author: SRINIVASAN, Circuit Judge:

text:
    AGRICULTURAL RETAILERS ASSOCIATION and The Fertilizer Institute, Petitioners v. UNITED STATES DEPARTMENT OF LABOR and Occupational Safety & Health Administration, Respondents
    No. 15-1326
    Consolidated with 15-1340
    United States Court of Appeals, District of Columbia Circuit.
    Submitted May 16, 2016
    Decided September 23, 2016

      Gary H. Baise, Stewart D. Fried, Washington, DC, Chris S. Leason, Mark C. Dangerfield, and Andrew E. Dudley, Phoenix, AZ, were on the joint briefs for petitioners. Anson M. Keller Sr., Washington, DC, entered an appearance.
    Ann S. Rosenthal, Associate Solicitor, Occupational Safety & Health Administration, Charles F. James, Counsel, U.S. Department of Labor, and Lauren S. Goodman, Senior Attorney, U.S. Department of Labor, were on the brief for respondents.
    Randy S. Rabinowitz, Seattle, WA, was on the brief for movant-intervenor for respondents.
    Before; ROGERS, SRINIVASAN and MILLETT, Circuit Judges.
   SRINIVASAN, Circuit Judge:

The Occupational Safety and Health Administration, part of the Department of Labor, aims to secure “safe and healthful working conditions” for the Nation’s workers. 29 U.S.C. § 651(b). To that end, OSHA in 1992 issued the so-called Process Safety Management Standard to protect the safety of those who work with or near highly hazardous chemicals. From its inception, the standard has exempted retail facilities from its requirements. The exemption rests on an assumption that the retail setting involves diminished risks of a substantial release of toxic chemicals. Recently, after a,catastrophic chemical explosion at a Texas fertilizer company that qualified as an exempt retail facility, OSHA narrowed the scope of the retail-facility exemption so that the safety standard’s requirements would now apply to formerly exempt facilities like the Texas plant.

The question we confront is whether, when OSHA narrowed the scope of the exemption for retail facilities, the agency issued a safety “standard” within the meaning of the Occupational Safety and Health Act (OSH Act). If so, we have jurisdiction to review OSHA’s action, and the OSH Act would have required the agency to adhere to procedural notice-and-comment requirements, which it concededly did not do. If, however, OSHA’s action did not amount to issuance of a “standard,” we would lack jurisdiction to review it and the OSH Act would have imposed, no obligation to follow notice-and-comment procedures.

Under our decisions, when an action by OSHA corrects a particular hazard, as opposed to adjusting procedures for detection or enforcement, it amounts to a “standard.” Applying that understanding, we conclude that the agency’s narrowing of the substantive scope of the exemption for retail facilities qualified as' issuance of a “standard.” We therefore have jurisdiction, and OSHA was required to adhere to notice-and-comment procedures. Consequently, we grant the petitions for review and vacate OSHA’s action.

I.

In 1992, OSHA promulgated the Process Safety Management (PSM) Standard in an effort to “provide safe and healthful employment and places of employment for employees in industries which have processes involving highly hazardous chemicals.” Process Safety Management of Highly Hazardous Chemicals; Explosives and Blasting Agents, 57 Fed. Reg. 6356, 6359 (Feb. 24, 1992), codified at 29 C.F.R. §1910.119 (2016). The PSM Standard “contains requirements for preventing or minimizing the consequences of catastrophic releases of toxic, reactive, flammable, or explosive chemicals.” 29 C.F.R. § 1910.119.

From the outset, OSHA exempted “[r]e-tail facilities” from the requirements of the PSM Standard. Id. § 1910.119(a)(2)(i). The exemption, OSHA explained in the preamble of the final standard,, was rooted in an understanding that “chemicals in retail facilities are in small volume packages, containers and allotments, making a large release [of toxic chemicals] unlikely.” 57 Fed. Reg. at 6369. OSHA identified “gasoline stations” as prototypical examples of retail facilities. Id. Shortly after promulgating the PSM Standard, OSHA issued a letter defining an exempt retail facility as “an establishment ... at which more than half of the income is obtained from direct sales to end users.” See Letter from Patricia K. Clark, Dir. of Enf't Programs, OSHA, to Gary Myers, President, The Fertilizer Inst. (June 19,1992). The “50 percent test” remained the rule for more than two decades.

In April 2013, a catastrophic chemical explosion at a fertilizer company in West, Texas, resulted in the deaths of 15 persons and injured many others. Although the company stored large quantities of a highly hazardous chemical (anhydrous ammonia) for bulk distribution as fertilizer to farmers, it had been exempt from’ the PSM Standard under the 50 percent test for retail facilities. That test had enabled establishments to claim the exemption even if they stored large amounts of hazardous chemicals for distribution in wholesale quantities to commercial end users (including farmers), as long as the distributions went directly to the end users.

After the explosion at the West, Texas, fertilizer facility, President Obama issued an executive order that, among other things, directed the Secretary of Labor to “identify any changes that need to be made in the retail ... exemption[ ] in the PSM Standard” so as to “meet the goal of preventing major chemical accidents.” Improving Chemical Facility Safety and Security, 78 Fed. Reg. 48029, 48032 (Aug. 1, 2013). OSHA responded in 2015-by issuing the Memorandum at issue in this case. OSHA, Memorandum on Process Safety Management of Highly Hazardous Chemicals and Application of the Retail Exemption (29 C.F.R. § 1910.119(a)(2)(i)), July 22, 2015.

The Memorandum “rescind[ed] all prior policy documents, letters of interpretation, and memoranda related to the retail exemption and the 50 percent test.” Id. OSHA explained that the “50 percent test allows employers who sell or distribute large, bulk quantities of highly hazardous chemicals directly to end consumers to claim the exemption, even if the end users are themselves commercial establishments.” Id. That result was “directly contrary to OSHA’s original intent,” i.e., “to exclude retail facilities from PSM coverage because the small container, package, or allotment sizes of the chemicals typically found at these facilities do not present the same safety hazards as establishments that handle large, bulk quantities of materials.” Id. Concluding that the retail exemption “should never have been interpreted to cover facilities engaged in distinctly wholesale activities,” OSHA announced that retail facilities would instead be defined by a Department of Commerce manual classifying types of businesses. Id. Under that definition, retail facilities must be “organized to sell merchandise in small quantities to the general public.” Id. Because farm supply ■ establishments like the West, Texas, facility sell chemieal fertilizers in bulk to farmers, they fall outside the revised definition of retail facilities. Id. Under the new definition, those facilities thus would become subject to the PSM Standard’s requirements for managing highly hazardous chemicals.

II.

The Agricultural Retailers Association, the Fertilizer Institute, and a number of individual businesses brought petitions for review in this court to challenge OSHA’s narrowed definition of retail facilities. According to petitioners, the OSH Act required the agency to adhere to notice- and-comment procedures in promulgating its new definition. We agree with petitioners.

The OSH Act authorizes the Secretary of Labor, through OSHA, to promulgate “occupational safety [and] health standard[s].” 29 U.S.C. § 655(b). The Act provides for pre-enforcement review in the courts of appeals of any such “standard” issued by OSHA. Id. § 655(f). The Act also authorizes the promulgation of “regulation[s]” (and other rules falling short of “standards”), which are governed by a different means of judicial review: challenges to regulations are brought under the Administrative Procedure Act (APA), which calls for initial review in federal district court rather than in a court of appeals. Id. § 657(c)(1); see also Edison Elec. Inst. v. OSHA, 411 F.3d 272, 277 (D.C. Cir. 2005); Workplace Health & Safety Council v. Reich, 56 F.3d 1465, 1467 (D.C. Cir. 1995).

The OSH Act provides for distinct treatment of “standards” in another pertinent respect as well. When promulgating or modifying a “standard,” OSHA must adhere to notice-and-comment procedures set forth in the OSH Act. 29 U.S.C. § 655(b). OSHA concedes that, when it promulgated its Memorandum redefining “retail facility,” it did not satisfy the procedural requirements for standards. The agency instead argues that the Memorandum did not issue or modify a standard. In the agency’s view, the Memorandum only interpreted an existing standard, and it therefore was subject neither to the procedural requirements set out in the OSH Act, id. nor to direct review in this court under that Act, id. § 655(f).

The existence of jurisdiction in this court, as well as the applicability of the OSH ■ Act’s notice-and-comment procedures,- both turn on the same question: whether OSHA’s Memorandum amounted to issuance (or modification) of an “occupational safety and health standard,” The OSH Act defines an “occupational safety and health standard” as “a standard which requires conditions, or the adoption or use of one or more practices, means, methods, operations, or processes, reasonably necessary or appropriate to provide safe or healthful employment and places of employment.” Id. § 652(8).

Our decisions construing that definition have established a framework for differentiating between OSHA standards and regulations. A standard within the meaning of that definition is “a remedial measure addressed to a specific and already identified hazard, not a purely administrative effort designed to uncover violations of the Act and discover unknown dangers.” Workplace Health & Safety Council, 56 F.3d at 1468 (quoting La. Chem. Ass’n v. Bingham, 657 F.2d 777, 782 (5th Cir. 1981)). Standards, that is, are designed for “correction rather than mere inquiry into possible hazards.” Id. They focus on “correcting] a particular significant risk,” not on “general enforcement.” Id. (quotation and internal quotation marks omitted).

In Workplace Health & Safety Council, we applied that understanding to find that a rule requiring employers to report workplace deaths and hospitalizations was a regulation rather than a standard. 56 F.3d at 1468. The “basic function of the rule [was] administrative,” in that it principally served to enable “collecting] information about unknown hazards.” Id. We distinguished “information-gathering” measures of that kind from the “correction of a particular significant risk.” Id. (quotation and internal quotation marks omitted).

When we later applied the same framework in Chamber of Commerce of the United States v. U.S. Department of Labor, 174 F.3d 206 (D.C. Cir. 1999), we reached the opposite outcome with regard to the OSHA rule at issue in that case. We determined that a compliance program subjecting businesses to extra inspections if they did not-engage in specified safety measures amounted to a standard rather than a regulation. That program aimed at “correcting, rather than merely uncovering,” workplace safety hazards. Id. at 210. It therefore could not “be described as merely an enforcement or detection procedure.” Id. (quotation and internal quotation marks omitted). Whereas the rule held to be a regulation in Workplace Health & Safety Council was “procedural,” the “basic function of the rule” in Chamber of Commerce was “substantive,” in that it “impose[d] upon -employers new,” and “more demanding,” “safety standards” than those in existence beforehand. Id. at 210-11.

Under the principles set forth in those decisions, we conclude that OSHA’s new definition of a retail facility, like the compliance program in Chamber of Commerce, amounts to a standard. The “basic function” of OSHA’s new definition is to address a' “particular significant risk,” id. at 209: the risk associated with storing large quantities of highly hazardous chemicals for distribution' to end users in bulk quantities, as had been the case at the West, Texas, fertilizer company. OSHA’s Memorandum aims not just to gather data about that risk or otherwise serve a general detection or enforcement function, but instead to correct the risk by subjecting facilities such as farm supply companies to the preventative measures in the PSM Standard. OSHA estimates that its revised definition would subject up to 4,800 facilities to “new,” and necessarily “more demanding,” substantive standards for the management of highly hazardous chemicals. Id. at 211.

Of course, the Memorandum itself does not require new preventative measures of its own accord; it does so in conjunction with the PSM Standard. But we do not look at the Memorandum in strict isolation. We consider the Memorandum’s “practical effect,” not “its formal characteristics.” Id. at 209. And the essential effect and object of the Memorandum is to expand the substantive reach of the PSM Standard by narrowing an exemption from that standard. As OSHA describes the measure, it aims to eliminate “policy and regulatory gaps” so as to help “prevent incidents like the West Fertilizer explosion.” OSHA, Questions and Answers— PSM Retail Exemption Policy, July 22, 2015. By redefining retail facilities, the Memorandum, in purpose and effect, subjects a substantial number of businesses previously classified as exempt retail facilities to additional safety standards in order to address a “particular significant risk.” Given those specific circumstances, the measure, under our decisions, qualifies as a standard within the meaning of the OSH Act.

OSHA argues that the Memorandum cannot be a standard because it would constitute an interpretive rule under the APA. But nothing in the OSH Act or APA establishes that the standard/non-standard distinction under the OSH Act must directly track the legislative/interpretive rule distinction under the APA. The OSH Act and the APA prescribe different procedural requirements, and those requirements do not necessarily apply to the same subset of rules. ‘ Unlike some other statutes, the OSH Act does not adopt the “interpretive rule” ' terminology, büt instead uses a vocabulary distinct from the APA’s. Compare 29 U.S.C. § 655, with 42 U.S.C. § 1395hh(c) (using the term “interpretive rules” in the Medicare Act). And petitioners’ principal submission is that they are entitled to relief under the OSH Act’s governing standards, a result that, in their view, renders the APA irrelevant. Petitioners’ Reply Br. at 1-3.

We thus need not decide whether the rule at issue here would constitute an interpretive rule for purposes of the APA. Because the Memorandum amounts to a standard within the meaning of the OSH Act, we have jurisdiction to review it and to vacate it for failure to comply with the procedural requirements established by that Act. Of course, nothing in our decision necessarily calls into question the substance of OSHA’s decision to narrow the exemption for retail facilities and correspondingly to expand the scope of the PSM Standard. We hold only that, insofar as OSHA does so, it must follow the notice-and-comment procedures for standards set forth in the OSH Act.

Finally, we consider the motion of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (the Union) to intervene in support of OSHA. Mot. to Intervene Out of Time Filed on Behalf of [the Union], Nov. 5, 2015. We deny the motion because the Union has failed to establish its standing to intervene. The Union submitted a declaration saying that certain Union members “may” be affected by OSHA’s action insofar as there are members whose employers previously fit within the retail facility exemption under the 50 percent rule but would no longer do so under the Memorandum’s revised definition. Decl. of Michael J. Wright ¶¶ 4-5 (attachment to Br. of Union). But because nothing in the Union’s declaration establishes that the Union does have such members, the Union has failed to demonstrate standing. See Summers v. Earth Island Inst., 555 U.S. 488, 498, 129 S.Ct. 1142, 173 L.Ed.2d 1 (2009). Although we deny the Union’s motion to intervene for that reason, we grant the Union’s alternative request to accord it amicus curiae status, and we thus have given full consideration to the Union’s arguments. See Rio Grande Pipeline Co. v. FERC, 178 F.3d 533, 539 (D.C. Cir. 1999).

* * * * *

For the foregoing reasons, we grant the petitions for review and vacate OSHA’s Memorandum for failure to abide by the OSH Act’s procedural requirements. We also deny the Union’s motion to intervene but grant it amicus status.

So ordered.


source: Caselaw Access Project

author: THOMPSON, Circuit Judge.

license: Public Domain

text:
    Brian O’SHEA, THROUGH his Executor Michael O’SHEA; Michael O’Shea, in his personal capacity, on his own behalf as Plan Beneficiary, and on behalf of other Plan Beneficiaries, Meghan O’Shea, John O’Shea and Colleen O’Shea, Plaintiffs, Appellants, v. UPS RETIREMENT PLAN; United Parcel Service of America, Inc.; UPS Retirement Plan Administrative Committee, Defendants, Appellees, Doe Defendants 1, 2, and 3, Defendants.
    No. 15-1923
    United States Court of Appeals, First Circuit.
    September 13, 2016

      Stephen D. Rosenberg, with whom ■ Caroline M. Fiore and The Wagner Law Group, Boston, MA, were on brief, for appellants.
    J. Timothy McDonald, with whom Megan S. Glowacki and Thompson Hiñe LLP, Cincinnati, OH, were on brief, for appel-lees.

      Before THOMPSON, Circuit Judge, SOUTER, Associate Justice, and BARRON, Circuit Judge.

       The Hon. David H, Souter, Associate Justice (Ret.) of the Supreme Court of the United States, sitting by designation.

   THOMPSON, Circuit Judge.

This suit, arising under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq., presents the highly sympathetic case of a retiree whose death one week before his official retirement date, but after his final day of work, had the unexpected consequence of depriving his beneficiaries of ten years of payments under an annuity plan. Though we regret the heartbreaking outcome, after careful consideration, we must affirm.

I.

We begin with the facts, which are not in dispute. Brian O’Shea (O’Shea) worked for defendant-appellee United Parcel Service of America, Inc. (UPS) for 37 years. As an employee of UPS, he participated in the UPS Retirement Plan (Plan). Unfortunately, in 2008, O’Shea was diagnosed with cancer. He became eligible for retirement in 2009, and decided to retire at the end of that year.

O’Shea met with a UPS human resources (HR) supervisor to discuss the logistics of his retirement in December 2009. The HR supervisor informed him that he could maximize his time on payroll by taking his seven weeks of accrued vacation and personal time and, thus, delaying his official retirement date. It is standard practice apparently for UPS to advise its employees that they can redeem their vacation time before officially retiring. Regrettably, the HR supervisor was not aware at the time that O’Shea was terminally ill.

O’Shea took the HR supervisor’s advice. He submitted his retirement application on January 7, 2010, his last day of work, and indicated that his annuity starting date would be March 1, 2010, the day after his official retirement date of February 28, 2010. He chose the “Single Life Annuity with 120-Month Guarantee” from a host of annuity payment plan options available under the Plan, and named his four children — plaintiffs-appellants Michael O’Shea, Meghan O’Shea, John O’Shea, and Colleen O’Shea (collectively, the O’Sheas) — as his beneficiaries. Under his selected annuity, “a reduced benefit [would] be paid to [O’Shea] for his lifetime, with a guarantee of 120 monthly payments.”

The application for retirement benefits, executed by O’Shea, provided, in pertinent part: “I will receive a monthly benefit for my lifetime with a guarantee of monthly payments for a period of 10 years. If I die within the 10-year guarantee period, my beneficiaries] will continue to receive my monthly benefit amount for the remainder of the guarantee period.” The section of the application where O’Shea listed his beneficiaries’ information provided: “If you die before the guarantee period ends, your designated beneficiarles] will receive payments-for the remainder of the guarantee period.” Nowhere in the retirement benefits application, and at no point during his consultation with the HR supervisor, was it made explicit that surviving to the annuity starting date (i.e., March 1, 2010, the day after his official retirement date) was a prerequisite to the ten-year payment guarantee. It seems that O’Shea was therefore unaware he risked forfeiting the ten years of guaranteed payments to his beneficiaries by delaying his retirement date, especially while terminally ill.

The retirement benefits application did explain, however, that the summarized benefit plan designations would be paid “subject to the terms of the Plan.” Section 5.4(d)(iii) of the Plan, which describes the “Single Life Annuity with 120-Payment Guarantee” selected by O’Shea, clarifies that “[i]f the Participant dies after the Annuity Starting Date but before receiving 120 monthly payments, the monthly payments shall be paid to the Participant’s Beneficiary — ” (emphasis added). The only provision of the Plan that explicitly provides for a retirement benefit if a participant dies prior to their annuity starting date is Section 5.6, which states: “If a vested Participant dies prior to his Annuity Starting Date, his Spouse or Domestic Partner will be entitled to receive a Prere-tirement Survivor Annuity_” (emphasis added).

After submitting his application for retirement benefits, O’Shea was invited to participate in UPS’s Special Restructuring Program (SRP), which ineentivized early retirement by offering one year’s compensation to select employees in exchange for signing a release of claims and retiring. O’Shea met with his attorney on February 12, 2010. The same day, he accepted the SRP and executed the release of claims. In return, O’Shea received a single, pre-tax payment of $98,800.

The release, which is only a few paragraphs long, defined the “Released Parties” broadly as UPS and “all related companies,”' including : “employee benefit programs (and the trustees,' administrators, fiduciaries, and insurers of such programs).” The released claims included “all known and unknown claims, promises, [and] causes of action ... that [O’Shea] may presently have ... against any Released Party.” It did not bar claims that accrued after execution of the agreement. But the release' made clear that O’Shea was “releasing [c]laims that [he] may not know about.”

O’Shea passed away on February 21, 2010, one week before his official retirement date, and eight days before his annuity starting date. About a month‘later, defendant-appellee UPS Retirement Plan Administrative Committee (the Committee) — the Plan’s claims administrator— sent the O’Sheas a letter denying them payments under the annuity plan. The Committee explained that only O’Shea’s spouse, if he had one, would be able to recover under the Plan.

The O’Sheas appealed this decision, believing that the ten years of annuity payments were guaranteed to them regardless of when their father died. Iri particular, they argued that nothing in the Plan “explains what happens if you select the ’Single Life Certain Annuity With 10-Year Payment Guarantee’ ... and you die before you retire (without a spouse or partner).”

The Committee denied the appeal on June 1, 2010. Relying on Section 5.6 of the Plan, the denial letter explained that the annuity payments were only guaranteed if O’Shea survived to his annuity starting date, and that O’Shea’s death as an active UPS employee triggered the “Preretirement Survivor Annuity” (payable only to spouses or domestic partners) in lieu of the “Single Life Annuity with 120-Month Guarantee.”

The O’Sheas filed a second administrative appeal, this time with the help of counsel, arguing that UPS breached its fiduciary duty to their father. Specifically, the O’Sheas asserted that their father was talked into delaying his retirement date, that the consequences of the delay were not made clear to him, and that UPS had misrepresented to him that his payments were “guaranteed.” On October 1, 2010, the Committee once again denied the appeal. This time the Committee highlighted language in the retirement application (“if I die within the 10-year guarantee period”), in addition to Section 5.6, noting that the application itself “clearly informed [ ] O’Shea that the only payments to beneficiaries were if he died within the 10-year guarantee period.” The Committee also explained that any breach of fiduciary duty or misrepresentation claim had been released by their father when he decided to participate in UPS’s SRP. ■

The O’Sheas then filed suit in district court, seeking recovery of the ten years of annuity payments allegedly “guaranteed” under the Plan. Their complaint included two counts: a claim for benefits under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), and a, claim for equitable relief under ERISA § 502(a)(3)(B), 29 U.S.C. § 1132(a)(3)(B). The equitable claim was based on alleged misrepresentations made to O’Shea when he selected his retirement benefits.

UPS first moved to dismiss the O’Sheas’ equitable claim, arguing that the claim: (1) was barred by the release O’Shea executed under the terms of the SRP; (2) was barred by the statute of limitations for breach of fiduciary duty claims under ERISA, 29 U.S.C. § 1113(2); and (3) was precluded by the O’Sheas’ ability “to avail themselves of other remedies.” Ruling from the bench, the district court granted the motion, concluding that any alleged misrepresentations were made before O’Shea selected his retirement benefits and, therefore, any potential claim based on those misrepresentations would have been released under the terms of the SRP. Because it held that O’Shea had released his equitable claim, the district court did not address UPS’s other arguments for dismissal.

The parties- then cross-moved for judgment as a case stated on the O’Sheas’ remaining claim for benefits under ERISA § 502(a)(1)(B), 29 U.S.C, § 1132(a)(1)(B). The district court ultimately granted UPS’s motion for judgment, concluding that UPS’s construction of the Plan terms was not only “plausible,” but “correct” in light of the plain language of the Plan’s terms. O’Shea v. UPS Ret. Plan, 115 F.Supp.3d 138, 151 (D.Mass.2015). The district court found Section 5.4 — which describes the “Single Life Annuity with 120-Month Guarantee” selected by O’Shea and provides “that ’[i]f the Participant dies after the Annuity Starting Date but before receiving 120 monthly payments, the monthly payments shall be paid to the Participant’s Beneficiary,” id. at 151 (quoting UPS Plan 62) — to be “the most important provision of the Plan” and determined that the O’Sheas’ reading of the Plan would render the first clause of Section 5.4 “useless.” Id Moreover, the district court found UPS’s reading of Section 5.6, which provides for “Preretirement Survivor Annuity” payments to a participant’s spouse or domestic partner, to be “[similarly reasonable.” Id. This appeal followed.

II.

On appeal, the O’Sheas argue that UPS’s interpretation of the Plan is arbitrary and capricious, and that the district court erred .in concluding that UPS’s reading of the Plan was correct. The O’Sheas also contend that the district court erred in dismissing their claim for equitable relief because, they argue, the claim “came into existence only after the release was executed” and O’Shea “did not intend knowingly and voluntarily to relinquish claims involving annuity payments.”

A. Claim for Benefits

Our review of the district court’s decision is de novo. Glista v. Unum Life Ins. Co. of Am., 378 F.3d 113, 125 (1st Cir.2004), Where, as here, the ERISA plan provides the plan administrator with the authority and discretion to interpret the plan and to determine eligibility for benefits, we must uphold the administrator’s decision “unless it was ‘arbitrary, capricious, or an abuse of discretion.’” Niebauer v. Crane & Co., 783 F.3d 914, 922-23 (1st Cir.2015) (quoting Cusson v. Liberty Life Assurance Co. of Bos., 592 F.3d 215, 224 (1st Cir.2010)). This analysis focuses on whether the record as a whole supports a finding that the plan administrator’s decision was “plausible,” “or, put another way, whether the decision is supported by substantial evidence in the record.” Id. at 923.

Under this standard, we need not decide the “best reading” of the Plan. Stamp v. Metro. Life Ins. Co., 531 F.3d 84, 94 (1st Cir.2008) (quoting Lennon v. Metro. Life Ins. Co., 504 F.3d 617, 624 (6th Cir.2007)). We need only consider whether UPS’s interpretation of the Plan and its application of the Plan terms to the facts of this case was “reasoned and supported by substantial evidence.” Id. (quoting Wright v. R.R. Donnelley & Sons Co. Group Benefits Plan, 402 F.3d 67, 74 (1st Cir. 2005)); see also Coffin v. Bowater Inc., 501 F.3d 80, 93, 96 (1st Cir.2007) (reviewing the plan administrator’s determination of benefit eligibility de novo and upholding its interpretation of the plan because its interpretation was “significantly more persuasive” than the plaintiffs’ interpretation); Kolling v. Am. Power Conversion Corp., 347 F.3d 11, 14 (1st Cir.2003) (concluding that “the Plan administrator has the discretion reasonably to determine the meaning of [a] phrase [in the Plan]”).

In denying the O’Sheas’ claim for benefits, UPS explained that because O’Shea died while still an active employee (i.e., before his official retirement and subsequent annuity starting date), O’Shea’s spouse, if he had one, would be the only person entitled to benefits under the terms of the Plan. And, in fact, Section 5.6, which provides for payments to a participant’s spouse or domestic partner if the participant dies before the annuity starting date, is the only provision in the entire Plan that provides for a benefit when a participant dies before the annuity starting date.

The provision, cited by UPS in its denial letter, describes the “Preretirement Survivor Annuity” and provides that “[i]f a vested Participant dies prior to his Annuity Starting Date, his Spouse or Domestic Partner will be entitled to receive a Prere-tirement Survivor Annuity....” (emphasis added). Section 5.6 does not state explicitly that the “Preretirement Survivor Annuity” is the exclusive benefit available if a participant dies before the annuity starting date. But because no other term in the Plan provides a benefit in that circumstance, UPS’s interpretation — that Section 5.6 provides the exclusive benefit when a participant dies before the annuity starting date — is certainly within “the bounds of reasonableness.” D & H Therapy Assoc. LLC v. Boston Mut. Life Ins. Co., 640 F.3d 27, 38 (1st Cir.2011).

In response, the O’Sheas argue that Section 5.6 does not reference the retirement benefit chosen by O’Shea — the “Single Life Annuity with 120-Month Guarantee” — and, therefore, Section 5.6 does not address “the possible ramifications if a participant elects that benefit but dies between ... the retirement election and ... the first annuity payment.” In the O’Sheas’ view, Section 5.4 of the Plan, which describes the annuity selected by their father, guarantees ten years of monthly payments to the participant and his beneficiaries once the benefit is elected. In support, the O’Sheas note that Section 5.4 does not directly state that the 120 months of payments will not be made if the participant dies before reaching the annuity starting date. This is true. Nevertheless, we read the plain language of Section 5.4 to comport with UPS’s interpretation — that Section 5.4 only guarantees ten years of payments if the participant survives to the annuity starting date.

The “Single Life Annuity with 120-Month Guarantee” available under Section 5.4 of the Plan provides for a reduced monthly benefit for the participant’s lifetime, with 120 monthly payments “guarantee[d].” Section 5.4(d)(iii) explains that “[i]f the Participant dies after the Annuity Starting Date but before receiving 120 monthly payments, the monthly payments shall be paid to the Participant’s Beneficiary, until the Participant and his Beneficiary have received a total of 120 payments.” (emphasis added). This language clearly seems to suggest that Section 5.4 only guarantees monthly payments to the participant’s beneficiaries when the' participant dies after reaching the annuity state date and, consequently, appears to create a clear precondition to the “120-Month Guarantee” — that the participant reach the annuity start date.

We agree with the district court that the O’Sheas’- proposed interpretation of this section — that it guarantees monthly payments to a participant’s beneficiaries even if the participant dies prior to the annuity starting date — “renders the first clause of this key phrase completely useless.” O’Shea, 115 F.Supp.3d at 151. The O’Sheas suggest that the phrase is included only “to reassure the reader that the payments to the participant and the beneficiaries will still total 120” even if the participant dies. But that interpretation still reads the words “after the Annuity Starting Date” out of the clause. If, as the O’Sheas argue, Section 5.4 guarantees all 120 payments to a participant’s beneficiaries even if the participant dies before the annuity start date, the Plan would not . need to specify that beneficiaries will receive the 120 payments “[i]f the Participant dies after the Annuity Starting Date.” (emphasis added). It could simply provide that if the participant dies before receiving 120 monthly payments, the monthly payments will be paid to the participant’s beneficiary. It does not.

Reading Sections 5.4 and 5.6 together, then, we find UPS’s interpretation of the Plan more than reasonable. O’Shea’s beneficiaries were eligible to receive either the “Single Life Annuity with 120-Month Guarantee” — if O’Shea passed away after his annuity starting date — or the “Prere-tirement Survivor Annuity” — if he passed away before the annuity starting date and had a spouse or domestic partner. Because O’Shea tragically passed away before his annuity start date, UPS reasonably concluded that his spouse (or domestic partner) was entitled to the “Preretirement Survivor Annuity,” but that his beneficiaries were not entitled to the “Single Life Annuity with 120-Month Guarantee.”

The O’Sheas attempt to blunt the impact of Section 5.4(d)(iii), arguing that because UPS did not rely on the section in its denial letters, we may not consider it now. See Niebauer, 783 F.3d at 926 (explaining that “ERISA’s notice provision ..'. requires plan administrators to ‘provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant’ ” (quoting 29 U.S.C. § 1133(1))). But the purpose of ERISA’s notice- requirements is “to ‘insure that whfen a claimant appeals a denial to the plan administrator, [he] will be able to address the determinative issues and have a fair chance to present [his] case.’ ” Id. at 927 (alterations in original) (quoting DiGregorio v. Hartford Comprehensive Emp. Benefit Serv. Co., 423 F.3d 6, 14 (1st Cir.2005)). “[S]trict compliance is not required” so long as “ ‘the beneficiary [was] supplied with a statement of reasons that, under the circumstances of the case, permitted a sufficiently clear understanding of the administrator’s position to permit effective review.’ ” Id. (second alteration in original) (quoting Terry v. Bayer Corp., 145 F.3d 28, 35 (1st Cir.1998)).

Here, UPS consistently explained to the O’Sheas that they were not entitled to the 10-year monthly annuity payments because their father passed while he was an active (albeit on leave) employee and prior to his annuity starting date. In its initial denial, UPS cited to Section 5.6 to support its contention that because O’Shea had passed away prior to his annuity start date the “Preretirement Survivor Annuity” was triggered instead of the annuity payments. In addition, the final denial highlighted the retirement application’s rephrasing of Section 5.4(d)(iii) — “if I die within the 10-year guarantee period” — to demonstrate why their father reasonably should have understood that his beneficiaries would only receive the annuity payments if he survived to the annuity starting date. Therefore, the O’Sheas were clearly on notice of UPS’s position that'the “Single Life Annuity with 120-Month Guarantee” was only available to a participant’s beneficiaries if the participant died after reaching the annuity start date. Given that the O’Sheas have “no credible claim that [their] understanding of the issues at stake was so -muddled as to inhibit effective review,” we see no error in relying on Section 5.4(d)(iii) even though it was not cited by UPS in its denial letters. Niebauer, 783 F.3d at 928.

Finally, the O’Sheas argue that UPS’s interpretation improperly incorporates “an unwritten exclusion of a benefit earned” into the Plan • in violation of ERISA. We agree with the O’Sheas that UPS may not-“carve[] out an exclusion from coverage that is nowhere expressed in the plan itself.” Colby v. Union Sec. Ins. Co. & Mgmt. Co. for Merrimack Anesthesia Assocs. Long Term Disability Plan, 705 F.3d 58, 65 (1st Cir.2013). But, as we have discussed in some detail, the condition that O’Shea had to survive until his annuity start date was “expressed in the plan itself.” Id.

Moreover, we agree with the district court that UPS’s interpretation of the Plan does not exclude O’Shea from coverage. See O’Shea, 115 F.Supp.3d at 151 (noting that “what is happening in this case is not really an exclusion from coverage”). Rather, UPS determined that O’Shea simply did not satisfy a condition under the plan that would allow him to receive the benefit he requested. If O’Shea had lived past the annuity starting date, his beneficiaries would have been entitled to the 10-year guaranteed benefits payments. Unfortunately, O’Shea did not meet this mandatory precondition for coverage and, instead, his spouse or domestic partner was entitled to receive the “Preretirement Surviv- or Annuity.”

B. Claim for Equitable Relief

The O’Sheas also argué that the district court erred in dismissing their claim for equitable relief under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3). They raise two related arguments: (1) that the district court erred in concluding that their equitable claim was barred by the SRP release because the claim came into existence after their father agreed to the SRP; and (2) that because the claim came into existence after their father signed the release, he could not have • “knowingly and voluntarily” waived the claim. Although framed as two arguments, since both arguments rise and fall on the premise that their equitable claim did not arise until the annuity benefits were denied by UPS, we will address them both together.

We review the district court’s grant of a-Rule 12(b)(6) motion de novo, taking all factual allegations in the complaint as true and drawing, all reasonable inferences in the non-moving party’s favor. Guerra-Delgado v. Popular, Inc., 774 F.3d 776, 780 (1st Cir.2014). In order to survive a motion to dismiss, a complaint must contain sufficient factual material to state a facially plausible claim. Id.

ERISA allows for the knowing and voluntary release of claims. Smart v. Gillette Co. Long-Term Disability Plan, 70 F.3d 173, 181 (1st Cir.1995). “To determine whether a waiver is' ‘knowing' and voluntary,’ ” we examine the totality of the circumstances, including: (1) the employee’s “education and business sophistication”; (2) the roles of the employer and employee in determining the terms of the release; (3) “the clarity, of the agreement”; (4) the amount of time given to the employee to review the agreement; (5) whether the employee received independent advice (particularly the advice of counsel); and (6) the consideration paid in exchange for the release. Morais v. Cent. Beverage Corp. Union Empls.’ Supplemental Ret. Plan, 167 F.3d 709, 713 & n.6 (1st Cir.1999) (quoting Smart, 70 F.3d at 181).

The O’Sheas do not seem to attack the validity of the SRP release, and they concede that their father executed the release paperwork and agreed to relinquish “all known o'r unknown claims”- in February 2010 — approximately a month after he submitted his retirement application and two months after he met with UPS’s HR supervisor. They simply argue that them equitable claim arises from misrepresentations that did not become actionable “until after [their father] died, when UPS declined, solely due to [their father’s] death, to pay the annuity.” But, by their own. account, the alleged misrepresentations occurred when O’Shea met with UPS’s HR supervisor in December 2010 and when he received the Plan documents. In essence, then, they argue that even though the acts giving rise to the claim occurred before their father signed the release, the claim did not arise until they suffered monetary damages. This argument ■ conflates the breach and the remedy.

Under § 502(a)(3), a civil áction may be brought “to enjoin any act or practice, which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this sub-chapter or the terms of' the- plan.” 29 U.S.C. § 1132(a)(3). Here, the O’Sheas allege that their father was “misled” by UPS about the terms of the Plan and that the terms of the Summary Plan Description were unclear and deceptive. These events occurred (i.e., he was allegedly misled and provided with deficient Plan documents) when he met with UPS’s HR supervisor to discuss the logistics of his retirement in December 2009. At that point, O’Shea could have sought equitable relief — reformation, for example — despite the fact that his beneficiaries had not yet been denied benefits. Therefore, when their father executed the release in February 2010, any equitable claim based on alleged misrepresentations made to their father when he selected his retirement benefits was released.

Although we are sympathetic to the unfortunate and unexpected fallout resulting from his untimely death, we need go no further. O’Shea’s claim for equitable relief existed when he signed the release, and is therefore barred.

III.

For the reasons articulated above, we affirm. Each side to bear its own costs.

      . For ease, to refer to the defendants-appel-lees UPS, UPS Retirement Plan, and UPS Retirement Plan Administrative Committee collectively, we will use "UPS.”

      . Before retirement, O'Shea’s monthly salary was $7,800.00. His monthly annuity payments would have been $4,117.35.

      . She did know that O'Shea was "in poor health,” but apparently did not realize the "severity of his illness.”

      . The "Annuity Starting Date” is "the first day of the first period for which an amount is payable as an annuity.”

      . In a section tided "If You Die Before You Retire,” the Plan’s summary plan description similarly provides: "If you die after you become vested in your Plan benefit but before your retirement benefit begins, your surviving spouse or surviving Domestic Partner ... may receive a monthly benefit from the Plan.”

      . According to the O'Sheas’ initial letter appealing UPS’s denial of benefits, UPS had also called the O’Shea family in "early March” and explained that the O’Sheas "would not get [their father's] pension because he died while still an 'active' employee and did not, in fact, retire.”

      , Although O'Shea was single when he died, his ex-wife subsequently brought a claim for the “Preretirement Survivor Annuity” benefits pursuant to a Qualified Domestic Relations Order. UPS approved her claim, and she began receiving $315.05 a month under the “Preretirement Survivor Annuity” (as opposed to the $4,117.35 UPS would have paid monthly under the "Single Life Annuity with 120-Month Guarantee”).

      .'' Since the facts were not in dispute, the parties agreed to resolve the action at a case stated hearing. O'Shea v. UPS Ret. Plan, 115 F.Supp.3d 138, 139 & n.1 (D.Mass.2015) (explaining that "[a] case stated hearing is a procedure that allows the Court to make a judgment based on the record in cases where there are minimal factual disputes” and allows "the Court ,. to ‘engage in a certain amount of factfinding, including the drawing of inferences’ " (quoting TLT Constr. Corp. v. RI, Inc., 484 F.3d 130, 135 n.6 (1st Cir.2007))).

      . Section 9.3 of the Plan provides that the Committee "shall have the exclusive right to interpret the Plan and decide any matters arising in the administration and operation of the Plan” in a “conclusive and binding” capacity.

      . As an initial matter, although the O'Sheas concede that the arbitrary and capricious standard of review applies to this case, they argue that the district court applied "an excessively broad and incorrect interpretation” of the standard. In general, they argue that the district court erred:, (1) in applying a "plausibility” standard instead of considering whether the administrator’s interpretation was "reasonable in light of the facts” and "comport[ed] with the actual language” of the Plan; (2) by "effectively ignoring] ambiguity in the Plan’s terms”; and (3) by improperly reading an exclusion into the Plan in violation of our case law.
      We think the O’Sheas largely misconstrue the district court's analysis, Far from depending on an "excessively broad” "plausibility” standard, the district court analyzed the Plan language and concluded that UPS’s interpretation of the Plan was, in fact, "correct.” O'Shea, 115 F.Supp.3d at 151. Similarly, the district court did not "ignore” ambiguity in the Plan terms; it rejected the O’Sheas’ arguments that the Plan was ambiguous, concluding that because it had already ruled that UPS’s reading of the Plan was correct, the O’Sheas’ ambiguity arguments "must fail.” Id. Moreover, the district court considered, and rejected, the O’Sheas’ argument that UPS’s interpretation would improperly write an exclusion into the Plan, determining that O’Shea was not, in fact, excluded from coverage, but that he simply did not satisfy a condition under the Plan that would allow him to receive the specific benefit he requested. Id. (noting that "what is happening in this case is not really an exclusion from coverage.... O’Shea was included within the scope of the Plan — he just did not receive the benefit he wanted”). Because we conclude, however, that UPS’s interpretation of the Plan is " ‘significantly more persuasive’ than the interpretation offered by the [O’Sheas],” D & H Therapy Assocs., LLC v. Boston Mut. Life Ins. Co., 640 F.3d 27, 36 (1st Cir.2011) (quoting Coffin v. Bowater Inc., 501 F.3d 80, 93, 96 (1st Cir.2007)), we need not parse the exact contours of the district court’s application of the standard of review, but will proceed directly to our consideration of whether UPS’s interpretation of the Plan was arbitrary and capricious.

      . The O’Sheas also spend a substantial amount of time arguing that because Section 5.6 was mandated by Congress to protect the rights of surviving spouses, the section should be read narrowly. This argument is not persuasive. Whether, or not, the language was required by Congress is irrelevant. The section now appears in the Plan, and it provides the only benefit available when a participant dies before the annuity starting date.

      . As UPS points out, under the O’Sheas' interpretation of the Plan, it is not entirely clear when benefits would become guaranteed: when the participant selects the benefit; when the necessary paperwork is submitted; or when the paperwork is accepted.

      .Although not controlling, see CIGNA Corp. v. Amara, 563 U.S. 421, 438, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011), contrary to the O'Sheas' arguments, the summary plan documents and the retirement benefits application also support UPS's interpretation of the Plan. The summary plan description provides, for example, “[i]f you die after you become vested in your Plan benefit but before your retirement benefit begins, your surviving spouse or surviving Domestic Partner ,.. may receive a monthly benefit from the Plan.” And the retirement benefits application provides that the participant "will receive a monthly benefit for [his] lifetime with a guarantee of monthly payments for a period of 10 years. If [he] die[s] within the 10-year guarantee period, [his] beneficiarles] will continue to receive [his] monthly benefit amount for the remainder of the guarantee period.” (emphasis added).

      . Because we find UPS’s interpretation of the Plan language much more reasonable than the O’Sheas' interpretation, we need not consider the O’Sheas’ arguments that the Plan is ambiguous (and how to construe the Plan in the face of ambiguity). See D & H Therapy Assocs., LLC, 640 F.3d at 36 (noting that although we have never articulated precise guidelines for determining "when a plan administrator's construction will be sufficiently reasonable to warrant deference even though it is only as persuasive or less persuasive than the interpretation offered by the plaintiffs,” we need not reach the issue when the plan administrator’s construction is " 'significantly more persuasive' ” than that offered by the plaintiffs (quoting Coffin, 501 F.3d at 96)).

      . We note that an examination of the relevant factors supports the conclusion that the release was made knowingly and voluntarily: the release is short and written in clear, simple language; O'Shea was given 45 days to review the agreement; he met with his counsel the same day he executed the agreement; and he was paid $98,800 in consideration.

      . Alternatively, the O’Sheas seem to imply that their equitable claim did not arise until they discovered the alleged misrepresentation. But because the SRP release explicitly covered all undiscovered claims, this argument goes nowhere.

      .Monetary loss is not a necessary component of a claim for equitable relief under § 502(a)(3). See Amara v. CIGNA Corp., 775 F.3d 510, 513-14, 518-19, 525-26 n.12 (2d Cir.2014) (implementing the Supreme Court’s decision in Amara and affirming class certification for plaintiffs who showed "likely harm” resulting from an employer’s inadequate plan summary).


author: TORRUELLA, Circuit Judge.

text:
    Daniel H. GEORGE, Jr., Petitioner, Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent, Appellee.
    No. 15-2305
    United States Court of Appeals, First Circuit.
    September 13, 2016
    See also 448 F.3d 96.

      John J.E. Markham, II, with whom Markham & Read was on brief, for appellant.
    Anthony T. Sheehan, Attorney, Tax Division, Department of Justice, with whom Caroline D. Ciraolo, Acting Assistant Attorney General, and Teresa E. McLaughlin, Attorney, Tax Division, were on brief, for appellee.
    Before TORRUELLA, LYNCH, and BARRON, Circuit Judges.
   TORRUELLA, Circuit Judge.

Daniel H. George, Jr., appeals a tax court decision affirming a determination by the Commissioner of the Internal Revenue Service (“IRS”) that he owed $3,790 million in income taxes and penalties on $5.65 million in bank deposits he made and interest earned from 1995 to 2002. George argues that these deposits were not his taxable personal income but the program income of Biogenesis Foundation, Inc. (“Biogenesis”), a social welfare organization that had tax-exempt status pursuant to section 501(c)(4) of the Internal Revenue Code, 26 U.S.C. § 501(c)(4). We agree with the tax court’s determination that an organization distinct from George did not exist during the applicable tax years and affirm.

I.

Between 1995 and 2002, George, a self-taught chemist, created his own health supplements. The proceeds from the sale of these supplements formed the basis of the bank deposits at issue in this appeal.

George conducted experiments and created mineral, herbal, and chemical supplements in his home in Rockport, Massachusetts. George also worked with health supplement companies that provided him with raw materials, equipment, and feedback. In turn, these companies purchased George’s supplements, which they incor-poi’ated into their own products. The supplement companies dealt with George directly, viewing him as a vendor, and paid him either in cash or by check.

In addition to his dealings with the supplement companies, George sold his supplements directly to individuals who came to his Rockport house. Some of these individuals formed a “core group,” members of which promoted George’s supplements through word of mouth and at meetings where they sold George’s supplements to other people.

The core group members also assisted George in holding retreats where he discussed health and spirituality and provided his supplements to attendees. Between 8 and 24 people participated in any given retreat and paid $300 to $1000 each to attend. The core group members provided services, such as cooking and organizing transportation, in lieu of paying fees. Part of the fees paid by nongroup attendees went towards reimbursing core group members for the costs of the retreats. George also received a portion of the fees as-payment for the supplements he administered.

George did, not issue receipts or otherwise document the payments he received from the supplement' companies or individuals. The only record of George’s transactions was his deposit of'these funds into fourteen different personal bank accounts he maintained. George did not spend any of the money he received from his activities. Rather, George covered his personal expenses using Social Security disability payments he received.

In 2002, the IRS began investigating George. During an interview with an IRS agent, George admitted he had not paid any taxes since the 1970s. George explained that he was hoping to accrue ’$10 million to set up a foundation and nonprofit research laboratory. George was subsequently charged with ■ and convicted of tax evasion in violation of 26 U.S.C. § 7201 based on his failure to pay taxes in the-tax years 1996, 1997, 1998, and 1999. The -United States District Court for the District of Massachusetts sentenced George to thirty months’ imprisonment. We upheld George’s conviction in United States v. George (“George I”), 448 F.3d 96 (1st Cir.2006).

. II.

In May 2003, six weeks after his tax evasion indictment, George incorporated Biogenesis. That July, George applied for tax-exempt status for Biogenesis as a charitable organization under section 601(c)(3) of the Internal Revenue Code, 26 U.S.C. § 501(c)(3). In the application, George certified that he was filing for tax-exempt status “within 15 months from the end of the month in which [Biogenesis] was created or formed.” The application also described ' Biogenesis’s mission, which was, according to George, to expand upon his research to create supplements for treatments based on cellular regeneration technology and provide health products to those in need. George claimed that Biogen-esis would achieve this goal by renting laboratory space and eventually opening its own headquarters. The IRS granted Biogenesis’s application in December 2003.

On October 26, 2011, Biogenesis retroactively filed tax forms claiming that it was a section 501(c)(4) organization for the tax years 1996 through 2002. For each of these tax years, Biogenesis reported revenue equal to the deposits plus interest earned in George’s personal bank accounts (excluding the bank account in which George’s Social Security payments were deposited).

The IRS subsequently issued a Notice of Deficiency to George stating that he owed taxes, plus penalties, on income earned for the tax years 1995 through 2002. George subsequently filed a petition for review with the tax court, claiming that the deposits and interest earned for those tax years were not his income -but Biogenesis’s. The tax court rejected George’s arguments, finding that no “organization” separate from George existed prior to Biogenesis’s incorporation in 2003 and that George’s activities during this period were commercial and did not further social welfare. As a result, the tax court found George liable for the full amount of the alleged deficiency. This timely appeal followed.

III.

“We review decisions of the tax court ‘in the same manner and to the same extent as decisions of the district courts in civil actions tried without a jury.”’ Interex, Inc. v. Comm’r, 321 F.3d 55, 58 (1st Cir.2003) (quoting 26 U.S.C. § 7482(a)(1)). Thus, its legal conclusions are reviewed de novo and its factual findings for clear error. Id.

On appeal, George renews his claim that Biogenesis existed as a section 501(c)(4) tax-exempt organization prior to its formal incorporation in 2003, such that the bank deposits and interest were not taxable as his personal income. Section 501(c)(4) of the internal revenue code exempts from taxation

[c]ivie leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes.

26 U.S.C. § 501(c)(4)(A). George argues that Biogenesis met these requirements in two ways. First, he contends that the tax court should have treated the IRS’s 2003 approval of Biogenesis’s section 501(c)(3) application as dispositive. Second, George argues that, regardless of its section 501(c)(3) status, the tax court’s conclusion that Biogenesis failed to meet section 501(c)(4)’s requirements in the contested tax years was clearly erroneous. As explained below, George was required to prove Biogenesis met all of section 501(c)(4)’s elements and he failed to do so.

A. Effect of Biogenesis’s Section 501(c)(3) Status

As a threshold matter, George claims that because Biogenesis qualified as a section 501(c)(3) organization upon the filing of its application, it must have previously fulfilled section 501(e)(4)’s requirements. In support of his argument, George cites Treasury Regulation § 1.501(c)(4)-l(a)(2)(i), which states that “[a] social welfare organization will qualify for exemption as a charitable organization if it falls within the definition of charitable set forth in paragraph (d)(2) of § 1.501(c)(3)-l.” 26 C.F.R. § 1.501(c)(4)-l(a)(2)(i). George interprets this regulation as meaning that an organization may qualify as tax exempt under section 501(c)(4) “if its activities would qualify for approval ... under section 501(c)(3).”

This argument is easily disposed of by our decision in George I. George argued in his tax evasion case that the district court should have sua sponte instructed the jury on section 501(c)(4) organizations. We rejected this contention and stated that Biogenesis’s section 501(c)(3) status was of “no consequence” because the IRS approves applications based on “an applicant’s unverified representations.” George I, 448 F.3d at 101 n.6 (citing Zimmerman v. Cambridge Credit Counseling Corp., 409 F.3d 473, 476-77 (1st Cir.2005)). Once an issue actually went to trial, we noted, courts could determine whether the applicant’s .representations matched the evidence. See id.; see also 26 U.S.C. § 6110(k)(3) (“[A] written determination [by the IRS] may not be used or cited as precedent.”).

This principle is equally applicable to George’s current tax delinquency case. Biogenesis’s section 501(c)(3) application contained only George’s unverified representations. These representations did not show how Biogenesis actually operated (if at all) from tax years 1995 to 2002. Thus, the tax court correctly looked at whether the evidence presented at George’s trial showed that a tax-exempt organization existed within the meaning of section 501(c)(4)..

B. Organization Requirement

Alternatively, George claims that the tax court erred in determining that Biogenesis did not independently fulfill section 501(c)(4)’s requirements. “To qualify for a § 501(c)(4) exemption, there must be (1) an organization, that (2) is not operated for profit, and that is (3) operated exclusively for the promotion of social welfare.” George I, 448 F.3d at 100 (citing 26 U.S.C. § 501(c)(4); 26 C.F.R. § 1.501(c)(4)-1). The party claiming the exemption bears the burden of demonstrating that it satisfies all of the prerequisites by a preponderance of the evidence. See IHC Health Plans, Inc. v. Comm’r, 325 F.3d 1188, 1193 (10th Cir.2003); Fed’n Pharmacy Servs., Inc. v. Comm’r, 625 F.2d 804, 806 (8th Cir.1980).

We agree with the tax court that George failed to prove that an organization distinct from himself existed prior to 2003. In reaching this conclusion, the tax court properly took into account the absence of organizational formalities and the lack of “separation between [George] and his activities.”

On appeal, George argues the tax court erred by relying too heavily on formal organizational structures such as his and the core group’s failure to “maintain[ ] financial records, ke[ep] minutes, draft[] organizing documents or bylaws, [or] request[] an employer identification number” as well as the absence of certain required filings. George’s argument fails for two reasons. First, it was proper for the tax court to look for objective indicia of organizational form such as filings and records. We approved the use of such indicia in George I, noting that George was not entitled to an instruction on section 501(c)(4) organizations in part because he “did not operate an ’organization,’ given that he failed to engage in any traditional business behavior, such as maintaining records, hiring employees, or maintaining a formal office.” 448 F.3d at 101. Other courts have used objective indi-cia to determine whether an organization had a primarily charitable, rather than commercial, purpose in tax exemption cases. See, e.g., Presbyterian & Reformed Publ’g Co. v. Comm’r, 743 F.2d 148, 155 (3d Cir.1984). We see no error in the tax court’s taking this evidence into account in determining whether an organization existed.

Second, the tax court did not view the lack of organizational formalities as dispositive. Rather, the tax court considered the evidence in the record and, after weighing all these factors, concluded that George and the core group did not operate like an organization in the relevant tax years. As noted by the tax court, one of the core group members did not view herself as a member of an organization. She testified- at George’s trial that “[-Biogenes-is] wasn’t really an entity at that point that I knew of.... [W]e were just a group of us trying to heal ourselves.” The tax court also noted that George was “the sole researcher, analyst, producer, service provider, and scientist,” such that “[n]o one in the core group besides [George] could have made an ongoing concern of the alleged organization’s reported primary exempt purpose — research in cell regeneration— during the years in issue.” Finally, the tax court factored into its analysis the fact that George “was the only ’member’ of his group with control over the alleged organization’s funds in his personal bank accounts.”

Based on this evidence, the tax court could reasonably conclude that the core group consisted of individuals who were interested in George’s supplements and advice, not members of an organization. It is not clear how the core group members would have continued Biogenesis’s alleged mission of building upon George’s research in his absence when none of the core group members participated in the research and creation of the supplements or had access to funding. George argues that the tax court should have considered other evidence in its organizational calculus, such as the core group members’ assistance with running the retreats and promoting George’s supplements. That George’s supplements had an ardent following,' however, does not change the crux of the tax court’s analysis that the creation of the supplements and. the control over the group’s funding were not distinct from George. George also claims that there would be no organization without the core group and retreat participants because he received from them .critical feedback to improve his supplements. We fail to see how this argument would prevent any sole proprietor’s customers from being viewed as an organization.

Requiring evidence showing that Biog-enesis could exist separate from George comports with general principles of tax law. Even if George intended to form an organization eventually, the tax code generally does not allow anticipatory assignments of income. See United States v. Basye, 410 U.S. 441, 447, 93 S.Ct. 1080, 35 L.Ed.2d 412 (1973) (“[Ijncome is taxed to the party who earns it and that liability may not be avoided through an anticipatory assignment of that income.”). Thus, the income from the supplements and the interest earned could not be attributed to an organization (rather than George) until that plan to create an organization actually came to fruition. George has shown neither any sufficient evidence showing that he or the core group behaved as members of an organization nor any other objective indicia of an organization. We therefore conclude the tax court was not clearly erroneous in finding no organization existed during the relevant tax years.

IV.

We need not go further. Because we find no organization, we need not address the parties arguments about whether George’s activities operated for profit or exclusively for the promotion of social welfare. The decision of the tax court is affirmed.

Affirmed.

      , George subsequently filed a tax return claiming he earned twenty-eight dollars in gross income and owed zero dollars in taxes for the 2002 tax-year.

      . The Commissioner also assessed penalties against George, which the tax court upheld. For tax years 1995 to 2001, the tax court imposed penalties for fraudulent failure to file a tax return pursuant to 26 U.S.C. § 6651(f). For tax year 2002, the tax court imposed a penalty for fraudulent underpayment of taxes pursuant to 26 U.S.C. § 6663. George does not appeal these penalties beyond challenging his underlying tax deficiencies. Thus, the merits of the penalties depend on our assessment of the deficiency claims.

      . We also reject George’s contention that the tax court analyzed whether Biogenesis qualified as a “civic organization” under section 501(c)(4) rather than a social welfare organization. As explained below, the tax court’s decision relied primarily on its finding that no organization separate from George existed and we see no error in this analysis. Any distinction between civic and social welfare organizations does not affect this conclusion.

      ."Generally speaking, the primary differences between Section 501(c)(3) organizations and Section 501(c)(4) organizations are that contributions to the former are tax deductible while those to the latter are not, and the latter can engage in some political activities while the former cannot.” George I, 448 F.3d at 99 n.4. The Commissioner does not dispute George's claim that, unlike a section 501(c)(3) organization, a section 501(c)(4) organization need not file a formal application with the IRS to claim tax-exempt status. We assume for the sake of this appeal, without deciding the issue, that George is right.”

      . The Commissioner’s brief urges us to apply the doctrine of collateral estoppel and give the findings in George I preclusive effect for the tax years 1996, 1997, 1998, and 1999. In order for collateral estoppel to apply, the parties "must have actually litigated the facts in question, and those facts must have been essential to a valid and final judgment in a prior action.” Morón-Barradas v. Dep't of Educ., 488 F.3d 472, 479 (1st Cir.2007). Although George argued that the jury should have been instructed on section 501(c)(4) organizations on appeal, the issue whether an organization existed was not litigated in George I. As we noted, George’s theory of defense in his criminal case was that the monies he deposited in his bank accounts "were gifts and donations from George’s patrons” rather than income of a section 501(c)(4) organization. George I, 448 F.3d at 100. Thus, the issue whether George’s core group formed an organization was never presented to the jury in George I.

      . Wé also believe that the fact that Biogenesis did not incorporate until 2003, although not dispositive, serves as a strong objective indicator that an organization distinct from George did not exist during the applicable tax years. Notably, George certified in his application that he was filing for tax-exempt status within 15 months of Biogenesis’s creation.

      . George argues the tax court should have given this witness's testimony less weight because "her function in the organization [preparing food for the retreats] had nothing to do with its legal status.” In other words, George argues that the tax court gave improper weight to the testimony of a witness he views as less persuasive than other core group members who testified. "[W]eighing the evidence ... is uniquely the province of the [trial] court.” Fed. Refinance Co. v. Klock, 352 F.3d 16, 29 (1st Cir.2003). We thus find no error in the tax court’s consideration of this testimony.

      .We also note that the supplement companies -George dealt with viewed him as a vendor and were unaware of his affiliation with a charitable organization. These companies made their checks put to George and were unaware of an organization called Biogenesis. This further supports the tax court’s finding that no organization separate from Biogenesis existed.


text:
    UNITED STATES of America, Appellee, v. Kevin Lee ROSS, Defendant, Appellant.
    No. 15-1460
    United States Court of Appeals, First Circuit.
    September 14, 2016

      Jane Elizabeth Lee, for appellant.
    Renée M. Bunker, Assistant United States Attorney, with whom Thomas E. Delahanty II, United States Attorney, was on brief, for appellee.
    Before TORRUELLA and BARRON, Circuit Judges, and LISI, District Judge.

       Of the District of Rhode Island, sitting by designation.

   TORRUELLA, Circuit Judge.

Following a two-day jury trial in the United States District Court for the District of Maine, defendant-appellant Kevin Ross was found guilty of one count of possession of child pornography under 18 U.S.C. § 2252A(a)(5)(B). Before trial, Ross sought to exclude from evidence six images and three videos of child pornography found on his computers and hard drive on the basis that the inflammatory nature of these materials risked unfairly prejudicing the jury against him under Federal Rule of Evidence 403. He contended that, because he was willing to stipulate that his computers contained child pornography, these images were of minimally probative value. The district court denied Ross’s request without viewing the challenged evidence. On appeal, Ross asserts that the district court committed reversible error when it declined to view the evidence before allowing its admission and by admitting these materials-. We affirm.

I.

In July of 2011, United States Postal Inspector Scott Kelley was monitoring a peer-to-peer network known as the Gnutel-la network and discovered that an Internet Protocol (“IP”) address from Maine was sharing files with hash values indicative of child pornography. Kelley connected to the IP address and downloaded nine files which proved to contain, child pornography. Kelley later learned that this IP address was assigned to the subscriber Kevin Ross at an address in Penobscot, Maine. Ross had joined his mother, Madeline Ross, at this address in 2011, after his father fell ill, and continued to live there after his father’s death in April 2011.

On July 25, Kelley obtained a search warrant for the Ross residence. He executed the warrant with several law enforcement officers on July 26. Ross was the only individual in the home at the time of the search. During the search, Chief of the Belfast Police Department Michael James McFadden and United States Postal Inspector Michael Connelly investigated the basement. There, they found a laptop playing a video in which a “young female, probably under the age of 2, .[was] engaged in full intercourse with an adult male.” The agents seized the laptop and the laptop’s internal hard drive, a desktop computer and the desktop’s internal hard drive, an external hard drive, and thumb drives from the basement. Despite having removed “all of the Internet devices” from- the residence, on August 10, McFadden discovered that the same IP address was still being used to access child pornography, and officers returned to Ross’s residence to conduct a search. They were unable to find any devices capable of connecting to the Internet and did not learn how anyone could have accessed the Internet from Ross’s residence after the initial search.

Ross was charged with one count of knowingly possessing child pornography under 18 U.S.C. § 2252A(a)(5)(B) and proceeded to a two-day jury trial. Prior to trial, the Government indicated that it intended to introduce two images and one video each from Ross’s laptop and desktop hard drives and his external hard drive, for a total of six images and three videos. Ross moved to exclude these materials. He contended that, because he was willing to stipulate that the videos and images contained child pornography, “[a]ny probative value that remains in showing this material is slight and substantially outweighed by the prejudicial quality of the evidence” under Federal Rule of Evidence 403. In the motion, Ross described the images and videos as “graphic and disturbing” such that they risked “creating] an emotional or visceral response with the jury,”

The district court denied the motion “[gjiven the limited number of actual images or videos to be proffered by the Government.” But the district court noted:

[T]he Court has not viewed any of the images or videos, and the Third Circuit suggested in [United States v. Cunningham, 694 F.3d 372 (3d Cir. 2012)] that, if contested, a trial judge should actually view the child pornography before admitting it. If defense counsel believes that the exhibits selected by the Government are too extreme and do not fairly represent what was' on the computer, the Court will investigate further, view the proffered exhibits, and rule on any specific objections that Mr. Ross wishes to press. In other words, if there are specific objections by Mr. Ross that the Government’s images and videos do not fairly represent the pornography on the subject computers or that they are particularly inflammatory, the Court will resolve this issue after having seen the proffered evidence outside the presence of the jury.

On the first day of trial, the district court repeated this request:

The Court: And the one issue that is still outstanding, I think, is whether or not the defendant contends that any of the images that the — that the government proposes to introduce, given the parameters of the order itself, still fall as inadmissible under Rule 403. In other words, do you want me to review those images before they’re introduced?
[Ross’s Counsel]: Your Honor, I don’t think the images misrepresent the type of material that was recovered from the computer. So for that reason, I would say the court doesn’t need to — to review the images.

At trial, Ross did not dispute that the computers and hard drives contained child pornography, instead arguing that someone else had used his IP address and computers to access the materials. He emphasized that his IP address continued to access child pornography after the computers were removed from his home and that forensics reports obtained by the Government showed that Ross’s computer had accessed child pornography in May 2011, when he and his family were on vacation in Michigan.

In addition to calling several officers ' who had searched -Ross’s home to testify, the Government presented the testimony of Michael Scichilone, a computer forensic analyst with the United States Postal Inspection Service Digital Evidence Unit. He stated that he located “over a hundred images and 50 videos of what appears to be a female under the age of 18 conducting sexual activities with adult male[s] and in sexual poses” on the desktop hard drive and “thousands of images” and “about 50 videos” on the laptop hard drive, as well as thousands of images and videos on the external hard drive and thumb drives. Scichilone testified. that Ross’s external hard drive could not itself access the internet and that it would need to have been “physically connected]” to a computer for these materials to be loaded onto it. Scichilone also presented extensive testimony that Ross’s computers had been used to access websites offering child pornography and that many of the file names on Ross’s devices contained terms such as “pedo,” short for “pedophilia,” and “PTHC,” an acronym for “preteen hard core.” During Scichilone’s testimony, the Government presented the three videos and six images now contested by Ross. Two of the videos are graphic depictions of adult males vaginally and anally raping children under the age of eight and the other depicts a five-year-old girl being forced to perform oral sex on an adult male.

The jury found Ross guilty, and Ross was sentenced to ninety months’ imprisonment and five years of supervised release. Ross now appeals. '

II.

Under Federal Rule of Evidence 403, “[t]he court may exclude relevant evidence if its probative value it substantially outweighed by a danger of ... unfair prejudice.” Fed. R. Evid. 403. Ross contends that Rule 403 requires that the district court review the challenged evidence and, as a result, the district court erred in failing to view or otherwise obtain a description of the challenged materials before making an evidentiary determination. Because Ross waived this point by “intentionally] relinquish[ing]” the argument before the district court,- he cannot now assert it on appeal. United States v. Olano, 507 U.S. 725, 733, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993) (quoting Johnson v. Zerbst, 304 U.S. 458, 464, 58 S.Ct. 1019, 82 L.Ed. 1461 (1938)). Waiver is different from forfeiture, which occurs where “a party fails to make a timely assertion of a right.” United States v. Sánchez-Berríos, 424 F.3d 65, 74 (1st Cir. 2005) (quoting United States v. Rodriguez, 311 F.3d 435, 437 (1st Cir. 2002)). Whereas a forfeited issue may be subject to plain error review, “a waived issue ordinarily cannot be resurrected on appeal.” Id. (quoting Rodriguez, 311 F.3d at 437).

Ross never suggested in any document filed to. the district court that the court should view the challenged evidence, Nevertheless, in its order and again before trial, the district court asked Ross whether he wanted the court to view the evidence, and Ross declined. Ross now contends that the district court was only asking whether it should view the materials for the limited purpose of determining whether they were representative of the subject matter of the images and videos found on the seized devices. The district court’s order, however, asked whether Ross had objections that the materials “do not fairly represent the pornography on the subject computers or that they are particularly inflammatory.” The use of “or” indicates that the district court was not merely querying the representativeness of the proposed evidence, but also asking whether Ross had objections based on its graphic nature. And when the district court posed this question before trial, it asked whether “the defendant contended] that any of the images ..still fall as ‘inadmissible under Rule 403?” Although Ross replied that that the images did not “misrepresent the type of material that was recovered from the computer,” his answer does not narrow the scope of the district court’s query, which more broadly concerned any potential objections under Rule 403. The district court placed this issue “squarely on the table,” United States v. Acosta-Colón, 741 F.3d 179, 187 (1st Cir. 2013), and Ross stated, without equivocation, that “the court doesn’t need ... to review the images.” His response “constitutes classic waiver, rather than forfeiture, which means that he cannot challenge the judge’s ruling even as plain error.” Id. Although we believe the better practice is for a district court to view challenged evidence (as distasteful as it may be) before making a ruling under Rule 403, we set aside the question of whether Rule 403 requires this step. In any case, the evidence against Ross was overwhelming, and any error was, at best, harmless.

We now turn to the analysis under Rule 403, which requires that a trial court exclude “evidence if its probative value is substantially outweighed by ‘the danger of unfair prejudice.’ ” United States v. Varoudakis, 233 F.3d 113, 121 (1st Cir. 2000) (quoting Fed. R. Evid. 403). “In balancing the scales of Rule 403, it is important to note that only ‘unfair’ prejudice is to be avoided, as ‘by design, all evidence is meant to be prejudicial.’ ” United States v. Morales-Aldahondo, 524 F.3d 115, 119-20 (1st Cir. 2008) (quoting Varoudakis, 233 F.3d at 122). Even where a party is willing to stipulate to a critical fact, “a criminal defendant may not stipulate or admit his way out of the full eviden-tiary force of the case as the Government chooses to present it.” Old Chief v. United States, 519 U.S. 172, 186-87, 117 S.Ct. 644, 136 L.Ed.2d 574 (1997). We review the district court’s Rule 403 determination for abuse of discretion. Morales-Aldahondo, 524 F.3d at 119.

Ross contends that, because he was willing to stipulate that his computers contained child pornography, the probative value of the evidence was so minimal that the district court committed reversible error by allowing its admission. To the contrary, the Government argues that the content of the images and videos was probative of Ross’s knowledge that his devices contained child pornography, which Ross did not concede. We agree.

In his opening argument, Ross explained that he did not “dispute that someone, somehow was using the computer or the Internet address that was assigned to Kevin Ross’ house to collect and access child pornography. .But whoever that someone was, it wasn’t Kevin Ross.” He focused on the instances in May 2011, when his computer accessed child pornography despite his being away from Maine, and in August 2011, when McFadden discovered that his IP address was accessing child pornography although no devices capable of reaching the internet remained in his home.

As such, Ross’s “proposed stipulation only went so far.” United States v. Dudley, 804 F.3d 506, 517 (1st Cir. 2015). And, because, knowledge was contested, the Government’s evidence “served a valid, non-cumulative, purpose.” Id. (quoting United States v. Eads, 729 F.3d 769, 778 (7th Cir. 2013)). The Government’s limited use of three videos and six images, among the many thousands of videos and images on Ross’s devices, demonstrated that Ross could not have somehow stumbled upon these items without immediately recognizing their graphic content, just as it was unlikely that Ross could have assumed that the many files with names indicative of child pornography on his computers were completely innocuous. The Government also presented the testimony of officers who saw a graphic video playing on Ross’s laptop during the search of his house immediately after finding Ross home alone.

Similarly, the Government carefully presented evidence of browser histories and search terms to indicate that Ross’s computers had been used to locate and view child pornography on numerous occasions and that his external hard drive and thumb drives, devices that could not independently access the internet, contained many images of .child pornography. All in all, the Government’s evidence demonstrated that this case was not an instance in which a few stray images were found on a single computer, but rather a scenario wherein multiple devices were being used continually to access and store thousands of highly graphic files. This account casts doubt on Ross’s defense that someone else had hijacked his computers. “The court is not required to scrub the trial clean of all evidence that may have an emotional impact,” Morales-Aldahondo, 524 F.3d at 120, and the district court did not abuse its discretion under Rule 403 in admitting a limited number of images and videos for the purpose of demonstrating Ross’s knowledge.

III.

Because the district court did not abuse its discretion in admitting the challenged evidence, we affirm.

Affirmed.

      . Kelley explained that a hash value is a "unique series of numbers ánd letters” associated with a file that, acts "almost like a DNA strand.”

      . Ross contends that four videos were played and suggests that the two longest videos, with lengths of ten and sixteen minutes, respectively, were played in their entirety. As the Government asserts, however, the record indicates that one of these videos (Exhibit 45) was not played for the jury, and that the other (Exhibit 46) was played for only a minute. The record is less dear as to whether the remaining videos, Exhibits 43 and 48, were played in full. (Indeed, there is no indication that Exhibit 48 was played at all, although the Government concedes that it was.). In any case, these videos were only thirty-nine seconds and one minute and forty-three seconds in length, respectively. While we acknowledge that the record could be clearer as to how long these videos were played, the outcome of this dispute would not change our analysis. See United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990).

      . Ross develops no argument to us that, even if the evidence was probative in this way, it must still have been excluded,


text:
    UNITED STATES of America, Appellee, v. Raymond NEGRÓN, Defendant, Appellant.
    No. 15-1898
    United States Court of Appeals, First Circuit.
    September 14, 2016

      Bruce E. Kenna, Manchester, NH, on brief for appellant.
    Seth R. Aframe, Assistant United States Attorney, and Emily Gray Rice, United States Attorney, on brief for appellee.
    Before TORRUELLA, LYNCH, and BARRON, Circuit Judges.
   TORRUELLA, Circuit Judge.

Defendant-Appellant Raymond Negrón appeals the United States District Court for the District of New Hampshire’s decision to deny a retroactive reduction to his sentence pursuant to 18 U.S.C. § 3582(c)(2). Negrón had previously entered into plea agreement pursuant to Federal Rule of Criminal Procedure 11(c)(1)(C), which “bind[s] the district court to a pre-agreed sentence if the court accepts the plea.” United States v. Rivera-Martinez, 665 F.3d 344, 345 (1st Cir. 2011). Under so-called C-type plea agreements, a defendant is eligible for a sentence reduction based on a retroactive amendment to the United States Sentencing Guidelines (“Guidelines”) only if the term of imprisonment specified in the agreement is “based on” a Guidelines sentencing range. We agree with the district court that the proposed sentenced in Negron’s plea agree.ment failed to meet this requirement and affirm.

I.

On August 22, 2012, a federal grand jury returned a nine-count indictment against Negrón. Negron and the Government subsequently reached a plea agreement in which Negrón pled guilty to counts one through eight. The Government dismissed count nine, which carried a mandatory minimum consecutive sentence of 120 months’ imprisonment. See 18 U.S.C. § 924(c)(l)(B)(I). Negron’s plea agreement was made pursuant to Federal Rule of Criminal Procedure 11(c)(1)(C). Under so-called C-type plea agreements, “the pai’ties bind the district court to a pre-agreed sentence if the court accepts the plea.” Rivera-Martínez, 665 F.3d at 345. Although the plea agreement did not state a base level offense, applicable Guidelines range, or criminal history category (“CHC”), the parties stipulated that Neg-rón would be sentenced to 144 months’ imprisonment.

The district court conducted a sentencing hearing on June 13, 2013„ and determined that Negrón had a total base offense level of 25 and CHC of I, corresponding to a Guidelines range sentence of 57 to 71 months’ imprisonment. Noting that the stipulated sentence was “slightly over twice the high end of the advisory guideline,” the district court accepted the plea agreement and imposed the stipulated sentence.

In 2014, the United States Sentencing Commission retroactively reduced the base offense level for many drug offenses by two levels. See U.S.S.G. § lB1.10(a)(l); U.S.S.G. supplement to app. C amend. 782 (Nov. 1, 2014); United States v. Vaughn, 806 F.3d 640, 643 (1st Cir. 2015). Because several of his convictions were for controlled substance offenses, Negrón subsequently filed a motion to modify his sentence pursuant to 18 U.S.C. § 3582(c)(2). The district court denied Negrón’s motion, concluding that Negrón’s sentence was not based on a Guidelines sentencing range affected by an amendment. This timely appeal followed.

II.

A district court performs a “two-step inquiry” in determining whether a defendant is entitled to a sentence reduction under § 3582(c)(2). Dillon v. United States, 560 U.S. 817, 826, 130 S.Ct. 2683, 177 L.Ed.2d 271 (2010). First, the district court must determine whether any applicable Guidelines amendments apply to the defendant’s sentence. Id. at 826-27, 130 S.Ct. 2683. Second, if the district court concludes the defendant is eligible for relief, it must weigh the sentencing factors described in 18 U.S.C. § 3553(a) and determine whether a reduction is warranted. Id. Here, the sole issue on appeal is whether the district court properly applied our decision in Rivera-Martínez, 665 F.3d at 344, to conclude that Negrón was ineligible for relief. Although “[w]e review a district court’s denial of a motion for reduction of sentence under section 3582(c)(2) for abuse of discretion,” United States v. Caraballo, 552 F.3d 6, 8 (1st Cir. 2008), because Neg-rón contends the district court committed legal error, our review is effectively de novo, id. (“A material error of law is perforce an abuse of discretion.”).

Courts may reduce the term of imprisonment for “a defendant who has been sentenced to a term of imprisonment based on a sentencing range that has subsequently been lowered by the Sentencing Commission.” 18 U.S.C. § 3582(c)(2). The term of imprisonment in a C-type plea agreement is “based on” a Guidelines sentencing range in two scenarios: (1) when the agreement “calls for a sentence within an identified sentencing range,” Rivera-Martínez, 665 F.3d at 348, and (2) when “the terms contained within the four corners of the plea agreement,” id. at 349, “make clear that the basis for a specified term of imprisonment is a Guidelines sentencing range applicable to the offense to which the defendant pleaded guilty,” id. at 348 (alterations omitted) (quoting Freeman V. United States, 564 U.S. 522, 539, 131 S.Ct. 2685, 180 L.Ed.2d 519 (2011) (Soto-mayor, J., concurring)).

Negron acknowledges his term of imprisonment is not within a specific Guidelines sentencing range, but argues that his plea agreement fell into this second category. As in Rivera-Martínez, however, Negrón’s plea agreement lacks the “two essential coordinates” that show a Guidelines sentencing range underpins the proposed sentence. Id. at 349. In that case, we found that a C-type plea agreement that failed to specify a CHC (despite specifying a base offense level) could not be considered to be based on a Guidelines sentencing range. Id. Negron’s case is even weaker because his plea agreement contains neither a base offense level nor a CHC. Absent either of these two esséntial coordinates, we cannot conclude Negrón’s plea agreement was based on a Guidelines sentencing range. Id.

Nonetheless, Negron contends that we can infer both numbers from the four corners of his plea agreement. With respect to the base offense level, Negron argues his plea' agreement contains all of the facts necessary to calculate this integer. With respect to his CHC, Negron claims this number was never seriously contested, due to his relatively sparse criminal record, and is obvious from his presentence report. Finally, Negron cites the fact that at his sentencing hearing the district court acknowledged that 144 months’ imprisonment was equal to doubling the high end of the applicable Guidelines range and “rounding [up to] an even twelve-year sentence.” Negron views this statement as evidence that his plea agreement was based on a Guidelines sentencing range.

Ñegrón’s arguments run contrary to our holding in Rivera-Martínez. Under the Guidelines, a district court may accept a C-type plea agreement only if the agreement stipulates a sentence that is within the applicable Guidelines range or the district court is satisfied that the sentence departs from the Guidelines range “for justifiable reasons.” U.S.S.G. § 6B1.2(c). In other words, even with C-type plea agreements, the district court must calculate the defendant’s base offense level and CHC to determine whether the sentence negotiated by the parties is acceptable. Because we have rejected the.view that all C-type plea agreements may qualify for relief under § 3582(c)(2), we have held that the fact that the district court “perform[ed] [Guidelines calculations] before deciding whether to accept the agreement” is insufficient to show that the stipulated sentence is based on a Guidelines sentencing range. Rivera-Martínez, 665 F.3d at 349.

The inclusion of admitted facts in Negrón’s plea agreement does not necessarily demonstrate that that parties ■ intended to base his sentence on a particular base offense level. Rather, these facts merely helped the district court perform the Guidelines analysis necessary to its review of the agreement. Moreover, a sentencing court need not rely exclusively on the facts listed in a plea agreement when performing its Guidelines calculation to determine whether to accept the plea. The district court and Negron both relied on his presentence report—a document outside of the four comers of the plea agreement—to calculate his CHC. We therefore reject Negrón’s contention that we can infer that he and the Government had a specific base offense level in mind from the stipulated facts in his plea agreement.

We also decline Negrón’s invitation to find that his plea agreement implicitly referenced his CHC. Although the “obviousness” of this integer may be an explanation for its absence from the plea agreement, it is not the only one. The absence of the CHC is equally consistent with the parties simply'viewing other factors besides Neg-rón’s Guidelines range as important to determining his sentence.

For similar reasons, we are equally unpersuaded by Negrón’s argument that his plea agreement must have been based on a Guidelines sentencing range because his stipulated sentence is roughly double the high end of the Guidelines sentencing range. We have recognized that the “term of imprisonment in a C-type plea agreement will most often be negotiated by reference to the relevant guideline provisions” and interpreted § 3582(c)(2) as requiring a stronger “linkage.” Id. (citing Freeman, 564 U.S. at 537, 131 S.Ct. 2685). Negrón’s observation falls short. Although the district court acknowledged, some relationship between the stipulated sentence and the applicable Guidelines range, the district court also factored into its analysis the fact that the Government had agreed to dismiss count nine of Negrón’s indictment, which carried a-mandatory minimum consecutive sentence of 120 months’ imprisonment. In other words, non-Guidelines factors also explained Negrón’s proposed sentence. Understanding the role the Guidelines played vis-á-vis the .dropped charge would require us to “to supplement the [a]greement with .,. the parties’ background negotiations,” something Rivera-Martínez forbids. Id. We therefore decline to accept Negrón’s invitation to infer a Guidelines basis for his stipulated sentence.

Finally, Negron claims his stipulated sentence was based on a Guidelines sentencing range because his plea agreement contains various references to the Guidelines including that (1) the district court was required to consider the Guidelines in an advisory capacity; (2) Negron was aware that the Guidelines were nonbinding; (3) the United States and the United States Probation Office would advise the court of any inaccuracies in the presentence report; and (4) the Government would- not “oppose an appropriate reduction in [Negrón’s] adjusted offense level, under the advisory Sentencing Guidelines, based upon [Negrón’s] prompt recognition and affirmative acceptance of personal responsibility for the offense.” These generic plea agreement statements are insufficient to show that Negrón’s term of imprisonment was based on a Guidelines sentencing range because it is not “evident from the agreement itself’ that the “basis for the specified term [of imprisonment] is a Guidelines sentencing range.” Freeman, 564 U.S. at 539, 131 S.Ct. 2685 (Sotomayor, J., concurring). They simply show that the Guidelines would play some amorphous role in the parties’ negotiations and the district court’s analysis of the plea. This falls short ,of the linkage Rivera-Martinez requires.

III.

. Because we cannot conclude that Neg-rón’s sentence was based on a Guidelines sentencing range, we agree with the district court that he is not eligible for a sentencing reduction pursuant to § 3582(c)(2).

Affirmed.

      . Counts one through five charged Negrón with controlled substance offenses in violation of 21 U.S.C. § 841(a)(1). Count six charged Negrón with sale of a firearm to a prohibited person in violation of 18 U.S.C. § 922(d). Counts seven through nine related to Neg-ron’s possession of a Mossberg twenty gauge bolt action shotgun. Negrón was charged with possession of an unregistered firearm, 26 U.S.C. §§ 5861(d), 5841, 5871; possession of a firearm with an obliterated serial number, 18 U.S.C. §922(k); and possession of a short-barreled shotgun during and in relation to a drug trafficking crime, 18 U.S.C. § 924(c)(l)(B)(I).

      . The district court stated that, if Negrón were legally eligible, it would have reduced his sentence to 116 months’ imprisonment.

      . We acknowledge that since we decided Rivera-Martinez, two other circuits have concluded that Justice Sotomayor’s concurrence is not the narrowest opinion in Freeman v. United States and thus nonbinding. See United States v. Davis, 825 F.3d 1014 (9th Cir. 2016) (en banc); United States v. Epps, 707 F.3d 337 (D.C. Cir. 2013). Nonetheless, we view Rivera-Martinez as controlling Negrón’s appeal.