Laurent v. PricewaterhouseCoopers LLP et al

Filing 236

OPINION AND ORDER re: #216 MOTION for Summary Judgment Plaintiffs' Notice of Motion for Summary Judgment filed by Smeeta Sharon, Timothy D. Laurent, #209 MOTION for Judgment on the Pleadings dismissing the Plaintiffs' Second Amended Complaint with prejudice filed by The Adminstrative Committee to the Retirement Benefit Accumulation Plan for Employees of PricewaterhouseCoopers LLP, The Retirement Benefit Accumulation Plan for Employees of PricewaterhouseCoopers LLP, PricewaterhouseCoopers LLP. For the foregoing reasons, Defendants' motion for judgment on the pleadings is GRANTED and Plaintiffs' motion for summary judgment is DENIED. The Clerk of Court is directed to close the motions at Docket Numbers 209 and 216. The parties are directed to provide a status update or proposed judgment to the Court by August 14, 2017. (As further set forth in this Order.) (Signed by Judge J. Paul Oetken on 7/24/2017) (cf)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
TIMOTHY LAURENT, et al.,
Plaintiffs,

06-CV-2280 (JPO)

-v-

OPINION AND ORDER

PRICEWATERHOUSECOOPERS LLP, et al.,
Defendants.
J. PAUL OETKEN, District Judge:

This action is brought by Plaintiffs Timothy Laurent and Smeeta Sharon, on behalf of
themselves and all others similarly situated, against Defendants PricewaterhouseCoopers LLP,
the Retirement Benefit Accumulation Plan for Employees of PricewaterhouseCoopers LLP, and
the Administrative Committee to the Retirement Benefit Accumulation Plan for Employees of
PricewaterhouseCoopers LLP (collectively, “PWC”) under the Employee Retirement Income
Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et. seq. PWC moves for judgment on the
pleadings pursuant to Federal Rule of Civil Procedure 12(c), asking the Court to dismiss
Plaintiffs’ claims with prejudice. (Dkt. No. 209.) Plaintiffs move for summary judgment
pursuant to Federal Rule of Civil Procedure 56. (Dkt. No. 216.) The Court held oral argument
on May 23, 2017. (Dkt. No. 233.) For the reasons that follow, PWC’s motion is granted and
Plaintiffs’ motion is denied.

1

I.

Motion for Judgment on the Pleadings
A.

Background 1

The following facts are taken from the SAC and documents incorporated therein. 2 (Dkt.
No. 133 (“SAC”).)
At issue in this action are terms of the Retirement Benefit Accumulation Plan for
Employees of PWC. (Dkt. No. 210-3 to -10 (“RBAP” or “Plan”); see SAC ¶ 23 n.2
(incorporating the Plan by reference).) Plaintiffs are former employees of
PricewaterhouseCoopers LLP who elected a distribution of the fully vested benefits under the
RBAP’s lump-sum option. (SAC ¶¶ 20-21, 32, 34.) The RBAP provides a lump-sum
distribution option for departing participants who have attained the Plan’s “Normal Retirement
Age.” 3 (RBAP § 5.4(a).) Under the RBAP, “[t]he amount of any lump sum payment . . . shall
not be less than the Actuarial Equivalent of the Participant’s Normal Retirement Benefit.” (Id.
§ 5.4(b).) The “Normal Retirement Benefit” is “calculated by projecting the Deemed Account

1

The Court provides a brief overview of certain background information relevant
to the current motions. Additional background is provided in the prior opinions in this case. See
Laurent v. PriceWaterhouseCoopers LLP, 963 F. Supp. 2d 310 (S.D.N.Y. 2013), aff’d, 794 F.3d
272 (2d Cir. 2015), cert. denied, 136 S. Ct. 981 (2016); Laurent v. PricewaterhouseCoopers
LLP, 448 F. Supp. 2d 537 (S.D.N.Y. 2006) (Mukasey, J.).
2

“In considering a Rule 12(c) motion, ‘a district court may consider the facts
alleged in the complaint, documents attached to the complaint as exhibits, and documents
incorporated by reference in the complaint.’” Biro v. Conde Nast, No. 11 Civ. 4442, 2014 WL
4851901, at *1 n.1 (S.D.N.Y. Sept. 30, 2014) (quoting DiFolco v. MSNBC Cable L.L.C., 622
F.3d 104, 111 (2d Cir. 2010)).
3

The Plan’s definition of “Normal Retirement Age” was the subject of previous
rulings by this Court and the Second Circuit. The RBAP defines “Normal Retirement Age” as
“[t]he earlier of the date a Participant attains age 65 or completes five (5) Years of Service.”
(RBAP § 2.32.) This Court held that the “five (5) Years of Service” component of this definition
was invalid under ERISA. See Laurent, 963 F. Supp. 2d at 319-22. The Second Circuit
affirmed, albeit on somewhat different grounds. See Laurent, 794 F.3d at 285.
2

Balance to Normal Retirement Age using the Deemed Plan Interest Rate.” (Id. § 5.1.) The
“Deemed Plan Interest Rate” is the annual rate of interest equal to the interest rate on 30-year
Treasury securities, as specified by the IRS for the month of February (or before July 1, 2001,
the month of May) immediately preceding the “Plan Year” in which the calculation is made. (Id.
§ 2.16; see id. § 2.37 (defining “Plan Year” as “[t]he twelve (12) consecutive month period
commencing each July 1 and ending the immediately following June 30”).)
Plaintiffs allege that the 30-year Treasury rate “was not an appropriate predictor of future
investment crediting rates under the RBAP.” (SAC ¶ 90.) The problem with using the 30-year
Treasury rate, according to Plaintiffs, is that it “undervalued” the “future interest credits”
promised by the Plan, which unlawfully forced participants who opted to receive their benefits in
the form of a lump sum to forfeit a portion of their return. (Id. ¶¶ 97-98.)
On June 26, 2014, this Court granted Plaintiffs’ motion for class certification as to Count
One and Count Five of the SAC. (Dkt. No. 175.) Both counts assert so-called “whipsaw” claims
seeking lump-sum distributions equal to the annuity payable at normal retirement age. 4 (SAC
¶¶ 113-118, 129-133.) See Laurent, 794 F.3d at 275 (describing the “whipsaw” calculation at
issue). Count One, in relevant part, alleges that PWC’s “lump sum calculation methodology,”
which used the 30-year Treasury rate specified in the Plan, “result[ed] in an unlawful forfeiture
of accrued benefits” in violation of ERISA and the Internal Revenue Code. (SAC ¶ 117.)

4

Until 2006, under ERISA, plans that offered participants lump-sum distributions
could not “deprive the participants of the value that would accrue if the participants waited and
took their distributions as an annuity at normal retirement age.” Laurent, 794 F.3d at 275. In
other words, plans were required to take the employee’s account balance, increase it “by the
plan’s interest rate multiplied by the time to normal retirement age,” and then discount that total
“back to present value at a set rate.” Id. This is known as the “whipsaw calculation.” Id. These
mandatory payments were eliminated in 2006―after this case was filed and after the
distributions at issue were made―when Congress passed the Pension Protection Act of 2006,
120 Stat. 780 (2006); the parties agree that the Pension Protection Act does not apply to this
case. Laurent, 794 F.3d at 276.
3

Plaintiffs have acknowledged that Count Five is pleaded in the alternative and seeks similar
relief—albeit under a slightly different theory. (Dkt. No. 162 at 8.)
Here, Plaintiffs seek relief under both Counts One and Five in the form of three
declarations from the Court:
1. A declaration that the lawful “normal retirement age” under the
RBAP for purposes of calculating lump sum benefits is not “5 years
of service” but age 65.
2. “[A] declaration that [the RBAP’s] method of computing the lump
sums to which withdrawing employees are entitled is unlawful,”
Berger v. Xerox, 338 F.3d 755, 763 (7th Cir. 2003).
3. A declaration that members of the Class remain entitled to benefits
under the Plan attributable to the investment credits that would have
been credited between the date of their lump sum distributions and
age 65, using the rate that the Court determines would have been
“the most reasonable projection rate” to estimate the amount of
those future credits at the time of the lump sum payments, Ruppert
v. Alliant Energy Cash Balance Pension Plan, [726 F.3d 936, 939
(7th Cir. 2013).]
(Dkt. No. 162 at 2-3 (alterations in original) (citing SAC ¶¶ 115-118, 133, 144, Prayer for Relief
¶ F).)
In their motion for judgment on the pleadings, Defendants argue that Plaintiffs do not
have an avenue for relief under ERISA. (See Dkt. No. 209.) Specifically, Defendants argue that
nothing in ERISA enables this Court to issue a declaration that invalidates the Plan’s projection
rate and replaces it with a new projection rate that complies with ERISA’s valuation
requirements. (Dkt. No. 210 at 2.)
B.

Legal Standard

Under Rule 12(c), “a party is entitled to judgment on the pleadings ‘only if it has
established that no material issue of fact remains to be resolved and that [it] is entitled to
judgment as a matter of law.’” Zurich Ins. Co. v. Crowley Latin Am. Servs., LLC, No. 16 Civ.
1861, 2016 WL 7377047, at *2 (S.D.N.Y. Dec. 20, 2016) (alteration in original) (quoting Bailey
4

v. Pataki, No. 08 Civ. 8563, 2010 WL 234995, at *1 (S.D.N.Y. Jan. 19, 2010)). “The standard
for granting a Rule 12(c) motion for judgment on the pleadings is identical to that of a Rule
12(b)(6) motion for failure to state a claim.” Citibank, N.A. v. Tormar Assocs. LLC, No. 15 Civ.
1932, 2015 WL 7288652, at *3 (S.D.N.Y. Nov. 17, 2015) (quoting Gioconda Law Grp. PLLC v.
Kenzie, 941 F. Supp. 2d 424, 427 (S.D.N.Y. 2013)) (internal quotation marks omitted). “In both
postures, the district court must accept all allegations in the non-movant’s pleadings as true and
draw all inferences in [that party’s] favor.” Id. (alteration in original) (quoting Gioconda Law
Grp. PLLC, 941 F. Supp. 2d at 427) (internal quotation marks omitted).
C.

Discussion

In order to maintain an action under ERISA, “a plaintiff must both ‘assert a
constitutionally sufficient injury arising from the breach of a statutorily imposed duty’ and
‘identify a statutory endorsement of the action.’” Am. Psychiatric Ass’n v. Anthem Health Plans,
Inc., 821 F.3d 352, 359 (2d Cir. 2016) (quoting Kendall v. Emps. Ret. Plan of Avon Prods., 561
F.3d 112, 118 (2d Cir. 2009)). Because “ERISA is a ‘comprehensive and reticulated statute, the
product of a decade of congressional study of the Nation’s private employee benefit system,’”
Great-W. Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209 (2002) (quoting Mertens v.
Hewitt Associates, 508 U.S. 248, 251 (1993)) (internal quotation marks omitted), courts are
“especially ‘reluctant to tamper with [the] enforcement scheme’ embodied in the statute by
extending remedies not specifically authorized by its text,” id. (alteration in original) (quoting
Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 147 (1985)). “ERISA’s ‘carefully crafted and
detailed enforcement scheme provides strong evidence that Congress did not intend to authorize
other remedies that it simply forgot to incorporate expressly.’” Id. (quoting Mertens, 508 U.S. at
251).
In the SAC, Plaintiffs point generally to ERISA § 502(a) as the provision under which all
5

relief may be granted. (SAC at 41.) In Plaintiffs’ motion for class certification, they specifically
identified ERISA § 502(a)(1)(B) as the particular provision under which they move for relief.
(Dkt. No. 162 at 2.) Now, in their opposition to PWC’s motion for judgment on the pleadings,
Plaintiffs also propose ERISA § 502(a)(3) as an alternative ground for relief. (See Dkt. No. 212
at 18-20.)
The Court addresses (1) whether PWC’s motion is untimely or procedurally improper; (2)
whether controlling authority permits Plaintiffs’ claims under ERISA § 502(a)(1)(B); and (3)
whether ERISA § 502(a)(3) provides an alternative path to relief.
1.

Timeliness and Propriety

Plaintiffs contend that PWC’s motion for judgment on the pleadings (1) “is untimely in
the extreme”; (2) was previously rejected by this Court in its decision on the motion for class
certification (see Dkt. No. 175); and (3) conflicts with the Second Circuit’s decision in Laurent,
794 F.3d at 289. (See Dkt. No. 212 at 2-3.)
Rule 12(c) provides the standard for determining whether a motion for judgment on the
pleadings is timely. It states that “[a]fter the pleadings are closed—but early enough not to delay
trial—a party may move for judgment on the pleadings.” Fed. R. Civ. P. 12(c). It is true that
this case is over a decade old, and PWC could have raised this argument years earlier than it did.
Instead it chose to focus on a different set of arguments at the motion-to-dismiss stage. But there
was no waiver or forfeiture by PWC. Rule 12(c) focuses on “delay [of] trial.” Where, as here,
the pleadings are closed but the parties have not started expert discovery and no trial date has
been set, PWC’s motion is not untimely. See Vail v. City of N.Y., 68 F. Supp. 3d 412, 422-23
(S.D.N.Y. 2014) (collecting cases).
Second, PWC made a similar argument to that advanced here in opposition to Plaintiffs’
Motion for Class Certification. (See Dkt. No. 168 at 4.) However, in deciding that motion, the
6

Court nowhere addressed whether ERISA endorses the relief sought by Plaintiffs, which is
addressed here for the first time. (See Dkt. No. 175 at 3 (“Plaintiffs and Defendants continue to
dispute whether RBAP’s NRA is valid under ERISA and, if it is not, how to remedy the problem.
But the scope of their dispute with respect to class certification is considerably narrower.”).)
Accordingly, this Court has not previously rejected PWC’s arguments.
Finally, the Second Circuit’s prior opinion in this case concerned the legality of the
Plan’s five-years-of-service “normal retirement age” provision. See Laurent, 794 F.3d at 289.
The Second Circuit expressly left “to the district court” the task of considering the “appropriate
relief,” which is the subject of the instant dispute. Id. And even if the Second Circuit’s decision
could be read as assuming that some relief would be appropriate, it made no such holding.
The Court thus concludes that Defendants’ motion for judgment on the pleadings is
timely and properly made.
2.

ERISA § 502(a)(1)(B)

Under ERISA § 502(a)(1)(B), “[a] civil action may be brought by a participant or a
beneficiary . . . 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.”
ERISA § 502(a)(1)(B) (emphases added). Plaintiffs argue that ERISA § 502(a)(1)(B) is the
proper section under which to assert their whipsaw claims. (See Dkt. No. 212 at 8-18.)
The Supreme Court has made clear that courts may invoke ERISA § 502(a)(1)(B) only to
enforce the terms of the Plan, “as written.” CIGNA Corp. v. Amara, 563 U.S. 421, 436 (2011).
In Amara, the Court considered both ERISA § 502(a)(1)(B) and ERISA § 502(a)(3). See id. at
425. Amara was not a whipsaw case; rather, it involved allegations that an ERISA plan
administrator provided inaccurate “summary plan descriptions,” which misled plan participants.
Id. at 428-31. Finding authority in ERISA § 502(a)(1)(B), the district court had ordered the
7

terms of the plan reformed and enforced, in order to remedy the false or misleading information
provided by the plan administrator. Id. at 425, 433-34; see also Amara v. CIGNA Corp., 348 F.
App’x 627 (2d Cir. 2009) (affirming the district court’s judgment).
On review, the Supreme Court held that reformation of plan terms is not a remedy
available under ERISA § 502(a)(1)(B). Amara, 563 U.S. at 436 (“The statutory language speaks
of ‘enforc[ing]’ the ‘terms of the plan,’ not of changing them.” (alteration in original) (quoting
29 U.S.C. § 1132(a)(1)(B))). While ERISA § 502(a)(1)(B) “allows a court to look outside the
plan’s written language in deciding what [a] term[] [is], i.e., what the language means,” it does
not “authorize[] a court to alter [that] term[].” Id.
Plaintiffs in this case, invoking ERISA § 502(a)(1)(B), ask the Court to strike the Plan’s
projection rate—the 30-year Treasury rate—and replace it with the “rate that the Court
determines would have been ‘the most reasonable projection rate’ to estimate” future investment
credits under the Plan. (Dkt. No. 162 at 3 (quoting Ruppert, 726 F.3d at 939).) The crux of the
disagreement between the parties here is whether, after the Supreme Court’s 2011 decision in
Amara, this Court is permitted to afford the relief sought by Plaintiffs
PWC does not dispute, for the purposes of this motion, that the 30-year Treasury rate is
improper. 5 (See Dkt. No. 211 at 19; Transcript of Oral Argument, May 23, 2017 at 21.)
However, PWC does dispute Plaintiffs’ request for a replacement rate. According to

5

Plaintiffs argue that the 30-year Treasury projection rate contained in the Plan is
illegal in light of a 2014 IRS Technical Advice Memorandum (“IRS TAM”), which explains that
“the balance in the cash balance account must be projected with interest credits to [Normal
Retirement Age],” and this projection must use “the same interest rate used to provide interest
credits to the cash balance account.” (Dkt. No. 212 at 12.) In other words, Plaintiffs argue that
it is illegal to credit accounts using one rate structure while Participants are working, but to
project the estimated future value of the accounts at retirement age when an early lump sum is
taken using a different (and lower) rate structure—here, the 30-year Treasury rate. This is the
essence of an ERISA “whipsaw” claim. See Laurent, 794 F.3d at 275–76; Ruppert, 726 F.3d at
939.
8

Plaintiffs, RBAP § 2.14 defines the correct interest-crediting rate, which is determined by “an
algorithm that defines a variable rate based on the performance of the funds offered under the
Plan’s hypothetical investment menu.” (Dkt. No. 212 at 12.) Plaintiffs argue that the correct
projection rate is equal to the average actual interest credit over a number of prior periods and
ask to the Court to supply this rate to replace the 30-year Treasury rate. (Id. at 12-13 (citing
Esden v. Bank of Boston, 229 F.3d 154, 166 n.17, 177 (2d Cir. 2000)).) PWC, however, argues
that such relief would amount to reformation rather than interpretation of the Plan, which, they
argue, is not authorized under ERISA § 502(a)(1)(B), as clarified by the Supreme Court in
Amara.
Plaintiffs rely primarily on pre-Amara cases to support their contention that, under
ERISA § 502(a)(1)(B), this Court can strike the Treasury rate from the Plan and replace it with a
new rate. (See Dkt. No. 212 at 9-13 (citing West v. AK Steel Corp., 484 F.3d 395 (6th Cir. 2007);
Berger, 338 F.3d 755; Esden, 229 F.3d 154.) Plaintiffs chiefly rely on May Department Stores
Co. v. Federal Insurance Co., 305 F.3d 597 (7th Cir. 2002), and UNUM Life Insurance Co. of
America v. Ward, 526 U.S. 358 (1999), two cases discussing the scope of permissible
interpretation under ERISA § 502(a)(1)(B). (See Dkt. No. 212 at 7-8, 15-16.) In May
Department Stores, decided almost a decade before Amara, the Seventh Circuit held that, “like
many other contracts, pension plans governed by ERISA contain provisions implied by law.”
305 F.3d at 601. Relying on May Department Stores, Plaintiffs argue that, if they are correct that
the 30-year Treasury rate violates ERISA, then “fleshing out the specifics of the RBAP’s
implied-by-law projection rate is not ‘changing’ the Plan’s terms: it is resolving an ambiguity”
by interpreting it to reflect a provision implied by law. (Dkt. No. 212 at 14.)
Plaintiffs also rely heavily on UNUM, pointing particularly to the Supreme Court’s
citation of UNUM in Amara. (Id. at 15-16.) UNUM involved a suit brought under ERISA
9

§ 502(a)(1)(B) to recover disability benefits under an ERISA-governed insurance policy in
California, which an insurance company had denied as untimely under the terms of the plan at
issue. UNUM, 526 U.S. at 364-65, 377. However, under California’s “notice-prejudice” rule, an
insurer denying a claim as untimely must also “prove that it suffered substantial prejudice”
before denying a claim. Id. at 366-67 (quoting Shell Oil Co. v. Winterthur Swiss Ins. Co., 15 Cal.
Rptr. 2d 815, 845 (1st Dist. 1993)). ERISA preempted the state’s notice-prejudice rule as a state
law that “relate[s] to” an employee benefit plan, ERISA § 514(a); unless, as disputed by the
parties, the rule “regulat[ed] insurance” and thus escaped preemption under the saving clause,
ERISA § 514(b)(2)(A). Id. at 367. The Supreme Court held that California’s notice-prejudice
rule applied as it regulated insurance and was, therefore, not preempted by ERISA. Id. at 379.
The effect of the Court’s decision in UNUM, then, was to incorporate California’s noticeprejudice rule into the terms of the plan. In Amara, the Court again confirmed that
§ 502(a)(1)(B), “allows a court to look outside the plan’s written language in deciding what those
terms are, i.e., what the language means.” Amara, 563 U.S. at 436. In support of this
proposition, the Amara Court relied on UNUM and described UNUM (parenthetically) as
“permitting the insurance terms of an ERISA-governed plan to be interpreted in light of state
insurance rules.” Id. (emphasis added).
Plaintiffs here rely on the Amara Court’s discussion of UNUM to argue “that
§ 502(a)(1)(B) remains the proper path for enforcement of claims like the one here that are more
‘like the simple enforcement of a contract as written.’” (Dkt. No. 212 at 16 (quoting Amara, 563
U.S. at 436).) Plaintiffs thus argue that this Court should conceptualize the striking and
replacing of the 30-year Treasury rate with a rate determined by an algorithm as a
“straightforward contract interpretative exercise.” (Dkt. No. 212 at 12.)
Thus, this Court must determine whether the relief sought by Plaintiffs amounts to
10

“interpret[ation]” of plan terms, as in UNUM (as described in Amara) —which is allowed under
ERISA § 502(a)(1)(B)—or reformation—which, the Amara Court held, is not. See Amara, 563
U.S. at 436.
A “request for reformation is . . . a request that the court alter the words of the document.
[A] party who seeks interpretation asks the court not to change the actual words of the document
but to determine the meaning of those words.” 5 Corbin on Contracts § 24.18. Here, Plaintiffs’
requested relief—the striking out of the 30-year Treasury rate and its replacement with a
different rate—amounts to a “change[] akin to the reform of a contract” rather than “the simple
enforcement of a contract as written.” Amara, 563 U.S. at 436. This relief goes further than the
reading of a state-law notice requirement into a plan, as in UNUM, and would require the Court
to fully replace a term of the plan. Plaintiffs would require the Court to reform the plan by
changing its actual words, rather than determining the meaning of those words.
After Amara, courts have consistently refused to allow similar relief under ERISA
§ 502(a)(1)(B), at least when the issue is presented. In Pender v. Bank of America Corp., 788
F.3d 354 (4th Cir. 2015), for example, the Fourth Circuit applied Amara to reject an ERISA
§ 502(a)(1)(B) claim where “the plaintiffs sought to enforce the plan not as written, but as it
should properly be enforced under ERISA.” Id. at 362. The plaintiffs in Pender argued that a
bank violated ERISA when it “misapplied [a] formula” by failing to modify that formula with
ERISA-mandated terms. Id. at 361 (citation omitted) (internal quotation marks omitted). The
Fourth Circuit held that Amara “explicitly precludes” plaintiffs from using § 502(a)(1)(B)
because the remedy required more than enforcement of plan terms—it required the court to
reform the terms of the plan. Id. at 362-63. Though the Second Circuit has not addressed the
issue, several other Courts of Appeals have reached conclusions similar to that reached by the
Fourth Circuit in Pender. See Soehnlen v. Fleet Owners Ins. Fund, 844 F.3d 576, 583 n.2 (6th
11

Cir. 2016) (“By arguing that the terms of the Plan do not comply with the law, Plaintiffs tacitly
concede that the relief they seek exists outside the scope of their plan. And an action attempting
to re-write the terms of a plan is unavailable under § [502](a)(1)(B).”); Singletary v. United
Parcel Serv., Inc., 828 F.3d 342, 349 (5th Cir. 2016) (applying the Eighth Circuit’s distinction
between claims for benefits under a plan as written and claims for equitable relief, where only
the latter authorizes a plaintiff to “seek[] to reform the Plan by obtaining a declaration that the
purported [Plan provisions] are void”) (second alteration in original) (quoting Ross v. Rail Car
Am. Grp. Disability Income Plan, 285 F.3d 735, 740 (8th Cir. 2002)).
To be sure, the Seventh Circuit has affirmed an award of relief under § 502(a)(1)(B),
post-Amara, in a whipsaw case, thus effectively allowing exactly the type of reliefs sought by
Plaintiffs here. Ruppert, 726 F.3d 936. However, the issue of whether Amara allows such relief
under that provision was not raised in the case, and the court did not address it. It therefore does
not serve as precedent for Plaintiffs’ position on the issue.
Plaintiffs also argue, with some force, that the Supreme Court’s decision in Amara should
not be viewed as having so easily discarded a long line of cases, including whipsaw cases, that
authorized claims for reformation-type relief under § 502(a)(1)(B). This is akin to the argument
in the context of statutory interpretation that Congress “does not . . . hide elephants in
mouseholes,” Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 468 (2001)―the point being that
such a major change should not be lightly inferred without evidence of a concomitant awareness
of its gravity on the part of the Congress (or, here, the Court). It is not at all clear, however, that
the elephants-in-mouseholes principle should apply at all to opinions of the Supreme Court,
which elucidate the meaning of the law through their own language. In any event, this argument
does not carry the day here for two reasons. First, the Supreme Court’s holding in Amara was
not offhand dicta; it was a carefully reasoned, unequivocal holding in the case. And second, its
12

holding was based on statutory language that the Court concluded was itself clear and
unambiguous.
Finally, at oral argument, Plaintiffs argued that, under US Airways, Inc. v. McCutchen,
133 S. Ct. 1537 (2013), the Court should view the illegal plan term as void and look outside the
Plan to fill the resulting gap. However, while the words of a plan may leave gaps, they also
“may speak clearly.” Id. at 1549. The Supreme Court in McCutchen endorsed “‘look[ing]
outside the plan’s written language’ to decide what an agreement means” so as not to “frustrate
the parties’ intent and produce perverse consequences.” Id. (quoting Amara, 563 U.S. at 436).
Here, the intent of the parties is not in question and the terms of the Plan speak clearly. The
relief requested by Plaintiffs is reformation—not interpretation and not gap-filling—and requires
more than the simple enforcement of the terms of the Plan as written.
Accordingly, Section 502(a)(1)(B) provides no avenue for relief.
3.

ERISA § 502(a)(3)

Plaintiffs contend that ERISA § 502(a)(3) provides an alternative path to the relief they
seek. (Dkt. No. 212 at 18-20.) ERISA § 502(a)(3) provides that “[a] civil action may be
brought . . . by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which
violates any provision of this title 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 title or the
terms of the plan.” 29 U.S.C. § 1132(a)(3).
ERISA § 502(a)(3) is a “‘catchall’ provision[] [that] act[s] as a safety net, offering
appropriate equitable relief for injuries caused by violations that § 502 does not elsewhere
adequately remedy.” Varity Corp. v. Howe, 516 U.S. 489, 512 (1996). However, “[t]he
provision authorizes solely equitable relief, and under the Supreme Court’s decision in GreatWest, [534 U.S. 204 (2002)], this means that money awards are available in suits brought under
13

§ 502(a)(3) ‘only in very limited circumstances.’” Wilkins v. Mason Tenders Dist. Council
Pension Fund, 445 F.3d 572, 578-79 (2d Cir. 2006) (quoting Gerosa v. Savasta & Co., 329 F.3d
317, 321 (2d Cir. 2003)); see also Coan v. Kaufman, 457 F.3d 250, 262 (2d Cir. 2006) (“Unlike
section 502(a)(2), section 502(a)(3) permits ERISA plan participants to bring suit for individual
remedies; but relief under section 502(a)(3) must be ‘equitable.’” (quoting 29 U.S.C.
§ 1132(a)(3))).
PWC initially argues that it would be improper to allow Plaintiffs to invoke ERISA
§ 502(a)(3) because Plaintiffs have based their claims for class relief on ERISA § 502(a)(1)(B).
(Dkt. No. 211 at 20–21 (citing Singletary, 828 F.3d at 349).) However, the Court is persuaded
that Plaintiffs may rely on § 502(a)(3) in the alternative, for two reasons. First, in the SAC,
Plaintiffs broadly invoke ERISA § 502(a) as the provision under which all relief may be granted.
(SAC at 41.) Second, courts have not been overly strict about allowing an alternative theory of
relief under ERISA § 502(a)(3). See Amara, 563 U.S. at 438–43.
Plaintiffs first argue that the Court may provide equitable relief where a plan
administrator has breached its fiduciary duty—and that failure to calculate benefits in accordance
with ERISA amounts to breach of fiduciary duty. (Dkt. No. 212 at 18-19.) See Varity, 516 U.S.
at 511 (“[A] plan administrator engages in a fiduciary act when making a discretionary
determination about whether a claimant is entitled to benefits under the terms of the plan
documents.”). But as PWC points out, it was not making a discretionary determination about
whether class members are entitled to benefits—it was merely adhering to the terms of the Plan
and distributing benefits “calculated ministerially according to the Plan’s terms.” (Dkt. No. 213
at 9.) Moreover, PWC correctly observes that, when designing the complained-of plan term,
PWC was acting in its settlor capacity, not as a fiduciary. (Dkt. No. 211 at 21; Dkt. No. 213 at
9.) Where “plan sponsors acts to adopt, modify, or terminate an ERISA plan, they act as settlors
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of a trust and do not fall into the category of fiduciaries.” In re Am. Express. Co. ERISA Litig.,
762 F. Supp. 2d 614, 625 (S.D.N.Y. 2010) (citing Lockheed Corp. v. Spink, 517 U.S. 882, 890
(1996)).
Next, Plaintiffs argue that reformation is appropriate under ERISA § 502(a)(3). Cases in
the Second Circuit and other circuits have held that the equitable remedy of reformation is
available in cases of fraud and mutual mistake―neither of which is at issue here. Plaintiffs note
that the Second Circuit has suggested that reformation is available where there is “fraud, mutual
mistake or terms violative of ERISA.” Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 103 (2d
Cir. 2005) (emphasis added) (Cudahy, J.) (citing DeVito v. Pension Plan of Local 819 I.B.T.
Pension Fund, 975 F. Supp. 258, 267 (S.D.N.Y. 1997)). But this reference to ERISA-violative
plan terms as an alternative basis for reformation (in the absence of fraud or mistake) is dicta.
Plaintiffs cite no other cases that endorse this approach, and the court in Nechis did not itself
provide relief under ERISA § 502(a)(3) based on a finding that the plan terms violated ERISA.
See id. (denying both injunctive relief and restitution under ERISA § 502(a)(3) where the claims
were legal and not equitable in nature). Indeed, while DeVito, the case cited by the Nechis court,
indicates that a court may order a defendant to reform its plan if it is found in violation of
ERISA, 975 F. Supp. at 267, the court did “not[] reach the issue of whether it has the authority to
reform a pension plan under ERISA.” 975 F. Supp. at 267 n.13 (emphasis added).
Moreover, the Second Circuit has more recently explained (on remand from the Supreme
Court in the Amara case) that, under federal common law, “[a] contract may be reformed due to
the mutual mistake of both parties, or where one party is mistaken and the other commits fraud
or engages in inequitable conduct,” where “such fraud reasonably cause[s] [a] plaintiff[] to be
mistaken about the terms of [a] pension plan.” Amara v. CIGNA Corp., 775 F.3d 510, 525-26
(2d Cir. 2014); see also Amara, 563 U.S. at 440 (“The power to reform contracts (as contrasted
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with the power to enforce contracts as written) is a traditional power of an equity court, not a
court of law, and was used to prevent fraud.”); Restatement (Second) of Contracts § 166 (1981)
(justifying reformation of a contract in light of a “party’s fraudulent misrepresentation”). The
Second Circuit did not mention other circumstances under which reformation might be justified.
And Plaintiffs do not allege mistake, fraud, or inequitable conduct here. See Gabriel v. Alaska
Elec. Pension Fund, 773 F.3d 945, 955 (9th Cir. 2014) (“The power to reform contracts is
available only in the event of mistake or fraud.”). Plaintiffs are therefore not entitled to relief in
the form of judicial reformation under ERISA § 502(a)(3).
Moreover, PWC emphasizes that Plaintiffs seek legal, not equitable, relief. (Dkt. No. 211
at 22-24.) The Supreme Court has held that ERISA § 502(a)(3) authorizes only “those categories
of relief that were typically available in equity (such as injunction, mandamus, and restitution,
but not compensatory damages).” Mertens, 508 U.S. at 256. PWC argues that the relief sought
by Plaintiffs in pursuing their whipsaw claims—money damages for the Plan’s implementation
of the 30-year Treasury rate—is a legal remedy that does not align with any of the forms of
equitable relief available under ERISA § 502(a)(3). (Dkt. No. 211 at 22-24.)
Indeed, judicial reformation under ERISA § 502(a)(3) is not available where a plaintiff
seeks “to impose personal liability on respondents for a contractual obligation to pay money—
relief that was not typically available in equity.” Great-West, 534 U.S. at 210. “Almost
invariably . . . suits seeking (whether by judgment, injunction, or declaration) to compel the
defendant to pay a sum of money to the plaintiff are suits for ‘money damages,’ as that phrase
has traditionally been applied, since they seek no more than compensation for loss resulting from
the defendant’s breach of legal duty.” Id. (alteration in original) (quoting Bowen v.
Massachusetts, 487 U.S. 879, 918-19 (1988) (Scalia, J., dissenting)). Here, the requested
declarations, if granted, will result in the award of money damages for benefits that were
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allegedly underpaid by PWC.
Plaintiffs attempt to restyle their requested relief as equitable—characterizing it as an
accounting for profit, surcharge, unjust enrichment, or a constructive trust. (Dkt. No. 212 at 1820.) But, at bottom, they are pursuing a legal claim for money damages. Of course, “[e]quity
courts possessed the power to provide relief in the form of monetary ‘compensation’ for a loss
resulting from a trustee’s breach of duty, or to prevent the trustee’s unjust enrichment.” Amara,
563 U.S. at 441-42 (emphasis added) (quoting Restatement (Third) of Trusts § 95 & cmt. a
(Tent. Draft No. 5, Mar. 2, 2009)). But Plaintiffs fail to demonstrate the breach of any duty and
have not shown any unjust enrichment. As the Second Circuit did in Nechis, the Court here
“decline[s] this invitation to perceive equitable clothing where the requested relief is nakedly
contractual.” Nechis, 421 F.3d at 104.
Finally, Plaintiffs argue that it would be “nonsensical” to find that the plan term at issue
is in violation of ERISA and yet preclude Plaintiffs from recovering. (Dkt. No. 212 at 8.) They
argue that supplying a remedy serves the purposes of ERISA as understood through its preamble,
which calls for the protection of “the interests of participants in employee benefit plans” by
“providing for appropriate remedies.” ERISA § 2(b). However, the Second Circuit has required
close adherence to ERISA’s text over reliance on its broadly stated purposes. In Central States,
the Second Circuit asserted that “vague notions of a statute’s ‘basic purpose’ are . . . inadequate
to overcome the words of its text.” Central States, 771 F.3d at 159 (quoting Great-West, 534
U.S. at 220). The court expressly recognized that, “although [plaintiff] might well be left
without an appropriate remedy as a result of this decision . . . the claims raised by [plaintiff] are
legal, not equitable, and therefore may not be brought under § 502(a)(3).” Id. at 159-60.
Accordingly, the Court concludes that Plaintiffs are not entitled to relief pursuant to
ERISA § 502(a)(3).
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II.

Motion for Summary Judgment
Plaintiffs seek summary judgment as to liability and relief under Counts One and Five of

the SAC. (Dkt. No. 216.) For the reasons stated above, Plaintiffs’ fail to establish they are
entitled to relief under ERISA for their whipsaw claims. Plaintiffs’ motion for summary
judgment is therefore denied.
III.

Conclusion
For the foregoing reasons, Defendants’ motion for judgment on the pleadings is

GRANTED and Plaintiffs’ motion for summary judgment is DENIED.
The Clerk of Court is directed to close the motions at Docket Numbers 209 and 216.
The parties are directed to provide a status update or proposed judgment to the Court by
August 14, 2017.

SO ORDERED.
Dated: July 24, 2017
New York, New York
____________________________________
J. PAUL OETKEN
United States District Judge

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