K. Wendell Lewis, et al. v. Pension Benefit Guaranty Corporation

Title IV of the Employee Retirement Income Security Act (“ERISA”) covers pension plans terminated when distressed and establishes the Pension Benefit Guaranty Corporation (“the Corporation”) as insurer of such plans. Title IV’s enforcement provision for suits against the Corporation – 29 U.S.C. § 1303(f) – provides, without qualification, for “appropriate equitable relief” against the Corporation, including in instances where the Corporation serves as a fiduciary with respect to a terminated plan’s remaining assets. In their case law on the meaning of “appropriate equitable relief” in the remedial section of Title I of ERISA, 29 U.S.C. § 1132(a)(3), this Court and the lower courts have indicated that monetary compensation, such as disgorgement of ill-gotten profits, is available against breaching fiduciaries. But the D.C. Circuit below held that disgorgement is not “appropriate equitable relief” against the Corporation because of a separate section of Title IV: 29 U.S.C. § 1344(c). Section 1344(c) addresses who shall be “credited” with gains on pensionplan assets after a plan is terminated. Contrary to the Second and Fourth Circuits’ view of § 1344(c), but in line with the Ninth Circuit’s, the D.C. Circuit read § 1344(c) to require that, in all instances, a gain in value on a terminated plan’s assets must go to the Corporation, even where – as here – those gains result from serious fiduciary breaches by the Corporation. The Question Presented is: Does § 1344(c) preclude disgorgement of profits from the Corporation as an appropriate equitable remedy under § 1303(f) for the Corporation’s breaches of fiduciary duties?