Free Response - District Court of Connecticut - Connecticut

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UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT -----------------------------------------------------X : JANICE C. AMARA, GISELA : R. BRODERICK, ANNETTE S. GLANZ : individually, and on behalf of others : similarly situated, : : Plaintiffs, : v. : : CIGNA CORP. AND CIGNA : PENSION PLAN, : : Defendants. : : -----------------------------------------------------X

3:01 CV 2361 (MRK) Trial Dates: September 11-15, 2006 January 24-25, 2007

DEFENDANTS' MEMORANDUM ON INDIVIDUAL ISSUES AND CLASS RELIEF

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TABLE OF CONTENTS Page I. II. INTRODUCTION ............................................................................................................. 1 ARGUMENT..................................................................................................................... 2 A. The Court Must Resolve A Number Of Individualized Issues Before Awarding Relief To Absent Class Members. ........................................................ 2 1. The Court Must Rule On Individualized Issues Of Likely Prejudice And/Or Harmless Error Before Affording A Remedy To Any Class Member Other Than The Named Plaintiffs Or Those Class Members Who Testified At Trial............................................................... 2 Defendants' Proposal For Resolving Individualized Issues ...................... 7

2. B.

Even For Those Class Members Who Prove Likely Prejudice And For Whom Defendants Cannot Demonstrate Harmless Error, The Court Can Only Award "Appropriate Equitable Relief" Under ERISA Section 502(a)(3). ............................................................................................................. 10 1. The Monetary Remedies Plaintiffs Seek Under ERISA Section 502(a)(3) Are Not "Appropriate" Because A Complete Remedy Was Available Under ERISA Section 502(a)(1)(B) If Plaintiffs Had Sued The Designated Plan Administrator. ....................................... 11 Plaintiffs' Request For An Injunction Requiring CIGNA To Provide Benefits Comparable To Those Available Under Part A Is Not "Appropriate Equitable Relief."........................................................ 14 Plaintiffs' Request For Additional Benefits Cannot Otherwise Be Characterized As "Appropriate Equitable Relief.".................................. 17

2.

3. C.

Plaintiffs And The Class Are Not Entitled To Benefits Under Part A (Or Something Similar) Through Today And Into The Future As A Remedy For Their 204(h) Notice Claim. ........................................................................... 19 1. No Member of the Class Is Entitled To Benefits Under Part A (Or Anything Comparable) Because Such A Remedy Bears No Relationship To The Harm Suffered, Since the 1998 Part B SPD Sufficiently Disclosed Part B's Ongoing Benefit Formula And Class Members Received Several Communications Describing Exactly What Their Benefits Were At Any Point In Time...................... 19 No Class Member Is Entitled To Benefits Under Part A Because Amendment No. 4 Properly Froze Benefit Accruals Under Part A And Has Not Been Challenged In This Litigation................................... 22 Rehires Are Not Entitled To Benefits Under Part A (Or Something Similar) Because They Were Not Entitled To Any Section 204(h) Notice....................................................................................................... 24 i

2.

3.

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TABLE OF CONTENTS (continued) Page D. Plaintiffs' Request For Additional Benefits Sufficient To Eliminate Wearaway Fails To Account For Subsequent Disclosures And Ignores The Legitimate Causes Of Wearaway......................................................................... 25 Plaintiffs' Request For Additional Benefits For Participants Who Previously Elected A Lump Sum Benefit With A Lower Value Than Their Subsidized Early Retirement Benefit Is Inappropriate. ....................................... 27 Plaintiffs' Request For A Common Fund Attorneys' Fee Enhancement, Incentive Payments, And Interest Are Not Appropriate...................................... 29

E.

F. III.

CONCLUSION................................................................................................................ 32

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TABLE OF AUTHORITIES Page Aiken v. Policy Mgmt. Sys. Corp., 13 F.3d 138 (4th Cir. 1993) .............................................................................................................2 Barnes v. Am. Tobacco Co., 161 F.3d 127 (3d Cir. 1998).............................................................................................................7 Bowen v. Mass., 487 U.S. 879 (1988).......................................................................................................................16 Branch v. G. Bernd Co., 955 F.2d 1574 (11th Cir. 1992) .......................................................................................................2 Brytus v. Spang & Co., 203 F.3d 238 (3d Cir. 2000)...........................................................................................................31 Burke v. Kodak Ret. Income Plan, 336 F.3d 103 (2d Cir. 2003).............................................................................................................4 Burstein v. Ret. Account Plan For Employees Of Allegheny Health Educ. and Research Found., 334 F.3d 365 (3d Cir. 2003)...........................................................................................................14 Central Laborers' Pension Fund v. Heinz, 541 U.S. 739, 743 (2004)...............................................................................................................20 Chiles v. Ceridian Corp., 95 F.3d 1505 (10th Cir. 1996) .........................................................................................................2 In re Citigroup Pension Plan ERISA Litig., No. 05 Civ. 5296, 2007 WL 4205855 (S.D.N.Y. Nov. 27, 2007) ...........................................20, 22 City of Burlington v. Dague, 505 U.S. 557 (1992).......................................................................................................................30 Coan v. Kaufman, 457 F.3d 250 (2d Cir. 2006).....................................................................................................15, 16 D'Amico v. CBS Corp., 297 F.3d 287 (3d Cir. 2002)...........................................................................................................14 Drennan v. Gen. Motors Corp., 977 F.2d 246 (6th Cir. 1992) .........................................................................................................31 Dunnigan v. Metro. Life Ins. Co., 277 F.3d 223 (2d Cir. 2002)...........................................................................................................32 iii

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TABLE OF AUTHORITIES (continued) Page

Eichorn v. AT&T Corp., 484 F.3d 644 (3d Cir. 2007), cert. denied, 128 S.Ct. 709 (2007) ..................................................16 Elmore v. Cone Mills Corp., 23 F.3d 855 (4th Cir. 1994) ...........................................................................................................31 Exarhakis v. Visiting Nurse Serv. of N.Y., No. 02-C 2006 WL 335420 (E.D.N.Y. Feb. 13, 2006)....................................................................4 First Unum Life Ins. Co. v. Wulah, Civ. No. 06-1749, 2007 U.S. Dist. LEXIS 82650 (S.D.N.Y. Nov. 8, 2007) ...............................4, 5 Fisher v. Penn Traffic Co., No. 06 Civ. 5848(HB), 2007 WL 496657 (S.D.N.Y. Feb. 16, 2007)............................................18 Flint v. ABB, Inc., 337 F.3d 1326 (11th Cir. 2003) .....................................................................................................32 Frommert v. Conkright, 433 F.3d 254 (2d Cir. 2006)...........................................................................................6, 11, 12, 14 Frommert v. Conkright, 472 F. Supp. 2d 452 (W.D.N.Y. 2007) ..........................................................................................15 Gerosa v. Savasta & Co., Inc., 329 F.3d 317 (2d Cir. 2003)...........................................................................................................15 Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002).....................................................................................................14, 15, 17, 18 Greeley v. Fairview Health Servs., 479 F.3d 612 (8th Cir. 2007) ...........................................................................................................2 Harris v. Bodman, Civil Action No. 06-1848 (JR), 2008 WL 647528 (D.D.C. March 11, 2008).................................6 Harrison v. Metro. Life Ins. Co., 417 F. Supp. 2d 424 (S.D.N.Y. 2006)............................................................................................12 Health Cost Controls of Illinois, Inc. v. Wash., 187 F.3d 703 (7th Cir. 1999) ...........................................................................................................2

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TABLE OF AUTHORITIES (continued) Page Henry v. Champlain Enter., Inc., 445 F.3d 610 (2d Cir. 2006)...........................................................................................................20 Int'l Bhd. of Teamsters v. United States, 431 U.S. 324 (1977).........................................................................................................................8 Irwin v. Dep't of Veterans Affairs, 498 U.S. 89 (1990)...........................................................................................................................6 Johnson v. Buckley, 356 F.3d 1067 (9th Cir. 2004) .........................................................................................................3 Krauss v. Oxford Health Plans, Inc., 517 F.3d 614 (2d Cir. 2008)...........................................................................................................13 LaRue v. DeWolff, Boberg & Assocs., Inc., 128 S. Ct. 1020 (2008)...................................................................................................................11 Layaou v. Xerox Corp., 238 F.3d 205 (2d Cir. 2001)...........................................................................................................22 Manginaro v. Welfare Fund of Local 771, I.A.T.S.E., 21 F. Supp. 2d 284 (S.D.N.Y. 1998)................................................................................................4 Mauser v. Raytheon Co. Pension Plan for Salaried Employees, 239 F.3d 51 (1st Cir. 2001)..............................................................................................................2 Mead v. Andersen, 309 F. Supp. 2d 596 (S.D.N.Y. 2004)............................................................................................32 Mertens v. Hewitt Assocs., 508 U.S. 248 (1993).................................................................................................................14, 17 Mitchell v. Emeritus Mgmt., LLC, 524 F. Supp. 2d 67 (D. Me. 2007) .................................................................................................18 Murphy v. Reliance Standard Life Ins. Co., 247 F.3d 1313 (11th Cir. 2001) .....................................................................................................31 Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 103 (2d Cir. 2005).....................................................................................................18

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TABLE OF AUTHORITIES (continued) Page York v. Hill, 528 U.S. 110 (2000).........................................................................................................................6 O'Connor v. Boeing N. Am. Inc., 197 F.R.D. 404 (C.D.Ca. 2000) .......................................................................................................7 Ranke v. Sanofi-Synthelabo, Inc., No. 04-1618, 2004 WL 2473282 (E.D.Pa. Nov. 3, 2004) .............................................................16 Savoie v. Merchants Bank, 166 F.3d 456 (2d Cir. 1999)...........................................................................................................30 Sheehan v. Metro. Life Ins. Co., 368 F. Supp. 2d 228 (S.D.N.Y. 2005)..............................................................................................4 Tyndall v. New England Teamsters & Trucking Industry Pension Fund, No. 3:03CV194, 2006 WL 3815140 (D. Conn. Dec. 7, 2006) ......................................................32 Varity Corp. v. Howe, 516 U.S. 489 (1996).........................................................................................................................2 In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124 (2d Cir. 2001).............................................................................................................7 Wachtel v. Guardian Life Ins. Co. of Am., 453 F.3d 179 (3d Cir. 2006).............................................................................................................7 Weinreb v. Hosp. For Joint Diseases Orthopaedic Inst., 404 F.3d 167 (2d Cir. 2005).........................................................................................................4, 5 Young v. Reconstructive Orthopaedic Assocs., II, No. 03-2034, 2005 WL 627796 (E.D. Pa. March 16, 2005)..........................................................16 STATUTES 5 U.S.C. § 702 ...............................................................................................................................16 29 U.S.C. § 1054(g) .................................................................................................................14, 15 29 U.S.C. § 1132(a)(3)...........................................................................................................1, 2, 19 42 U.S.C. § 1396b(d) .......................................................................................................................7

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TABLE OF AUTHORITIES (continued) Page 26 C.F.R. § 1.411(d)-6T (Q-9)...................................................................................................2, 13 26 C.F.R. § 1.417(a)(3)..................................................................................................................18 29 U.S.C. § 1054(h) .................................................................................................................10, 19 RULES Fed. R. Civ. P. 23(c)(1)(B) ..........................................................................................................1, 7 MISCELLANEOUS Herbert B. Newberg & Alba Conte, Newberg on Class Actions §§ 9.59, 9.71 (4th ed.) ..........................................................................8 Manual for Complex Litigation (Fourth) 32.42 (2004) ...................................................................9

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I.

INTRODUCTION

In its February 15, 2008 Memorandum of Decision ("MOD"), the Court directed the parties to file briefs "regarding class relief. . . [and] the issue of how to address any remaining claims, including individual claims." (MOD at 122). In their submission, however, Plaintiffs proceed as if all individualized issues have been adjudicated, and therefore argue that all class members are now entitled to broad injunctive and monetary relief. Their proposed relief includes an award of "additional retirement benefits under the Part A Tier 1 and Tier 2 formulas from January 1, 1998 until CIGNA distributes the revised notices about the Part B reductions." (Pls' Proposed Order at 3). Plaintiffs' assertion that there is nothing left for the Court to decide except the remedy ignores the Court's March 12, 2007 Order issued under Federal Rule of Civil Procedure 23(c)(1)(B), in which the Court identified a number of individualized issues that ultimately must be resolved. Moreover, the monetary remedies that Plaintiffs propose are not available under Section 502(a)(3) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §1132(a)(3), the provision under which the Court held that Plaintiffs must proceed. Furthermore, in seeking an award of past accruals under Part A as if the CIGNA Pension Plan had never been amended, Plaintiffs request, in effect, that the Court reverse its decision that the Part B cash balance plan design was entirely lawful. Finally, Plaintiffs conveniently ignore the consequences of their inexplicable choice not to name the designated Plan Administrator as a defendant in this action.

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As set forth below, Defendants offer suggestions for addressing the individual issues identified by the Court in its March 12, 2007 Order. Defendants also explain why most of the remedies sought by Plaintiffs simply do not pass muster under ERISA Section 502(a)(3). II. A. ARGUMENT

The Court Must Resolve A Number Of Individualized Issues Before Awarding Relief To Absent Class Members. 1. The Court Must Rule On Individualized Issues Of Likely Prejudice And/Or Harmless Error Before Affording A Remedy To Any Class Member Other Than The Named Plaintiffs Or Those Class Members Who Testified At Trial.

In their Memorandum on Relief, Plaintiffs do not address the numerous individualized issues that must be resolved before absent class members can claim any entitlement to relief, and that affect the scope of any such relief. For example, in its March 12, 2007 Order, the Court identified the following individualized issues in connection with Count II, Plaintiffs' claim regarding the adequacy of CIGNA's summary plan descriptions ("SPDs"): "Whether any individual class member of likely prejudiced by any of the violations alleged in Count II;" and "Whether any violation alleged in Count II was harmless error as to any individual class member" (March 12, 2007 Order at 5).1 The Court reached the very same conclusion with respect to Plaintiffs' Section 204(h) notice claim, Count IV, and relative value disclosure claim, Count V. (Id. at 6-8).2

1

Defendants acknowledge that this Court is bound by Second Circuit precedent. Nevertheless, Defendants submit that the likely prejudice/harmless error standard articulated by the Second Circuit is inconsistent with ERISA's disclosure and enforcement provisions, and the primacy of written plan documents under ERISA. (See Defs' Post-Trial Brief at 8485). At a minimum, a plan participant should be required to prove detrimental reliance before being entitled to benefits based on a flawed SPD. The First, Fourth, Seventh, Eighth, Tenth, and Eleventh Circuits all have imposed a requirement that participants prove detrimental reliance or prejudice to state a claim based on a deficient SPD. See Mauser v. Raytheon Co. Pension Plan for Salaried Employees, 239 F.3d 51, 55 (1st Cir. 2001); Aiken 2

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Consistent with its March 12, 2007 Order, the Court recognized in its decision on the merits that a presumption of likely prejudice is rebutted where a plaintiff has "actual knowledge . . . of the requirement omitted from the SPD." (MOD at 103). Defendants acknowledge that this Court has held that certain uniform written communications were insufficient to defeat a claim of likely prejudice, or demonstrate harmless error, on a classwide basis, and Defendants do not seek to relitigate those issues here. Nevertheless, and pursuant to the Court's March 12, 2007 Order, the Court still has to rule on likely prejudice/harmless error for each absent class member. In particular, before an absent class member is entitled to a remedy, the Court must rule on whether that class member had "actual knowledge" of the information the Court held was not

v. Policy Mgmt. Sys. Corp., 13 F.3d 138, 141 (4th Cir. 1993); Health Cost Controls of Illinois, Inc. v. Washington, 187 F.3d 703, 711 (7th Cir. 1999); Greeley v. Fairview Health Servs., 479 F.3d 612, 614-15 (8th Cir. 2007); Chiles v. Ceridian Corp., 95 F.3d 1505, 1519 (10th Cir. 1996); Branch v. G. Bernd Co., 955 F.2d 1574, 1578-80 (11th Cir. 1992).
2

The Court also correctly recognized in its March 12, 2007 Order that "[w]hether any individual class member was likely to suffer a significant reduction in [his or her] rate of future benefit accrual as a result of the amendment adopting the Plan," such that the Plan Administrator was required to provide that individual with a Section 204(h) notice, was an individualized issue. (March 12, 2007 Order at 6). That is, regardless of whether any particular class member actually suffered a reduction in his or her rate of future benefit accruals (because, for example, interest rates fell after the cash balance plan was adopted), an individual can only state a Section 204(h) notice claim if that individual was "likely" at the time of the amendment to suffer a "significant" reduction in the rate of future benefit accrual. 26 C.F.R. § 1.411(d)-6T (Q-9) (Section 204(h) notice obligations are triggered only based on the facts and circumstances "at the time the amendment is adopted."). Indeed, as the Court held, "[u]nder § 204(h), if notice is not due to an individual at the time of the amendment, the plan administrator need never provide a § 204(h) notice to that individual." (MOD at 107). Importantly, moreover, this analysis must be limited to a comparison of the likely future normal retirement age-65 benefits under Parts A and B without regard to subsidized early retirement benefits or the wearaway associated with those subsidized benefits. (MOD at 72) ("Thus, reductions or eliminations of early retirement benefits, for example, do not require a § 204(h) notice."). Again, this is an individualized issue that depends on how the cash balance conversion was likely to affect each participant, based on that participant's expected future benefit accruals if Part A had continued (including, among other things, that participant's age, service, and salary history), and that participant's expected future benefit accruals under Part B.

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sufficiently disclosed, and whether that class member's particular claims otherwise succeed or fail under the likely prejudice/harmless error analysis.3 For example, at the time of the cash balance plan conversion, CIGNA's business included pension plan consulting and administration, and some CIGNA employees participated in the design of other cash balance plans or of Part B itself. These employees may have fully understood the implications of a cash balance plan, the potential for wearaway under Part B, the causes of such wearaway, and the relative benefit accruals provided under Part B compared to Part A. Indeed, the Court found that CIGNA was "aware of the significant reduction in the rate of future benefit accrual" and "aware of the possibility of wearaway." (MOD at 87, 94). CIGNA could only have that awareness through its employees, many of whom are class members. Furthermore, the Court made
3

See Burke v. Kodak Ret. Income Plan, 336 F.3d 103, 113 (2d Cir. 2003) ("[W]e require, for a showing of prejudice, that a plan participant or beneficiary was likely to have been harmed as a result of a deficient SPD. Where a participant makes this initial showing, however, the employer may rebut it through evidence that the deficient SPD was in effect a harmless error.") (emphasis in original); Weinreb v. Hosp. For Joint Diseases Orthopaedic Inst., 404 F.3d 167, 171 (2d Cir. 2005) ("dispensing with any showing of prejudice. . . would afford unjustified windfalls to employees"); Exarhakis v. Visiting Nurse Serv. of N.Y., No. 02-CV5562, 2006 WL 335420, at *12 (E.D.N.Y. Feb. 13, 2006) ("The emphasis on the word `likely' indicates the heightened showing required in order to survive a summary judgment motion on a deficient-SPD claim; rather than simply identifying a factual dispute that possibly prejudiced plaintiff, e.g., that plaintiff might have filed for and received benefits had the SPD not been deficient, plaintiff must provide sufficient evidence on which an inference could be based that she would have filed for the benefits but for the deficiency in the SPD."); Sheehan v. Metro. Life Ins. Co., 368 F. Supp. 2d 228, 262 (S.D.N.Y. 2005) ("The rule to be derived from Burke and Manginaro is that in an ERISA action, likely prejudice to a plaintiff will be presumed if, as the result of an SPD deficiency, he was not aware of the need to take an action within his control (submitting an affidavit, filing a law suit) which would have avoided the restriction on eligibility for benefits, and consequently failed to take that action.") (emphasis added); Manginaro v. Welfare Fund of Local 771, I.A.T.S.E., 21 F. Supp. 2d 284, 296 (S.D.N.Y. 1998) (same); First Unum Life Ins. Co. v. Wulah, Civ. No. 06-1749, 2007 U.S. Dist. LEXIS 82650, at *19-20 (S.D.N.Y. Nov. 8, 2007) ("Unlike Weinreb, Exarhakis, and most cases applying the likely prejudice standard, in which it was undisputed that a plan participant (or potential participant) lost out on benefits because of the plan administrator's failure to apprise him of certain features of the plan, [plaintiff] has not shown that he is materially worse off than he would have been had he received an SPD . . .").

4

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reference to a number of employee complaints about Part B, some of which reflected clear knowledge that benefits under Part B could be less than they were under Part A. (Id. at 84-85). This evidence suggests that the likely prejudice/harmless error issue will be resolved in Defendants' favor for at least some absent class members. Likewise, other plan participants may have performed their own benefit comparisons, hired financial planners, looked at benefit estimates they received before and after the conversion, or spoken to co-workers to learn the relevant information. For example, the Court found that Plaintiff Janice Amara learned about wearaway from a conversation with CIGNA's Chief Actuary, Mark Lynch. (Id. at 94). If Mr. Lynch (or anyone else) told other class members about wearaway, then those class members' claims ­ to the extent based on the failure to disclose wearaway ­ would fail on a likely prejudice/harmless error standard. See Weinreb, 404 F.3d at 172 (holding that plaintiff failed to establish likely prejudice where there was no SPD, but plaintiff was advised informally of plan enrollment requirement). Similarly, absent class member Steven Law's deposition testimony that he performed his own benefit comparisons should demonstrate the absence of likely prejudice and/or harmless error, and therefore preclude any remedy to him. (Law Dep. at 70-75, attached as Ex. A hereto).4 In addition, Plaintiffs make clear in their Memorandum on Relief that they seek an award of ten years of additional retroactive benefits (from 1998 to the present), plus continued benefits going forward.5 (Pls' Proposed Order at 3). However, even if a particular class member did not
4

Defendants offer the deposition testimony of Mr. Law, who did not testify at trial, only by way of example to demonstrate that this Court should hear testimony from him and each absent class member before making findings on likely prejudice or harmless error. Specifically, Plaintiffs request (1) for those who already have commenced their pension, dollars in the amount of back benefits and interest, and (2) for those who have not yet commenced benefits, retroactive increases in their account balances and prospective increases in the amount they are paid. (Pls' Mem. at 34-37).

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have actual knowledge of the relevant information sufficient to demonstrate no likely prejudice/harmless error in 1997 or 1998, any remedy to which that class member may be entitled should cease, at a minimum, at the point in time when that class member acquired actual knowledge of the relevant information (or otherwise ceased to be prejudiced/harmed). See e.g., Frommert v. Conkright, 433 F.3d 254, 263 (2d Cir. 2006) (where the company provided a deficient SPD but then provided an adequate one in 1998, limiting remedy for prior deficient SPD to those hired prior to 1998). By way of example, class members Barbara Hogan6 and Robert Upton7 testified that they learned about wearaway and/or that their benefits under Part B were lower than under Part A, at some point in time before trial. (Defs' Proposed Post-Trial Findings of Fact ¶¶ 391, 406). Likewise, Plaintiffs Janice Amara, Gisela Broderick, and Annette Glanz alleged in the various versions of the Complaint certain facts (and retained counsel and experts who opined on those facts), and should be charged with knowledge of those facts at or about the time the Complaint was filed. See Irwin v. Dep't of Veterans Affairs, 498 U.S. 89, 92 (1990) ("Under our system of representative litigation, each party is deemed bound by the acts of his lawyer-agent and is considered to have notice of all facts, notice of which can be charged upon the attorney.") (emphasis added, internal citations and quotations omitted); New York v. Hill, 528 U.S. 110, 115 (2000) (same); Harris v. Bodman, Civil Action No. 06-1848 (JR), 2008 WL 647528, at *1 (D.D.C. March 11, 2008) (client will be charged with knowledge of the EEOC's issuance of a right to sue letter at the point in time when attorney had notice of the

6

Ms. Hogan testified that she requested a benefit estimate in 1999 and compared that estimate to her prior benefit estimates. She also was not affected by wearaway because she received more favorable opening account balance conversion factors. (Defs' Proposed Post-Trial Findings of Fact ¶¶ 385, 391). Mr. Upton learned in 1999 that his pension benefit was going to be 29% lower under the new plan. (Defs' Proposed Post-Trial Findings of Fact ¶ 406)

7

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letter). This knowledge ­ at a minimum ­ cuts off liability for any new accruals for each Plaintiff or class members at the point in time when that knowledge was acquired. Thus, not only is the question of whether a particular absent class member is entitled to a remedy an individualized inquiry, but whether that remedy continues and for how long it continues are also individualized issues that the Court must decide before any remedy is awarded. For that reason, Plaintiffs' assertion that the Court can now order a classwide remedy is simply wishful thinking.8 2. Defendants' Proposal For Resolving Individualized Issues.

Pursuant to the Court's March 12, 2007 Order and its February 15, 2008 Memorandum of Decision, the adjudication of classwide issues has concluded and a series of individualized issues remain to be adjudicated.9 The Second Circuit, in In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124, 141 (2d Cir. 2001), explained in similar circumstances that when individualized issues arise, a court may "decertify[] the class after the liability trial and provid[e] notice to class members concerning how they may proceed to prove damages." See also Barnes v. Am. Tobacco Co., 161 F.3d 127, 147-49 (3d Cir. 1998) (affirming decertification of Rule 23(b)(2) class given unmanageability of individual issues); O'Connor v. Boeing N. Am. Inc., 197 F.R.D. 404, 413 (C.D.Ca. 2000) (decertifying Rule 23(b)(2) class because "individual variances"

8

Defendants may also be able to rely on a release signed by certain absent class members as a complete defense to their claims. Although the Court rejected Defendants' defense based on the release signed by Plaintiffs and certain class members who testified, the Court acknowledged that a later version of the release may have overcome the ambiguity that the Court found fatal to Defendants' position. (MOD at 39 n.12). Whether this defense would be successful would presumably be determined on a case-by-case-basis. The purpose of Fed. R. Civ. P. 23(c)(1)(B) is to identify which claims, issues, and defenses are being litigated on a classwide basis so the parties and the Court can "`determine how the case will be tried.'" Wachtel v. Guardian Life Ins. Co. of Am., 453 F.3d 179, 186 (3d Cir. 2006) (vacating class certification order based on inadequacy of Rule 23(c)(1)(B) statement of issues, which requires a "full and clear articulation of the litigation's contours. . . .").

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caused the court to conclude that "maintaining a class action no longer provides for judicial economy or the fair determination of [the] controversy"). Here, for the reasons explained above, individualized issues of likely prejudice/harmless error (and whether any particular class member was likely, at the time of the cash balance plan amendment, to suffer a significant reduction in his or her rate of future benefit accrual) must be resolved before absent class members are entitled to a remedy. Under these circumstances, Defendants would not oppose decertification of the class based on the resolution of the classwide issues identified in the Court's March 12, 2007 Order. Alternatively, Defendants believe that another approach can accomplish the same goals without formal decertification of the class: Accumulated experience in class action litigation has led to several recognized approaches for managing and resolving related individual issues. After identifying common issues that would support class certification, and recognizing generally or specifically that individual issues would remain after common questions have been litigated, the chief judicial management tool for handling individual issues is to sever them for subsequent trial. ... * * * When irreducible individual issues remain, it is in the interest of the entire class to ensure that adequate notice is sent to the class to advise class members of the need to come forth individually in some manner than the court prescribes in order to assert their claims. Herbert B. Newberg & Alba Conte, Newberg on Class Actions §§ 9.59, 9.71 (4th ed.). In accordance with this authority, and the process for resolving individualized issues identified by the Supreme Court in Int'l Bhd. of Teamsters v. United States, 431 U.S. 324, 360-61 (1977), Defendants propose a three-step process for resolving the individualized issues in this litigation:

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o First, class members should be provided notice (agreed to by the parties and approved by the Court) outlining the Court's findings and the current status of the litigation, and an opportunity to express their willingness to participate in future proceedings regarding each individual's knowledge of the relevant facts, other aspects of the likely prejudice/harmless error analysis, and any other individualized issues. o Second, for those class members who are willing to proceed to the next phase of the case, Defendants must be afforded the opportunity to serve document requests and conduct depositions regarding these individualized issues. o Third, this Court can conduct "Teamsters hearings" to resolve all remaining individualized issues for each class member. Teamsters, supra, 431 U.S. at 360-61. See also Manual for Complex Litigation (Fourth) 32.42 (2004). As that process is completed for each absent class member, the Court can issue findings of fact and conclusions of law as to (1) whether that class member was likely, at the time of the cash balance conversion, to have suffered a reduction in his or her rate of future benefit accruals, (2) whether that class member was likely prejudiced (and, if appropriate, until what time period) by any disclosure deficiencies, (3) whether any deficiencies in the disclosures to that participant were harmless error (or whether they became harmless error at some point in time such that any remedy should end), and (4) the appropriate remedy, if any, to address that participant's prejudice or harm, and the length of time that remedy should remain in force, in accordance with the principles discussed in detail below.10

10

Plaintiffs argue in their Memorandum on Relief that Defendants previously agreed to afford the same remedies to all Plan participants, and suggest that Defendants waived any right to litigate individualized issues. (Pls' Mem. at 25). This is disingenuous for several reasons. First, Defendants made an offer to treat all Plan participants in a similar fashion if the Court denied the motion for class certification. (See Defs' Opp. to Pl's Mot. For Class Cert. at 9). As made clear from Defendants' submission and the Order granting the motion for class certification, however, Defendants' offer was not accepted by Plaintiff Amara (the only plaintiff to whom the offer was extended) and was not adopted by the Court. Second, Defendants only offered to treat "similarly situated" individuals similarly. As Defendants made clear in that same submission ­ and in numerous subsequent filings ­ detrimental reliance and/or prejudice are individualized issues that must be resolved before determining 9

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B.

Even For Those Class Members Who Prove Likely Prejudice And For Whom Defendants Cannot Demonstrate Harmless Error, The Court Can Only Award "Appropriate Equitable Relief" Under ERISA Section 502(a)(3). Defendants respectfully disagree with the Court's conclusion that the SPDs, summary of

material modification ("SMM"), and Section 204(h) notice did not satisfy ERISA's requirements. Nevertheless, in light of the Court's ruling in its Memorandum of Decision, Defendants do not oppose Plaintiffs' request for a supplemental communication to class members that contains more detailed information about wearaway and otherwise satisfies ERISA's requirements as interpreted by the Court. Defendants respectfully submit that this communication should be based on the original 1998 SPD, with any modifications the Court deems necessary (and subject to whatever input from the parties the Court is willing to accept).11 Aside from this request for a supplemental communication, Plaintiffs' proposed remedies are largely barred by ERISA's carefully crafted, and limited, remedial provisions.

whether individuals are similarly situated. Indeed, Defendants specifically made clear their position that if this case were certified, "every one of the estimated 25,000 class members would be called upon to present evidence, as to, inter alia, the extent if any, of his or detrimental reliance on the SPD." (Defs' Opp. to Pl's Mot. For Class Cert. at 12). (This brief referred to "detrimental reliance" because it was filed before the Second Circuit articulated its likely prejudice/harmless error analysis.) That has been Defendants' position consistently, and remains their position today.
11

Importantly, however, this communication should only be subject to the statutory disclosure requirements as they existed in 1998, when the cash balance plan was adopted and when it became effective. Plaintiffs offer no justification or precedent to support their request that the proposed remedial communication be subject to later versions of those requirements. (See Pls' Mem. at 30-31).

10

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1.

The Monetary Remedies Plaintiffs Seek Under ERISA Section 502(a)(3) Are Not "Appropriate" Because A Complete Remedy Was Available Under ERISA Section 502(a)(1)(B) If Plaintiffs Had Sued The Designated Plan Administrator.

This Court has held that Plaintiffs can maintain their disclosure claims against CIGNA only under ERISA Section 502(a)(3). (MOD at 70). Plaintiffs' remedies therefore are limited to those provided for in that subsection of ERISA. Section 502(a)(3) authorizes only limited remedies: A civil action may be brought . . . by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan. 29 U.S.C. § 1132(a)(3). The Supreme Court and the Second Circuit have explained that Section 502(a)(3) operates as a "catchall," and that relief under that provision is not "appropriate" where relief is available under another provision of ERISA: [The Supreme Court] has consistently disfavored the expansion of the availability of equitable relief where remedies at law are sufficient. In Varity Corp. v. Howe, 516 U.S. 489, 512, 116 S. Ct. 1065, 134 L. Ed. 2d 130 (1996), the Court concluded that §§ 502(a)(3) and (5), the section's "catchall" provisions, "act as a safety net, offering appropriate equitable relief for injuries caused by violations that § 502 does not elsewhere adequately remedy." It also observed that "we should expect that where Congress provided adequate relief for a beneficiary's injury, there will likely be no need for further equitable relief, in which case such relief normally would not be `appropriate.' " Id. at 515, 116 S. Ct. 1065. Frommert, 433 F.3d at 270; LaRue v. DeWolff, Boberg & Assoc., Inc., 128 S.Ct. 1020, 1026 (2008) ("[W]e have held that relief is not "appropriate" under § 502(a)(3) if another provision, such as § 502(a)(1)(B), offers an adequate remedy.") (Roberts, J. concurring) (citing Varity, supra).

11

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More specifically, the Second Circuit ruled in Frommert that "recalculation of benefits" is an available remedy under ERISA Section 502(a)(1)(B) for a Section 204(h) notice violation and that such relief is therefore not available under ERISA Section 502(a)(3). The court held: The relief that the plaintiffs seek, recalculation of their benefits consistent with the terms of the Plan, falls comfortably within the scope of § 502(a)(1)(B), which allows a plan participant "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." Because adequate relief is available under this provision, there is no need on the facts of this case to also allow equitable relief under § 502(a)(3). See Johnson v. Buckley 356 F.3d 1067, 1077 (9th Cir. 2004) ("when relief is available under section 1132(a)(1), courts will not allow relief under § 1132(a)(3)'s `catch-all provision.'"). Frommert, 433 F.3d at 270. See also Harrison v. Metro. Life Ins. Co., 417 F. Supp. 2d 424, 433 (S.D.N.Y. 2006) (dismissing Section 502(a)(3) claim because, as with the claim dismissed in Frommert, adequate relief was available under Section 502(a)(1)(B)). In this case, as in Frommert, Plaintiffs claimed ERISA disclosure violations. In Frommert, however, the plaintiffs sued the pension plan administrators. See Frommert, 433 F.3d at 256 (noting that defendants included "individually named Plan Administrators"). By contrast, Plaintiffs in this case had ample opportunity to sue the designated Plan Administrator for disclosure violations under Section 502(a)(1)(B), but they inexplicably chose not to do so. (MOD at 64 n. 23) (observing that "had Plaintiffs' counsel, even simply in an excess of caution, elected to name the plan administrator in addition to the company and the Plan itself, substantial confusion and effort would have been avoided"). Instead, Plaintiffs pursued their disclosure claims against CIGNA under Section 502(a)(3). To the extent Plaintiffs now seek under Section 502(a)(3) a recalculation of their benefits without wearaway, that same relief would have been

12

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available had they sued the designated Plan Administrator under Section 502(a)(1)(B).12 Pursuant to Frommert, Varity, and LaRue, because Plaintiffs could have sought recalculation of their benefits against the designated Plan Administrator under Section 502(a)(1)(B), they cannot obtain such relief under Section 502(a)(3), and their claim for relief against CIGNA must fail as a matter of law. Recognizing the difficulties they face in obtaining a remedy under Section 502(a)(3), Plaintiffs devote several pages of their Memorandum on Relief to an exploration of why they are entitled to a remedy under Section 502(a)(1)(B) against the Plan instead of CIGNA. (Pls' Mem. at 21-25). This position cannot be reconciled, however, with the Court's clear (and correct) pronouncement that "[t]he Second Circuit has also noted this assignment of duties by permitting suits to recover benefits under a plan to proceed against the plan itself and/or the administrator of the plan, while restricting claims of inadequate disclosures to plan administrators only." (MOD at 63) (emphasis added). Cf. Krauss v. Oxford Health Plans, Inc., 517 F.3d 614, 631 (2d Cir. 2008) ("since Oxford is not `the person specifically so designated by the terms of the instrument under which the plan is operated,' 29 U.S.C. § 1002(16)(A)(I), it is not a plan `administrator' within the meaning of ERISA § 502(c)(1), 29 U.S.C. § 1132(c)(1). [Plaintiffs] therefore cannot recover statutory damages under that provision of ERISA for Oxford's nondisclosure of certain information.").13

12

As noted below, Plaintiffs' assertion that they are entitled to be awarded additional pension benefits under Part A, as if Part B had never existed, does not pass muster under Section 502(a)(1)(B) or Section 502(a)(3). Defendants acknowledge that the Plan is an appropriate defendant ­ and perhaps the only proper defendant ­ on a traditional claim seeking benefits under the terms of the plan. The Court recognized this as well in its decision. (MOD at 68 n.26). Here, however, Plaintiffs seek benefits beyond those to which they are entitled under the Plan (and beyond those for which the Plan has been funded) as a remedy for disclosure violations.

13

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The appropriate path for Plaintiffs to have taken on their disclosure claims was set forth clearly in the Second Circuit's decision in Frommert. Plaintiffs should have sued the designated Plan Administrator under Section 502(a)(1)(B), and requested that the Court order the Plan Administrator to recalculate their benefits without the undisclosed provision ­ in this case, wearaway. See Frommert v. Conkright, 472 F. Supp. 2d 452, 458-59 (W.D.N.Y. 2007) (holding that the "best course" under Section 502(a)(1)(B) is to direct the plan administrator "`to recalculate plaintiff's retirement benefit'"). Plaintiffs' conscious decision to forego this path, while difficult to comprehend, forecloses them from being awarded the remedies they now seek under Section 502(a)(3). 2. Plaintiffs' Request For An Injunction Requiring CIGNA To Provide Benefits Comparable To Those Available Under Part A Is Not "Appropriate Equitable Relief."

Even if the Court were to conclude that Plaintiffs are entitled to a remedy under ERISA Section 502(a)(3), the principal remedy they propose ­ awarding them retroactive and prospective benefits recalculated under Part A ­ does not constitute "appropriate equitable relief." As this Court is well-aware, the Supreme Court has held that "appropriate equitable relief" under Section 502(a)(3) is limited to "those categories of relief that were typically available in equity." Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 210 (2002) (emphasis added); Mertens v. Hewitt Assocs., 508 U.S. 248, 256 (1993) (same).14 Regarding
14

See also D'Amico v. CBS Corp., 297 F.3d 287, 292 n. 5 (3d Cir. 2002) ("Because plaintiffs have chosen to proceed under 29 U.S.C. § 1132(a)(3), their fiduciary duty claims are limited to equitable relief. Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 122 S.Ct. 708 718-19, 151 L.Ed.2d 635 (2002)."); Burstein v. Ret. Account Plan For Employees Of Allegheny Health Educ. and Research Found., 334 F.3d 365, 373 and n.12 (3d Cir. 2003) ("These claims for breach of fiduciary duty under ERISA are brought pursuant to ERISA § 502(a)(3)(B), 29 U.S.C. § 1132(a)(3)(B). . . . We note that the Supreme Court has drawn a distinction between legal and equitable remedies in detailing what remedies are available under ERISA § 502(a)(3)(B) in its recent decision in Great­West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002).").

14

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injunctive relief in particular (the relief sought by Plaintiffs under ERISA Section 502(a)(3) in this case), the Supreme Court explained in Knudson that: statutory reference to that [injunction] remedy must, absent other indication, be deemed to contain the limitations upon its availability that equity typically imposes. Without this rule of construction, a statutory limitation to injunctive relief would be meaningless, since any claim for legal relief can, with lawyerly inventiveness, be phrased in terms of an injunction. Knudson, 534 U.S. at 211 n.1 (emphasis added). Here, Plaintiffs request an injunction requiring CIGNA to provide Plaintiffs (through the Plan) more money, both retroactively and prospectively. Although framed in terms of an injunction, this proposed remedy does not constitute equitable relief under Section 502(a)(3). Id. at 211 n.1; Gerosa v. Savasta & Co., Inc., 329 F.3d 317, 321 (2d Cir. 2003) ("In determining the propriety of a remedy [under ERISA Section 502(a)(3)], we must look to the real nature of the relief sought, not its label."). To the contrary, this is precisely the type of relief that the Supreme Court held in Knudson was not available under ERISA. Knudson, 534 U.S. at 210 ("Almost invariably . . . suits seeking (whether by judgment, injunction, or declaration) to compel the defendant to pay a sum of money to the plaintiff are suits for money damages, as that phrase has traditionally been applied. . . . And money damages are, of course, the classic form of legal relief.") (emphasis added; internal quotations and citations omitted). Pursuant to Knudson, the Second Circuit in Coan v. Kaufman, 457 F.3d 250 (2d Cir. 2006), affirmed this Court and rejected a retirement plan participant's request for a similar "injunction" seeking additional benefits: We agree with the district court, moreover, that the alternative relief Coan seeks under section 502(a)(3), an injunction requiring the defendants to restore funds to the defunct 401(k) plan to be distributed to former participants, does not transform what is effectively a money damages request into equitable relief.

15

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Id. at 264. Similarly, the Third Circuit recently held as a matter of law that a remedy strikingly similar to the injunction requested by Plaintiffs here was not equitable relief under Section 502(a)(3). In Eichorn v. AT&T Corp., 484 F.3d 644 (3d Cir.), cert. denied, 128 S.Ct. 709 (2007), the plaintiffs asserted a claim under Section 502(a)(3) for appropriate equitable relief, and sought an injunction "requiring [the defendant] to adjust its pension records," which would have "create[d] an obligation to pay the plaintiffs more money, both in the past and going forward." Id. at 655. The Third Circuit held that such a remedy ­ even though phrased an "equitable injunction" ­ was not equitable relief available under Section 502(a)(3).15 Plaintiffs' requested injunction in this case ­ requiring CIGNA to provide Plaintiffs benefits comparable to those they had under Part A ­ is no different from the proposed injunctions in Coan and Eichorn seeking greater pension benefits. Both remedies, although phrased in terms of an injunction, would "create an obligation to pay the plaintiffs more money" and both are legal relief not available under ERISA Section 502(a)(3). Coan, 457 F.3d at 264; Eichorn, 484 F.3d at 655.16 Consequently, as in Coan and Eichorn, Plaintiffs' request for an injunction under ERISA Section 502(a)(3) should be denied.
15

See also Ranke v. Sanofi-Synthelabo, Inc., No. 04-1618, 2004 WL 2473282, at *7 (E.D.Pa. Nov. 3, 2004) (holding that request for reinstatement of the enhanced pension benefit was not "appropriate equitable relief" under ERISA); Young v. Reconstructive Orthopaedic Assocs., II, No. 03-2034, 2005 WL 627796, at *15 (E.D. Pa. March 16, 2005) (refusing to award "benefits [plaintiff] would have received had [defendant] not breached its fiduciary duty" because such a remedy "does not fall within the narrow set of remedies defined by the Supreme Court as appropriate under ERISA Section 502(a)(3)"). Plaintiffs reliance on Bowen v. Mass., 487 U.S. 879 (1988), for a contrary proposition is misplaced. The Supreme Court in Knudson specifically distinguished Bowen on the grounds that it dealt with a different statute with different statutory language: Bowen v. Massachusetts, supra, upon which petitioners rely, is not to the contrary. We held in Bowen that the provision of the Administrative Procedure Act that precludes actions seeking "money damages" against federal agencies, 5 U.S.C. § 702, does not bar a State from seeking specific relief to obtain money to which it claims 16

16

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3.

Plaintiffs' Request For Additional Benefits Cannot Otherwise Be Characterized As "Appropriate Equitable Relief."

Plaintiffs also argue, as others have before them, that because equity courts had sole jurisdiction over matters relating to trusts, they had broad discretion to craft appropriate remedies without regard for the distinction between "legal" and "equitable." (See Pls' Mem. at 5-8). The Supreme Court, however, squarely considered and specifically rejected the argument that equitable relief under ERISA Section 502(a)(3) encompasses all such remedies: Since all relief available for breach of trust could be obtained from a court of equity, limiting the sort of relief obtainable under § 502(a)(3) to "equitable relief" in the sense of "whatever relief a common-law court of equity could provide in such a case" would limit the relief not at all. We will not read the statute to render the modifier ["equitable"] superfluous. Mertens, 508 U.S. at 257-58 (footnote omitted); see also Knudson, 534 U.S. at 219 ("These trust remedies are simply inapposite. In Mertens, we rejected the claim that the special equity-court powers applicable to trusts define the reach of § 502(a)(3)."). Consistent with Knudson and Mertens, the Second Circuit has explained: [the Supreme] Court made clear that section 502(a)(3) requires both that the "basis for [the] claim" and the "nature of the recovery" sought be equitable. See Sereboff, 126 S.Ct. at 1874. Even if breach of fiduciary duty is an equitable claim, therefore, remedies for breach of that fiduciary duty do not constitute "equitable relief" under section 502(a)(3) unless the plaintiff seeks a "categor[y] of relief that [was] typically available in equity." Mertens, 508 U.S. at 256 (emphasis omitted).

entitlement under the federal Medicaid statute, 42 U.S.C. § 1396b(d) (1994 ed. and Supp. V). Bowen "did not turn on distinctions between `equitable' actions and other actions ... but rather [on] what Congress meant by `other than money damages' " in the Administrative Procedure Act. Department of Army v. Blue Fox, Inc., 525 U.S. 255, 261, 119 S.Ct. 687, 142 L. Ed. 2d 718 (1999). Knudson, 534 U.S. at 210.

17

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Coan, 457 F.3d at 264.17 Here, the relief Plaintiffs seek is, at bottom, an award of additional benefits, both prospectively and retroactively. No matter how Plaintiffs try to characterize this relief, such a remedy is not "appropriate" or "equitable," and consequently is unavailable under ERISA Section 502(a)(3).18

17

See also Fisher v. Penn Traffic Co., No. 06 Civ. 5848(HB), 2007 WL 496657, at *5 (S.D.N.Y. Feb. 16, 2007) ("Fisher cannot cloak a legal claim for damages in equitable clothing. ERISA § 502(a)(3) `only allows for equitable relief.' Although Fisher requests declarations [that he receive a lump-sum benefit] from this Court, the nature of such declarations is inherently legal."); Mitchell v. Emeritus Mgmt., LLC, 524 F. Supp. 2d 67, 71 (D. Me. 2007) (rejecting the plaintiff's remedial request as not "typically available at equity" because it would require defendant "to pay her life insurance benefits"). Plaintiffs also try to justify their request for "past due benefits" on the grounds that Defendants have been unjustly enriched. (Pls' Mem. at 18-21). Plaintiffs ignore, however, that this Court already held that the cash balance plan was entirely lawful, and accordingly no unjust enrichment resulted from the adoption of Part B. This Court also did not find any unjust enrichment (nor did Plaintiffs allege or prove any) as a result of the disclosures that this Court held were deficient. Indeed, the remedy Plaintiffs propose for the disclosure violations bears no relationship to any alleged unjust enrichment. Moreover, any unjust enrichment only could form the basis of a claim for restitution at law, and would not be "appropriate equitable relief" under ERISA Section 502(a)(3). The Supreme Court in Knudson explained that a claim for restitution in equity based on unjust enrichment could only lie where specific "money or property identified as belonging in good conscience to the plaintiff could clearly be traced to particular funds or property in the defendant's possession." Knudson, 534 U.S. at 213. By contrast, where the plaintiff "could not assert title or right to possession of particular property, but in which nevertheless he might be able to show just grounds for recovering money to pay for some benefit the defendant had received from him, the plaintiff had a right to restitution at law." Id. (emphasis added). Here, Plaintiffs do not assert title or right to any particular property, so any claim to unjust enrichment would be a claim at law, not "equitable relief" under ERISA Section 502(a)(3). E.g., Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 103 (2d Cir. 2005) (rejecting claim for unjust enrichment where the monies sought could not "clearly be traced back to particular funds or property in the defendant's possession").

18

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C.

Plaintiffs And The Class Are Not Entitled To Benefits Under Part A (Or Something Similar) Through Today And Into The Future As A Remedy For Their 204(h) Notice Claim. In their Memorandum On Relief, Plaintiffs propose as a remedy for their Section 204(h)

notice claim that every class member should be entitled to benefits substantially equivalent to the benefits they would have earned under the Plan if Part A were still in effect today and into the future.19 (Pls' Mem. at 34-37). Even putting aside that Plaintiffs' proposed remedy runs afoul of the "appropriate equitable relief" limitations in ERISA Section 502(a)(3), Plaintiffs' proposed remedy also fails because it (1) bears no relationship to the prejudice or harm Plaintiffs suffered, as it disregards the myriad communications provided to Plaintiffs notifying Plan participants that they would earn benefits under the Part B benefit formula, (2) ignores Amendment No. 4, which was a separate (and unchallenged) amendment that froze benefits under Part A and was disclosed to class members in clear and unambiguous terms, and (3) cannot be reconciled with the Court's holding that rehires were not entitled to any Section 204(h) notice and are not entitled to any remedy on their Section 204(h) notice claim. 1. No Member of the Class Is Entitled To Benefits Under Part A (Or Anything Comparable) Because Such A Remedy Bears No Relationship To The Harm Suffered, Since the 1998 Part B SPD Sufficiently Disclosed Part B's Ongoing Benefit Formula And Class Members Received Several Communications Describing Exactly What Their Benefits Were At Any Point In Time.

Defendants acknowledge that some courts have stated that plan amendments are not enforceable where a proper Section 204(h) notice is not provided. However, neither the statute nor Second Circuit precedent authorizes such a sweeping result where it is not necessary to remedy the harm caused to plan participants. To the contrary, Section 204(h) did not contain any

19

Plaintiffs also propose a remedy on their Section 204(h) notice claim regarding wearaway that is the same remedy proposed on Plaintiffs' SPD/SMM claims. The wearaway remedy is discussed separately infra at 25-27.

19

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provision authorizing the complete invalidation of plan amendments enacted without a Section 204(h) notice until the statute itself was amended in 2001, and even that new statute provides that an amendment is invalid only if the failure to provide the Section 204(h) notice was an "egregious failure." 29 U.S.C. § 1054(h).20 Here, awarding Plaintiffs and members of the class benefit accruals under Part A (or anything similar) would be a windfall, and would provide Plan participants with much more than any of them reasonably could have, or would have, expected. "[T]here is no doubt about the centrality of ERISA's object of protecting employees' justified expectations of receiving the benefits their employers promise them." Frommert, 433 F.3d at 262 (quoting Central Laborers' Pension Fund v. Heinz, 541 U.S. 739, 743 (2004)). (See also MOD at 71 (Section 204(h) notice requirement is designed to protect "employees' reasonable expectations regarding [their] benefits")). On the other hand, however, the "aim of ERISA is to make the plaintiffs whole, but not to give them a windfall." Henry v. Champlain Enter., Inc., 445 F.3d 610, 624 (2d Cir. 2006) (citation and internal quotations omitted) (emphasis added). Accordingly, the court in In re Citigroup Pension Plan ERISA Litig., No. 05 Civ. 5296, 2007 WL 4205855, at * 3 (S.D.N.Y. Nov. 27, 2007), invalidated a plan amendment adopting a cash balance plan only "to the extent" the amendment failed to disclose one particular aspect of the plan, but did not invalidate the entire plan. The Section 204(h) notice disclosure violations found by this Court fall into two distinct categories: (1) disclosure deficiencies regarding wearaway and opening account balances, and (2) disclosure deficiencies regarding the ongoing benefits earned under Part B each year from 1998 to the present. The latter deficiencies relate only to the disclosures in the 1997 Newsletter

20

That Congress had to amend Section 204(h) in 2001 to specifically insert a provision invalidating amendments for which a Section 204(h) notice was not provided demonstrate that this remedy was not available under the prior version of the statute.

20

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and Retirement Kits.21 Importantly, Plaintiffs have not alleged ­ and this Court has not found ­ any misrepresentations or disclosure deficiencies regarding the description of the ongoing benefit formula in the 1998 SPD. To the contrary, the SPD (which post-dates both the Retirement Kit and the Newsletter) unambiguously describes how benefit credits are earned based on the class member's age, service, and salary, and how interest is earned on the account balance at a rate based on "5-year Treasury Bonds as of November of the previous calendar year, plus 0.25 percentage points." (Defs' Proposed Post-Trial Findings of Fact ¶ 242).22 Thus, by the time of the publication of the SPD (if not before), class members were properly apprised of the ongoing benefit formula. Class members also received annual account statements reflecting their account balances at the beginning of each year, the amount of benefit credits and interest earned during the year, and their account balance at the end of the year. As such, each class member knew exactly how much he/she earned in additional benefits in each year, and how that number was calculated. For example, Plaintiff Annette Glanz was explicitly told in her annual account statements that she earned a benefit of $3095.98 in 1998, $3495.14 in 1999, $4994.94 in 2000, and $5668.89 in 2001, and she was told how those benefits were calculated. (See Trial Ex. 520). Yet despite these disclosures, Plaintiffs request, as a remedy for the disclosure violation, benefit

21

Deficiencies regarding wearaway ­ and the appropriate remedy for such deficiencies ­ are addressed infra at 25-27. Importantly, these deficiencies relate exclusively to the creation of opening account balance