Free Trial Memo - District Court of Connecticut - Connecticut

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UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT JANICE C. AMARA, GISELA R. BRODERICK, ANNETTE S. GLANZ, individually and on behalf of all others similarly situated, : : : : : : Plaintiffs, : : : : : : : Defendants. :

vs. CIGNA Corp. and CIGNA Pension Plan,

Civil No. 3:01-CV-2361 (MRK)

PLAINTIFFS' MEMORANDUM ON RELIEF

Stephen R. Bruce Ct23534 Allison C. Caalim 805 15th St., NW, Suite 210 Washington, DC 20005 (202) 371-8013 Thomas G. Moukawsher Ct08940 Moukawsher & Walsh, LLC 21 Oak St. Hartford, CT 06106 (860) 278-7000 Attorneys for Named Plaintiffs and Plaintiff Class

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Table of Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 I. Under ERISA §502(a)(3), Complete Relief, Including Past Due Benefits, Can Be Provided to the Members of the Class Consistent With Great-West and Varity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 A. Great-West Holds that Appropriate Equitable Relief Does Not Include "Personal Liability" for a "Contractual Obligation" to Reimburse Money, But It Recognizes that Equitable Relief Includes Orders to Recalculate Benefits to Remedy Statutory Violations . . . . 8 The Equitable Relief Affirmed in Varity for Disclosure Violations Was Not Diminished by Great-West. . . . . . . . . . . . . . . . . . . . . . . . . 12 Requiring Retirement Benefits to Be Paid in the Future to "Undo" Statutory Violations Is "Specific" or Injunctive Relief. . . . . . . . . . . 14 Like Back Pay under Title VII, Past Due Benefits Are an "Integral Part of an Equitable Remedy"; Past Due Benefits Can Also Be Recovered Through Equitable Restitution of CIGNA's Unjust Cost Savings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

B.

C.

D.

II.

Frommert Shows that Past Due Benefits for Statutory Violations Can Alternatively Be Recovered Under §502(a)(1)(B) . . . . . . . . . . . . . . . . . . 21 The Relief Which Plaintiffs Seek Is "Appropriate" Because It Protects Participants from CIGNA's Disclosure Violations and Deters Future Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Plaintiffs' Relief Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 A. Declaratory and Injunctive Relief to Require Disclosure of the Full Impact of the Cash Balance Changes . . . . . . . . . . . . . . . . . . . . 30

III.

IV.

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B.

Continue the Prior Formulas Until Notice of Reductions Is Provided to Remedy the Violation of the ERISA §204(h) Notice Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Protect the "Full Value" of Prior Benefits, Prohibit Undisclosed Wear-Aways, and Provide "At Least Roughly Equivalent" Future Benefits to Redress the SMM/SPD Violations. . . . . . . . . . . . . . . . 34 Order Annuities with Equitable Setoffs of Lump Sums to Cure the Relative Value Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Other Relief Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

C.

D.

E. F. V.

CIGNA's Anticipated Counter-Proposals on Great-West, the Costs of Remedies, Retroactive Relief, "Cashed Out" Participants, and Relative Value Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

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TABLE OF AUTHORITIES FEDERAL CASES Amato v. Western Union Int'l, Inc., 773 F.2d 1402 (2d Cir. 1985) .............. 1 In re AOL Time Warner ERISA Litig., 2007 WL 3145111 (S.D.N.Y. 2007) ...................................................................................................... 45 Beck v. Levering, 947 F.2d 639 (2d Cir. 1991), cert. denied, 112 S.Ct. 1937 (1992) ............................................................................................ 43 Bennett v. Manufacturers & Traders, 2005 WL 2896962 (N.D.N.Y. 2005) 37 Bowen v. Massachusetts, 487 U.S. 879 (1988) ...................... 8, 10, 15-16, 18 Bridges v. American Electric Power Co., 498 F.3d 442 (6th Cir. 2007) .... 50 Broga v. Northeast Utilities, 315 F. Supp. 2d 212 (D.Conn. 2004) ............ 17 Burke v. Kodak, 336 F.3d 103 (2d Cir. 2003) ................................... 5, 27, 37 Burke v. Kodak, C.A. 00-6596 (W.D.N.Y. 2004) ....................................... 40 Burton v. City of Belle Glade, 966 F. Supp. 1178 (S.D. Fl. 1997) .............. 39 Carrabba v. Randalls Food Markets, 145 F. Supp. 2d 763 (N.D. Tex. 2000) ...................................................................................................... 48 Central Laborers' Pension Fund v. Heinz, 541 U.S. 739 (2004) ........... 1, 49 Central States Southeast and Southwest Areas Health and Welfare Fund v. Merck-Medco Managed Care, 433 F.3d 181 (2d Cir. 2005) ............. 16 Central States Southeast & Southwest Areas Health and Welfare Fund v. Merck-Medco Managed Care, 504 F.3d 229 (2d Cir. 2007) ............. 45 In re Citigroup Pension Plan ERISA Litigation, 241 F.R.D. 172 (S.D.N.Y. 2006) ................................................................................ 16-17
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In re Citigroup Pension Plan ERISA Litigation, 470 F. Supp. 2d 323 (S.D.N.Y. 2006) ................................................................................. 4, 32 Clark v. Wooster, 119 U.S. 322 (1886) ....................................................... 19 Coan v. Kaufman, 457 F.3d 250 (2d Cir. 2006) ............................................ 4 Cobell v. Norton, 283 F. Supp. 2d 66 (D.D.C. 2003) ................................. 44 Crocco v. Xerox, 137 F.3d 105 (2d Cir. 1998) ............................................ 16 Crosby v. Bowater Inc. Retirement Plan, 382 F.3d 587 (6th Cir. 2004) ..... 23 Curtiss-Wright v. Schoonejongen, 514 U.S. 73 (1993) ............................... 36 Dittmann v. Dyno Nobel, 1998 WL 865603 (N.D.N.Y. 1998) ................... 24 Dobson v. Hartford Life & Accident Ins. Co., 389 F.3d 386 (2d Cir. 2004) 44 Dobson v. Hartford Life & Accident Ins. Co., 518 F. Supp. 2d 365 (D. Conn. 2007) ..................................................................................... 44 Dunnigan v. Metropolitan Life Ins. Co., 277 F.3d 223 (2d Cir. 2002) . 20, 44 Esden v. Bank of Boston, 229 F.3d 154 (2d Cir. 2000) ............................... 22 Flight Attendants v. Zipes, 491 U.S. 754 (1989) ........................................... 5 Florin v. Nationsbank, 34 F.3d 560 (7th Cir. 1994) ................................... 46 Forbush v. J.C. Penney Pension Plan, C.A. 90-2719 (N.D. Tex.) .............. 46 Franklin v. Thornton, 983 F.2d 939 (9th Cir. 1993) ................................... 38 Frommert v. Conkright, 433 F.3d 254 (2d Cir. 2006) .......................... passim Frommert v. Conkright, 472 F. Supp. 2d 452 (W.D.N.Y. 2007) ................ 48 FTC v. Verity Int'l, 443 F.3d 48 (2d Cir. 2006) .......................................... 21
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Gediman v. Anheuser-Busch, 299 F.2d 537 (2d Cir. 1962) ........................ 40 Gilley v. Monsanto, 490 F.3d 848 (11th Cir. 2007) .................................... 16 Goldberger v. Integrated Resource Inc., 209 F.3d 43 (2d Cir. 2000) ......... 46 Graden v. Conexant Systems, 496 F.3d 291 (3d Cir. 2007) ........................ 11 Greater Blouse, Skirt & Undergarment Ass'n, Inc. v. Morris, 1996 WL 325595 (S.D.N.Y. 1996) ................................................................. 24 Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002) passim Hall v. LHACO, Inc., 140 F.3d 1190 (8th Cir. 1998) ................................. 25 Harper v. Virginia Department of Taxation, 509 U.S. 86 (1993) ............... 49 Harzewski v. Guidant, 489 F.3d 799 (7th Cir. 2007) ............................. 49-50 Hecht Co. v. Bowles, 321 U.S. 321 (1944) ................................................... 6 Heidgerd v. Olin Corp., 906 F.2d 903 (2d Cir. 1990) ................................... 5 Herman v. So. Carolina National Bank, 140 F.3d 1413 (11th Cir. 1998) .. 26 Ingersoll Rand Co. v. McClendon, 498 U.S. 133 (1990) ............................ 25 Johnson v. Georgia Highway Express, 417 F.2d 1122 (5th Cir. 1969) ...... 19 Katsaros v. Cody, 744 F.2d 270 (2d Cir. 1984) ...................................... 4, 43 LaRue v. DeWolff, Boberg, and Assocs., 552 U.S. --, 2008 WL 440748 (Feb. 20, 2008) ...................................................................................... 12 Layaou v. Xerox Corp., 238 F.3d 205 (2d Cir. 2001) ............................. 5, 22 Layaou v. Xerox Corp., 330 F. Supp. 2d 297 (W.D.N.Y. 2004) ................. 22 Leckey v. Stefano, 263 F.3d 267 (3d Cir. 2007) .......................................... 38
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Lorillard v. Pons, 434 U.S. 575 (1978) ........................................................ 7 In re Marsh ERISA Litig., 2006 WL 3706169 (S.D.N.Y. 2006) ................. 11 Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134 (1985) ......... 11 Mathews v. Chevron Corp., 362 F.3d 1172 (9th Cir. 2004) ........................ 10 Mertens v. Hewitt Associates, 508 U.S. 248 (1993) ............................. 6-7, 19 Mitchell v. Robert De Mario Jewelry, 361 U.S. 288 (1960) ...................... 5-6 Modern Settings, Inc. v. Prudential-Bache Secur., Inc., 936 F.2d 640 (2d Cir. 1991) ......................................................................................... 37 Paese v. Hartford Life & Accident Ins. Co., 449 F.3d 435 (2d Cir. 2006) . 46 Page/Collins v. PBGC, No. 88-3406 (D.D.C.) ...................................... 43, 46 Pease v. Rathbun-Jones Engineering Co., 243 U.S. 273 (1917) ................ 19 Peralta v. Hispanic Business, Inc., 419 F.3d 1064 (9th Cir. 2005) ............ 27 Pereira v. Farace, 413 F.3d 330 (2d Cir. 2005) ..................................... 4, 20 Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41 (1987) ......................... 1-2 Porter v. Warner Holding Co., 328 U.S. 395 (1946) .......................... 3, 6, 19 Reynoldsville Casket Co. v. Hyde, 514 U.S. 749 (1995) ............................. 49 Roberts v. Texaco, Inc., 979 F. Supp. 185 (E.D.N.Y. 1997) ....................... 45 Robinson v. Lorillard Corp., 444 F.2d 791 (4th Cir. 1971) .......................... 8 Sereboff v. Mid Atlantic Medical Services, 547 U.S. 356 (2006) ............ 9-10 Sheppard v. Consolidated Edison Co., 2002 WL 2003206 (E.D.N.Y. 2002) ...................................................................................................... 45
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Strom v. Goldman, Sachs & Co., 202 F.3d 138 (2d Cir. 1999) .................... 4 Sullivan v. LTV Aerospace & Defense Co., 82 F.3d 1251 (2d Cir. 1996) ..... 8 Swede v. Rochester Carpenters Pension Fund, 467 F.3d 216 (2d Cir. 2006) ................................................................................................. 48-49 Taylor v. United Technologies, 2007 WL 2302284 (D.Conn. 2007) .......... 51 Varity Corp. v. Howe, 516 U.S. 489 (1996) ............................ 2, 13-14, 26-27 Wal-Mart Stores, Inc. v. Visa U.S.A. Inc., 396 F.3d 96 (2d Cir. 2005) . 45, 47 West v. AK Steel, 484 F.3d 395 (6th Cir. 2007) ..................................... 22-23 Whitlock v. Hause, 694 F.2d 861 (1st Cir. 1982) ........................................ 19 Wickham Contracting Co. v. Local Union 3, IBEW, 955 F.2d 831 (2d Cir.), cert. denied, 506 U.S. 946 (1992) .......................................................... 44

FEDERAL STATUTES, REGULATIONS AND LEGISLATIVE HISTORY ERISA §2, 29 U.S.C. §1001 .......................................................................... 1 ERISA §203(e), 29 U.S.C. §1053(e) ........................................................... 38 ERISA §204(b)(5)(B)(ii), 29 U.S.C. §1054(b)(5)(B)(ii) ............................. 31 ERISA §204(h), 29 U.S.C. §1054(h) ................................................... passim ERISA §205(a)(1), 29 U.S.C. §1055(a)(1) ................................................. 38 ERISA §205(c), 29 U.S.C. §1055(c) .......................................................... 38 ERISA §205(g), 29 U.S.C. §1055(g) .................................................... 38, 40 ERISA §502(a)(1)(B), 29 U.S.C. §1132(a)(1)(B) ............................... passim

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ERISA §502(a)(2), 29 U.S.C. §1132(a)(2) ........................................... 12, 50 ERISA §502(a)(3), 29 U.S.C. §1132(a)(3) .......................................... passim IRC §417(e), 26 U.S.C. §417(e) ................................................................. 38 Treas. Reg. 1.401(a)-20 ............................................................................... 38 Treas. Reg. 1.411(a)-11(c)(2)(i) .............................................................. 4, 38 Treas. Reg. 1.417(a)(3)-1 ............................................................................ 31 Treas. Reg. 1.417(e)-1(b) ........................................................................ 4, 38 Treas. Reg. 54.4980F-1 ............................................................................... 30 65 Fed. Reg. 70227 (Nov. 21, 2000) ........................................................... 31 P.L. 107-16, §659 ........................................................................................ 33 P.L. 109-80, §701(a) .................................................................................... 31 S.Rep. No. 93-127, 1974 U.S.C.C.A.N. 4838 .................................. 2, 25- 26 H. Conf. Rep. 101-386, 1989 U.S.C.C.A.N. 3018 ...................................... 26 MISCELLANEOUS Dobbs, Law of Remedies (2d ed.) ................................................ 2, 19, 21, 47 John Langbein, What ERISA Means By "Equitable": The Supreme Court's Trail of Error in Russell, Mertens, and Great-West, 103 Colum. L. Rev. 1317, 1336 (Oct. 2003) .......................................................................... 26 Manual for Complex Litigation (Fourth) .............................................. 28, 39 Restatement (2d) of Trusts .......................................................................... 5-7

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Introduction ERISA §502(a)(3) authorizes the Court to enjoin the enforcement of undisclosed benefit reductions in the CIGNA Pension Plan and to provide other appropriate equitable relief to the extent the undisclosed provisions were the subject of misleading representations by CIGNA. ERISA §502(a)(1)(B) also authorizes the Court to order that past due benefits be paid in accordance with the lawful and properly disclosed plan provisions. Ordering that benefits be provided to employees and their families to redress statutory violations is an inescapable necessity for a statute entitled the "Employee Retirement Income Security Act" whose basic purpose is to protect "the interests of participants in employee benefit plans and their beneficiaries." ERISA §2."There is no doubt about the centrality of ERISA's object of protecting employees' justified expectations of receiving the benefits their employers promise them." Central Laborers' Pension Fund v. Heinz, 541 U.S. 739, 743 (2004). ERISA was "enacted for the purpose of assuring employees that they would not be deprived of their reasonably anticipated pension benefits." Amato v. Western Union Int'l, Inc., 773 F.2d 1402 (2d Cir. 1985). The causes of action in ERISA Section 502(a) provide "essential tools for accomplishing the stated purposes of ERISA." Pilot Life Ins. Co. v. Dedeaux, 481
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U.S. 41, 52-53 (1987). Congress "specifically" designed ERISA's enforcement provisions "to provide...participants and beneficiaries with broad remedies for redressing or preventing violations." S. Rep. 93-127, at 35; 1974 U.S.C.C.A.N. 4838, 4871. "Relief may take the form of accrued benefits due, a declaratory judgment on entitlement to benefits, or an injunction against a plan administrator's improper refusal to pay benefits." Dedeaux, supra, 481 U.S. at 53. If the contrary position was accepted, Congress would have enacted a series of pension reforms over a nearly 35-year period, while perversely leaving participants and their families with no meaningful remedies when those rules are broken. As the Supreme Court observed in Varity Corp. v. Howe, 516 U.S. 489, 515 (1996), "We are not aware of any ERISA-related purpose that denial of a remedy would serve." If the position were to be accepted that "all available remedies" are to be denied, Dobbs recognizes that this would be "exactly equivalent to saying the plaintiff has no right at all." Law of Remedies, §2.4(7) (emph. in orig.). Based on discussions with counsel, Plaintiffs anticipate nonetheless that CIGNA will contend that the statutory cause of action on which this Court primarily relies in the February 15, 2008 decision, ERISA §502(a)(3), forecloses all or almost all meaningful relief. As indicated above, the long-established and
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well-settled legal principle is, however, that "[u]nless a statute in so many words, or by a necessary and inescapable inference, restricts the court's jurisdiction in equity, the full scope of that jurisdiction is to be recognized and applied." Moreover, where the "equitable jurisdiction" of the court is "properly invoked," the court has "the power to decide all relevant matters in dispute and to award complete relief." Porter v. Warner Holding Co., 328 U.S. 395, 398-9 (1946) ("unless otherwise provided by statute" or "by a necessary and inescapable inference" "[t]he great principles of equity, securing complete justice, should not be yielded"). No relief or very limited relief for misleading disclosures is especially antithetical to ERISA §204(h) because Congress virtually built relief for disclosure violations into the law. As the primary illustration, ERISA §204(h), as in effect until June 7, 2001 provides that "[a] plan ... may not be amended so as to provide for a significant reduction in the rate of future benefit accrual, unless ... not less than 15 days before the effective date of the plan amendment, the plan administrator provides a written notice, setting forth the plan amendment and its effective date to each participant in the plan ...." The Second Circuit has already ruled that without the proper notice, the amendment that provides for a significant reduction is "ineffective." Frommert v. Conkright, 433 F.3d 254, 268 (2d Cir.
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2006). Accord In re Citigroup Pension Plan ERISA Litig., 470 F.Supp.2d 323, 340 (S.D.N.Y. 2006) ("the amendments never took legal effect").1 As discussed further below, Plaintiffs appreciate that the Court has discretion in providing "appropriate" relief. But the breadth of that discretion is defined by the statutory specifics, such as in Section 204(h) and by the statutory purpose of protecting the reasonably-anticipated retirement income of participants and their beneficiaries. See Strom v. Goldman, Sachs & Co., 202 F.3d 138, 247 (2d Cir. 1999) (the "objective is to eliminate the direct economic effect of an alleged violation of the statute" and thereby "serve Congress' purpose of affording meaningful relief to benefit plan beneficiaries in circumstances such as these") 2; Katsaros v. Cody, 744 F.2d 270, 281 (2d Cir. 1984) ("ERISA grants the court wide discretion in fashioning equitable relief to protect the rights of pension fund beneficiaries"). It is incontestable that disclosing important information about retirement benefits to participants in an understandable manner and not misleading

Similarly, the Treasury regulations on relative value disclosures build in the conclusion that "No consent is valid" unless the required explanation is provided. Treas. Reg. 1.411(a)-11(c)(2)(i) and 1.417(e)-1(b)(2)(i). Pereira v. Farace, 413 F.3d 330, 340 (2d Cir. 2005), and Coan v. Kaufman, 457 F.3d 250, 263-4 (2d Cir. 2006), both distinguish Strom on the ground that the plaintiffs in Pereira and Coan were seeking money damages instead of equitable relief.
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them about their benefits are among ERISA's primary reforms. See Heidgerd v. Olin Corp., 906 F.2d 903, 907 (2d Cir. 1990); Layaou v. Xerox, 238 F.3d 205, 209 (2d Cir. 2001); Burke v. Kodak, 336 F.3d 103, 110 (2d Cir. 2003); Frommert, supra, 433 F.3d at 262. As the Supreme Court found in Mitchell v. Robert De Mario Jewelry, 361 U.S. 288, 296 (1960), concerning the Fair Labor Standards Act, "because of what we have found to be the statutory purposes, there is doubtless little room for the exercise of discretion not to order reimbursement."3 I. Under ERISA §502(a)(3), Complete Relief, Including Past Due Benefits, Can Be Provided to the Members of the Class Consistent With GreatWest and Varity. At common law, an order requiring a trustee to provide benefits in compliance with the terms of a trust or with statutory requirements was equitable relief. Indeed, at common law, trust beneficiaries had no where else to turn for remedies than courts of equity. Section 199 of the Res. (2d) of Trusts provides under the heading "Equitable Remedies of Beneficiary": "The beneficiary of a trust can maintain a suit (a) to compel the trustee to perform his duties as a trustee; (b) to enjoin the trustee from committing a breach of trust; (c) to compel the trustee to redress a breach of trust..." Under "Nature of Remedies of Beneficiary," Accord Flight Attendants v. Zipes, 491 U.S. 754, 758-9 (1989) (finding that discretion on "appropriate remedies" is guided by the "`large objectives' of the relevant Act").
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Section 197 of the Restatement provides that "[e]xcept as stated as Section 198, the remedies of the beneficiary against the trustee are exclusively equitable."4 Supreme Court decisions when "memories of the divided bench"5 were less distant than today were to the same effect. In addition to the Supreme Court's decision in Porter v. Warner Holding Co., supra, on the restitution of rents collected by an apartment owner in excess of emergency price controls, the Supreme Court held in Mitchell v. Robert De Mario Jewelry, supra, concerning the restoration of lost wages required to be paid by the FLSA, that: When Congress entrusts to an equity court the enforcement of prohibitions contained in a regulatory enactment, it must be taken to have acted cognizant of the historic power of equity to provide complete relief in light of the statutory purposes. As this Court long ago recognized, `there is inherent in the Courts of Equity a jurisdiction ... to give effect to the policy of the legislature.' 361 U.S. at 291-92 (quoting and following 1839 Supreme Court decision).6 Accord Hecht Co. v. Bowles, 321 U.S. 321, 329 (1944) ("The essence of equity

Section 198 provides: "If the trustee is under a duty to pay money immediately and unconditionally to the beneficiary, the beneficiary can maintain an action at law against the trustee to enforce payment."
5

4

Mertens v. Hewitt Associates, 508 U.S. 248, 256 (1993).

The dissent in Mitchell agreed with the majority that "It is not to be doubted that an equity court, proceeding under unrestricted general equity powers, may decree all the relief, including incidental legal relief, necessary to do complete justice between the parties." 361 U.S. at 299.
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jurisdiction has been the power of the Chancellor to do equity and to mould each decree to the necessities of the particular case"); Res. (2d) of Trusts, §205, comment a (if "trustee commits a breach of trust, the beneficiary may have the option of pursuing a remedy which will put him in the position in which he was before the trustee committed the breach of trust ... or ... a remedy which will give him any profit which the trustee has made by committing the breach ... or ... which will put him in the position in which he would have been if the trustee had not committed the breach of trust"). Against this backdrop, Congress enacted ERISA §502(a)(3) authorizing the Federal courts "to enjoin any act or practice which violates any provision of this title or the terms of the plan or to obtain other appropriate equitable relief to redress such violations or to enforce any provisions of this title or the terms of the plan." In interpreting statutory language like "appropriate equitable relief," it is well-settled that the relevant precedents are those in effect "at the time" of the enactment. See, e.g., Lorillard v. Pons, 434 U.S. 575, 582 (1978). Indeed, the majority in Mertens v. Hewitt Assoc., supra, criticizes the dissent for "projecting current attitudes upon the helpless past" when the issue was "the state of the law" "in 1974, when ERISA was enacted." 508 U.S. at 257 n.7. When ERISA was enacted in 1974, the Supreme Court's view of the judiciary's authority to provide
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equitable relief to redress violations of statutory requirements was expressed in cases like Mitchell and Porter and Title VII cases like Robinson v. Lorillard Corp., 444 F.2d 791, 802 (4th Cir. 1971) ("The back pay award is ... equitable- intended to restore the recipients to their rightful economic status absent the effects of the unlawful discrimination").7 A. Great-West Holds that Appropriate Equitable Relief Does Not Include "Personal Liability" for a "Contractual Obligation" to Reimburse Money, But It Recognizes that Equitable Relief Includes Orders to Recalculate Benefits to Remedy Statutory Violations.

Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002), unfortunately seems to sometimes be known more by gross characterization than what the Court actually held. The Court's careful distinction between the contractual relief which it denied and the equitable relief available under Title VII and in Bowen v. Massachusetts, 487 U.S. 879 (1988), for statutory violations is sometimes simply overlooked. This has sowed confusion even with respect to basic remedies for statutory violations, but Plaintiffs respectfully submit that Great-West presents no barrier to the relief sought here.

The Second Circuit has also determined that Congress intends for all of the relief available under ERISA §§502(a)(1)(B) and 502(a)(3) to be "equitable in nature" for purposes of deciding whether there is a right to a jury trial. Sullivan v. LTV Aerospace & Defense Co., 82 F.3d 1251, 1257-9 (2d Cir. 1996).
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In Great-West, the petitioners (the insurer and a plan) sued an employee's spouse under a plan's reimbursement provision to recover medical expenses paid to the spouse from proceeds she had received from a third-party tortfeasor. The Supreme Court held that such relief was not equitable because the petitioners sought "to impose personal liability on respondents for a contractual obligation to pay money" and "an injunction to compel the payment of money past due under a contract, or specific performance of a past due monetary obligation, was not typically available in equity." 534 U.S. at 210-211. The Court distinguished its prior ruling in Bowen on Medicare benefits as a case which sought "specific relief" to redress a violation of a federal statute: "Bowen ... did not deal with specific performance of a contractual obligation to pay past due sums." Id. at 212. Instead, it dealt with a "statutory obligation" the violation of which the State of Massachusetts claimed "would lead to underpayments in the future. Thus, the [Bowen] suit was not merely for past due sums, but for an injunction to correct the method of calculating payments going forward." Id. Four years later, the Supreme Court rejected an expansive view of Great West in Sereboff v. Mid Atlantic Medical Services, 547 U.S. 356 (2006). There the Court demurred when it was asked to hold that relief for a claim sounding in contract can never be appropriate equitable relief because contract claims are
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always at law. The Court reverted to historic equity jurisprudence, relying on a 1914 case for the proposition that a "contract to convey a specific object even before it is acquired" can be enforced as an equitable lien, even if the "specific object" is expressed in monetary terms. Id. at 363 and 367. Sereboff warns against reading Great West to squeeze the life out of Section 502(a)(3): ERISA provides for equitable remedies to enforce plan terms, so the fact that the action involves a breach of contract can hardly be enough to prove relief is not equitable; that would make Section 502(a)(3)(B)(ii) an empty promise. Id. In Bowen, the Supreme Court likewise warned that "[t]he fact that a judicial remedy may require one party to pay money to another is not a sufficient reason to characterize the relief as `money damages.'" 487 U.S. at 893. That the benefits are monetary "cannot transform the nature of the relief sought­specific relief, not relief in the form of damages." Id. at 895. Citing this principle, the Ninth Circuit held in Mathews v. Chevron Corp., 362 F.3d 1172, 1185 (9th Cir. 2004), that remedying a breach of fiduciary duty in a misrepresentation case by ordering a plan to treat participants as retiring later did not involve money damages even though it resulted in the plaintiffs collecting money in the form of additional benefits. The important thing was that the Court's order changed the position of the plaintiffs under the plan terms. Id. Along the same line, the Third Circuit

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recently held in Graden v. Conexant Systems, 496 F.3d 291 (3d Cir. 2007), that ERISA entitles participants "not only to what is in their accounts, but also to what should be there given the terms of the plan and ERISA's fiduciary obligations." Id. at 297. Graden rejected the defendant's argument that the claim was "better characterized as one for damages rather benefits," holding that "it is beyond dispute that such relief" is "properly characterized as `benefits' because it merely gives the participant what he is entitled to receive under the plan." Id. at 298-9. Accord In re Marsh ERISA Litig., 2006 WL 3706169, *7 (S.D.N.Y. 2006) ("It is of no consequence that, in the final reckoning, Plan members will benefit from the recovery, because it is taken for granted that an ERISA-covered plan ultimately serves individuals"). In both Great-West and Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134 (1985), the plaintiffs sought to remedy individual injuries with cash and were not seeking to adjust their rights under the plan terms to redress or undo statutory violations. In Russell, the plaintiff was eventually paid disability benefits under the terms of the plan but sought consequential damages for the delay in her receipt of those benefits. In Great-West, the insurer and plan sought to recover medical expenses that they had previously incurred from the personal injury recovery that an employee's spouse secured from a tortfeasor.
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Just last month, the Supreme Court rejected a related attempt to limit the relief available under Section 502(a)(2). In LaRue v. DeWolff, Boberg, and Assocs., 552 U.S. --, 2008 WL 440748 (Feb. 20, 2008), the Court overturned a Fourth Circuit ruling that participants lack standing to sue for individualized losses from breaches of fiduciary duty because ERISA §409 is limited to "losses to the plan." The Court allowed Mr. LaRue to seek a Section 502(a)(2) remedy for a breach of fiduciary that affected him individually because the breach "creates the kind of harms that concerned the draftsmen of §409." In doing so, the Court distinguished Russell as a case that sought "a remedy for individual injuries distinct from plan injuries." 2008 WL 440748 at *5. Thus, Great-West prohibits a "freestanding claim for money damages." But it does not prohibit "specific relief" designed to undo statutory violations. 534 U.S. at 212 and 218 n.4. Here, in contrast to both Russell and Great-West, but as in LaRue, the Plaintiffs seek remedies based on the underlying plan terms and the law, and not remedies for "individual injuries distinct from plan injuries." B. The Equitable Relief Affirmed in Varity for Disclosure Violations Was Not Diminished by Great-West.

A construction of Great-West that blocks appropriate relief for misleading disclosures about retirement benefits would be contrary to the Supreme Court's

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holding in Varity, supra. As in this case, Varity dealt with "misleading" assurances to participants "that they would continue to receive similar benefits in practice," 516 U.S. at 501­even though Varity "knew ... the reality was very different" and was "aware of the importance of the matter" to the employees. Id. at 494 and 503. The Varity Corp. nevertheless provided its employees with "materially misleading" assurances "to persuade the employees ... to accept the change," "to avoid the undesirable fallout that could have accompanied" forthright disclosures, and "to save the employer money at the beneficiaries' expense." Id. at 493-94 and 505-6. "[T]he basic message conveyed to the employees was that transferring from Massey-Ferguson to Massey Combines would not significantly undermine the security of their benefits." Id. at 501.8 For redress, the participants in Varity sought "an order that, in essence,
8

As here:

The ultimate message Varity intended to convey-`your benefits are secure'depended in part upon its repeated assurances that benefits would remain `unchanged,' in part upon the detailed comparison of benefits, and in part upon assurances about Massey Combines' `bright' financial future. Varity's workers would not necessarily have focused upon each underlying supporting statement separately, because what primarily interested them, and what primarily interested the District Court, was the truthfulness of the ultimate conclusion that transferring to Massey Combines would not adversely affect the security of their benefits. Id. at 504-5.
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would reinstate each of them as a participant in the employer's ERISA plan," id. at 492, and provide "the benefits they would have been owed under their old, Massey-Ferguson plan, had they not transferred to Massey Combines." Id. at 49495. The Supreme Court agreed with the Eighth Circuit and the employees that ERISA §502(a)(3) is a "catchall" provision enacted "as a safety net, offering appropriate equitable relief for injuries caused by violations that § 502 does not elsewhere adequately remedy." Id. at 512. The Court concluded that "We are not aware of any ERISA-related purpose that denial of a remedy would serve. Rather, we believe that granting a remedy is consistent with the literal language of the statute, the Act's purposes, and pre-existing trust law." Id. at 515. "[I]t is hard to imagine why Congress would want to immunize breaches of fiduciary obligation that harm individuals by denying injured beneficiaries a remedy." Id. at 513. Accordingly, the Court affirmed the judgment of the Eighth Circuit which had, in turn, affirmed the district court's determinations on appropriate relief. 516 U.S. at 492 and 494-95. C. Requiring Retirement Benefits to Be Paid in the Future to "Undo" Statutory Violations Is "Specific" or Injunctive Relief.

In Bowen, the Supreme Court recognized that "an equitable action for specific relief ... may include an order providing for the reinstatement of an

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employee with backpay or for `the recovery of specific property or monies.'" 487 U.S. at 893. Quoting Dobbs, the Court stated that "specific remedies `are not substitute remedies at all, but attempt to give the plaintiff the very thing to which he was entitled.'" Id. at 895. The Court extensively quoted from Judge Bork's opinion in another case involving Medicare reimbursements sought by the State of Maryland: "Maryland is seeking funds to which a statute allegedly entitles it rather than money in compensation for the losses." Thus, Maryland is seeking "specific relief, not relief in the form of damages." Id. (quoting Maryland Dept. of Human Resources v. Department of Health and Human Services, 763 F. 2d 1441, 1446 (D.C. Cir. 1985)). Likewise in Bowen, the Supreme Court concluded that the respondent was "seeking to enforce the statutory mandate itself, which happens to be one for the payment of money. The fact that the mandate is one for the payment of money must not be confused with the question whether such payment, in these circumstances, is a payment of money as damages or as specific relief."487 U.S. at 900. "[S]ince the orders are for specific relief (they undo the Secretary's refusal to reimburse the State) ..., they are within the District Court's jurisdiction." Id. at 910.9
9

In a dissenting opinion, Justice Scalia agreed:

An action seeking an order that will prevent the wrongful disallowance of
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Recent Second and Eleventh Circuit decisions also hold that a judgment requiring pension benefits to be paid in the future is injunctive relief. See Central States Southeast and Southwest Areas Health and Welfare Fund v. Merck-Medco Managed Care, 433 F.3d 181, 199 (2d Cir. 2005) ("participant" has standing "to obtain injunctive relief related to ERISA's disclosure and fiduciary duty requirements without a showing of individual harm"); Gilley v. Monsanto, 490 F.3d 848, 855-56 (11th Cir. 2007) ("the judgment here does include injunctive relief, because it requires Monsanto to continue to pay pension benefits as they accrue in the future"). Crocco v. Xerox, 137 F.3d 105, 107 n.2 (2d Cir. 1998), observes, moreover, that participants can sue the company, as Plaintiffs have done here, if their claims "request injunctive or equitable relief under 502(a)(3)." In In re Citigroup, 241 F.R.D. 172, 181 (S.D.N.Y. 2006), Citigroup challenged whether restoring retirement benefits for violations of ERISA §204(h) might fall outside the scope of "restitutionary relief." Judge Scheindlin held that "[w]hile it is true that Plan participants are suing to recover benefits, the primary relief being sought is declaratory" which "is neither restitutionary nor equitable."

future claims is an action seeking specific relief and not damages, since no damage has yet occurred. 487 U.S. at 921-22.
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"What is sought is a declaration that [Citigroup's] method of computing [accrued benefits] is unlawful. [A] declaratory judgment is normally a prelude to a request for other relief, whether injunctive or monetary." Id. (quoting Berger, 338 F.3d at 764).10 Here, as in Bowen and cases like Citigroup, the class seeks specific injunctive relief to "undo" the violations and "correct the method of calculating benefit payments going forward" as well as "past due sums." The difficulty with any effort to characterize the relief that Plaintiffs seek as legal rather than specific injunctive relief can be illustrated by the remedies sought for Ms. Broderick. If the prior CIGNA benefit formula is required to continue because of the absence of Section 204(h) notice of a significant reduction and the misleading representations that significant reductions were "not a component or a possible result" of the new formula (Slip Op. at 80), Plaintiffs' actuary, Mr. Poulin, calculates that Ms. Broderick's past and future monthly benefits should increase by approximately $1,357 per month. Ex. 7 (subtracting the highest of the cash balance accrued benefit or the minimum benefit from the projected prior plan benefit). Ms. Broderick started her monthly retirement benefits in December 2004 when she was age 60 and 9 months. Ex. 4, Tab 8, and Ex. 38. Thus, by the end of Accord Broga v. Northeast Utilities, 315 F.Supp.2d 212, 256 (D.Conn. 2004) (ordering defendant to modify retirement plan records "[t]o do equity and to cure its breach of its own fiduciary duties" in disclosures).
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May 2008, Ms. Broderick will have 3½ years of past due monthly benefits, plus an increase in future benefits for the rest of her life. The life expectancy tables that the IRS uses for Individual Retirement Accounts estimate that to be 21.8 years.11 Plaintiffs contend that the increases in Ms. Broderick's monthly benefits for an estimated period of 21.8 years in the future are equitable relief, like the recalculations of Medicare reimbursements in Bowen. Plaintiffs further maintain that her 3.5 years of back payments are an "integral part" of the equitable relief as contemplated in Great-West, 534 U.S. at 218, and further discussed below. Indeed, as in Bowen, 487 U.S. at 889, back payments are an "inevitable" part of the relief because it is very unlikely that by the time of the Court's judgment in a case like this no participant will have benefits which are "past due."12 D. Like Back Pay under Title VII, Past Due Benefits Are an "Integral Part of an Equitable Remedy"; Past Due Benefits Can Also Be Recovered Through Equitable Restitution of CIGNA's Unjust Cost Savings.

In analyzing the term "appropriate equitable relief" under ERISA

11

See http://www.irs.gov/publications/p590/ar02.html (Appendix C).

As a second example of the relief Plaintiffs seek, Mr. Poulin calculates that Ms. Glanz's monthly benefit would be increased by approximately $852 per month to remedy the §204(h) violation. Ex. 7. Because Ms. Glanz is currently age 43, none of the increased monthly benefits are presently due. Thus, the increases in future benefits due her are entirely equitable.
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§502(a)(3), Mertens v. Hewitt Associates recognized that "we have construed the similar language of Title VII of the Civil Rights Act," i.e., "any other equitable relief as the court deems appropriate." 508 U.S. at 255. Against this backdrop, Great-West distinguished the restitution that the insurer/petitioner sought in that case from the many precedents under Title VII like Johnson v. Georgia Highway Express, Inc., 417 F.2d 1122, 1125 (5th Cir. 1969), where back pay was "an integral part of an equitable remedy" for a statutory violation. The Court stated that "[t]he restitution sought here by Great-West is not that, but a freestanding claim for money damages." 534 U.S. at 218 n.4. Dobbs' treatise on remedies, which Great-West cites as one of the standard texts, 534 U.S. at 211, also finds that "backpay and reinstatement remedies are usually considered equitable." §6.10(1) at 163. The Title VII precedents are, moreover, not a unique product of that statute but in line with historic equity practice. As indicated by Porter v. Warner Holdings, supra, "where ... the equitable jurisdiction of the court has properly been invoked for injunctive purposes, the court has the power to decide all relevant matters in dispute and to award complete relief." 328 U.S. at 399. Accord Clark v. Wooster, 119 U.S. 322, 325 (1886); Pease v. Rathbun-Jones Engineering Co., 243 U.S. 273, 279 (1917); Whitlock v. Hause, 694 F.2d 861, 863 (1st Cir. 1982) (historically, courts of equity courts were permitted "to award
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money damages where such an award was incidental to the equitable relief that supplied jurisdiction initially"). In addition to being an integral part of the basic injunctive relief, the past due benefits sought by the class are equitable restitution. As this Court determined, CIGNA chose not to tell its employees about the adverse impact of the changes including by disavowing any cost savings in order to avoid the employee backlash that was likely to result from disclosure. Slip Op. at 22, 80-1, 85-7 and 104. CIGNA also affirmatively represented that "CIGNA Pays" substantial amounts in the years when participants like Ms. Broderick were actually earning nothing. Ex. 99 (stating that "CIGNA Pays" $7,617 and $16,757 for 2001 and 2002). Thus, while CIGNA was estimating annual cost savings internally of approximately $10 million, Slip Op. at 22, CIGNA was repeatedly assuring its employees that significant reductions were "not a component" of the retirement program changes and that "[o]ne advantage the company will not get ... is cost savings," Slip Op. at 22 and 80. Restitution is equitable when it recovers the "defendant's unjust gain." Pereira v. Farace, 413 F.3d 330, 340 (2d Cir. 2005); Dunnigan v. Metropolitan Life Ins. Co., 277 F.3d 223, 229 (2d Cir. 2002) ("When benefits are paid only after the date on which the beneficiary was entitled to receive them under the terms of
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the plan, the beneficiary has not received the full value of what was promised and, to the same degree, the plan has realized an unjust enrichment (assuming the lateness was unjustified"); FTC v. Verity Int'l, 443 F.3d 48, 68 (2d Cir. 2006) (although "it is incorrect to generalize" "in many cases" "the defendant's gain will be equal to the consumer's loss"); Dobbs, Law of Remedies, §4.1(2) ("The fundamental substantive basis for restitution is that the defendant has been unjustly enriched by receiving something, tangible or intangible, that properly belongs to the plaintiff. Restitution rectifies unjust enrichment by forcing restoration to the plaintiff"). Here, because of the representations that CIGNA made to its employees, CIGNA's cost savings were unjust gains. II. Frommert Shows that Past Due Benefits for Statutory Violations Can Alternatively Be Recovered Under ERISA §502(a)(1)(B). Separate from ERISA §502(a)(3), ERISA §502(a)(1)(B) provides authority for a 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." In Frommert v. Conkright, 433 F.3d 254, 270 (2d Cir. 2006), the Second Circuit addressed the remedies for Xerox's failure to disclose an adverse plan provision in violation of ERISA §204(h). Frommert decided that when a participant's benefits have been calculated by applying an

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unlawful plan term, e.g., a term that is "ineffective" because of the absence of §204(h) notice, but there is no ongoing violation of the notice rules because the violation has been corrected going forward, the participant may recover benefits under the plan's effective terms under ERISA §502(a)(1)(B). The Second Circuit made clear that this conclusion was based on its determination that "sweeping relief" under §502(a)(3) was "not warranted" and that "the necessary remedies can be fully provided under §502(a)(1)(B)." Id. at 269-70. Accord Layaou v. Xerox Corp., 238 F.3d 205, 212 (2d Cir. 2001), and on remand, 330 F.Supp.2d 297, 304 (W.D.N.Y. 2004); Esden v. Bank of Boston, 229 F.3d 154, 161-62 and 177 (2d Cir. 2000) (summary judgment against class in action under ERISA §502(a)(1)(B) and (a)(3) to recover unpaid benefits under cash balance plan due to violation of statutory requirements "REVERSED and ... REMANDED for further proceedings to calculate class damages").13 Thus, where, as here, there are past due benefits and ongoing violations, Great West, Bowen, the Title VII cases, and the 19th and early 20th century equity cases all indicate that the past due benefits can be awarded as an "integral part of

See also West v. AK Steel, 484 F.3d 395, 405 (6th Cir. 2007) (although "§502(a)(1)(B) offers redress only for the recovery of benefits, enforcement of rights, or clarification of rights to future benefits under the terms of the Plan, those terms must nevertheless comply with ERISA").
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an equitable remedy." 534 U.S. at 218. Alternatively, following Frommert, past due benefits can be awarded under §502(a)(1)(B), and the provision of benefits in the future can be remedied under §502(a)(3). The only decision of which Plaintiffs' counsel are aware in which relief has been denied in an analogous case involving retirement benefits is Crosby v. Bowater Inc. Retirement Plan, 382 F.3d 587 (6th Cir. 2004). In Crosby, relief was denied on the basis that the Plaintiffs sought money due and owing while specifically disclaiming any claim under ERISA §502(a)(1)(B). 382 F.3d at 591 and 594. Thereafter, West v. AK Steel, 484 F.3d 395, 403-5 (6th Cir. 2007), distinguished Crosby and affirmed an award of relief in a class action involving the same statutory violation where the Plaintiffs proceeded under ERISA §502(a)(1)(B). Based on a statement by defense counsel, it appears that CIGNA may be misreading what this Court held about ERISA §502(a)(1)(B). This Court held that CIGNA cannot directly be reached under §502(a)(1)(B), but the Plan, which is a defendant in this action can be held liable under §502(a)(1)(B). Compare Slip Op. at 67 with 68 n.26 ("To the extent Plaintiffs seek to recover benefits under the Plan under §502(a)(1)(B), they may pursue such claims against the Plan itself, which is a named defendant"). Indeed, under ERISA §502(d)(2), the only entity
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against which a "money judgment" under Title I of ERISA "shall be enforceable" is the Plan "unless liability against such person is established in his individual capacity."14 Accordingly, the Plan will be bound to provide the relief that this Court orders under §502(a)(1)(B).15 Relatedly, whether Stewart Beltz, CIGNA's putative former Plan administrator, and/or John Arko, the CIGNA employee who currently holds that title, were named as additional defendants for purposes of the cause of action under §502(a)(1)(B) is a red herring. As this Court's February 15th decision recognizes, even if Plaintiffs had named Mr. Beltz and/or Mr. Arko, Plaintiffs would not be able to recover anything more under §502(a)(1)(B) because neither Mr. Beltz nor Mr. Arko would be liable in their personal capacity and neither one

Although they may be named as defendants, plan administrators are not liable under §502(a)(1)(B) in their "individual capacity." Dittmann v. Dyno Nobel, 1998 WL 865603, *7 n.7 (N.D.N.Y. 1998) ("neither the Trustee nor the Administrators may be held personally liable for pension benefits pursuant to § 502(a)(1)(B)"); Greater Blouse, Skirt & Undergarment Ass'n, Inc. v. Morris, 1996 WL 325595,*4 (S.D.N.Y. 1996) ("ERISA ... does not require the plan administrator personally to pay pension benefits, which are uniquely the Plan's obligation"). An argument from CIGNA that it should not have to pay past due benefits would also appear to be collaterally estopped by CIGNA's actions in the Depenbrock v. CIGNA litigation. According to CIGNA, benefits have already been recalculated and paid for all participants rehired before 12/21/1998 as a result of the Depenbrock decision. Defs. Post-Trial Br. (dkt.#251) at 113; Defs. PostTrial Findings (dkt. #250) at ¶¶43-44.
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has any power apart from CIGNA to effect remedies. See Hall v. LHACO, Inc., 140 F.3d 1190, 1196 (8th Cir. 1998). As this Court has also observed, CIGNA represented to Judge Squatrito that "If the Court orders that a provision of the Plan must be changed or removed, the Plan acting through its trustees and fiduciaries, must then implement that relief as to all of the Plan's participants." Dfs. Opp. Br. filed June 7, 2002, at 8 (dkt. #30). Thus, CIGNA is committed to having the Plan act through its trustees and fiduciaries to implement the relief as to all participants. As a result, if this Court considers past due benefits to be legal relief pursuant to Frommert, the Court can order the Plan acting through its trustees and fiduciaries to implement that relief. III. The Relief Which Plaintiffs Seek Is "Appropriate" Because It Protects Participants from CIGNA's Disclosure Violations and Deters Future Violations. While this Court clearly has authority to provide complete relief, the question remains whether the relief that Plaintiffs seek is "appropriate." The Court possesses discretion at the relief stage, but that discretion is bounded by the statutory provisions and the statutory purpose of affording meaningful relief to participants for violations of ERISA. Congress intended "to completely secure the rights and expectations brought into being by this landmark reform legislation." Ingersoll Rand Co. v. McClendon, 498 U.S. 133, 137 (1990) (quoting S.Rep. No.
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93-127, at 36, 1974 U.S.C.C.A.N. 4838, 4872). Congress was clearly displeased that courts had been "reluctant to apply concepts of equitable relief" and were not using "the full range of legal and equitable remedies available in both state and federal courts." 1974 U.S.C.C.A.N. at 4842 and 4871. See also Herman v. So. Carolina Nat'l Bank, 140 F.3d 1413, 1423 (11th Cir. 1998) (quoting H. Conf. Rep. 101-386, at 431-32, 1989 U.S.C.C.A.N. 3018, 3035-36: "It remains the intent of Congress that the courts use their power to fashion legal and equitable remedies that not only protect participants and beneficiaries but deter violations of the law as well"). In Varity, supra, 516 U.S. at 515, the Supreme Court held that "granting a remedy" for misleading representations under the "catchall" authority of 502(a)(3) "is consistent with the literal language of the statute, the Act's purposes, and preexisting trust law." The "catchall" provision of ERISA §502(a)(3) thus "vindicates the core principle of trust remedy law, the make-whole standard, which restores the victim to the position that he or she would have had if there had been no breach of trust." John Langbein, What ERISA Means By "Equitable": The Supreme Court's Trail of Error in Russell, Mertens, and Great-West, 103 COLUM. L. REV. 1317, 1336 (Oct. 2003). In Frommert, 433 F.3d at 272, the Second Circuit held that the district
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court's determination of appropriate equitable relief "must be based on ERISA policy and the `special nature and purpose of employee benefit plans.'" After the Second Circuit remanded Frommert, Judge Larimer relied on the ruling in Burke v. Kodak, 336 F.3d at 113, that "The consequences of an inaccurate SPD must be placed on the employer" and articulated the principles used in determining appropriate relief. He stated that he looked to "most clearly reflect[] what a reasonable employee would have anticipated based on the not-very-clear language in the Plan and SPD" guided by the point that "if there is some doubt or ambiguity as to th[e] formula," "it must be resolved in favor of the employee" while "adequately preventing employees from receiving a windfall." Id. at *5. If CIGNA had been negligent in only one aspect of its disclosures, rather than having misled its own employees on multiple points, Plaintiffs would not rule out that there would more room for discretion in determining the appropriate relief. But when, as here, a defendant engages in a pattern of repeated disclosure violations and misleading statements with financial gains from those statements, ERISA §502(a)(3) clearly authorizes complete relief. Varity, supra, 516 U.S. at 512-15. Accord, Peralta v. Hispanic Business, Inc., 419 F.3d. 1064, 1074-75 (9th Cir. 2005) ("substantive relief under ERISA is available where an employer actively and deliberately misleads its employees to their detriment").
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Here, as in Frommert, CIGNA's evidently engrained practice of providing misleading communications to its own employees about vitally important retirement benefits will not be deterred by a slap on the wrists. In fact, just three days after this Court's decision, CIGNA's head of HR circulated a memo to "all employees" announcing that "we are disappointed and troubled" by this Court's ruling that "CIGNA did not adequately communicate with employees" but "[w]e continue to believe that we treated all employees fairly and appropriately." New Ex.246.16 Another indication of CIGNA's continuing views of disclosure occurred at about the same time. CIGNA announced on January 18, 2008 that the Part A Tier 1 participants who had been "grandfathered" are going to be moved to the cash balance formula. A 10-page January 18th notice touts how CIGNA has "enhanced" the cash balance pay credits without ever mentioning the huge benefit reductions that these participants will incur. New Ex. 247. On February 15th, CIGNA followed up with "personalized" statements about the change which buries and diminishes the impact. The personalized statements bury any mention of "lower"

CIGNA distributed this communication to members of the class even though the Court and the parties previously discussed the rules against communicating with members of the class on the subject of the representation. See Manual for Complex Litigation (4th), §21.33.
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benefits until the last page of a seven-page notice and then diminish that statement with a graph showing much smaller reductions than CIGNA's internal documents compute. Compare New Ex. 248 at 11/11 (indicating an approximately 5% reduction after 5 years) with Ex.79 at 29424 (2002 memo estimating that grandfathered employees moved to cash balance will have their benefits reduced by 61% to 78% after 5 years). As these recent communications show, CIGNA continues to be very reluctant to take responsibility for its representations to participants that the plan was not being changed to reduce benefits and very reluctant to disclose new benefit reductions. By violating ERISA's disclosure requirements and making misleading statements about benefits, CIGNA has indisputably gained financially from lower benefit costs while keeping its employees in the dark about the reductions in their retirement incomes. The resulting losses to participants' future old age income will not be adequately restored and CIGNA will not be adequately deterred unless employees recover the additional benefits which CIGNA led them to believe they were still earning. IV. Plaintiffs' Relief Proposal Based on the Court's decision and as initially outlined in Plaintiffs' Additional Submission on Relief (dkt.#205, filed Sept. 12, 2006), Plaintiffs seek
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the following relief on each of the claims on which the Court has granted judgment: A. Declaratory and Injunctive Relief to Require Disclosure of the Full Impact of the Cash Balance Changes.

First, Plaintiffs are requesting declaratory and injunctive relief to finally require CIGNA to disclose the impact of the cash balance changes to all class members. The Plaintiffs ask for an order requiring CIGNA to tell all class members in understandable terms in both a 204(h) notice and an SMM/SPD, that the cash balance formula is a very significant benefit reduction which was structured in a way where there could be lengthy periods of wear-away during which no benefits accrue at all. Plaintiffs also ask that the relative value disclosures be corrected for the shortfalls identified in the Court's decision. For a Section 204(h) notice that is issued today to be effective, it must conform to new 204(h) regulations which require disclosure of "sufficient information to allow each applicable individual to determine the approximate magnitude of the expected reduction." Treas. Reg. §54.4980F-1, Q&A 11. Because timely notice of the amendment will not occur until after June 29, 2005, see Frommert, 433 F.3d at 263 ("an ERISA `amendment' occurs only when the plan's employees are informed of a change in the text of the plan"), any wear-

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aways should now be prohibited by Section 701(a) of the Pension Protection Act. P.L. 109-80, which added ERISA §204(b)(5)(B)(ii). Following Department of Labor guidance, CIGNA should be required to issue a revised Summary of Material Modification/updated SPD to understandably disclose "how [the] prior conversion may have affected benefits that classes of participants may have reasonably expected the plan to provide," 65 Fed. Reg. 70227 (Nov. 21, 2000), and to correct the misleading communications which the Court has identified. CIGNA should also be required to send revised relative value disclosures to address the deficiencies that the Court identified in those disclosures and to conform to the Treasury Department's new regulations on relative value disclosures. Treas. Reg. 1.417(a)(3)-1(c) through (e). B. Continue the Prior Formulas Until Notice of Reductions Is Provided to Remedy the Violation of ERISA §204(h) Notice Rule.

As the Court found, CIGNA has never provided Section 204(h) notice that significant reductions were a component of the changes. Worse still, CIGNA's representations in the Newsletter and Retirement Kit intentionally led employees to believe that "wear away was not a likely result of the transition to Part B, that the full value of the accrued benefits under Part A, including early retirement

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benefits, would be included in the opening account balances, and that the accrual rates for both short- and long-term employees under Part B were at least roughly equivalent to those under Part A." Slip Op. at 104. The relief which Plaintiffs are requesting for the violation of the Section 204(h) notice rule between 15 days before January 1, 1998 and the date when the revised notice described above is finally distributed is virtually built into the statute. ERISA §204(h) provides that "unless" the statutory notice of significant reduction is provided, the plan "may not be amended so as to provide for a significant reduction in the rate of future benefit accrual." See Frommert, 433 F.3d at 268 ("without such proper notice to Plan participants, the amendment was ineffective as to them"); Citigroup, 470 F.Supp.2d at 340 ("the amendments never took legal effect"). CIGNA's violation of the 204(h) notice requirements is particularly egregious because CIGNA not only omitted disclosure of the reductions but included misleading information indicating that significant reductions were "not a component" of the new design. Moreover, to this day, CIGNA continues to deny that it failed to "fairly and appropriately" disclose the reductions. Ex. 246. To remedy the ERISA §204(h) violation, all members of the class who CIGNA employed after the January 1, 1998 cash balance conversion, including
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persons rehired after that date, whose benefits are less than the benefits they would have earned under the Part A formula should be restored to the Part A benefit formulas (Tier 1 or Tier 2) that applied on December 31, 1997. The absence of the required disclosure compounded by the affirmative misrepresentations means that the benefit-reducing amendments were "ineffective." Unless and until proper notice of reductions is given, participants must continue to accrue benefits under the more favorable benefit formulas in effect on December 31, 1997. Participants like Ms. Broderick who commenced benefits after December 31, 1997 should receive the difference between the benefit they have received and the benefit due under the lawful Plan terms, with pre- and post-judgment interest. Although the statute and regulations are silent on prejudice, Fr