US Airways v. McCutchen - Oral Argument - November 27, 2012

US Airways v. McCutchen

Media for US Airways v. McCutchen

Audio Transcription for Opinion Announcement - April 16, 2013 in US Airways v. McCutchen

Audio Transcription for Oral Argument - November 27, 2012 in US Airways v. McCutchen

John G. Roberts, Jr.:

We'll hear argument this morning in Case 11-1285, US Airways v. McCutchen.

Mr. Katyal.

Neal Kumar Katyal:

Thank you, Mr. Chief Justice, and may it please the Court:

ERISA permits plan fiduciaries to seek appropriate equitable relief to enforce the terms of the plan.

Six years ago, this Court, in Sereboff, concluded that reimbursement actions by ERISA plans, such as the one at issue here, seek equitable liens by agreement.

And because the plan's claim here is one for an equitable lien by agreement, that means one person with equitable defenses, those derived from unjustment enrichment, offer no help to Respondents.

Sonia Sotomayor:

Mr. Katyal, if you go to equity, why aren't you bound by equity?

Neal Kumar Katyal:

We certainly are, Justice Sotomayor, bound by equity.

Our contention is not that once you say the magic words “ equitable lien by agreement ”, that somehow transforms into a “ we win ” as plaintiffs.

Sonia Sotomayor:

Well, but that's exactly what your bottom line is, which is, you have someone else do the work for you, and you don't pay them.

Neal Kumar Katyal:

Quite to the contrary, Justice Sotomayor, our position is that the rules of equity bind equitable liens by agreement just as they bind anything else.

We're not trying to say that the equity doesn't apply--

Sonia Sotomayor:

So why does your lien have priority to the attorney's lien that is normally created at the commencement of the litigation?

Why is the attorney bound by the agreement you signed with the beneficiary?

Neal Kumar Katyal:

--So, our position is that the attorney doesn't -- there is no lien created with the attorney; that once Mr. Sereboff signed -- entered into an agreement with US Air, that agreement said -- provided for 100 percent reimbursement rights.

And there is no -- essentially, what happened is Mr. Sereboff -- Mr. -- Mr. McCutchen double-promised his money.

He promised it first to -- first to the US Airways plan, and then he promised it to -- to his attorneys.

And that's a problem that he might have with his attorneys, although, as I understand the facts here, maybe that debt has been forgiven, but it is not something that creates an independent lien on the money that's at issue here.

That is, the rules in equity say that it is the agreement that controls -- when we're talking about an un -- when we're talking about an equitable lien by agreement--

Ruth Bader Ginsburg:

With Sereboff, that you -- you referred to, that -- that certainly describes the lien you rely on, but there's a footnote toward the end that leaves open the make-whole doctrine and, I assume, also the common fund doctrine.

So -- so it's -- it's an open question.

Neal Kumar Katyal:

--Right.

So our position is not that Sereboff's letter controls this case.

We do think the reasoning of Sereboff essentially does decide the question, because what Sereboff said, Justice Ginsburg -- and this is at page 368 of the opinion in the text -- it said -- the Sereboffs had argued the make-whole doctrine.

And the -- in response, what this Court said is, quote,

"Mid Atlantic's claim is not considered equitable because it is a subrogation claim. "

"Mid Atlantic's action qualifies as an equitable remedy because it is indistinguishable from an action to enforce an equitable lien established by agreement of the sort epitomized by our decision in Barnes. "

Mid Atlantic need not characterize this action as a freestanding action for equitable subrogation.

Accordingly, the parcel of equitable defenses the Sereboffs claim accompany any such action are beside the point.

“ Beside the point ”.