ERISA class action litigation differs in important respects from many other types of employment class actions, in part because of its unique remedial provisions and continuing issues involving the scope of recovery. In McCravy v. Metropolitan Life Insurance Co., the United States Court of Appeals for the Fourth Circuit held that equitable remedies were available to provide benefits in excess of those available under the plan to an ERISA life insurance beneficiary.

The McCravy case involved sympathetic facts for the claimant.  In McCravy, the employee purchased employer-sponsored life insurance through Met Life for her daughter when the daughter was 19 years old.. The plan provided that the daughter’s eligibility ceased when she reached the age of 24, but the insurer continued to accept premiums after the daughter’s 24^th birthday.  Tragically, the daughter was murdered when she was 25, and the insurer sought simply to return the modest premiums paid after she became ineligible under the plan. McCravy then sued Met Life claiming violations of ERISA Sections 502(a)(2) and 502(a)(3). 

The district court dismissed McCravy’s 502(a)(2) claim but granted McCravy summary judgment on her 502(a)(3) claim.  The district court, however, limited her damages to return of premiums.  The Fourth Circuit, which agreed to rehear the case in light of the Supreme Court’s decision in CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011), reversed the district court.  According to the Fourth Circuit, McCravy’s potential recovery in the case was not limited, as a matter of law, to return of her premiums.  In reaching its decision, the Fourth Circuit focused on the Supreme Court’s decision in Amara.  According to the Fourth Circuit, the Supreme Court “expanded the relief available to plaintiffs asserting breach of duty under” Section 502(a)(3) and remedies such as estoppel and surcharge are remedies traditionally available in courts of equity and therefore are available under Section 502(a)(3).  The Fourth Circuit’s decision is an indication that the debate over what types of remedies are in fact “equitable” for purposes of ERISA Section 502(a)(3) is far from over.

Equitable remedies likely will be further reshaped this fall.  In the Supreme Court’s October 2012 term, the United States Supreme Court will hear U.S. Airways v. McCutchen, Case Number 11-1285.  The Third Circuit in McCutchen, recognizing a split in the Circuits on the issue, held that equitable principles could limit a plan’s subrogation rights when the plan did not account for the attorney fees the claimant incurred in obtaining relief from a third party.  In McCutchen, the Supreme Court will consider whether equitable principles may limit a benefit plan’s reimbursement rights under ERISA notwithstanding a plan’s plain terms.  In essence, the Court will tackle the issue of whether equity allows the courts to override a plan’s language based on equitable principles of fairness to plan participations.

The scope of equitable claims and defenses in ERISA litigation, both class and individual claims, remains unsettled.  Equitable remedies, however, are seldom—if ever—subject to bright lines rules, and this area will continue to generate controversy and litigation.

ERISA class certification motions routinely cite cases for the proposition that ERISA cases are the paradigmatic example of cases that are appropriate for class certification.  The United States District Court for the Southern District of Ohio’s recent decision in Adams v. Anheuser-Busch Companies, Case No. 2:10-cv-826, provides continuing support for this oft-cited proposition even after the Supreme Court’s decision in Wal-Mart-Stores, Inc. v. Dukes.

In Adams, the named plaintiffs, former employees of an Anheuser-Busch subsidiary, sought to pursue claims on behalf of a class of former employees for denial of benefits under ERISA § 502(a)(1)(B) , 29 U.S.C. Sec. § 1132(a)(1)(B), and for breach of fiduciary duty under ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2).  The claims at issue were based on plaintiffs’ claim that when their AB subsidiary was sold, they had been “involuntarily terminated” under the AB Pension Plan.  The plaintiffs’ claims for benefits were denied and, after the named plaintiffs exhausted their plan remedies, they filed a class action lawsuit.

The District Court in Adams certified the class.  In discussing commonality, the District Court cited without any significant discussion the Supreme Court’s Dukes opinion.  According to the District Court, common questions of law existed because the meaning of the AB Pension Plan’s provisions regarding change of control and involuntary termination were at issue.  The Adams Court also concluded that common questions of fact existed because the class was comprised of former employees impacted by the same fiduciary decision, and the same denial of benefits determination. 

Despite suggestions of the demise of class actions following the Supreme Court’s decision in Dukes, the Adams decision is an indication that little has likely changed in ERISA class actions.  For cases that involve challenges to fiduciary decisions that impact an ERISA governed plan, it will likely remain the case that certification will continue to be the de facto result. 

The Bottom Line:  Successful challenges to class in ERISA cases on commonality will continue to be left to those cases where questions of law or fact are so individualized that commonality can be defeated by showing the unique and individualized nature of the claims for which certification is being sought—the same challenges that were common before Dukes.