Amara was a very significant decision in several respects. First, it cut off the availability of ERISA Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) as a means to circumvent the equitable relief requirements of Section 502(a)(3), 29 U.S.C. § 1132(a)(3). Prior to Amara, plaintiffs would argue that Section 502(a)(1)(B) remedies encompassed reforming the plan to be consistent with the law. This strategy was applied to statutory claims, breach of fiduciary duty, and disclosure claims. Amara was a classic example. Plaintiffs alleged the plan’s disclosures were defective because they did not disclose adverse information, so the appropriate remedy was to reform the plan to conform to the benefit suggested by the disclosures. But Justice Breyer explained that the remedy under Section 502(a)(1)(B) is to enforce the plan as written. So if plaintiffs claim the plan must be reformed, Justice Breyer suggested that they must satisfy the Section 502(a)(3) requirements to justify this equitable remedy. These can be significant requirements; for example, plaintiffs may have to prove harm, causation, and reliance to justify reformation, which often may make it an individualized (not class) remedy.
Another significant aspect of the decision is the notion that the summary plan description (SPD) is not the plan. The rationale for the Supreme Court’s reading was straightforward: the SPD is usually not drafted to be the plan, it is typically not amended pursuant to the requirements for amending the plan, and under Curtiss-Wright,27 one can’t use the SPD to informally amend the plan document. This seems rather obvious, but prior to Amara, many courts had treated the SPD as if it were the plan. Amara doesn’t mean the SPD is not important. But if plaintiffs have a claim based on the SPD, they will likely need to comply with Section 502(a)(3) by showing harm, causation, and reliance to entitle themselves to any relief based on a defective SPD.
Those first two rulings were very pro-defendant. The Amara decision also includes a significant ruling that is less defendant friendly; basically, that there may be monetary relief available under Section 502(a)(3). The Court did so by distinguishing Mertens’28 limitation on monetary relief under Section 502(a)(3) as applying only to claims against non-fiduciaries, and specifically noted that surcharge may be available against fiduciaries.
Stepping back, however, Amara appears to fit comfortably within equitable remedies jurisprudence and the Court’s prior rulings, such as Mass Mutual, Mertens, Harris Trust, Great West, and Sereboff.29 If we place all these cases in the big picture, they make some sense. If the Court finds a trust law or equitable relief analog for the remedy being sought, the Court finds such relief constitutes appropriate equitable relief under Section 502(a)(3). Likewise, Amara did not set aside Mertens or prior case law regarding restrictions on equitable relief. Rather, I believe Amara is meant to fit within, not overturn, these prior decisions, including that relief awarded under Section 502(a)(3) must be “typical” and “appropriate” equitable relief based on trust law and equitable remedies antecedents. Viewed in this light, Amara simply clarified and corrected the lower courts’ over-broad application to fiduciaries of Mertens’ bar on monetary remedies.
Some of the big implications going forward are: How are the lower courts going to construe Amara? Will they impose traditional trust law limits on equitable relief? For example, for reformatory remedies, will they require reliance, harm, and causation, as required to justify equitable remedies in the past?
By expanding the potential monetary remedies available against fiduciaries, Amara will increase the importance of good fiduciary training, administration, and communication. Amara also illustrates the expectations of the federal courts that SPDs should fairly disclose negative or adverse information to participants.