Cigna Corp. v. Amara

Decision Date16 May 2011
Docket NumberNo. 09–804.,09–804.
Parties CIGNA CORPORATION, et al., Petitioners, v. Janice C. AMARA et al., individually and on behalf of all others similarly situated.
CourtU.S. Supreme Court

563 U.S. 421
131 S.Ct.
1866
179 L.Ed.2d 843

CIGNA CORPORATION, et al., Petitioners,
v.
Janice C. AMARA et al., individually and on behalf of all others similarly situated.

No. 09–804.

Supreme Court of the United States

Argued Nov. 30, 2010.
Decided May 16, 2011.


Theodore B. Olson, Washington, D.C., for Petitioners.

Stephen R. Bruce, Washington, DC, for Respondents.

Edwin S. Kneedler, for United States as amicus curiae, by special leave of the Court, supporting the Respondents.

Joseph J. Costello, Jeremy P. Blumenfeld, Jamie M. Kohen, Morgan, Lewis & Bockius LLP, Philadelphia, PA, Theodore B. Olson, Amir C. Tayrani, John F. Bash, Gibson, Dunn & Crutcher LLP, Washington, D.C., for Petitioners CIGNA Corporation and CIGNA Pension Plan.

Thomas G. Moukawsher, Moukawsher & Walsh, Hartford, CT, Christopher J. Wright, Timothy J. Simeone, Wiltshire & Grannis, LLP, Washington, D.C., Stephen R. Bruce, Counsel of Record, Allison C. Pienta, Washington, DC, for Respondents.

Justice BREYER delivered the opinion of the Court.

In 1998, petitioner CIGNA Corporation changed the nature of its basic pension plan for employees. Previously, the plan provided a retiring employee with a defined benefit in the form of an annuity calculated on the basis of his preretirement salary and length of service. The new plan provided most retiring employees with a (lump sum) cash balance calculated on the basis of a defined annual contribution from CIGNA as increased by compound interest. Because many employees had already earned at least some old-plan benefits, the new plan translated already-earned benefits into an opening amount in the employee's cash balance account.

Respondents, acting on behalf of approximately 25,000 beneficiaries of the CIGNA Pension Plan (which is also a petitioner here), challenged CIGNA's adoption of the new plan. They claimed in part that CIGNA had failed to give them proper notice of changes to their benefits, particularly because the new plan in certain respects provided them with less generous benefits. See Employee Retirement Income Security Act of 1974 (ERISA) §§ 102(a), 104(b), 204(h), 88 Stat. 841,

563 U.S. 425

848, 862, as amended, 29 U.S.C. §§ 1022(a), 1024(b), 1054(h).

The District Court agreed that the disclosures made by CIGNA violated its obligations

131 S.Ct. 1871

under ERISA. In determining relief, the court found that CIGNA's notice failures had caused the employees "likely harm." The Court then reformed the new plan and ordered CIGNA to pay benefits accordingly. It found legal authority for doing so in ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) (authorizing a plan "participant or beneficiary" to bring a "civil action" to "recover benefits due to him under the terms of his plan").

We agreed to decide whether the District Court applied the correct legal standard, namely, a "likely harm" standard, in determining that CIGNA's notice violations caused its employees sufficient injury to warrant legal relief. To reach that question, we must first consider a more general matter—whether the ERISA section just mentioned (ERISA's recovery-of-benefits-due provision, § 502(a)(1)(B)) authorizes entry of the relief the District Court provided. We conclude that it does not authorize this relief. Nonetheless, we find that a different equity-related ERISA provision, to which the District Court also referred, authorizes forms of relief similar to those that the court entered. § 502(a)(3), 29 U.S.C. § 1132(a)(3).

Section 502(a)(3) authorizes "appropriate equitable relief" for violations of ERISA. Accordingly, the relevant standard of harm will depend upon the equitable theory by which the District Court provides relief. We leave it to the District Court to conduct that analysis in the first instance, but we identify equitable principles that the court might apply on remand.

I

Because our decision rests in important part upon the circumstances present here, we shall describe those circumstances in some detail. We still simplify in doing so. But

563 U.S. 426

the interested reader can find a more thorough description in two District Court opinions, which set forth that court's findings reached after a lengthy trial. See 559 F.Supp.2d 192 (D.Conn.2008) ; 534 F.Supp.2d 288 (D.Conn.2008).

A

Under CIGNA's pre–1998 defined-benefit retirement plan, an employee with at least five years service would receive an annuity annually paying an amount that depended upon the employee's salary and length of service. Depending on when the employee had joined CIGNA, the annuity would equal either (1) 2 percent of the employee's average salary over his final three years with CIGNA, multiplied by the number of years worked (up to 30); or (2) 1 2/3percent of the employee's average salary over his final five years with CIGNA, multiplied by the number of years worked (up to 35). Calculated either way, the annuity would approach 60 percent of a longtime employee's final salary. A well-paid longtime employee, earning, say, $160,000 per year, could receive a retirement annuity paying the employee about $96,000 per year until his death. The plan offered many employees at least one other benefit: They could retire early, at age 55, and receive an only-somewhat-reduced annuity.

In November 1997, CIGNA sent its employees a newsletter announcing that it intended to put in place a new pension plan. The new plan would substitute an "account balance plan" for CIGNA's pre-existing defined-benefit system. App. 991a (emphasis deleted). The newsletter added that the old plan would end on December 31, 1997, that CIGNA would introduce (and describe) the new plan sometime during 1998, and that the new plan would apply retroactively to January 1, 1998.

Eleven months later CIGNA filled in the details. Its new plan created an individual

131 S.Ct. 1872

retirement account for each employee. (The account consisted of a bookkeeping entry backed by a CIGNA-funded trust.) Each year CIGNA

563 U.S. 427

would contribute to the employee's individual account an amount equal to between 3 percent and 8.5 percent of the employee's salary, depending upon age, length of service, and certain other factors. The account balance would earn compound interest at a rate equal to the return on 5–year treasury bills plus one-quarter percent (but no less than 4.5 percent and no greater than 9 percent). Upon retirement the employee would receive the amount then in his or her individual account—in the form of either a lump sum or whatever annuity the lump sum then would buy. As promised, CIGNA would open the accounts and begin to make contributions as of January 1, 1998.

But what about the retirement benefits that employees had already earned prior to January 1, 1998? CIGNA promised to make an initial contribution to the individual's account equal to the value of that employee's already earned benefits. And the new plan set forth a method for calculating that initial contribution. The method consisted of calculating the amount as of the employee's (future) retirement date of the annuity to which the employee's salary and length of service already (i.e., as of December 31, 1997) entitled him and then discounting that sum to its present (i.e., January 1, 1998) value.

An example will help: Imagine an employee born on January 1, 1966, who joined CIGNA in January 1991 on his 25th birthday, and who (during the five years preceding the plan changeover) earned an average salary of $100,000 per year. As of January 1, 1998, the old plan would have entitled that employee to an annuity equal to $100,000 times 7 (years then worked) times 1 2/3percent, or $11,667 per year—when he retired in 2031 at age 65. The 2031 price of an annuity paying $11,667 per year until death depends upon interest rates and mortality assumptions at that time. If we assume the annuity would pay 7 percent until the holder's death (and we use the mortality assumptions used by the plan, see App. 407a (incorporating the

563 U.S. 428

mortality table prescribed by Rev. Rul. 95–6, 1995–1 Cum. Bull. 80) ), then the 2031 price of such an annuity would be about $120,500. And CIGNA should initially deposit in this individual's account on January 1, 1998, an amount that will grow to become $120,500, 33 years later, in 2031, when the individual retires. If we assume a 5 percent average interest rate, then that amount presently (i.e., as of January 1, 1998) equals about $24,000. And (with one further mortality-related adjustment that we shall describe infra, at 1872 – 1874) that is the amount, more or less, that the new plan's transition rules would have required CIGNA initially to deposit. Then CIGNA would make further annual deposits, and all the deposited amounts would earn compound interest. When the employee retired, he would receive the resulting lump sum.

The new plan also provided employees a guarantee: An employee would receive upon retirement either (1) the amount to which he or she had become entitled as of January 1, 1998, or (2) the amount then in his or her individual account, whichever...

To continue reading

Request your trial
1215 cases
  • Dual Diagnosis Treatment Ctr., Inc. v. Blue Cross California, Case No.: SA CV 15-0736-DOC (DFMx)
    • United States
    • U.S. District Court — Central District of California
    • November 22, 2016
    ...permit a party to ask for equitable estoppel as a form of equitable relief under 29 U.S.C. § 1132(a)(3). See, e.g., CIGNA Corp. v. Amara, 563 U.S. 421, 443 (2011) ("Amara"). The traditional elements of equitable estoppel are: "(1) the party to be estopped must know the facts; (2) he must in......
  • Moyle v. Liberty Mut. Ret. Benefit Plan
    • United States
    • U.S. District Court — Southern District of California
    • April 11, 2017
    ...1132(a)(1)(B). On August 23, 2007, the Ninth Circuit affirmed. Then in 2011, the Supreme Court decided CIGNA Corp. v. Amara, 563 U.S. 421, 440–42, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011), which did not address the holding in Varity, and did not overturn or overrule Varity, but outlined the s......
  • Moitoso v. FMR LLC, CIVIL ACTION NO. 18-12122-WGY
    • United States
    • U.S. District Court — District of Massachusetts
    • March 27, 2020
    ...section 1132(a)(3) allows the equitable remedy of surcharge when a fiduciary breaches its duties, CIGNA Corp. v. Amara, 563 U.S. 421, 442, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011), though the remedy of surcharge is not available against a non-fiduciary. Mertens v. Hewitt Assocs., 508 U.S. 248......
  • Spear v. Fenkell, CIVIL ACTION NO. 13-2391
    • United States
    • U.S. District Court — Eastern District of Pennsylvania
    • September 30, 2016
    ...The subject of what remedies qualify as "equitable" under Knudson36 has engendered a great deal of uncertainty. See CIGNA Corp. v. Amara, 563 U.S. 421, 440-42 (2011) (describing a variety of equitable remedies available under section 502(a)(3) in response to a lower court's uncertainty abou......
  • Request a trial to view additional results
39 firm's commentaries
  • The ERISA Litigation Newsletter (November 2013)
    • United States
    • Mondaq United States
    • November 25, 2013
    ...theory in the same manner as any other investor in publicly traded stock."). 275 F.R.D. 681, 698-99 (S.D. Fla. 2011). 131 S. Ct. 1866, 1880-82 (2011). Wal-Mart, 131 S. Ct. at 2560-61. Cf., e.g., Randall v. Rolls-Royce Corp., 637 F.3d 818, 823-24 (7th Cir. 2011) (noting that named plaintiffs......
  • The ERISA Litigation Newsletter (December 2013)
    • United States
    • Mondaq United States
    • December 18, 2013
    ...a plan's benefit claim procedures with ACA's requirements. This aspect of the court's decision is in tension with Amara v. Cigna, 131 S. Ct. 1866 (2011), where the Supreme Court stated that Section 502(a)(1)(B) is limited to enforcing benefit plan terms as written, and that claims for addit......
  • When adjudicating trust disputes, the equity courts are duty-bound to act, sua sponte if necessary, in vindication of the lawful intentions of settlors
    • United States
    • JD Supra United States
    • April 20, 2022
    ...States, 30 U.S. 173, 188 (1831) (“It is the peculiar province of equity, to compel the execution of trusts.”); CIGNA Corp. v. Amara, 563 U.S. 421, 439 (2011). 224 Scott & Ascher §24.1.1 (Action at Law in Tort). 3 legal action in tort or contract against the trustee for an internal breach of......
  • The ERISA Litigation Newsletter - November 2011
    • United States
    • Mondaq United States
    • November 10, 2011
    ...mandate under the Affordable Care Act, an issue now ripe for Supreme Court review; the Supreme Court's Decision in CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011); and reconciling obligations relating to the production of documents under ERISA § 104(b)(4) versus the claims regulation, 29 C.F.R......
  • Request a trial to view additional results
11 books & journal articles
  • How to litigate an Erisa disability claim
    • United States
    • James Publishing Practical Law Books Erisa disability. Claims and litigation Content
    • May 6, 2021
    ...of discretion is only in the summary plan description or in some other document, it may not be enforceable. See CIGNA Corp. v. Amara , 563 U.S. 421, 436-437 (2011). Discretionary Authority Is Flawed and Insuicient. Grants of discretion must be clear. Kinstler v. First Reliance Std. Ins. Co ......
  • Reviving the Prophylactic VRA: Section 3, Purcell, and the New Vote Denial.
    • United States
    • Yale Law Journal Vol. 132 No. 5, March 2023
    • March 1, 2023
    ...and restitution."); Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 210 (2002) (finding the same); CIGNA Corp. v. Amara, 563 U.S. 421, 440 (2011) (reaffirming the holding of Mertens, including its description of mandamus as (268.) Bray, supra note 265, at 1045 n.282 (collec......
  • THE LAW WANTS TO BE FORMAL.
    • United States
    • January 1, 2021
    ...of this doctrine are found in Sereboff v. Mid Atlantic Medical Services, Inc., 547 U.S. 356, 359, 361-63 (2006); CIGNA Corp. v. Amara, 563 U.S. 421, 424-25, 439 (2011); US Airways, Inc. v. McCutchen, 569 U.S. 88, 98 (2013); and Monlanile v. Board of Trustees of the National Elevator Industr......
  • AN UNEXPECTED CHALLENGE: THE CONSEQUENCE OF A LIMITED TRIBAL APPELLATE CASELOAD.
    • United States
    • Journal of Appellate Practice and Process Vol. 23 No. 1, January 2023
    • January 1, 2023
    ...and restitution, but not compensatory damages)." Mertens v. Hewitt Assoc., 508 U.S. 248, 257 (1993); see also Cigna Corp. v. Amara, 563 U.S. 421, 440-42 (2011) (identifying other forms of equitable relief, including estoppel, reformation of contract, and surcharge). "[F]or restitution to li......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT