The Supreme Court, in a unanimous 8-0 decision (with Justice Sotomayor taking no part in the consideration of the case) vacated and remanded CIGNA Corp. v. Amara, No. 09-804, 563 U.S. ____ (2011) to the district court for further consideration. The Supreme Court concluded that ERISA Section 502(a)(1)(B) does not provide relief to plan participants who seek to enforce the language of an intentionally misleading Summary Plan Description (SPD) that conflicts with plan terms. With Justice Breyer writing the majority opinion, the Court said that monetary relief might conceivably be obtained on remand under ERISA Section 502(a)(3) as “appropriate equitable relief.”
The Amara decision arises from two district court opinions that were summarily affirmed by the Second Circuit. The class action was originally filed in connection with deficiencies in CIGNA’s 1998 conversion of its traditional defined benefit pension plan (“Part A”) to a cash balance plan (“Part B”). The district court determined that the conversion to the cash balance plan violated ERISA Sections 102 and 204(h) because the associated SPD and notices of the change in plan terms intentionally misrepresented plan terms — suggesting incorrectly that Part B benefits would be greater than Part A benefits (a factual finding not challenged on appeal). The district court found that because participants had shown “likely harm,” and CIGNA had failed to establish harmless error, the plaintiff class was entitled to money damages equal to additional benefits determined using a Part A plus Part B formula. See Amara v. CIGNA Corp., 534 F. Supp. 2d 288 (D. Conn. 2008); Amara v. CIGNA Corp., 559 F. Supp. 2d 192 (D. Conn. 2008). The Second Circuit summarily affirmed the district court’s holdings. See Amara v. CIGNA Corp., Nos. 08-3388-cv (L) and 08-3460-cv (XAP), 348 Fed. Appx. 627 (2d Cir. 2009). The Supreme Court agreed to decide whether the district court correctly applied a “likely harm” standard of review.
For more details, please read the recent One Minute Memo.