Laurent v. PricewaterhouseCoopers LLP

18‐487‐cv
Laurent v. PricewaterhouseCoopers LLP
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term 2019
(Submitted: October 23, 2019 Decided: December 23, 2019)
Docket No. 18‐487‐cv
TIMOTHY D. LAURENT AND SMEETA SHARON, on behalf of themselves and all
others similarly situated,
Plaintiffs‐Appellants,
v.
PRICEWATERHOUSECOOPERS LLP,
THE RETIREMENT BENEFIT ACCUMULATION
PLAN FOR EMPLOYEES OF PRICEWATERHOUSECOOPERS LLP,
THE ADMINISTRATIVE COMMITTEE TO THE RETIREMENT BENEFIT
ACCUMULATION PLAN FOR EMPLOYEES OF PRICEWATERHOUSECOOPERS LLP,
Defendants‐Appellees. *
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
* The Clerk of the Court is respectfully directed to amend the official caption to
conform to the above.
Before:
KATZMANN, Chief Judge, and CHIN and DRONEY, Circuit Judges.
Appeal from a judgment of the United States District Court for the
Southern District of New York (Oetken, J.) dismissing plaintiffs‐appellantsʹ
claims alleging that the terms of their employee retirement benefits plan violated
the Employment Retirement Income Security Act, 29 U.S.C. § 1001 et seq. In a
prior appeal, we affirmed the district courtʹs holding that the plan violated the
statute, and we remanded for the district court to consider the appropriate relief.
On remand, however, defendants‐appellees moved for judgment on the
pleadings pursuant to Federal Rule of Civil Procedure 12(c), contending that the
relief requested by plaintiffs‐appellants ‐‐ reformation of the plan and the
recalculation of benefits in accordance with the reformed plan ‐‐ was unavailable
as a matter of law. The district court agreed.
VACATED AND REMANDED.
JULIA PENNY CLARK, Bredhoff & Kaiser, PLLC,
Washington, DC (Eli Gottesdiener, Gottesdiener
Law Firm, PLLC, Brooklyn, New York, on the
brief), for Plaintiffs‐Appellants.
‐2‐
DANIEL J. THOMASCH (Richard W. Mark, Amer S.
Ahmed, and Alejandro A. Herrera, on the brief),
Gibson, Dunn & Crutcher LLP, New York, New
York, for Defendants‐Appellees.
BRENDAN BALLARD, Trial Attorney (Kate OʹScannlain,
Solicitor of Labor, G. William Scott, Assistant
Solicitor for Plan Benefits Security, and Thomas
Tso, Counsel for Appellate and Special Litigation,
on the brief), U.S. Department of Labor,
Washington, D.C., for Amicus Curiae U.S. Secretary
of Labor.
Brian T. Burgess, William M. Jay, Jaime A. Santos, James
O. Fleckner, and Alison V. Douglass, Goodwin
Procter LLP, Washington, D.C. and Boston,
Massachusetts, and Steven P. Lehotsky, U.S.
Chamber Litigation Center, Washington, D.C., for
Amicus Curiae Chamber of Commerce of the United
States of America, the American Benefits Council, the
Business Roundtable, and the ERISA Industry
Committee.
___________
CHIN, Circuit Judge:
Plaintiffs‐appellants Timothy D. Laurent and Smeeta Sharon
(ʺPlaintiffsʺ), on behalf of themselves and similarly situated former employees of
defendant‐appellee PricewaterhouseCoopers LLP (ʺPwCʺ), brought this action in
2006 alleging that their retirement plan ‐‐ the ʺRetirement Benefit Accumulation
‐3‐
Plan for Employees of PricewaterhouseCoopers LLPʺ (the ʺPlanʺ) ‐‐ violated the
Employee Retirement Income Security Act (ʺERISAʺ), 29 U.S.C. § 1001 et seq. In a
series of decisions, three different district judges (Mukasey, Daniels, and Oetken,
JJ.) held that the Plan violated ERISA. See Laurent v. PricewaterhouseCoopers LLP,
794 F.3d 272, 278 (2d Cir. 2015) (ʺLaurent Vʺ). In 2015, on PwCʹs interlocutory
appeal, we agreed, holding that ʺthe [P]lanʹs definition of ʹnormal retirement ageʹ
as five years of service violates [ERISA] . . . because it bears no plausible relation
to ʹnormal retirement.ʹʺ Id. at 273. Because the district court had not addressed
ʺthe appropriate relief,ʺ we remanded for ʺthe district court to consider that
question in the first instance.ʺ Id. at 289.
On remand, however, PwC moved for judgment on the pleadings,
arguing that ERISA did not authorize the relief sought by Plaintiffs ‐‐
reformation of the Plan to bring it into compliance with ERISA and the
recalculation of benefits in accordance with the reformed Plan. The district court
agreed, holding that ERISA did not authorize the recalculation of benefits in the
circumstances here, and dismissed the Second Amended Complaint (the ʺSACʺ)
with prejudice on that basis, notwithstanding the violation of ERISA.
‐4‐
Plaintiffs appeal, contending that the district court erred in granting
PwCʹs motion because ERISA does in fact authorize the relief they sought. We
agree, and for the reasons detailed below, we VACATE the judgment and
REMAND for further proceedings consistent with this Opinion.1
BACKGROUND
I. The Plan
The Plan is a cash balance plan subject to regulation under both
ERISA and the Internal Revenue Code. In 1996, the Internal Revenue Service
announced its position that where a cash balance plan permits participants to
take benefits before normal retirement age (ʺNRAʺ) in the form of a lump‐sum
and promises future credits, the plan must: (1) project the participantʹs account
balance out to the participantʹs NRA and add an amount reflecting the value of
the future interest credits that would have accrued had the account balance
remained in the plan until that future date; and (2) discount that projected total
back to the distribution date using the planʹs discount rate, as limited by a
statutory maximum. I.R.S. Notice 96‐8, 1996‐1 C.B. 359. This calculation is
1 Plaintiffs also argue on appeal that the district court exceeded the scope of this Courtʹs
mandate in reaching PwCʹs argument that no relief was available under ERISA. Because we
hold that Plaintiffs prevail on the merits, we do not reach the issue of the scope of the mandate.
‐5‐
known as the whipsaw calculation. See Esden v. Bank of Bos., 229 F.3d 154, 159 (2d
Cir. 2000); see also Laurent v. PricewaterhouseCoopers LLP, 448 F. Supp. 2d 537, 544
(S.D.N.Y. 2006) (ʺLaurent Iʺ) (ʺIt is the forward projecting and discounting back
that accounts for the whipsaw terminology.ʺ).2 ʺʹ[W]hipsaw paymentsʹ . . .
guarantee that plan participants who take distributions in the form of a lump
sum when they terminate employment will receive the actuarial equivalent of the
value of their accounts at retirement.ʺ Laurent V, 794 F.3d at 273.
The Plan provides that when a vested employee leaves employment,
she has the option of receiving (1) an annuity commencing at NRA or (2) an
immediate lump‐sum payment. Id. at 275. The present value of the lump‐sum
payment must be worth at least as much as the value of the stream of income
from the annuity commencing at normal retirement age. Id.; see Esden, 229 F.3d
at 163. In other words, if a plan offers participants a lump‐sum distribution, it
ʺcannot deprive the participants of the value that would accrue if the participants
waited and took their distributions as an annuity at normal retirement age.ʺ
2 ERISA was amended in 2006 by the Pension Protection Act of 2006, Pub. L. No. 109‐280,
§ 701(a)(2), 120 Stat. 780 (2006) (the ʺPPAʺ), which eliminated the whipsaw calculation
requirement for participants in cash balance benefit plans who elect lump‐sum distributions.
The parties agree, however, that the PPA does not apply to this case because the conduct at
issue pre‐dates the PPA.
‐6‐
Laurent V, 794 F.3d at 275. The whipsaw calculation is used to determine the
difference between the ʺvalue of a cash balance plan account at any given time
and the value of the account as an annuity payable at [NRA].ʺ Id.
Here, as the district court and this Court have held, the Plan violates
ERISA in at least one respect. It defines ʺNormal Retirement Ageʺ as ʺ[t]he earlier
of the date a Participant attains age 65 or completes five (5) Years of Service.ʺ J.
Appʹx at 1028 (emphasis added). As we concluded in Laurent V, ERISA does not
give an employer ʺboundless discretionʺ to set any period of time as the NRA;
rather, a planʹs NRA ʺmust have some reasonable relationship to the age at
which participants would normally retire.ʺ 794 F.3d at 281. We held that five
years of service was not a ʺnormal retirement age.ʺ Id. at 289.
Moreover, as PwC does not dispute for the purposes of this appeal,
the Planʹs use of the 30‐year Treasury rate as the projection rate is improper
because it understates future interest credits. See Laurent v.
PricewaterhouseCoopers LLP, No. 06‐CV‐2280 (JPO), 2017 WL 3142067, at *4 & n.5
(S.D.N.Y. July 24, 2017) (ʺLaurent VIʺ); ERISA § 204(c)(3). Indeed, the Internal
Revenue Service concluded that the Plan ʺcredits the accounts using one interest
‐7‐
rate structureʺ ‐‐ based on equity rates of return ‐‐ ʺand projects them to Normal
Retirement Age using anotherʺ ‐‐ the 30‐year Treasury rate. J. Appʹx at 1195.
II. Procedural History
This case has a long procedural history dating back to 2006.
Relevant here is that in 2013, PwC moved to dismiss the SAC, arguing, inter alia,
that the Planʹs ʺfive years of serviceʺ NRA was valid as a matter of law. In a
decision issued August 8, 2013, the district court rejected PwCʹs argument and
held that the Planʹs NRA violated ERISA because ʺfive years of serviceʺ is not an
ʺageʺ under ERISA. See Laurent v. PriceWaterhouseCoopers LLP, 963 F. Supp. 2d
310, 321 (S.D.N.Y. 2013) (ʺLaurent IVʺ).
Following Laurent IV, PwC petitioned for interlocutory appeal and
plaintiffs moved to certify the class. On January 22, 2014, the district court
certified Laurent IV for interlocutory appeal and on April 22, 2014, this Court
granted the petition. On June 26, 2014, while the interlocutory appeal was
pending, the district court granted Plaintiffsʹ motion for class certification on the
counts asserting ʺwhipsawʺ claims seeking lump‐sum distributions equal to the
annuity payable at NRA.
‐8‐
In an opinion issued on July 23, 2015, this Court affirmed the district
courtʹs order denying PwCʹs motion to dismiss. See Laurent V, 794 F.3d at 273.
Although we disagreed with the district courtʹs reasoning, we agreed that the
Planʹs method of calculating the NRA was unlawful because it ʺbears no
plausible relation to ʹnormal retirement,ʹ and is therefore inconsistent with the
plain meaning of the statute,ʺ id., and affirmed on that ground alone. We then
remanded for the district court to determine the proper remedy. Id. at 289. In a
footnote, we also noted:
Since ERISA grants a private cause of action to enforce,
inter alia, the terms of the plan, 29 U.S.C. § 1132(a)(3),
PwC may be compelled to ʹact in accordance with the
documents and instruments governing the plan insofar
as they accord with the statute.ʹ
Id. at 289 n.19 (quoting US Airways, Inc. v. McCutchen, 569 U.S. 88, 100 (2013)).
On remand, following seven months of additional discovery, PwC
moved for judgment on the pleadings pursuant to Federal Rule of Civil
Procedure 12(c), arguing that Plaintiffs were not entitled to relief for their ERISA
claims. Plaintiffs opposed the motion as untimely and a violation of the mandate
rule, see, e.g., United States v. Ben Zvi, 242 F.3d 89, 95 (2d Cir. 2001), and cross‐
moved for summary judgment pursuant to Rule 56.
‐9‐
The district court granted PwCʹs motion and denied Plaintiffsʹ
motion. Laurent VI, 2017 WL 3142067 at *1. The district court held that PwCʹs
motion was not untimely and that its arguments had not been waived, and it
held further that the Supreme Courtʹs holding in CIGNA Corp. v. Amara, 563 U.S.
421, 436 (2011) (ʺAmara IIIʺ), precluded it from reforming the Plan under ERISA
§ 502(a)(1)(B). Laurent VI, 2017 WL 3142067 at *4‐7. The district court also
rejected Plaintiffsʹ argument that they could obtain an equitable remedy under §
502(a)(3). Laurent VI, 2017 WL 3142067 at *7‐9.
First, the district court concluded that there was no breach of
fiduciary duty because the Plan administrator was not acting in his fiduciary
capacity when he distributed benefits in accordance with the Plan. Id. at *8.
Second, the district court held that equitable reformation of the Plan was not
available here because there was no allegation of fraud or mutual mistake.
Finally, the district court found unpersuasive Plaintiffsʹ ʺattempt to restyleʺ the
requested relief as seeking ʺan accounting for profit, surcharge, or unjust
enrichment, or a constructive trust.ʺ Id. at *8‐9. Because Plaintiffsʹ requested
remedy, in its view, was ʺat bottom . . . a legal claim for money damages,ʺ id. at
‐ 10 ‐
*9, the district court concluded that it was precluded under Mertens v. Hewitt
Assocs., 508 U.S. 248, 256 (2002).
Plaintiffs subsequently moved for reconsideration, and then for
clarification of the district courtʹs order pursuant to Federal Rules of Civil
Procedure 60(a) and (b). The district court denied both motions.
This appeal followed.
DISCUSSION
Plaintiffs argue on appeal that the following two‐step procedure is a
remedy authorized by ERISA:
1. An order . . . compelling Defendants to bring the terms and
administration of the Plan into compliance with ERISA . . . ;
2. An order requiring Defendants to re‐calculate the benefits
accrued and/or due under the terms of the Plan in accordance with
the requirements of ERISA, and for the Plan to pay these amounts,
plus interest, to or on behalf of all Class . . . members who received
less in benefits or benefit accruals than the amount to which they are
entitled.
Appellantʹs Br. at 9 (quoting Compl., Prayer for Relief ¶¶ E & F). Plaintiffs and
the Secretary of Labor (the ʺSecretaryʺ), as amicus curiae, contend that both Steps
1 and 2 are authorized by § 502(a)(1)(B) of ERISA. In the alternative, they
‐ 11 ‐
contend that Step 1 is authorized under § 502(a)(3) and that Step 2 is authorized
under § 502(a)(1)(B).3
I. Standard of Review
ʺWe review a judgment under Federal Rule of Civil Procedure 12(c)
de novo,ʺ accepting as true the allegations of the nonmovant and drawing all
reasonable inferences in its favor. Graziano v. Pataki, 689 F.3d 110, 114 (2d Cir.
2012). Where a judgment is premised on a question of statutory interpretation,
we similarly review that interpretation de novo. City of Syracuse v. Onondaga Cty.,
464 F.3d 297, 310 (2d Cir. 2006).
II. ERISAʹs Remedial Provisions
The civil enforcement provision of ERISA at issue in this case
provides, in relevant part:
(a) Persons empowered to bring a civil action
A civil action may be brought‐‐
3 PwC also contends that Plaintiffs forfeited this ʺtwo‐stepʺ argument by failing to raise it
below. But Plaintiffs did ask for their two‐step remedy, albeit in their reply in support of their
motion for summary judgment. The district court never reached the argument not because it
deemed it forfeited ‐‐ indeed it had discretion to consider it, see Ruggiero v. Warner‐Lambert Co.,
424 F.3d 249, 252 (2d Cir. 2005) ‐‐ but because it determined PwC was entitled to judgment on
the pleadings and consequently did not reach Plaintiffsʹ request on the merits. In any event, we
are ʺnot limited to the particular legal theories advanced by the parties but rather retain[] the
independent power to identify and apply the proper construction of governing law.ʺ McDonald
v. Pension Plan of NYSA‐ILA Pension Tr. Fund, 320 F.3d 151, 160 (2d Cir. 2003) (quoting Kamen v.
Kemper Fin. Servs., 500 U.S. 90, 99 (1991)).
‐ 12 ‐
(1) by a participant or beneficiary‐‐
(A) for the relief provided for in subsection (c) of this
section, or
(B) to recover benefits due to him under the terms of his plan,
to enforce his rights under the terms of the plan, or to clarify
his rights to future benefits under the terms of the plan;
(2) by the Secretary, or by a participant, beneficiary or
fiduciary for appropriate relief under section 1109 of this title;
(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or
practice which violates any provision of this subchapter or the terms
of the plan, or (B) to obtain other appropriate equitable relief (i) to
redress such violations or (ii) to enforce any provisions of this
subchapter or the terms of the plan [] . . . .
29 U.S.C. § 1132(a) (emphasis added).
A. Section 502(a)(1)(B)
The Supreme Court considered the limits of ERISA § 502(a)(1)(B) in
Amara III. Amara III involved a pension plan for CIGNA employees that,
although compliant with ERISA, differed from the summary plan description
previously provided to the planʹs participants. 563 U.S. at 428. After holding
that the discrepancy violated ERISAʹs notice requirements, the district court,
relying on § 502(a)(1)(B), reformed CIGNAʹs existing pension plan to match the
terms stated in the summary plan description. Id. at 434. CIGNA appealed and
the Supreme Court vacated, holding that § 502(a)(1)(B) did not authorize plan
‐ 13 ‐
reformation in this context. Id. at 435‐36. In reaching its holding, the Supreme
Court observed:
Where does § 502(a)(1)(B) grant a court the power to
change the terms of the plan as they previously existed?
The statutory language speaks of ʹenforc[ing]ʹ the ʹterms
of the plan,ʹ not of changing them. The provision
allows a court to look outside the planʹs written
language in deciding what those terms are, i.e., what the
language means. But we have found nothing
suggesting that the provision authorizes a court to alter
those terms, at least not in present circumstances, where
that change, akin to the reform of a contract, seems less
like the simple enforcement of a contract as written and
more like an equitable remedy.
Id. (citations and emphases omitted). Because modifying the CIGNA planʹs
terms to match the summary plan description went beyond ʺsimple
enforcement,ʺ the Court held it was not authorized by § 502(a)(1)(B). Id. at 436.
Following Amara III, courts of appeals have construed § 502(a)(1)(B)
as limited to authorizing the enforcement of pension plans as written. See
Soehnlen v. Fleet Owners Ins. Fund, 844 F.3d 576, 583 n.2 (6th Cir. 2016); Singletary
v. United Parcel Serv., Inc., 828 F.3d 342, 349 (5th Cir. 2016); Pender v. Bank of
America Corp., 788 F.3d 354, 362 (4th Cir. 2015). This Court has done so as well in
a non‐precedential summary order. See Gill v. Bausch & Lomb Supplemental Ret.
Income Plan I, 594 F. Appʹx 696, 699 (2d Cir. 2014) (summary order) (ʺAmara [III]
‐ 14 ‐
instructs a district court to limit itself to ʹthe simple enforcement of a contract as
written.ʹʺ).
The Seventh Circuit, by contrast, has affirmed two awards of
whipsaw benefits under § 502(a) following Amara III. See Ruppert v. Alliant
Energy Cash Balance Pension Plan, 2010 WL 5464196 (W.D. Wis. Dec. 29, 2010),
affʹd, 726 F.3d 936 (7th Cir. 2013); Thompson v. Ret. Plan for Emps. of S.C. Johnson &
Sons, Inc., 716 F. Supp. 2d 752 (E.D. Wis. 2010), affʹd in relevant part, 651 F.3d 600
(7th Cir. 2011). Neither affirmance, however, cites to Amara III and in both cases,
judgment had been entered in the plaintiffsʹ favor in the district court before
issuance of the Amara III decision.
B. Section 502(a)(3)
ERISA § 502(a)(3) allows plan participants, beneficiaries, or
fiduciaries to bring civil actions to enjoin any act or practice that violates ERISA
or to obtain other ʺappropriate equitable reliefʺ to redress the violation. 29 U.S.C.
§ 1132(a)(3); see Mertens, 508 U.S. at 255. The Supreme Court has interpreted the
term ʺappropriate equitable reliefʺ as referring to ʺcategories of relief that,
traditionally speaking (i.e., prior to the merger of law and equity) were typically
available in equity.ʺ Amara III, 563 U.S. at 439 (internal quotation marks
omitted). Because ʺ[a] claim for money due and owing under a contract is
‐ 15 ‐
quintessentially an action at law,ʺ Great‐West Life & Annuity Ins. Co. v. Knudson,
534 U.S. 204, 210 (2002) (internal quotation marks omitted), money damage
awards are not available under § 502(a)(3). See id.; Mertens, 508 U.S. at 255.
The Supreme Court also discussed § 502(a)(3) in Amara III. After
concluding that the relevant pension plan could not be reformed under
§ 502(a)(1)(B), the Supreme Court considered whether a remedy for the Amara
plaintiffs could instead be found in § 502(a)(3). 563 U.S. at 438. There, the
plaintiffs had argued that reformation was available as an equitable remedy for
fraud. The issue was whether this remedy required a showing of detrimental
reliance. In holding it did not, the Court hinted that courts should construe
remedies in equity available under § 502(a)(3) broadly, stating:
we conclude that the standard of prejudice must be
borrowed from equitable principles, as modified by the
obligations and injuries identified by ERISA itself.
Information‐related circumstances, violations, and
injuries are potentially too various in nature to insist
that harm must always meet that more vigorous
ʺdetrimental harmʺ standard when equity imposed no
such strict requirement.
Id. at 444‐45 (emphasis added).
‐ 16 ‐
C. Application
Although we have previously affirmed the entry of a two‐step
reformation and enforcement remedy under ERISA, see Amara v. CIGNA Corp.,
775 F.3d 510, 532 (2d Cir. 2014) (ʺAmara Vʺ), we have not yet had occasion to
consider the availability of reformation to plaintiffs in circumstances such as
these, where the written terms of a pension plan indisputably violate ERISA, but
there is no allegation that the violation stems from traditional fraud, mistake, or
otherwise inequitable conduct. We nonetheless conclude that reformation of the
Plan was available here under ERISA § 502(a)(3), and that, consistent with our
precedent, the district court was then authorized to enforce the reformed Plan as
a second step under § 502(a)(1)(B).
1. Reformation under § 502(a)(3)
ERISA authorizes reformation of the Plan because, by its plain
language, § 502(a)(3) authorizes participants and beneficiaries to ʺobtain . . .
equitable relief (i) to redress such violations or (ii) to enforce any provisions of
this subchapter or the terms of the plan.ʺ 29 U.S.C. § 1132(a)(3). Here, because
reformation is an equitable remedy and the Plan violated a ʺprovision[] of [the]
‐ 17 ‐
subchapterʺ ‐‐ specifically, ERISA § 3(24) ‐‐ we conclude that § 502(a)(3)
authorizes the district court to reform the Plan. Id.
The district court reached a contrary conclusion because it
interpreted Mertens and its progeny as limiting the availability of equitable
remedies under § 502(a)(3) to the specific circumstances under which those
remedies were typically available in equity courts. Laurent VI, 2017 WL 3142067,
at *8 (ʺPlaintiffs do not allege mistake, fraud, or inequitable conduct here. . . .
Plaintiffs are therefore not entitled to relief in the form of judicial reformation
under ERISA § 502(a)(3).ʺ).4 But neither the statute nor Mertens imposes this
added requirement. Instead, § 502(a)(3) tells us that equitable remedies are
available to ʺredress violations ofʺ or ʺto enforce any provisions ofʺ ERISA
subchapter I. And Mertens holds only that remedies under § 502(a)(3) are limited
to ʺthose categories of relief that were typically available in equity (such as
injunction, mandamus, and restitution, but not compensatory damages).ʺ 508
U.S. at 256. Reformation is indisputably a typical and traditional form of
4 In finding that violations of subchapter I of ERISA themselves form the basis for a
district court to enter equitable remedies under § 502(a)(3), we do not hold that the violation
here could not, in itself, be construed as a form of fraud or mistake sufficient to warrant
reformation. Moreover, while we do not need to reach the issue, here PwC arguably engaged in
inequitable conduct ‐‐ deciding to use an unreasonable definition of NRA and applying two
different interest rates in an unfair manner.
‐ 18 ‐
equitable relief, see Simmons Creek Coal Co. v. Doran, 142 U.S. 417, 435 (1892); see
also Amara III, 563 U.S. at 440 (ʺThe power to reform contracts . . . is a traditional
power of an equity courtʺ), and is thus categorically available to a participant or
beneficiary to enforce violated provisions of ERISA.
Even were we to find ambiguity in the statute, our holding finds
further support in the body of law that has developed around ERISA in this
context. The Supreme Court has instructed that when construing a remedy in
equity under ERISA § 502(a)(3), courts are to be guided by ʺequitable principles,
as modified by the obligations and injuries identified by ERISA itself.ʺ Amara III,
563 U.S. at 445. Admittedly, the Amara III Courtʹs discussion of § 502(a)(3) is
arguably dicta, see id. at 442 (noting that the Court ʺneed not decide which
remedies [were] appropriate . . . to resolve the partiesʹ disputeʺ). But our own
precedent too has identified ʺfraud, mutual mistake, or terms violative of ERISAʺ
as independent bases that justify the equitable remedy of reformation under
§ 502(a)(3). Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 103 (2d Cir. 2005)
(emphasis added).
Moreover, the outcome advocated by PwC (and the Chamber of
Commerce and other amici curiae) ‐‐ that even where employees prove an ERISA
‐ 19 ‐
violation, they have no remedy ‐‐ is inconsistent with the ʺmaxim of equity . . .
that ʹ[e]quity suffers not a right to be without a remedy.ʹʺ Amara III, 563 U.S. at
440 (quoting R. Francis, Maxims of Equity 29 (1st Am. ed. 1823)). And the
Supreme Court has expressly identified § 502(a)(3) as occupying a special
ʺcatchallʺ remedial role in ERISAʹs statutory scheme, Varity Corp. v. Howe, 516
U.S. 489, 512 (1996), particularly in instances where other remedies for violations
of the statute may be unavailable. See id. at 515 (ʺ[Plaintiffs] must rely on the
third subsection or they have no remedy at all. We are not aware of any ERISA‐
related purpose that denial of a remedy would serve. Rather, we believe that
granting a remedy is consistent with the literal language of the statute, the Actʹs
purposes, and pre‐existing trust law.ʺ).
We hold that § 502(a)(3) authorizes district courts to grant equitable
relief ‐‐ including reformation ‐‐ to remedy violations of subsection I of ERISA,
even in the absence of mistake, fraud, or other conduct traditionally considered
to be inequitable.
2. Enforcement under § 502(a)(1)(B)
After concluding that reformation of the Plan is available to
Plaintiffs under § 502(a)(3), we have little trouble holding that the district courtʹs
‐ 20 ‐
authority to grant Step 2 of Plaintiffsʹ proposed remedy ‐‐ enforcement of the
reformed Plan under § 502(a)(1)(B) ‐‐ follows. As the Supreme Court noted in
Amara III, ʺequity often considered reformation a ʹpreparatory stepʹ that
ʹestablishes the real contract.ʹʺ 563 U.S. at 441 (quoting 4 Pomery, Equity
Jurisprudence § 1375, at 999). And indeed, we have already expressly affirmed a
two‐step remedy of reformation‐and‐enforcement in the post‐Amara III, ERISA
context. See Amara V, 775 F.3d at 532.
PwC does not quarrel with our view that § 502(a)(3) is the proper
vehicle for enforcing violations of ERISA subsection I, or that enforcement of a
pension plan is authorized by § 502(a)(1)(B).5 But PwC does dispute our
authority under ERISA to enter Plaintiffsʹ two‐step remedy more generally,
arguing that at least one circuit has rejected this approach. See Eichorn v. AT&T
Corp., 484 F.3d 644, 654‐57 (3d Cir. 2007). To the extent that it is so, however,
Eichorn pre‐dates Amara III and contradicts our own precedent. And while PwC
points to controlling cases that limit the remedies available under both § 502(a)(3)
5 To the contrary, PwC has explicitly pointed to § 502(a)(3) as the provision upon which
current Plan participants may properly rely to sue for violations of the statute. See Appelleeʹs
Br. at 26; see also Tr. Oral Arg., J. Appʹx at 613 (ʺCan you sue to seek an injunction or reform it if
you were in the plan and you said I donʹt like the way this plan is set up, I donʹt think itʹs legal.
I want to go in. [Section] 502(a)(3) gives you a vehicle to do that.ʺ).
‐ 21 ‐
and § 502(a)(1)(B) independently, it is notable that none of those cases considers
the two provisions simultaneously. See, e.g., Mertens, 508 U.S. at 256‐58; Great‐
West, 534 U.S. at 209‐19. In the absence of controlling authority otherwise, we are
inclined to follow the Supreme Courtʹs express preference that violations of
ERISA should be remedied. See Varity Corp., 516 U.S. at 515; accord Esden, 229
F.3d at 177 (ʺUnder ERISA, to correct this lack of safeguards, Congress created
substantive rights for pension plan participants and expressly created private
causes of action in federal court to vindicate those rights.ʺ).
As we have concluded that ERISA authorizes, in the circumstances
here, the two‐step remedy of reformation under § 502(a)(3) and enforcement
under § 502(a)(1)(B), we do not address Plaintiffsʹ alternative arguments for
relief. Nor do we address the nature of any reformation and consequent relief to
which Plaintiffs may be entitled, whether on their motion for summary judgment
or otherwise, leaving those questions to be resolved by the district court in the
first instance.
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CONCLUSION
For the reasons set forth above, the judgment of the district court is
VACATED and the case is REMANDED for further proceedings consistent with
this Opinion.
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