Cooperative Benefit Administrators, Inc. v. Ogden

United States Court of Appeals
Fifth Circuit
F I L E D
REVISED APRIL 29, 2004
IN THE UNITED STATES COURT OF APPEALS April 15, 2004

FOR THE FIFTH CIRCUIT Charles R. Fulbruge III
Clerk
_____________________

No. 03-30518
_____________________

COOPERATIVE BENEFIT ADMINISTRATORS, INC.,
In Its Capacity as a Named Fiduciary of
the National Rural Electric Cooperative
Association Long-Term Disability Plan,

Plaintiff - Counter Defendant - Appellee,

versus

DALE R. OGDEN,

Defendant - Counter Claimant - Appellant.

---------------------
Appeal from the United States District Court for the Middle
District of Louisiana
---------------------

Before HIGGINBOTHAM, SMITH, and WIENER, Circuit Judges.

WIENER, Circuit Judge:

Defendant-Appellant Dale Ogden appeals the district court’s

grant of the summary judgment motion of Plaintiff-Appellee

Cooperative Benefit Administrators, Inc. (“CBA”), enforcing terms

of an ERISA-governed long-term disability plan against her and

dismissing her counterclaim for benefits. Ogden also appeals the

district court’s denial of her motion to dismiss for lack of

subject matter jurisdiction and for failure to join her daughters

as indispensable parties, as well as the court’s denial of her
motion for partial summary judgment. For the following reasons, we

reverse the district court’s denial of Ogden’s motion to dismiss,

albeit not on jurisdictional grounds; we render a judgment of

dismissal, but for failure to state a claim in federal common law;

and we affirm the district court’s dismissal of Ogden’s

counterclaim for benefits.

I. FACTS AND PROCEEDINGS

The National Rural Electric Cooperative Association (“NRECA”)

is a trade association for more than 1,000 rural electric

cooperatives throughout the United States. CBA is the claims

adjudicator for NRECA’s Group Benefits Program, a multiple-employer

benefits plan sponsored by NRECA for its member cooperatives. This

Program consists of five welfare benefits plans, including a self-

insured Long-Term Disability Benefits Plan (“the Plan”) governed by

the Employee Retirement Income Security Act of 1974 (“ERISA”).1 As

claims adjudicator for the Program, CBA is also an ERISA fiduciary

as defined by § 1102(a).2 Ogden is a former employee of Cajun

Electric Power Cooperative, Inc., one of NRECA’s member

cooperatives, and was a participant in the Plan at all relevant

times. After sustaining non-work related injuries that rendered

her totally disabled, Ogden filed a claim in April 1995 seeking

long-term disability benefits under the Plan. Within three weeks,

1
See 29 U.S.C. §§ 1002(1), et seq.
2
See 29 U.S.C. § 1102(a).

2
CBA approved her request and began paying Ogden the full amount of

her benefits under the Plan.

The Plan documents contain a “Benefit Offset” provision that

allows CBA, as plan fiduciary, to estimate the amount of benefits

a participant is eligible to receive from sources outside the Plan3

and to deduct —— or “offset” —— the combined amount of these

outside benefits from the amount that the participant is entitled

to receive under the Plan. Benefits from outside sources that were

subject to offset included “any payments [from other sources]. . .

whether the payment is made to, or on behalf of, the Participant,

the Participant’s spouse or any dependent of the Participant.” As

there is often a substantial delay between the time that a

participant becomes eligible for outside benefits and the time that

such benefits are actually paid to the participant, the Plan also

gives CBA the option of advancing to a participant the full amount

of his Plan benefits, without offset, conditioned on the

participant’s agreeing to reimburse the Plan the amount of the

advances attributable to eventual receipts of outside benefits. To

reinforce a participant’s reimbursement obligation, the Plan

requires him to sign a Reimbursement Agreement (“Agreement”), the

3
The following outside sources are subject to offset under
the Plan: (1) workers’ compensation benefits, (2) welfare benefits
to which the participant may be entitled to receive under the terms
of an employee benefit plan other than one sponsored by the NRECA
Group Benefits Program, (3) benefits under state or federal law,
(4) wage payments, (5) pension payments, (6) life insurance
disability payments, (6) Social Security Retirement benefits, and
(7) Social Security Disability benefits.

3
terms of which are stated in the plan documents, obligating the

participant both to cooperate with CBA in pursuing benefits from

outside sources and to reimburse the Plan the amount of the

advances within 30 days following receipt of any benefits from

outside sources. The Agreement specifies that, if the participant

fails to repay the Plan within thirty days for amounts previously

advanced, the participant is liable to the Plan for the full amount

of the advances, plus interest and any costs or attorney’s fees

incurred by CBA in enforcing the Agreement. If a participant

refuses to reimburse the Plan in accordance with the provisions of

the Agreement, CBA is authorized by the Plan to reduce —— “setoff”

—— reimbursements owed to it by the participant against future

monthly benefits as they become due.

In June 1995, CBA learned that Ogden and her two dependent

daughters had become eligible to receive Social Security disability

benefits, which, as we have noted, are among the types of outside

benefits that are subject to the Plan’s offset provisions.4

Consequently, CBA informed Ogden that it would begin offsetting the

estimated amount of her and her daughters’ anticipated Social

Security disability benefits against her monthly benefits under the

Plan, unless she agreed to provide CBA with a copy of her Social

Security application and sign a Reimbursement Agreement as required

4
The Plan defines Social Security disability benefits to
include “benefits paid to the Participant’s spouse or children on
account of the Participant’s employment and earnings record.”

4
by the Plan. Ogden opted to sign the Agreement and continue to

receive the full amount of her benefits without offset. In the

Agreement, Ogden promised

[t]o repay CBA the amounts advanced to [her] in
accordance with the offset provisions of the [LTD]
plan and this Reimbursement Agreement within 30
days of [her] receipt of the proceeds of any
benefits, awards, or payments recovered from Social
Security . . . The repayment will not exceed the
amount of the benefits, awards, or payments
recovered from Social Security, except that it
shall include interests, costs, and attorney’s fees
as provided in this RA.

In October 1996, CBA informed Ogden that she had become

eligible to receive her retirement pension and that her total

monthly benefits under the Plan would be offset by $66.52, the full

amount of her monthly pension payments. Thus, her total monthly

benefits from the Plan were reduced from $996.77 to $930.25,

starting with her November 1996 payment.

Initially, the Social Security Administration (“SSA”) denied

Ogden’s claim. CBA subsequently offered to hire Allsup, Inc. to

pursue the claim on Ogden’s behalf. Ogden accepted this offer, and

CBA paid all expenses related to Allsup, Inc.’s representation.

The SSA finally approved Ogden’s claim for disability benefits in

October 1997, more than two years after she had submitted her

application. Shortly thereafter, the SSA issued Ogden a Notice of

Award, stating that she was entitled to monthly Social Security

disability benefits of $844, starting the following month, plus a

lump-sum payment of $26,808 for retroactive disability payments for

5
the period April 1995 through October 1997. The SSA also informed

Ogden that her two daughters, both of whom had attained majority

after Ogden’s application was filed and were thus no longer her

dependents, would each receive lump-sum payments totaling $27,624

for the same period.

The present controversy arose when, after receiving her lump-

sum Social Security award, Ogden refused to reimburse the Plan

$27,291.29 to cover advances that she owed under the terms of the

Plan and the Agreement. Although CBA began suspending Ogden’s

benefits in December 1998 through the exercise of its setoff

rights, it continued to seek reimbursement from Ogden from her

lump-sum award. In April 2000, after several attempts to obtain

reimbursement failed, CBA filed suit in district court for

$27,693.86 in benefit “overpayments.” Because Ogden’s daughters

had not, at that time, received their lump-sum Social Security

awards, CBA based its demand on the amount of Ogden’s lump-sum

award and the estimated amount of her daughters’ anticipated lump-

sum awards, plus pre-judgment interest at eight percent, post-

judgment interest, and attorney’s fees and costs.

In July 2000, the SSA paid Ogden’s two major daughters lump

sums of $26,994 and $630, respectively. CBA subsequently amended

its complaint to state a demand for $22,784.74, an amount that

reflected both the sums it had recouped from Ogden since December

1998 as a result of its suspension of her plan benefits under the

setoff provision and the sums her daughters had actually received.

6
CBA premised subject matter jurisdiction on two separate grounds:

(1) ERISA § 502(a)(3),5 which authorizes a plan fiduciary to bring

a civil action for equitable relief to enforce the terms of the

plan, and (2) the federal common law of unjust enrichment as

applied to ERISA.

Ogden answered the complaint and counterclaimed for back

benefits allegedly owed to her from May 2000 to date, plus

attorney’s fees and costs. She then filed a motion to dismiss

CBA’s complaint for lack of subject matter jurisdiction on the

basis that CBA had failed to state a statutory claim for equitable

relief under § 502(a)(3) and that federal common law could not be

invoked to provide CBA with a remedy. That motion also included an

alternative Rule 12(b)(7)6 motion to dismiss CBA’s complaint for

failure to join her daughters as indispensable parties under Rule

19.7

While these motions were still pending, Ogden filed a motion

for partial summary judgment on the merits of CBA’s claims,

asserting, inter alia, that she could not be held liable under the

5
See 29 U.S.C. § 1132(a)(3). ERISA § 502(a)(3) authorizes a
civil action “by a participant, beneficiary, or fiduciary (A) to
enjoin any act or practice which violates any provision of this
title 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 title or the terms of the plan[.]” 29 U.S.C.
§ 1132(a)(3).
6
Fed. R. Civ. P. 12(b)(7).
7
Fed. R. Civ. P. 19.

7
terms of the Agreement for the Social Security awards received by

her daughters, as they were no longer her dependents when they

received those awards. Specifically, Ogden requested that the

district court (1) dismiss CBA’s reimbursement action on the

merits, (2) declare that CBA erred in offsetting her plan benefits

by the amount of her retirement pension, and (3) declare that CBA

had accepted her alleged offer to pay the amount she owed to the

Plan through setoff of her plan benefits. CBA then filed a cross-

motion for summary judgment on the merits of its claims and on

Ogden’s counterclaim for benefits.

In January 2002, after both sides had filed their dispositive

motions, the Supreme Court issued its decision in Great-West Life

& Annuity Insurance Co. v. Knudson, which further defined the scope

of § 502(a)(3)’s equitable relief provision.8 Subsequently, the

parties filed supplemental memoranda addressing Knudson’s impact on

CBA’s reimbursement claim.

In March 2003, the district court heard oral argument on

Ogden’s motions to dismiss and for partial summary judgment, as

well as on CBA’s cross-motion for summary judgment. During the

course of the proceedings, CBA conceded that it had failed to state

a viable claim for equitable relief under § 502(a)(3), after which

the district court dismissed that claim. The court ruled, however,

that the dismissal of CBA’s statutory claim did not preclude the

8
534 U.S. 204 (2002).

8
exercise of federal question jurisdiction under § 1331, theorizing

that CBA had a right to assert a federal common law claim grounded

in unjust enrichment.9

The district court then denied Ogden’s Rule 12(b)(7) motion,

reasoning that, unlike their mother, Ogden’s daughters were not

contractually bound by the Agreement to repay the amounts advanced

to Ogden by the Plan and thus were not indispensable parties to the

suit. Finally, the district court denied Ogden’s motion for

partial summary judgment and granted CBA’s cross-motion for summary

judgment, concluding that Ogden had failed to raise a genuine issue

of fact regarding CBA’s unjust enrichment claim and that her

counterclaim was barred for failure to exhaust administrative

remedies.

The district court entered judgment against Ogden for

$22,784.74, plus attorney’s fees, costs, and interest at the rate

of eight percent per annum, compounded annually, from the date on

which Ogden and her daughters had received their Social Security

disability benefits. It is from this judgment that Ogden timely

filed a notice of appeal.

II. ANALYSIS

A. Standard of Review

9
Frank v. Bear Stearns & Co., 128 F.3d 919, 922 (5th Cir.
1997) (“[f]ederal question jurisdiction may exist over claims
arising under federal common law”); see 28 U.S.C. § 1331.

9
 We review de novo both a denial of a motion to dismiss and a

grant of a motion for summary judgment.10

B. CBA’s Federal Common Law Claim

As noted, CBA’s complaint alleged two alternative bases for

jurisdiction: (1) a statutory claim for equitable relief under §

502(a)(3), and (2) a federal common law claim of unjust enrichment.

As CBA conceded that it could not maintain its claim for equitable

relief under § 502(a)(3), we need not address it except to note

that, in seeking to impose personal liability on Ogden to enforce

her “contractual reimbursement obligation under the LTD Plan and

the Reimbursement Agreement,” CBA was requesting precisely the kind

of “legal” remedy that the Supreme Court has held to be beyond §

502(a)(3)’s jurisdictional grant.11

As the district court correctly ruled, however, CBA’s failure

to state a statutory cause of action under ERISA does not bar

federal subject matter jurisdiction over its unjust enrichment

claim under federal common law. Indeed, the Supreme Court has made

clear that federal question jurisdiction may exist over claims

10
See Benton v. United States, 960 F.2d 19, 21 (5th Cir.
1992) (per curiam).
11
See Knudson, 534 U.S. at 210, 221 (an action that seeks “to
impose personal liability on [a defendant] for a contractual
obligation to pay money” is “legal” in nature and unauthorized by
§ 502(a)(3)); see also Bombardier Aerospace Employee Welfare
Benefits Plan v. Ferrer, Poirot & Wansbrough, P.C., 354 F.3d 348,
356 (5th Cir. 2003); Bauhaus USA, Inc. v. Copeland, 292 F.3d 439,
444 (5th Cir. 2002).

10
arising under federal common law.12 Nevertheless, simply because

federal courts have subject matter jurisdiction over CBA’s action

to determine the existence of a federal common law remedy of unjust

enrichment on CBA’s behalf does not mean that CBA has successfully

stated a federal common law cause of action for unjust enrichment.13

In cases such as this, for which Congress has empowered the

judiciary to create federal common law pursuant to federal

legislation, the ability of a plaintiff to state a federal common

law cause of action depends on the existence of a “gap” in the text

of that legislation that allows for the creation of the federal

common law remedy sought by the plaintiff.14

Our holding in Frank v. Bear Stearns & Co. to the effect that

federal question jurisdiction did not exist because the plaintiff’s

12
See Illinois v. Milwaukee, 406 U.S. 91, 100 (1972) (“We see
no reason not to give ‘laws’ its natural meaning, and therefore
conclude that § 1331 jurisdiction will support claims founded upon
federal common law as well as those of a statutory origin.”
(citation omitted)); see also Frank, 128 F.3d at 922.
13
See, e.g., Airco Indus. Gases, Inc. Div. of BOC Group , Inc.
v. Teamsters Health & Welfare Pension Fund, 850 F.2d 1028, 1032 (3d
Cir. 1988) (“[t]he question of whether the district court had
subject matter jurisdiction pursuant to [28 U.S.C. § 1331] is not
whether [the plaintiff-employer] had a valid cause of action
against the [defendant-plan] under federal common law . . . [but]
[r]ather . . . whether the determination of the existence vel non
of that cause of action is a question “arising under . . . the laws
. . . of the United States.”) (citing 28 U.S.C. § 1331) (1982)).
14
Jamail, Inc. v. Carpenters Dist. Council of Houston Pension
& Welfare Trusts, 954 F.2d 299, 303 (5th Cir. 1992) (“Whenever
Congress enacts complex comprehensive legislation, such as ERISA,
minor gaps in the legislation are unavoidable . . .[,][and] [i]t is
the judiciary’s role . . . to fill in these gaps.”).

11
complaint did not state a claim under federal common law is not to

the contrary.15 In the instant case, our power to create federal

common law is premised on congressional authorization to fill

interstitial gaps in the text of federal legislation, here, ERISA.

Accordingly, we have jurisdiction over the action to construe that

legislation to determine the existence of a federal common law

cause of action on CBA’s behalf. By contrast, the issue in Frank

was whether the plaintiff’s state law claims implicated “federal

common law issues” because their resolution required interpretation

of a federal contract.16 Thus, in Frank we did not have

congressional authorization to make substantive rules pursuant to

a federal statute, and we could exercise federal question

jurisdiction over the action only if we found that the action fell

within “the narrow class of cases where federal rules are necessary

to protect uniquely federal interests.”17 As the action did not

fall within that narrow class of cases, we concluded that federal

common law did not “exist” in the case, and thus there was no basis

for federal question jurisdiction.18

More to the point of today’s inquiry, we have held that

federal common law may be applied to fill “minor gaps” in ERISA’s

15
See 128 F.3d at 924.
16
See id. at 922.
17
See id. at 923 (citations omitted).
18
Id. at 925.

12
text, as long as the federal common law rule created is “compatible

with ERISA’s policies.”19 In so holding, however, we cautioned that

the power of the judiciary “to develop federal common law pursuant

to ERISA does not give carte blanche power to rewrite the

legislation to satisfy our proclivities.”20 Thus, federal courts

do not have authority under ERISA to create federal common law when

that statute “specifically and clearly addresses the issue before

th[e] Court.”21 This is so because, in such instances, the

legislative scheme does not contain a “gap” that requires “filling”

19
Jamail, Inc., 954 F.2d at 304; Rodrigue v. Western and
Southern Life Ins. Co., 948 F.2d 969, 971 (5th Cir. 1991) (“federal
courts should create federal common law when adjudicating disputes
regarding ERISA”) (citing Degan v. Ford Motor Co., 869 F.2d 889,
892 (5th Cir. 1989)); Cefalu v. B.F. Goodrich Co., 871 F.2d 1290,
1297 (5th Cir. 1989) (“federal courts may create federal common law
governing employee benefit plans in order to supplement the
statutory scheme”) (citing Nachwalter v. Christie, 805 F.2d 956,
959 (11th Cir. 1986)); see also United States v. Little Lake Misere
Land Co., Inc., 412 U.S. 580, 593 (1973) (“[T]he inevitable
incompleteness presented by all legislation means that interstitial
federal lawmaking is a basic responsibility of the federal
courts.”); Morales v. Pan Am. Life Ins. Co., 914 F.2d 83, 87 (5th
Cir. 1990) (declining to create federal common law unjust
enrichment and third-party beneficiary claims where creation of
such claims “would be inconsistent with ERISA’s terms and
policies”).
20
Jamail, Inc., 954 F.2d at 303.
21
Cefalu, 871 F.2d at 1297 (refusing to apply federal common
law to ERISA “because ERISA specifically and clearly addresse[d]
the issue before th[e] Court”); Rodrigue, 948 F.2d at 971-72
(refusing to create federal common law rule that would allow
employee to assert an estoppel-based argument against the Plan
because ERISA “addresses estoppel claims”) (citing Degan v. Ford
Motor Co., 869 F.2d 889, 895 (5th Cir. 1989) (power to create
federal common law when adjudicating ERISA disputes exists only
where ERISA preempts but does not address the issue) (citations
omitted)).

13
by application of federal common law. Thus, a court’s general

opinion as to what remedies might further ERISA’s underlying

policies will not be sufficient “‘to overcome the words of its text

regarding the specific issue under consideration.’”22

Although we have not previously recognized a federal common

law right of unjust enrichment or restitution in the context of an

ERISA fiduciary’s efforts to obtain reimbursement of funds paid to

a participant, CBA argues that such a right comports with ERISA’s

goal of enforcement of plan terms and is necessary to provide CBA

with relief in the absence of equivalent statutory or state law

remedies.23 Ogden counters that the Supreme Court, in both Mertens

v. Hewitt Associates and Knudson, interpreted § 502(a)(3)’s

“appropriate equitable relief” language to proscribe precisely the

type of monetary relief —— or “legal” remedy —— that CBA requests.

As such, argues Ogden, the district court did not have authority to

grant CBA a federal common law right that would, in effect, allow

it to circumvent the plain language of ERISA’s text, i.e., to do

indirectly that which under ERISA it cannot do directly.

As our discussion indicates, CBA’s entitlement to a federal

common law remedy is dependent on our determining that a gap exists

in ERISA’s text regarding CBA’s right, as a plan fiduciary, to

22
Knudson, 534 U.S. at 220 (quoting Mertens v. Hewitt Assocs.,
508 U.S. 248, 261 (1993)).
23
CBA did not assert a state law cause of action for breach
of contract, and thus we express no opinion as to whether such a
claim would be preempted.

14
bring an action for a money judgment enforcing a participant’s

contractual reimbursement obligation. As we shall show, ERISA’s

civil enforcement provision specifically and clearly addresses this

issue, thereby eschewing any possibility that a “gap” exists in the

statutory text that would permit us to employ federal common law to

create the remedy that CBA seeks.

To reach that determination, we need only examine the text of

§ 502(a)(3) in light of the Supreme Court’s decisions in Mertens

and Knudson. Section 502(a)(3) arms plan fiduciaries with a cause

of action “to obtain . . . appropriate equitable relief” to redress

any act in violation of ERISA or the terms of the plan or to

enforce ERISA’s provisions or the terms of the plan.24 In Mertens,

the Supreme Court interpreted § 502(a)(3)’s “appropriate equitable

relief” language to include only “those categories of relief that

were typically available in equity,” reasoning that a contrary

interpretation —— namely, one that would allow a plaintiff to bring

an action for monetary damages, “the classic form of legal relief,”

—— “would limit the relief not at all” and “render the modifier

[equitable] superfluous.”25 Although the Mertens plaintiffs did

not, as CBA does here, ask the Court to recognize a federal common

law cause of action in unjust enrichment, the Court, in rejecting

their proposed construction of § 502(a)(3), did admonish the

24
29 U.S.C. § 1132(a)(3).
25
508 U.S. at 255-56, 257, 258.

15
plaintiffs that “[t]he authority of courts to develop a ‘federal

common law’ under ERISA is not the authority to revise the text of

the statute.”26

In Knudson, the Supreme Court revisited the boundaries of

“equitable relief” under § 502(a)(3) and again carefully emphasized

that Congress’s use of the word “equitable” was not inadvertent,

but rather was a deliberate act on its part to limit a § 502(a)(3)

plaintiff’s remedies to those that were traditionally considered

equitable in nature.27 For an action to lie in equity, the Court

stated, an ERISA plaintiff must “seek not to impose personal

liability on the defendant, but to restore to the plaintiff

particular funds or property in the defendant’s possession.”28 The

Knudson Court was singularly unimpressed by the ERISA plan’s

concerns that limiting § 502(a)(3) actions to include only those

remedies “typically available in equity” would deprive the plan of

any remedy and create a result contrary to a “‘primary purpose of

ERISA,’ namely, the enforcement of the terms of a plan.”29 To this

end, the Court noted that, “‘[e]ven assuming ... that petitioners

are correct about the pre-emption of previously available

26
Id. at 259 (citing Firestone Tire & Rubber Co. v. Bruch, 489
U.S. 101, 110 (1989)).
27
534 U.S. at 220-221. Like CBA, the plan in Knudson sought
reimbursement from the beneficiary out of funds that were beyond
the beneficiary’s possession and control. See id. at 214.
28
Id. at 214.
29
Id. at 215, 220.

16
state-court actions’ or the lack of other means to obtain relief,

‘vague notions of a statute’s “basic purpose” are nonetheless

inadequate to overcome the words of its text regarding the specific

issue under consideration.’”30

Looking at ERISA’s civil enforcement provision as a whole, the

Court in Knudson observed:

In the very same section of ERISA as § 502(a)(3),
Congress authorized ‘a participant or beneficiary’ to
bring a civil action to enforce his rights under the
terms of the plan,’ without reference to whether the
relief sought is legal or equitable. But Congress did
not extend the same authorization to fiduciaries.
Rather, § 502(a)(3), by its terms, only allows for
equitable relief. We will not attempt to adjust the
“carefully crafted and detailed enforcement scheme”
embodied in the text that Congress has adopted.31

As the plan clearly sought to impose personal liability on the

beneficiary to enforce her contractual reimbursement obligation

under the plan, the Court held that the plan’s action was legal in

nature and outside the scope of equitable relief permitted by §

502(a)(3).32

In the wake of Mertens and Knudson, we have twice interpreted

§ 502(a)(3) in the context of a plan’s suit for reimbursement from

a beneficiary. In Bauhaus U.S.A., Inc. v. Copeland, we reversed

the district court’s exercise of subject matter jurisdiction over

the plan’s claim, noting that the funds sought by the plan were not

30
Id. at 220 (quoting Mertens, 508 U.S. at 261).
31
Id. at 220-221 (citations omitted).
32
See Knudson, 534 U.S. at 221.

17
within the participant’s possession and control.33 More recently,

in Bombardier Aerospace Employee Welfare Benefits Plan v. Ferrer,

Poirot and Wansbrough, we affirmed the district court’s exercise of

subject matter jurisdiction on the basis that the participant had

constructive possession over the funds sought by the plan.34 In

each case, we stressed that, for a plan fiduciary’s action to fall

within § 502(a)(3)’s jurisdictional grant, it must seek recovery of

(1) specifically identifiable funds, (2) that belong in good

conscience to the Plan, and (3) that are within the possession and

control of the defendant-beneficiary.35

As Mertens and Knudson demonstrate, Congress, in drafting §

502(a)(3)(B) to allow only “equitable relief,” specifically

contemplated the possibility of extending to plan fiduciaries a

right to sue a participant for money damages and chose instead to

limit fiduciaries’ remedies to those typically available in equity.

As ERISA’s text “specifically and clearly addresses” the issue

33
292 F.3d at 445.
34
See 354 F.3d at 356.
35
See id.; Bauhaus, 292 F.3d at 444-45. During oral argument
before the district court, CBA conceded that it had failed to state
a claim for equitable relief under § 502(a)(3) because it had moved
to re-open discovery so that it could “trace the location and
amount of social security disability benefits in the possession,
custody or control of Ogden.” Cooperative Benefit Adm’rs, Inc., 265
F. Supp. 2d 662, 670 (M.D. La. 2003). We read the district court’s
decision to dismiss CBA’s § 502(a)(3) claim based on this
concession as an implicit finding on its part that the funds CBA
sought to recover from Ogden were either not specifically
identifiable or beyond her possession and control.

18
whether CBA, as a plan fiduciary, has a right to pursue a claim for

legal relief against Ogden, there is no “gap” in ERISA on this

question and thus no basis for granting CBA a federal common law

remedy. We therefore cannot sanction the district court’s decision

to grant CBA a federal common law right to pursue its claim for

money damages against Ogden.

CBA nevertheless argues that Knudson’s statement that “there

may have been other means for petitioners to obtain the essentially

legal relief that they seek” can be construed as either an

endorsement of a federal common law remedy or at least an

intimation that its holding did not foreclose the possibility that

a federal common law remedy might exist.36 We are unpersuaded.

Aside from obviously being dicta, this statement was made only to

highlight the Court’s point, discussed above, that the availability

vel non of other remedies to the plan was irrelevant to the Court’s

decision to deny the plan’s claim for legal relief because that

type of relief was expressly proscribed by ERISA’s text.37 Thus,

we do not read this statement as an invitation to the lower courts

36
Knudson, 534 U.S. at 220.
37
The Court went on to state that it “express[ed] no opinion
as to whether [the plan] could have intervened in the state-court
tort action brought by respondents or whether a direct action by
petitioners against respondents asserting state-law claims such as
breach of contract would have been pre-empted by ERISA . . . . [or]
whether [the plan] could have obtained equitable relief against
respondents’ attorney and the trustee of the Special Needs Trust.”
Id.

19
to grant plan fiduciaries a federal common law right to pursue

claims for legal remedies against participants.

We are equally unconvinced by CBA’s suggestion that Mertens

and Knudson are somehow inapposite because the plaintiffs in those

cases did not seek a federal common law remedy. To reach the

decision we make today, we need only determine that ERISA’s text

specifically and clearly addresses the question whether CBA, as a

plan fiduciary, has a right to pursue a claim for legal relief

against Ogden. Mertens and Knudson explain in great detail that

Congress not only considered this precise question in enacting §

502(a)(3), but answered it in the negative. Far from being

inapposite, then, these opinions are directly controlling of our

decision not to extend to CBA a federal common law right to pursue

its reimbursement claim against Ogden.

We also reject CBA’s attempt to analogize its case to our

precedent in Jamail v. Carpenters District Council of Houston

Pension & Welfare Trusts.38 Decided prior to Mertens and Knudson,

Jamail recognized the existence of an employer’s federal common law

right to recover contribution “overpayments” mistakenly made to its

ERISA plan.39 Noting that ERISA § 1132 provides a private right of

action for fiduciaries, participants, and beneficiaries, but not

for employers, we reasoned in Jamail that a “gap” existed in

38
954 F.2d 299 (5th Cir. 1992).
39
See id. at 305.

20
ERISA’s text regarding an employer’s rights to recover overpayment

of contributions from the plan to which such overpayments had been

made.40 Thus, we held that recognition of a federal common law

right of restitution for an employer vis-à-vis a plan was

appropriate, as ERISA’s text did not address the issue, and such a

right would further ERISA’s underlying purposes by encouraging

small employers to sponsor benefit plans for their employees.41

Although CBA styles its reimbursement action as one for

“overpayment of benefits,” Jamail is clearly distinguishable, based

on the obvious difference between an employer qua employer and a

traditional ERISA party, i.e., plans, fiduciaries, participants,

and beneficiaries. In Jamail, we were faced with an actual gap in

ERISA’s text which makes no mention of employers. We could not,

therefore, point to precise language in ERISA’s text demonstrating

that, either expressly or implicitly, Congress had proscribed the

kind of relief that the employer plaintiff sought. As ERISA’s text

did not specifically and clearly address whether an employer had a

right to recoup mistakenly paid contributions from the plan, and as

creation of such a remedy was compatible with the policies of

ERISA, the Jamail panel did not have to “rewrite” ERISA to grant

the employer a federal common law right of restitution against the

plan. Jamail thus has no bearing on our refusal today to create a

40
See id. at 303-04.
41
See id.

21
federal common law right of unjust enrichment that would allow a

plan fiduciary to assert an action for legal relief against a

participant, both parties being members of categories expressly

identified in § 502.

We acknowledge that, in holding as we do, we may appear to be

at variance with the Fourth Circuit’s pre-Mertens decision in

Provident Life & Accident Insurance Company v. Waller.42 In Waller,

the Fourth Circuit recognized the existence of a federal common law

right of restitution on the part of a plan fiduciary to recover

benefits from a beneficiary.43 The facts of that case are as

follows: The Plan administrator sought reimbursement of benefits

paid to the beneficiary after settlement funds from a third party

tortfeasor were received on behalf of the beneficiary.44 The Plan

administrator did not, however, allege jurisdiction under §

502(a)(3), but rather under § 502(a)(2)(B), which provides a civil

action only to participants and beneficiaries to recover benefits

owed from a plan.45 Noting that § 502(a)(2)(B) does not authorize

the converse, i.e., suits by plan administrators to recover from

participants or beneficiaries, the Fourth Circuit held that the

provision in question did not provide a basis for jurisdiction and

42
906 F.2d 985 (4th Cir. 1990).
43
See id. at 993.
44
See id. at 986-87.
45
See id.; 29 U.S.C. § 1132(a)(1).

22
went on to create a federal common law right of restitution for the

plan administrator.46

A close reading of Waller’s analysis, however, reveals that

the reasoning and facts of that case constitute an inadequate basis

for our recognition of a federal common law right of unjust

enrichment in the instant case. Although the Fourth Circuit noted

that “it [was] probable” that the plan administrator had stated a

cause of action for equitable relief under § 502(a)(3), it declined

to decide the issue, as the plan administrator had not advanced §

502(a)(3) as the basis for jurisdiction and “as there [was]

seemingly little or no authority” on what was required to state an

action for equitable relief under § 502(a)(3).47 Thus, the Waller

court recognized a federal common law right of restitution on the

part of a plan administrator against a beneficiary without ever

considering the applicability of § 502(a)(3) to the administrator’s

requested relief.

Even so, CBA urges us to follow Waller in granting it a

federal common law right of restitution against Ogden, pointing out

that the Fourth Circuit recently upheld Waller’s holding in a post-

Knudson decision, Rego v. Westvaco Corporation.48 In Rego, the

Fourth Circuit declined to grant a beneficiary a federal common law

46
See Waller, 906 F.2d at 987, 991.
47
See id. at 988 n.6
48
319 F.3d 140, 149 (4th Cir. 2003).

23
right to sue the plan for breach of fiduciary duty and negligent

misrepresentation.49 In reaching its decision, the court reasoned

that, because “Congress clearly contemplated plaintiffs like [the

beneficiary] and explicitly created remedies for them within the

text of the statute itself,”50 the court could not “disregard

Congress’ decision to limit the scope of those remedies.”51 The

Fourth Circuit went on, however, to distinguish its holding in Rego

from its decision to create a federal common law remedy in Waller

on the basis that, in Waller, “‘ERISA [did] not provide an explicit

remedy’” for the administrator.52

We find questionable the Rego court’s efforts to distinguish

Waller, in that the reasoning in the later case fails to account

for the fact that Waller had not considered the applicability of §

502(a)(3) to the plan administrator’s claim prior to granting the

administrator a federal common law remedy. We therefore decline to

adopt the Fourth Circuit’s reasoning in Waller, as approved by

Rego, because in neither case was the Court in a position to decide

whether a “gap” existed in ERISA’s text that would allow for the

application of federal common law. Accordingly, CBA’s reliance on

49
See id.
50
Id.
51
Id.
52
Id. (quoting Waller, 906 F.2d at 990).

24
Waller, although somewhat understandable in light of Rego, is

nevertheless misplaced.

Our decision not to follow Waller’s holding is equally

unaffected by Jamail’s suggestion that Waller was correctly

decided.53 A close look at Jamail’s discussion of Waller reveals

that its approval was based on a pre-Mertens understanding of what

constitutes “equitable” relief under § 502(a)(3).54 Specifically,

we noted in Jamail that “restitution is a cause of action with its

origins in equity” and cited Waller as an example of a case in

which equity had been achieved in aid of the plan by the court’s

recognition of a federal common law right of restitution on the

part of the plan.55 With the hindsight benefit of Mertens and

Knudson, however, we now know that “not all relief falling under

the rubric of restitution is available in equity,” and that

restitution can be either a legal or equitable remedy, depending on

the “‘basis for [the plaintiff’s] claim’ and the nature of the

underlying remedies sought.”56 In Jamail, we could not have known

whether the reimbursement action brought by the plan in Waller was

legal or equitable in nature, or whether the Waller court was

53
See Jamail, Inc., 954 F.2d at 305.
54
See id. (describing Waller as “a case in which equitable
principles were applied to the pension plan’s benefit”) (citing
Waller, 906 F.2d at 990).
55
Id.
56
Knudson, 534 U.S. at 212-13 (quoting Reich v. Continental
Casualty Co., 33 F.3d 754, 756 (7th Cir. 1994)).

25
“achieving equity” in allowing the plan a federal common law right

of restitution. This is because the Waller court did not consider

the issue or otherwise analyze whether the plan had stated a cause

of action for equitable relief under § 502(a)(3). The Jamail

panel’s misconception of the nature of equitable relief becomes

even more apparent when we observe that, if the Waller plaintiff’s

restitution action were truly equitable in nature, as the Jamail

panel assumed, there would have been no need for the Waller court

to create a federal common law remedy to “achiev[e] equity” because

the plan’s action would have been authorized under § 502(a)(3).

Thus, Jamail’s discussion of Waller does not affect our decision

today to reject Waller’s holding.

To summarize, the district court erred in recognizing a

federal common law right of unjust enrichment on CBA’s behalf. As

the text of § 502(a)(3) and Supreme Court precedent make clear,

Congress, in choosing the modifier “equitable,” specifically

contemplated and chose to proscribe the legal remedy that CBA

proffers. As ERISA’s text specifically and clearly addresses the

issue now before us, there is no “gap” in that text that would

warrant our application of federal common law. We thus hold that

ERISA plan fiduciaries do not have a federal common law right to

sue a beneficiary for legal (as distinct from equitable) relief on

a theory of unjust enrichment or restitution. Concluding that CBA

failed to state a cause of action under the federal common law

26
applicable to ERISA, we reverse the district court’s denial of

Ogden’s motion to dismiss this claim.57

C. Ogden’s Counterclaim for Benefits58

The district court held that Ogden’s counterclaim for benefits

from May 2000 to date was barred for failure to exhaust

administrative remedies; specifically, for not complying with the

Plan’s claim-review procedures.59 We have held that “claimants

seeking benefits from an ERISA plan must first exhaust available

administrative remedies under the plan before bringing suit to

recover benefits.”60 Here, the Plan’s documents require a

participant to file an administrative appeal of the denial of a

claim for benefits within 90 days after being notified that the

57
Jurisdiction over Ogden’s counterclaim is premised on §
1132(a)(1) which allows a participant to bring a civil action “to
recover benefits due to him under the terms of his plan.” 29 U.S.C.
1132(a)(1)(B).
58
Ogden also moved for partial summary judgment in the
district court on her affirmative defense that CBA was not entitled
to offset her plan benefits by the amount of her monthly retirement
pension because, under the terms of the Plan, retirement pension
benefits could only be offset “to the extent [they were] paid to
the Participant,” and Ogden had in fact withdrawn the funds from
her pension and rolled them into an IRA. The district court
rejected this argument on the basis that Ogden had not followed the
Plan’s claim review procedure in challenging CBA’s decision to
offset her pension benefits. We do not address this issue as Ogden
has not briefed it on appeal.
59
See Cooperative Benefit Adm’rs, Inc., 265 F. Supp. 2d at
681.
60
Bourgeois v. Pension Plan for the Employees of Santa Fe
Int’l Corps., 215 F.3d 475, 479 (5th Cir. 2000) (citing Denton v.
First Nat’l Bank of Waco, 765 F.2d 1295, 1300 (5th Cir. 1985)).

27
claim has been denied. In the district court, Ogden argued that

any attempt to exhaust her administrative remedies would have been

futile, but she has not advanced this limited exception to the

exhaustion requirement on appeal.61 Neither has she challenged the

district court’s finding that she failed to comply with the Plan’s

claim review procedures. Instead, Ogden merely asserts that, in

the event we hold that she is not contractually liable under the

Reimbursement Agreement for the Social Security benefits received

by her adult daughters —— an issue that we do not reach as a result

of our finding that CBA failed to state a federal common law cause

of action —— then she is entitled to recover the amount of her plan

benefits that CBA suspended through exercise of its setoff rights.

As Ogden has not shown on appeal that she exhausted her

administrative remedies, or that her efforts to exhaust would have

been futile, we must affirm the district court’s conclusion that

her counterclaim is barred for failure to exhaust, and thus we

affirm the court’s grant of summary judgment dismissing her

counterclaim.

III. CONCLUSION

Concluding that CBA has failed to state an ERISA cause of

action under federal common law, we reverse the district court’s

denial of Ogden’s motion to dismiss CBA’s claim, grounded in

61
We have “recognized an exception to the affirmative defense
of failure to exhaust administrative remedies when such attempts
would be futile.” Id. (citing Hall v. Nat’l Gypsum Co., 105 F.3d
225, 232 (5th Cir. 1997)).

28
federal common law, but do so for failure to state a claim, not for

lack of subject matter jurisdiction, and we render a judgment

dismissing that claim; however, we affirm the district court’s

grant of summary judgment dismissing Ogden’s counterclaim for

benefits because she failed to exhaust administrative remedies.

REVERSED and RENDERED in part; AFFIRMED in part.

29