Amicus Curiae Brief — LaRue v. DeWolff, Boberg & Associates, Inc.

SEP 1% 2007

SUT io f-t.

SUPREME COCET

3n The

Supreme Court of the Anited States

°

JAMES LARUE,

Petitioner,

v.

DEWOLFF, BOBERG & ASSOCIATES, INC.;

and DEWOLFF, BOBERG & ASSOCIATES, INC.,

EMPLOYEES’ SAVINGS PLAN,

Respondents.

.

On Writ Of Certiorari To The

United States Court Of Appeals

For The Fourth Circuit

¢

BRIEF OF THE CHAMBER OF COMMERCE

OF THE UNITED STATES OF AMERICA AND

THE FINANCIAL SERVICES ROUNDTABLE AS

AMICI CURIAE IN SUPPORT OF RESPONDENTS

®

ROBIN S. CONRAD MARK A. CASCIARI

SHANE BRENNAN Counsel of Record

NATIONAL CHAMBER YUKYONG CHOI

LITIGATION CENTER, INC. SEYFARTH SHAW LLP

1615 H Street, N.W. 131 S. Dearborn Street,

Washington, D.C. 20062 Suite 2400

(202) 463-5337 Chicago, [L 60603

RICHARD WHITING (312) 460-5000

Scott TALBOTT DIANE SOUBLY

THE FINANCIAL SERVICES SEYFARTH SHAW LLP

ROUNDTABLE Two Seaport Larie,

1001 Pennsylvania Avenue, N.W., Suite 300

Suite 500 Boston, MA 02210

Washington, D.C. 20004 (617) 946-4800

(202) 589-2400 Counsel for Amici Curiae

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

rr

ne

TABLE OF CONTENTS

Page

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STATEMENT OF INTEREST ..............:ccccccscceceesees 1

SUMMARY OF ARGUMENT .............::ccccccceeeeceeeees 3

FRESE LOE CRA ee 6

I. PETITIONERS COMPLAINT SEEKS

INDIVIDUAL MONETARY RELIEF AND

CANNOT BE SAID TO ASSERT A CLAIM

FOR PLAN RELIEF UNDER ERISA

SG ee END eieseretanovansntsntesinnsmmnnnecoes 6

A. The Allegations In The Complaint And

The Court’s Decision In Mass. Mutual Life

Ins. Co. v. Russell Preclude Petitioner’s

Ability To Seek Monetary Relief For An

Individual Account Under Section

B. Fort Halifax Packing Co. v. Coyne Pro-

vides Additional Support Why Petitioner

Does Not Seek Monetary Relief To The

Plan Under Section 409(a)..................05 10

Il. IF PETITIONER PREVAILS, THE FOCUS

OF SECTION 409A) WOULD TURN TO

INDIVIDUAL CONSEQUENTIAL DAMAGE

CLAIMS AND WOULD TIP THE DELI-

CATE CONGRESSIONAL BALANCE THAT

ENCOURAGES, IN PART BY LIMITING

REMEDIES, THE VOLUNTARY ESTAB-

LISHMENT OF EMPLOYEE BENEFIT

PET sesinsnnsiccnndnctininntuiientihedgasanninnnnennneee 13

li

TABLE OF CONTENTS - Continued

Page

III. PETITIONER'S SURCHARGE ARGUMENT

CONFLICTS WITH THIS COURTS DE-

CISION IN MERTENS V. HEWITT ASSOCS.

THAT CHARACTERIZES PETITIONER'S

REQUESTED RELIEF AS LEGAL RELIEF... 23

ST dersecpncnsinjisaininsinneninesainieesciienmematinainin 29

ili

TABLE OF AUTHORITIES

Page

FEDERAL CASES

Beck v. Pace Int'l Union, 427 F.3d 668 (9th Cir.

2005), rev'd, 147 S.Ct. 2310 (2007) ....... ce eeeeee eee 22

Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955

acca aaa ite ariel cd 9,19

Burnette v. Carothers, 192 F.3d 52 (2d Cir.

RENEE ernie Was overs ene mane oe ee 6

Endsley v. City of Chicago, 230 F.3d 276 (7th

i a a 9g

Farr v. U.S. West Comme’ns, Inc., 151 F.3d 908

a el 17

Fort Halifax Packing Co. v. Coyne, 482 U.S. 1

ASSET EEE SSE Os eran Tn CO 4,12

Great-West Life & Annuity Ins. Co. v. Knudson,

ee ee, Be ID ecnnevciniccioncnccctinsebonins 25, 26, 27, 28

Helfrich v. PNC Bank, Kentucky, Inc., 267 F.3d

477 (6th Cir. 2001), cert. denied, 535 U.S. 928

AR a ce en ene ne 18

Hughes Aircraft Co. v. Jacobson, 105 F.3d 1288

(9th Cir. 1997), rev'd, 525 U.S. 432 (1999)............. 22

Hughes v. Legion Ins. Co., No. 03-0993, 2007

WL 781951 (S.D. Tex. March 12, 2007)................. 18

In re Vioxx Prods. Liability Litig., No. 1657, ___

F.Supp.2d ___, 2007 WL 2309877, (E.D. La.,

es Seas UIE sikteiiisceniiacgiatcanepseiedaaeieeh eietiasicalicsiptiede 19

lv

TABLE OF AUTHORITIES — Continued

Page

IT Corp. v. Gen. American Life Ins. Co., 107

IR NET 10

Knieriem v. Group Health Plan, Inc., 434 F.3d

AES ree nee ee ne 28

Kyle Rys., Inc. v. Pacific Admin. Serv., 990 F.2d

adalat 10

Lockheed Corp. v. Spink, 517 U.S. 882 (1996)........... 22

Mass. Mut. Life Ins. Co. v. Russell, 473 U.S.

SEIS en esi nr ene ne eeem 8, 14, 24

Mertens v. Hewitt Assocs., 508 U.S. 248 (1993)... passim

Nachman v. PBGC, 446 U.S. 359 (1982)...............006 14

Nord v. Black & Decker Disability Plan, 296

F.3d 823 (9th Cir. 2002), rev’d, 538 U.S. 822

EFAS reno re ere owe a a ene ae oe am 22

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41

SRE SESE ERIE tre eas a eee IAA USES TE eT Be OTE 14

R.J.R. Serv., Inc. v. Aetna Cas. & Sur. Co., 895

eS ES re ene 6

Sereboff v. Mid Atlantic Med. Servs., Inc., 126

I a cepuienmameenan 25, 26, 28

Shaw v. Delta Air Lines, Inc., 463 U.S. 85

EE LS Lae REE ene Oe near ee Ieee SERS ROE 13

Tegtmeier v. Midwest Operating Eng’rs Pension

Trust, 390 F.3d 1040 (7th Cir. 2004) ........ ce eeeeeee 10

TABLE OF AUTHORITIES - Continued

Page

Todisco v. Verizon Commce’n, No. 06-1957, ___

F.3d __, 2007 WL 2231733 (1st Cir. Aug. 6,

IIT Pvsescaciseienetrivinstnieniinniiiasaissasaianiiaamnaienbeiniinein 17

Varity Corp. v. Howe, 516 U.S. 489 (1993) .......... eee 9

FEDERAL STATUTES AND REGULATIONS

Se es Oe OO ccecsecnciciveiiacisitinnicinmbiibaiaiainl 2

Bee ees Oy Se ee iccsiniccscevesvevccnsiasninsetianeubatnemiiaien 16

Le eS ) | nes 9

Be ee Oe Se crnescenacioomsssisennicensisinmaimialan 10

Se rs ie eR ivntectcnessnesesnsnnssennsenscevieniinnmmnetian 11

Be sO i neceitnsetnecrveevinnrinnieninniiennnianiiiaaiigl 13

BP CTs. BCD cccccncesncresesesersesistssnnisinntnianninn 24

a ee iidetintisiednssnrsaneinnvionnininneiaiaiiaal passim

ae Ta Oe HED wrtcscccnecsernsnssteniennnninntiiiiiiia passim

BD UB.C.. § TASTLANS) .coscrevererceesssccseeves sereeenensees passim

BP is B See ic cvccvesicnnssnciccsnniscésnciendinnuaiant 24

BD EEG B BIE ccsctecescvisnstectesscnnssrsoiinsstnctnniiniias 24

Be We te BID iccesecsevresnsnninvstineicvinnentaccsipaliand 24

a RENEE om 10

Gk be ecttcenicncsrscesecsineinantiinitiiaiomeiain 12

Revenue Act of 1978, Pub. L. No. 95-600,

SISA a), GS Beat. FISH CAGTS) ..cccceccsscscccsscescoccsssceses 10

vi

TABLE OF AUTHORITIES — Continued

Page

MISCELLANEOUS

Bureau of Labor Statistics, U.S. Dept. of Labor,

Employment Situation (July 2007), available

at http://www.bls.gov/news.release/pdf/empsit.

ESET SE ee ae ee 15, 16

Bureau of Labor Statistics, U.S. Dept. of Labor,

National Compensation Survey: Employee

Benefits in Private Industry (March 2007),

available at http://www.bls.gov/ncs/ebs/sp/

Don Clark and Peg Brickley, Jntel’s Email

Recovery Effort Is Set to Cost ‘Many Millions,’

WALL St. J. April 25, 2007; Page B11 (report-

ing on Jn re Intel Corp. Microprocessor Litig.,

No. 05-1717 (D. Del. commenced Nov. 8,

EEO EE Se 19

DAN B. DoBBS, DOBBS LAW OF REMEDIES (West)

SSR RE ee Sa See 27

Employee Benefits Security Admin., U.S. Dept. of

Labor, Private Pension Plan Bulletin Historical

Tables (March 2004) available at http://Awww.dol.

gov/ebsa/pdf/privatepensionplanbulletinhistorical

I ee 11

Frederick L. Pilot, Employer-Based Coverage

Eroding Throughout California, New Studies

Report, 7 Pen. & Ben. Daily 134 (Pen. & Ben.

Cr ene 23

vii

TABLE OF AUTHORITIES — Continued

H.R. Conr. REP. No. 93-1280 (1974), reprinted

in 1974 U.S.C.C.A.N. 5038, 5167, and in 3

LEGISLATIVE History OF ERISA 4673 (1976)......

Kevin M. Scott, Supreme Court Reversals of

The Ninth Circuit, 48 Ariz. L. Rev. 341, 341

Survey Finds Massive Cost Increases for Pen-

sion Fund Liability Insurance, 30 Pens. &

Ben. Rep. 1691 (BNA) (Aug. 5, 2003).................

U.S. Census Bureau, Income, Poverty, and Health

Insurance Coverage in the United States: 2006

(August 2007), available at http:/AWwww.census.

gov/prod/2007 pubs/p60-233.pdf ............cccceeeeeeees

U.S. Government Accountability Office, Report

to Congressional Requesters, Employee Com-

pensation, Employer Spending on Benefits

Has Grown Faster Than Wages, Due Largely

to Rising Costs of Health Insurance and Re-

tirement Benefits (February 2006), available

at http://www.gao.gov/new.items/d06285. pdf ....

U.S. Government Accountability Office, Report

to the Chairman, Committee on Education

and Labor, House of Representatives, Em-

ployer-Sponsored Health and Retirement

Benefits, Efforts to Control Employer Costs

and the Implications for Workers (March

2007), available at http:/Avww.gao.gov/new.items/

IIIT sscsncmctonniienmitadcnainbiddidtestaauie 11, 21

a

vill

TABLE OF AUTHORITIES — Continued

Page

William J. Wiatrowski, Medical and Retirement

Plan Coverage: Exploring The Decline In

Recent Years, MONTHLY LaB. REvV., pg. 30,

FE eee icctensienicrninsnnctstintncineienmsicainidicnmionasios 16

1

STATEMENT OF INTEREST

This amici curiae brief is submitted on behalf of

the Chamber of Commerce of the United States of

America (the “Chamber”) and the Financial Services

Roundtable (collectively the “Amici”).’

The Chamber is the world’s largest business

federation. The Chamber has an underlying member-

ship of more than three million businesses of every

size, in every industry sector and in every geographi-

cal region of the country. The Financial Services

Roundtable represents 100 of the largest integrated

financial services companies that provide banking,

insurance and investment products and services to

the American consumer. Roundtable member compa-

nies provide fuel for America’s economic engine,

accounting directly for $65.8 trillion in managed

assets, $1 trillion in revenue, and 2.4 million jobs. An

important function of the Chamber and the Financial

Services Roundtable is to represent the interests of

their members by filing amicus briefs in cases involv-

ing issues of concern to the American business com-

munity. This is one such case.

‘ In accordance with Supreme Court Rules, the Amici

represent that no counsel for any party to this action authored

this brief or made a monetary contribution to its preparation or

submission. Sup. CT. R. 37.6. In addition, the Amici represent

that the brief is filed with the consent of the parties. See Letter

of P. Stris dated 7/27/07 and Letter of T. Gies dated 8/29/07, both

of which have been filed with the Court.

2

Most of the Amici’s business members have

established and continue to maintain employee

benefit plans regulated by the Employee Retirement

Income Security Act of 1974 (“ERISA”), 29 U.S.C.

§ 1001 et seg. These members have a vital interest in

the outcome of this case. If the Court of Appeals is

reversed, this Court’s decision would expand ERISA

remedies, and thus ERISA claims, beyond the intent

of the Congress as evidenced by the language of the

statute. Such an expansion of ERISA remedies will

increase the cost of ERISA plan administration to

Amici members, including the cost associated with

appointing and monitoring ERISA fiduciaries, and

likely will force Amici members to cut back benefits,

or decline to provide benefit improvements or benefit

enhancements. Under the ERISA scheme, private

sector employers can reduce non-vested ERISA bene-

fits or choose not to offer benefit enhancements,

because the statute promotes the voluntary estab-

lishment of benefit plans. Judicial expansion of

ERISA remedies by reversing the Court of Appeals

therefore would contravene the Congressional scheme

in ERISA to maximize the establishment and main-

tenance of ERISA plans by limiting remedies.

The issues before the Court are (1) whether

ERISA Section 409(a), 29 U.S.C. § 110%a), permits an

individual, as opposed to a plan, remedy, even though

the statutory language permits only a plan remedy;

and, (2) whether ERISA Section 502(a)(3), 29 U.S.C.

§ 1132(aX3), permits legal, as opposed to equitable,

relief, even though the statutory language does not

3

use the word “legal” and this Court already has

definitively ruled that Section 502(a\(3) permits only

equitable relief. The Amici have a substantial inter-

est in the issues presented to the Court for review,

and submit this brief in support of the position of

Respondents on these issues.

¢

SUMMARY OF ARGUMENT

The first issue presented for review comes to the

Court in a unique procedural posture that requires

the Court to accept as true the well-pled allegations

in the Petitioner’s Complaint. The first issue asks

whether ERISA Section 502(a)(2) and Section 409(a),

29 U.S.C. §§ 1132(aX2), 1109(a),’ authorize a partici-

pant in a defined contribution pension plan, on behalf

of himself and no other participants, to recover “lost”

gains attributable to his individual plan account. The

Complaint does not allege that Petitioner seeks relief

for the plan and does not purport to arise under

ERISA Section 502(a)(2); rather, it purports to arise

only under Section 502(aX(3), 29 U.S.C. § 1132(aX3).

The threshold reason that the Court should affirm

the judgment of the Court of Appeals is that the

Complaint does not even place at issue ERISA Sec-

teen 502(a)(2).

* Section 502(aX2) expressly incorporates Section 40%a) of

ERISA. 29 U.S.C. §§ 110%a), 1132(aX2) (2007). Section 502(aX2)

and Section 409 are used interchangeably in this brief.

4

Additionally, even under any attenuated reading

of the Complaint, Petitioner does not seek monetary

relief for his defined contribution pension plan - an

undisputed precondition to stating a valid claim

under Section 502(a)(2). The Complaint instead seeks

“make whole” relief of £150,000 that would pass

through the plan without any administrative process-

ing or consideration, directly into Petitioner’s indi-

vidual account.’ Brief in Opp’n, App. 4a. This Court

stated in Fort Halifax Packing Co. v. Coyne, 482 U.S.

1 (1987), that a single benefit payment “hardly consti-

tutes the operation of a benefit plan,” because the

employer does “little more than write a check.” Jd. at

12. By analogy, a single payment of $150,000 directly

to an individual account wcuid not implicate a plan,

and thus could not constitute plan relief within the

meaning of Sections 502(a)(2) and 409(a).

This Court should not countenance Petitioner's

attempt to recast his Section 502(a\(3) claim in the

Complaint into an unstated Section 502(a)(2) claim.

He thus seeks to expand the scope of Sections

502(a\(2) and 409(a) beyond their language — an

undertaking that this Court should reject.

Petitioner’s attempt to rewrite Sections 502(a)(2)

and 409(a) would have adverse consequences to the

millions of private sector Americans who receive

* In fact, Petitioner no longer has an individual account

with the DeWolff, Boberg & Associates, Inc., Employees’ Savings

Plan. Mot. To Dismiss The Writ 5-6. The $150,000 would pass

directly to Petitioner’s personal bank account.

5

employee benefits from ERISA plans. The statute is

carefully crafted to encourage employers to establish

ER®SA plans on a voluntary basis. Its remedies thus

are limited in a way that Congress thought would

accomplish this goal. If those remedies are expanded

beyond what the statute allows, the balance set by

Congress would be tipped, and fewer ERISA plans

would be established or the level of benefits provided

under ERISA plans would be lessened. This Court

should stay true to ERISA in order to stay true to the

salutary Congressional goals in ERISA.

Ti.e second issue presented for review is whether

the Petitioner’s Section 502(a)(3) claim for $150,000

is one for “equitable relief.” Although four sections in

ERISA specifically allow legal relief, Section 502(aX3)

is not one of the four, so the second issue should be

resolved against the Petitioner. Indeed, this Court’s

decision in Mertens v. Hewitt Assocs., 508 U.S. 248

(1993) also provides the answer to the second issue by

showing that, regardless of the label Petitioner at-

taches to his demand for monetary relief, the

$150,000 Petitioner demands is not in the possession

of either Respondent and thus Petitioner’s requested

monetary relief is legal in nature. The Court should

affirm the judgment of the Court of Appeals for the

Fourth Circuit.

6

ARGUMENT

I. PETITIONER’S COMPLAINT SEEKS INDI-

VIDUAL MONETARY RELIEF AND CANNOT

BE SAID TO ASSERT A CLAIM FOR PLAN

RELIEF UNDER ERISA SECTION 409(A).

A. The Allegations In The Complaint And

The Court’s Decision In Mass. Mutual

Life Ins. Co. v. Russell Preclude Peti-

tioner’s Ability To Seek Monetary Relief

For An Individual Account Under Sec-

tion 409(a).

Given the procedural posture of this case, the

focus of the Court’s review should be the Petitioner’s

Complaint.* The Complaint alleges that Petitioner

directed the Plan through its administrators, to

invest his money in the DeWolff, Euberg & Associates,

Inc., Employees’ Savings Plan, commonly known as a

401(k) Plan, in a certain way, but Respondents “failed

* This case comes before the Court in a unique procedural

posture. The District Court entered judgment for Respondents

on the pleadings under Feb. R. Civ. P. 12(c). Pet. Br. 11. In

deciding a Rule 12(c) motion, courts “apply the same standard as

that applicable to a motion under Rule 12(bX6), accepting the

allegations contained in the Complaint as true and drawing all

reasonable inferences in favor of the nonmoving party.” Burnette

v. Carothers, 192 F.3d 52, 56 (2d Cir. 1999). While the Court

should view the well-pled facts in the Complaint in the light

most favorable to the non-moving party, the Court is “not obliged

to ignore any facts set forth in the complaint that undermine the

plaintiff ’s claim or to assign any weight to unsupported conclu-

sions of law.” R.J.R. Serv., Inc. v. Aetna Cas. & Sur. Co., 895 F.2d

279, 281 (7th Cir. 1989).

7

to invest Plaintiff's money as directed.” Brief in Opp’n,

App. 3a, 12a. The Complaint further alleges that, as a

result, “the Plaintiff’s interest in the plan has been

depleted approximately $150,000.00.” Id. at 3a-4a. The

Complaint characterizes the alleged failure to follow

directions as a breach of fiduciary duty under ERISA.

Id. at 4a. The Complaint’s prayer for relief states that

it seeks individual monetary relief only under ERISA

Section 502(aX3), 29 U.S.C. § 1132(a)(3).°

Ignoring his Complaint, however, Petitioner has

attempted to recast his individual claim for relief

under ERISA Section 502(a)(3) as a Section 502(a)(2)/

Section 409(a) claim of fiduciary breach seeking mone-

tary relief for the plan as a whole. See Pet. Br. 16-29.

ERISA Section 409(a) provides:

Any person who is a fiduciary with respect to

a plan who breaches any of the responsibilities,

* The Complaint’s entire prayer for relief demands:

(1) a declaration from the court that the Defendant

has breached its’ fiduciary duty pursuant to *.R.1.S.A.

29 U.S.C.S. § 1001 et. seg., (2) for appropriate ‘make

whole’ or other equitable relief pursuant to E.R.1.S.A.

29 U.S.C.S. § 1132(aX3), (3) for a statutory penalty for

failure to provide information Plaintiff requested pur-

suant to E.R.1.S.A.. 29 U.S.C.S. §1132(c), (4) for attor-

ney’s fees and costs pursuant to E.R.I.S.A. 29 U.S.C.S.

§ 1132(g), and [5] for such other and further relief as

the court deems just and proper.

Brief in Opp’n, App. 4a. Nothing in this list of remedies seeks

monetary relief for the DeWolff, Boberg & Associates, Inc.,

Employees’ Savings Plan.

8

obligations or duties imposed upon fiduciar-

ies by this subchapter shall be personally li-

able to make good to such plan any losses to

the plan resulting from each such breach,

and to restore to such plan any profits of

such fiduciary which have been made

through use of assets of the plan by the fidu-

ciary, and shall be subject to such other equi-

table or remedial relief as the court may

deem appropriate, including removal of such

fiduciary.

29 U.S.C. § 1109(a) (2007) (emphasis added). In Mass.

Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (1985), the

Court ruled that this language permits only “reme-

dies that would protect the entire plan, rather than

... the rights of an individual beneficiary.” Jd. at 141.

As noted, the Complaint does not allege that

Petitioner seeks monetary relief under Section 409(a),

nor does it allege that the Petitioner seeks to make

good a loss “to the plan.” Relying on Russell, this

Court should reaffirm on this appeal that ERISA

Section 409(a) will provide a claim for relief only if a

plaintiff seeks relief for a plan in her complaint.

Given the procedural posture of this case and the

holding of Russell, the Court should rule that the

failure of Petitioner to allege in his Complaint that he

seeks relief for the plan demonstrates that Petitioner

seeks individual monetary relief in this case and thus

does not state a claim for monetary relief under

ERISA Section 409(a).

There is another pleading deficiency in Peti-

tioner’s Complaint. The Complaint merely concludes

in paragraph XIII that Respondent DeWolff, Boberg

9

& Associates, Inc., is a “fiduciary.” Brief in Opp’n,

App. 3a. However, there are no allegations of fact

showing why it is a “fiduciary” as that term is defined

in ERISA Section 3(21)A). 29 U.S.C. § 1002(21)A)

(2007). A sufficiently particular allegation of fiduciary

status is a prerequisite to state a valid claim for a

fiduciary breach. See Varity Corp. v. Howe, 516 U.S.

489, 498 (1993) (finding that fiduciary status turns on

the act or omission at issue, and not on the formal

title of plan administrator); Bell Atlantic Corp. uv.

Twombly, 127 S.Ct. 1955, 1964-65 (2007) (finding that

plaintiff is obligated to state in his complaint the

grounds of his entitlement to relief, which “requires

more than labels and conclusions”); and, see gener-

ally, Endsley v. City of Chicago, 230 F.3d 276, 284

(7th Cir. 2000) (stating that a plaintiff “may plead

himself out of court by including factual allegations

which, if true, show that his legal rights were not

invaded”).

Indeed, paragraph XIV of the Complaint alleges

that Respondent DeWolff, Boberg & Associates, Inc.,

“failed to invest Plaintiff’s money as directed... .”

Brief in Opp’n, App. 3a-4a (emphasis added). Peti-

tioner’s Complaint thus concedes that it was he, as

opposed to any fiduciary, who directed and thus

controlled the investment of funds in his individual

account. A person who undertakes purely ministerial

functions within a framework of rules, practices and

procedures does not exercise any authority or control

with respect to management or disposition of the

assets of the plan, and as a result, is not a fiduciary.

10

See 29 C.F.R. § 2509.75-8, D-2 (2006); see also IT

Corp. v. Gen. American Life Ins. Co., 107 F.3d 1415,

1421 (9th Cir. 1997) (noting that discretionary au-

thority means more than the mere “power to err”);

Tegtmeier v. Midwest Operating Eng’rs Pension Trust,

390 F.3d 1040, 1047-48 (7th Cir. 2004) (noting that

. misinformation by ministerial employee unique to a

participant was not a fiduciary function); and Kyle

Rys., Inc. v. Pacific Admin. Serv., 990 F.2d 513, 516-

17 (Sth Cir. 1993) (noting that an insurance company

is not fiduciary when it negligently administered

claims under the plan). The Complaint in this case

does not state a valid claim for relief under Section

409(a).

B. Fort Halifax Packing Co. v. Coyne Pro-

vides Additional Support Why Peti-

tioner Does Not Seek Monetary Relief

To The Plan Under Section 409(a).

Congress enacted Internal Code Section 401(k) in

the Revenue Act of 1978.° A 401(k) plan is an “indi-

vidual account plan” or “defined contribution plan” as

defined in ERISA Section 3(34). 29 U.S.C. § 1002(34)

(2007). A defined contribution plan, like a 401(k) plan,

is a retirement plan that provides for establishment

of an individual account for each plan participant. Jd.

Each plan participant’s benefits under a defined

* Revenue Act of 1978, Pub. L. No. 95-600, § 135(a), 92 Stat.

2763 (1978) (current version at 26 U.S.C. § 401 (2007)).

11

contribution plan is based on the money contributed

by him or by his employer on his behalf to his indi-

vidual account. Jd. This arrangement contrasts with

defined benefit plans, which pay guaranteed monthly

pension benefits out of aggregated plan assets and do

not have individual accounts. 29 U.S.C. § 1002(35)

(2007).’ It certainly could be argued that Section

409(a) does not provide a remedy for an investment

loss to an individual account occasioned by a failure

to comply with a participant’s investment instruction,

because the monetary relief would always be allo-

cated to the individual account, as opposed to the

plan as a whole.

Alternatively, the Court could decide whether the

Complaint seeks to make good a loss “to the plan” by

deciding whether the plan administrator would

exercise administrative discretion upon the plan’s

" In 1974 when ERISA was enacted, the predominant form of

retirement plan was the defined benefit plan. See Employee Benefits

Security Admin., U.S. Dept. of Labor, Private Pension Plan Bulletin

Historical Tables, Table E8 (March 2004), available at http://www.

dol.gov/ebsa/pdf/privatepensionplanbulletinhistoricaltables.pdf (noting

that in 1975, of a total 38 million retirement plan participants in

the United States, 27 million participated in defined benefit

pension plans and 11 million participated in defined contribu-

tion pension plans). Over the years, defined contribution plans

have replaced the defined benefit plan as the predominant form

of ERISA retirement plans. See U.S. Government Accountability

Office, Report to the Chairman, Committee on Education and

Labor, House of Representatives, Employer-Sponsored Health

and Retirement Benefits, Efforts to Contro] Employer Costs and

the Implications for Workers, pg. 3] (March 2007), available at

http:/Awww.gao.gov/new.items/d07355. pdf.

12

receipt of money and thereby involve the plan in a

meaningful way. A single, one-time payment of money

to Petitioner would have no effect whatsoever on the

administration and operation of the DeWolff, Boberg

& Associates, Inc., Employees’ Savings Plan, and thus

should not be seen to constitute relief “to the plan”

within the meaning of Section 409(a).

To guide this Court’s analysis of whether a single,

one-time payment of money, would go “to the plan,”

the Amici suggest that the Court review its reasoning

in Fort Halifax Packing Co. v. Coyne, 482 U.S. 1. In

Fort Halifax, the Court determined that a single

benefit payment “hardly constitutes the operation of a

benefit plan”; rather than trigger any plan obligations

or responsibilities, an employer does “little more than

write a check.” Jd. at 12. The Court stated as well in

Fort Halifax that a precondition to the establishment

of an ERISA plan is a “uniform administrative

scheme, which provides a set of standard procedures

to guide processing of claims and disbursement of

benefits.” Jd. at 9. Similarly, the United States De-

partment of Labor takes the view in its regulations

that mere “compensation” payments are not pay-

ments by an ERISA benefit plan. 29 C.F.R. § 2510.3-

1(b) (2006).

If the Complaint in this case makes any Section

409(a) allegation at all, it alleges, at most, that the

DeWolff, Boberg & Associates, Inc., Employees’ Sav-

ings Plan would act as a mere pass-through for any

monetary relief to Petitioner. Giving every possible

benefit of the doubt to Petitioner, the Complaint still

13

fails to allege any impact on the plan’s administrative

scheme or any exercise of the plan administrator’s

discretion in allocating $150,000 to the Petitioner.

Nothing in the Complaint alleges what the Plan

would do upon receipt of that money other than to

pass it on in toto to Petitioner. The only possible

inference from the Complaint is that the Plan, at

most, would serve as a mere stopping point for the

$150,000 requested by Petitioner, on its way to Peti-

tioner. The monetary relief in this case thus resem-

bles the single, one-time payment of money in Fort

Halifax. Just as that payment did not establish an

ERISA plan, so too the monetary relief of a single

payment of $150,000 demanded by Petitioner is not

“plan” relief. For this additional reason, the Court

should find that the Complaint does not state a claim

for monetary relief under ERISA Section 409(a).

Il. IF PETITIONER PREVAILS, THE FOCUS

OF SECTION 409A) WOULD TURN TO

INDIVIDUAL CONSEQUENTIAL DAMAGE

CLAIMS AND WOULD TIP THE DELICATE

CONGRESSIONAL BALANCE THAT EN-

COURAGES, IN PART BY LIMITING REME-

DIES, THE VOLUNTARY ESTABLISHMENT

OF EMPLOYEE BENEFIT PLANS.

ERISA regulates private sector employee benefit

plans. 29 U.S.C. § 1003(a) (2007). The statute’s regu-

latory scheme does not come into play, however,

unless and until, the employer voluntarily chooses to

establish an ERISA plan. See, e.g., Shaw v. Delta Air

14

Lines, Inc., 463 U.S. 85, 91 (1983). To encourage

employers to establish ERISA plans, Congress de-

vised the ERISA statutory scheme to limit remedies

associated with fiduciary or other breaches of ERISA

standards. The legislative history of ERISA proves

this point: “It is axiomatic to anyone who has worked

for any time in this area that pension plans cannot be

expected to develop if costs are made overly burden-

some, particularly for employers who generally foot

most of the bill. This would be self-defeating and

would be unfavorable rather than helpful to the

employees for whose benefit this legislation is de-

signed.” H.R. Conr. Rep. No. 93-1280 (1974), re-

printed in 1974 U.S.C.C.A.N. 5038, 5167, and in 3

LEGISLATIVE History OF ERISA at 4673 (1976) (state-

ment of Rep. Ullman, Member, House Comm. On

Ways and Means). This statutory scheme is more

than unique; it is “comprehensive and reticulated,”

Nachman v. PBGC, 446 U.S. 359, 361 (1982), and one

with which this Court is “reluctant to tamper.” Rus-

sell, 473 U.S. at 147.

In Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41

(1987), the Court recognized the importance of lim-

ited remedies in the ERISA statutory scheme: “(T]he

detailed provisions of § 502(a) set forth a comprehen-

sive civil enforcement scheme that represents a

careful balancing of the need for prompt and fair

claims settlement procedures against the public

interest in encouraging the formation of employee

benefit plans.” Jd. at 54. Likewise, in Mertens v.

Hewitt Assocs., the Court remarked: “ERISA is an

15

enormously complex and detailed statute that re-

solve[s}) innumerable disputes between powerful

competing interests — not all in favor of potential

plaintiffs.” 508 U.S. at 262-63. Congress clearly

decided when it enacted ERISA that creating a civil

enforcement scheme of specific remedies will serve

the greater good of encouraging private sector em-

ployers to establish employee benefit plans and to

enhance the benefits provided under those plans. Any

judicial expansion of the relief permitted under

Section 409(a) would tip the delicate balance struck

by Congress in enacting ERISA.*

Upsetting that balance by expanding Section

409% a) remedies would cause severe repercussions.

ERISA’s scheme has generated an impressive degree

of coverage in ERISA plans for tens of millions of

American workers. Approximately 51% of the private

sector workforce in this country, or about 64 million

Americans, participate in at least one type of em-

ployer-sponsored retirement plan.”

* As Petitioner aptly points out, expanding Section 409(a)

remedies in the way he advocates not only would affect pension

plans, but would also affect welfare plans: “Although this case

involves a pension plan and not a welfare plan, resolution of the

questions presented will likely have a significant impact on both

pension and welfare plans.” Pet. Br. 4 n. 1 (cont'd) (emphasis in

original).

* Bureau of Labor Statistics, U.S. Dept. of Labor, National

Compensation Survey: Employee Benefits in Private Industry,

Table 1 (March 2007), available at http://www.bls.gov/ncs/ebs/sp/

ebsm0006 pdf and Bureau of Labor Statistics, U.S. Dept. of

(Continued on following page)

16

Changes in the law of employee benefits have a

real impact on the decision-making process of both

employers and employees, and thus affect the success

of the ERISA scheme:

Legal changes, such as the introduction of

401(k) plans, can change the benefit pack-

ages available to employees or change the

advantages employees can receive from those

benefits. Changes in the law can prompt em-

ployers to offer plans or discourage them

from doing so. Likewise, employees may

change their decision to participate in a plan

based on legal changes. For example, if a law

or regulation change made it more difficult

for employees to get access to funds in a de-

fined contribution plan, they might be less

inclined to participate in the plan.

William J. Wiatrowski, Medical and Retirement

Plan Coverage: Exploring The Decline In Recent

Years, MONTHLY LAB. REV., pg. 30, August 2004.

ERISA, of course, covers much more than pen-

sion plans. Its reach in the welfare benefit plan

context extends to medical, surgical, hospital care,

sickness, accident, disability, death, unemployment,

vacation, apprenticeship, day care, scholarship and

prepaid legal service plans. See 29 U.S.C. § 1002(1\A)

Labor, Employment Situation, Table A (July 2007), available at

http://www.bls.gov/news.release/pdf/empsit.pdf (as of July 2007,

the employed civilian labor force totaled approximately 146

million, of which approximately 22 million were employed by the

government».

17

(2007). In Petitioner’s own words, “(t]he importance of

ERISA today can hardly be overstated.” Pet. Br. 4.

If the Court accepts Petitioner’s position on the

first issue presented for review, the delicate balance

between limited remedy and voluntary establishment

of plans would not endure. Section 409(a) would

extend to an entirely new set of claims for individual,

consequential monetary relief that otherwise would

be addressed under Section 502(a)(3). For example, if

Petitioner prevails, an ERISA plan beneficiary, who

believes that a failure to follow instructions to desig-

nate her as a beneficiary is the fault of the plan

administrator, could file a Section 409(a) action

claiming that the administrator caused the conse-

quential loss of benefits “to the plan.”” If Petitioner

prevails, an ERISA plan participant, who incurs

additional taxes by virtue of the plan administrator’s

failure to advise him clearly of tax consequences of

his decision to draw down or forego benefits, could

commence a Section 409(a) action seeking to recover

the value of the additional taxes incurred “to the

plan.” If Petitioner prevails, an ERISA plan partici-

pant, who enrolls in a plan but whose insurance

premium does not reach the insurance company due

to an administrative oversight, could file a Section

The holding in Todisco v. Verizon Commce’n, No. 06-1957,

_. F3d __, 2007 WL 2231733, *4 (ist Cir. Aug. 6, 2007),

therefore, would be implicitly overruled.

" The holding in Farr v. U.S. West Comme'ns, Inc., 151 F.3d

908 (9th Cir. 1998), therefore, would be implicitly overruled.

18

409(a) action seeking the consequential damages “to

the plan.”” And, if Petitioner prevails, a 401(k) plan

participant whose investment instructions are mis-

read by an errant computer could file a Section 409(a)

action claiming that the failure caused a loss “to the

plan.”

In a case remarkably similar to the instant

dispute, the Court of Appeals for the Sixth Circuit

found that the participant’s requested remedy — the

difference between the value of his 401(k) account

had his instructions been followed and the actual

value of his account — constituted monetary damages

and was not an equitable remedy permitted under

Section 502(aX3). Helfrich v. PNC Bank, Kentucky,

Inc., 267 F.3d 477, 481 (6th Cir. 2001), cert. denied,

535 U.S. 928 (2002). The Sixth Circuit rejected the

participant’s argument that he was merely seeking

restitution of the benefits he could have earned had

the plan fiduciary followed his instructions to invest

in higher performing mutual funds. Jd. The plan

fiduciary itself had neither wrongfully retained any

funds nor profited from the failure to follow the

* The holding in Hughes v. Legion Ins. Co., No. 03-0993,

2007 WL 781951 (S.D. Tex. March 12, 2007), therefore, would be

implicitly overruled.

" These hypothetical examples become more likely as the

baby boomer generation approaches retirement and finds that

its retirement benefits do not meet its monetary needs. As this

phenomenon occurs, more Americans may turn to the courts, if

Petitioner prevails, with 20/20 hindsight, to correct through

ERISA Section 40% a) unfortunate investment choices.

19

participant’s instructions, and thus there was nothing

to “restore” to the participant. Jd. Petitioner’s Section

409(a) argument in this case is an attempt to circum-

vent this and other holdings through the simple

artifice of demanding in his briefs monetary relief “to

the plan.”

There is a cost associated with any expansion of

remedies, even for non-meritorious claims. Judicial

expansion of ERISA remedies beyond what Congress

intended would encourage more litigation. This

Court’s recent decision in Bell Atlantic Corp. uv.

Twombly recognized the staggering cost and burden

of modern litigation: “[T]he threat of discovery ex-

pense wil! push cost-conscious defendants to settle

even anemic cases before reaching [the summary

judgment stage of the] proceedings.” 127 S.Ct. at

1967. The threat of discovery expense is particularly

severe in light of the recent e-discovery amendments

to the Federal Rules of Civil Procedure.” If the Court

of Appeals is reversed on the first issue presented for

review, the resulting expansion of ERISA Section

Electronic discovery responses easily reach millions of

dollars in costs if several years’ worth of archived email and files

must be preserved, restored, searched and reviewed to remove

non-relevant confidential material. See, e.g., In re Vioxx Prods.

Liability Litig., No. 1657, __ F.Supp.2d ___, 2007 WL 2309877

(E.D. La., Aug. 14, 2007) amenting the burden of e-discovery on

responding parties, reviewing courts, and the system of justice);

see also Don Clark and Peg Brickley, Jntel’s Email Recovery

Effort Is Set to Cost ‘Many Millions,’ WALL ST. J. April 25, 2007;

Page Bll (reporting on Jn re Intel Corp. Microprocessor Litig.,

No. 05-1717 (D. Del. commenced Nov. 8, 2005)).

20

409(a) remedies will impose unpredictable but sub-

stantial costs on employers and other plan sponsors.

The total compensation cost (comprising wages

and benefits) for private employers already has

increased as a direct result of added costs of health

and retirement benefits. This phenomenon has

affected employer-sponsored benefit choices. “Rising

health care and retirement costs affect both employ-

ers and employees. Employers may turn to using

more contingent workers to whom they may not need

to pay benefits and to a workforce overseas. From the

employees’ perspective, as the cost of benefits rises,

they will be confronted with continued trade-offs in

their compensation packages.” Indeed, according to

the U.S. Census Bureau, the percentage of workers

who received employment-based health insurance has

steadily declined from 2000 to 2006."

’* U.S. Government Accountability Office, Report to Con-

gressional Requesters, Employee Compensation, Employer

Spending on Benefits Has Grown Faster Than Wages, Due

Largely to Rising Costs of Health Insurance and Retirement

Benefits, pg. 2 (February 2006), availabdle at http://www.gao.gov/

new.items/d06285. pdf.

** See id. at 26.

" U.S. Census Bureau, Income, Poverty, and Health

Insurance Coverage in the United States: 2006, pg. 18, and Fig.

6 at pg. 19 (August 2007), available at http://www.census.gov/

prod/2007 pubs/p60-233. pdf.

21

Additionally, employers hesitate to take on

fiduciary responsibilities out of a fear of liability.”

More employers are offering automatic enrollment in

401(k) plans, which can increase participation rates.

However, “[s]ome experts are concerned that employ-

ers may choose low-risk default investments — which

may provide inadequate returns — to avoid fiduciary

liability that might be related to higher-risk invest-

ments.” There is a concern as well that participants

often possess little financial knowledge and may not

choose appropriate investments. Although some

employers offer one-on-one counseling, Internet-based

education and telephone hotlines, other employers

choose not to offer these investment tools because of

concerns of fiduciary liability.” Volatility in benefit

costs associated with defined benefit plans also has

caused employers either not to offer defined benefit

plans or to freeze the plans.”

'* Fiduciary liability insurance costs have increased, in part

because of increased ERISA litigation. See Survey Finds Massive

Cost Increases for Pension Fund Liability Insurance, 30 Pens. &

Ben. Rep. 1691 (BNA) (Aug. 5, 2003).

'* See U.S. Government Accountability Office, Report to the

Chairman, Committee on Education and Labor, House of

Representatives, Employer-Sponsored Health and Retirement

Benefits, Efforts to Control Employer Costs and the Implications

for Workers, pg. 35 (March 2007), available at http://www.gao.

gov/new.items/d07355. pdf.

* Id. at 36.

* Id. at 34 (Eighty-two percent of employers who froze or

terminated their defined benefit plans cited cost volatility as a

significant factor).

22

It is noteworthy that this Court has reversed the

Court of Appeals for the Ninth Circuit in particular in

a number of ERISA cases.” In one such case, Lock-

heed Corp. v. Spink, 517 U.S. 882 (1996), the Ninth

Circuit expanded ERISA’s remedies to hold an em-

ployer liable for a breach of fiduciary duties when it

decided to amend a retirement plan and offer eligible

employees incentives to accept early retirement. This

Court reversed, finding that the Ninth Circuit erred

when it failed to make a threshold determination

whether the employer was acting as a fiduciary (which

it was not) and stated that the act of amending the

plan did not constitute a transfer or use of plan assets

for the benefit of the employer. Jd. at 891-92. It could

be argued that the Ninth Circuit’s expansion of ERISA

remedies, although often reversed by this Court, has

* “The frequency of the Ninth Circuit’s reversals has been

even greater in recent times: over the past twenty-one Supreme

Court terms (since the Fifth Circuit was split), the Ninth Circuit

has been reversed an average of 14.48 times, with the next

closest circuit (the ‘new’ Fifth) reversed 5.14 times per term over

the same time period.” Kevin M. Scott, Supreme Court Reversals

of The Ninth Circuit, 48 Ariz. L. Rev. 341, 341 (2006).

This record applies to the Ninth Circuit’s attempt in ERISA

cases to expand claims. See, e.g., Beck v. Pace Intl Union, 427

F.3d 668 (9th Cir. 2005) (holding that a merger is a not permis-

sible form of plan termination under ERISA), rev'd, 147 S Ct.

2310 (2007); Nord v. Black & Decker Disability Plan, 296 r.3d

823 (9th Cir. 2002) (holding that courts may require plan

administrators to accord special weight to treating physicians),

rev'd, 538 U.S. 822 (2003); Hughes Aircraft Co. v. Jacobson, 105

F.3d 1288 (9th Cir. 1997) (holding that amending a plan impli-

cated ERISA fiduciary duties), rev'd, 525 U.S. 432 (1999).

23

adversely affected the establishment and enhance-

ment of ERISA plans within that Circuit. It recently

has been reported, in the welfare benefit plan context,

that in California more than 75% of the 6.5 million

Californians who were uninsured at some point in

2005 are reported to have either worked for an em-

ployer who did not offer health benefits or were

ineligible for such benefits.”

It is the position of the Amici that the Court

should not judicially create remedies in Section

409(a) that do not now exist in the statute, given the

dramatic, negative consequences of an expansion of

remedies on the establishment and enhancement of

ERISA-covered benefit plans.

Ill. PETITIONER’S SURCHARGE ARGUMENT

CONFLICTS WITH THIS COURT’S DECI-

SION IN MERTENS V. HEWITT ASSOCS.

THAT CHARACTERIZES PETITIONER’S

REQUESTED RELIEF AS LEGAL RELIEF.

The Complaint seeks “appropriate ‘make whole’

or other equitable relief pursuant to E.R.1.S.A., 29

U.S.C.S. § 1132(aX3)....” Brief in Opp’n, App. 4a.

Section 502(aX3\B\(i) allows “appropriate equitable

relief to redress” a fiduciary breach. 29 U.S.C.

§ 1132(aX(3 Bi). The second question presented for

23

Frederick L. Pilot, Emplover-Based Coverage Eroding

Throughout California, New Studies Report, 7 Pen. & Ben. Daily

134 (Pen. & Ben. Rep.) (BNA) (July 13, 2007).

24

review is whether Petitioner’s request for “make

whole” relief seeks “equitable relief” or whether it

constitutes “legal relief” not within the scope of

Section 502(aX3)(B)(i).

Four provisions in ERISA expressly allow “legal”

relief: Section 502(g2)E) and Section 4301(a)(1),

which allow claims dealing with employer collective

bargaining agreements and withdrawal liability

obligations to multi-employer benefit plans, and

Section 104(a)(5XC) and Section 4003(e)1), which

allow certain Secretary of Labor and Pension Benefit

Guaranty Corporation claims. 29 U.S.C. §§ 1132(g\2XE),

1451(a\(1), 1024(aX5XC) and 1303(e1) (2007). In the

context of a very carefully crafted statute, the only

reasonable inference one can draw from Congress’s

failure to use the word “legal” in Section 502(a)(2)

and Section 502(a\(3) and its use of that word in four

other sections not at issue here is that Congress did

not intend to provide legal relief under Section

502(aX3). That inference is supported by ERISA’s

legislative history, which shows that an earlier ver-

sion of Section 409(a) allowed “legal or equitable”

relief and was amended to delete the word “legal.” See

Russell, 473 U.S. at 145-46 & n. 14 (citing legislative

history).

In keeping with this reasonable inference, this

Court already has answered the second issue pre-

sented for review in Mertens v. Hewitt Assocs., 508

U.S. 248. The allegations in the complaint in Mertens

were strikingly similar to those in the Complaint in

this case. The Mertens plaintiffs sued a non-fiduciary

25

who allegedly participated in a fiduciary breach

under Section 502(a)(3): “Petitioners contend that

requiring respondent to make the Kaiser plan whole

for the losses resulting from its alleged knowing

participation in the breach of fiduciary duty by the

Kaiser plan’s fiduciaries would constitute ‘other

appropriate equitable relief’ within the meaning of

§ 502(a\(3).” 508 U.S. at 253.“ This Court reasoned:

“Although they often dance around the word, what

‘petitioners in fact seek is nothing other than compen-

satory damages — monetary relief for all losses their

plan sustained as a result of the alleged breach of

fiduciary duties. Money damages are, of course, the

classic form of legal relief.” Jd. at 255 (emphasis in

original). In this case, Petitioner likewise seeks

compensatory damages for a loss sustained as a

result of an alleged breach of fiduciary duties. It is

impossible to characterize Petitioner’s request for

monetary relief in any other way, since his Complaint

expressly seeks “make whole” monetary relief.

The Court’s more recent decisions in Great-West

Life & Annuity Ins. Co., v. Knudson, 534 U.S. 204

(2002) and Sereboff v. Mid Atlantic Med. Servs., Inc.,

126 S.Ct. 1869 (2006), confirm that Petitioner seeks

legal, and not equitable, relief when he demands

“make whole” money. In Great-West, the Court rea-

soned that whether a demand for money is legal or

“ The Mertens plaintiffs did not sue for relief under Sec-

tions 409% a) and 502(aX2) because they sued nonfiduciaries,

which are not proper defendants under those sections.

26

equitable “depends on the basis for the plaintiff’s

claim and the nature of the underlying remedies

sought.” Id., 534 U.S. at 213 (quotation marks and

brackets omitted; emphasis added). The Court added

that a plaintiff could seek money as an equitable

remedy “where money or property identified as be-

longing in good conscience to the plaintiff could

clearly be traced to particular funds or property in

the defendant’s possession.” Jd. In Sereboff, the Court

reiterated that monetary equitable relief is a function

of the court’s ability to impose a constructive trust or

equitable lien on particular funds or property in the

defendant's possession. Jd., 126 S.Ct. at 1874. The

Complaint in this case does not seek to recover any

money or property in Respondents’ possession; in-

deed, it acknowledges that no such money or property

exists, as the Complaint seeks to recover money equal

to a lost investment opportunity (as opposed to money

that the defendant took from the plan, or money that

defendant earned from money taken from the plan).

The claim in Great-West was “not that respondents

hold particular funds that, in good conscience, belong

te petitioners,” id., 534 U.S. at 214 (emphasis added),

or that “identifiable funds (or property) belonging to

the plaintiff and held by the defendant,” id. at 216,

and the claim in this case is not that Respondents hold

any identifiable money that belongs to Petitioner.

That Petitioner labels his requested monetary

relief “surcharge” is of no moment. Petitioner con-

cedes that his definition of “surcharge” “may superfi-

cially appear akin to compensatory damages,” Pet. Br.

27

37, but the resemblance is more than superficial.

Petitioner argues that surcharge is equitable because

it can be described as “restitutionary.” Jd. The remedy

of equitable restitution, however, can apply only if a

defendant holds particular funds that in good con-

science belong to a plaintiff.” Respondents in this

case do not possess any property or ill-gotten profits

to return to the Petitioner. Lack of possession was the

precise reason why petitioner in Great-West could not

recover, and the same reasoning must apply in this

case: “The basis for petitioners’ claim is not that

respondents hold particular funds that, in good

conscience, belong to petitioners, but that petitioners

are contractually entitled to some funds for benefits

* This Court has defined “equitable relief” by reference to

Dan B. Dosss, Dospps Law OF REMEDIES (West) (1993). Great-

West, 534 U.S. at 213. Dopss cannot be read to view “surcharge”

as equitable relief distinct from equitable restitution and

constructive trust. “In the constructive trust case the defendant

has legal rights to something that in good conscience belongs to

plaintiff. The property is ‘subject to a constructive trust,’ and the

defendant is a ‘constructive trustee.’ The defendant is thus made

to transfer title to the plaintiff who is, in the eyes of equity, the

true ‘owner. ” DosBBs, § 4.3(1).

When equity imposes a constructive trust upon an as-

set of the defendant, the plaintiff ultimately gets for-

mal legal title. The effect is to allow the plaintiff to

recover the asset in specie. For instance, the plaintiff

‘may recover legal rights to Blackacre itself, or a par-

ticular bank account, or rights in an intangible such

as a trademark, not merely a money judgment equal to

the value of such assets. If the asset has increased in

value, the plaintiff gets the increase.

Id. § 4.3(2) (emphasis added).

28

that they conferred.” 534 U.S. at 715 (emphasis in

original).”

Following Mertens, Great-West and Sereboff,

Petitioner is wrong to urge this Court to recognize

surcharge as an equitable remedy “notwithstanding

any compensatory purpose it may serve.” Pet. Br. 40.

If the Court accepts Petitioner’s attempt to recast his

request for legal relief by calling it “surcharge,” the

Court would be rejecting the reasoning of these three

of its prior decisions.

* The Court of Appeals for the Eighth Circuit has rejected a

“surcharge” argument like that of the Petitioner, in Knieriem v.

Group Health Plan, Inc., 434 F.3d 1058 (8th Cir. 2006). In an

attempt to recast his request for compensatory damages,

plaintiff there had argued (without success) that Section

502(aX3) permits a monetary “surcharge” upon the fiduciary for

his breach and therefore is a form of an equitable relief permit-

ted by ERISA.

29

CONCLUSION

The Court should affirm the decision of the Court

of Appeals for the Fourth Circuit.

September 11, 2007

Respectfully submitted,

Rosin S. CONRAD

SHANE BRENNAN

NATIONAL CHAMBER

LITIGATION CENTER, INC.

1615 H Street, N.W.

Washington, D.C. 20062

(202) 463-5337

RICHARD WHITING

Scott TALBOTT

THE FINANCIAL SERVICES RUNDTABLE

1001 Pennsylvania Avenue, N.W.,

Suite 500

Washington, D.C. 20004

(202) 589-2400

Mark A. CASCIARI

Counsel of Record

YUKYONG CHOI

SEYFARTH SHAW LLP

131 S. Dearborn Street,

Suite 2400

Chicago, IL 60603

(312) 460-5000

DIANE SOUBLY

SEYFARTH SHAW LLP

Two Seaport Lane,

Suite 300

Boston, MA 02210

(617) 946-4800

Counsel for Amici Curiae