FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CGI TECHNOLOGIES AND SOLUTIONS 

INC, in its capacity as sponsor and

fiduciary for CGI Technologies

and Solutions, Inc Welfare Benefit

No. 11-35127 Plan,

Plaintiff-Appellee,  D.C. No.

v. 2:10-cv-00298-RSM

RHONDA ROSE; NELSON LANGER

ENGLE PLLC,

Defendants-Appellants. 

CGI TECHNOLOGIES AND SOLUTIONS 

INC, in its capacity as sponsor and

fiduciary for CGI Technologies

and Solutions, Inc Welfare Benefit No. 11-35128

Plan, D.C. No.

Plaintiff-Appellant,  2:10-cv-00298-RSM

v. OPINION

RHONDA ROSE; NELSON LANGER

ENGLE PLLC,

Defendants-Appellees. 

Appeal from the United States District Court

for the Western District of Washington

Ricardo S. Martinez, District Judge, Presiding

Argued and Submitted

February 9, 2012—Seattle, Washington

Filed June 20, 2012

7219
Before: Mary M. Schroeder and Ronald M. Gould, Circuit

Judges, and Ralph R. Beistline, Chief District Judge.*

Opinion by Judge Gould;

Concurrence by Judge Schroeder;

Dissent by Chief District Judge Beistline

*The Honorable Ralph R. Beistline, Chief District Judge for the United

States District Court for Alaska, sitting by designation. 

7220 CGI TECHNOLOGIES AND SOLUTIONS v. ROSE
COUNSEL

Matthew W.H. Wessler (argued), Public Justice, P.C., Washington, D.C., Leslie A. Brueckner, Public Justice, P.C., Oakland, California, Michael Nelson, Nelson Langer Engle

PLLC, Paul L. Stritmatter, Strittmatter Kessler Whelan Coluccio, Hoquiam, Washington, for the defendantsappellants/cross-appellees.

Noah G. Lipschultz (argued), Littler Mendelson, P.C., Minneapolis, MN, Leigh Ann Tift, Littler Mendelson, P.C., Seattle,

Washington, Joanna M. Silverstein, Littler Mendelson, P.C.,

Seattle, Washington, for the plaintiff-appellee/cross-appellant.

CGI TECHNOLOGIES AND SOLUTIONS v. ROSE 7223
OPINION

GOULD, Circuit Judge:

Rhonda Rose (“Rose”) appeals the district court’s grant of

partial summary judgment in favor of CGI Technologies and

Solutions, Inc. (“CGI”) in its action seeking “appropriate

equitable relief” under § 502(a)(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C.

§ 1001, et seq. CGI appeals the district court’s grant of partial

summary judgment in favor of Rose’s counsel and codefendant, Nelson Langer Engle, PLLC (“NLE”), dismissing

NLE from the action. CGI also appeals the district court’s

grant of proportional fees and costs to NLE, deducted from

CGI’s recovery from Rose. We affirm in part and reverse in

part, remanding the matter to the district court for further proceedings consistent with our decision.

I

Rose was employed by CGI which provides to its employees and their dependents a self-funded welfare benefits plan

(“the Plan”) governed by ERISA. The Plan includes a subrogation and reimbursement clause that expressly: (1) gives to

CGI the right to full reimbursement for medical expenses paid

on behalf of the beneficiary from any funds recovered by the

beneficiary from a third party tortfeasor, (2) exempts CGI

from responsibility for attorneys’ fees paid in any such recovery, expressly disclaiming the application of the common

fund doctrine; and (3) requires full reimbursement to CGI

regardless of whether the beneficiary is made whole by the

recovery.

In 2003, Rose was seriously injured in a car accident with

a drunk driver, and consequently she had nerve damage and

neck and back injuries that required surgical intervention.

From this accident Rose also suffered several types of damages including past and future medical expenses, past and

7224 CGI TECHNOLOGIES AND SOLUTIONS v. ROSE
future loss of wages, and pain and suffering. The parties stipulated that her personal injury claim was at least

$1,757,943.08. With the assistance of NLE, Rose recovered a

combined total of $376,906.84 from her action against the

third party tortfeasor and from her underinsured motorist

claim with her automobile insurance provider. The parties

stipulated that this recovery represents only 21.44% of Rose’s

total damages. 

Between 2007 and 2010, the Plan, on behalf of Rose, paid

about $32,000 in medical expenses incurred as a result of

Rose’s injuries related to the accident. After Rose’s recovery

of these damages partially compensating her for her injuries,

CGI asserted a first priority of payment and demanded to be

reimbursed for the full amount the Plan had paid in medical

expenses on Rose’s behalf. Rose, through her counsel,

declined to reimburse the Plan, and NLE placed the disputed

amount in trust. CGI filed suit in the district court against both

Rose and NLE seeking “appropriate equitable relief,” under

§ 502(a)(3) in the form of a constructive trust and/or an equitable lien.

The parties filed cross-motions for summary judgment. The

district court granted partial summary judgment in favor of

NLE, concluding that the Plan’s reimbursement provision

could not be enforced against NLE. The district court granted

partial summary judgment in favor of CGI, concluding that

under § 502(a)(3), CGI, per the express terms of the Plan, was

entitled to recover the full amount it paid in medical expenses

on Rose’s behalf. Finally, despite the Plan’s language to the

contrary, the district court also ruled that CGI was responsible

for a proportional amount of the costs and fees incurred by

NLE in recovering damages on Rose’s behalf, and that this

amount would be deducted from CGI’s recovery from Rose.

The parties now cross-appeal.

CGI TECHNOLOGIES AND SOLUTIONS v. ROSE 7225
II

We consider the parties’ cross-appeals in turn.1

A

We first address CGI’s appeal of the district court’s grant

of partial summary judgment in favor of NLE. The district

court dismissed NLE from the action, concluding that NLE

was not a proper defendant under § 502(a)(3). Section

502(a)(3) states:

A civil action may be brought . . . by a participant,

beneficiary, or fiduciary (A) to enjoin any act or

practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain

other appropriate equitable relief (i) to redress such

violations or (ii) to enforce any provisions of this

subchapter or the terms of the plan.

29 U.S.C. § 1132(a)(3) (emphasis added). The district court

concluded that equitable relief under § 502(a)(3) could not be

enforced against NLE because NLE, as Rose’s counsel, was

not a signatory to the Plan with its reimbursement provision.

In reaching this conclusion, the district court relied principally

on Hotel Employees & Restaurant Employees International

Union Welfare Fund v. Gentner, 50 F.3d 719 (9th Cir. 1995).

In Gentner, we affirmed the district court’s dismissal of the

beneficiary’s attorney from the plan’s action for reimbursement under § 502(a)(3), deciding that because the attorney

was not a signatory to the plan, he was not a proper defendant.

Id. at 721-22. Gentner in its holding established a general rule

1We review the district court’s grant of summary judgment de novo.

Gonzales v. Arrow Fin. Servs., LLC, 660 F.3d 1055, 1060 (9th Cir. 2011).

“Summary judgment is appropriate where ‘there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a matter of

law.’ ” Id. (quoting Fed.R.Civ.P. 56(a)). 

7226 CGI TECHNOLOGIES AND SOLUTIONS v. ROSE
that a plan fiduciary may not assert a claim under § 502(a)(3)

against a beneficiary’s attorney who is not a signatory of the

plan.

[1] Here, although we agree with the district court’s conclusion that CGI may not enforce the Plan’s reimbursement

provision against NLE, we clarify that Gentner’s holding is

no longer valid after the Supreme Court’s ruling in Harris

Trust and Savings Bank v. Salomon Smith Barney, 530 U.S.

238 (2000). See Miller v. Gammie, 335 F.3d 889, 900 (9th

Cir. 2003) (en banc) (holding that an intervening decision by

a court of last resort controls where “the relevant court of last

resort [has] undercut the theory or reasoning underlying the

prior circuit precedent in such a way that the cases are clearly

irreconcilable”). In Harris Trust, the Court considered

whether § 502(a)(3) authorized an action against a nonfiduciary “party in interest” who, acting in concert with a plan fiduciary, violated ERISA. Noting that “[t]he common law of

trusts . . . offers a starting point for analysis of ERISA unless

it is inconsistent with the language of the statute, its structure,

or its purposes,” the Court stated that under the common law

of trusts:

[I]t has long been settled that when a trustee in

breach of his fiduciary duty to the beneficiaries

transfers trust property to a third person, the third

person takes the property subject to the trust, unless

he has purchased the property for value and without

notice of the fiduciary’s breach of duty. The trustee

or beneficiaries may then maintain an action for restitution of the property (if not already disposed of) or

disgorgement of proceeds (if already disposed of),

and disgorgement of the third person’s profits

derived therefrom. 

530 U.S. at 250. Accordingly, the Court rejected the argument

that liability under § 502(a)(3) depended “on whether

ERISA’s substantive provisions impose a specific duty on the

CGI TECHNOLOGIES AND SOLUTIONS v. ROSE 7227
party being sued,” id. at 245, and concluded that a third party

transferee of “ill-gotten trust assets” could be held liable

under ERISA provided that it is shown that “the transferee . . .

had actual or constructive knowledge of the circumstances

that rendered the transaction unlawful.” Id. at 251. Thus, “an

action for restitution against a transferee of tainted plan assets

satisfies the appropriate[ness] criterion in § 502(a)(3).” Id. at

253. 

[2] Harris Trust left open “the universe of possible defendants” in an action for “appropriate equitable relief” under

§ 502(a)(3), which, contrary to our holding in Gentner, could

include an attorney who was not a signatory to the plan. Id.

at 246; see also Cyr v. Reliance Standard Life Ins. Co., 642

F.3d 1202, 1206 (9th Cir. 2011) (en banc) (“In short, the

Court [in Harris Trust] did not find a limit in § [502](a)(3) as

to who could be sued.”). 

Under the principles of liability expressed in Harris Trust,

we conclude that there is no unlawful transaction that would

support CGI’s action against NLE under § 502(a)(3). In Harris Trust, the third party defendant, Salomon Smith Barney,

induced the plan’s fiduciary to enter into a transaction prohibited under another provision of ERISA. Id. at 243. The Court

concluded that Salomon Smith Barney’s unlawful transaction

supported the petitioners’ § 502(a)(3) claim seeking rescission, restitution, and disgorgement. Here, by contrast, NLE

engaged in no similar unlawful transaction. NLE merely honored Rose’s request that it hold the entire disputed amount in

trust subject to the resolution of CGI’s claim for reimbursement. 

The Fifth Circuit has interpreted Harris Trust to recognize

a cause of action under § 502(a)(3) against an attorney who,

on behalf of his client, holds disputed funds in trust pending

adjudication of the rightful owner. In Bombadier Aerospace

Employee Welfare Benefits Plan v. Ferrer, Poirot and Wansbrough, 354 F.3d 348 (5th Cir. 2003), the Fifth Circuit con7228 CGI TECHNOLOGIES AND SOLUTIONS v. ROSE
cluded that Harris Trust supports a cause of action against “a

non-‘party in interest’ attorney-at-law when he holds disputed

settlement funds on behalf of a plan-participant client who is

a traditional ERISA party.” Id. at 353. Relying on the

Supreme Court’s decision in Great-West Life & Annuity Ins.

Co. v. Knudson, 534 U.S. 204 (2002), the Fifth Circuit reasoned that the action against the attorney was appropriate

under § 502(a)(3) because it was an in rem action to establish

a constructive trust, the beneficiary had “constructive possession of the disputed funds,” and the attorney held the funds in

trust subject to the beneficiary’s direction to release the funds.

354 F.3d at 356. 

[3] We disagree with the Fifth Circuit on the merits

because as Harris Trust counsels, we find no unlawful transaction on the part of NLE to support NLE as a defendant. As

did the attorneys in Bombadier, NLE has placed the entire

disputed amount in trust pending the outcome of CGI’s litigation. It has not asserted a right to the specific funds, nor

appropriated the funds in any unlawful way.2 NLE has agreed

that pending the final adjudication of CGI’s claim, it stands

ready to disburse the fund in accordance with the court’s

order. We conclude that this holding of disputed funds in trust

is reasonable conduct by the law firm. To conclude otherwise

would introduce into ERISA a duty on the part of a beneficiary’s counsel that unreasonably interferes with traditional

and lawful attorney-client interactions. Moreover, there is no

need to maintain a suit against an attorney who merely acts

as a beneficiary’s agent because naming the beneficiary who

has constructive possession over the disputed funds will

ensure proper disbursal where the presiding court so orders.

2By contrast, an attorney who before adjudication pays himself out of

the disputed funds, effectively reducing the available amount to less than

the plan’s claim, would be an appropriate defendant under Harris Trust.

See Wal-Mart Stores, Inc. Assocs.’ Health and Welfare Plan v. Wells, 213

F.3d 398, 401 (7th Cir. 2000) (describing as “clearly wrongful” the action

of a beneficiary’s attorney in actual possession of the disputed funds who

diminishes the disputed funds by paying himself). 

CGI TECHNOLOGIES AND SOLUTIONS v. ROSE 7229
Because NLE did not engage in an unlawful transaction by

placing the entire disputed amount in trust while the issue of

CGI’s rightful recovery remained unresolved, we conclude

that CGI cannot maintain an action against NLE under

§ 502(a)(3).

B

We next consider together Rose’s appeal from the district

court’s grant of partial summary judgment in favor of CGI

and CGI’s appeal from the district court’s grant of partial

summary judgment in favor of Rose, with respect to CGI’s

responsibility for its proportional share of NLE’s attorneys’

fees. The Plan called for full reimbursement to CGI regardless

of whether Rose was made whole and disclaimed the application of the common fund doctrine to require CGI to contribute

to attorneys’ fees incurred in recovering funds from a third

party tortfeasor. The district court concluded that under

§ 502(a)(3), CGI was entitled to full reimbursement of its outlay of the funds for medical expenses based on the Plan’s

express terms, but that notwithstanding the express terms of

the Plan, CGI was responsible for its proportional share of the

attorneys’ fees that permitted Rose’s recovery on her tort

claim. Rose argues that full reimbursement was not “appropriate equitable relief,” as mandated by § 502(a)(3), because

it amounted to simple contract interpretation, a classic form

of legal relief. She contends that “appropriate equitable

relief” must encompass traditional equitable principles,

including consideration of applicable traditional equitable

defenses such as the make-whole doctrine which Rose argues

should reasonably limit CGI’s relief to less than full reimbursement.3

 CGI argues that the district court was required to honor

3Accordingly, Rose invokes a derivative version of the make-whole

doctrine by arguing that CGI is entitled to a pro rata share in line with her

limited recovery of 21.44% of her total damages estimate instead of arguing that CGI is not entitled to any recovery because she was not made

whole. 

7230 CGI TECHNOLOGIES AND SOLUTIONS v. ROSE
the express terms of the Plan which mandated full reimbursement to CGI and disclaimed the application of traditional

equitable defenses.

1

[4] The parties do not dispute that CGI’s claim is equitable

in nature, as is required for relief under § 502(a)(3). See Sereboff v. Mid Atlantic Med. Servs., Inc., 547 U.S. 356, 369

(2006). Much like the respondent plan’s claim in Sereboff,

CGI’s claim is equitable because it is “an action to enforce an

equitable lien established by agreement.” Id. at 368. Nor do

the parties dispute that CGI is entitled to some form of “appropriate equitable relief.” The question we must decide,

however, is whether in granting “appropriate equitable

relief,” the district court, in its balancing of the equities,

should take into account traditional equitable defenses that

may limit CGI’s recovery to less than full reimbursement

despite Plan terms, or instead give primacy to basic contract

interpretation to entitle CGI to full reimbursement and to

exempt CGI from responsibility for attorneys’ fees. 

[5] This question of ERISA interpretation has not been

decided previously by our circuit. Section 502(a) of ERISA

describes who may enforce ERISA plans by bringing civil

actions. 29 U.S.C. § 1132(a). Section 502(a)(1)(B) gives a

legal cause of action to plan participants and beneficiaries but

excludes plan fiduciaries from similarly enforcing the terms

of the plan. A plan fiduciary’s only means to seek relief is

found in § 502(a)(3) which expressly limits a fiduciary’s

cause of action to one based on equitable principles that govern injunction and other equitable relief. See 29 U.S.C.

§§ 1132(a)(1)(B), (a)(3); Knudson, 534 U.S. at 221 (noting

that ERISA only authorizes fiduciaries to seek equitable relief

under § 502(a)(3)). 

[6] The Supreme Court has held that equitable principles

must be satisfied for an ERISA fiduciary to gain relief under

CGI TECHNOLOGIES AND SOLUTIONS v. ROSE 7231
§ 502(a)(3), but in considering such suits the Court has not yet

squarely addressed whether the statutory term “appropriate

equitable relief” requires consideration of traditional equitable

defenses. Stated another way, we do not read the Supreme

Court’s precedents to have clarified if in giving “appropriate

equitable relief” a court must take into account all or some

traditional equitable defenses and considerations. See Cigna

Corp. v. Amara, 131 S. Ct. 1866, 1880 (2011) (affirming that

“[§ ] 502(a)(3) invokes the equitable powers of the District

Court,” including the power to reform plan terms); Sereboff,

547 U.S. 356, 367-68 (2006) (holding that a contractual right

to reimbursement from funds recovered from a third party

supported a plan’s action under § 502(a)(3) because the clause

established an equitable lien by agreement); Knudson, 534

U.S. at 213 (holding that actions under § 502(a)(3) must be

equitable in nature and § 502(a)(3) did not support a plan’s

action seeking legal restitution; namely, “a judgment imposing a merely personal liability upon the defendant to pay a

sum of money”); Varity Corp. v. Howe, 516 U.S. 489, 512

(1996) (describing § 502(a)(3) as a “catchall provision[ ] . . .

[that] offer[s] appropriate equitable relief for injuries caused

by violations that § 502 does not elsewhere adequately remedy,” and noting that “[w]e should expect that courts, in fashioning ‘appropriate’ equitable relief, will keep in mind the

special nature and purpose of employee benefit plans, and will

respect the policy choices reflected in the inclusion of certain

remedies and the exclusion of others); Mertens v. Hewitt

Associates, 508 U.S. 248, 256-58 & n.8 (1993) (holding that

“ ‘[e]quitable relief’ [in § 502(a)(3)] must mean something

less than all relief,” and refers only to “those categories of

relief that were typically available in equity (such as injunction, mandamus, and restitution, but not compensatory damages)).

2

[7] The Supreme Court’s decisions regarding § 502(a)(3)

highlight the traditional division between law and equity that

7232 CGI TECHNOLOGIES AND SOLUTIONS v. ROSE
evokes § 502(a)(3)’s authorization of “appropriate equitable

relief;” such relief must be based on relief traditionally available at equity. See Knudson, 534 U.S. at 216-17 (“It is easy

to disparage the law-equity dichotomy as ‘an ancient classification’ and an ‘obsolete distinctio[n].’ Like it or not, however,

that classification and distinction has been specified by the

statute; and there is no way to give the specification meaning

—indeed, there is no way to render the unmistakable limitation of the statue a limitation at all—except by adverting to

the differences between law and equity to which the statute

refers.”) (internal citations omitted). 

The statutory term “appropriate equitable relief” thus

places an “unmistakable limitation” on the availability of

equitable relief, and the scope of this Congressionallyestablished limitation is set by referring to the differences

between law and equity. A court must assess the degree to

which the traditional equitable defenses that Rose raises here,

namely the make-whole doctrine and the common fund doctrine, are applicable in delimiting those categories of relief

that were typically available in equity and that therefore hem

in what is “appropriate equitable relief” within the meaning of

§ 502(a)(3).

Our law previously has set some guidelines about equitable

relief in other contexts, but it is not a certainty that each principle thus established should be considered to be incorporated

within the limitation of § 502(a)(3) that equitable relief be

“appropriate.” For example, “it is a general equitable principle

of insurance law that, absent an agreement to the contrary, an

insurance company may not enforce a right to subrogation

until the insured has been fully compensated for her injuries,

that is, has been made whole.” Barnes v. Indep. Auto. Dealers

Ass’n of Cal. Health & Welfare Benefit Plan, 64 F.3d 1389,

1395 (9th Cir. 1995). Under the common fund doctrine, “a litigant or a lawyer who recovers a common fund for the benefit

of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole.” Boeing Co.

CGI TECHNOLOGIES AND SOLUTIONS v. ROSE 7233
v. Van Gemert, 444 U.S. 472, 478 (1980). “The common-fund

doctrine reflects the traditional practice in courts of equity,

and it stands as a well-recognized exception to the general

principle that requires every litigant to bear his own attorney’s

fees.” Id. Both the make-whole doctrine and the common

fund doctrine are rooted in concerns about unjust enrichment,

a traditional principle of equitable relief. See id. (common

fund rule); Chandler v. State Farm Mut. Auto. Ins. Co., 589

F.3d 1115, 1119-29 (9th Cir. 2010) (make-whole rule). Traditionally at equity, it was within the province of the court to

consider concerns of unjust enrichment when fashioning equitable remedies such as an equitable lien or a constructive

trust, even where contract terms attempted to limit their application. See, e.g., 1 Palmer, The Law of Restitution § 1.1, at 4

(“In equity the principal remedy [to unjust enrichment] is constructive trust; but equitable lien, subrogation, and accounting

are techniques frequently used to prevent unjust enrichment”);

4 Palmer, The Law of Restitution § 23.18(d) at 472-74 (stating that “the principle of unjust enrichment . . . should serve

to limit the effectiveness of contract provisions which in

terms provide for reimbursement out of the insured’s tort

recovery without regard to whether or the extent to which,

that recovery includes medical expense”).

Relying on our decision in Barnes v. Indep. Auto. Dealers

Ass’n of Cal. Health & Welfare Benefit Plan, CGI argues that

the district court must remain faithful to the terms of the Plan

that disclaim the application of traditional equitable defenses.

64 F.3d 1389 (9th Cir. 1995). In Barnes, we stated that “[w]e

would not apply the interpretive ‘make-whole rule’ as a ‘gapfiller’ if the subrogation clause in the Plan document specifically allowed the Plan the right of first reimbursement out of

any recovery Barnes was able to obtain even if Barnes were

not made whole.” Id. at 1392. Our discussion in Barnes is not

dispositive of the question we decide today, however, because

the relief sought in Barnes was purely legal in nature, namely

a beneficiary’s challenge of the plan’s denial of benefits, and

so appropriately subject to our observation that the parties

7234 CGI TECHNOLOGIES AND SOLUTIONS v. ROSE
could contract out of the application of the make-whole doctrine. Here, however, we consider the scope of “appropriate

equitable relief” under § 502(a)(3), and whether the district

court is bound by restrictive contract terms in its formulation

of equitable relief. Neither Congress nor the Supreme Court

has said that any such contractual limitation necessarily curtails the district court’s equitable powers under § 502(a)(3).

To the contrary, the Court in Amara reasoned that the district

court, sitting as a court of equity in a § 502(a)(3) action, need

not honor the express terms of the Plan where traditional

notions of equitable relief so require. See Amara, 131 S. Ct.

at 1879 (stating that contract reformation is within the equitable powers of the district court); see also US Airways v.

McCutchen, 663 F.3d 671, 679 (3rd Cir. 2011) (“The importance of the written benefit plan is not inviolable, but is

subject—based upon equitable doctrines and principles—to

modification and, indeed, equitable reformation under

§ 502(a)(3).” (citing Amara, 131 S. Ct. at 1879)).

3

[8] The Circuits have split on whether strict adherence to

the terms of an ERISA plan that disclaims the application of

traditional equitable defenses constitutes “appropriate equitable relief.” Several circuits, and notably the Eleventh, Eighth,

Seventh and Fifth Circuits, have stressed the primacy of an

ERISA plan’s express language, and have decided that in balancing the equities, simple contract interpretation that provides for full reimbursement per the plain terms of a plan that

disclaims the application of traditional equitable defenses

such as the make-whole doctrine and the common fund doctrine, constitutes “appropriate equitable relief” under

§ 502(a)(3). See, e.g., Zurich Am. Ins. Co. v. O’Hara, 604

F.3d 1232, 1238 (11th Cir. 2010) (stating that the application

of “federal common law to override the Plan’s controlling

language, which expressly provides for reimbursement

regardless of whether [the beneficiary] was made whole by

his third-party recovery, would frustrate, rather than effectuCGI TECHNOLOGIES AND SOLUTIONS v. ROSE 7235
ate, ERISA’s ‘repeatedly emphasized purpose to protect contractually defined benefits.’ ”); Admin. Comm. of Wal-Mart

Stores, Inc. Associates’ Health & Welfare Plan v. Shank, 500

F.3d 834, 839 (8th Cir. 2007) (stating that “[n]othing in the

statute suggests Congress intended that section 502(a)(3)’s

limitation of the [plan’s] recovery to “appropriate equitable

relief” would upset these contractually-defined expectations

[such as a make-whole rule disclaimer]. Indeed, ERISA’s

mandate that ‘[e]very employee benefit plan shall be established and maintained pursuant to a written instrument,’ 29

U.S.C. § 1102(a)(1), establishes the primacy of the written

plan”); Administrative Committee of Wal-Mart Stores, Inc.

Assocs.’ Health & Welfare Plan v. Varco, 338 F.3d 680, 691-

92 (7th Cir. 2003) (stating that in an action under § 502(a)(3),

“it is inappropriate to fashion a common law rule that would

override the express terms of a private plan unless the overridden plan provision conflicts with statutory provisions or other

policies underlying ERISA . . . . Those cases which have

applied the federal common fund doctrine in the favor of individual ERISA participants have done so, correctly, only in the

absence of controlling plan language”); Bombadier Aerospace

Employee Welfare Benefits Plan v. Ferrer, Poirot and Wansbrough, 354 F.3d 348, 361 (5th Cir. 2003) (stating that “the

Plan’s terms not only give it the right to recover benefits ‘to

the extent of any and all’ settlement payments, but explicitly

state that the participant must bear the fees and costs associated with his tort action . . . neither the federal nor Texas common fund doctrine may be invoked to prevent or reduce the

Plan’s recovery of the funds that it advanced to [the beneficiary] up to the full amount of his recovery from the tortfeasor”); see also Wal-Mart Stores, Inc. Assocs.’ Health and

Welfare Plan v. Wells, 213 F.3d 398, 402 (7th Cir. 2000)

(suggesting that in an action under § 502(a)(3), the parties to

an ERISA plan could, by contract, alter the “background of

common-sense understandings and legal principles [such as

the common fund doctrine] that . . . operate as default rules

7236 CGI TECHNOLOGIES AND SOLUTIONS v. ROSE
to govern in the absence of a clear expression of the parties’

intent that they not govern”). 

[9] By contrast, only the Third Circuit, in US Airways v.

McCutchen, has concluded “that Congress intended to limit

the equitable relief available under § 502(a)(3) through the

application of equitable defenses and principles that were typically available in equity” despite the negation of such

defenses and principles in an ERISA plan. 663 F.3d at 676.

McCutchen, who participated in an ERISA-governed

employee welfare benefits plan, was injured in a car accident

and the plan paid $66,866 in medical expenses on his behalf.

Id. at 672. McCutchen recovered $110,000 from third parties,

and the plan, based on a subrogation clause in the plan requiring full reimbursement, sought to recover the full $66,866

from McCutchen even though McCutchen’s net recovery was

less than that amount after paying a 40% contingency fee to

his attorney. Id. at 673. 

Like Rose here, McCutchen argued that notwithstanding

the plan terms, it was unfair to grant the plan full reimbursement because he was not fully compensated for his injuries

and the plan did not contribute to attorneys’ fees and costs. Id.

at 674. The Third Circuit agreed, finding no indication in

ERISA or in the Supreme Court’s jurisprudence that Congress

intended to limit relief under § 502(a)(3) to “traditional equitable categories” yet not limit relief “by other equitable doctrines and defenses that were traditionally applicable to those

categories.” Id. at 676-79. 

[10] We agree with the Third Circuit that under

§ 502(a)(3), the district court, in granting “appropriate equitable relief,” may consider traditional equitable defenses notwithstanding express terms disclaiming their application. Id.

at 679 (stating that in equity, “contractual language was not

as sacrosanct as it is normally considered to be when applying

breach of contract principles at common law . . . [, and] equitable principles can apply even where no one has committed

CGI TECHNOLOGIES AND SOLUTIONS v. ROSE 7237
a wrong”). While a weighing of the equities, including the

consideration of equitable defenses, might support that full

reimbursement per the Plan’s terms is “appropriate equitable

relief,” like the Third Circuit we disagree with the other circuits to the extent that they have held that § 502(a)(3) categorically excludes the application of traditional equitable

defenses where the plan disclaims their application and

requires reimbursement as set by the plan. Id. at 678. Congress in § 502(a)(3) empowered district courts to consider

equitable principles in granting injunctive relief to a plan fiduciary against a plan beneficiary, and we will not read out of

the statute the limitation that equitable relief be appropriate.

CGI argues, however, that under Sereboff “appropriate

equitable relief” is consistent with simple interpretation of the

express terms of the plan provision in question requiring full

reimbursement without reference to traditional limitations to

recovery such as the make-whole doctrine and the common

fund doctrine. In Sereboff, the parties did not raise the issue

below, and the Court expressly declined to address whether

“appropriate equitable relief” encompasses equitable

defenses such as the make-whole doctrine or the common

fund doctrine. Sereboff, 547 U.S. at 368 n.2. CGI would have

us decide that the parties may, by contract, limit the district

court’s ability, in its capacity as a court of equity under

§ 502(a)(3), to fashion “appropriate equitable relief” along

these lines. But we are not persuaded that Congress intended

to permit a plan to so limit the equitable powers of the district

court in an action under § 502(a)(3). Instead, without limitation, the Supreme Court has said that “[§ ] 502(a)(3) invokes

the equitable powers of the District Court.” See Amara, 131

S. Ct. at 1880. In other contexts the Supreme Court has made

clear that a federal court’s powers of traditional equitable

relief are broad. See, e.g., Brown v. Plata, 131 S. Ct. 1910,

1944 (2011) (stating that “[o]nce invoked, the scope of a district court’s equitable powers . . . is broad, for breadth and

flexibility are inherent in equitable remedies”) (internal quotation marks omitted); Grupo Mexicano de Desarrollo S.A. v.

7238 CGI TECHNOLOGIES AND SOLUTIONS v. ROSE
Alliance Bond Fund, Inc., 527 U.S. 308, 318-19, 322 (1999)

(stating “that equity is flexible; but in the federal system, at

least, that flexibility is confined within the broad boundaries

of traditional equitable relief.”); Swann v. CharlotteMecklenburg Bd. of Educ., 402 U.S. 1, 12 (1970) (stating that

“[o]nce a right and a violation have been shown, the scope of

a district court’s equitable powers to remedy past wrongs is

broad, for breadth and flexibility are inherent in equitable

remedies”); Porter v. Warner Holding Co., 328 U.S. 395, 398

(1946) (stating that “[u]nless otherwise provided by statute,

all the inherent equitable powers of the District Court are

available for the proper and complete exercise of that jurisdiction”); Hecht Co. v. Bowles, 321 U.S. 321, 330 (1944) (stating

that “[t]he essence of equity jurisdiction has been the power

of the Chancellor to do equity and to mould each decree to the

necessities of the particular case. Flexibility rather than rigidity has distinguished it”). We, of course, have said the same.

See, e.g., S.E.C. v. Platforms Wireless Int’l Corp., 617 F.3d

1072, 1096 (9th Cir. 2010) (stating that “a district court has

broad equity powers to order the disgorgement of ill-gotten

gains obtained through the violation of the securities law”)

(internal quotation marks and alteration omitted); United

States v. Alisal Water Corp., 431 F.3d 643, 654 n.5 (9th Cir.

2005) (recognizing “district court’s broad authority to enforce

federal laws through exercise of its equitable powers”).

Absent an express indication that either Congress or the

Supreme Court has limited a district court’s powers to fashion

“appropriate equitable relief,” as contended by CGI, we

decline to read such a contractual limitation into a statutory

term. See Hecht, 321 U.S. at 330 (stating that “if Congress

desired to make such an abrupt departure from traditional

equity practice as is suggested, it would have made its desire

plain”). 

[11] We do not see good reason in interpreting § 502(a)(3)

to recede from the traditional broad powers of a court in

equity. We therefore hold that the parties may not by contract

deprive the district court of its power to act as a court in

CGI TECHNOLOGIES AND SOLUTIONS v. ROSE 7239
equity in a § 502(a)(3) action. Contract terms should be considered by the court in assessing what is the proper scope of

equitable relief. But notwithstanding the express terms of the

Plan disclaiming the application of the make-whole doctrine

and the common fund doctrine, it is within the district court’s

broad equitable powers under § 502(a)(3) not to give those

provisions a controlling weight in fashioning “appropriate

equitable relief.” 

We express no opinion at this time on what result the district court, in exercising those powers, should reach. We do

not restrict the ability of the district court to hold further hearings and take further evidence relevant to how the phrase “appropriate equitable relief” should be interpreted in § 502(a)(3)

and applied in this case to the claim of CGI against Rose. 

III

[12] We AFFIRM the district court’s grant of summary

judgment in favor of NLE, dismissing NLE from the action.

However, because we see no indication that in fashioning “appropriate equitable relief” for CGI, the district court did more

than interpret the plain terms of the reimbursement provision,

and no indication that the district court considered traditional

equitable principles in assigning responsibility to CGI for

attorneys’ fees and costs, we VACATE the judgment in favor

of CGI, VACATE the judgment that NLE deduct fees and

costs from CGI’s entitlement, and REMAND to the district

court for such proceedings as are appropriate for the district

court to determine what is “appropriate equitable relief” in

context here. In doing so the district court should apply traditional equitable principles including consideration of traditional equitable defenses. The amount to which CGI is

entitled to recover under § 502(a)(3) and the proportional

amount of attorneys’ fees and costs for which CGI is responsible under § 502(a)(3) must be consistent with principles of

equity and not merely contract. 

7240 CGI TECHNOLOGIES AND SOLUTIONS v. ROSE
AFFIRMED in part and VACATED and REMANDED in

part for further proceedings consistent with our decision. Each

party shall bear its own costs.

SCHROEDER, Circuit Judge, concurring:

I concur in Judge Gould’s good opinion. It reaches the right

result, and reconciles ERISA’s statutory language, giving

courts power to fashion “appropriate equitable relief,” ERISA

§ 502(a)(3), with Supreme Court discussions of the statute.

The ERISA Plan document in this case provided that if the

Plan paid out benefits to a beneficiary who later recovered tort

damages from a third party, the Plan would have a first priority for total reimbursement from the recovery—even when, as

in this case, the recovery represented a small fraction of the

beneficiary’s damages and the beneficiary would be left with

very little. This unfairness was magnified by a provision purporting to disclaim the equitable common fund doctrine—a

provision that, if enforced, would mean the Plan would not

have to contribute to the fees of the attorneys who recovered

the money from which the Plan would be reimbursed. 

The district court considered itself bound to apply the provisions of the Plan document. The result—leaving the beneficiary here vastly undercompensated for her actual damages,

and the Plan unjustly enriched—is manifestly unfair. It is also

inconsistent with Congress’s purpose in enacting ERISA:

“promot[ing] the interests of employees and their beneficiaries in employee benefit plans.” Shaw v. Delta Air Lines, Inc.,

463 U.S. 85, 90 (1983). Thus in fashioning “appropriate equitable relief” under ERISA § 502(a)(3), the district court is not

necessarily bound to the terms of the Plan document. “The

power to reform contracts (as contrasted with the power to

enforce contracts as written) is a traditional power of an

equity court, not a court of law, and was used to prevent

fraud.” CIGNA Corp. v. Amara, 131 S.Ct. 1866, 1879 (2011).

CGI TECHNOLOGIES AND SOLUTIONS v. ROSE 7241
The Third Circuit recently decided a case materially identical

to this one, and refused to enforce the terms of the Plan as

written. It said:

“[T]he judgment requiring McCutchen to provide

full reimbursement to US Airways constitutes inappropriate and inequitable relief. Because the amount

of the judgment exceeds the net amount of McCutchen’s third-party recovery, it leaves him with less

than full payment for his emergency medical bills,

thus undermining the entire purpose of the Plan. At

the same time, it amounts to a windfall for US Airways, which did not exercise its subrogation rights

or contribute to the cost of obtaining the third-party

recovery. Equity abhors a windfall.”

US Airways, Inc. v. McCutchen, 663 F.3d 671, 679 (3d Cir.

2011).

We are therefore correctly vacating the district court’s

judgment and remanding for the district court to fashion “appropriate equitable relief,” pursuant to § 502(a)(3). “Appropriate” relief would presumably include applying the

equitable make-whole doctrine, or fashioning other fair relief

by reducing the Plan’s recovery to an amount equivalent to

the proportion of the beneficiary’s actual damages that she

recovered. Traditional equitable remedies would also appear

to support requiring the Plan to contribute to the firm’s fees

under the common fund doctrine. The majority recognizes

such traditional equitable principles should apply to the facts

presented in this case.

BEISTLINE, Chief District Judge, dissenting:

I respectfully dissent. While the majority reaches a fair

result under the facts presented, it does so at the expense of

7242 CGI TECHNOLOGIES AND SOLUTIONS v. ROSE
the plain language of the Plan and effectively usurps the role

of Congress in establishing restrictions on how such plans

may manage themselves. In my view, the District Court

granted “appropriate equitable relief” when it enforced the

reimbursement provision of the Plan. The majority expresses

no opinion as to whether CGI is entitled to reimbursement,

but simply states that, in the interest of eliminating unjust

enrichment, the District Court should have considered the

make-whole doctrine and the common fund doctrine in its

determination of what constituted an appropriate equitable

remedy under 29 U.S.C. § 1132(a)(3). Yet, in reaching its

conclusion, the majority disregards the fact that both doctrines

are disclaimed in the language of the Plan. By expressly abandoning both doctrines, the Plan precludes their application.

While I can understand the merits of these doctrines, I do not

believe that we can now inject principles into the Plan that the

Plan purposefully and specifically excluded. I do not view the

“appropriate equitable relief” provision as a mechanism for

courts to rewrite ERISA plans. Such an interpretation invites

litigation and unnecessarily complicates management of these

plans. If Congress intended ERISA plans to include these

equitable defenses notwithstanding the express terms of the

plan disclaiming them, it certainly could have said so.

I would, therefore, AFFIRM the District Court to the extent

it applied the plain language of the Plan and REVERSE to the

extent that it did not. 

CGI TECHNOLOGIES AND SOLUTIONS v. ROSE 7243