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Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204 (2002), could prove more important than all but a handful of the Supreme Court’s several dozen Employee Retirement Income Security Act (ERISA) decisions. At issue was a narrow question with broad implications: Does ERISA authorize suit to enforce a health care plan provision requiring a participant to reimburse the plan for injury-related payments that the participant receives from the plan but later recovers from a third party? That question called forth another: Was the relief sought equitable? For the ERISA provision on which the plan insurer necessarily relied-� 502(a)(3)-offers only “equitable relief.” It authorizes suit by a participant, beneficiary or fiduciary to “enjoin” any “act or omission” that violates ERISA’s key subchapter, or the plan itself, or to obtain “other appropriate equitable relief.” The plan insurer in Great-West argued principally that it was seeking “other appropriate equitable relief” to compel the beneficiary to reimburse it for the plan-conferred benefit she had received: namely, restitution. A divided Supreme Court rejected this argument. The court held-through Justice Antonin Scalia-that restitution is not always, or even usually, equitable. It is equitable only when a court imposes a constructive trust on “money or property identified as belonging in good conscience to the plaintiff,” and then only if the money or property can “clearly be traced to particular funds or property in the defendant’s possession.” The insurer was not seeking to impress a constructive trust on any assets-the money that the beneficiary recovered from her injurer having been distributed to a state fund and her lawyer without ever having passed through her hands-but instead “personal liability.” That relief was restitution, but not equitable restitution. Great-West has already led to extensive litigation regarding whether and when plan reimbursement provisions can be enforced in federal court. To that question courts have given different answers. See, e.g., Qualchoice Inc. v. Rowland, 367 F.3d 638 (6th Cir. 2004). Important as that question may be, Great-West‘s real importance surely lies elsewhere. Like the insurer in Great-West, plan participants and beneficiaries often have no enforcement provision other than � 502(a)(3) through which they can enforce important ERISA rights. Those harmed by ERISA violations irremediable by injunctive relief will either be entitled to equitable restitution or, in many cases perhaps, no remedy at all. Parsing the meaning of ‘equitable’ relief The four dissenters in Great-West took Scalia to task for “exhum[ing]” the “ ancient classification” of the “divided bench.” Scalia responded that Congress had mandated that task, just as he had responded to much the same criticism writing for the majority in Mertens v. Hewitt Associates, 508 U.S. 248 (1993). Mertens held that equitable relief does not include compensatory damages, but instead only “those categories of relief that were typically available in equity”: “injunction, mandamus, and restitution.” It rejected the argument that compensatory damages are necessarily equitable in ERISA cases on the ground that equity courts, which had exclusive jurisdiction over cases involving breaches of trusts, regularly awarded “make whole” remedies in such cases. For such remedies, whatever their availability in trust cases, were not “typically” available in equity cases outside the trust context. What Great-West introduced into ERISA remedial law is the distinction between equitable and legal restitution. Mertens had not drawn it-and had no occasion to, Scalia stressed, because the case involved only a claim for compensatory damages. The court had now to decide what forms of restitution equity typically allowed. Scalia found only one: the imposition of a constructive trust. Great-West will not be confined to the plan reimbursement context, much as plaintiffs will try to particularize its holding. Its reach will extend to any suits in which plaintiffs turn to � 502(a)(3) for relief. Often they will find no other remedial provision to which they can turn. Of ERISA’s civil enforcement provisions, only � 502(a)(3) allows a participant or beneficiary to enforce key provisions of ERISA and recover individualized relief. Section 502(a)(3) alone authorizes participants and beneficiary to sue when a fiduciary breach (such as a fiduciary’s misrepresentation, failure to provide required information or unlawful administration of a plan) causes them harm-causes them, for instance, to withdraw from a plan, forgo benefits, make a bad benefits election or invest their pension plan holdings imprudently. Before Great-West, most courts were quick to remedy these harms without passing on the finer points of the law/equity distinction. The award of damages for lost benefits and various “make whole” remedies with antecedents in trust law often passed-implausibly in many cases-as restitution. Some courts awarded damages with little more justification than by noting- Mertens notwithstanding-that courts of equity liberally remedied breaches of trusts. Few interpreted “equitable” as narrowly as Great-West. Great-West will leave injunctive relief intact-including injunctions to rescind benefit elections, reinstate a former participant to a plan and restore benefits prospectively, to cite some common examples-though it will clearly foreclose the recovery of damages by asking a court to enjoin a defendant from dishonoring an obligation to pay money. See, e.g., Griggs v. E.I. du Pont de Nemours & Co., 385 F.3d 440 (4th Cir. 2004). It will also leave intact restitution as a remedy to redress some of the more egregious types of fiduciary breaches, like the misappropriation of a participant’s assets, which will usually be remediable through the imposition of a constructive trust. Much less certain, though, is the survival of monetary relief to compensate participants and bene- ficiaries for lost benefits and related harms caused by fiduciary breaches. Cases raising the issue are just now starting to make their way through the courts of appeals. Several circuits have already shut the door on recovery. See, e.g., Crosby v. Bowwater Inc. Retirement Plan, 382 F.3d 587 (6th Cir. 2004); Rego v. Westvaco Corp., 319 F.3d 140 (4th Cir. 2003). Others, not wanting to reckon with an unruly body of existing law, have chosen to find some other basis on which to deny relief. See, e.g., Watson v. Deaconess Waltham Hosp., 298 F.3d 102 (1st Cir. 2002). A clear and stable body of case law may elude some circuits for years. As defendants continue to employ Great-West as a defense in fiduciary litigation, the courts might respond in any number of ways: Some courts will no doubt endeavor to dress up damages in equity’s clothes. One court, for example, has held that a plaintiff could seek to impress a constructive trust on the general assets of an employer on the apparent ground that, as a fiduciary, it had unjustly enriched itself by withholding benefits from employees by excluding them as plan participants. See Godshall v. Franklin Mint Co., 285 F. Supp. 2d 628 (E.D. Pa. 2003). That characterization betrays the accepted understanding of a constructive trust. In other cases, though, the concept of “equitable relief” could prove manipulable, and the treatises and restatements on which Great-West directs lower courts to rely may yield inconsistent answers, if any, on questions remote from the subjects they address. Another response may be greater reliance on � 502(a)(1)(B), which authorizes suit to recover, and declare the right to future, benefits. Its language may be spacious enough to accommodate some claims often litigated under a fiduciary theory of liability. Greater reliance on � 502(a)(1)(B) would at least have the salutary effect of bringing ERISA remedial law into line with Varity Corp. v. Howe, 516 U.S. 489 (1995), which holds that a plaintiff may resort to � 502(a)(3) only if ERISA otherwise provides no remedy, and the principle that equitable relief is available only when damages are not. Another provision that courts might call into service more often is � 502(a)(2). It allows suit on behalf of a plan to recover for the plan’s losses. What, exactly, constitutes plan losses is not altogether clear. Great-West may well raise the importance of the issue. It has recently arisen in suits challenging pension plan investment in employer stock. U.S. Department of Labor presents another possibility The Department of Labor (DOL) has offered courts another possibility. Noting that the defendant in neither Mertens nor Great-West was a fiduciary, it has argued that � 502(a)(3) authorizes relief in suits against fiduciaries “to restore to a beneficiary losses resulting directly from a fiduciary breach,” noting that such relief “was typically” and “only” available from equity courts. DOL Brief in Ostler v. OCE-USA Inc., No. 01-3801 (7th Cir. 2002). DOL has acknowledged that Mertens refused to “define the reach of � 502(a)(3)” by reference to the “special equity-court powers applicable to trusts.” It has argued nonetheless that the “the recovery of losses from breaching fiduciaries is a separate category of relief that was typically (indeed exclusively) available in equity,” and therefore “equitable,” even if restitution (whether legal or equitable) is unavailable because the fiduciary was not unjustly enriched. No doubt Scalia would dismiss this distinction, but two justices-Ruth Bader Ginsburg and Stephen Breyer-have tentatively commended it to plaintiffs. See Aetna Health Inc. v. Davila, 124 S. Ct. 2488 (2004) (Ginsburg, J., concurring). There is of course yet another possibility: that the Supreme Court will soon take up again the issue of remedies under � 502(a)(3). With four justices, the DOL and leading academics having lined up against Great-West-and not just its specific holding, but more generally the historical-doctrinal assumptions on which it rests-its place in ERISA remedial law is by no means secure. Matthew Wiener is a partner in the Philadelphia office of Dechert, where he is a member of the litigation department.

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