WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court
today ruled May 16 that although Section 502(a)(1)(B) of the Employee
Retirement Income Security Act does not permit a district court to reform the
terms of a pension plan, Section 502(a)(3) does authorize such relief (CIGNA
Corporation, et al. v. Janice C. Amara, et al., No. 09-804, U.S. Sup. (lexis.com subscribers may access Supreme Court briefs for this case); See
December 2010, Page 9).
Janice Amara filed a class action against CIGNA Corp. and
the CIGNA Pension Plan (collectively, CIGNA), claiming that CIGNA's Jan. 1,
1998, conversion from a traditional pension plan to a cash balance plan
violated ERISA and that CIGNA violated certain of ERISA's disclosure
requirements during the transition. Amara sought relief under ERISA
Sections 502(a)(1)(B) and 502(a)(3).
The U.S. District Court for the District of Connecticut
ruled that CIGNA violated its disclosure obligations, which caused the
participants "likely harm." The District Court reformed the new plan and
ordered CIGNA to pay benefits according to the reformed plan under Section
502(a)(1)(B). The Second Circuit U.S. Court of Appeals affirmed in a
The Supreme Court concluded that Section 502(a)(1)(B),
which authorizes a plan participant or beneficiary to bring a civil action to
recover benefits due under the plan, does not authorize a court to alter the
terms of the plan, "at least not in the present circumstances, where that
change, akin to the reform of a contract, seems less like the simple
enforcement of a contract as written and more like an equitable remedy."
However, the Supreme Court held that Section 502(a)(3),
which authorizes "appropriate equitable relief" for violations of ERISA "or the
terms of the plan," does confer on the District Court the power to reform the
Because the District Court had not determined if an
appropriate remedy may be imposed under Section 502(a)(3), the Supreme Court
vacated the judgment and remanded, instructing the District Court that whether
a showing of detrimental reliance must be proved will depend on the specific
remedy but that, "to obtain relief by surcharge for violations of [ERISA's
disclosure provisions], a plan participant or beneficiary must show that the
violation injured him or her. But to do so, he or she need only show harm
Justice Stephen G. Breyer wrote the opinion, in which
Chief Justice John G. Roberts and Justices Anthony M. Kennedy, Ruth Bader
Ginsburg, Samuel Anthony Alito and Elena Kagan joined. Justice Sonia
Sotomayor took no part in the consideration or decision of the case.
Justice Antonin Scalia filed an opinion concurring in the
judgment, in which Justice Clarence Thomas joined.
[Editor's Note: The opinion is available at www.mealeysonline.com or
by calling the Customer Support Department at 1-800-833-9844. Document
#54-110511-039Z. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]
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