RESPONDENT: Janice C. Amara, et al.
LOCATION: CIGNA Headquarters
DOCKET NO.: 09-804
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Second Circuit
CITATION: 563 US 421 (2011)
GRANTED: Jun 28, 2010
ARGUED: Nov 30, 2010
DECIDED: May 16, 2011
Edwin S. Kneedler - Deputy Solicitor General, Department of Justice, for the United States as amicus curiae, supporting the respondents
Stephen R. Bruce - for the respondents
Theodore B. Olson - for the petitioners
Facts of the case
Under the Employee Retirement Income Security Act (ERISA), plan administrators must provide all plan participants with a "summary plan description" (SPD), as well as a "summary of material modifications" when material changes are made to the plan. After CIGNA converted its traditional defined benefit pension plan to a cash balance plan, it issued a summary plan description to plan participants. In 2001, Janice Amara, one of the participants, filed a class-action lawsuit, claiming that CIGNA failed to comply with ERISA's notice requirements and SPD provisions. The U.S. District Court for the District Connecticut found for Amara, and the U.S. Court of Appeals for the Second Circuit affirmed, finding that the SPD misrepresented the terms of the plan itself.
Did the district court have authority under Section 502(a)(1)(B) of ERISA to reform CIGNA's pension plan?
Media for CIGNA v. AmaraAudio Transcription for Oral Argument - November 30, 2010 in CIGNA v. Amara
Audio Transcription for Opinion Announcement - May 16, 2011 in CIGNA v. Amara
Stephen G. Breyer:
This is a ERISA pension case which means it's pretty complicated.
But in the case, petitioner was a company called CIGNA runs a pension plan for its employees and the plan is governed by ERISA, the Employment Retirement Security Act of 18 -- 1974.
Now under ERISA, participants in a pension plan are entitled to get periodic summaries of their benefits and obligations.
In 1997, CIGNA decided to change its pension plan and it sent notices to the plan participants but the notices omitted certain key details about reductions of the rate that employees would accrue benefits in the future.
And in particular, it -- they -- CIGNA did not tell its employees that -- because of a mathematical core of a certain kind, the way in which the -- they were going to calculate those benefits.
Those employees could work many years without accruing any additional benefits.
After the bench trial, the District Court found that CIGNA's disclosures violated ERISA.
So, there's a violation, but what's the remedy?
CIGNA claimed that there is no remedy unless the participants proved that they relied upon the misstatements to their detriment.
The District Court found there could be a remedy.
If the false disclosures resulted in likely harm to the plan participants and it said, "Well, the participants here can get -- recover the benefits because -- under a remedy provision, 502(a)(1)(B)", which I'm going to call remedy prong one.
That prong one permits the participant, “to recover benefits due to him under the terms of the plan.”
So, the Second Circuit affirmed to get the remedy.
But we granted cert to determine what standard of harm the participants have to satisfy.
Is it as the District Court thought likely harm?
Or is it as CIGNA said reliance to ones detriment?
But we first found that we have to consider whether the District Court should have treated the summary benefit descriptions under remedy prong one.
Was this whole thing benefits due under the terms of the plan?
Well, so now what do we hold?
Well, in a sense we hold that that prong one, benefits due under the plan in this case is the wrong prong.
The District Court's remedy consisted of two steps.
The first step was to reform the terms of the plan to comport with the summary documents.
The second was to make CIGNA enforce the plan as it was rewritten.
Now that second step is certainly part of enforcing the plan benefits but we don't see how changing the plan can be part of -- in giving them the benefits due under the plan.
So where does the District Court get the authority to do that?
Well, the failure of the District Court to bring us remedy within prong one does not mean that the participants are necessarily out of luck.
That's because there's another remedial provision, 502(a)(3) called prong two and that permits the participants to obtain, “other appropriate equitable relief to redress ERISA violations.”
The District Court thought that that relief was unavailable but we disagree.
Under one of our earlier cases called Mertens, the phrase appropriate equitable relief refers to those categories of relief that before the merger of law and equity were typically available in equity.
And so we looked it up and we found that there are at least three remedies here from equity, consistent with what the District Court did.