Opposition Brief — Fisher v. Penn Traffic Traffic Co., The (No. 09-188)

4

oe iN a

\ i > Ne ers

No. 09-188 es

OFFICE OF SHE CLERK _|

In The

Supreme Court of the Gnited States

¢

JOSEPH V. FISHER,

Petitioner,

v.

THE PENN TRAFFIC COMPANY,

BYRON E. ALLUMBAUGH, RICHARD P. BRENNAN,

KEVIN P. COLLINS, JAMES A. DEMME,

MATTHEW GLASS, ROBERT HOCKETT,

RICHARD D. HOLIHAN, JR., PETER L. ZURKOW,

JOHN DOES NOS. 1-5, BERNADETTE

RANDALL-BARBER AND JANE ROES NOS. 1-5,

Respondents.

¢

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Second Circuit

Sf

BRIEF FOR RESPONDENTS IN OPPOSITION

*

WILLIAM H. O’BRIEN

Counsel of Record

COOLEY GODWARD KRONISH LLP

1114 Avenue of the Americas

New York, New York 10036

(212) 479-6000

Attorneys for Respondents

COCKLE LAW BRIEF PRINTING CO +800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED

1. Whether ERISA § 409 authorizes a personal re-

covery for individual injuries.

2. Whether this Court should overrule its decisions

in Massachusetts Mutual Life v. Russell, 473 U.S. 134

(1985) and LaRue v. DeWolff, Boberg & Assoc., Inc.,

128 S.Ct. 1020 (2008), which held that ERISA § 409

only authorizes recovery for injuries to an ERISA

plan, and does not authorize a personal recovery for

individual injuries.

3. Whether money damages are “equitable relief”

under ERISA § 502(a)(3).

4. Whether this Court should overrule its decisions

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

Great-West Life & Annuity Ins. Co. v. Knudson, 534

U.S. 204 (2002), which held that money damages are

not “equitable relief” under ERISA § 502(a)(3).

1]

PARTLES TO THE PROCEEDINGS

AND RULE 29.6 STATEMENT

There are no parties to the proceedings other

than those listed in the captions.

Pursuant to Supreme Court Rule 29.6, Defendant- —

Respondent The Penn Traffic Company (“Penn Traf-

fic”), by and through its attorneys Cooley Godward

Kronish LLP, certifies that Penn Traffic does not have

a parent corporation nor does any publicly traded

corporation own 10% or more of its stock.

lil

TABLE OF CONTENTS

QUESTIONS PRESENTED ..................cccccsessceoeees

PARTIES TO THE PROCEEDINGS AND RULE

DO FE occ a tnictirerniass tas tncietanadesens

STATEMENT OF THE CASE..................... elaine

BE osdiiias ss recs ccass cereieecacacardai

II. Disposition by the Lower Courts.................

REASONS FOR DENYING THE WRIT ...............

I. The Court Should Not Revisit Whether

ERISA § 502(a)(2) Provides Recovery for

Individual Injuries, Which Was Settled

in Russell and Recently Reaffirmed in

EEE ccchcacdcnte st teshctercs keen eke ee

A. Russell Precludes Recovery under § 409

for Individual Injuries ........<.00.00sc00secees.

B. Russell Remains Good Law and Was

Recently Reaffirmed in LaRue..............

C. Russell and LaRue Were Correctly

Decided; Overturning Them Would

Undermine the Vital Role of Stare

PRE cgoonk chenskscaink aca aoe

Il. The Court Should Not Disturb the Well-

Settled Rule that “Equitable Relief” Under

ERISA § 502(a)(3) Does Not Include Com-

DOTRERCOLY LINGO GOG ni asinscssicedecseccssescsansewneecs

A. Mertens and _ Great-.Vest Preclude

Recovery Under § 502(a)(3) for Com-

pensatory Damages.........................00005

14

18

1V

TABLE OF CONTENTS - Continued

Page

B. Overruling Mertens, Great-West, and

Related Lower Court Decisions Would

Equally Offend Stare Decisis Prin-

INE hs iva vcdee tuvenieiasaieneniessuseteatnensnsiasesos 22

Ill. The Peculiar Facts of This Case Would

Vv

TABLE OF AUTHORITIES

Page

CASES

Armstrong v. Jefferson Smurfit Corp., 30 F.3d

ee iad cc acadaisinsivnios cla wcentieie 22

Barry v. Trustees of the Int'l Assoc. of Full-Time

Salaried Officers and Employees of Outside

Local Unions and District Counsel’s (Iron

Workers) Pension Plan, 404 F. Supp.2d 145

er costa chs ceuscsdedsuoucuceuenniietscctasomuenieainses oes 11

Brosted v. Unum Life Ins. Co. of Am., 421 F.3d

Fe Ft PE esiktsiciausacanaceisaciancxsrnreenaiceecaelins 24

Calhoon v. Trans World Airlines, Inc., 400 F.3d

tN a as Sein aces dacuycenveesoneieass toassetsicues 24

Callery v. U.S. Life Ins. Co. in the City of New

York, 392 F.3d 401 (10th Cir. 2004)..............000000006. 24

Coan v. Kaufman, 457 F.3d 250 (2d Cir.

eaves al ann diecin ean epnedescaneaetes 4,8, 11, 22

Crosby v. Bowater Inc. Retirement Plan for

Salaried Employees of Great Northern Paper

ine. 362 F.3e S87 (6th Cir. 2004) ...........:secccecesccsces 23

D’Amico v. CBS Corp., 297 F.3d 287 (3d Cir.

Detar UL east iden oweaiuneariaeewoivesoanisbaewareck ye

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

Bt arn csevavcduuscedainntonnatcnecarevenctens passim

Farr v. U.S. West Communications, 151 F.3d

Be ee RI vopccde ce cceciccsceussacgsoccesnancns <oe<suers 24

Halbach v. Great-West Life & Annuity Ins. €_ ,

Re Ee Bk ae) re 24

vi

TABLE OF AUTHORITIES — Continued

Page

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

A I og. occ cisccavancodsdbonvaeas tachadninkesavnes 24

In re Braniff Airways, Inc., 27 B.R. 222 (N.D.

eR ER TA es Re Soe a a RIAN Fe aoe a OP o. a7

Kazazian v. Bartlett & Barlett LLP, No. 03 Civ.

7699 (LAP), 2006 WL 2563517 (Sept. 6, 2006)....... 11

LaRue v. DeWolff, Boberg & Assoc., Inc., 450

F.3d 570, rev'd on other grounds, 128 S.Ct.

rs ic oi cse ds sucha shane bhuneckeiedciseavenituenncaun 23

LaRue v. DeWolff, Boberg & Assoc., Inc., 128

ee goa cn cn dcareskascavankissacahonss passim

Lee v. Burkhart, 991 F.2d 1004 (2d Cir. 1998)......... 4,8

Massachusetts Mutual Life v. Russell, 473 U.S.

I Orange el oa ane cesvalegnsaeuans passim

McDonald v. Provident Indemnity Life Ins. Co.,

60 F.3d 234 (Sth Cir. 1995) ................ccccsscoerseseses 9,11

McLeod v. Oregon Lithoprint Inc., 102 F.3d 376

a ae ucel osd cas ean chemaunvnerene 24

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

Panecassto v. Unisource Worldwide, Inc., No.

3:01lev2065 (CFD), 2006 WL 2128647 (July

I ee aero avensniceceulias 1]

Patterson v. McLean Credit Union, 491 U.S.

SRE tea rayon par Sh eT 17

Pilot Ins. Co. v. Dedeaux, 481 U.S. 41 (1987) ......15, 16

Rego v. Westvaco Corp., 319 F.3d 140 (4th Cir.

he oad var aoe so yedds epi eavudedinduionaccieve 23

Vill

TABLE OF AUTHORITIES — Continued

Page

STATUTES

ee ay ON osc vcacdss boa slnesinevcahsaveatansssraneanenl 3

BO US. S LAGS) OFA CG) ccssscccccsscnscessescssversscsvecens 3

Be re OE oan ces pacvenedgsensvnsexasasaerstenusai passim

re te Bo avai vncdeincelnvisessisnsecssvansornans passim

29 U.S.C. § 1341(c)(8)(D)G)(D) and (11)(ID) .............. 2, 27

BP Ree We Mo iisae ca can ns nuk cara cectouie oaieinconkeanesvccts ivan 27

REGULATIONS

Be ar re ee I, FU hs os psc vc sd'sn kan cansraccevacestabectercceuanvess 7

re ee eI I as sass c taxa usakdcne saeceschodsgunbasustobucsasuuceas 2

Be rs OF IE sah rei Fcckikaciceatatorsmcitinmuimsoenre 2,27

1

STATEMENT OF THE CASE

I. The Allegations

This case involves the interpretation .of two of

ERISA’s civil enforcement provisions, § 502(a)(2),

29 U.S.C. §1132(a)(2) and § 502(a)(3), 29 U.S.C.

§ 1132(a)(3). Plaintiff-Petitioner Joseph Fisher

(“plaintiff” or “Fisher”) filed a complaint against

Defendants-Respondents (“defendants”) on August 2,

2006. (Appendix (“A.”) 20a). Fisher was a participant

in and beneficiary of defendant The Penn ‘Traffic

Commpany’s Cash Balance Pension Plan. The com-

plaint is based upon defendants’ denial of plaintiff’s

application for a lump sum benefit, at a time when

defendants were advised that the plan was under-

funded and that a distress termination of the plan

might be necessary.

In the complaint, plaintiff alleged that defendant

The Penn Traffic Company (“Penn Traffic”) was the

Sponsor, Administrator, and Named Fiduciary, as

defined by ERISA, of The Penn Traffic Company Cash

Balance Pension Plan (the “Plan”) (A. 21la-22a,

11,6); that defendants Byron E. Allumbaugh,

Richard P. Brennan, Kevin P. Collins, James A.

Demme, Matthew Glass, Robert Hockett, Richard D.

Holihan and Peter L. Zurkow were members of the

Board of Directors of Penn Traffic (the “Board”), who

acted as fiduciaries with respect to plaintiff’s appli-

cation for benefits (A. 22a, 9 7), and that defendant

Bernadette Randall-Barber was a member of the

Administrative Committee of the Plan (A. 22a, J 8).

Plaintiff filed an application on August 15, 2003,

requesting pension benefits in the form of a lump

sum distribution. (A. 23a, 4 10).

At the time Fisher applied for a lump sum

distribution, the Plan was underfunded, and Penn

Traffic had been advised that it might have to

terminate the Plan in a distress termination under

which the Pension Benefit Guaranty Corporation

(“PBGC”) would assume its assets and liabilities. (A.

24a, J 20).’

On September 29, 2003, the Board passed a

resolution to terminate the Plan.* (A. 25a, 7 22). On

October 17, 2003, Fisher’s application for a lump sum

was denied, and he was offered a monthly annuity

instead, which he declined. (A. 23a, 4 11). The com-

plaint alleged that the decision to deny plaintiff’s

application was made by the Board. (A. 23a, 4 13).

The complaint further alleged that because the PBGC

Penn Traffic was then already in bankruptcy, having filed

for protection on May 30, 2003. Jn Re Penn Traffic, No. 03-22945

(ASH) (docket entry # 1) (Bankr. S.D.N.Y.). At the time, the Plan

was 60 percent underfunded, or by $126 million. See www.pbge

gov/media/news-archive/news-releases/2005/pr05-25. html.

’ The prohibition on lump sum payments is triggered as

soon as it is anticipated that, because of insufficient assets to

covers its obligations, an ERISA plan will have to undergo a

distress termination. 29 C.F.R. § 4044.4; Jn re Braniff Airways,

Inc., 27 BR 222, 227 (N_D. Tex. 1982). At the very latest, the

prohibition arises once plan administrators give notice of

distress termination to the PBGC. 29 U.S.C. § 1341(eKX3 Dx)

and (ii) 11); 29 C.F.R. § 4041.42.

3

has assumed ownership over the Plan, and is

prohibited by statute from making lump sum pay-

ments, Fisher cannot receive a lump sum payment as

requested, but “may receive a lower annuity than

provided for by the terms of the Plan if Plaintiff’s

annuity is in excess of PBGC limits.” (A. 25a, 4 25).°

In its First Claim for Relief, the complaint

alleged that defendants breached their fiduciary

duties under ERISA §404(a\(1), 29 U.S.C.

§ 1104(a)(1) in connection with the denial of the lump

sum application. (A. 25a-26a, {9 26-27). The Claim

asserted that plaintiff is entitled to appropriate relief

therefore under § 502(a)(2). (A. 26a, 9 28).

The Second Claim for Relief is premised on the

same allegations, and asserted that plaintiff is

entitled to equitable relief under ERISA § 502(a)(3)

for the alleged breaches of fiduciary duty. (A. 27a,

q{ 30-31).

The Third Claim alleged that in denying the

lump sum application, Penn Traffic and its Board

violated ERISA § 406(b)(1) and (2), 29 U.S.C.

§ 1106(b)(1) and (2) (prohibiting certain conflicts of

interest). (A. 27a, 4/4] 32-33). The Claim asserted that

* Plaintiff did not sue the Plan for a lump sum payment

anytime in the penod between the denial of his application in

2003 and the PBGC’s assumption of responsibility for the Plan

(Pet. 4). Instead, he waited three years before filing the present

suit against the Plan fiduciaries

4

plaintiff is entitled to appropriate relief therefore

under, again, §§ 592(a)(2) and (a)(3).

As relief, plaintiff sought “judgment against the

defendants, jointly and severally, for the amount of

his lump sum benefit” together with interest thereon.

(A. 28a). Fisher also asked for declarations that

defendants violated their fiduciary duty, and “de-

claring the amount of the lump sum benefit to which

Plaintiff is entitled.” (A. 28a).

II. Disposition by the Lower Courts

On October 2, 2006, defendants moved to dismiss

the complaint for failure to state a claim on which

relief may be granted (A. 7a), which the district court

granted, (A. 16a-17a). The court ruled that neither

provision under which plaintiff proceeded authorized

the relief he sought. Relying on Massachusetts

Mutual Life v. Russell, 473 U.S. 184 (1985)

(“Russell”), Coan v. Kaufman, 457 F.3d 250 (2d Cir.

2006) (“Coan”), Lee v. Burkhart, 991 F.2d 1004 (2d

Cir. 1993), and the plain language of the statute and

its legislative history, the court held that Fisher

sought relief for his own benefit and not in a

representative capacity on behalf of the Plan, and he

thus had failed to state a cognizable claim under

ERISA § 502(a\(2). (A. 9a-13a). The court rejected

plaintiff’s attempt to distinguish Russell on the

ground that it involved a claim for extracontractual

damages. (A. lla-12a).

5

Similarly, relying on Mertens v. Hewitt Assocs.,

508 U.S. 248 (1993) (“Mertens”), Great-West Life &

Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002)

(“Great-West”), and Coan, the district court held that

plaintiff sought compensatory damages, and he thus

failed to state a cognizable claim under ERISA

§ 502(a)(3), which allows only for equitable relief.

(A. 13a-16a). Rejecting plaintiff’s argument that

Mertens did not apply to claims against fiduciaries,

the court found that the case law was “as one with

respect to the case at bar, t.e., Plaintiff cannot cloak a

legal claim for damages in equitable clothing.” Jd.

Fisher appealed the judgment. Pending his

appeal, this Court handed down its decision in LaRue

v. DeWolff, Boberg and Associates, Inc., 128 S.Ct.

1020 (2008) (“LaRue”). At oral argument, the panel

requested the parties brief the impact of LaRue on

the case. In a summary order issued on April 2, 2009,

the Second Circuit affirmed the district court’s judg-

ment. The court of appeals followed the district

court’s reasoning in rejecting Fisher’s claim under

ERISA § 502(a)(2), because “Fisher seeks relief for

himself as an individual, rather then [sic] on behalf of

all or any part of the plan.” (A. 4a). Moreover, the

Second Circuit held that LaRue did not alter this

result, since the harm to the defined contribution

plan at issue there affected the plan, whereas

* The court also concluded that the declaratory relief sought

by plaintiff was “inherently legal.” (A. 16a)

6

Fisher’s request for a lump sum payment for himself

“cannot be construed as benefitting the plan.” (A. 4a).

Finally, the court rejected Fisher’s argument that his

claim under § 502(a\3) was equitable because it

involved suit against a fiduciary and, historically,

such suits were within the exclusive jurisdiction of

the courts of equity, ruling that Fisher’s request for

money damages was not “a category of relief typically

available in equity” (A. 5a), and thus not recoverable

under § 502(a)(3). (A. 5a).

REASONS FOR DENYING THE WRIT

I. The Court Should Not Revisit Whether

ERISA § 502(a)(2) Provides Recovery for

Individual Injuries, Which Was Settled in

Russell and Recently Reaffirmed in

LaRue

A. Russell Precludes Recovery under § 409

for Individual Injuries

ERISA § 502(a)(2) authorizes suit for appropriate

relief under ERISA § 409. In Russell, this Court

unanimously held that § 409 allows recovery only for

injunies to an ERISA plan, and did not authorize a

personal recovery for individual injuries.

Fisher claims that the Second Circuit and other

lower courts have failed to recognize that Russe/l

applies only to claims for “extracontractual damages.”

This seriously misstates Russell.

Plaintiff’s contentions that Russell's deter-

mination that § 409 affords relief only for the benefit

of a plan and not for individuals is only dicta, and

that § 409 allows individual claims so long as they

are for plan benefits, are wrong. Both the majority

opinion and the concurrence in Russell were clear

that Russell’s holding concerned who can sue under

§ 409, not what types of claims can brought under

that provision. “(T]he entire text of § 409 persuades

us that Congress did not intend that section to

authorize any relief except for the plan itself.” Id. at

144 (emphasis added). The concurring opinion

expressly agreed with this holding: “I agree with the

Court’s decision today that § 409 is more fairly read

in context as providing ‘remedies that would protect

the entire plan’ rather than individuals....” Id. at

150 (Brennan, J.). The Court again made clear that

its holding concerned who was protected by § 409

when, after summarizing its ruling, it specifically

noted that “we do not reach any question concerning

the extent to which § 409 may authorize recovery of

extracontractual damages from a fiduciary by a plan.”

Id. at 144, n.12 (emphasis added). In other words, the

defect in Russeli’s claim was not that extra-

contractual damages were unavailable under that

section, but that she was seeking a personal recovery

and not one for the benefit of the plan.”

Plaintiff’s quotation (Pet. 15-16) trom Russell referring to

a distinction between benefits and extracontractual damages

(473 U.S. at 148) did not concern the scope of § 409. Rather, it is

(Continued on following page)

8

Further, the Court explicitly rejected the very

argument that plaintiff makes here — that the

“catchall” clause in § 409 authorizing “such other

equitable or remedial relief as the court may deem

appropriate” is independent of the remainder of the

section limiting remedies to the plan alone, and thus

permits individual recoveries. See id. at 138, 140-41;

id. at 149-50 (Brennan, J., concurring).

Fisher concedes, as he must, that Russell has

been “routinely cited” for the proposition that § 409

provides recovery only for claims that seek relief for

injuries to the plan, regardless of whether the claim

is for extracontractual damages. (Pet. 16). See, e.g.,

Coan v. Kaufman, 457 F.3d 250, 262 (2d Cir. 2006)

(noting that Russell stated that “such [409] claims

may not be made for individual relief,” and therefore

upholding dismissal of §§ 502(a)(2)/409 claim for

failure to bring suit in a representative capacity on

behalf of other plan participants, “as required by

section 502(a)(2)”); Lee v. Burkhart, 991 F.2d 1004 (2d

Cir. 1993) (affirming dismissal of § 502(a)(2) claim

because plaintiffs were requesting denied benefits

from a separate part of the opinion addressing an entirely

different issue — the argument that a private mght of action

under ERISA for extracontractual damages should be implied,

even if it is not expressly authorized, which the Court turned to

after it completed its analysis of the claim under § 409. Id. at

145-48. (The Court unanimously rejected the implied-private-

right-of-action argument, as well.) Nothing in the Court’s

analysis of this distinct issue alters the Court's holding and

analysis regarding § 409.

9

and thus “seeking damages on their on behalf, not on

behalf of the Plan”); McDonald ov. Provident

Indemnity Life Ins. Co., 60 F.3d 234, 237-38 (5th Cir.

1995) (affirming dismissal of §502(a)(2) claim

because, while there may have been injury to the

plaintiffs, there was no loss to the plan). In fact, not a

single court applying Russell has adopted Fisher’s

theory that its import is restricted to claims for

extracontractual damages. That theory is illogical,

wrong, and contrary to the language of § 409 itself.

B. Russell Remains Good Law and Was

Recently Reaffirmed in LaRue

Fisher also contends that, even if Russell origi-

nally precluded al] claims under § 409 for individual

injuries, it was implicitly overruled by Great-West.

This contention is at odds with Russell, Great-West,

and this Court’s recent reaffirmance of Russell in

LaRue.”

Quoting a clause in Great-West that “vague no-

tions of a statute’s ‘basic purpose’ are nonetheless

inadequate to overcome the words of its text

regarding the specific issue under consideration,” 534

U.S. at 220 (emphasis in orginal) (quoting Mertens,

508 U.S. at 261), Fisher argues that this is a direction

that ERISA is to be read “literally,” which, sup-

posedly, is in conflict with what Russell did, thereby

* Notably, Fisher's petition omits any mention of this

Court's decision in LaRue

10

purportedly overruling Russell’s specific holding on

the scope of § 409. (Pet. 17-19).

In fact, neither Great-West nor Mertens concerned

§ 409. Both relied on Russell, without criticism. 534

U.S. at 209; 508 U.S. at 254. As did Russell, both

ruled that the claims at issue were not cognizable

under ERISA. Russell was unanimous that individual

recovery was not available under § 409. As plaintiff

concedes, the lower courts have repeatedly relied on

Russell as precluding recovery by individuals. (Pet.

16). The notion that stating the general proposition

that statutory text cannot be re-written by general

arguments about the law’s purpose operated to over-

rule Russell sub silentio is baseless.

In any event, Russell did not use a vague notion

of “basic purpose” to “overcome the words of the text.”

Precisely to the contrary, what the Court in Russell

did was to analyze the text of § 409. The Court

concluded that the clause “such other equitable or

remedial relief as the court may deem appropriate”

must be read in context with the entire section:

To read directly from the opening clause of

§ 409(a), which identifies the proscribed acts,

to the “catchall” remedy phrase at the end —

skipping over the intervening language

establishing remedies benefiting, in the first

instance, solely the plan — would divorce the

phrase being constructed from its context and

construct an entirely new class of relief

available to entities other than the plan....

This “blue pencil” method of statutory

11

interpretation ... tmpermissibly ignores the

relevant context in which statutory language

subsists.... [T]his mode of interpretation

would render superfluous the preceding

clauses providing relief singularly to the

plan, and would slight the language fol-

lowing after the phrase “such other equitable

or remedial relief.” ... A fair contextual

reading of the statute makes it abundantly

clear that its draftsmen were primarily

concerned with the possible misuse of plan

assets, and with remedies that would protect

the entire plan, rather than with the rights

of an individual beneficiary.

473 U.S. at 141-42 (emphasis added). That is, “the

entire text of § 409 persuades us that Congress did

not intend that section to authorize any relief except

for the plan itself.” Jd. at 144 (emphasis added).

Fisher, again, cites no case suggesting that

Russell is no longer good law. On the contrary, cases

after Mertens and also after Great-West have con-

tinued to construe § 409 as not authorizing individual

relief, relying on Russell.’

” See, e.g, Coan, 457 F.3d at 257; McDonald v. Provident

Indemnit» Life Ins. Co., F.3d 234, 237 (5th Cir. 1995): Kazazian

uv. Bartlett & Barlett LLP, No. 03 Civ. 7699 (LAP), 2006 WL

2563517, at *3 (Sept. 6, 2006); Panecassio v. Unisource

Worldwide, Inc., No. 3:01cev2065 (CFD), 2006 WL 2128647, at *9

(July 26, 2006); Barry vu. Trustees of the Int'l Assoc. of Full-Time

Salaried Officers and Employees of Outside Local Unions and

District Counsel's (Iron Workers) Pension Plan, 404 F. Supp.2d

(Continued on following page)

12

Most critically, this Court reaffirmed the central

holding of Russell less than two years ago in LaRue.

Decided on February 20, 2008, LaRue resolved an

ambiguity concerning the application of Russell to

“defined contribution” plans, in which plan assets are

held in the participants’ individual accounts in the

plan (unlike the Plan in this case, a cash balance plan

that did not have individual accounts). (A. 4a). Mr.

LaRue claimed that the defendant’s failure to follow

LaRue’s instructions for the investments in his

account “‘depleted’ his interest in the Plan” (128 S.Ct.

at 1022-23), and LaRue considered the question of

whether § 502(a)(2) authorizes a participant in a

defined contribution plan to sue for misconduct that

“impaired the value of plan assets in the participant’s

individual account” (id. at 1022 (footnote omitted)

(emphasis added)).

Reviewing Russell, LaRue stated that Russell

“stressed” that § 409(a) “characterizes the relevant

fiduciary relationship as one ‘with respect to a plan,’

and repeatedly identifies the ‘plan’ as the victim of

any fiduciary breach and the recipient of any relief.”

128 S.Ct. at 1024 (emphasis added). LaRue also

stated that Russell “concluded” that the draftsmen of

§ 409(a) “‘were primarily concerned with the possible

misuse of plan assets, and with remedies that would

protect the entire plan, rather than with the rights of

145, 155-56 (D.C. 2005); Communications Workers of America,

1995 WL 590871, at *3.

13

an individual beneficiary.” /d. at 1025 (quoting

Russell).

Independent of Russell, the Court in LaRue also

discussed the extent and reach of §§ 502(a)(2)/409,

and held that they authorized only actions for the

benefit of plans:

Section 502(a)(2) provides for suits to enforce

the liability-creating provisions of § 409,

concerning breaches of fiduciary duties that

harm plans.

* * *

(Section 502(a)(2)] authorizes the Secretary

of Labor as well as plan participants, bene-

ficiaries, and fiduciaries, to bring actions on

behalf of a plan to recover for violations of

the obligations defined in § 409(a).

128 S.Ct. at 1023, 1024 (footnote omitted) (emphasis

added). And LaRue concluded that “$ 502(a)(2) does

not provide a remedy for individual injuries distinct

from plan injuries... .” 128 S.Ct. at 1026 (emphasis

added).

With regard to the “protect the entire plan”

language in Russell, LaRue explicitly confirmed that

it was accurate and good law in cases such as this

one, involving defined benefit plans. “(O]ur references

to the ‘entire plan’ in Russell... accurately reflect the

operation of § 409 in the defined benefit context... .”

128 S.Ct. at 1025. In short, LaRue confirmed what

Russell had already established: that § 409 autho-

rizes only claims for the benefit of the plan and its

14

assets. LaRue reaffirms Russell’s essential analysis,

and expressly reaffirms Russell’s “entire plan” lan-

guage in the context of defined benefit plans.

C. Russell and LaRue Were Correctly

Decided; Overturning Them Would

Undermine the Vital Role of Stare

Decisis

In the alternative, Fisher claims that Russell

must be overruled because its method of statutory

construction ignored ERISA’s remedial purpose,

which caused it to link the “catchall” provision of

§ 409 to the remainder of the paragraph limiting

remedies to the plan alone. (Pet. 20). This argument —

which would require that the Court also overrule

LaRue — is meritless.

As noted above, the Court in Russell anchored its

analysis firmly in the text of §409. The Court did

not identify an ambiguity or vagueness in its plain

meaning that could be resolved only by recourse to

general statutory purpose. On the contrary, the

Court’s holding was based on a reading of statutory

language and surrounding provisions. Russell, 473

U.S. at 144.

Although Fisher disputes Russell’s reading of

§ 409 because it ignored the placement of a comma

before the “catchall phrase,” which, in his view,

operates to sever that phrase from the rest of the

sentence (Pet. 23-37), the Court considered an

interpretation of the statute along these lines and

15

rightly rejected it. The Court noted that such a

reading would “divorce the phrase being construed

from its context and construct an entirely new class of

relief available to other entities than the plan.” 473

U.S. at 141-42. Specifically, it would “render super-

fluous the preceding clauses providing relief sin-

gularly to the plan, and would slight the language

following after the phrase ‘such other equitable or

remedial relief.” This language, authorizing the

removal of a fiduciary, is another instance of the kind

of “plan-related relief” provided for by the preceding

clauses. Id. at 142. In short, Russell’s interpretation

of § 409 is true to its meaning.

But even with respect to statutory purposes, the

decisions in Russell and LaRue limiting relief to the

plan are faithful to the congressional intent mani-

fested in ERISA’s carefully balanced remedial

scheme. Without denying ERISA’s primary goal of

“benefitting employees,” Mertens, 508 U.S. at 262-63,

this Court has always recognized the complex balance

Congress struck in passing ERISA. Pilot Ins. Co. vu.

Dedeaux, 481 U.S. 41, 54 (1987) (“(T]he detailed

provisions of [ERISA] 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.”) (emphasis added); Mertens, 508 U.S.

at 262 (describing ERISA as “an enormously complex

and detailed statute that resolved innumerable

disputes between powerful competing interests — not

16

all in favor of potential plaintiffs.”); id. at 263

(acknowledging a tension between “the primary

ERISA goal of benefitting employees and the sub-

sidiary goal of containing pension costs”). The goal of

cost containment was expressly noted by the majority

in Russell, 473 U.S. at 148 n.17 (“Congress was

concerned lest the cost of federal standards dis-

courage the growth of private pension plans.”) (citing

legislative history).

Thus, Congress made various “policy choices”

reflected “in the inclusion of certain remedies and the

exclusions of others[.]” Pilot Ins. Co., 481 U.S. at 54.

This Court has resisted recalibrating the balances in

ERISA and changing the choices Congress has made.

“We will not attempt to adjust the balance between

those competing goals {of benefiting employees and

containing pension costs] that the text adopted by

Congress has struck.” Mertens, 508 U.S. at 2563.

Given the compromise nature of ERISA, it cer-

tainly would have been rational for Congress to have

concluded that imposing on fiduciaries personal

liability to beneficiaries for injuries that did not harm

the plan would deter plan formation and service as

fiduciaries of qualified individuals or institutions. In

reaching a result protective of these interests, Russe/l

and Laltue were sensitive to ERISA’s purposes; to

have held otherwise would have been to substitute

a different policy balance for the one reached by

Congress.

In sum, Russell and LaRue were correctly

decided and need not be revisited.

Yet even if this Court would come to a different

conclusion were it approaching the issue for the first

time, it is not. Fisher offers no justification for a

radical and disruptive break with the settled prece-

dent represented by Russell, relied on for twenty-five

years, and reaffirmed less than two years ago in

LaRue. And as this Court has stated, stare decisis has

its greatest force when interpreting federal statutes.

LaRue, 128 S.Ct. at 1028 (“in matters of statutory

interpretation ... principles of stare decisis have

their greatest effect”) (Roberts, C.J., concurring);

Patterson v. McLean Credit Union, 491 U.S. 164, 172-

73 (1989) (“[clonsiderations of stare decisis have

special force in the area of statutory interpretation,

for here, unlike in the context of constitutiona!

interpretation, the legislative power is implicated,

and Congress remains free to alter what [this Court]

ha{s] done.”). Thus, if Congress disagreed with this

Court’s interpretation of § 409, it was — and is — free

to amend the statute. That in 25 years Congress has

not done so should make this Court even more

reluctant to reconsider these rulings. To overturn

Russell now would usurp the role of Congress, inject

uncertainty into the ERISA remedial scheme, and

upset the settled expectations created by Russell,

LaRue, and their progeny, which stare decisis aims to

protect.

18

ll. The Court Should Not Disturb the Well-

Settled Rule that “Equitable Relief” Under

ERISA § 502(a}(3) Does Not Include Com-

pensatory Damages

A. Mertens and Great-West Preclude Re-

covery Under § 502(a)(3) for Compensa-

tory Damages

This Court established in Mertens, and re-

affirmed in Great-West, that compensatory damages

are not “equitable relief” within the meaning of

§ 502(a)(3). Fisher nevertheless argues that lower

courts have uniformly misapplied this Court's

decisions in Mertens and Great-West to suits against

fiduciaries. (Pet. 30-34). Plaintiff offers no convincing

reason why money damages should turn into

equitable relief when the defendant is a fiduciary. To

do so would disregard the reasoning of Mertens and

Great-West and contravene virtually every lower court

to have considered the issue.

Section 502(a\(3) authorizes only “equitable

relief.” However, plaintiff seeks a money judgment. A

money judgment is, of course, the quintessential form

of legal! relief. Fisher argues that his request for a

money judgment nonetheless seeks equitable relief.

Mertens and Great-West preclude this contention.

The central holding of Mertens was that “equi-

table relief” under § 502(a)(3) means the “categories”

of relief that were “typically available in equity.” This

includes “injunction, mandamus, and restitution,” but

“not compensatory damages.” 508 U.S. at 250

19

(emphasis added). Great-West reaffirmed this holding

of Mertens. 534 U.S. at 210; see also id. at 215 (“all

the Supreme Court meant in Mertens and other cases

was that restitution, in contrast to damages, is a

remedy commonly ordered in equity cases and there-

fore an equitable remedy in a sense in which dam-

ages, though occasionally awarded in equity cases,

are not”) (quoting Reich v. Continental Casualty Co.,

33 F.3d 754, 756 (7th Cir. 1994)); id. at 234

(describing Mertens’ definition of equitable relief as

“categories of relief typically available in equity (such

as injunction, mandamus, and restitution, but not

compensatory damages” as the “core holding of

Mertens”) (Ginsberg, J., dissenting).

Fisher contends that his damage claim is

nevertheless equitable relief because it is asserted

against fiduciaries and thus would have been within

the exclusive jurisdiction of an equity court. This

argument is, again, without any merit.

In Mertens, the petitioners, participants in a

pension plan, brought suit against the plan’s actuary

for knowing participation in a fiduciary’s breach

based on failing to fund the plan adequately. This led

the PBGC to terminate the plan and, in turn,

resulted in the petitioners receiving “only the benefits

guaranteed by ERISA ... which are in general

substantially lower than the fully vested pensions

due them under the plan.” 508 U.S. at 250. The

petitioners sought monetary relief (id.), arguing that

requiring the respondent “to make the ... plan

whole” for the losses it caused “would constitute

20

‘other appropriate equitable relief’ within the

meaning of § 502(a)(3).” Id. at 253.

The Court rejected this claim, noting that peti-

tioners “do not seek a remedy traditionally viewed as

‘equitable,’ such as injunction or restitution.” Rather,

they were seeking “nothing other than compensatory

damages - monetary relief... .” Id. at 255 (emphasis

in original). “Money damages are, of course, the

classic form of legal relief.” Jd. (emphasis in original).

Petitioners in Mertens, like Fisher here (Pet. 30-

34), argued that “this reading of ‘equitable relief’ fails

to acknowledge ERISA’s roots in the common law of

trusts,” in that “a beneficiary’s action to recover losses

resulting from a breach of duty ... traditionally has

been obtained in courts of equity and therefore is, by

definition, ‘equitable relief.’” /d. at 256 (citation

omitted). The Court acknowledged this:

It is true that, at common law, the courts of

equity had exciusive jurisdiction over vir-

tually all actions by beneficiaries for breach

of trust.... It is also true that money

damages were available in those courts

against the trustee ... and against third

persons who knowingly participated in the

trustee’s breach.

Id. at 256 (citations and footnote omitted). The Court

further recognized that “[tlhe term ‘equitable relief’

can assuredly mean ... whatever relief a court of

equity is empowered to provide in the particular case

at issue.” Id. “But .. . ‘equitable relief’ can also refer

21

to those categories of relief that were typically

avaliable in equity (such as injunction, mandamus,

and restitution, but not compensatory damages).” Jd.

(emphasis in original). However, “[iJn the context of

the present statute, we think there can be no doubt.”

Id. at 257. The Court rejected the first reading, and

held that money damages are not available under

§ 502(a)\(3). Id. at 256-59; see also id. at 263, 268-69;

id. at 273 (White, J., dissenting) (under majority

opinion’s interpretation, § 502(a)(3) relief excludes

“compensatory damages,” “money damages,” “com-

pensatory monetary awards,” or “suit for damages

against a fiduciary ... for] a participating non-

fiduciary”) (emphasis added).

In holding that under § 502(a)(3) equitable relief

means the kinds of relief typically available in equity,

which did not include compensatory damages,

Mertens repudiated the idea, advanced by Fisher

here, that the meaning of equitable relief should be

determined by the defendant’s status or the intri-

cacies of equity court jurisdiction.

Great-West reaffirmed Mertens’ core holding and

analysis of what constitutes equitable relief. Re-

sponding to an argument similar to that made by

Plaintiff — that “the common law of trusts provides

petitioners with equitable remedies that allowed

them to bring this action under § 502(a\(3),” id. at 219

— this Court again rejected construing § 502(a\(3)

through the lens of equity court jurisdiction con-

cerning trusts:

22

These trust remedies are simply inap-

posite. In Mertens, we rejected the claim

that the special equity-court powers

applicable to trusts define the reach of

§ 502(a)(3). Instead, we held that the term

“equitable relief” in § 502(a)\(3) must refer to

“those categories of relief that were typically

available in equity...”

Id. at 219 (italicized emphasis in original, bold

emphasis added). Under both Mertens and Great-

West, the historical peculiarities of equity courts’

exclusive jurisdiction over suits against trustees

cannot transform the legal relief sought by Fisher

here — money damages — into equitable relief.

B. Overruling Mertens, Great-West, and

Related Lower Court Decisions Would

Equally Offend Stare Decisis Principles

Every Circuit to consider the issue has held that

§ 502(a\(3) does not authorize recovery of compen-

satory damages.

First Circuit: Armstrong v. Jefferson Smurfit

Corp., 30 F.3d 11, 13 (ist Cir. 1994) (“the

status of the defendant (..e., fiduciary or

nonfiduciary) does not affect the question of

whether compensatory legal damages con-

stitute ‘appropriate equitable relief’ under

the statute. This is the question answered, in

the negative, by the Mertens Court.”).

Second Circuit: Coan v. Kaufman, 457 F.3d

250, 262 (2d Cir. 2006) (claim for make-whole

Zo

monetary relief against an ERISA fiduciary

was not “equitable relief” under § 502(a)(3)).

Third Circuit: D’Amico v. CBS Corp., 297

F.3d 287, 289, 292 n.5 (38d Cir. 2002)

(“Because plaintiffs have chosen to proceed

under 29 U.S.C. § 1132(a)(3), their fiduciary

duty claims are limited to equitable relief

[citing Great-West].... Thus, even if we held

that plaintiffs were not required to exhaust

their remedies, they would not be able to

recover damages for any of their un-

exhausted claims.”).

Fourth Circuit: LaRue v. DeWolff, Boberg &

Assoc., Inc., 450 F.3d 570, 577, rev'd on

other grounds, 128 S.Ct. 1020 (2008) (under

Mertens “the relevant question is

whether a given type of relief was available

in equity courts as a general rule”; equally,

“the fact that plaintiff happens ‘to be a

participant or fiduciary is entirely beside the

point in the §1132(a)(3) analysis”) (original

emphasis); Rego v. Westvaco Corp., 319 F.3d

140 (4th Cir. 2003).

Sixth Circuit: Crosby v. Bowater Inc. Retire-

ment Plan for Salaried Employees of Great

Northern Paper Inc., 382 F.3d 587, 596 (6th

Cir. 2004) (“If it be argued that Mr. Crosby’s

position should be likened to that of a

beneficiary of a trust, who could invoke the

jurisdiction of an equity court to enforce a

right to receive money from the trust, the

short answer is that just such an argument

has heen explicitly rejected by the United

24

States Supreme Court.”); Helfrich v. PNC

Bank, Kentucky, Inc., 267 F.3d 477, 482 (6th

Cir. 2001) (“ERISA does not permit plan

beneficiaries to claim money damages from

plan fiduciaries.”).

Seventh Circuit: Brosted v. Unum Life Ins.

Co. of Am., 421 F.3d 459, 466 (7th Cir. 2005)

(noting that a claimant “clearly cannot re-

cover compensatory damages under section

502(a)(3)”; deciding case on other grounds).

Eighth Circuit: Halbach v. Great-West Life

& Annuity Ins. Co., 561 (F.3d 872, 882-3 (8th

Cir. 2009); Calhoon v. Trans World Airlines,

Inc., 400 F.3d 593, 598 (8th Cir. 2005).

Ninth Circuit: Farr v. U.S. West Commu-

nications, 151 F.3d 908, 916 (9th Cir. 1998);

McLeod v. Oregon Lithoprint Inc., 102 F.3d

376, 378 (9th Cir. 1996).

Tenth Circuit: Callery v. U.S. Life Ins. Co.

in the City of New York, 392 F.3d 401, 404

(10th Cir. 2004).

The stare decisis considerations that apply to this

Court’s § 409 jurisprudence apply with equal force to

its § 502(a)\(3) precedents, and should prevail against

a grant of certiorari. The lower courts’ reliance on

Mertens and Great-West is evident from the above

cases. If Congress intended a different result than

Mertens and Great-West, it could have amended and

still could amend § 502(a)\(3) to permit recovery of

compensatory damages. That it has not done so

25

argues heavily against breaking with this well-

established authority.

III. The Peculiar Facts of This Case Would

Provide a Poor Vehicle for the Court’s

Review

Although Fisher points to a perceived injustice

caused by Russeli. Great-West and Mertens, the pecu-

hiarities of his case make it a poor tool to accomplish

the revisions to ERISA’s remedial scheme that he

champions.

First, Fisher’s argument is premised on the

supposed unavailability of relief for the denial of his

lump sum payment, but that is largely a product of

his own making. The logical target of a suit for denial

of a plan benefit is the Plan itself, and the proper

vehicle is ERISA § 502(a)(1)(B). Fisher flatly states

that “{ilf the Plan herein had not been terminated,

Petitioner would have sued under ERISA § 502(a)(1)(B)

for benefits due to him under the terms of the plan,”

but because “the Plan has been terminated, and

because all state laws are preempted,” he may only

recover under §§ 502(a)(2) or 502(a\(3). (Pet. 15, n.5).

But his belief that the termination of the Plan

prevented a suit for benefits under § 502(a)(1)(B) is

only speculative; it is not clear that a court cannot

award judgment against a plan in a state of ter-

mination but before the plan’s assets have been

transferred to the PBGC and the plan has been

dissolved.

26

Moreover, whether Fisher would have been able

to recover against the Plan under § 502(a)(1)(B) is

unknown because he chose not to bring such a claim.

Had he pursued recovery against the Plan, he could

have argued that the ban on lump sum payments

initiated by a distress termination did not affect his

application for such a payment, because he applied

for a lump sum payment before the prohibition arose

and his claim should be evaluated in light of the

circumstances at the time of his application. The Plan

would have disputed Fisher’s contention, but the

issue could have been litigated and determined.

Because he chose not to sue the Plan, the result is

unknown, and it is far from clear that the issuance of

a notice of distress termination after he submitted his

application made it impossible for Fisher to press a

claim on his application.

Second, in the end, Fisher’s inability to obtain a

lump sum payment in lieu of an annuity is a direct

result of the federal pension law policy that disfavors

jump sum payments from a distressed plan.

As alleged in the complaint, at the time Fisher

applied for a lump sum distribution (August 15,

2003), the Plan was underfunded, and Penn Traffic

had been advised that there might have to be a

distress termination of the Plan. (A. 23a, 24a, 44 10,

20). Penn Traffic was already in bankruptcy, and the

Plan was underfunded by 60 percent. See p. 1, n.1,

above. As also alleged in the complaint, on September

29, 2003, the Boara, adopted a resolution to terminate

27

the Plan. (A. 25a, JY 22). In such circumstances,

ERISA disapproves of lump sum distributions.

As noted above (p. 2, n.2), the PBGC is prohibited

from paying lump sum benefits once it has assumed

trusteeship over the plan. 29 C.F_R. § 4022.7(a). As a

measure of its critical role in preserving assets when

a plan is in extremis, this prohibition reaches back in

time before the PBGC’s assumption of trusteeship,

forbidding lump sum payments both from the time a

notice of distress termination is given to the PBGC,

29 U.S.C. § 13841(c”3)(D)G)1) and (i)(II); 29 C.F-R.

§ 4041.42; and, even earlier, from the time it is

anticipated that a plan has insufficient assets and

will have to terminate, 29 C.F.R. § 4044.4; Jn re

Braniff Airways, Inc., 27 B.R. at 227 (“The purpose of

the Regulation [the version of § 4044.4 then in effect,

identical in all relevant respects] is to maintain the

respective positions of the participants in a plan’s

assets and prevent a run on the bank”).”

Had these ERISA prohibitions not existed, Fisher

would have been able to compel a lump sum pension

payment, either from the Plan or from the PBGC.

Thus, nothing in federal policy supports re-writing

ERISA’s provisions as construed by this Court be-

cause Fisher did not receive a lump sum benefit

payment. Indeed, ERISA envisions just what occurred

* Additionally, the plan trustee may recoup lump sum

payments made within the 3 years prior to termination which

fall within the recoverable amount pursuant to 29 U.S.C. § 1345.

28

here — that in the case of a distress termination, plan

beneficiaries receive an annuity as determined by

PBGC guidelines.

CONCLUSION

For the foregoing reasons, the petition for a writ

of certiorari should be denied.

Respectfully submitted,

COOLEY GODWARD KRONISH LLP

WILLIAM H. O’BRIEN

LORI PLOEGER

JEFFREY W. LANG

1114 Avenue of the Americas

New York, New York 10036

(212) 479-6000

Attorneys for Respondents