Winsor v. Sequoia Benefits and Insurance Services LLC
- Jacquelyn Corley
- 3:21-cv-00227
- U.S. District Court · Northern District of California
- 9
In Winsor v. Sequoia, Judge Corley granted defendants’ dismissal motion without prejudice because plaintiffs lacked standing to pursue their employee-benefits claims.
The plaintiffs—current and former participants in RingCentral’s Welfare Benefits Plan—and the defendants, including Sequoia Benefits & Insurance Services LLC. The case was closed after the court granted the dismissal motion without prejudice.
What happened
In Winsor v. Sequoia Benefits and Insurance Services LLC, current and former participants in RingCentral’s Welfare Benefits Plan alleged that the defendants accepted insurance commissions and failed to negotiate lower administrative fees in violation of federal employee-benefits law.
The court ruled that the plaintiffs had not shown a concrete personal injury. They did not plausibly allege that returning commissions to the plan would affect their benefits or contributions, or that lower administrative fees would have reduced what they paid. The court also found that the plaintiffs had not shown that a judgment would likely provide them money or lower their contributions.
Judge Jacquelyn Scott Corley granted the defendants’ motion to dismiss without prejudice because the plaintiffs lacked the constitutional standing required to sue. The court did not decide whether the defendants were employee-benefits fiduciaries, and the file was closed.
The detailed version
- Winsor v. Sequoia Benefits and Insurance Services LLC · No. 3:21-cv-00227
- Jacquelyn Corley
- Nov. 1, 2021
Background
The plaintiffs were current and former participants in RingCentral, Inc.’s Welfare Benefits Plan. They alleged that the defendants, acting as fiduciaries of the plan, violated the Employee Retirement Income Security Act (ERISA) by accepting commissions from insurers without returning them to the plan and by failing to negotiate lower administrative fees.
The court had previously dismissed the original complaint for lack of Article III standing, meaning the plaintiffs had not shown the concrete personal injury required for a federal court to hear the case, but had allowed them to amend. The defendants then moved to dismiss the amended complaint, arguing that the plaintiffs still lacked standing and, alternatively, had not plausibly alleged that the defendants were fiduciaries. The court also granted the defendants’ request for judicial notice of documents related to the plan.
Standing and Commissions
The plaintiffs alleged that their insurance contributions helped fund commissions paid to the defendants by insurer Anthem. The amended complaint stated that Nicole Beichle’s contributions funded $91.08 of commissions in 2018–2019 and that Rachael Wright Winsor’s contributions funded $151.43 in 2017.
The court held that these allegations did not show an injury to the plaintiffs themselves, as opposed to an injury to the plan. The plaintiffs did not allege facts supporting an inference that returning the commissions to the plan would change their benefits, reduce their contributions, or otherwise concretely affect them. Relying principally on the Supreme Court’s decision in Thole v. U.S. Bank N.A., the court rejected the argument that plan participants automatically suffer a personal injury whenever plan fiduciaries allegedly mismanage plan assets.
The court also rejected the plaintiffs’ argument that they had a non-financial interest in preventing the defendants from profiting improperly. Because the plan was a defined-benefit plan, the court concluded that the plaintiffs’ benefits were not tied to the plan’s value in the manner relevant to the trust-law standing theory they advanced. The court further stated that a statutory violation, without a concrete personal harm, does not establish Article III standing.
Administrative Fees
The plaintiffs also argued that they suffered financial injury because their contributions were higher than they would have been if the defendants had negotiated lower administrative fees. The court held that higher contributions could constitute an injury in fact, but found that the amended complaint did not plausibly allege that lower fees would have caused RingCentral to reduce the employees’ contributions. The complaint stated that RingCentral used various factors and benefits in setting employees’ share of insurance contributions and did not identify a specific formula.
Redressability
The court separately found that redressability was lacking. Redressability is the requirement that a court decision would likely remedy the plaintiff’s injury. The plaintiffs asserted that the defendants might be required to return money to the plan or directly to the plaintiffs. The court found no allegations or cited law showing that the plaintiffs would receive money returned to the plan, and no plan provision requiring the plan to distribute recovered funds to them. It also found no RingCentral policy requiring the company to reduce the plaintiffs’ contributions if administrative fees were lower.
Disposition
The court concluded that the amended complaint did not establish an injury in fact that judicial relief could redress. It therefore held that the plaintiffs lacked Article III standing and granted the defendants’ motion to dismiss without prejudice. The court did not reach the defendants’ alternative argument that the plaintiffs had not plausibly alleged that the defendants were ERISA fiduciaries. The order states that the dismissal was without leave to amend, disposed of Docket No. 60, and directed the Clerk to close the file.
Read the full 9-page opinion on CourtListener, the free public archive maintained by the Free Law Project.