IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-60461

AARON GEARLDS, JR.,

Plaintiff-Appellant

v.

ENTERGY SERVICES, INCORPORATED; ENTERGY MISSISSIPPI,

INCORPORATED,

Defendants-Appellees

Appeal from the United States District Court

for the Southern District of Mississippi

Before REAVLEY, PRADO, and ELROD, Circuit Judges.

REAVLEY, Circuit Judge:

Plaintiff Aaron Gearlds, Jr. appeals from the district court’s dismissal of

his suit alleging claims of equitable estoppel and breach of fiduciary duties

pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”). 

The district court dismissed the suit under Federal Rule of Civil Procedure

12(b)(6). Because we conclude that Gearlds stated a claim for relief that is

cognizable under ERISA, we REVERSE the district court’s judgmentfor Entergy

Services, Inc.

United States Court of Appeals

Fifth Circuit

F I L E D

February 19, 2013

Lyle W. Cayce

Clerk

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No. 12-60461

I.

According to the complaint, the facts of which we accept as true, Gearlds

was employed by Defendant Entergy Mississippi and participated as a

beneficiary of an ERISA plan administered by Defendant Entergy Services, Inc. 

(henceforth only “Entergy”). Gearlds worked for Entergy Mississippi from 1976

until 1994 when he began collecting long term disability benefits. Those benefits

ended in 2002 because he was deemed no longer disabled. Although Gearlds’s

employment was not terminated, Entergy Mississippi did not pay Gearlds from

that point on. In 2005, Gearlds took early retirement at the age of 55, receiving

a reduced pension and full medical, dental, and vision benefits. Gearlds alleged

in his complaint that he agreed to retire early because the defendants told him

orally and in writing that he was covered by Entergy’s Medical Benefits Plus

Plan and would continue to receive medical benefits. At some point, Gearlds

waived medical benefits available under his wife’s retirement plan when she

retired from her employment because of the assurances he had received from

Entergy.

In 2010, however, Entergy notified Gearlds that it was discontinuing his

medical benefits. Apparently, when Entergy determined the benefits to which

Gearlds was entitled upon retirement in 2005, it believed that Gearlds was still

receiving long term disability benefits, which had actually ended three years

earlier, and it therefore included the time from 2002 to 2005 when computing

Gearlds’s service time under the retirement plan. This error caused Entergy to

determine that Gearlds was eligible for medical coverage and that his monthly

retirement benefit would be $800.65. Entergy informed Gearlds that he was

actually not entitled to medical benefits and that his monthly benefit should

have been $305.68. Entergy did not seek reimbursement of any over payments,

and it further stated that it would allow Gearlds to continue to receive the same

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$800.65 monthly benefit. It indicated, however, that Gearlds’s medical coverage

would cease.

Gearlds filed the instant suit, alleging that Entergy negligently induced

him to take early retirement insofar as it promised him health care benefits. He

asserted claims for (1) breach of fiduciary duty pursuant to ERISA § 502(a)(3),

now codified as 29 U.S.C. § 1132(a)(3), and (2) equitable estoppel. Gearlds

sought as damages past and future medical expenses, interest, attorneys fees,

costs, and any other damages, equitable or otherwise, to which he may be

entitled.

Upon motion by Entergy, the district court dismissed the complaint for

failure to state a claim. The district court reasoned that Gearlds sought only

compensatory money damages, which was not an available equitable remedy

under § 502(a)(3). The court further held that Gearlds’s claim for equitable

estoppel failed because Gearlds had not alleged the kind of extraordinary

circumstances necessary under our precedent. Gearlds now appeals.

II.

The district court’s dismissal for failure to state a claim is reviewed de

novo. Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011). “To survive a

motion to dismiss, a complaint must contain sufficient factual matter, accepted

as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal,

556 U.S. 662, 667, 129 S. Ct. 1937, 1949 (2009) (internal quotation marks and

citation omitted). “A claim has facial plausibility when the plaintiff pleads

factual content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Id. “[T]he complaint must

provide more than conclusions, but it need not contain detailed factual

allegations.” Turner, 663 F.3d at 775 (internal quotation marks and citation

omitted).

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As relevant to the instant case, § 502(a)(3) permits a plan beneficiary to

bring a civil action to obtain “other appropriate equitable relief” for ERISA

violations. 29 U.S.C. § 1132(a)(3). Until recently, it was accepted in this and

other circuits that “other appropriate equitable relief” was limited to the kinds

of remedies typically available at equity, such as injunctions, mandamus, or

restitution, and that so-called “make-whole” monetary damages were not within

the scope of the statute. See Amschwand v. Spherion Corp., 505 F.3d 342, 343

(5th Cir. 2007); see also McCravy v. Metro. Life Ins. Co., 690 F.3d 176, 180 (4th

Cir. 2012). In Amschwand, for example, a plan beneficiary sought make-whole

damages for breach of fiduciary duty in the form of lost policy proceeds. See 505

F.3d at 348. We held that such a remedy was “not equitable in derivation” and

was instead “akin to the legal remedies of extracontractual or compensatory

damages.” Id. Because the remedy sought “was not typically available in prefusion courts of equity,” we denied relief. Id. Under this precedent, Gearlds’s

claim for monetary damages is inappropriate under § 502(a)(3). Because of

recent Supreme Court precedent, however, we must reevaluate that conclusion.

The Supreme Court recently stated an expansion of the kind of relief

available under § 502(a)(3) when the plaintiff is suing a plan fiduciary and the

relief sought makes the plaintiff whole for losses caused by the defendant’s

breach of a fiduciary duty. See CIGNA Corp. v. Amara, 131 S. Ct. 1866, 1878–80

(2011). In Amara, a class of plaintiffs sued an employer and a pension plan

because the employer misled the plaintiffs about the conversion of a defined

benefit retirement plan into a cash balance plan and provided less generous

benefits. Id. at 1870. The district court found that the defendant had

intentionally misled the employees, and it reformed the terms of the new plan. 

Id. at 1874–75. The district court, inter alia, “require[d] the plan administrator

to pay to already retired beneficiaries money owed them under the plan as

reformed.” Id. at 1880. 

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As legal authority for the relief, the district court relied on ERISA

§ 502(a)(1)(B), which allows plan participants or beneficiaries to bring suit for

recovery of benefits under ERISA plans. See id. at 1875–76; 29 U.S.C.

§ 1132(a)(1)(B). The Supreme Court held that § 502(a)(1)(B) did not authorize

the relief because that section did not permit the district court to change or

reform the terms of the plan as they previously existed. Amara, 131 S. Ct. at

1876–77. The Court then went on, however, to order on remand a remedy might

be available under § 502(a)(3)’s provision for “other appropriate equitable relief.” 

The Court concluded that the district court’s allowance of monetary damages

could fall within the scope of the statute. Id. at 1878–80.

Although the district court’s remedy was in the form of money, the

Supreme Court reasoned that it was not beyond the scope of traditional

equitable relief because “[e]quity courts possessed the power to provide relief in

the form of monetary ‘compensation’ for a loss resulting from a trustee’s breach

of duty, or to prevent the trustee’s unjust enrichment.” Id. at 1880. This form

of relief was commonly known as “surcharge.” Id. The Court believed it

“critical” that the Amara defendant’s position as a fiduciary was analogous to a

trustee, and it concluded that “an award of make-whole relief” in the form of

surcharge was within the scope of “appropriate equitable relief” for purposes of

§ 502(a)(3). Id.

In the instant case, Gearlds argues that Amara is controlling. He

contends that Entergy breached its fiduciary duty by representing that he was

eligible for plan benefits for the remainder of his life by opting for early

retirement, and that he detrimentally relied on the misrepresentations. Gearlds

argues that he continued paying premiums for his benefits and lost the

opportunity to obtain alternate benefits through his wife’s retirement plan. He

seeks to recover the amount of insurance benefits that he has lost as a result of

the defendants’ alleged breach and misrepresentations. 

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In McCravy, the Fourth Circuit addressed a somewhat similar case. 

There, the plaintiff paid life insurance premiums for several years for her

dependent child only to learn upon the child’s death that the child had been

ineligible for dependent coverage. McCravy, 690 F.3d at 178. The plan denied

the plaintiff’s claim for benefits and sought to reimburse the plaintiff only for the

premiums that she had paid. Id. In her suit for breach of fiduciary duty, the

plaintiff alleged that the defendant had represented to her that her child was

covered by dependent life insurance, and that as a result she did not obtain

different insurance. Id. The plaintiff sought the amount of life insurance

proceeds lost because of the defendant’s alleged breach. Id. at 181. The Fourth

Circuit concluded based on Amara that because a monetary make-whole remedy

could be available under § 502(a)(3), the plaintiff was not limited to recovering

the premiums she had paid. Id. The court remanded for the district court to

determine in the first instance whether the breach of fiduciary duty claim would

succeed on the merits and whether surcharge was an appropriate remedy under

the circumstances of the case. Id. at 181–82.

Here, we follow a similar path. The district court cited Amara but it did

not consider whether surcharge was an appropriate remedy. The district court

instead dismissed the suit because Gearlds sought only money damages, which

is ordinarily a legal remedy. After Amara, however, that is not the end of the

inquiry into equity. Gearlds’s complaint is viable in light of Amara.

Entergy characterizes Amara’s discussion of § 502(a)(3) as dictum. Even

assuming it is dictum, however, we give serious consideration to this recent and

detailed discussion of the law by a majority of the Supreme Court. See McCravy,

690 F.3d at 181 n.2 (stating about Amara that the court “cannot simply override

a legal pronouncement endorsed just last year by a majority of the Supreme

Court”); Reich v. Continental Cas. Co., 33 F.3d 754, 757 (7th Cir. 1994) (holding

that the Supreme Court’s “recent dictum . . . provides the best, though not

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infallible, guide to what the law is”); see also United States v. Becton, 632 F.2d

1294, 1296 n.3 (5th Cir. 1980) (noting that, as compared with other dicta, “[d]icta

of the Supreme Court are, of course, another matter”). Based on the depth of the

Court’s treatment of the issue, we are persuaded to join the Fourth Circuit in

concluding that Amara’s pronouncements about surcharge as a potential remedy

under § 502(a)(3) should be followed. We also conclude, therefore, that our

circuit’s contrary prior decisions, such as Amschwand, have been implicitly

overruled. Cf. United States v. Short, 181 F.3d 620, 624 (5th Cir. 1999) (“[T]his

panel is bound by the precedent of previous panels absent an intervening

Supreme Court case explicitly or implicitly overruling that prior precedent

. . . .”).

To be sure, Gearlds did not expressly plead or argue “surcharge,” but he

did argue that he should be made whole in the form of compensation for lost

benefits, and his complaint specifically asked for “[a]ny and all other damages

and/or relief, equitable or otherwise, to which [he] may be entitled under federal

law.” Courts must focus on the substance of the relief sought and the allegations

pleaded, not on the label used. See Edwards v. City of Houston, 78 F.3d 983, 995

(5th Cir. 1996) (en banc) (“[W]e have oft stated that ‘the relief sought, that to be

granted, or within the power of the Court to grant, should be determined by

substance, not a label.’” (citation omitted)). We conclude that Gearlds has at

least stated a plausible claim for relief, and therefore further proceedings are

required. We leave to the district court the determination whether Gearlds’s

breach of fiduciary duty claim may prevail on the merits and whether the

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circumstances of the case warrant the relief of surcharge.1 See McCravy, 690

F.3d at 181–82.

Gearlds also sought a remedy based on equitable estoppel. The district

court dismissed that claim because “extraordinary circumstances” were not

constituted by the allegations. See High v. E-Systems, Inc., 459 F.3d 573 (5th 

Cir. 2006). Because relief is available under the surcharge doctrine under

Amara, we do not address the equitable estoppel claim. The district court is free

to consider that claim on remand.

Finally, Gearlds challenges the district court’s dismissal of Defendant

Entergy Mississippi. The district court dismissed Entergy Mississippi because

Gearlds did not allege that Entergy Mississippi was a proper defendant. Gearlds

argues that Entergy Mississippi was a proper and necessary defendant only

because he was employed by Entergy Mississippi and his plan benefits accrued

through his employment. Gearlds did not allege, however, that Entergy

Mississippi sponsored or administered the plan, or made any decisions with

respect to his benefits; therefore, the district court did not err. See Musmeci v.

Schwegmann Giant Super Markets, Inc., 332 F.3d 339, 349–50 (5th Cir. 2003)

(holding that employer was a proper defendant, in addition to the pension plan,

1 Entergy also argues that Gearlds’s breach of fiduciary duty claim fails because

Gearlds did not plausibly allege that it acted in a discretionary, rather than a ministerial,

manner. See Reich v. Lancaster, 55 F.3d 1034, 1049 (5th Cir. 1995). The district court did not

address this issue because it determined that the remedy Gearlds sought was not available

under § 502(a)(3), which we have concluded was incorrect. We need not decide at this point

whether Entergy’s conduct was discretionary or ministerial, but Gearlds’s allegations of

affirmative misrepresentations at least plausibly alleged a breach of fiduciary duty. See In re

Unisys Corp. Retiree Med. Benefit “ERISA” Litig., 57 F.3d 1255, 1264 (3d Cir. 1995) (“[W]hen

a plan administrator affirmatively misrepresents the terms of a plan or fails to provide

information when it knows that its failure to do so might cause harm, the plan administrator

has breached its fiduciary duty to individual plan participants and beneficiaries.”). It bears

emphasis that we consider this case at the pleading stage; Entergy’s actual conduct will

require further development and consideration by the district court.

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because the employer was both the plan administrator and sponsor, and the

employer made the decision to deny benefits).

AFFIRMED IN PART AS TO ENTERGY MISSISSIPPI, REVERSED AND

REMANDED AS TO ENTERGY SERVICES, INC.

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