injured in a car accident with a drunk driver, and consequently she had nerve damage and neck and back injuries that required surgical intervention. From this accident Rose also suffered several types of damages including past and future medical expenses, past and future loss of wages, and pain and suffering. The parties stipulated that her personal injury claim was at least $1,757,943.08. With the assistance of NLE, Rose recovered a combined total of $376,906.84 from her action against the third party tortfeasor and from her underinsured motorist claim with her automobile insurance provider. The parties stipulated that this recovery represents only 21.44% of Rose's total damages.
Between 2007 and 2010, the Plan, on behalf of Rose, paid about $32,000 in medical expenses incurred as a result of Rose's injuries related to the accident. After Rose's recovery of these damages partially compensating her for her injuries, CGI asserted a first priority of payment and demanded to be reimbursed for the full amount the Plan had paid in medical expenses on Rose's behalf. Rose, through her counsel, declined to reimburse the Plan, and NLE placed the disputed amount in trust. CGI filed suit in the district court against both Rose and NLE seeking "appropriate equitable relief," under § 502(a)(3) in the form of a constructive trust and/or an equitable lien.
The parties filed cross-motions for summary judgment. The district court granted partial summary judgment in favor of NLE, concluding that the Plan's reimbursement provision could not be enforced against NLE. The district court granted partial summary judgment in favor of CGI, concluding that under § 502(a)(3), CGI, per the express terms of the Plan, was entitled to recover the full amount it paid in medical expenses on Rose's behalf. Finally, despite the Plan's language to the contrary, the district court also ruled that CGI was responsible for a proportional amount of the costs and fees incurred by NLE in recovering damages on Rose's behalf, and that this amount would be deducted from CGI's recovery from Rose. The parties now cross-appeal.
We consider the parties' cross-appeals in turn.*fn2
We first address CGI's appeal of the district court's grant of partial summary judgment in favor of NLE. The district court dismissed NLE from the action, concluding that NLE was not a proper defendant under § 502(a)(3). Section 502(a)(3) states:
A civil action may be brought . . . by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this sub-chapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or ...