CIGNA Corp. v. Amara - 563 U.S. 421, 131 S. Ct. 1866 (2011)

Rule:

29 U.S.C.S. § 1132(a)(3) allows an employee benefit plan participant, beneficiary, or fiduciary to obtain other appropriate equitable relief to redress violations of parts of the Employee Retirement Income Security Act of 1974 or the terms of the plan.

Facts:

Until 1998, petitioner CIGNA Corporation's pension plan provided a retiring employee with an annuity based on preretirement salary and length of service. Its new plan replaced that annuity with a cash balance based on a defined annual contribution from CIGNA, increased by compound interest. The new plan translated already-earned benefits under the old plan into an opening amount in the cash balance account. Respondents, on behalf of beneficiaries of the CIGNA Pension Plan (also a petitioner), challenged the new plan's adoption, claiming, as relevant here, that CIGNA's notice of the changes was improper, particularly because the new plan in certain respects provided them with less generous benefits. The District Court found that CIGNA's disclosures violated its obligations under §§ 102(a), 104(b), and 204(h) of the Employee Retirement Income Security Act of 1974 ("ERISA"). In determining relief, it found that CIGNA's notice defects had caused the employees “likely harm.” It then reformed the new plan and ordered CIGNA to pay benefits accordingly, finding its authority in ERISA § 502(a)(1)(B), which authorizes a plan “participant or beneficiary” to bring a “civil action” to “recover benefits due . . . under the terms of his plan.” The Second Circuit affirmed. CIGNA contended that the district court lacked authority to reform the plan terms under 29 U.S.C.S. § 1132(a)(1)(B), which authorized the participants to bring a civil action under the Employee Retirement Income Security Act of 1974 to recover plan benefits.

Issue:

Did the district court lack authority to reform the plan terms under 29 U.S.C.S. § 1132(a)(1)(B)?

Answer:

Yes

Conclusion:

The U.S. Supreme Court unanimously held that, while § 1132(a)(1)(B) did not authorize reformation of the plan, § 1132(a)(3) authorized equitable relief which reformation essentially provided. Section 1132(a)(1)(B) provided only for enforcement of the plans terms and not for changing the terms, and the misleading disclosures by CIGNA were not enforceable plan terms. However, reformation of the plan was consistent with the authorization in § 1132(a)(3) to provide appropriate equitable relief, the district court's injunctions provided relief which was traditionally considered equitable, and the remaining relief granted by the district court could be supported by equitable principles of contract reformation, equitable estoppel, and monetary relief for a trustee's breach of duty. It thus remained to determine the applicable equitable principles and to apply the standards applicable to such principles.