IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 06-20346

MELISSA AMSCHWAND, INDIVIDUALLY AND ON BEHALF OF THE

ESTATE OF THOMAS AMSCHWAND

Plaintiff-Appellant

v.

SPHERION CORP; ET AL

Defendants

SPHERION CORP, INDIVIDUALLY AND AS PLAN ADMINISTRATOR OF

THE GROUP PLAN LIFE POLICIES 779407-10-001 & 779407-11-001;

GROUP PLAN LIFE POLICIES, 779407-10-001 & 779407-11-001;

TRUSTEES OF THE INTERIM HEALTH BENEFITS TRUST GROUP LIFE

PLAN; GROUP LIFE AND ACCIDENTAL DEATH AND

DISMEMBERMENT INSURANCE PLAN

Defendants-Appellees

Appeal from the United States District Court

for the Southern District of Texas, Houston

Before JONES, Chief Judge, and BENAVIDES and STEWART, Circuit Judges.

EDITH H. JONES, Chief Judge:

This appeal addresses whether, under ERISA § 502(a)(3), 29 U.S.C.

§ 1132(a)(3), “other appropriate equitable relief” permits recovery of extracontractual, or “make-whole,” damages in the form of payment of life insurance

benefits that would have accrued to a plan beneficiary but for a plan fiduciary’s

United States Court of Appeals

Fifth Circuit

F I L E D

October 18, 2007

Charles R. Fulbruge III

Clerk
No. 06-20346

1 The Summary of Coverage provision stated: “Active Work Rule: If you happen to be

ill or injured and away from work on the date your coverage would take effect, the coverage

will not take effect until you return to full-time work for one full day. This rule also applies

to an increase in your coverage.”

2

breach of fiduciary duty. Constrained by the Supreme Court’s decision in GreatWest Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204, 122 S. Ct. 708

(2002), we must deny relief.

I. BACKGROUND

During Mr. Amschwand’s medical leave for a bout with cancer that he did

not survive, his employer Spherion switched insurance companies, replacing

Prudential with Aetna Life Insurance Company (“Aetna”) as the new provider

of basic and supplemental life insurance benefits under the company Plan. A

“special provision” of Aetna’s group insurance policy covering Spherion

employees was entitled the “Active Work Rule” and provided:

If the employee is ill or injured and away from work on the date any

of his or her Employee Coverage (or any increase in such coverage)

would become effective, the effective date of coverage (or increase)

will be held up until the date he or she goes back to work for one full

day.

This provision was expressly noted in the “Summary of Coverage” Aetna

prepared for Spherion employees.1 As part of the transition to the new policy,

Aetna and Spherion agreed that the Active Work Rule requirement would be

waived for employees like Mr. Amschwand, who were not currently working fulltime due to a medical condition that antedated the switch from Prudential to

Aetna. For reasons Spherion has failed to explain, however, Mr. Amschwand

was not among those who received coverage despite being on disability leave

when the Policy took effect on May 1, 2000. Unlike other similarly situated

employees, Mr. Amschwand never received a waiver and, unbeknownst to him,

he remained subject to the Active Work Rule.
No. 06-20346

3

Spherion, an ERISA fiduciary and plan administrator, notified its

employees that they could elect to participate in the Aetna Plan during an “open

enrollment” period, which commenced in March 2000. Mr. Amschwand duly

enrolled and was informed by Spherion that he could maintain his existing

$248,000 basic coverage and his $142,000 level of supplemental coverage under

the Policy. On November 6, 2000, a representative of Spherion’s Human

Resources Department orally confirmed to Mr. Amschwand that all of his life

insurance was convertible under the Policy and that he remained eligible for all

benefits.

As his condition deteriorated, Mr. Amschwand repeatedly contacted

Spherion to confirm that he was fully covered under the Aetna Policy. Each

time, Spherion representatives failed to mention the Active Work Rule

requirement and incorrectly assured him that the full spectrum of coverage he

enjoyed under the pre-Aetna Plan remained valid. Moreover, in spite of the

Amschwands’ repeated oral requests for documentation of the Policy terms and

the corresponding Summary of Coverage, Spherion either maintained that

informational booklets were not yet available for employees, or simply failed to

provide any paperwork describing the conditions ofthePolicy. Believing himself

covered, Mr. Amschwand timely paid the basic and supplemental life insurance

premiums while on disability leave until his death in February, 2001.

Mr. Amschwand diligently sought to ensure that his wife would be provided for

under the Plan. Both parties agree, however, that Spherion never informed him

that in order for the Policy to take effect he was required to return to work for

at least one full day.

Shortly after her husband’s death, Mrs. Amschwand filed a claim with

Aetna only to be informed that because her husband had not satisfied the Active

Work Rule, he was ineligible for benefits under the Policy. After being denied

recovery in Aetna’s administrative appeals process, Mrs. Amschwand filed suit
No. 06-20346

2 Amschwand already has recovered statutory damages in the amount of $100 per day

from the date of Spherion’s failure to timely provide policy documentation, as well as attorney’s

fees, pursuant to ERISA §§ 502(c)(1)(B) and (g)(1), 29 U.S.C. §§ 1132(c)(1)(B), (g)(1),

respectively. The present appeal concerns only the availability of a monetary remedy under

§ 502(a)(3).

4

seeking relief under ERISA § 502(a)(3) in the form of “monetary losses caused

by [the Spherion Defendants’] breach of fiduciary duty.”2 That is, Amschwand

sought the equivalent of the combined life insurance benefits that she would

have received if her husband had complied with the Active Work Rule. Spherion

refunded the premium payments but maintained thatthe additional demand for

money damages did not constitute “appropriate equitable relief” within the

meaning of subsection (a)(3). The district court agreed, granting summary

judgment for Spherion. The court also dismissed as moot a third-party

complaint filed by Aetna. Amschwand appeals.

II. STANDARD OF REVIEW

This court reviews the district court’s summary-judgment grant de novo,

applying the same standard used below. Chacko v. Sabre, Inc., 473 F.3d 604,

609 (5th Cir. 2006). Summary judgment is appropriate “if the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any material fact and

that the moving party is entitled to a judgment as a matter of law.” FED. R. CIV.

P. 56(c).

III. DISCUSSION

Section 502(a)(3) allows a plan participant, beneficiary, or fiduciary to

obtain,inter alia,“appropriate equitable relief”to enforce the terms or to remedy

violations of an employee-benefit plan. The scope and nature of relief available

to aggrieved parties under this statutory provision has been circumscribed by a

line of Supreme Court decisions beginning with Mertens v. Hewitt Associates,

508 U.S. 248, 113 S. Ct. 2063 (1993). Analyzing the remedies that were
No. 06-20346

3 This court has held similarly. See Rogers v. Hartford Life & Accident Ins. Co.,

167 F.3d 933, 944 (5th Cir. 1999) (noting that § 502(a)(3) excludes “extra-contractual,” “makewhole,” and “compensatory” damages); Weir v. Federal Asset Disposition Ass’n, 123 F.3d 281,

290 (5th Cir. 1997) (no compensatory or punitive damages available under § 502(a)(3) against

a fiduciary in her individual capacity).

5

historically available in courts of equity, the Court in Mertens held that

§ 502(a)(3) did not authorize a suitfor monetary damages against a nonfiduciary

that participated in the plan fiduciary’s breach of duty. Despite the fact that

monetary damages were among the remedies historically granted by pre-fusion

equity courts in actions brought by a beneficiary against a trustee, the Court

reasoned that consequential damages were a legal rather than equitable remedy

and denied relief. Id. at 255-56, 113 S. Ct. at 2068-69. Justice Scalia supported

this conclusion by acknowledging that in trust disputes a court sitting in equity

could routinely establish “purely legal rights and grant legal remedies”

otherwise beyond its equitable jurisdiction. Id. at 256, 113 S. Ct. at 2068; see

also GEORGE GLEASON BOGERT & GEORGE TAYLOR BOGERT, THE LAW OF TRUSTS

AND TRUSTEES, § 870 (rev. 2d ed. 1995). Congress’s use of the term “equitable”

in subsection (a)(3), therefore, was construed to encompass only categories of

relief “typically available in equity,” like injunction, mandamus, or restitution.

Id. at 256, 113 S. Ct. at 2069. Had Congress intended subsection (a)(3) to

authorize the panoply of legal remedies sometimes awarded by equity courts, the

term “equitable” would become superfluous. Id. at 257-58, 113 S. Ct. at 2069-70;

see also LaRue v. DeWolff, Boberg & Assocs., Inc., 450 F.3d 570, 574 (4th Cir.

2006), cert. granted, ____ U.S. ____, 127 S. Ct. 2971 (2007). (“[E]quitable relief

connotes only a subset of the full palliative spectrum.”) (citation and internal

quotation marks omitted). Money damages, Mertens concluded, were the “classic

form of legal relief” and thus not a “typically equitable” remedy available under

§ 502(a)(3). 508 U.S. at 255, 113 S. Ct. at 2068.3
No. 06-20346

6

The spectrum of § 502(a)(3) relief contracted further in Great-West Life &

Annuity Insurance Co. v. Knudson, 534 U.S. 204, 122 S. Ct. 708 (2002). GreatWest, a nonfiduciary insurance company, sought an injunction for money

damages as restitution against a plan beneficiary, who had violated the plan’s

subrogation clause by failing to reimburse Great-West for his tort recovery in a

lawsuit. Although restitution was mentioned in Mertens as “typically equitable,”

relief, Justice Scalia clarified in Great-West that “not all relief falling under the

rubric of restitution is available in equity.” 534 U.S. at 212, 122 S. Ct. at 714.

The crucial distinction between two historical species of restitution is that

equitable restitution seeks only to restore to the plaintiff particular funds or

property in the defendant’s possession, while legal restitution imposed personal

liability for breach of a legal duty. Great-West ultimately reaffirms the Mertens

requirement that the nature of the relief sought under § 502(a)(3) be “typically

equitable”; it adds a second requirement that the cause of action giving rise to

the claim be generically equitable as well. Great-West’s desired relief was not

“equitable” within this interpretation of § 502(a)(3) because under California law

a constructive trust or equitable lien cannot be established over funds or

property not within a defendant’s control.

The freshest of Mertens’s progeny, Sereboff v. Mid Atlantic Medical

Services, Inc., ____ U.S. ____, 126 S. Ct. 1869 (2006), reinforces the two-part

equity test. In Sereboff, an injured beneficiary who recovered a tort settlement

was sued by the plan fiduciary to recoup medical expenses it had paid on the

beneficiary’s behalf. But in contrast to Great-West, the Sereboff beneficiaries

retained possession and control of the particular settlement funds that the

fiduciary sought. Accordingly, the Supreme Court held that the relief sought by

the fiduciary would have been recognized as equitable by a pre-fusion equity

court and was subject to the restitutionary remedy of an equitable lien on the
No. 06-20346

4 As the pleadings demonstrate, this action can alternatively be characterized as a

demand for damages from the breach of Thomas Amschwand’s life insurance policy. Contrary

to Spherion’s insistence, breach of contract, although historically not an action brought in

equity, does not put equitable recovery under § 502(a)(3) out of Amschwand’s reach. See

Sereboff, ____ U.S. ____, 126 S. Ct. at 1874 (“ERISA provides for equitable remedies to enforce

plan terms, so the fact that the action involves a breach of contract can hardly be enough to

prove relief is not equitable; that would make § 502(a)(3)(B)(ii) an empty promise.”).

7

settlement funds. See Sereboff, ____ U.S. ____, 126 S. Ct. at 1874-75. Sereboff

seems to confirm thatthe sine qua non of restitutionary recovery available under

§ 502(a)(3) is a defendant’s possession of the disputed res. See, e.g., Coan v.

Kaufman, 457 F.3d 250, 264 (2d Cir. 2006) (restitutionary relief is deprived of

its equitable character for purposes of § 502(a)(3)“when, as here, the defendants

never possessed the funds in question and thus were not unjustly enriched”)

(citation and internal quotation marks omitted); Knieriem v. Group Health Plan,

Inc., 434 F.3d 1058, 1063 (8th Cir. 2006); Callery v. United States Life Ins. Co.,

392 F.3d 401, 406 (10th Cir. 2004); Bast v. Prudential Ins. Co. of Am., 150 F.3d

1003, 1011 (9th Cir. 1998).

This appeal, in contrast to the Supreme Court cases, is a suit by a

beneficiary seeking relief under § 502(a)(3) from a plan fiduciary for breach of

fiduciary duty.4 Amschwand places great weight on the distinguishing factthat

Spherion’s fiduciary status is “critical because, in courts of equity, make-whole

relief was routinely available as a remedy for breach of fiduciary duty in cases

brought against fiduciaries.” Echoing the methodology of Justice Ginsburg’s

dissenting opinion in Great-West (a rationale resurrected in her concurrence in

Aetna Health Inc. v. Davila, 542 U.S. 200, 124 S. Ct. 2488 (2004)), Amschwand

argues that the district court misconstrued Mertens and Great-West, which

narrowly held that extracontractual damages against nonfiduciaries are not

equitable relief cognizable under § 502(a)(3). Against a fiduciary like Spherion,
No. 06-20346

5 On its face, § 502(a)(3) defines who may bring an action; it does not condition the scope

of recovery on the identity of the defendant. This is not true of other ERISA remedial

provisions. See, e.g., Bombardier Aerospace Employee Welfare Benefits Plan v. Ferrer, Poirot

& Wansbrough, 354 F.3d 348, 352 & 353 n.13 (5th Cir. 2003) (citing statutory sections).

8

however, money damages are available under § 502(a)(3) because such a claim

would have entitled her to equitable restitution in the pre-fusion equity courts.

Anschwand’s proposed distinction among defendants has been rejected by

many of our sister circuits. There is no textual argument for drawing this

distinction under § 502(a)(3). Under Great-West, only the nature of the claim

and the relief sought – not the status of the litigants – determine the scope of

available § 502(a)(3) recovery.5 See, e.g., Callery, 392 F.3d at 409; McLeod v. Or.

Lithoprint Inc., 102 F.3d 376, 378 (9th Cir. 1996) (“the status of the defendant,

whether fiduciary or nonfiduciary, does not affect the question whether damages

constitute ‘appropriate equitable relief’” under § 502(a)(3)). That wider relief

was traditionally available in equity courts against fiduciaries than

nonfiduciaries is irrelevant to ERISA’s remedial scheme. Mertens and its

progeny state that § 502(a)(3) relief is affirmatively not grounded in “the special

equity-court powers available to trusts.” Great-West, 534 U.S. at 219, 122 S. Ct.

at 718; Mertens, 508 U.S. at 258, 113 S. Ct. at 2070; see also Crosby v. Bowater

Inc. Ret. Plan for Salaried Employees of Great N. Paper Inc., 382 F.3d 587, 596

(6th Cir. 2004).

Amschwand further repeats the unsuccessful argument that because

monetary damages for breach of fiduciary duty were sometimes awarded against

trustees in courts of equity, they are automatically available under § 502(a)(3).

See, e.g., Davila, 542 U.S. at 223-24, 124 S. Ct. at 2504 (Ginsburg, J., concurring)

(arguing that ERISA imports general trust principles recognized by equity

courts). Mertens, however, held that even if breach of fiduciary duty is a

generically equitable claim,the remedy sought — here, restitution — must have
No. 06-20346

6 Cf. Langbecker v. Elec. Data Sys. Corp., 476 F.3d 299, 309 n.20 (5th Cir. 2007) (legal

restitution is not a remedy cognizable under § 502(a)(3)); Coan, 457 F.3d at 264 (attempted

recovery of funds allegedly dissipated by fiduciary’s mismanagement of a 401(k) plan not

actionable under § 502(a)(3)); Callery, 392 F.3d at 406 (attempted recovery of life insurance

benefits by plan beneficiary who alleged breach of fiduciary duty not cognizable under

§ 502(a)(3)).

9

been one typically awarded, not one that could have been awarded, by a court of

equity. The species of restitutionary relief sought by Amschwand here does not

qualify as a “typically equitable” remedy under Great-West. Spherion never

maintained possession of Amschwand’s insurance proceeds, yet possession is the

key to awarding equitable restitution in the form of a constructive trust or

equitable lien. In contrast, Amschwand seeks relief – whether characterized as

make-whole or restitutionary – that is legal in nature because it represents

damages on the insurance contract that Spherion allegedly breached.6 See

LaRue, 450 F.3d at 575 (“absence of unjust possession is fatal to an equitable

restitution claim”); Bauhaus USA, Inc. v. Copeland, 292 F.3d 439, 445 (5th Cir.

2002) (no § 502(a)(3) recovery because settlement proceeds were in the registry

of the Mississippi chancery court, not under the defendant’s control). Stated

otherwise, even were we to find that Amschwand’s cause of action sounds in

equity, her desired relief is not typically equitable.

A defendant’s possession of the disputed res is central to the notion of a

restitutionary remedy, which was conceived not to assuage a plaintiff’s loss, but

to eliminate a defendant’s gain. See, e.g., Great-West, 534 U.S. at 229, 122 S. Ct.

at 723 (Ginsburg, J., dissenting); Bombardier Aerospace Employee Welfare

Benefits Plan v. Ferrer, Poirot & Wainsbrough, 354 F.3d 348, 355-56 (5th Cir.

2003). The Courts of Appeals have widely adopted this reasoning. See, e.g.,

LaRue, 450 F.3d at 576 (value of a plaintiff’s loss is a “measure that is

traditionally legal, not equitable”); Coan, 457 F.3d at 264 (restitutionary

remedies are based upon a defendant’s gain); Callery, 392 F.3d at 406 (same);
No. 06-20346

7 Amschwand’s alternative characterization of the remedy she seeks under § 502(a)(3)

as injunctive relief that would preclude Spherion’s withholding payment of the make-whole

damages is essentially indistinguishable from a demand for payment. Such attempts to

recharacterize a desired § 502(a)(3) remedy as a purely equitable form of relief, like an

injunction, have been consistently rejected. See Great-West, 534 U.S. at 210-11, 122 S. Ct. at

713; Mertens, 508 U.S. at 255; 113 S. Ct. at 2068; Bowen v. Massachusetts, 487 U.S. 879, 915-

16, 108 S. Ct. 2722, 2743 (1988) (Scalia, J., dissenting); Eichorn v. AT&T Corp., 484 F.3d 644,

655 (3d Cir. 2007); Callery, 392 F.3d at 405.

8 This court has explicitly rejected language from our pre-Mertens decisions which

speculates that such relief could be available under § 502(a)(3). See, e.g., Rogers, 167 F.3d at

944, recognizing abrogation of Corcoran v. United Healthcare, Inc., 965 F.2d 1321 (5th Cir.

1992) (“Although our decision in Corcoran may have ‘left the door open’ to the possibility of

recovering certain extra-contractual damages necessary to make a plaintiff whole, the Supreme

Court firmly closed this door in Mertens.”).

10

Bast, 150 F.3d at 1011 (defendant’s “ill-gotten profit” is integral to equitable

restitutionary remedies). Thus, if Spherion breached its fiduciary duty to

Mr. Amschwand, the appropriate equitable remedy is the disgorgement of

Spherion’s ill-gotten profits, i.e., refund of the policy premiums. See Lind v.

Aetna Health, Inc., 466 F.3d 1195, 1200-01 (10th Cir. 2006) (citing Callery,

392 F.3d at 406); Helfrich v. PNC Bank, Ky., Inc., 267 F.3d 477, 481 (6th Cir.

2001); Kerr v. Charles F. Vatterott & Co., 184 F.3d 938, 944-45 (8th Cir. 1999).

Obtaining the lost policy proceeds, as Amschwand requests, is simply a

form of make-whole damages.7 Cf. Coan, 457 F.3d at 264; Callery, 392 F.3d at

406. This demand is not equitable in derivation, but is akin to the legal

remedies of extracontractual or compensatory damages. See GEORGE GLEASON

BOGERT & GEORGE TAYLOR BOGERT, THE LAW OF TRUSTS AND TRUSTEES § 870

(rev. 2d ed. 1995) (payment of a sum due under the trust or damages for a

trustee’s wrongful act are legal remedies occasionally granted by an equity

court); RESTATEMENT (SECOND) OF TRUSTS § 198(1) (1959) (enforcement of

trustee’s duty to pay money was an action at law).8In contrast to the makewhole damages sought here, equitable restitution was designed to restore the

trust res damaged by a trustee’s breach of duty; it did not aim to compensate a
No. 06-20346

11

beneficiary for expected gains that would have accrued absent a fiduciary’s

breach. See RESTATEMENT (SECOND) OF TRUSTS § 205 (1959). Because the

remedy sought here was nottypically available in pre-fusion courts of equity, we

are obliged to follow the Supreme Court’s decision in Great-West and deny

§ 502(a)(3) relief.

IV. CONCLUSION

For the aforementioned reasons, the judgment of the district court is

AFFIRMED.
No. 06-20346

12

BENAVIDES, Circuit Judge, specially concurring:

The facts as detailed in Chief Judge Jones’s opinion scream out for a

remedy beyond the simple return of premiums. Regrettably, under existing law

it is not available. I am constrained to join the court’s opinion, which I find

correctly applies controlling precedent.