Court Opinion

ID: 2971406
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:34:38.402447+00
Date Added: 2024-06-11T15:29:38.656883
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
            Pursuant to Sixth Circuit Rule 206            2       Crosby v. Bowater Incorporated           No. 03-1044
   ELECTRONIC CITATION: 2004 FED App. 0303P (6th Cir.)            Retirement Plan, et al.
               File Name: 04a0303p.06
                                                                              _________________
UNITED STATES COURT OF APPEALS                                                     COUNSEL
              FOR THE SIXTH CIRCUIT                       ARGUED: Thomas J. Piskorski, SEYFARTH SHAW,
                _________________                         Chicago, Illinois, for Appellants. Eva T. Cantarella, HERTZ,
                                                          SCHRAM & SARETZKY, Bloomfield Hills, Michigan, for
FRANK J. CROSBY ,                 X                       Appellee. ON BRIEF: Ian H. Morrison, SEYFARTH
individually and on behalf of      -                      SHAW, Chicago, Illinois, for Appellants. Eva T. Cantarella,
all others similarly situated,     -                      Bradley J. Schram, Robert P. Geller, Bradford T. Yaker,
                                   -  No. 03-1044         HERTZ, SCHRAM & SARETZKY, Bloomfield Hills,
              Plaintiff-Appellee, -                       Michigan, for Appellee.
                                    >
                                   ,
             v.                                                               _________________
                                   -
                                   -                                              OPINION
BOWATER INCORPORATED               -                                          _________________
RETIREMENT PLAN FOR                -
SALARIED EMPLOY EES OF             -                        DAVID A. NELSON, Circuit Judge. This appeal shows
GREAT NORTHERN PAPER INC. -                               that the distinction between law and equity can still have
                                   -                      consequences. (“The forms of action we have buried,”
and BOWATER ,                      -                      Maitland observed in a very different context, “but they still
INCORPORATED ,                     -                      rule us from their graves.”1)
        Defendants-Appellants. -
                                   -                        The plaintiff, a participant in a retirement plan governed by
                                  N                       the Employee Retirement Income Security Act of 1974
       Appeal from the United States District Court       (ERISA), 88 Stat. 832, claimed that the plan administrator
  for the Western District of Michigan at Grand Rapids.   had acted improperly in using a pre-retirement mortality
    No. 01-00683—Richard A. Enslen, District Judge.       discount factor when calculating lump sum pre-retirement
                                                          benefits. As a result, the plaintiff asserted, he was paid a
                Argued: April 20, 2004                    benefit that fell $5,249.08 short of what he was entitled to
                                                          receive. Invoking § 502(a)(3) of ERISA, 29 U.S.C.
        Decided and Filed: September 9, 2004

Before: BOGGS, Chief Judge; NELSON and SUTTON,
                 Circuit Judges.
                                                              1
                                                               F.W . Maitland, The Forms of Action at Common Law 2 (A.H.
                                                          Chaytor & W .J. Whittaker eds., 1948).

                           1
No. 03-1044                  Crosby v. Bowater Incorporated                    3    4    Crosby v. Bowater Incorporated              No. 03-1044
                                       Retirement Plan, et al.                           Retirement Plan, et al.

§ 1132(a)(3),2 and purporting to act on behalf of a class of                        534 U.S. 204 (2002), and Mertens v. Hewitt Associates, 508
approximately 350 plan participants said to be similarly                            U.S. 248 (1993).
situated, the plaintiff brought suit against the plan and its
administrator for what he described as “equitable and                                  If we assume, for purposes of analysis, that the defendants
injunctive relief.” At the heart of the plaintiff’s prayer for                      had no discretion to use the mortality discount factor in
relief was a request for recovery of additional lump sum                            making the benefit calculation, the fact remains that ERISA
benefits.                                                                           § 502(a)(3), which authorizes only suits for injunctive or
                                                                                    other equitable relief, does not, in most situations, authorize
  After a wave of motions had been filed, the district court                        an action for money claimed to be due and owing. An action
entered an order granting class certification, granting                             in which the plaintiff complains that the defendant owes him
summary judgment in favor of the plaintiff and the class,                           money and has refused to pay the debt is, of course, the locus
ordering a recalculation of lump sum pre-retirement benefits                        classicus of an action at law; if we were to say that such an
without the mortality discount, and requiring the defendants                        action qualifies as a suit in equity, we should be giving the
“to immediately refund [the] under-payments . . . .”                                words used by Congress in § 502(a)(3) a meaning that Great-
                                                                                    West and Mertens teach they will not bear. The challenged
   For the district court to order the defendants to “refund”                       judgment will therefore be reversed.
(i.e. to pay) the difference between the amount calculated
without a mortality discount and the amount actually received                                                      I
was to grant a form of relief not typically available in equity.
Such relief, we conclude, was thus not available under the                             The individual plaintiff, Frank J. Crosby, was a participant
statutory provision on which the plaintiff elected to base his                      in an ERISA retirement plan administered by defendant
action. See Great-West Life & Annuity Ins. Co. v. Knudson,                          Bowater Incorporated, the parent corporation of Mr. Crosby’s
                                                                                    sometime employer, Great Northern Paper, Inc. Before he
                                                                                    reached his normal retirement age, but after his pension rights
     2
                                                                                    had vested, Mr. Crosby lost his job as a result of Great
     As codified in Title 29 of the U.S. Code, ERISA § 502(a)(3)                    Northern’s having been sold to another company. The
provides as follows:                                                                termination of Mr. Crosby’s employment accelerated his right
     “A civil action m ay be b rought —                                             to receive benefits under the retirement plan.
                                      ***
     (3) by a participant, beneficiary, or fiduciary (A) to enjoin any                The Bowater plan was of the “cash balance” variety, a
     act or practice w hich vio lates any p rovisio n of this subchapter or         species of the “defined benefit” genus. The plan gave Mr.
     the terms o f the plan, or (B) to obtain other ap propriate                    Crosby a hypothetical “Personal Account,” and his benefits
     equ itable relief (i) to redress such violations or (ii) to enforce
     any provisions o f this subchapter or the terms of the plan.”
                                                                                    were to be a function of the balance in that account. The
     29 U.S.C. § 11 32(a)(3) (emphasis supplied).                                   balance reflected credits geared to Mr. Crosby’s monthly
                                                                                    compensation and a specified rate of interest. The Personal
     A separate provision, § 502(a)(1)(B) of ERISA, 29 U.S.C.                       Account was nothing more than a computational construct,
§ 113 2(a)(1)(B ), authorizes a p articipa nt to bring suit “to re cover benefits   and benefits were to be paid from the plan’s general assets.
due to him under the term s of his plan. . . .” The plaintiff in this case did
not invoke § 502(a)(1)(B).
No. 03-1044                Crosby v. Bowater Incorporated                5    6      Crosby v. Bowater Incorporated           No. 03-1044
                                     Retirement Plan, et al.                         Retirement Plan, et al.

   If Mr. Crosby had been able to retire from Great Northern                  to normal retirement age, (2) dividing the resultant age-65
at age 65 — the “normal retirement age” specified in the plan                 account balance by the annuity factor prescribed in the plan,
— a joint-and-survivor annuity would have been payable as                     and (3) discounting the age-65 annuity to its present value.
long as he or his wife continued living. The amount of the                    Bowater acceded to this request, notwithstanding that the
annuity would have been determined by taking the balance in                   Internal Revenue Service had approved the plan provision
Mr. Crosby’s Personal Account at age 65 and dividing it by                    pegging the lump sum entitlement to the amount credited to
a prescribed annuity factor. And had Mr. Crosby died before                   the participant’s Personal Account. Mr. Crosby was advised
age 65 while still employed by Great Northern, a death                        that his claim for a larger benefit had been granted and that
benefit would have been payable in an amount equal to the                     his lump sum entitlement had been recalculated. The
then present value of his accrued retirement benefit.                         resulting figure was $52,013.90. We presume that this
                                                                              amount was paid in full.
   When Mr. Crosby ceased to be an employee of Great
Northern, not having retired or died on the job, he became                      In a detailed explanation of how it arrived at the
eligible, under the terms of the plan, for a distribution of his              $52,013.90, Bowater told Mr. Crosby, among other things,
retirement benefit. Mr. Crosby, who was 43 years old at the                   that it had used a pre-normal-retirement-age mortality
time, elected to take his distribution in a lump sum.                         discount factor in its present-value calculation. When it
                                                                              determined the present value of an age-65 annuity, in other
   Bowater, as plan administrator,3 told Mr. Crosby that the                  words, Bowater took into account the possibility that Mr.
lump sum would be $48,732.14. That was the balance in                         Crosby might die before reaching the age at which he would
Crosby’s Personal Account. (Article XII of the plan provided                  be entitled to start receiving annuity payments.
that a participant’s accrued benefit could only be distributed
in a form of payment selected by the participant from a list of                 Mr. Crosby objected to the use of the mortality discount
options incorporated in § 12.2 of the plan. The second option,                factor, filing an appeal with Bowater in which he made the
set forth in § 12.2(b), was “[a] single lump sum payment                      following argument:
equal to the amount credited to the Participant’s Personal
Account as of the end of the month preceding his Benefit                          “This discount factor is not consistent with the
Commencement date.”)                                                              calculation method described in IRS Notice 96-8.
                                                                                  Further, I believe this discount reduces my accrued
   Claiming that the relevant statutory law, as interpreted by                    benefit, and, thus, is not allowed under ERISA.”
the Internal Revenue Service in IRS Notice 96-8 (IRB 1996-
6, Feb. 5, 1996), entitled him to receive more than the amount                Bowater’s Pension Administration Committee denied the
credited to his Personal Account, Mr. Crosby asked Bowater                    appeal, issuing a five-page explanation of its decision to do
to recompute his lump sum by (1) projecting interest credits                  so.
                                                                                Mr. Crosby then sued the Bowater plan and Bowater
    3
                                                                              Incorporated in the United States District Court for the
      Except where the context indica tes otherwise, all references in this   Western District of Michigan. The complaint alleged, among
opinion to “Bowater” should be read as mea ning Bowater in its plan-          other things, (1) that “when Bowater discounted Crosby’s
adm inistrator capa city.
No. 03-1044                  Crosby v. Bowater Incorporated                   7    8      Crosby v. Bowater Incorporated             No. 03-1044
                                       Retirement Plan, et al.                            Retirement Plan, et al.

age-65 annuity to present value, it should not have used a                         use of a mortality discount factor for the period before normal
mortality discount for the period before normal retirement                         retirement age. Joinder of such a large number of individuals
age;” (2) that “[i]f Bowater had utilized the . . . mortality                      was said to be impracticable, and the complaint stated that
discount factors for the period after normal retirement age                        Mr. Crosby “seeks both equitable and injunctive relief for the
only, Crosby’s lump sum entitlement . . . would have been                          Class, as permitted under ERISA § 502(a)(3).”
$57,262.98” instead of the $52,013.90 produced by the
method Bowater in fact used; and (3) that “Bowater’s use of                           The complaint’s prayer for relief asked the court to enter a
a mortality discount for the period before normal retirement                       judgment ordering the defendants to “[r]e-compute any and
age caused a partial forfeiture of Crosby’s accrued benefit,                       all lump sum benefits previously paid,” using the
thereby violating ERISA § 203(a), 29 U.S.C. § 1053(a).”4                           methodology followed in the recomputation of Mr. Crosby’s
                                                                                   lump sum entitlement “but without any mortality discount for
   The complaint stated that Mr. Crosby brought his claim                          the period before normal retirement age.” The court was
“under ERISA § 203(a), 29 U.S.C. § 1053(a), and the                                further asked to (1) order the defendants to “[p]ay all Plan
enabling statute, ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3).”                      participants or their beneficiaries who previously received a
As noted above, Mr. Crosby did not bring his claim under                           lump sum distribution . . . the difference between the amount
ERISA § 502(a)(1)(B) — the section that authorizes a party                         [so] computed . . . and the lump sum amount the participant
to sue for “benefits due to him under the terms of his                             or beneficiary received from the Plan, plus pre-judgment and
plan. . . .” (Under the language of the plan, Mr. Crosby was                       post-judgment interest on this amount;” to (2) “[e]njoin
entitled to less than he had already been paid — a                                 defendants from utilizing a mortality discount for the period
circumstance that explains the decision not to invoke                              before normal retirement age when computing a lump sum
§ 502(a)(1)(B).5)                                                                  distribution from the Plan in the future;” and to (3) order the
                                                                                   defendants to “[p]ay . . . reasonable attorney’s fees and costs
  The complaint alleged that approximately 350 plan                                . . . .” The prayer for relief also included a request that the
participants or beneficiaries were in the same boat as Mr.                         court “impose a constructive trust over the amount of plan
Crosby — i.e., they were victims of Bowater’s insistence on                        assets necessary to pay the amounts determined . . . and award
                                                                                   any other equitable relief this Court deems appropriate.”

     4                                                                                The defendants responded to the complaint with a motion
      Section 203(a) sets forth rules on the extent to which accrued               to dismiss under Rule 12(b)(6), Fed. R. Civ. P. The first and
benefits are nonforfeitable. As Mr. Crosb y subsequently reiterated in a
brief filed with the district co urt, “Cro sby’s claim is for violation of . . .
                                                                                   second numbered paragraphs of the defendants’ motion read
the anti-forfeiture rules unde r ER ISA § 20 3(a).”                                as follows:
     5
      In his brief on appeal, Mr. Crosby tells us that he “could not bring             “1. Crosby purports to bring this action under Section
his claim und er ER ISA § 50 2(a)(1)(B) because the Plan ’s lump sum                   502(a)(3) of the Employee Retirement Income Security
provision contempla tes paym ent of an amo unt equal to the particip ant’s             Act of 1974 (‘ERISA’), 29 U.S.C. § 1132(a)(3), and
Personal Acco unt . . ., the amo unt Bowater initially offered Crosby.                 styles it as an action to enforce Section 203(a)(2)(A) of
Consequently, if Crosby had brought his claim under § 502(a)(1)(B), he                 ERISA.
would be entitled to no relief at all . . . .” W e intimate no view as to
whether this propo sition is correct.
No. 03-1044           Crosby v. Bowater Incorporated           9   10    Crosby v. Bowater Incorporated                No. 03-1044
                                Retirement Plan, et al.                  Retirement Plan, et al.

  2. Crosby sues to recover an increased lump sum                  The response was accompanied with a cross motion for
  distribution of his retirement benefit under the Plan, a         summary judgment based on the complaint as filed; at no time
  retirement benefit plan sponsored and administered by            did Mr. Crosby seek leave to amend the complaint.
  Bowater. In particular, Crosby claims that in calculating
  the present value of his retirement benefit, defendants            In due course, after Mr. Crosby had filed a motion for class
  incorrectly used a mortality discount for the part of that       certification, the district court ordered briefing on the
  calculation dealing with the time before Crosby had              appropriateness of the requested equitable remedies in the
  reached age 65.”                                                 event the plaintiff succeeded on his summary judgment
                                                                   motion. In the brief filed pursuant to the court’s direction,
The brief accompanying the motion pointed out that the             Mr. Crosby reiterated he had brought his claim under
statutory provision on which Mr. Crosby purported to sue did       § 502(a)(3), “which authorizes ‘appropriate equitable relief.’”
not authorize a suit for the relief he was seeking:                Arguing that the relief he sought was “equitable” as well as
                                                                   “appropriate,” Mr. Crosby cited Great-West Life & Annuity
    “Although what he really seeks is an award of                  Ins. Co. v. Knudson, 634 U.S. 204 (2002), as “suggest[ing]
  additional benefits, a claim properly brought under              that if the relief requested does not seek to impose liability for
  ERISA § 502(a)(1)(B), 29 U.S.C.                                  a contractual monetary obligation, it is probably an
  § 1132(a)(1)(B)[footnote omitted], Crosby purports to            appropriate equitable remedy.” The district court was told that
  sue under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3).             “Crosby does not seek to impose liability on defendants for
  That provision only authorizes Crosby to bring an action         any contractual obligation to pay money.”
  to ‘enjoin any act or practice which violates any
  provision of [ERISA] or the terms of the plan.’”                   After the completion of briefing, and having dispensed with
                                                                   oral argument, the district court entered a final judgment in
  Mr. Crosby filed a response to the 12(b)(6) motion in which      which the court granted class certification; denied the
he admitted the substance of paragraphs 1 and 2 of the             defendants’ motion to dismiss; granted the plaintiff’s
motion:                                                            summary judgment motion; enjoined the defendants “to
                                                                   recalculate the lump sum benefits of class members who had
  “1. Crosby agrees that he brought this action under              previously received lump sum benefits, in accordance with
      § 203(a)(2) and § 502(a)(3) of the Employee                  the Court’s Opinion, and to immediately refund under-
      Retirement Income Security Act (‘ERISA’).                    payments, plus pre-judgment and post-judgment interest;”
      29 U.S.C. § 1053(a)(2) and 29 U.S.C. § 1132(a)(3).           and to “calculate lump sum benefit payments for class
                                                                   members who have not yet received any lump sum benefits in
  2. Crosby agrees that (a) he is suing to recover                 accordance with the Court’s Opinion.”
     additional lump sum benefits; (b) the Plan is
     sponsored and administered by Bowater; and (c) he               The opinion itself — a comprehensive and well-crafted
     claims that Bowater incorrectly utilized a mortality          analysis of a variety of issues, some of which are not in
     discount for the period before age 65 when it                 contention on appeal — reasoned that because the plan
     computed his lump sum.”                                       provided for payment of a pre-retirement death benefit in the
                                                                   amount of the then-vested present value of the participant’s
No. 03-1044           Crosby v. Bowater Incorporated        11    12        Crosby v. Bowater Incorporated               No. 03-1044
                                Retirement Plan, et al.                     Retirement Plan, et al.

accrued benefit, the death benefit was not “incidental” to the    to a party who prevailed in a court of equity (injunctive relief,
participant’s accrued benefit and the plan administrator thus     e.g.) were far from identical to the remedies the prevailing
lacked discretion to use a mortality discount factor in           party could obtain in a court of law. Although, in most
reducing the projected age-65 annuity to its present value.       jurisdictions, the same courts have long administered both
The bottom line, in the district court’s view, was that the       law and equity,6 the unified courts have been administering
lump sum payment to which Mr. Crosby claimed to be                what Professor Geldart described as “distinct bodies of law,
entitled — $57,262.98, as the court noted — should not have       governed largely by different principles.”7
undergone the mortality reduction that resulted in a lump sum
payout of only $52,013.90.                                           Against this background, we return to the text of ERISA
                                                                  § 502(a)(3), the statutory section under which plaintiff Crosby
  The defendants perfected a timely appeal. Much of the           brought his suit. Under § 502(a)(3), as codified at 29 U.S.C.
argument they present to our court is a defense of the merits     § 1132(a)(3), Mr. Crosby could institute a proceeding “(A) to
of the plan administrator’s decision to take pre-retirement       enjoin any act or practice which violates [ERISA] or the
mortality risk into account. The defendants argue further that    terms of the plan, or (B) to obtain other appropriate equitable
the decision should have been reviewed under an arbitrary-        relief (i) to redress such violations or (ii) to enforce any
and- capricious standard, and that the district court was         provisions of [ERISA] or the terms of the plan.” (Emphasis
required to uphold the decision as reasonable. We do not          supplied.) Section 502(a)(3) does not authorize a plan
reach these issues, because — as the defendants also argue —      participant to sue for recovery of benefits due to him under
the primary relief sought by Mr. Crosby did not qualify as        the terms of the plan. That is the office of § 502(1)(B) — a
“equitable relief” of the sort authorized by ERISA                section with which Mr. Crosby has always insisted he will
§ 502(a)(3), 29 U.S.C. § 1132(a)(3).                              have nothing to do.
                              II                                     But what if the benefits are not claimed to be due under
                                                                  terms of the plan, strictly speaking, but under the terms of a
   The present opinion is not the place for a history lesson on   statute — in this case ERISA § 203(a), 29 U.S.C. § 1053(a)
the development of the parallel systems of jurisprudence          — setting forth requirements that the plan must satisfy? The
known as “law” and “equity.” It will suffice, we trust, to        answer, we believe, depends on whether the claim for benefits
remind the reader that courts of law — in which the common        allegedly due under the statutory requirements is or is not, at
law of the English speaking peoples had its principal growth      bottom, a claim for injunctive or other equitable relief. No
— were for a number of centuries separate and distinct from       matter how well founded it may be as a matter of substantive
chancery courts (originally the court of an ecclesiastical
person appointed by the king to be his chancellor); that the
rules of decision followed in chancery courts were not                 6
common law rules, but rules of equity; that chancery courts             In England, for example, this has been true since 1875. See W.M.
(i.e. courts of equity) likewise had their own procedures —       Geldart, Elements of English Law (5th Ed. 1953) at p. 22. In some
                                                                  American jurisdictions — New Jersey, for example — the fusion took
procedures under which, for example, the chancellor               place within living memory. See N.J. Const., Art. 11, §4, ¶ 3 (1947).
performed the fact-finding rôle that in courts of law would be
performed by a jury; and that the remedies typically available         7
                                                                           Geldart, id.
No. 03-1044             Crosby v. Bowater Incorporated          13    14    Crosby v. Bowater Incorporated               No. 03-1044
                                  Retirement Plan, et al.                   Retirement Plan, et al.

law, a claim for benefits is not cognizable under § 502(a)(3)           We do not find this line of argument persuasive. It is true
of ERISA unless it is a claim for “equitable relief.”                 that Mr. Crosby requested the district court to impose a
                                                                      constructive trust over the amount of plan assets necessary to
   As used in § 502(a)(3), the Supreme Court has repeatedly           pay his claim — and over the separate assets of Bowater
held, “equitable relief” refers to “those categories of relief that   Incorporated, if necessary — but we do not read Harris Trust
were typically available in equity (such as injunction,               as suggesting that such a request for securitization of the debt
mandamus, and restitution, but not compensatory damages).”            can transmogrify Mr. Crosby’s claim for a money judgment
Mertens v. Hewitt Associates, 508 U.S. 248, 256 (1993); cf.           into an essentially equitable claim. A glance at the facts of
Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S.               Harris Trust explains why.
204, 210 (2002). And “[a]lmost invariably . . . suits seeking
(whether by judgment, injunction, or declaration) to compel             In Harris Trust a retirement plan had purchased certain
the defendant to pay a sum of money to the plaintiff are suits        motel interests from a company that the plan had been using
for ‘money damages,’ as that phrase has traditionally been            as a stockbroker. Because the stockbroker was a “party in
applied, since they seek no more than compensation for loss           interest,” as the Supreme Court assumed, the purchase of the
resulting from the defendant’s breach of legal duty.” Bowen           motel interests was prohibited under § 406(a)(1)(A) of
v. Massachusetts, 487 U.S. 879, 918-19 (1988) (Scalia, J.,            ERISA, 29 U.S.C. § 1106(a)(1)(A). Invoking the “equitable
dissenting), as quoted with approval in Great-West, 534 U.S.          relief” provision of ERISA § 502(a)(3), the trustee and the
at 210. “And ‘[m]oney damages are, of course, the classic             administrator of the retirement plan sued the stockbroker for
form of legal relief.’” Id. (quoting Mertens, 508 U.S. at 255).       rescission of the purchase of the motel interests; restitution of
                                                                      the purchase price, with interest, from the stockbroker; and
   Mr. Crosby acknowledged in the court below that suits              disgorgement of any profits the stockbroker had made with
seeking to compel the defendant to pay a sum of money to the          the purchase money.
plaintiff are “almost invariably” excluded from the category
of suits seeking relief typically available in equity, according         The Court of Appeals for the Seventh Circuit concluded
to the Supreme Court. Citing Harris Trust and Savings Bank            that as a non-fiduciary, the stockbroker could not be held
v. Salomon Smith Barney Inc., 530 U.S. 238 (2000), however,           liable under § 502(a)(3) for participating in a transaction
Crosby argued that “‘[a]lmost invariably’ does not mean               prohibited by § 406. See Harris Trust and Savings Bank v.
‘always’ . . . .” (Reply Brief in Support of Plaintiff’s Request      Salomon Brothers Inc., 184 F.3d 646, 653 (7th Cir. 1999). The
for Equitable Relief, at page 29.) Because he is seeking              Supreme Court reversed, holding that the stockbroker’s non-
imposition of a constructive trust (an equitable remedy) on           fiduciary status did not insulate it from claims for equitable
property that he says “truly and equitably” belongs to him,           relief under § 502(a)(3).
see Harris Trust at 250-51, and because “restitution [another
equitable remedy] may be awarded for any ‘ill-gotten plan               Referring to the law of trusts — one of the main branches
assets or profits,’” see id. at 253, Mr. Crosby argued that his       of equity jurisprudence — the Harris Trust court observed
individual claim for the wrongfully withheld $5,249.08 was            that
not a claim for legal relief, but a claim for the sort of
“equitable relief” spoken of in § 502(a)(3).                            “it has long been settled that when a trustee in breach of
                                                                        his fiduciary duty to the beneficiaries transfers trust
No. 03-1044            Crosby v. Bowater Incorporated        15    16       Crosby v. Bowater Incorporated                     No. 03-1044
                                 Retirement Plan, et al.                    Retirement Plan, et al.

  property to a third person, the third person takes the           on assets so conveyed.8 And he is not seeking disgorgement
  property subject to the trust, unless he has purchased the       of profits made by a third party on ill-gotten assets. Harris
  property for value and without notice of the fiduciary’s         Trust, as we see it, is thus inapposite.
  breach of duty. The trustee or beneficiaries may then
  maintain an action for restitution of the property (if not          While Harris Trust is readily distinguishable from the case
  already disposed of) or disgorgement of proceeds (if             now before us, Great-West, in our judgment, is not. It is true
  already disposed of), and disgorgement of the third              that the plaintiffs in Great-West sought to impose personal
  person’s profits derived therefrom.” Harris Trust, 530           liability on the defendants for a contractual obligation to pay
  U.S. at 250.                                                     money, whereas here the plaintiff insists that the asserted
                                                                   liability is not contractual in nature.9 But if we accept, for
The Court went on to explain that                                  purposes of analysis, plaintiff Crosby’s representation that he,
                                                                   unlike the plaintiffs in Great-West, has no claim for breach of
  “[o]nly a transferee of ill-gotten trust assets may be held      contract, we think that the distinction between the Great-West
  liable, and then only when the transferee (assuming he           case and this one is a distinction without a difference.
  has purchased for value) knew or should have known of
  the existence of the trust and the circumstances that             The statutory origin of Bowater’s asserted obligation to pay
  rendered the transfer in breach of the trust.” Id. at 251.       Mr. Crosby an additional $5,249.08, with interest, does not
                                                                   mean that a breach of the obligation to pay is redressable
And — making an obvious point that has obvious
significance for us — the Supreme Court observed that a suit
against a transferee for tainted plan assets, in addition to            8
                                                                         M r. Cro sby does ask for imposition of a constructive trust over
satisfying the “appropriateness” criterion,                        sufficient assets to assure that his claim will be paid, thereby putting him
                                                                   in a better position than he wo uld occupy as a general credito r. But
  “is also ‘equitable’ in nature. See Mertens, 508 U.S., at        Crosby has no basis for obtaining such a priority, as far as we can see, and
  260 (‘[T]he “equitable relief” awardable under                   he is clearly not asking for application of the principle applied in Ha rris
                                                                   Trust — the principle tha t trust property transferred to a third party in
  § 502(a)(5) includes restitution of ill-gotten plan assets       breach of the trustee’s fiduciary duty is impressed with a trust “unless [the
  or profits . . .’); ibid. (explaining that, in light of the      third party] has purchased the property for value and without notice of the
  similarity of language in §§ 502(a)(3) and (5), that             fiduciary’s breach of duty.” Harris Trust, 530 U.S. at 250.
  language should be deemed to have the same meaning in
                                                                        9
  both subsections).” Id. at 253 (emphasis supplied).                    On its face, as we have seen, the language of the retireme nt plan’s
                                                                   lump sum provision contemplates payment of an amount equal only to the
  In the case at bar, of course, Mr. Crosby is not seeking         participant’s Personal Account — an amount less than Bowater has
restitution to the plan of assets wrongfully conveyed to a third   already voluntarily paid . In add ition to p ointing this out, Mr. Crosby
                                                                   notes that among the plan’s miscellaneous provisions is the following:
party. He is not seeking to have a constructive trust imposed      “The adoption and maintenance of this Plan shall not be deemed to
                                                                   constitute a contract, expressed or implied, between the Company and any
                                                                   Employee or to be a consideration for, or inducement or condition of, the
                                                                   employment of any person .” It thus seems clear that M r. Cro sby wo uld
                                                                   have had no claim for breach of contract absent ERISA, whatever the
                                                                   situation may be in light of ERISA.
No. 03-1044           Crosby v. Bowater Incorporated       17    18    Crosby v. Bowater Incorporated               No. 03-1044
                                Retirement Plan, et al.                Retirement Plan, et al.

through a suit in equity rather than an action at law.           mortality discount factor in computing future lump sum
Historically, an action in debt was no less an action at law     distributions. Assuming that such relief might be beneficial
than an action in covenant. See F.W. Maitland, The Forms of      to someone, however, it could only benefit members of the
Action at Common Law 63, 64 (A.H. Chaytor & W. J.                class other than Mr. Crosby. In the next (and concluding) part
Whittaker eds., 1948). And an action of assumpsit (a form of     of this opinion we address the question whether Mr. Crosby
trespass on the case) to redress the breach of a statutory       can maintain the present suit on behalf of other class members
obligation to pay a sum certain was likewise an action at law.   who might arguably receive some benefit from the equitable
See G.C. Cheshire and C.H.S. Fifoot, Law of Contract 15 (3rd     relief sought for them.
ed. 1952); Marley v. Bankers’ Indemnity Insurance Co., 166
A. 350, 351 (R.I. 1933) (holding that trespass on the case is                                   III
the appropriate action to enforce a statutory right).
                                                                    The Supreme Court has held that a class action may
  If it be argued that Mr. Crosby’s position should be likened   proceed despite the dismissal of the named plaintiff’s claim,
to that of a beneficiary of a trust, who could invoke the        if the class has been certified and at least one class member
jurisdiction of an equity court to enforce a right to receive    has a live claim. See County of Riverside v. McLaughlin, 500
money from the trust, the short answer is that just such an      U.S. 44, 51-52 (1991), and Sosna v. Iowa, 419 U.S. 393, 399-
argument has been explicitly rejected by the United States       403 (1975). But these decisions in no way detract from the
Supreme Court. See Great-West, 353 U.S. at 219:                  principle that the judicial power of Article III courts extends
                                                                 only to the “cases and controversies” specified in that article.
  “These trust remedies are simply inapposite. In Mertens,       If the class action is to be maintained, therefore, there must be
  we rejected the claim that the special equity-court powers     “a named plaintiff who has such a case or controversy at the
  applicable to trusts define the reach of § 502(a)(3).”         time the complaint is filed and at the time the class action is
                                                                 certified.” Sosna, 419 U.S. at 402. Where the named
   It remains to be mentioned that Mr. Crosby does request a     plaintiff’s claim is one over which “federal jurisdiction never
form of equitable relief in asking that the defendants be        attached,” there can be no class action. See Walters v. Edgar,
ordered to recompute — without any mortality discount for        163 F.3d 430, 432-33 (7th Cir. 1998), cert. denied, 526 U.S.
the period before normal retirement age — “any and all lump      1146 (1999).
sum benefits previously paid to Plan participants,” including
Mr. Crosby. As far as Crosby’s individual claim is                 For reasons already explained, we do not believe that Mr.
concerned, however, such a recomputation by the defendants       Crosby ever had a justiciable claim under ERISA § 502(a)(3),
is unnecessary; Mr. Crosby or his advisors have already          the particular statutory provision on which he elected to sue.
performed the recomputation themselves, and Crosby’s             Our caselaw teaches — perhaps surprisingly — that federal
complaint specifies the amount claimed to be due him down        subject matter jurisdiction is lacking in such a situation. Thus
to the last penny. Equity, as the pertinent equitable maxim      in QualChoice, Inc. v. Rowland, 367 F.3d 638, 650 (6th Cir.
tells us, does not require the doing of a vain act.              2004), we affirmed the dismissal, on jurisdictional grounds,
                                                                 of an action that sought essentially legal relief under
  Mr. Crosby’s complaint also asks for equitable relief in the   § 502(a)(3). In Community Health Plan of Ohio v. Mosser,
form of injunction against use of a pre-normal-retirement-age    347 F.3d 619, 624 (6th Cir. 2003), similarly, we held that an
No. 03-1044           Crosby v. Bowater Incorporated        19
                                Retirement Plan, et al.

action seeking legal relief under § 502(a)(3) must be
dismissed for lack of subject matter jurisdiction. Community
Insurance Co. v. Morgan, 54 Fed. Appx. 828, 831-33 (6th
Cir. 2002), and Sheet Metal Local #24 v. Newman, 35 Fed.
Appx. 204, 207 (6th Cir. 2002), are in accordance with that
holding. If these decisions mean what they say, federal
jurisdiction never attached to Mr. Crosby’s claim in the case
at bar. It follows that there is no class action. See Walters,
163 F.3d at 432-33.
  The judgment entered by the district court is VACATED
and the case is REMANDED with instructions to DISMISS
Mr. Crosby’s complaint for lack of subject matter jurisdiction.