The United States Supreme Court recently clarified the scope of equitable relief available under the Employee Retirement Income Security Act (“ERISA”), holding inU.S. Airways, Inc. v. McCutchen that equitable principles cannot trump the unambiguous terms of an ERISA benefit plan. The Court also confirmed that, where plan terms are not clear, equity may be used to supplement any ambiguous or missing provisions.
The Court’s April 16, 2013 decision is a victory for plan sponsors and confirms that participants cannot appeal to equity to challenge clear, but adverse, plan provisions. However, the decision also highlights the importance of careful and thorough drafting of ERISA plan documents. In future cases, plan participants will likely seek to highlight ambiguities and perceived holes in plan documents in an effort to avoid unfavorable terms, especially where a plan does not provide its administrator with discretion to interpret ambiguity.