On May 16, the Supreme Court issued an opinion in Cigna Corp. v. Amara, No. 09-804, holding that, although ERISA § 502(a)(1)(B) does not give a district court authority to reform a pension plan, § 502(a)(3) does authorize "appropriate equitable relief," and the standard of harm to be applied depends on the equitable theory under which a district court provides relief.
In 1998, CIGNA Corporation changed its basic pension plan for employees from a defined-benefit plan to a cash-balance plan calculated on the basis of an annual defined contribution as increased by compound interest. In November 1997, CIGNA sent its employees a newsletter announcing that it intended to adopt a new plan. The newsletter further explained that the old plan would end on December 31, 1997, that CIGNA would introduce and describe the new plan during 1998, and that the new plan would apply retroactively to January 1, 1998. CIGNA did not announce the complex details of the new plan until eleven months later.
The instant case was filed on behalf of a class of approximately 25,000 beneficiaries of the CIGNA Pension Plan, challenging CIGNA's adoption of the new plan. The class members claimed that CIGNA had failed to give them proper notice of the changes to their benefits, particularly because the new plan provided them with less generous benefits in certain respects. After a bench trial, the District Court agreed that the disclosures made by CIGNA violated its obligations under ERISA §§ 204(h), 102(a) & 104(b), and found that the notice failures caused the employees "likely harm." The District Court then proceeded to reform CIGNA's new pension plan and required CIGNA to pay benefits according to the reformed terms of the plan. The District Court found legal authority to modify the terms of the plan under ERISA § 502(a)(1)(B) and, though it considered whether ERISA § 502(a)(3) also might provide authority for the relief it awarded, it did not answer that question. The Court of Appeals for the Second Circuit affirmed the District Court's decision in all respects.
The Supreme Court reversed and remanded. The specific issue on which the Court granted certiorari was whether the District Court applied the correct legal standard, namely a "likely harm" standard, in determining that CIGNA's notice violations caused its employees sufficient injury to warrant legal relief. In CIGNA's briefing, however, it raised the preliminary question of whether § 502(a)(1)(B) authorizes the relief entered by the District Court. The Court answered this preliminary question in the negative. Specifically, the Court noted that § 502(a)(1)(B) grants a participant the right to bring a civil action to recover benefits due under the terms of his plan, but nowhere does it authorize a court to change the terms of a plan. The Court went on to consider the question left unanswered by the District Court: whether § 502(a)(3) authorizes entry of the relief awarded by the District Court. This question, the Court answered in the affirmative. Section 502(a)(3) allows a participant, beneficiary, or fiduciary to obtain other "appropriate equitable relief" to redress violations of the relevant parts of ERISA or the terms of the plan.
The Court went on to explain that the relief awarded by the District Court could be equated to a number of forms of relief that, traditionally speaking, were typically available in equity. The District Court's orders could be regarded as: reformation of the terms of the plan in order to remedy the false or misleading information provided by CIGNA; estoppel; injunctive relief; or a surcharge. Depending on which form of relief the District Court intended to award, the standards to be applied might vary, and the Court outlined several factors the District Court might consider in awarding appropriate equitable relief. Because it was unclear what form of equitable relief had been awarded, however, the Court vacated the District Court's order and remanded the case for the District Court to decide whether it was appropriate to exercise its discretion under § 502(a)(3) to award appropriate equitable relief, and what standard for determining harm it would apply.
Justice Breyer delivered the opinion of the Court, in which Chief Justice Roberts and Justices Kennedy, Ginsburg, Alito, and Kagan joined. Justice Scalia filed an opinion concurring in the judgment, in which Justice Thomas joined. Justice Sotomayor took no part in the consideration or decision of the case.