9th Cir. OKs Simultaneous ERISA Claims Against Liberty

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By Carmen Castro-Pagan

May 20 —A class of participants in Liberty Mutual Insurance Co.'s pension plan seeking past service credit can bring simultaneous claims for recovery of benefits and equitable relief under ERISA, the U.S. Court of Appeals for the Ninth Circuit ruled.

In its May 20 decision, the three-judge appellate panel held that under CIGNA Corp. v Amara, 563 U.S. 421 (2011), if participants are unable to recover benefits based on plan interpretation and enforcement, they can still receive reformation of the plan as an equitable remedy.

The appeals court agreed with the U.S. Court of Appeals for the Eighth Circuit's application of Amara in Silva v. Metro. Life Ins. Co., 762 F.3d 711 (8th Cir. 2014). There, the Eighth Circuit held that a plaintiff may seek both a claim for benefits under Employee Retirement Income Security Act Section 502(a)(1)(B) and equitable relief under ERISA Section 502(a)(3) (153 PBD, 8/8/14).

The dispute at issue stems from Liberty's acquisition of Golden Eagle Insurance Co. in 1997. A group of former Golden Eagle employees filed an ERISA class action against Liberty to recover benefits. They also asked the court to award them equitable remedies—something that is available under ERISA Section 502(a)(3)'s catchall provision.

They alleged that during the acquisition, Liberty told them that they could participate in Liberty's defined benefit pension plan with full credit for the years of service they worked at Golden Eagle. Upon retirement, they learned they wouldn't get such credit.

The district court certified the class and later granted summary judgment to Liberty, holding that the administrator didn't abuse its discretion in calculating benefits without reference to their service at Golden Eagle (128 PBD, 7/3/13). The district court also held that the participants couldn't simultaneously seek benefits under Section 502(a)(1)(B) and equitable relief under Section 502(a)(3).

Alternative Theories of Liability

The appeals court agreed that under the plain language of the plan, it was reasonable to determine that the participants' service time with Golden Eagle was excluded from benefit accruals.

However, it reversed the district court's decision that the participants' equitable claims were in essence claims for monetary relief of their denial past service credit benefits.

Participants may present both claims as alternative—rather than duplicative—theories of liability, the appeals court said. This approach is an accurate application of U.S. Supreme Court precedent because it allows participants to plead alternative theories of relief without obtaining double recoveries, the court said.

The district court also erred in granting summary judgment to Liberty since there was a factual dispute of whether Liberty breached its fiduciary duty by failing to inform Golden Eagle employees that past service credit for the purpose of benefit accrual didn't include the period prior to October 1997, the court said.

The opinion was written by Judge Harry Pregerson and joined by Judge Consuelo M. Callahan and District Judge Stanley A. Bastian, sitting by designation.

The Butler Firm, Jack Winters Jr., and Nicholas & Tomasevic represented the participants. Jackson Lewis PC represented Liberty.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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