Merrimon v. Unum Life Insurance Co. of America

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 to the

administration of employee welfare benefit plans. 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

1
Although the decedents' employers were the named
administrators of the plans, each of them delegated to the insurer
discretionary authority to make claim determinations.

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

the same time, the insurer mailed books of drafts to the

plaintiffs, along with informational materials regarding the

accounts. 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

2
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 a personal stake in the outcome of the

controversy as to assure that concrete adverseness which sharpens

the presentation of issues upon which the court so largely

depends.'" 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." Lujan,

504 U.S. at 560 (footnote omitted) (internal citations and

quotation marks omitted). 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

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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 rights to sue for

violations of those strictures. See 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 in cases where the plaintiff has suffered an

interference with protected interests but no measurable 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. See Varity Corp. v. Howe, 516 U.S. 489,

496 (1996). 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, 272-

73 (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

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

(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.

3
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),
cert. denied, 133 S. Ct. 1242 (2013). Any possible defect in
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.").

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 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. The DOL responded by submitting a 16-

page amicus brief. 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. The

plaintiffs demur, arguing that the DOL Guidance was 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

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administers may warrant judicial deference, depending on the degree

to which the agency's exposition of the issue is deemed

authoritative. 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 a variety of ways. As a 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." Doe v.

Leavitt, 552 F.3d 75, 81 (1st Cir. 2009). Those factors include

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

validity of its reasoning, [and the] consistency [of its

interpretation] with earlier and later pronouncements." 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. Here, as in

Doe, "the agency has consulted appropriate 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 DOL's position is of

relatively recent vintage is not fatal. 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. Section 406(b).

The plaintiffs' 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 by retaining and

investing RAA funds for its own enrichment. 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." U.S.

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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 a 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. See Edmonson, 725 F.3d at

428; Faber, 648 F.3d at 106. 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 a plan that contained a specific directive to pay

beneficiaries in a lump sum. See id. at 25. 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. See Acosta v. Pac. Enters., 950 F.2d 611, 620 (9th

Cir. 1991). 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 did not offend section 406(b) was nevertheless

incorrect. 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). That is precisely what

happened here. 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.

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 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' RAAs" while retaining the assets backing these

accounts. Merrimon, 845 F. Supp. 2d at 319-20. 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. It granted partial

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summary judgment holding the insurer liable under ERISA section

404(a). See id.

The insurer mounts a formidable challenge to this

holding. 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. We owe a measure of deference to this

view. See supra Part III(A). This deference is especially

appropriate because the only 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.

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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. Retention of Policy Proceeds. It is clear beyond

hope of contradiction that sponsors of 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 a retained asset

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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"). Any further obligation

that the insurer had to the beneficiaries "constituted a

straightforward creditor-debtor relationship." 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).

4
The plans except death benefits totaling less than $10,000.
That exception is not relevant here.

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 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

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fiduciary when it invested the retained funds.5 See Edmonson, 725

F.3d at 426.

2. Setting of Interest Rate. This leaves the second

theme sounded by the plaintiffs. 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

5
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 ERISA-

related 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

6
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.

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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 a 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. This case is not about the

desirability, fairness, or social utility of retained asset

-28-
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.

7
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.

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