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9th Circuit Court of Appeals Finds for Plan, Explains Limits of ERISA “Surcharge”

Posted Friday, June 6, 2014 by Linda M. Josephson

The Ninth Circuit Court of Appeals handed down a decision today in a case handled by Bruce McKenzie and Frank Morales of our office. In Gabriel v Alaska Electrical Pension Fund, the Court declined to apply the equitable remedy of “surcharge” where the plan erroneously paid benefits for a period of time to a nonvested participant.

“We were pleased by the decision and particularly pleased by the Court’s application of the Supreme Court’s decision in Cigna Corp. v. Amara, which some practitioners have seen as a “sea change” in the courts’ approach to cases of this kind,” said Bruce McKenzie. “We believe the majority appropriately concluded that the equitable remedies discussed in Amara (estoppel, reformation and surcharge) can only be applied in the limited circumstances described in its opinion and not in situations involving a mere administrative error that did not result in any improper benefit to the plan or its fiduciaries.”

The opinion can be found at http://cdn.ca9.uscourts.gov/datastore/opinions/2014/06/06/12-35458.pdf.