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stating that to deny standing to personal representative would be to deny any recovery at all
Summary of this case from Clarke v. Ford Motor CompanyOpinion
No. 00 Civ. 7396 (RWS)
January 10, 2001
Louis A. Craco, Jr., Esq., New York, NY, Attorney for Plaintiffs.
Buchanan Ingersoll, New York, NY, David J. Molton, Esq., Gayle N. Wolkenberg, Esq., Alison R. Rohmer, Esq., Attorney for Defendant.
OPINION
Defendant Kennametal, Inc. ("Kennametal") moves to dismiss the complaint for failure to state a claim, pursuant to Fed.R.Civ.P. 12 (b)(6), in lieu of filing an answer. For the reasons set forth below, the motion is granted in part and denied in part.
The Parties
Plaintiff Beate Freudenberg Gustafson ("Gustafson") is a citizen of the Federal Republic of Germany and a resident of Sweden and Mexico. She is the daughter of the late Gisela and Hugo Freudenberg. Gustafson is also the executrix of, and heir to, Gisela Freudenberg's estate.
Plaintiff Susanne Freudenberg Burick ("Burick") is a citizen of both the Federal Republic of Germany and Mexico, and is a resident of Mexico. She is the daughter of the late Hugo and Gisela Freudenberg and an heir to Gisela Freudenberg's estate.
Kennametal is a corporation incorporated under the law of Pennsylvania, with its principal place of business in Latrobe, Pennsylvania.
Facts
The complaint alleges the following facts, all of which are presumed true for the purposes of this motion to dismiss. Hugo Freudenberg was employed by Kennemetal before his death in 1999. Kennemetal established a Business Travel Accident Plan ("the Plan"), which provided insurance benefits to employees through a contract with Reliance Standard Life Insurance Company ("RSL"). As part of his compensation, Freudenberg received policy number SR 46294 through the Plan, which provided, inter alia, for payment of $500,000 to Freudenberg's designated beneficiary in the event of his death in an accident occurring while he was traveling on Kennametal business. The Plan also provided for an additional $50,000 payment to Mr. Freudenberg's beneficiary if he was wearing a seatbelt at the time of such accident. Gisela Freudenberg was the designated beneficiary of Freudenberg's policy.
On July 5, 1999, Hugo Freudenberg drove from his remote home in Macavaca, Mexico, to Ajijic, Mexico, in order to make arrangements for upcoming Kennametal meetings. Cellular telephone service had been disrupted in Macavaca, so Freudenberg drove to Ajijic in order to make use of a land line. His wife Gisela accompanied him. As they approached Ajijic, the Freudenberg car crashed, and Hugo died at the scene, although he was wearing his seatbelt. Gisela passed away from crash-related injuries approximately ten hours later.
Plaintiffs communicated with Kennametal shortly after the death of their parents about submitting a claim under the Plan, and provided documents and information regarding the circumstances of the crash showing that the trip had been undertaken for Kennemetal business purposes. Kennametal did not follow up on this information, but passed the application to a "low-level employee," who filled out and submitted to RSL a claim form entitled "Proof of Death Claim Statement," and represented that there was no evidence proving that Freudenberg was travelling on Kennametal business at the time of the crash. Although Kennametal had information provided by plaintiffs regarding the business purpose of the trip, this information was left out, and the relevant question spaces on the form were left blank. RSL requested additional information on October 5, 1999. Kennametal's counsel replied in a letter which failed to set forth the relevant information, stating only, "Kennemetal generally had very little information on Mr. Freudenberg's day-to-day activities and July 5, 1999 is no exception." Compl. ¶ 29. An affidavit from another Kennemetal employee was attached to the letter, but failed to establish the business purpose of the trip.
In a letter of December 22, 1999, RSL denied the claim due to Kennametal's failure to provide sufficient evidence that Freudenberg had been traveling on Kennametal business when the accident took place.
On January 12, 2000, counsel for Kennametal advised plaintiffs by letter that it was their obligation to appeal the denial of benefits, and suggested they assemble specific information in support of the appeal. A similar letter was sent again on January 21, 2000.
Plaintiffs retained counsel to investigate and prosecute the appeal. After obtaining numerous documentary and affidavit evidence, plaintiff's counsel appealed the denial of benefits by letter of March 27, 2000. After a telephone conversation with RSL, plaintiff's counsel gathered more evidence, and filed an additional submission on June 20, 2000.
RSL reversed its earlier denial and granted benefits under the Plan by letter of July 23, 2000. Plaintiffs received full payment of $550,000 on or about August 30, 2000.
Procedural History
Plaintiffs filed this action on September 29, 2000, seeking approximately $30,000 in interest that had accumulated on the $550,000 in benefits during the eight-month delay allegedly caused by Kennametal's failure to prosecute the claim properly, and $70,000 for attorneys' fees incurred in prosecuting the administrative appeal. The complaint alleges common law breaches of contract and fiduciary duty, as well as violations of the Employee Retirement Income Security act, 29 U.S.C. § 1001, et seq. ("ERISA").
On October 23, 2000, Kennametal filed a motion to dismiss pursuant to Rule 12(b)(6), Fed.R.Civ.P., in lieu of filing an answer. The motion alleged that ERISA preempts the common law breach of contract and fiduciary duty claims alleged in the second and third counts of the complaint, that the ERISA provision the complaint invokes does not provide the relief requested, and the relevant ERISA provision does not recognize the availability of the relief sought by the plaintiffs. In addition, Kennametal alleges that because the plaintiffs were not beneficiaries of Freudenberg's insurance policy, but rather the heirs of the named beneficiary, they have no standing to bring this suit in their individual capacities pursuant to ERISA, and therefore the suit may proceed only on behalf of Gustafson as executrix of Gisela Freudenberg's estate. The plaintiffs filed a brief in opposition to the motion on November 2, 2000. Kennemetal filed a reply brief on November 9, 2000, and the motion was deemed fully submitted upon oral argument on November 15, 2000.
Discussion I. Lega1 Standard for a Motion to Dismiss Pursuant to Rule 12(b)(6)
Courts considering a 12(b)(6) motion must "accept the material facts as alleged in the complaint as true, and construe all reasonable inferences in plaintiff's favor." Hernandez v. Coughlin, 18 F.3d 133, 136 (2d Cir.), cert. denied, 513 U.S. 836, 115 S.Ct. 117, 130 L.Ed.2d 63 (1994). Dismissal is "appropriate only if 'it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Harris v. City of New York, 186 F.3d 243, 250 (2d Cir. 1999) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).
II. ERISA Preempts Plaintiffs' Common Law Claims
ERISA provides the mechanism for recovering from employee welfare benefit plans established by employers. 29 U.S.C. § 1002 (3). The parties agree that the Plan at issue in this case is an employee welfare benefit plan as defined by ERISA because it provides for "benefits in the event of sickness, accident, disability, [or] death," 29 U.S.C. § 1002 (1). See Compl. ¶¶ 44-51; Def. Mem. at 9-11.
In a provision that has been broadly construed, ERISA mandates that it shall "supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144 (c) (1); see Ludwig v. NYNEX Service Co., 838 F. Supp. 769, 790 (S.D.N.Y. 1993) (ERISA's preemption provision is "conspicuous for its breadth") (citation omitted). State law "relates to" an employee benefit plan when "it has a connection with or reference to such plan." 29 U.S.C. § 1144 (c)(1); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45, 107 S.Ct. 1549, 1552, 95 L.Ed.2d 39 (1987). Therefore, common law actions that "relate to" employee benefit plans are preempted by ERISA. See id.;Kennedy v. Empire Blue Cross and Blue Shield, 989 F.2d 588, 591 (2d Cir. 1993) (finding that ERISA preempts state law claims to the extent that they "relate to" any employee benefit plan); Smith v. Dunham-Bush, Inc., 959 F.2d 6 (2d Cir. 1992) (holding that state law of general application "relates to" pension plan for preemption purposes, although it had only indirect effect on the plan); Maloney v. Local 46 Metallic Lathers' Union, No. 99 Civ. 9920 (VM), 2000 WL 1482930 (S.D.N.Y. Sept. 29, 2000) (holding that ERISA preempts all direct and indirect intrusion into the employee benefit plan arena).
Plaintiffs recognize that their common law claims for breach of contract and fiduciary duty unequivocally "relate to" an employee benefit plan within the meaning of ERISA. See Pltf. Mem. at 10. Accordingly, ERISA preempts the Second and Third Counts of the complaint, and they are dismissed without prejudice.
III. The Plaintiffs Have Standing To Bring ERISA Claims
The Civil Enforcement Provision of ERISA provides that a "participant or beneficiary'" of an employee welfare benefit plan may initiate a civil action "to recover benefits due him under the terms of his plan, [or] to enforce his rights under the terms of the plan. . . ." 29 U.S.C. § 1132 (a)(1)(B). Standing under ERISA is narrow, and is generally limited to those persons specifically designated in the statute. Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 21 (1983); Pressroom Unions-Printers League Income Security Fund v. Continental Assurance Co., 700 F.2d 889, 892 (2d Cir.), cert. denied, 464 U.S. 845 (1983). As neither plaintiff is a participant or beneficiary of the Plan, Kennemetal argues that they lack standing to pursue this action. See Tucker v. Shreveport Transit Management Inc., 226 F.3d 394, 397 (5th Cir. 2000);Lifeline Ltd. No II v. Connecticut General Life Ins. Co., 821 F. Supp. 1201 (E.D. Mich. 1993).
However, "[a]n insurance company should not be allowed to deny health benefits merely because the participant and beneficiary of the health plan have died." Yarde v. Pan American Life Insurance Co., Nos. 94-1167, 94-1312, 67 F.3d 298, 1995 WL 539736, *5 (4th Cir. Sept. 12, 1995) (table) (quoting Cottle v. Metropolitan Life Ins. Co., No. 92 C 1452, 1993 WL 8201, *1 (N.D. Ill. 1993)). Construing the language of ERISA as Kennemetal proposes would unduly restrict recovery of benefits due under employee welfare benefit plans, for to deny standing to the sole heirs or executrix would be to deny any recovery at all. Although the language of ERISA does not specifically authorize the executrix and/or sole heirs of participants and beneficiaries to bring suit under its civil enforcement provisions, other courts have recognized that inferring such a rule comports with congressional intent in establishing ERISA. See e.g., Yarde v. Pan American Life Insurance Co., 67 F.3d 298, 1995 WL 539736, *12 (sole heir of deceased beneficiary has derivative standing to for delayed payments); Hirsch for the Estate of Paul Hirsch v. National Mall Service, Inc., 989 F. Supp. 977, 983 (N.D. Ill. 1997) (wife as executrix may bring suit under 29 U.S.C. § 1140); Estate of Curtis v. Prudential Ins. Co., 839 F. Supp. 491, 495 (E.D. Mich. 1993) (allowing personal representative of deceased plan participant's estate to pursue ERISA claim pursuant to § 1132(a)(1)(B)); Krishna v. Colgate Palmolive Co., No. 90 Civ. 4116 (CSH), 1991 WL 125186, *2, *5 n. 5 (S.D.N.Y. July 2, 1991) (finding that, either as heir of deceased insurance plan participant or as estate's executrix, interpleader movant stated a "colorable claim" to insurance benefits pursuant to § 1132). Cf. Dallas County Hosp. Dist. v. Associates' Health and Welfare Plan, No. Civ.A.3: 99-CV-2746-G, 2000 WL 284196, *3 (N.D. Tex. March 15, 2000) (holding that hospital, as assignee of deceased plan participant, had § 1132(a)(1)(B) standing to sue for benefits).
In Yarde, the Fourth Circuit held that the sole heir of a deceased participant's deceased beneficiary had derivative standing to pursue a § 1132(a)(1)(B) ERISA claim, because, although no specific assignment had been made between the beneficiary and the heir, the heir stood in the beneficiary's shoes for the purposes of pursuing the claim. 1995 WL 539736, *56. Having no direct Second Circuit precedent to guide this Court, and in light of the similarity between the circumstances in Yarde and in the instant case, the reasoning of Yarde will be adopted here.
Although Pressroom stated that ERISA actions are generally limited to those brought by enumerated parties, 700 F.2d at 893, the question specifically presented in that case was whether the district court had subject matter jurisdiction over an ERISA action brought by a pension fund pursuant to § 1132(d)(1), rather than the distinct and more narrow standing question raised here under § 1132(a)(1)(B).
Therefore, in order not to frustrate the overriding intent of ERISA, the executrix and sole heirs of the deceased beneficiary of a deceased participant's employee welfare benefit plan have standing to bring a civil ERISA action for recovery of death-related benefits where, as here, if standing were not conferred, "there would be no one left to enforce whatever rights the beneficiary had. . . ." Cottle, 1993 WL 8201, *2.
IV. Under ERISA, Claims for Interest on Payments Wrongfully Delayed Are Cognizable, But Claims for Attorneys' Fees for Administrative Representation Are Not CognizableA. The Complaint Arises Under ERISA's Remedial Provision
As an initial matter, Kennemetal contends that the remaining ERISA count should be dismissed because it alleges a cause of action under 29 U.S.C. § 1109, which provides relief only to the plan rather than to individual beneficiaries. See Mass. Mutual Life Ins. Co. v. Russell, 473 U.S. 143, 105 S.Ct. 3085 (1989); Lee v. Burkhart, 991 F.2d 1004 (2d Cir. 1993) Kennemetal's argument places form over substance. The Federal Rules of Civil Procedure set forth flexible pleading requirements which are to be "construed so as to do substantial justice." Fed.R.Civ.P. 8 (f). Although the caption to the First Cause of Action cites "ERISA — 29 U.S.C. § 1109" as the basis for relief, the complaint elsewhere refers to other ERISA sections. Compl. ¶¶ 5, 8. The complaint fairly presents an ERISA claim, and the remaining count will be construed as invoking ERISA's remedial provision, 29 U.S.C. § 1132 (a)(3)(B). See Aramony v. United Way of America, 949 F. Supp. 1080, 1083 (S.D.N.Y. 1996) (construing claims as arising under 29 U.S.C. § 1132 although not so enumerated in complaint, and denying motion to dismiss).
That section provides: "A civil action may be brought — (3) by a participant, beneficiary, or fiduciary (a) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (b) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan." 29 U.S.C. § 1132 (A)(3).
B. Interest on Delayed Benefit Payments Is Recoverable
Kennemetal, citing Russell, 473 U.S. 143, contends that the interest plaintiffs seek is an "extracontractual damage" that is not recoverable under ERISA. In Russell, the Supreme Court addressed the question of extracontractual damages accruing due to a delay in payments in the context of a beneficiary's attempt to recover against a fiduciary. However, the beneficiary in Russell sued pursuant to ERISA § 409, 29 U.S.C. § 1109, which provides no cause of action for individuals, rather than the provision at issue here, ERISA § 502(a)(3), 29 U.S.C. § 1132 (a)(3), which allows beneficiaries to recover "other appropriate equitable relief." See 473 U.S. at 139 n. 5 ("Because respondent relies entirely on § 409(a) and expressly disclaims reliance on § 502(a)(3), we have no occasion to consider whether any other provision of ERISA authorizes recovery of extracontractual damages."); id. at 150 (Brennan, J., concurring) ("we save for another day the question [regarding] the nature and extent of the "appropriate equitable relief . . . to redress" such violations under § 502(a) (3).").
The Second Circuit recently addressed the scope of the "equitable relief" provision of 29 U.S.C. § 1132 (a)(3)(B) in Strom v. Goldman, Sachs Co., 202 F.3d 138 (2d Cir. 1999). Strom was the widow and named beneficiary of her husband's insurance policy. Although her husband had filed all the proper forms, his employer's error caused a delay in implementing the policy. As a result, Strom's husband was not covered by the plan at the time of his death. Strom filed an action to recover the benefits she would have received if not for the employer's error. The Strom Court found that the relief sought, which was intended "to eliminate the direct economic effect of an alleged violation of the statute," 202 F.3d at 147, fell within the parameters of § 1132(a) (3), because that provision is a "'make whole' remedy," id. (quoting Albermarle v. Paper Co. v. Moody, 422 U.S. 405, 419, 95 S.Ct. 2362, 45 L. Ed.2d 280 (1975)).
In so doing, Strom carved out an exception to, if not overruled,Lee v. Burkhart, 991 F.2d 1004, 1011 (2d Cir. 1993), which had held that "[m]oney damages are generally unavailable under [§ 1132(a)(3)]."See Dunnigan v. Metropolitan Life Ins. Co., 99 F. Supp.2d 307, 320 (S.D.N.Y. 2000) ("the reasoning of [cases upon which Lee relied] "has been effectively overturned by the Second Circuit's recent decision inStrom").
Although equitable relief generally does not encompass monetary awards, restitution is equitable in nature. Mertens v. Hewitt Assocs., 508 U.S. 248, 256, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993). Considering this fine distinction, the Second Circuit specifically reasoned that the plaintiff would have no other means of being made whole if the "other equitable relief" clause of § 1132(a)(3) were not construed so as to include her claim for monetary restitution, and the restitution should equitably be awarded to rectify the defendant's unjust enrichment. 202 F.3d at 148-49. See Ream v. Frey, 107 F.3d 147 (3d Cir. 1997) (finding that § 1132(a)(3)(B) "appropriate equitable relief" clause to encompass monetary restitution); Howe v. Varitv Corp., 36 F.3d 746 (8th Cir. 1994) (same), aff'd, 516 U.S. 489, 116 S.Ct. 1065, 134 L.Ed.23d 130 (1996); cf. Juliano v. Health Maintenance Organization of New Jersey, Inc., 221 F.3d 279, 292 (2d Cir. 2000) (declining to award restitution pursuant to § 1132(A)(3)(B) where benefit denied was medical care rather than payments, because plaintiff had failed to show that defendant was "wrongfully in possession of" the funds sought). Restitution is available within the discretion of the trial court if the plaintiff shows that (1) the defendant received a benefit; (2) at plaintiff's expense; (3) under circumstances that equitably warrant the court to order the defendant to make restitution. See Tech Express, Inc. v. FTF Bus. Systems Corp., No. 99CIV11692 GEL, 2000 WL 1877020, *5 (S.D.N Y Dec. 26, 2000).
Although the availability of interest on benefit payments delayed as a result of an employer's error was not specifically addressed in Strom, the reasoning of that case leads to the conclusion that this remedy falls within the class of "make whole relief" made available by § 1132(a) (3). At least one other court in this district has adopted this rule. InDunnigan v. Metropolitan Life Ins. Co., 99 F. Supp.2d 307, 320 (S.D.N.Y. 2000) the Honorable Shira A. Scheindlin held that interest on unjustifiably delayed payments is recoverable as restitution pursuant to § 1132(a)(3)(B), as long as the plaintiff can show the fiduciary defendant's underlying violation of ERISA, for example by breaching its fiduciary duty. The requirement that the plaintiff allege and prove that the delay in processing the benefits was the fault of the defendant ensures that the restitutionary interest remedy will not award plaintiffs for delays caused by their own inaction. Viewing "the gravamen of the complaint through the lens of common sense and basic notions of fairness," Judge Scheindlin observed the "truism that monthly benefits have a time-value component that is lost when those benefits are paid retroactively in a lump sum . . . there is a real economic difference between a payment of $1000 in June 1994 and payment of that same $1000 in February 1999." Id., 99 F. Supp.2d at 313. Restitution in such a case is available because the plan administrator was unjustly enriched by the time-value of the funds while it wrongfully kept them from the plaintiff, here the period between December of 1999 and August 30, 2000.See Strom, 202 F.3d at 143.
Dunnigan is currently on appeal to the Second Circuit.
The Seventh, Eighth, and Third Circuits are in accord with this reading of § 1132(a)(3)(B). See Clair v. Harris Trust Savings Bank, 190 F.3d 495, 498 (7th Cir. 1999), cert. denied, U.S. ___, 120 S.Ct. 1166, 145 L.Ed.2d 1076 (2000) (section 1132(A)(3)(B) provides cause of action for interest accruing due to breach of trust, as restitution);Kerr v. Charles F. Vatterott Co., 184 F.3d 938, 945 (8th Cir. 1999) (recognizing that interest may be recoverable under § 1132(a)(3) (B), but declining to award it where the defendant was not unjustly enriched and the plaintiff received adequate compensation for the time value of the delayed benefit payments); Fotta v. Trustees of the United Mine Workers of America, Health and Retirement Fund of 1974, 165 F.3d 209, 212 (3d Cir. 1998) ("the awarding of interest where benefits have been unjustifiably delayed not only ensures full compensation, but also serves to prevent unjust enrichment.").
Therefore, plaintiffs may sustain a cause of action for interest on delayed benefit payments pursuant to § 1132(a)(3)(B) as long as they allege that defendant's breach of ERISA or the Plan caused the delay. See Dunnigan, 99 F. Supp.2d at 320, 322.
The complaint alleges that "Kennemetal breached its duties as Plan Administrator and fiduciary of plaintiffs, by failing to prosecute a claim for benefits under the Plan diligently and effectively," and that this breach was the direct and proximate cause of the delay in payment. Compl. ¶ 4. The complaint at ¶¶ 46-47 specifically alleges a violation of the implied duty of good faith and fair dealing to participants and beneficiaries under ERISA. See Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 110, 109 S.Ct. 948 (1989) ("courts are to develop a 'federal common law of rights and obligations under ERISA-regulated plans'") (quoting Pilot Life, 481 U.S. at 56); Dunnigan, 99 F. Supp.2d at 323-24 ("Imposition of an implied term of good faith in ERISA plans is appropriate because it accomplishes both goals of the statute; it protects the rights of the beneficiary and the rights of the plan.").
The implied covenant requires that the parties to the insurance contract honestly submit or process appropriate materials in a timely fashion. The complaint alleges that, although the plaintiffs duly submitted relevant documentation, the defendant failed to incorporate them into the initial application and failed:
This implied duty expands on the existing fiduciary duty of plan administrators set forth in 29 U.S.C. § 1104. Liability for breach of those fiduciary duties is provided in § 1109, but, as discussed above, § 1109 does not provide individuals with a cause of action, so § 1132(a)(3) is the appropriate mechanism to address the defendant's liability for violating the implied duty of good faith and fair dealing. As the Dunnigan court recognized, despite the strong reasons against adding terms to a statutory scheme as comprehensive as ERISA, implying this remedy is necessary and equitable in order to avoid placing beneficiaries in a "catch-22 situation," in which plans fail to provide for interest on delayed benefit payments, so delay does not constitute a breach of the administrator's contractual fiduciary duty. 99 F. Supp.2d at 323.
diligently, zealously and thoroughly to investigate the circumstances surrounding Mr. Freudenberg's accident; fail[ed] to assemble, and to present to RSL in an effective and persuasive manner, the facts establishing that the accident was covered under the Plan; fail[ed] to preserve e-mail archives and other corporate records which could have aided in establishing the validity of the claim; misinform[ed] RSL that it could not determine facts necessary for RSL to conclude the claim was covered by the Plan; and fail[ed] formally to take the position, as policyholder, that the claim was, in fact, covered.
Compl. ¶ 47. In addition, the complaint also identifies the Plan itself as a source of the defendant's fiduciary duty to Plan participants. Compl. ¶ 13. The complaint further alleges that these breaches lead to the denial of benefits, forcing an appeal process that delayed the contracted-for payment. Compl. ¶ 50. As such, the complaint fairly alleges a breach of the implied covenant of good faith and fair dealing.
Because the requisite elements of a claim for interest accrued on unjustifiably delayed benefit payments have been stated, the motion to dismiss this element of Count One is denied.
C. Attorneys' Fees Accrued for Administrative Representation Are Not Recoverable
However, the attorneys' fees incurred by plaintiff in pursuing the administrative appeal of the initial denial of benefits do not qualify as appropriate equitable relief within the meaning of § 1132(a)(3)(B) as set forth above, and therefore are not recoverable.
ERISA provides that beneficiaries, participants and fiduciaries prevailing in court actions may recover reasonable attorneys' fees and costs. 29 U.S.C. § 1132 (g)(1). However, this provision does not grant individuals the right to compensation for attorneys' fees incurred during the administrative portion of the claim process. See, e.g.,Anderson v. Procter Gamble Co., 220 F.3d 449, 455 (6th Cir. 2000) ("no court has ever held that a plaintiff who settles all of her ERISA claims at the administrative stage and files suit only to recover costs is permitted to recover attorneys' fees"); McElwaine v. U.S. West. Inc., 176 F.3d 1167, 1172 n. 8 (9th Cir. 1999) (construing § 1132(g), holding that "[f]ees are not available for the administrative portion of an ERISA appeal"); Aminoff v. Ally Gargano, Inc., 1996 WL 675789 (S.D.N.Y. 1996) (rejecting plaintiff's claim for attorneys' fees because, "under the plain language of the statute, plaintiffs cannot recover fees incurred in settling the dispute because no litigation was ever instituted").
Finally, the factors that counseled toward interpreting interest as "equitable relief" available under § 1132(a)(3)(B) do not apply to attorneys' fees. As discussed above, the award of interest on delayed payments is appropriate equitable relief because the defendant was unjustly enriched by the time value of the funds it owed plaintiffs but held during the delay. No such justification supports an award of attorneys' fees spent during the administrative appeal. Strom specifically limited the monetary relief recoverable pursuant to § 1132(a)(3)(B) to "the benefit that [the plaintiff] would have received absent the alleged breach of duty, but not consequential or other damages." 202 F.3d at 149. Unlike interest on delayed payments, which unjustly enriched Kennemetal during the delay, the attorneys' fees expended do not constitute a "benefit" the plaintiffs would have "received" if not for Kennemetal's breach. Moreover, Kennemetal did not gain from plaintiffs' choice to hire attorneys to prosecute the administrative appeal. Therefore, the expenditure of attorneys' fees arose solely as a consequence of defendant's breach, and do not qualify as "appropriate equitable relief" pursuant to § 1132(a)(3). See Mertens, 508 U.S. at 248 ("the text of ERISA leaves no doubt that Congress intended 'equitable relief' to include only those types of relief that were typically available in equity, such as injunction, mandamus, and restitution."); Strom, 202 F.3d at 149.
Conclusion
For the foregoing reasons, the common law claims and the ERISA claim for attorneys' fees expended during the administrative process are dismissed. The plaintiffs may pursue their ERISA claim for interest on the delayed benefits.
It is so ordered.