June 17 — An upcoming U.S. Supreme Court ruling on constitutional standing could have big implications for benefit plan participants seeking to hold fiduciaries liable for statutory violations, attorneys said during a webinar presentation.
The case, Spokeo, Inc. v. Robins, U.S., No. 13-1339, cert. granted 4/27/15, asks the Supreme Court to determine whether a statutory violation in and of itself is a sufficient injury to give rise to a private right of action under a given statute.
Although the case doesn't specifically involve the Employee Retirement Income Security Act, it could have big implications for ERISA plaintiffs seeking equitable relief for statutory violations that don't cause financial injury, said Ian H. Morrison of Seyfarth Shaw LLP's Chicago office.
Morrison and other attorneys discussed during a June 16 webinar the state of ERISA's equitable remedies provision following a recent appellate court decision. The webinar—Equitable Remedies After Rochow: Has Anything Really Changed?—was sponsored by the American Bar Association's Joint Committee on Employee Benefits.
The panelists outlined a number of equitable remedies available to ERISA litigants in the years following the U.S. Supreme Court's seminal decision on the issue in CIGNA Corp. v. Amara, 131 S.Ct. 1866, 50 EBC 2569 (U.S. 2011).
According to Elizabeth Hopkins, a Department of Labor attorney, the increased acceptance of equitable surcharge by the federal courts is “probably the biggest change” coming out of Amara.
Surcharge—which requires a showing of fiduciary breach and actual harm—permits courts to award make-whole monetary relief along with disgorgement of profits.
Although courts routinely rejected ERISA-based surcharge claims prior to Amara, Hopkins said that many federal appellate courts—including the Fourth, Fifth, Seventh, Eighth and Ninth circuits—have embraced surcharge as a potential remedy for ERISA litigants.
However, Morrison was quick to point out that relatively few courts have actually awarded a surcharge remedy. Most of the appellate court rulings on surcharge have held that the remedy might be available while remanding the dispute to a lower court to sort out, Morrison said.
He added that if and when courts begin considering whether to issue surcharge awards, there will be “a lot of interesting proof issues” surrounding which party should be held responsible.
Turning to other open questions surrounding surcharge, Hopkins said that courts will continue to address what constitutes a fiduciary breach that would allow for a surcharge award, and what a litigant most demonstrate to show “actual harm” as a result of that breach.
On that point, Morrison advised attorneys and court-watchers to pay attention to the Spokeo case. Morrison said that if the Supreme Court finds that the Spokeo plaintiffs lack constitutional standing, that could make it much harder for ERISA litigants to satisfy surcharge's “actual harm” requirement in cases involving alleged statutory violations that aren't accompanied by financial or other loss.
Hopkins agreed that Spokeo was a case to watch out for, saying it could “critically affect ERISA cases and lots of other cases.”
The Supreme Court agreed to take the Spokeo case in April, but it hasn't yet announced when it will hold oral arguments.
Excerpted from a story that ran in Pension & Benefits Daily (06/19/2015).
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