The opinion
Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
5-2-2007
Eichorn v. AT&T Corp
Precedential or Non-Precedential: Precedential
Docket No. 05-5461
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PRECEDENTIAL
IN THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________
Case No: 05-5461
_______________
KURT H. EICHORN; WILLIAM J. HUCKINS;
T. ROGER KIANG; EDWARD W. LANDIS;
ORLANDO NAPOLITANO, INDIVIDUALLY AND
ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED; GILBERT G. DALEY;
SUSAN H. DIBONA; BETH KING;
MICHAEL S. ORATOWSKI;
THOMAS L. SALISBURY; LAWRENCE WALSH,
individually and on behalf of all others similarly
situated; WILLIAM LAWLESS;
RUSSELL LEPPALA; GABE P. TOROK;
JUDITH B. BRUGNER; KATE HARRIS;
CAROLE T. JOHNSON; CHARLES O. LAUGHLIN, II;
MICHAEL A. MCFARLAND; BARBARA OLIVER;
GARY PATTERSON; ROBERT PROUIX; WILLIAM J.
SCHROTT; ROBERT MICHAEL SHEPHERD; RONALS
A. SOKOL; JOSEPH T. SZLASA; DIANE F. TAYLOR;
LORRAINE J. WELCH; MARIE ZEITS,
Appellants
v.
AT&T CORP.; LUCENT TECHNOLOGIES INC.; TEXAS
PACIFIC GROUP; NCR CORPORATION; THE CIT
GROUP, INC.; JOHN DOE CORPORATIONS 1-10
_______________
On Appeal From the United States District Court
for the District of New Jersey
(D.C. Civil Nos. 96-cv-04674; 96-cv-03587)
District Judge: Honorable Stanley R. Chesler
_______________
Submitted Under Third Circuit LAR 34.1(a)
March 27, 2007
Before: FISHER, JORDAN and ROTH, Circuit Judges
(Filed May 2, 2007)
_______________
Noel C. Crowley
Crowley & Crowley
20 Park Place - Suite 206
Morristown, NJ 07960
Counsel for Appellants
2
Carmine A. Iannaccone
James P. Flynn
Lauren D. Daloisio
Epstein, Becker & Green
Two Gateway Center - 12th Fl.
Newark, NJ 07102
Counsel for Appellees AT&T Corp.,
Lucent Technologies, Inc. and NCR Corp.
David M. Fabian
Christine M. Gurry
Traflet & Fabian
264 South Street
Carriage Court Two
Morristown, NJ 07960
Counsel for Appellee, TX PAC Group
Robert M. Leonard
Drinker, Biddle & Reath
500 Campus Drive
Florham Park, NJ 07932
Counsel for Appellee, CIT Group, Inc.
_______________
OPINION OF THE COURT
_______________
3
JORDAN, Circuit Judge.
This case is before us for the second time on appeal.
In the previous appeal, Eichorn v. AT&T Corp., 248 F.3d 131
(3d Cir.), cert. denied, 534 U.S. 1014 (2001), we held that the
plaintiffs had presented sufficient evidence of the defendants’
specific intent to interfere with their pension rights to survive
summary judgment on their claims under § 510 of the
Employee Retirement Income Security Act (ERISA), 29
U.S.C. § 1140. Id. at 150. We reversed the District Court’s
order granting summary judgment to the defendants and
remanded for further proceedings. Id. After nearly three
years of additional proceedings on remand, the District Court
again granted summary judgment to the defendants, holding
that the relief the plaintiffs sought was not available to them.
The plaintiffs appeal from that order and challenge several of
the District Court’s interlocutory orders. We will affirm.
I
We have previously set forth the basic facts in this
litigation, Eichorn, 248 F.3d at 136-37, and we recite only the
facts relevant to the present decision.
A
The plaintiffs are former employees of Paradyne
Corporation (“Paradyne”). In 1995, Paradyne was part of
AT&T Corp. (“AT&T”). AT&T reorganized that year,
splitting into three parts: AT&T, Lucent Technologies, Inc.
(“Lucent”), and NCR Corporation. In the course of the
4
reorganization, AT&T transferred Paradyne to Lucent. In
1996, Lucent sold Paradyne to a business called Texas Pacific
Group (“Texas Pacific”). Before that sale, the plaintiffs in
this case had pension plans that included certain “bridging
rights.” If an employee left Lucent or another of the former
AT&T companies and returned within six months, either to
the company the employee had left or to another of the former
AT&T companies, the employee could “bridge” the two terms
of employment, receive pension credit for all prior service,
and continue to accrue pension benefits as if he had never left.
If the employee left and did not return until after the six-
month “bridging period” had expired, the employee would
need to work for an additional five years to regain his
previous level of pension benefits.
The alleged basis for the plaintiffs’ ERISA claims is
that the defendants entered into agreements as part of the sale
of Paradyne that had the effect of cancelling the plaintiffs’
bridging rights. In 1995, when Paradyne was part of AT&T,
AT&T announced its intent to sell Paradyne. Recognizing the
value of Paradyne’s work force, and wanting to make
Paradyne more attractive to potential buyers, AT&T
announced a policy precluding any employee who voluntarily
left Paradyne from being hired by any other division of
AT&T. On June 18, 1996, Lucent and Texas Pacific signed a
purchase agreement for the sale of Paradyne, and on July 31,
1996, the sale closed. The June 18 purchase agreement
included a provision—referred to in this litigation as the “Pre
Closing Net”—whereby Lucent promised that neither it nor
any of the other former AT&T companies would hire any
Paradyne employees who left Paradyne voluntarily before the
5
sale closed and whose annual salaries were more than
$50,000. On the date of the closing, Lucent signed an
“employee matters agreement,” which included a
paragraph—referred to in this litigation as the “Post Closing
Net”—extending the provisions of the Pre Closing Net for
245 days (eight months) after the closing.
Once the sale closed, the Paradyne employees’
employment with Lucent terminated, and the “bridging
period” began. Because the no-hire agreement embodied in
the Pre Closing Net and Post Closing Net lasted for eight
months, the Paradyne employees who made more than
$50,000 annually were prevented from exercising their
bridging rights.1
B
Near the time of the Paradyne sale, Kurt Eichorn and
Gilbert Daley filed substantially identical class action
complaints in the United States District Court for the District
of New Jersey, naming AT&T, Lucent, and Texas Pacific as
defendants, and asserting, inter alia, that the Pre Closing Net
and Post Closing Net violated § 510 of ERISA. The actions
were consolidated and, after discovery, the District Court
granted the defendants’ motion for summary judgment,
1
Of the 29 plaintiffs in this case, 3 eventually returned to
Lucent, and all 3 remained there long enough to bridge their
pension rights, though they note they were “damaged by loss
of pension-created service during the time corresponding to
their period of separation.”
6
holding that the plaintiffs had not put forth sufficient evidence
to create a triable issue of fact as to whether the defendants
had the required intent to interfere with the plaintiffs’
bridging rights. Eichorn v. AT&T Corp., No. 96-3587, 1999
WL 33471890, at *2-6 (D.N.J. Aug. 23, 1999). On appeal,
this court reversed and remanded that holding because we
determined that the plaintiffs had presented sufficient
circumstantial evidence to create a genuine issue of material
fact regarding the defendants’ intent. Eichorn, 248 F.3d at
149-50. The panel also directed the District Court on remand
to address the plaintiffs’ motions for additional discovery and
for class certification. Id. at 150.
C
On remand, the District Court reopened discovery and
allowed the plaintiffs to file a motion for class certification.
The parties appear to have proceeded after remand on the
assumption that the plaintiffs would be entitled to some form
of compensatory damages if they succeeded in proving their
ERISA claims. On May 27, 2003, over three months after the
close of reopened discovery and some seven years from the
start of the case, the plaintiffs submitted spreadsheets to the
District Court, offering their damage calculations for the first
time. The spreadsheets were prepared by plaintiffs’ counsel’s
son, Stephen Crowley, who was not offered as an expert and
has no training or experience with the economics of
employment benefits.
Mr. Crowley’s calculations purported to quantify what
each plaintiff would have earned in pension benefits, had he
7
or she remained employed at an AT&T company after the sale
of Paradyne. In performing the calculations, Mr. Crowley
made various assumptions about such future events as when
the plaintiffs would have retired, how their salaries would
have increased had Paradyne remained part of Lucent, what
choices the plaintiffs would have made with respect to their
pension benefits, and what each plaintiff’s life expectancy
was. With his calculations, Mr. Crowley submitted a life
expectancy chart from the “Foundation for Infinite Survival”
and various statistical tables from the United States
Department of Labor which, he asserted, provided part of the
basis for his calculations.
The District Court accepted the plaintiffs’ belated
submissions and reopened discovery again to allow the
defendants to depose Mr. Crowley. After deposing Mr.
Crowley, the defendants made a motion to strike his
calculations and to preclude him from testifying at trial. The
plaintiffs opposed the motion and argued that, if the District
Court were to grant the defendants’ motion, the plaintiffs
should be allowed to engage a damages expert. On
November 10, 2004, the District Court granted the
defendants’ motion and denied as untimely the plaintiffs’
request for leave to engage an expert.
In the course of making his initial ruling from the
bench, which was later reduced to a written order, the District
Judge explained that he did not believe his order would
effectively end the case for the plaintiffs, because the
plaintiffs might still be entitled to seek back pay and would
8
not need the assistance of an expert to establish their
entitlement to that relief. The Judge said,
at a minimum, it would appear that a back pay
case can in some manner or other go to the jury.
Indeed, in this type of ERISA claim, a back pay
claim is normally one of the court claims which
go. In short, the theory of the case is that the
plaintiffs were precluded from employment
because of and based upon a desire to deny
them ... rights which they have under ERISA
... .
And therefore, in the Court’s view, what
could and would go to the jury would indeed be
claims predicated upon the denial of their
employment and potential back pay claims.
Further, the District Judge noted that the plaintiffs
sought injunctive relief, and the Judge agreed that there was
“at least a possibility” that such relief was available. Even so,
he did not definitively rule on the issue, and the written order
stated that “the Court does not reach the issue whether
plaintiffs can quantify or establish any right to ‘back pay’
and/or equitable relief increasing plaintiff[s’] pension benefits
and reserves such issue for resolution at or before trial.” After
he granted the defendants’ motion to strike Mr. Crowley’s
testimony and evidence, the District Court ordered the parties
to confer with a magistrate judge “to schedule limited
discovery of remaining damages issues and preparation of a
final pretrial order.”
9
After the reopened discovery closed, the defendants
moved for summary judgment. They argued that the only
relief available to the plaintiffs on their claim under ERISA
§ 510 for unlawful interference with benefits is the
“appropriate equitable relief” available through § 502(a)(3) of
the statute. Summary judgment was appropriate, they argued,
because the only relief that the plaintiffs had requested or
could request—given the District Court’s order striking
Stephen Crowley’s submissions and denying the plaintiffs
leave to find an expert to replace him—was “back pay,”
which is not “equitable relief” under § 502(a)(3). The District
Court agreed with that analysis and, accordingly, granted
summary judgment to the defendants. The plaintiffs now
appeal, challenging the summary judgment order, the order
that struck Stephen Crowley’s submissions and denied leave
to retain an expert, and certain other interlocutory orders.2
2
The plaintiffs challenge the District Court’s order of
October 23, 2003, denying the plaintiffs’ motion for class
certification, and its orders of April 16, 2003, and July 19,
2005, denying the plaintiffs’ motions to compel discovery of
certain matters. We have considered the arguments of the
parties with respect to the District Court's order of April 16,
2003. We are satisfied that the District Court correctly
interpreted the mandate of this court with respect to the scope
of the § 510 claims as to which the plaintiffs had presented
enough evidence to survive a motion for summary judgment,
and that the District Court did not otherwise abuse its
discretion in denying the plaintiffs’ motion to compel. The
plaintiffs’ challenges to the District Court's orders of October
23, 2003, and July 19, 2005, are moot in light of our
10
II
The plaintiffs argue that the District Court erred both
in ruling that Mr. Crowley’s proposed evidence was
inadmissible and in denying them leave to present an expert in
lieu of Mr. Crowley. More specifically, though the plaintiffs
concede that Mr. Crowley was not qualified as an expert, they
argue that no special qualifications were necessary to testify
regarding future damages in this case and that Mr. Crowley’s
testimony and spreadsheets were admissible under Federal
Rule of Evidence 1006 as summaries of the contents of the
statistical tables he submitted. The plaintiffs also argue that
the District Court’s order denying them leave to retain an
expert witness after Mr. Crowley was excluded was an abuse
of discretion. Those arguments are without merit.
A
In excluding Mr. Crowley’s evidence, the District
Court was within the broad discretion afforded it under
Federal Rules of Evidence 701 and 702 to act as a gatekeeper
charged with preventing unreliable opinion testimony.
Although this court has recognized that lay opinion as to
technical matters may sometimes be appropriate, Asplundh
Mfg. Div. v. Benton Harbor Eng’g, 57 F.3d 1190, 1200-01 (3d
Cir. 1995), we have cautioned that “Rule 701 requires that a
lay opinion witness have a reasonable basis grounded either in
experience or specialized knowledge for arriving at the
opinion that he or she expresses. ... In order to satisfy these
disposition of this case.
11
Rule 701 requirements, the trial judge should rigorously
examine the reliability of the lay opinion by ensuring that the
witness possesses sufficient special knowledge or experience
which is germane to the lay opinion offered.” Id. at 1201
(original emphasis). Whether a witness is “qualified” to offer
opinion testimony is committed to the discretion of the trial
court, and we have no difficulty holding that the District
Court was within its discretion in saying that Mr. Crowley
was not qualified to offer a damages opinion here. As the
plaintiffs concede, Mr. Crowley had no personal knowledge
of the underlying facts and no relevant experience or
training.3
We also reject the plaintiffs’ argument that Mr.
Crowley’s submissions were admissible under Rule 1006.
That Rule provides that “[t]he contents of voluminous
3
The plaintiffs correctly note that expert testimony is not
always required to prove damages in cases where projected
future earnings are part of the calculation. See, e.g., Lightning
Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1175-76 (3d Cir.
1993); Maxfield v. Sinclair Int’l, 766 F.2d 788, 797 (3d Cir.
1985). Here, however, the calculations were sufficiently
complex that the District Court was within its discretion to
hold that someone more qualified than plaintiffs’ counsel’s
son was needed to testify. Cf. Lifewise Master Funding v.
Telebank, 374 F.3d 917, 928-29 (10th Cir. 2004) (“Given Mr.
Livingston's utter lack of any familiarity, knowledge, or
experience with damages analysis, the district court did not
abuse its discretion in ruling that he could not testify as an
expert regarding such a complex subject matter as LifeWise's
fourth damages model.”).
12
writings, recordings, or photographs which cannot
conveniently be examined in court may be presented in the
form of a chart, summary, or calculation.” Courts have
cautioned that Rule 1006 is “not a back-door vehicle for the
introduction of evidence which is otherwise inadmissible,”
and that the voluminous evidence that is the subject of the
summary must be independently admissible. Peat, Inc. v.
Vanguard Research, Inc., 378 F.3d 1154, 1160 (11th Cir.
2004); see also United States v. Pelullo, 964 F.2d 193, 204-05
(3d Cir. 1992). The plaintiffs’ proffered calculations are
better described as a synthesis rather than a summary of the
charts and other evidence on which Mr. Crowley relied. The
calculations went beyond the data they summarized and
included several assumptions, inferences, and projections
about future events, which represent Mr. Crowley’s opinion,
rather than the underlying information. The proposed
evidence is thus subject to the rules governing opinion
testimony and was properly held inadmissible. See Fed. R.
Evid. 701, 702; Gomez v. Great Lakes Steel Div. Nat’l Steel
Corp., 803 F.2d 250, 258 (6th Cir. 1986) (proposed exhibit
was improperly admitted because, despite being labeled
“Summary of Actual Damages,” it “projected future events
and economic losses, and was therefore not a simple
compilation of voluminous records.”); State Office Sys., Inc.
v. Olivetti Corp., 762 F.2d 843, 845-46 (10th Cir. 1985)
(projections of future lost profits set forth in a summary “are
not legitimately admissible as summaries under Rule 1006,
since they are interpretations of past data and projections of
future events, not a simple compilation of voluminous
records.”).
13
B
In denying the plaintiffs leave to engage an expert to
replace Mr. Crowley, the District Court was within its power
under Rule 16(b) of the Federal Rules of Civil Procedure to
make and enforce scheduling orders. Rule 16 gives the
district courts wide latitude to manage discovery and other
pretrial matters, and to set deadlines for amending pleadings,
filing motions, and completing discovery. Subsection (b)
provides that scheduling orders “shall not be modified except
upon a showing of good cause and by leave of the district
judge.” This Court and others have frequently upheld a trial
court’s exercise of discretion to deny a party’s motion to add
experts or other fact witnesses after the close of discovery or
after a deadline in a scheduling order. E.g., Burks v. Okla.
Publ’g Co., 81 F.3d 975, 978-80 (10th Cir. 1996); Geiserman
v. MacDonald, 893 F.2d 787, 790-91 (5th Cir. 1990); Koplove
v. Ford Motor Co., 795 F.2d 15, 18 (3d Cir. 1986).
In this case, the reopened discovery on remand closed
in January of 2003. As the defendants note, the plaintiffs
were obligated under Federal Rule of Civil Procedure
26(a)(1)(C) to disclose early in the case, at or within 14 days
after the discovery planning conference required by Rule
26(f), “a computation of any category of damages claimed”
and “the documents or other evidentiary material, not
privileged or protected from disclosure, on which such
[damage] computation is based ... .” The plaintiffs did not
submit that information until May 2003, several months after
the reopened discovery had closed, and nearly seven years
into this litigation. Although the District Court pressed
14
plaintiffs’ counsel about plaintiffs’ plan to proceed without
expert testimony on the issue of damages, and although the
Court told plaintiffs’ counsel that “defendants have to know
what claims a plaintiff is going to pursue in terms of damages
in order to be able to prepare for it,” the plaintiffs insisted that
no expert testimony was necessary. The District Court then
reopened discovery again to allow the defendants to depose
Mr. Crowley. The plaintiffs did not request leave to present a
damages expert until after the defendants filed their motion to
exclude Mr. Crowley. The District Court considered the
plaintiffs’ explanation for the lateness of their request, the
prejudice that would result if it were granted or denied, and
the extent to which the plaintiffs’ decision to proceed without
expert testimony was a deliberate one. Under the
circumstances, the District Court was well within its
discretion to deny the plaintiffs’ motion.
III
Section 510 of ERISA, 29 U.S.C. § 1140, makes it
unlawful for an employer to act against an employee “for the
purpose of interfering with the attainment of any right to
which such participant might become entitled” under a benefit
plan. Section 510 concludes with the statement that “[t]he
provisions of section 1132 [i.e., ERISA § 502] of this title
shall be applicable in the enforcement of this section.” The
Supreme Court has held that the remedies available for a
violation of § 510 are thus limited to those set forth in §
502(a) of ERISA, 29 U.S.C. § 1132. Ingersoll-Rand Co. v.
McClendon, 498 U.S. 133, 144 (1990); Pilot Life Ins. Co. v.
Dedeaux, 481 U.S. 41, 54 (1987); Mass. Mut. Life Ins. Co. v.
15
Russell, 473 U.S. 134, 146 (1985); see also Cox v. Keystone
Carbon Co., 861 F.2d 390, 392 (3d Cir. 1988) (explicitly
rejecting the argument that “once Congress created a right
pursuant to § 510, Congress was without power to restrict the
remedies available ... [and] it is entirely up to the court to
fashion appropriate remedies... .”).
Though the parties dispute the scope and application of
subsections (a)(1)(B) and (a)(3), they do not suggest that any
other portions of ERISA § 502 apply to this case.
A
The District Court held that the plaintiffs could not
seek relief under ERISA § 502(a)(1)(B) because that section
only provides relief for violations of the terms of a benefit
plan, and the plaintiffs have not alleged such a violation. We
agree.
1
Subsection (a)(1)(B) provides that “[a] civil action may
be brought by a participant or beneficiary ... 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.” 29 U.S.C. §
1132(a)(1)(B) (emphasis added). The subsection thus
provides a cause of action only where a plaintiff alleges a
violation of the terms of a benefits plan or an ambiguity in the
plan requiring judicial interpretation. In holding that
subsection (a)(1)(B) is not an appropriate vehicle for
16
enforcing a claim of interference with the benefits of a plan,
which is the gravamen of the claim here, the Seventh Circuit
explained:
[T]o enforce the terms of a plan under Section
502, the participant must first qualify for the
benefits provided in that plan. Rather than
concerning itself with these qualifications, one
of the actions which Section 510 makes
unlawful is the interference with a participant's
ability to meet these qualifications in the first
instance.
Tolle v. Carroll Touch, Inc., 977 F.2d 1129, 1134 (7th Cir.
1992) (citation omitted). This appears to be the view of the
few courts that have squarely confronted the issue. See Strom
v. Goldman, Sachs & Co., 202 F.3d 138, 142 (2d Cir. 1999)
(citing Tolle); Russell v. Northrop Grumman Corp., 921 F.
Supp. 143, 150 (E.D.N.Y. 1996) (citing Tolle). Other courts
have implicitly taken this view by indicating in dicta that §
502(a)(3) is the provision available for enforcing a § 510
interference claim. See Millsap v. McDonnell Douglas Corp.,
368 F.3d 1246, 1247 (10th Cir. 2004) (“Section 502(a)(3) of
ERISA provides the plan participant with his exclusive
remedies for a § 510 violation.”); Spinelli v. Gaughan, 12
F.3d 853, 856 (9th Cir. 1993) (quoting § 502(a)(3) as the
enforcement mechanism for rights under § 510); Custer v.
Pan Am. Life Ins. Co., 12 F.3d 410, 421 (4th Cir. 1993)
(Section 510, “enforced through § 1132(a)(3) [i.e.,
§ 502(a)(3)], provides a companion to § 1132(a)(1), which
provides actions to recover benefits or clarify rights.”); Held
17
v. Mfrs. Hanover Leasing Corp., 912 F.2d 1197, 1203 (10th
Cir. 1990) (“If discharging [the plaintiff] was ‘unlawful’
under § 1140 [i.e., § 510], plaintiff was entitled to bring (and
did bring) an action for declaratory and injunctive relief under
29 U.S.C. § 1132, which authorizes [the relief set forth in
ERISA § 502(a)(3)].”);4cf. Dana M. Muir, ERISA Remedies:
4
In Held, the plaintiff alleged that the defendants violated
ERISA § 510 by coercing him to resign shortly before he had
completed the ten years of service necessary for certain of his
pension rights to vest. 912 F.2d at 1198. Although the
majority in Held stated that the plaintiff had “two distinct
causes of action,” one of which was a claim under §
502(a)(1)(B) for “benefits due under the plan,” id. at 1203-04,
it is clear from both the majority’s and the dissenting judge’s
discussion that the cause of action under § 502(a)(1)(B) was
not to enforce rights under § 510, but was instead based on
the plaintiff’s allegation that he had actually accrued some
pension rights that the defendants had failed to honor. See id.
at 1203 n.7 (reading the complaint as potentially raising a
“colorable claim to something less than ‘100% of accrued
benefits’ based on his employment of more than nine years”);
id. at 1203-04 (“Admittedly, the parties’ briefs emphasize Mr.
Held’s § 510 claim and give short shrift to the issue of Mr.
Held’s separate claim for benefits due under the plan.”)
(emphasis added); id. at 1207 (Ebel, J., dissenting)
(disagreeing with “the majority’s view that the plaintiff has
filed a separate claim for benefits due him under the terms of
the retirement plan” because, as he read the record, “it is clear
that plaintiff’s request for benefits is linked only to his
discriminatory termination claim under section 510 of
18
Chimera or Congressional Compromise?, 81 Iowa L. Rev. 1,
39 & nn. 321-22 (1995) (“Many commentators and courts
agree that Section 502(a)(3) ... provides the sole basis for suits
alleging a violation of Section 510.”). Decisions from at least
one court appear to take the opposite view. See Zimmerman
v. Sloss Equip., Inc., 835 F. Supp. 1283, 1290 (D. Kan. Apr.
8, 1993) (“The remedies for a violation of ERISA § 510 are
those set forth in ERISA § 502(a)(1)(B) and (a)(3).”); Babich
v. Unisys Corp., No. 92-1473, 1994 WL 167984, at *3 (D.
Kan. 1994) (“the damages available to an ERISA § 510
plaintiff are found in ERISA’s enforcement provision,
§ 502(a)(1)(B) and (a)(3).” (citing Zimmerman and Cox v.
Keystone Carbon Co., 861 F.2d 390, 392-94 (3d Cir. 1988)).5
We agree with the Seventh Circuit’s reasoning in
Tolle, which follows from a straightforward reading of the
statute. Subsection (a)(1)(B) provides remedies only against a
defendant who has failed to comply with the terms of a
benefits plan. It allows plaintiffs to collect benefits “due
under the terms of the plan” or to enforce “rights under the
terms of the plan.” Here, the plaintiffs have alleged that the
defendants interfered with their ability to become eligible for
further benefits, not that the defendants have breached the
terms of the plan itself. We therefore agree with the District
ERISA.”).
5
As we will explain, infra § III.A.2, our decision in Cox v.
Keystone Carbon, 861 F.2d 390 (3d Cir. 1988) does not hold
that § 502(a)(1)(B) provides relief for a claim under § 510 for
interference with benefits.
19
Court that subsection (a)(1)(B) does not provide relief for the
violation of ERISA that the plaintiffs have alleged, and,
accordingly, summary judgment on the issue was proper.
2
The plaintiffs argue that this Court’s decisions in Cox
v. Keystone Carbon Co., 861 F.2d 390 (3d Cir. 1988) (“Cox
I”) and Cox v. Keystone Carbon Co., 894 F.2d 647 (3d Cir.
1990) (“Cox II”), and the Tenth Circuit’s decision in Adams v.
Cyprus Amax Minerals Co., 149 F.3d 1156 (10th Cir. 1998),
support a different result. In this they are mistaken.
The plaintiffs’ principal argument appears to be that,
although they have not alleged that the defendants violated
the terms of the benefits plan, the District Court could
nevertheless effectively create a violation of the plan through
a decree ordering Lucent to adjust its pension records to treat
the plaintiffs as if they had remained at Lucent until
retirement. The plaintiffs contend that such an order would
result in an immediate obligation on the part of the defendants
to pay the plaintiffs money that was rendered “past due” by
operation of the court’s decree, thus entitling the plaintiffs to
seek relief under subsection (a)(1)(B). This bootstrap
approach finds no support in the decisions the plaintiffs cite.
The Tenth Circuit’s opinion in Adams is inapposite, as
the plaintiffs in that case alleged violations of the terms of a
plan rather than interference with the attainment of benefits.
The court in Adams was not asked to construct a violation of
an order and then treat that violation as if it were a violation
of the terms of a benefit plan. The court was simply asked to
20
construe the terms of the plan itself to determine whether the
plaintiffs were eligible for the benefits they sought. 149 F.3d
at 1158-62. Unlike the plaintiffs in this case, the plaintiffs in
Adams alleged a violation of the terms of their former
employer’s plan and were thus clearly entitled to seek relief
under ERISA § 502(a)(1)(B). Here, by contrast, the plaintiffs
have alleged that the defendants interfered with their ability to
become eligible for benefits, which, as the Seventh Circuit
explained in Tolle, is not a proper basis for relief under §
502(a)(1)(B).
Although Cox I and Cox II involved claims under
ERISA § 510, they are also unavailing as support for the
plaintiffs’ argument. In Cox I, this Court indicated in dictum
that § 510 could be enforced through § 502(a)(1)(B) when an
interference-with-benefits claim is alleged. 861 F.2d at 392-
93. However, that appears to have been a proposition
assumed by the parties and accepted by us without analysis or
discussion. Moreover, we expressly declined to decide
whether § 502(a)(1)(B) provided any relief to the plaintiff in
that case. Id. at 394. Instead, we remanded for the district
court to determine in the first instance “if Cox is entitled to
relief pursuant to § 502(a)(1)(B), and if so, whether or not
Cox is entitled to a jury trial on this claim.” Id.
On remand, the district court held that Cox had stated a
§ 510 claim enforceable under § 502(a)(1)(B), but that he was
not entitled to a jury trial and that he lost on the merits of that
claim. Cox appealed, and we affirmed in Cox II. As in Cox I,
the primary focus of our discussion was whether Cox was
entitled to a jury trial. 894 F.2d at 649-50. We did not
undertake any analysis of whether the district court had
21
correctly held that a claim under § 510 could be enforced
under § 502(a)(1)(B). The only comment we made that
appears directly relevant to this issue undermines, rather than
supports the plaintiffs’ position in this case. In disposing of
Cox’s arguments, we stated, “[t]o the extent that Cox seeks
compensatory damages for tortious interference, that claim
does not fall within section 502(a)(1)(B).” 894 F.2d at 650.
Our decisions in Cox I and Cox II thus do not conflict with the
Seventh Circuit’s reasoning in Tolle, nor do they prevent us
from adopting that reasoning in this case, as the District Court
did. Because we find that reasoning persuasive, we hold that
a § 510 claim for interference with benefits is not enforceable
under § 502(a)(1)(B).
B
The District Court held that the plaintiffs were not
entitled to “appropriate equitable relief” under ERISA §
502(a)(3) because they had waived their right to request
equitable restitution or injunctive relief. Alternatively, the
District Court ruled that, even if the plaintiffs had not waived
any of their rights with respect to a remedy, the relief they
requested was not “appropriate equitable relief” within the
meaning of the statute. We agree on the latter point and,
therefore, do not reach the question of waiver.
1
Section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3),
provides:
22
A civil action may be brought—
(3) 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;
(emphasis added). The Supreme Court has held that the
phrase “appropriate equitable relief” means only “those
categories of relief that were typically available in equity” in
the days of the divided bench, Great-West Life & Annuity Ins.
Co. v. Knudson, 534 U.S. 204, 210 (2002) (quoting Mertens v.
Hewitt Assocs., 508 U.S. 248, 256 (1993) (original
emphasis)). According to the Supreme Court, such relief
includes “injunction, mandamus, and restitution, but not
compensatory damages.” Mertens, 508 U.S. at 256. Thus, a
plaintiff seeking relief under ERISA § 502(a)(3) must tie that
request to a form of relief typically available in equity. In
Great-West, the Court suggested that “the basic contours of
the term [equitable relief] are well known,” and can be
understood by consulting “standard current works such as
Dobbs, Palmer, Corbin, and the Restatements, which make
the answer clear.” 534 U.S. at 217; see also Sereboff v. Mid
Atl. Med. Servs., Inc., 126 S. Ct. 1869, 1875-76 (2006)
(referring to Dobbs, Palmer, and Pomeroy’s Equity
23
Jurisprudence to explain the contours of the right to an
equitable lien).
As earlier noted, the plaintiffs sought a decree from the
District Court requiring Lucent to adjust its pension records
retroactively to create an obligation to pay the plaintiffs more
money, both in the past and going forward. The District
Court rightly saw this as being, in essence, a request for
compensatory damages merely framed as an “equitable”
injunction. The Court thus rightly concluded that the
requested relief is not available under § 502(a)(3).6 Great-
West, 534 U.S. at 210; Mertens, 508 U.S. at 255 (1993); see
also Bowen v. Massachusetts, 487 U.S. 879, 915-16 (1988)
6
This is not to say that an ERISA plaintiff’s demand for
money necessarily requires the conclusion that the relief
sought is not “equitable” within the meaning of the statute.
The Supreme Court has explained that some forms of
equitable relief—such as constructive trusts, equitable liens,
or accounting for the profits derived from wrongly held
property—include the payment of money. Great-West, 534
U.S. 213-14 & n.2. As the Court explained in Great-West,
however, these forms of relief are available in limited
circumstances. “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, since
they seek no more than compensation for loss resulting from
the defendant's breach of legal duty.” Id. at 210 (quoting
Bowen v. Massachusetts, 487 U.S. 879, 918-19 (1988)
(Scalia, J., dissenting)).
24
(Scalia, J., dissenting) (“It does not take much lawyerly
inventiveness to convert a claim for payment of a past due
sum (damages) into a prayer for an injunction against refusing
to pay the sum, or for a declaration that the sum must be paid,
or for an order reversing the agency’s decision not to pay.”).
2
The plaintiffs argue that the relief they seek is
indistinguishable from the relief approved by the Supreme
Court in Varity Corp. v. Howe, 516 U.S. 489 (1996), and,
therefore, Varity and this Court’s decisions in Cox I and Cox
II, as well as the Tenth Circuit’s decision in Adams, compel a
different result. Once again, we disagree.
In Varity, the defendant corporation deceived several
of its employees into transferring their jobs and their benefit
plans from a profitable subsidiary to another subsidiary that
had been set up to fail. Id. at 493-94. The trial court found
that the defendant had violated its obligation as a fiduciary to
operate its benefits plan “solely in the interest of the
participants and beneficiaries” of the plan, and issued an
order—citing ERISA § 502(a)(3) as its source of
authority—directing the corporation to reinstate the
transferred employees back into the benefits plan of the
profitable subsidiary. Id. at 494-95. Varity is distinguishable
from the present case for at least two reasons.
First, the plaintiffs in Varity were deceived into
transferring from one subsidiary to another within the same
company, and thus the relief in that case was measurable
25
according to the defendants’ gain, rather than the plaintiffs’
loss. LaRue v. DeWolff, Boberg & Assocs., 450 F.3d 570, 576
(4th Cir. 2006) (holding that a plaintiff could not recover
under ERISA § 502(a)(3) where he alleged that he lost money
because his 401(k) plan administrator had failed to follow his
directions for making changes to his investment, noting that
the plaintiff “gauges his recovery not by the value of
defendants’ nonexistent gain, but by the value of his own
loss—a measure that is traditionally legal, not equitable”);
Millsap, 368 F.3d at 1253 (holding, in a § 510 case involving
a plant closing, that back pay was not “appropriate equitable
relief” because it measured the plaintiffs’ loss rather than the
defendants’ gain). In Varity, the plaintiffs sought pension
benefits for work they had actually done for their employer,
and the court’s decree was a matter of restoring the plaintiffs’
benefits enrollment to the preexisting arrangement, thus
undoing the effects of the defendants’ deception. Here,
however, the plaintiffs are seeking pension benefits for work
they never did for AT&T or its former divisions, but which
they argue they might have done had AT&T not adopted a
hiring policy that they claim violated ERISA. The remedy
they seek is thus akin to “back pay,” which is not an equitable
remedy within the meaning of the statute. Great-West, 534
U.S. at 218 n.4; see also Millsap, 368 F.3d at 1253 (“[P]aying
backpay damages is like paying an extra worker who never
came to work.” (quoting Ford Motor Co. v. EEOC, 458 U.S.
219, 229 (1982))); id. at 1254 (“Plaintiffs’ proposed method
of calculating their backpay award is based on each individual
class member’s loss rather than Defendant’s gain ... [and] is
thus in the nature of compensatory damages.”); 2 Dan B.
Dobbs, Law of Remedies § 6.10(5) at 226 (2d ed. 1993)
26
(“Back pay claims do not differ remedially from the personal
injury claim for lost wages, or the contract claim for past
wages due, for example ... [s]o, while reinstatement is clearly
equitable as a form of injunctive relief, back pay seems to be
just as clearly legal.”) (footnotes omitted).
Second, the Court in Varity did not rule on the question
of whether the relief sought was “equitable” within the
meaning of the statute, because the defendants stipulated that
it was. 516 U.S. at 508 (“Varity concedes that the plaintiffs
satisfy most of this provision’s requirements, namely, that the
plaintiffs are plan ‘participants’ or ‘beneficiaries,’ and that
they are suing for ‘equitable’ relief to ‘redress’ a violation of
§ 404(a), which is a ‘provision of this title.’”(emphasis
added)); see also Great-West, 534 U.S. at 221 n.5 (“In Varity
... it was undisputed that the respondents were seeking
equitable relief ...” (emphasis omitted).
Cox I and Cox II are also unavailing as support for the
plaintiffs’ position. It is true that those decisions addressed
whether there is a right to a jury trial in actions under ERISA
§ 502(a)(1)(B), and that ultimately we decided there is not,
because such actions are analogous to actions for breach of
trust, which were typically heard in courts of equity. See Cox
II, 894 F.2d at 649 (citing Turner v. CF & I Steel Corp., 770
F.2d 43 (3d Cir. 1985)). It does not follow, however, that all
relief available for a breach of trust at common law is
“equitable relief” within the meaning of § 502(a)(3) of
ERISA. The Supreme Court explicitly rejected that argument
in Mertens. 508 U.S. at 258 (holding that the term “equitable
27
relief” in § 502(a)(3) does not mean “all relief available for
breach of trust at common law”).
Neither does Adams require a result contrary to our
decision here. In the context of determining whether the
plaintiffs in that case were entitled to a jury trial on their
claims, the Tenth Circuit explained that the recovery of
benefits due under the terms of a plan is analogous to
equitable restitution. 149 F.3d at 1162. As discussed above,
however, the plaintiffs are not seeking benefits that were
wrongly withheld for work they performed for the defendants.
Rather, they are seeking an award of benefits as an
approximation of the loss they suffered as a result of what
they say is the defendants’ violation of § 510 of ERISA. As
the Supreme Court explained in Great-West, this amounts to a
claim for legal damages, not equitable restitution, and thus is
relief not available to the plaintiffs in this case. 534 U.S. at
213-14 (explaining the difference between legal and equitable
relief); Skretvedt v. E.I. DuPont De Nemours, 372 F.3d 193,
210-12 (3d Cir. 2004) (same).
We therefore agree with the District Court that the
relief the plaintiffs sought is not “equitable” within the
meaning of ERISA § 502(a)(3).
C
Finally, the plaintiffs argue that the District Court’s
grant of summary judgment is contrary to the mandate of this
Court, and that its reading of § 502 would render § 510 of
28
ERISA without effect. Both of those arguments are without
merit.
A district court must “implement both the letter and
spirit of the mandate” it receives from this Court, but district
courts are free to “consider, as a matter of first impression,
those issues not expressly or implicitly disposed of by the
appellate decision.” Bankers Trust Co. v. Bethlehem Steel
Corp., 761 F.2d 943, 949-50 (3d Cir. 1985) (citing cases).
We held in the previous appeal that the plaintiffs had
presented sufficient evidence to survive a summary judgment
motion that argued the defendants lacked any intent to
interfere with the plaintiffs’ pension benefits. We neither
explicitly nor implicitly ruled on the question of whether any
of the relief the plaintiffs sought was available under § 502,
and that issue was therefore open for the District Court to
address on remand.
The plaintiffs argue, however, that the defendants’
failure to raise the issue of whether § 502 afforded the
plaintiffs any relief resulted in a waiver of that issue. For that
proposition, they rely on our decision in Skretvedt. In
Skretvedt, the plaintiff filed an eight-count complaint, the
District Court granted summary judgment to the defendants
on all eight counts, and the plaintiff only appealed as to two
of the eight counts. 372 F.3d at 197-99. The plaintiff won a
remand on appeal and then sought to relitigate on remand
some of the remaining six counts for which he had not
secured a remand. Id. at 199. We held that the plaintiff had
waived any right to recover on those claims by not
challenging the District Court’s grant of summary judgment
29
on those claims in the first appeal. The panel stated that
“[w]e have consistently rejected such attempts to litigate on
remand issues that were not raised in a party’s prior appeal
and that were not explicitly or implicitly remanded for further
proceedings.” Id. at 203 (emphasis added); see also
Wisniewski v. Johns-Manville Corp., 812 F.2d 81, 88 (3d Cir.
1987) (“An issue that is not addressed in an appellant’s brief
is deemed waived on appeal.”) (emphasis added).
Here, however, the defendants were the appellees in
the previous appeal. As such, they were not required to raise
all possible alternative grounds for affirmance to avoid
waiving those grounds. See Kessler v. Nat'l Enters., Inc., 203
F.3d 1058, 1059 (8th Cir. 2000) (“[A]ppellate courts should
not enforce the [waiver] rule punitively against appellees,
because that would motivate appellees to raise every possible
alternative ground and to file every conceivable protective
cross-appeal, thereby needlessly increasing the scope and
complexity of initial appeals.”); Crocker v. Piedmont
Aviation, Inc., 49 F.3d 735, 741 (D.C. Cir. 1995) (“[F]ull
application of the waiver rule to an appellee puts it in a
dilemma between procedural disadvantage and improper use
of the cross-appeal, [and t]hat dilemma, together with the
potential judicial diseconomies of forcing appellees to
multiply the number of arguments presented, justifies a degree
of leniency in applying the waiver rule to issues that could
have been raised by appellees on previous appeals.”) (original
emphasis).
We also reject the plaintiffs’ argument that the District
Court’s construction of § 502(a) renders § 510 ineffective. As
30
the Supreme Court has noted, the “prototypical” claim under
§ 510 of ERISA is when an employer terminates an employee
to prevent his pension rights from vesting. Ingersoll-Rand,
498 U.S. at 143. Under such circumstances, the typical
remedy is reinstatement, which is an equitable remedy within
the terms of the statute. 2 Dobbs § 6.10(5) at 226. It may be
that § 502(a) restricts the scope of § 510 as a practical matter
by leaving without remedy some violations of § 510 that
differ from the “prototypical” case. That the plaintiffs are
without a remedy in this case, however, does not render § 510
ineffective in all cases, and thus does not implicate the canon
of statutory interpretation that cautions against interpreting a
statute so as to render one part inoperative. See generally
United States v. Menasche, 348 U.S. 528, 538 (1955).
IV
For the foregoing reasons, we will affirm the judgment
of the District Court.
31