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Nos. 09-784 and 09-804

 

In the Supreme Court of the United States

JANICE C. AMARA, ET AL., INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PETITIONERS

v.

CIGNA CORPORATION, ET AL.

CIGNA CORPORATION, ET AL., PETITIONERS

v.

JANICE C. AMARA, ET AL.,

INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED

ON PETITIONS FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

NEAL KUMAR KATYAL
Acting Solicitor General
Counsel of Record
EDWIN S. KNEEDLER
Deputy Solicitor General
MATTHEW D. ROBERTS
Assistant to the Solicitor
General
Department of Justice
Washington, D.C. 20530-0001
SupremeCtBriefs@usdoj.gov
(202) 514-2217

M. PATRICIA SMITH
Solicitor of Labor
TIMOTHY D. HAUSER
Associate Solicitor
NATHANIEL I. SPILLER
Counsel for Appellate and
Special Litigation
EDWARD D. SIEGER
Attorney
Department of Labor
Washington, D.C. 20210

QUESTIONS PRESENTED

1. Whether participants in an employee benefit plan covered by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq., who make an unrebutted showing of likely harm from material mis representations in a summary plan description (SPD) may recover benefits based on the inconsistency be tween the SPD and the plan terms as described in other plan documents.

2. Whether the district court abused its discretion in basing the amount of the participants' recovery on the SPD misrepresentations rather than awarding larger amounts based on additional misrepresentations in a notice required by Section 204(h) of ERISA, 29 U.S.C. 1054(h) (2000), or a summary of material modifications.

In the Supreme Court of the United States

No. 09-784

JANICE C. AMARA, ET AL., INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PETITIONERS

v.

CIGNA CORPORATION, ET AL.

No. 09-804

CIGNA CORPORATION, ET AL., PETITIONERS

v.

JANICE C. AMARA, ET AL., INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED

ON PETITIONS FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

 

INTEREST OF THE UNITED STATES

This brief is submitted in response to the order of this Court inviting the Solicitor General to express the views of the United States. In the view of the United States, the petitions for a writ of certiorari should be denied.

STATEMENT

1. Under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq., a defined benefit pension plan generally may not be amended to reduce significantly the rate of future benefit accrual unless the plan administrator provides the notice to par ticipants required by Section 204(h) of ERISA, 29 U.S.C. 1054(h). Until 2001, that notice had to "set[] forth the plan amendment and its effective date," 29 U.S.C. 1054(h)(1) (2000), which meant that the notice had to include either the amendment's text or an under standable summary. 26 C.F.R. 1.411(d)-6, Q&A-10 (1999); 26 C.F.R. 1.411(d)-6T, Q&A-10 (1997). The pre- 2001 version of Section 204(h) did not address the rem edy for a violation of the notice requirement. Under amendments to Section 204(h) enacted in 2001, Eco nomic Growth and Tax Relief Reconciliation Act, Pub. L. No. 107-16, § 659, 115 Stat. 137-141, the notice must now provide sufficient information, as determined by the Secretary of Treasury, to allow individuals to under stand the effect of the plan amendment. 29 U.S.C. 1054(h)(2) and (3). Section 204(h) also now specifies that, in the case of an "egregious failure" to satisfy its requirements, the plan shall be applied as if it entitled affected individuals to the greater of the benefits to which they would have been entitled absent the amend ment or the benefits under the plan as provided by the amendment. 29 U.S.C. 1054(h)(6).

ERISA further requires the administrator of an em ployee benefit plan to give participants a summary plan description (SPD) and a summary of any material modi fications (SMM) that are "sufficiently accurate and com prehensive to reasonably apprise [them] * * * of their rights and obligations under the plan." 29 U.S.C. 1022(a). The SPD must provide notice of, among other things, "circumstances which may result in disqualifica tion, ineligibility, or denial or loss of benefits," 29 U.S.C. 1022(b), and the SMM must provide notice of changes in those circumstances, 29 U.S.C. 1022(a). The SPD and SMM must "be written in a manner calculated to be un derstood by the average plan participant," 29 U.S.C. 1022(a), and "must not have the effect [of] mislead ing, misinforming or failing to inform participants." 29 C.F.R. 2520.102-2(b). See 29 U.S.C. 1024(b).

2. a. During 1997 and 1998, CIGNA Corporation con verted its traditional defined benefit pension plan to a cash balance plan, an alternative form of defined benefit pension plan. Pet. App. 16a-17a.1 In a traditional de fined benefit plan, each employee's benefit is generally defined as an annuity beginning at normal retirement age and calculated based on the employee's compensa tion and years of service. Id. at 9a. In a cash balance plan, each employee's benefit is generally defined by reference to the amount in a hypothetical account. The balance in that account typically increases over time with hypothetical contributions-pay credits, which are based on a percentage of the employee's compensation, and interest credits, which are based on application of a specified interest rate to the hypothetical account bal ance. Id. at 12a.

In converting to the cash balance plan, CIGNA used a transition method called the "greater of A or B." Un der that approach, CIGNA first amended the plan to freeze the benefits that employees had accrued under the traditional defined benefit formula (Part A) and then amended the plan to provide that, going forward, em ployees would receive the greater of those frozen bene fits (which ERISA prohibited CIGNA from reducing, 29 U.S.C. 1054(g)) or the benefits due under a new cash balance formula (Part B). Pet. App. 13a-14a, 16a-22a. An alternative transition method, called "A plus B," would have been more favorable to employees. Under that approach, after the conversion, CIGNA would have paid employees both their frozen accrued benefits under the traditional formula (Part A) and additional benefits under the new cash balance formula (Part B). Id. at 13a. Although ERISA permitted the "greater of A or B" ap proach at the time of CIGNA's conversion, ERISA no longer permits that approach. For any conversion after June 29, 2005, participants' post-conversion benefits cannot be less than those provided by the "A plus B" approach. Pension Protection Act of 2006 (PPA), Pub. L. No. 109-280, § 701(a), 120 Stat. 981, 29 U.S.C. 1054(b)(5)(B)(iii).

b. CIGNA implemented the "greater of A or B" ap proach by creating an opening balance for each partici pant under Part B based on the participant's ac crued benefit under Part A. Pet. App. 19a. Because of CIGNA's choice of discount rates and mortality risk ad justments, however, as well as its decision not to include the value of certain benefits, a participant's Part B open ing account balance was frequently much less than the present value of the participant's Part A accrued benefit at the time of the conversion. Id. at 23a, 121a-123a.

As a result of CIGNA's plan design decisions, as well as declining interest rates in the years following the con version, many employees experienced an extended pe riod during which their Part B benefit was less than the then-present value of their frozen Part A accrued bene fit. Pet. App. 23a-25a. During this period, affected em ployees continued to work, and their hypothetical cash balance accounts continued to grow, but, until the cash balance accounts caught up with the previously accrued benefits under Part A, they earned no additional retire ment benefits beyond what they had already earned. Id. at 25a. Some employees experienced several years of working without accruing additional benefits, and, in some cases, employees were never able to "wear away" the difference between their frozen Part A benefits and their benefits under Part B. Id. at 25a-26a.

CIGNA was aware that the amended plan could result in "wear away" periods during which employees would work without actually accruing additional bene fits, but CIGNA did not inform employees about that possibility. Pet. App. 29a, 118a-119a. Instead, CIGNA provided materially misleading statements suggesting that employees would continue to accrue additional benefits as they worked, with no "wear away" periods. Id. at 126a-127a. In a November 1997 newsletter, which CIGNA later identified as the notice required by ERISA Section 204(h), id. at 95a, CIGNA stated that the conversion would "significantly enhance its retirement program." Id. at 31a. The newsletter said that "the new plan is designed to work well for both longer- and shorter-service employees" and provides "benefit growth throughout [an employee's] career." Ibid. (brackets in original).

In December 1997, CIGNA sent each participant a retirement kit, which CIGNA later identified as the re quired SMM. Pet. App. 33a, 95a. Like the newsletter, the retirement kit described the changes to CIGNA's retirement program as enhancements. Id. at 34a. Al though the kit provided details about the calculation of opening balances under Part B, it did not describe all of the discounts applied in calculating those balances. Id. at 35a. In addition, it stated that "[e]ach dollar's worth of credits is a dollar of retirement benefits payable to [participants] after [they] are vested," id. at 36a; that the new plan generally provides "larger benefits for shorter-service employees and comparable benefits for longer-service employees," id. at 37a; and that partici pants "will see the growth in [their] total retirement benefits from CIGNA every year." Ibid.

In October 1998 and September 1999, CIGNA issued SPDs for the cash balance plan. Pet. App. 39a. The SPDs stated that "[e]ach dollar's worth of credit is a dollar of retirement benefits payable to [participants] after [they] are vested," and reported that amounts in a participant's account "continue to grow every year [the participant is] with CIGNA." Id. at 39a-40a, 126a.

CIGNA was aware that employees lacked full infor mation about the true effects of the conversion to the cash balance plan, including "wear away" and a lower accrual rate for many participants, but chose not to in form employees about those effects in order to ease the transition to the amended plan. Pet. App. 110a-113a. CIGNA wanted to avoid possible employee protests, which CIGNA was aware had caused some other em ployers to abandon or scale back similar conversions to cash balance plans. Id. at 113a-114a.

3. a. In 2001, Janice C. Amara and other plan partici pants brought a class action lawsuit against CIGNA and its pension plan (together CIGNA) in the United States District Court for the District of Connecticut. Pet. App. 41a. As relevant here, the plaintiffs alleged that, in con verting to the cash balance plan, CIGNA had failed to comply with the notice requirements of ERISA Section 204(h), as well as ERISA's SPD and SMM provisions. Id. at 94a.

b. In February 2008, after an extensive bench trial, the district court determined that CIGNA had violated Section 204(h) and the SPD and SMM requirements. Pet. App. 5a-159a.

The court declined to decide whether the version of Section 204(h) in effect at the time of the conversion required explicit notice that benefits were being reduced or that participants might experience periods of "wear away" under the amended plan. Pet. App. 103a-104a. The court concluded that, even if those affirmative dis closures were not required, CIGNA's Section 204(h) notice failed to comply with ERISA's requirements be cause it included "material misrepresentations suggest ing benefit increases" and indicating that "reductions in the rate of future benefit accrual were not a component or a possible result" of the conversion. Id. at 104a-106a.

The district court determined that CIGNA's SPDs and SMM likewise failed to comply with ERISA's re quirements because the documents did not disclose the possibility of "wear away" periods, even though CIGNA knew that a sizeable number of employees were likely to experience such periods because of the amended plan's design. Pet. App. 118a-126a. Moreover, even assuming that CIGNA had no affirmative duty to inform partici pants about "wear away," the court found that the SPDs and SMM contained "materially misleading statements" that led participants to believe that they would steadily earn additional benefits under the amended plan. Id. at 126a-128a. The court further found that the documents contained misrepresentations that led participants to believe that all benefits accrued under the traditional plan, including early retirement benefits, would be in cluded in determining opening account balances under the cash balance plan. Id. at 128a-131a.

The court rejected CIGNA's argument that the par ticipants were not entitled to relief because they had failed to demonstrate injury. Pet. App. 131a-137a. The court noted that, under Burke v. Kodak Retirement In come Plan, 336 F.3d 103 (2d Cir. 2003), cert. denied, 540 U.S. 1105 (2004), a participant may recover based on a deficient SPD only if the participant establishes likely prejudice or harm. Pet. App. 131a-132a. If a participant shows likely harm, the court explained, "the employer may rebut [that showing] through evidence that the defi cient SPD was in effect a harmless error." Id. at 132a (quoting Burke, 336 F.3d at 113). The court found that the participants collectively had shown likely harm and that CIGNA had failed to establish harmless error. Id. at 133a-137a. The court reasoned that CIGNA's suc cessful efforts to conceal the full effects of the cash bal ance transition had deprived employees of the opportu nity to take timely action in response, including protest ing when the new plan was implemented. Id. at 137a; see id. at 112a-114a (finding that CIGNA deliberately misinformed employees about the effects of the conver sion and thereby successfully avoided protests that had led other companies to roll back conversion plans).

c. In June 2008, the district court issued an opinion addressing the appropriate remedy. Pet. App. 160a- 221a. The court concluded that no individual issues re mained regarding whether participants were harmed by the SPD violations. Id. at 162a-169a. The court rejected as contrary to Second Circuit precedent CIGNA's argu ment that each plan participant should be required to prove detrimental reliance. Id. at 165a n.1. The court also declined to afford CIGNA an additional opportunity to prove harmless error because CIGNA had failed to take advantage of its earlier opportunities to rebut the participants' showing of likely harm. Id. at 166a. In particular, the court noted, CIGNA had declined to en gage in discovery that the court had authorized to deter mine whether class members had actual knowledge of the undisclosed information about the cash balance plan, and CIGNA had decided not to call any participants as witnesses at trial. Ibid.

As a remedy for the SPD and SMM violations, the court ordered CIGNA to provide benefits under the "A plus B" approach. Pet. App. 194a-201a. The court rea soned that using that approach would eliminate "wear away" and rectify CIGNA's misrepresentation about the opening balances under the cash balance plan. Id. at 195a-197a. The court declined to provide an additional remedy for the SMM's statement that benefits under the post-conversion plan would be "comparable" to prior benefits. Id. at 200a-201a.

As for the Section 204(h) violation, the court con cluded that the appropriate remedy was to require CIGNA to issue new notices that comply with the re quirements of Section 204(h) as amended in 2001. Pet. App. 184a-194a. The court declined to order further relief requested by the plaintiffs because that would have required invalidation of the initial amendment freezing benefits under the pre-conversion plan, which the plaintiffs had not independently challenged, id. at 187a-191a, and because the remedy for the SPD and SMM violations provided participants with substantial relief, id. at 192a.

4. In an unpublished order, the court of appeals af firmed the district court's rulings. Pet. App. 1a-4a. The court of appeals relied on "substantially the reasons stated" by the district court. Id. at 4a.

DISCUSSION

This Court should deny both petitions for a writ of certiorari. The Court's review is not warranted to exam ine the Second Circuit's summary order, which affirmed the district court's fact-specific remedial decision. The courts of appeals uniformly agree that an SPD controls over conflicting plan terms. Although the courts dis agree on the extent to which participants must show prejudice or reliance to recover benefits as described in the SPD, this case is not an appropriate vehicle to re solve that question. Other courts of appeals have ad dressed remedial issues concerning misleading SPDs in situations far removed from the facts here; and those courts would not necessarily have reached a different result than the court below in this factual setting, which involves class-wide harm from inaccurate disclosure of a plan amendment concerning future accrual of pension benefits. Moreover, the plan amendment in this case adopted a method of converting to a cash balance plan that is now illegal under ERISA and which is therefore not likely to recur. In addition, even if the relief awarded by the district court were not available as a remedy for CIGNA's SPD violations, that court could award similar relief for CIGNA's violation of the notice requirement in ERISA Section 204(h), which specifically governs plan amendments of the sort at issue here. And the district court's decision on the Section 204(h) rem edy has little prospective significance because Congress has since amended that provision as well.

A. The Issues In No. 09-804 Do Not Warrant This Court's Review

1. Contrary to CIGNA's contention (Pet. 21-24), the courts below applied the correct standard for determin ing when participants may obtain benefits based on an SPD that conflicts with the plan terms as described in other documents.

The SPD is the central mechanism for achieving one of ERISA's fundamental goals-ensuring that partici pants accurately understand their rights and obligations under the plan. Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 83 (1995); see 29 U.S.C. 1001(a) and (b), 1022. As this Court and the courts of appeals have con sistently recognized, the SPD is one of the "documents and instruments governing the plan." Kennedy v. Plan Admin. for DuPont Sav. & Inv. Plan, 129 S. Ct. 865, 877 (2009); see Bergt v. Retirement Plan for Pilots Em ployed by MarkAir, Inc., 293 F.3d 1139, 1143 (9th Cir. 2002); Chiles v. Ceridian Corp., 95 F.3d 1505, 1511 (10th Cir. 1996); Jensen v. SIPCO, Inc., 38 F.3d 945, 949 (8th Cir. 1994), cert. denied, 514 U.S. 1050 (1995); Alday v. Container Corp. of Am., 906 F.2d 660, 665-666 (11th Cir. 1990), cert. denied, 498 U.S. 1026 (1991); 29 U.S.C. 1024(b)(2) and (4). Indeed, because the SPD is fre quently the only document describing the plan's terms that participants ever receive, see Peter J. Wiedenbeck, ERISA in the Courts 84 (2008), ERISA "contemplates that the [SPD] will be an employee's primary source of information regarding employment benefits." Burstein v. Retirement Account Plan, 334 F.3d 365, 378 (3d Cir. 2003) (citation omitted). ERISA therefore requires the SPD to contain an "accurate and comprehensive" de scription of participants' "rights and obligations under the plan." 29 U.S.C. 1022(a).

ERISA also requires that, in determining rights and benefits under the plan, the administrator act "in accor dance with the documents and instruments governing the plan" and ERISA's other requirements, including the requirement that the SPD accurately reflect partici pants' rights. 29 U.S.C. 1104(a)(1)(D); see Curtiss- Wright, 514 U.S. at 82-83. Accordingly, a plan adminis trator would violate ERISA by interpreting the plan's terms to deny or restrict benefits to which the SPD states participants are entitled. For these reasons, the eleven courts of appeals that have considered the ques tion have uniformly agreed that, when the SPD conflicts with less favorable terms described in other plan docu ments, the SPD controls. See Burstein, 334 F.3d at 378 & n.18 (citing cases).

Nonetheless, as the Second Circuit recognized in Burke v. Kodak Retirement Income Plan, 336 F.3d 103 (2003), cert. denied, 540 U.S. 1105 (2004), employees cannot collect additional benefits based on a conflict be tween the SPD and less favorable plan terms unless the employees have been prejudiced by the SPD violation. That rule is consistent with the general principle that courts do not provide relief for harmless errors. See National Ass'n of Home Builders v. Defenders of Wild life, 551 U.S. 644, 659-660 (2007). A contrary rule would provide a windfall for some employees at the expense of plans and their sponsors. That, in turn, could adversely affect the solvency of plans or discourage employers from creating them, contrary to other important goals of ERISA. See 29 U.S.C. 1001, 1001a.

The Second Circuit has also adopted the appropriate framework for discerning when SPD errors are harm less. The participant first bears the burden of showing that he was likely harmed as a result of the deficient SPD. Burke, 336 F.3d at 113. In this case, for example, the plaintiffs showed that the SPDs likely led partici pants to hold erroneous beliefs about their benefit ac cruals under the cash balance plan, which both affected the terms under which participants believed they contin ued to work for CIGNA and deprived them of the oppor tunity to take timely action in response to CIGNA's adoption of an amendment that significantly altered plan terms. Pet. App. 137a. In particular, the district court found that CIGNA's misrepresentations dissuaded par ticipants from protesting the conversion to the cash bal ance plan, action that had resulted in rollbacks of similar proposed conversions at other companies. Id. at 113a- 114a. Even after a participant has shown likely harm, however, the plan and its administrator can defeat the claim for additional benefits by showing that the SPD error was actually harmless. Burke, 336 F.3d at 113. For example, they might show that the participant had actual knowledge of the less favorable plan terms, e.g., Schad v. Stamford Health Sys., Inc., No. 08-5962-cv, 2009 WL 4981271, * 2 (2d Cir. Dec. 21, 2009), or that accurate SPDs were issued before the purportedly inac curate ones could have had any adverse effect, e.g., Pierce v. Security Trust Life Ins. Co., 979 F.2d 23, 30 (4th Cir. 1992).2

The Second Circuit's approach is consistent with ERISA and the Department of Labor's regulations, which "place the burden on employers to draft an SPD that is accurate, comprehensible, and clear regarding restrictions on eligibility for benefits." Burke, 336 F.3d at 113. This approach also appropriately reflects the reality that an employee's accrual of pension benefits is part of the compensation offered by the employer for the employee's services. The terms of those benefits must be accurately reflected in the SPD and SMM. It is therefore fair to give effect to the SPD and SMM unless the employee knew of the less favorable plan terms and understood that they would govern.

The Second Circuit's approach also appropriately takes into account the genuine difficulty participants would face in proving precisely how they were affected by inaccurate disclosures, sometimes years after the fact. For example, many participants rely on oral repre sentations and discussions with friends, coworkers, and colleagues for information about the plan. As a result, misstatements in SPDs can be propagated throughout the workplace and influence even employees who do not read them. Similarly, even if just a minority of partici pants would have read, communicated, or objected to the amended terms of the plan as described in an accurate SMM, the failure to correctly describe the amendment can have a widespread impact on participants; for exam ple, by depriving them of the opportunity to protest and thereby secure the reversal of adverse changes to the plan-as the district court concluded occurred here. Pet. App. 113a-114a.

The Second Circuit's approach correctly declines to require each individual participant to prove detrimental reliance on the defective SPD. Because giving effect to plan terms that conflict with the SPD violates ERISA, a rule giving effect to less favorable terms unless em ployees prove detrimental reliance on the SPD would not be consistent with the statutory scheme. Requiring proof of actual reliance would also undermine ERISA's fundamental goals. Beneficiaries would frequently be unable to satisfy that burden-especially beneficiaries of deceased participants who are unlikely to have evi dence that the participants actually read the SPD and acted differently in response. E.g., Branch v. G. Bernd Co., 955 F.2d 1574, 1579-1580 & n.2 (11th Cir. 1992). At the same time, administrators would have little incentive to ensure the accuracy of the SPDs they are required by ERISA to furnish, which would frustrate ERISA's goal that participants understand their benefits.

Finally, a requirement that participants demonstrate individualized reliance would also be contrary to ERISA's broader goals of ensuring efficiency, predict ability, and uniformity in plan administration, see Conkright v. Frommert, 130 S. Ct. 1640, 1649 (2010). A reliance requirement would likely preclude class treat ment of SPD benefit claims, see Heffner v. Blue Cross & Blue Shield, 443 F.3d 1330, 1340 (11th Cir. 2006), and cause benefits under a single plan to vary based on the memories of individual participants and their ability to document how they acted in response to inaccuracies in the SPD.

2. CIGNA is mistaken in arguing (Pet. 23) that the decision below conflicts with this Court's decision in Curtiss-Wright. In Curtiss-Wright, the district court concluded that a revision to an SPD purporting to termi nate health benefits was an invalid plan amendment be cause neither the SPD nor the other plan documents contained an amendment procedure, and the court of appeals affirmed. 514 U.S. at 75-77. This Court re versed, agreeing with the employer that a provision in the plan's constitution, which gave the company the right at any time to amend the plan, satisfied the re quirement in 29 U.S.C. 1102(b)(3) that every plan spec ify an amendment procedure. 514 U.S. at 78-81. The Court remanded for the lower courts to decide whether the appropriate company officials had approved the new SPD provision. Id. at 85.

As noted above, eleven courts of appeals have held that the SPD controls when it materially conflicts with plan terms that are less favorable to participants, and none has viewed Curtiss-Wright as an impediment to that holding. The conclusion that the SPD trumps in consistent plan terms presents no conflict with Curtiss- Wright because that conclusion does not rest on the the ory that the SPD has formally amended the plan. In stead, as described above, it rests on the legal proposi tion that a plan administrator cannot give effect to less favorable plan terms that conflict with the SPD without violating ERISA's command that the administrator act in accordance with governing plan documents and ERISA's requirements. See 29 U.S.C. 1104(a)(1)(D).3

3. As CIGNA notes (Pet. 12-20), other courts of ap peals have taken somewhat different views than the Sec ond Circuit of what additional showing, if any, a partici pant must make to obtain benefits based on a material conflict between the SPD and the plan terms as de scribed in other plan documents. Five circuits (the First, Fourth, Seventh, Eighth, and Tenth) require a participant to show "significant reliance upon, or possi ble prejudice flowing from, the faulty plan description." Govoni v. Bricklayers, Masons & Plasterers Int'l Union of Am., 732 F.2d 250, 252 (1st Cir. 1984) (Breyer, J.); Aiken v. Policy Mgmt. Sys. Corp., 13 F.3d 138, 142 (4th Cir. 1993); Hightshue v. AIG Life Ins. Co., 135 F.3d 1144, 1149 (7th Cir. 1998); Harris v. Blue Cross Blue Shield, 995 F.2d 877, 880 (8th Cir. 1993); Chiles, 95 F.3d at 1519. The Eleventh Circuit requires proof of detri mental reliance. See Heffner, 443 F.3d at 1340. And three circuits (the Third, Fifth, and Sixth) do not re quire any further showing beyond a material and clear conflict between the SPD and plan terms. See Washing ton v. Murphy Oil USA, Inc., 497 F.3d 453, 458-459 & n.2 (5th Cir. 2007); Burstein, 334 F.3d at 380-382; Ed wards v. State Farm Mut. Auto. Ins. Co., 851 F.2d 134, 135, 137 (6th Cir. 1988).

Although this Court's intervention may be warranted at some point to resolve this disagreement among the courts of appeals, this case is not an appropriate vehicle to resolve it, for four related reasons. First, this case presents the issue in an unusual factual setting that is not likely to recur. CIGNA's SPDs misrepresented that the method it had chosen to convert from its traditional defined benefit plan to a cash balance plan would not cause employees to experience "wear away" periods in which they would work without accruing additional re tirement benefits. Those misrepresentations harmed all affected employees by preventing a critical mass from mounting the kind of protest that had led other compa nies to revise cash balance conversions that had simi larly disadvantaged participants. Indeed, the district court found that CIGNA withheld accurate information from employees to avoid that very consequence. See Pet. App. 113a-114a. No court of appeals that applies a significant reliance or possible prejudice standard has considered this type of situation, and those courts might well agree with the courts below that such harm is suffi cient to entitle affected employees to relief. But other courts are not likely to consider the issue in comparable circumstances because a cash-balance transition with "wear away" is now illegal. See p. 4, supra (describing PPA, 29 U.S.C. 1054(b)(5)(B)(iii)).

Second, the 2001 amendments to ERISA Section 204(h) specifically address the question of remedy in a case like this one, which involves defective notice of a plan amendment reducing the future accrual of bene fits. The statute now expressly provides that such an amendment cannot be given effect if there is an "egre gious" violation of the notice requirements. 29 U.S.C. 1054(h)(6). The consequences of violations like the one at issue here will now be addressed primarily under that special standard.

Third, CIGNA's failure to take advantage of oppor tunities to discover whether individual class members were actually harmed makes it unclear whether the Sec ond Circuit's standard made a difference in this case. CIGNA argues that the result would have been different in the First, Fourth, Seventh, Eighth, Tenth, and Elev enth Circuits because those courts require every partici pant "to make an individualized showing that they relied on or were prejudiced by" the defective SPDs. Pet. 19. But the district court declined to undertake individual ized inquiries here because CIGNA had failed to take advantage of earlier opportunities to discover whether individual class members were actually harmed by the SPDs. Pet. App. 166a. The court of appeals affirmed based on the district court's reasoning. Id. at 4a. It therefore cannot be determined whether CIGNA's liabil ity resulted from a difference between the Second Cir cuit's standard and those applied by other circuits or, instead, from CIGNA's own litigation decisions.

Finally, the likely harm issue may be irrelevant to the outcome here because CIGNA not only violated ERISA's SPD requirements but also made similar mis representations that violated Section 204(h). The dis trict court recognized that it had the legal authority to remedy the Section 204(h) violation by reinstating the pre-conversion benefit formula. Pet. App. 187a-191a. The court decided not to provide that remedy for the Section 204(h) violation, however, in part because that would have required invalidation of the initial amend ment freezing benefits under the pre-conversion plan, which the plaintiffs had not independently challenged, id. at 188a-189a, but also because the remedy for the SPD violation already provided participants with signifi cant relief, id. at 192a. If the SPD remedial issue were resolved in CIGNA's favor, and participants could no longer receive additional benefits as a remedy for the SPD violation, the district court might well reconsider its choice of remedy for the Section 204(h) violation and choose a remedy comparable to the one it originally pro vided for the SPD violation.

This Court should deny CIGNA's petition for a writ of certiorari.

B. The Issues In No. 09-784 Do Not Warrant This Court's Review

The Court should also deny the Amara plaintiffs' petition. They make no claim that the decision below conflicts with any decision of this Court or another court of appeals. Instead, they raise only fact-specific chal lenges to the district court's remedial decision that do not warrant this Court's review.

The district court provided a fair remedy tailored to CIGNA's misrepresentations. CIGNA misled partici pants into believing that all of their accrued benefits under the pre-conversion plan would be reflected in the cash balance opening accounts and that they would ac crue additional benefits under the cash balance plan without "wear away" periods. The court's remedy cor rected both of those misrepresentations by requiring CIGNA to pay benefits using the "A plus B" approach, under which participants receive both their accrued ben efits under the pre-conversion formula (Part A), frozen as of the date of the conversion, and the new benefits provided by the cash balance formula (Part B). Pet. App. 196a; see p. 4, supra. Moreover, the court's rem edy gave participants precisely what Congress now re quires an employer to provide when it converts to a cash balance plan. See ibid. (describing PPA, 29 U.S.C. 1054(b)(5)(B)(iii)).

The Amara petitioners contend (09-784 Pet. 23-26) that the district court abused its discretion in declining to provide additional relief for CIGNA's statement in the SMM that the cash balance plan would provide bene fits "comparable" to the benefits under the traditional plan. But the Amara petitioners conceded in the district court that the court's remedial authority did not extend to rewriting the terms of the plan. See Pet. App. 201a. The district court therefore did not abuse its discretion in declining to rewrite the plan to comply with the vague promise of "comparable" benefits. Ibid. Moreover, the "A plus B" approach that the court ordered as a remedy for CIGNA's other misrepresentations, although it did not provide benefits identical to those under the pre- conversion plan, provided substantial relief for any vio lation based on a promise of "comparable" benefits.

The Amara petitioners also contend (09-784 Pet. i, 15-23) that the district court erred because it purport edly concluded that it lacked authority to reinstate the pre-conversion formula as a remedy for CIGNA's Sec tion 204(h) violation. Contrary to that contention, the court understood that it had the authority to reinstate the pre-conversion formula, Pet. App. 187a-191a, but it "determine[d], in an exercise of its equitable powers," that reinstatement was "not an appropriate remedy," id. at 191a. The court reasoned that reinstatement would have required the invalidation of the initial amendment freezing benefits under the pre-conversion plan, which the Amara petitioners had not independently chal lenged, and that the "A plus B" remedy already pro vided substantial relief. Id. at 188a-189a, 192a.

As the Amara petitioners recognize (09-784 Pet. 15), a district court has broad discretion to determine the appropriate remedy for ERISA violations. The district court did not abuse that discretion here. In any event, even if the court misunderstood the scope of its remedial authority under the version of Section 204(h) then in effect, Congress has since amended that provision to address expressly the available remedies. See p. 2, su pra (citing 29 U.S.C. 1054(h)(6)). Whether the district court misapprehended the remedies available under the prior version of Section 204(h) is thus of little continuing importance.

The issues raised by the Amara petition do not war rant this Court's review.

C. The Court Need Not Grant, Vacate, And Remand In Light Of Conkright

In its recent decision in Conkright, this Court held that an administrator with discretionary authority to interpret a plan, who makes a "single honest mistake in plan interpretation," is entitled to deference for "subse quent related interpretations of the plan." 130 S. Ct. at 1644. Contrary to the suggestions of the respective petitioners-which were made before the decision in Conkright and were therefore necessarily speculating about its impact-the Court need not grant, vacate, and remand (GVR) this case for further consideration in light of that decision.

CIGNA contended (Pet. 24-26) that a GVR would be warranted because the lower courts did not defer to the remedy that CIGNA proposed for its ERISA violations. But CIGNA did not ask the district court to defer to its remedial proposal as a matter of plan interpretation. Instead, CIGNA argued, without asking for deference, that the proposal was supported by the testimony of the participants' expert. See Pet App. 197a-198a; Defs.' Mem. on Individual Issues and Class Relief 27; Defs.' Resps. to the Court's Apr. 30, 2008, Inquiries 5. And, in the court of appeals, CIGNA did not even request the court to adopt the remedy it had proposed in the district court, much less ask for deference. See CIGNA C.A. Br. 2-61. Accordingly, CIGNA has not preserved any claim to which Conkright is pertinent.

As for the Amara petitioners, their request for relief based on Conkright was premised on the supposition that it would address the scope of a district court's "al lowable discretion" in fashioning ERISA remedies. 09-784 Pet. 13. To the extent Conkright addresses that question, however, it holds only that the district court must in some circumstances defer to an administrator's plan interpretation. That holding provides no basis for any further relief for the Amara petitioners. A remand in light of Conkright is therefore not warranted.

CONCLUSION

The petitions for a writ of certiorari should be denied.

Respectfully submitted.

NEAL KUMAR KATYAL
Acting Solicitor General
EDWIN S. KNEEDLER
Deputy Solicitor General
MATTHEW D. ROBERTS
Assistant to the Solicitor
General
Department of Justice

M. PATRICIA SMITH
Solicitor of Labor
TIMOTHY D. HAUSER
Associate Solicitor
NATHANIEL I. SPILLER
Counsel for Appellate and
Special Litigation
EDWARD D. SIEGER
Attorney
Department of Labor

MAY 2010

1 Unless otherwise noted,"Pet." and "Pet. App." refer to the petition and appendix in No. 09-804.

2 Because the Second Circuit requires employees to prove likely harm before they can recover and further allows employers to preclude recovery by establishing that any violation was actually harmless, CIGNA is incorrect in arguing (Pet. 22) that the Second Circuit's ap proach is functionally equivalent to strict liability. Although CIGNA contends (ibid.) that some participants suffered no actual harm, the district court found that CIGNA failed to take advantage of the oppor tunities it was given to rebut the participants' showing of likely harm. See Pet. App. 166a.

3 Unlike this and other cases that give effect to more favorable terms in SPDs, the new SPD provision in Curtiss-Wright was less favorable to participants.