Court Opinion

ID: 9480446
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:48:15.234294+00
Date Added: 2024-06-11T17:47:41.528795
License: Public Domain

WELLFORD, Circuit Judge,
dissenting.
The district court in this interesting case held for the defendant Bank, and, in any event, would limit damages to recovery of the amount due the Warrens under the plan plus interest.1 The court found that the Warrens did “not allege that they instructed SNB to complete the transfer of the funds prior to December 31, 1984. Nor do they allege that SNB, by virtue of its ‘familiarity] with such matters,’ should have known to do so.” The district court held that “extracontractual damages are not recoverable in actions, like the present one, brought pursuant to § 1132(a)(3).” Quoting Drinkwater v. Metropolitan Life Ins. Co., 846 F.2d 821, 824 (1st Cir.), cert. denied, 488 U.S. 909, 109 S.Ct. 261, 102 L.Ed.2d 249 (1988), the court concluded that “compensatory and punitive damages ... are extracontractual,” and that “other appropriate equitable relief,” as used in § 1132(a)(3)(B) of ERISA, “should be interpreted to mean what it says — declaratory or injunctive relief, not compensatory and punitive damages.” See also Note, 71 Cornell L.Rev. 1014 (1986).
In Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 142 n. 9, 105 S.Ct. 3085, 3090 n. 9, 87 L.Ed.2d 96 (1985), the Supreme Court referred to § 502(a)(2) as “the enforcement provision for § 409,” that authorizes suits by four classes of persons including “beneficiaries” such as Dr. Warren. The Court emphasized that “the common interest shared by all four classes is the financial integrity of the plan.” Id. (emphasis added). The Court added that Congress intended the enforcement or remedies part of ERISA (§ 502) to “protect the entire plan, rather than ... the rights of an individual beneficiary.” Id. at 142, 105 S.Ct. at 3090 (emphasis added). Discussing the plan administrators’ delay in processing Russell’s disputed claim, the Court found that, “[Tjhere really is nothing at all in the statutory text to support the conclusion that such a delay [by the plan administrators] gives rise to a private right of action for compensatory or punitive relief.” Id. at 144, 105 S.Ct. at 3091.2 The court concluded:
Thus, the relevant text of ERISA, the structure of the entire statute, and its legislative history all support the conclusion that in § 409(a) Congress did not provide, and did not intend the judiciary to imply, a cause of action for extracon-tractual damages caused by improper or untimely processing of benefit claims.
473 U.S. at 148, 105 S.Ct. at 3093 (emphasis added).
The majority seizes on language in Justice Brennan’s concurrence that characterizes some of the language cited above as “dicta ... sweeping more broadly than the narrow ground of resolution.” Id. at 150, 105 S.Ct. at 3094. I would take the opinion of the majority in Russell, even if dicta, as setting a proper guide to follow rather than Justice Brennan’s separate opinion which speaks for a minority of the Court.
We have followed the language of the majority in Russell in holding that § 502(a)(3) of ERISA does not authorize “extracontractual” damages in the form of punitive awards. See Varhola v. Doe, 820 F.2d 809, 817 (6th Cir.1987). Four courts of appeals and several district courts have read the majority opinion in Russell to prohibit the recovery of “extracontractual” compensatory damages under § 502(a)(3). See, e.g., Amos v. Blue Cross-Blue Shield, 868 F.2d 430, 431 (11th Cir.), cert. denied, — U.S. -, 110 S.Ct. 158, 107 L.Ed.2d 116 (1989); Drinkwater, 846 F.2d at 825; Sokol v. Bernstein, 803 F.2d 532, 534 (9th Cir.1986) (“[D]amages for emotional distress are unavailable under § 502(a)(3) as well as under § 409.”); Hancock v. Montgomery Ward Long Term Disability *985Trust, 787 F.2d 1302, 1307 (9th Cir.1986) (“[L]anguage of section 1132(a)(3) providing for ‘equitable relief ... supports this view in that extraeontractual damages against a fiduciary are not an available form of ‘equitable relief.’”); Powell v. Chesapeake and Potomac Tel. Co., 780 F.2d 419, 424 (4th Cir.1985), cert. denied, 476 U.S. 1170, 106 S.Ct. 2892, 90 L.Ed.2d 980 (1986) (“[T]he provision for ‘other appropriate equitable relief,’ whatever it embraces, cannot be held to authorize extra-contractual or punitive damages for the breach of a plan administrator’s fiduciary duties under ERISA.”).
Recently, we stated, in agreement with these other circuit courts, that “[t]here can be no extraeontractual recovery in the context of an ERISA plan.” Davis v. Kentucky Finance Cos. Retirement Plan, 887 F.2d 689, 696 (6th Cir.1989), cert. denied, — U.S. -, 110 S.Ct. 1924, 109 L.Ed.2d 288 (1990). The majority seeks to characterize this as dicta, but plaintiff in Davis asserted reversible error in the district court’s refusal to allow her “to litigate her claims for extraeontractual compensatory and punitive damages.” Id. at 695. The majority’s expression that the contrary holding in Davis constitutes dicta is simply mistaken.
Contrary to the majority’s holding in this case, the panel in International Union UAW Local 91 v. Park-Ohio Indus., 876 F.2d 894 (6th Cir.1989) (unpublished opinion), applied the same rationale adopted in Davis in holding that extraeontractual damages are not recoverable under § 502(a)(3). The panel stated:
Relying upon the Ninth Circuit’s opinion in Sokol, the district court found Russell’s rationale equally applicable in the present case, and went on to reason that the legislative history of ERISA would compel a finding that extraeontractual damages are unavailable, as well. The union contends, however, that this is an issue that Russell expressly left open, and that the legislative history of ERISA demonstrates that the principles of the law of trust [sic] should be incorporated, including alternative remedies for a breach of trust that would meet the objective of “making a beneficiary whole.”
We are unpersuaded by the union’s vague reference to trust law principles. Indeed, ERISA’s incorporation of the law of trusts argues against allowing extra-contractual compensatory damages in actions for breach of fiduciary duties under §§ 1132(a)(1)(B) or 1132(a)(3) of ERISA. As Varhola indicates, extraeontractual damages are not ordinarily available in breach of trust cases, whether or not in some attenuated sense such damages might “make the plaintiff whole.” Further, we find Russell controlling and join the other circuits which have held that the language and structure, as well as the legislative history, of § 1132 prohibit the allowance of such damages.
Accordingly, we affirm the district court’s holding that extraeontractual compensatory damages are not available in actions under §§ 1132(a)(1)(B) or 1132(a)(3) of ERISA.

Id.

With all due respect, neither Judge Lively nor Judge Nelson have cited a single ERISA case holding that extraeontractual compensatory damages are recoverable under § 502(a)(3).3 Moreover, I do not find Justice Brennan’s separate opinion in Russell to be controlling or “instructive” on the issue before us. I agree with the conclusions of this court and each of the other circuits which have interpreted the pertinent ERISA language at issue in this case and emphasize that we are compelled to follow the prior precedent of this court.
The damages sought by the Warrens unfortunately, and I am not unsympathetic to *986their plight from a tax standpoint, are not recoverable as extracontractual claims or as “other appropriate equitable relief” under § 502(a)(3)(B)(i) or any other section of ERISA. Our court has already said as much in Davis (and to the same effect in Varhola), and all other circuits which have considered this question have so interpreted ERISA. Because I find no allegation in the Warrens’ amended complaint that SNB was under a specific duty or specific instruction to complete the transfer of the funds by December 31, 1984, I can see no basis for the extensive efforts of my brethren to create a cause of action for the Warrens on general equitable principles apart from the language of ERISA.
I would affirm the decision of the district court. I accordingly DISSENT.

. The district court cites 3A A. Scott & W. Fratcher, The Law of Trusts § 205 n. 2 (4th ed.1988), for the latter proposition.

. Justice Stevens reiterated that, "the six carefully integrated civil enforcement provisions found in § 502(a) of the statute ... provide strong evidence that Congress did not intend to authorize other remedies." 473 U.S. at 146, 105 S.Ct. at 3092 (emphasis in original).

. Walters v. Marathon Oil Co., 642 F.2d 1098 (7th Cir.1981), United States v. Martinson, 809 F.2d 1364 (9th Cir.1987), Goldberg v. Medtronic, Inc., 686 F.2d 1219 (7th Cir.1982), and Cia. Petrolera Caribe, Inc. v. Argo Caribbean, Inc., 754 F.2d 404 (1st Cir.1985), do not pertain to statutory provisions similar to those at issue in this case. The First and Ninth Circuits, moreover, have specifically held in ERISA construction cases, contrary to earlier “equity” language of Cia. Petrolera and Martinson, that ERISA does not provide extraeontractual consequential type damages. See Drinkwater, supra, and Hancock, supra.