<nobr>Jun 3, 2008</nobr>

Solicitor General Recommends High Court Review of ERISA Remedies Case

U.S. Solicitor General Paul Clement on May 23 urged the U.S. Supreme Court to grant certiorari in Amschwand v. Spherion Corp. in order to address "equitable relief" under ERISA Section 502(a)(3).

The Supreme Court in March invited the Solicitor General to file a brief on whether the federal government believes that ERISA allows for "make whole" relief equivalent to the life insurance benefits a plan beneficiary would have received if it were not for an alleged plan fiduciary breach. The U.S. Court of Appeals for the Fifth Circuit ruled that a life insurance plan beneficiary could not recover the equivalent of benefits she would have received following her husband's death if her husband's employer had not purportedly breached its fiduciary duties by mistakenly telling the participant that he was covered under the plan.

The Solicitor General argues that the court of appeals erroneously held that Section 502(a)(3) does not authorize a suit by a plan beneficiary against a plan fiduciary for monetary relief equal to the insurance benefits that the beneficiary would have received. In urging the Court to grant certiorari, Clements said that it is important to eliminate the confusion among the lower courts on whether monetary redress against a breaching fiduciary is "equitable relief," and to ensure that plan participants and beneficiaries are not deprived of the protections provided by ERISA.

Clements says that this kind of suit is "directly analogous" to an action against a breaching trustee for monetary redress of a breach of trust, which was typically available in courts of equity in the days of the divided bench. "If those suits are not available, numerous participants and beneficiaries who have suffered serious economic injuries because of fiduciary breaches will be left without any meaningful remedy, a result Congress could not have intended when it enacted ERISA," the Solicitor General contends.

There is no doubt that this is a case to keep your eye on. The Solicitor General's recommendation that the Supreme Court grant certiorari would appear to increase the chances that the case will be heard. If the Court does consider the case and decides that make-whole relief constitutes equitable relief, employers can expect another round of ERISA litigation.

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Websites:

Solicitor General's Brief

Fifth Circuit Decision

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