Cigna Corporation v. Amara

563 U.S. 421 (2011)

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Nature of the Case

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Facts

Under D's defined-benefit retirement plan, an employee with at least five years’ service would receive an annuity annually paying an amount that depended upon the employee's salary and length of service. The annuity would equal either (1) 2 percent of the employee's average salary over his final three years with CIGNA, multiplied by the number of years worked (up to 30); or (2) 1 2/3 percent of the employee's average salary over his final five years with CIGNA, multiplied by the number of years worked (up to 35). The annuity would approach 60 percent of a longtime employee's final salary. A well-paid longtime employee, earning, say, $160,000 per year, could receive a retirement annuity paying the employee about $96,000 per year until his death. Employees could retire early, at age 55, and receive an only-somewhat-reduced annuity. In November 1997, D announced that it intended to put in place a new pension plan. The old plan would end on December 31, 1997. The account balance plan created an individual retirement account for each employee. D would contribute to the employee's account an amount equal to between 3 percent and 8.5 percent of the employee's salary. The account balance would earn compound interest at a rate equal to the return on 5-year treasury bills plus one-quarter percent (but no less than 4.5 percent and no greater than 9 percent). The employee would receive the amount then in his or her account--in the form of either a lump sum or whatever annuity the lump sum would buy. The new plan also provided employees a guarantee: An employee would receive upon retirement either (1) the amount to which he or she had become entitled as of January 1, 1998, or (2) the amount then in his or her account, whichever was greater. Amara (Ps), acting on behalf of approximately 25,000 beneficiaries, claimed that D had failed to give them proper notice of changes to their benefits, particularly because the new plan in certain respects provided them with less generous benefits. The District Court held that D violated its obligations under ERISA. It held that D told its employees nothing about any of risks associated with the new plan. It found that D intentionally misled its employees. The court reformed the terms of the new plan's guarantee. The court held that ERISA § 502(a)(1)(B) provided the legal authority to enter this relief. It declined to consider whether ERISA § 502(a)(3) also provided legal authority to enter this relief. The parties cross-appealed. The Court of Appeals affirmed. The parties cross-appealed again. The Supreme Court granted certiorari. D appealed in part on the claim that detrimental reliance was not shown.