Self-Insurance Inst v. Korioth , 32 F.3d 175 ( 1995 )


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  •                   UNITED STATES COURT OF APPEALS
                           for the Fifth Circuit
    
                   _____________________________________
    
                                No. 94-50089
                   _____________________________________
    
                SELF-INSURANCE INSTITUTE OF AMERICA, INC.,
    
                                                     Plaintiff-Appellee,
    
                                    VERSUS
    
                           CLAIRE KORIOTH, ET AL.,
    
                                                 Defendants-Appellants.
    
          ______________________________________________________
    
               Appeals from the United States District Court
                     for the Western District of Texas
          ______________________________________________________
    
                                (May 22, 1995)
    
                         ON PETITIONS FOR REHEARING
            (Opinion September 15, 5th Cir. 1994, 
    32 F.3d 175
    )
    
    
    Before LAY,1 DUHÉ, and DeMOSS, Circuit Judges.
    
    DUHÉ, Circuit Judge:
    
          Defendants-Appellants, certain state officials of Texas, ask
    
    that we reverse an award of back taxes and attorneys' fees against
    
    them and in favor of Self-Insurance Institute of America (SIIA).
    
    SIIA, an association whose members include self-insured ERISA plan
    
    sponsors and third party administrators, sued to enjoin enforcement
    
    of a maintenance tax on contract administrators of insurance plans
    
    (Tex. Ins. Code art. 21.07-6 (West Supp. 1995)) against ERISA
    
    plans, plan sponsors, and third-party administrators. The district
    
    court held that ERISA preempted the state tax law, enjoined the
    
    1
        Circuit Judge of the 8th Circuit, sitting by designation.
    State Defendants from enforcing or threatening to enforce article
    
    21.07-6 with respect to ERISA plans and ERISA administrators,
    
    ordered   a   refund    of   taxes   and    fees   paid    by     ERISA    plans   or
    
    administrators under article 21.07-6, and awarded attorneys' fees.
    
    Conceding the equitable relief, Defendants have appealed only the
    
    refund order and attorneys' fee award.             Upon cross-petitions for
    
    rehearing, the panel withdrew its opinion.                
    44 F.3d 245
     (5th Cir.
    
    1995).    On rehearing, we vacate both the refund order and the
    
    attorneys' fee award.
    
                                           I.
    
         In an earlier appeal this Court determined that SIIA, as a
    
    plaintiff seeking injunctive relief from state regulation on the
    
    basis of federal preemption, has presented a federal question, and
    
    that SIIA met requirements for associational standing to seek
    
    injunctive and declaratory relief on behalf of its members.                   Self-
    
    Insurance Inst. of Am. v. Korioth, 
    993 F.2d 479
     (5th Cir. 1993).
    
    In addition to enjoining Defendants from enforcing the state tax
    
    law, the district court on remand ordered Defendants to refund
    
    taxes and fees paid by SIIA members.2              Defendants challenge the
    
    refund    order   as    being   improperly     beyond       the    scope    of     the
    
    associational standing approved for SIIA.
    
         We agree.         The panel of the first appeal approved SIIA's
    
    associational standing noting, "[I]t is undeniable that SIIA's
    
    2
      The judgment appealed provides in part "that the Defendants must
    refund any taxes and/or fees paid by any self-funded ERISA plan,
    employer/sponsor of such a plan, or contract administrator of such
    a plan, as result of the attempted or threatened application of
    these articles of the Texas Insurance Code." 
    3 Rawle 564
    .
    
                                           2
    individual      members    need     not    participate     in   the   litigation.
    
    Therefore SIIA is properly in a position to represent its members
    
    in a representative capacity and has standing to do so."                    Self-
    
    Insurance, 993 F.2d at 484-85.                 Though an association may have
    
    standing to seek "a declaration, injunction, or some other form of
    
    prospective relief" on behalf of its members, it does not enjoy
    
    standing   to    seek     damages    for       monetary   injuries    peculiar   to
    
    individual members where the fact and extent of injury will require
    
    individualized proof.         Warth v. Seldin, 
    422 U.S. 490
    , 515-16
    
    (1975).
    
         As conceded by SIIA at oral argument, a refund cannot be
    
    litigated without the individual participation of SIIA's members.3
    
    In view of the State's continuing authority to tax non-ERISA
    
    administration through article 21.07-6, each member of SIIA must
    
    show the extent to which it administers ERISA-governed plans or
    
    non-ERISA-governed insurance plans before a court could determine
    
    refund eligibility and amount.             See NGS Am., Inc. v. Barnes, 998
    
    
    3
       SIIA also conceded that state rather than federal proceedings
    are the proper forum for the members seeking refunds. It became
    apparent at argument that SIIA wants us to uphold the refund order,
    not because it desires to obtain a federal money judgment on
    remand, but because of dissatisfaction with the state remedy for
    obtaining a refund. With a federal order of refund, SIIA could
    threaten contempt if the State through dilatory tactics or
    burdensome requirements frustrates the members' attempts to obtain
    their refunds through the state administrative procedure.
        Texas provides an administrative remedy for an administrator
    seeking a refund but none of the members of SIIA have pursued it
    yet. In the present posture of this case, SIIA's concerns about
    the efficacy of Texas administrative procedures for refunds are not
    before us.   We will not countenance SIIA's efforts to obtain a
    federal order of refund to use as a preemptive strike in state
    administrative proceedings.
    
                                               
    3 F.2d 296
    , 300 (5th Cir. 1993) (affirming an injunction against
    
    collection   of   the   article    21.07-6    tax    from    third-party
    
    administrators, but only in their capacities as administrators of
    
    ERISA-governed plans; noting that Commissioner may enforce the tax
    
    against   third-party   administrators       in   their     capacity   as
    
    administrators of non-ERISA governed plans).
    
         Though SIIA enjoys associational standing to seek injunctive
    
    relief, we conclude that to obtain refund relief, each member of
    
    SIIA who claims a refund must be a party.         SIIA therefore has no
    
    standing to claim a refund on its members' behalf.        See Warth, 422
    
    U.S. at 516; see also United Steelworkers of Am. v. University of
    
    Ala., 
    599 F.2d 56
    , 59 (5th Cir. 1979) (recognizing Union's standing
    
    to seek declaratory and injunctive relief, but no standing to seek
    
    money damages on behalf of members where damages are not common to
    
    entire membership nor shared by all in equal degree).        We conclude
    
    that the refund order exceeds the scope of SIIA's associational
    
    standing and vacate the refund order.4
    
                                      II.
    
         In its motion for attorneys' fees, SIIA invoked an ERISA
    
    provision for a fee award by an ERISA "participant, beneficiary, or
    
    fiduciary." 29 U.S.C.A. § 1132(g)(1)(West 1985). Defendants argue
    
    that the court erred in awarding attorneys' fees because it had
    
    
    4
      Defendants have also argued that the court erred by ordering the
    state Defendants to pay tax refunds at all because of the Eleventh
    Amendment sovereign immunity of states. With vacatur of the refund
    order, the judgment does not call for Defendants to pay money. We
    therefore do not reach the question whether the order of refund
    would offend the Eleventh Amendment.
    
                                       4
    previously    found   that   SIIA     was    not   an   ERISA    participant,
    
    beneficiary, or fiduciary.       We agree.
    
         SIIA is not an entity enumerated in § 1132(g)(1); it had
    
    associational standing only because its members were.            See 
    3 Rawle 532
    
    (district court's finding that SIIA not an enumerated entity);
    
    Self-Insurance,    993    F.2d   at   481-84   (finding   federal    question
    
    jurisdiction notwithstanding fact that suit was not authorized by
    
    ERISA   §    1132(g)(1)    conferring       standing    upon    participants,
    
    beneficiaries, and fiduciaries only); id. at 484 (upholding SIIA's
    
    standing because its members were fiduciaries).                  Because the
    
    statute authorizes attorneys' fees only in favor of the enumerated
    
    entities, we will not expand the privilege to include a party with
    
    associational standing.      See Runyon v. McCrary, 
    427 U.S. 160
    , 185
    
    (1976) (requiring "explicit Congressional authorization" to alter
    
    the "American Rule" that attorneys' fees are not a recoverable cost
    
    of litigation); Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 
    421 U.S. 240
    , 247 (1975) (recognizing that some fee-shifting statute
    
    must apply in order to alter the American Rule).               ERISA does not
    
    support a fee award in favor of SIIA.
    
         SIIA alternatively argues that fees are authorized under the
    
    Declaratory Judgment Act, 28 U.S.C.A. § 2201-02 (West 1994).
    
    Section 2201, which authorizes federal courts to grant declaratory
    
    relief, plainly does not grant a right to fees.           Also, § 2202, the
    
    provision authorizing "further necessary or proper relief"5 in a
    
    5
       28 U.S.C. § 2202 provides in full, "Further necessary or proper
    relief based on a declaratory judgment or decree may be granted,
    after reasonable notice and hearing, against any adverse party
    
                                           5
    declaratory action, does not provide statutory authority for an
    
    award of attorneys' fees.        Mercantile Nat'l Bank v. Bradford Trust
    
    Co., 
    850 F.2d 215
    , 218 (5th Cir. 1988).
    
          SIIA makes much of a statement in Mercantile that § 2202 does
    
    not authorize a fee award "that would not otherwise be available
    
    under state law in a diversity action."              Id.    SIIA contends that
    
    this statement allows us to consider whether the Texas Declaratory
    
    Judgment Act (DJA) would grant SIIA a right to fees.              We disagree,
    
    because the Texas DJA is inapplicable.              Jurisdiction in this case
    
    is   under   28   U.S.C.A.   §   1331       (West   1993)   (federal    question
    
    jurisdiction), not diversity where state law applies.                  Mercantile
    
    recognizes that a party may recover fees in a federal declaratory
    
    judgment action where "controlling substantive law" permits such
    
    recovery.    Mercantile, 850 F.2d at 216, 217.               The Texas DJA is
    
    neither substantive nor controlling.
    
          SIIA having failed to show its entitlement to fees under an
    
    applicable fee-shifting statute, we vacate the award of attorneys'
    
    fees in SIIA's favor.
    
                                         III.
    
          We vacate the refund order because SIIA's individual members'
    
    entitlement to refunds involves questions beyond which SIIA was
    
    granted standing to litigate.        Because no statute authorizes a fee
    
    award, we vacate the fee award as well.             SIIA's additional request
    
    for attorneys' fees in this appeal is denied.
    
          VACATED; fee request DENIED.
    
    
    whose rights have been determined by such judgment."
    
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