The U.S. Supreme Court has been asked to review a case in which a retirement plan beneficiary filed both a violation of fiduciary duty claim and a claim for benefits, which an appellate court said could not both be considered.
In the case of Jennifer Strang v. Ford Motor Company General Retirement Plan, et al., Strang says the 6th U.S. Circuit Court of Appeals held that an Employee Retirement Income Security Act (ERISA) claimant is barred from alleging a claim for breach of fiduciary duty under ERISA section 502(a)(3) whenever that claimant also has the opportunity to allege a claim for benefits under ERISA section 502(a)(1)(B).
However, Ford attorneys argue that rather than concluding that a plaintiff can never bring a fiduciary-breach claim under Section 502(a)(3) when a claim for benefits is available under Section 502(a)(1)(B), the 6th Circuit simply applied its well-established rule that a fiduciary-breach claim under Section 502(a)(3) must be “based on an injury separate and distinct from the denial of benefits.” The appellate court determined that the surcharge claim based on “Ford’s withholding of the election forms” constituted the “same injury” as the ensuing denial of benefits because “the remedy sought is the same: the $463,254.78 difference between what Strang received and what she would have received had John Strang’s distribution election been effective.”
But, in her argument in support of petition for writ of certiorari, Strang says she did allege distinct wrongdoing by the plan. “A fiduciary breaches its duty when it deliberately prevents an ERISA plan participant from making a proper claim for benefits,” the argument for the petition says. Strang alleges that John Strang repeatedly asked for the correct forms for electing a lump-sum distribution of his pension benefits, but Ford never provided them. It is because of this fiduciary breach by Ford that John Strang was denied benefits for not using the proper forms. Strang claimed that Ford’s refusal to provide John Strang with proper election forms upon request was the injury giving rise to the breach of fiduciary duty claim, distinct from the subsequent denial of benefits.
Strang says the 6th Circuit regarded her claims as the same injury strictly because they would result in granting the same relief—recovery of lost plan benefits. “It does not matter that Ms. Strang posited a different theory based on Ford’s deliberate effort to prevent John Strang from making a proper election, because ‘the nature of the defendant’s wrongdoing’ is deemed irrelevant in the Sixth Circuit,” the argument says.
Citing cases in other circuits, Strang’s attorneys represent there is a split between the 6th Circuit and other circuits regarding this issue. They also suggest, citing case law, that while it would be appropriate to reject additional equitable relief after awarding a claim for benefits, it is inappropriate to dismiss the claim for breach of fiduciary duty at the pleading stage simply because it seeks the same relief as the benefit claim.What makes it seem the Supreme Court may take up this matter is that it has asked the Solicitor General to file a brief in this case expressing the views of the United States.