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Groupon IPO Looms Large, Helped By Palo
Alto Law Firm
Boon or Bust for Employee Rights A duo of East Palo Alto lawyers from DLA Piper

Under ERISA Plans? LLP advised the underwriters on what could be the
largest tech initial public offering of the year.

On May 16, the U.S. Supreme

Robert J. McKennon is a partner Law Practice
Court issued its much
of McKennon Schindler LLP in Population, Lawyers Drive in Opposite
its Newport Beach office. He
anticipated opinion in Cigna
Corp. v. Amara, 2011 DJDAR Directions
represents clients in insurance
6962 (May 16, 2011), which, In California, population growth and rise in
and business litigation matters.
He can be reached at according to the grant of attorney head count did not go hand in hand over
rm@mslawllp.com. His firm's certiorari, was supposed to the past decade.
California Insurance Litigation address the standard of proof
Blog can be found at necessary for a beneficiary of an
www.californiainsurancelitigation.com. Employee Retirement Income Judges and Judiciary
Security Act of 1974 (ERISA) Judge Sounds Alarm Over Circuit’s Caseload
plan to recover benefits where To deliver quality justice in the face of a staggering
there is a discrepancy between the plan document and the plan summary, known as caseload, the 9th U.S. Circuit Court of Appeals
the summary plan description. While the Court addressed that issue, it addressed a needs at least 10 or more additional appellate
potentially much more important issue: What constitutes "other appropriate equitable judges, Circuit Judge Marsha S. Berzon said
relief" under Section 502(a)(3)? The Court's ruling may well lead to a significant Thursday.
expansion of equitable remedies available to employees who are covered under pension
plans and life, health and disability insurance plans.
Appellate Practice
In 1998, CIGNA Corp. changed its basic pension plan for employees from a defined- Panel Upholds Firm's Disqualification
benefit plan to a cash-balance plan calculated on the basis of an annual defined A state appellate court Thursday upheld the
contribution as increased by compound interest. In November 1997, CIGNA sent its disqualification of a San Diego law firm that
employees a newsletter announcing that it intended to adopt a new plan. Various allegedly used confidential documents in a lawsuit
features of the new plan meant that some employees received fewer benefits than they against VeriSign Inc.
would have under the pre-1998 defined-benefit system. CIGNA did not explain these
features in its description of the new plan; to the contrary, it told employees that the
new plan provided "an overall improvement in retirement benefits" and guaranteed Admin/Regulatory
that retiring employees would receive at least as much as the benefits to which they Schwab Execs Move to Dismiss SEC Charges
were entitled as of Jan. 1, 1998. Two Charles Schwab executives on Thursday
moved to dismiss a U.S. Securities and Exchange
A class of approximately 25,000 beneficiaries of the CIGNA pension plan challenged Commission lawsuit that claims they misled
CIGNA's adoption of the plan. They asserted that CIGNA failed to give them proper customers who invested in a fund tied to
notice of the changes to their benefits, which they claimed provided less generous mortgage-backed securities.
benefits. After a bench trial, the district court agreed that the disclosures violated
CIGNA's obligations under ERISA. As a remedy, the court reformed CIGNA's new
pension plan to conform with the representations made in the summary plan Bar Associations
description, and required that CIGNA pay benefits according to the reformed terms of Senate Approves State Bar Reform
the plan. In rendering its decision, the court relied on Section 502(a)(1)(B), which State senators voted overwhelming Thursday in
allows plan participants to sue for plan benefits. The 2nd U.S. Circuit Court of Appeals support of legislation that would transform the
upheld the court's ruling. State Bar's governing body from one comprised
primarily of elected lawyers to one dominated by
The Supreme Court reversed and remanded, holding that Section 502(a)(1)(B) did appointed members.
not authorize the relief awarded by the district court. Specifically, the Court explained
that while Section 502(a)(1)(B) grants a participant the right to bring a civil action to
enforce the terms of a plan, it does not authorize a court to reform a plan to change its Community News
terms as written by the employer. The Court noted that Section 502(a)(1)(B) speaks of Judge Alex Kozinski enjoyed dinner and thought-
enforcing the terms of the plan, not of changing them. provoking conversation with a group of intellectual
property experts. Independent mediator Jeff
While the solicitor general argued that terms of the summary plan description could Kichaven moderated the panel.
be enforced when those terms benefited participants, the Supreme Court emphasized Seated in armchairs on stage, the panel engaged
that the summary plan description was intended to provide clear, simple the judge, the audience and each other in a
communication, not legally-binding terms. The Supreme Court, however, clarified that theoretical debate about the not-so-distant future
Section 502(a)(3) authorized entry of the relief awarded by the district court because of media and technology.
that section allows a plan beneficiary "to obtain other appropriate equitable relief" for
violations of ERISA, which included reformation of contract, promissory estoppel and Joining Kozinski on stage were M. John Carson

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6/3/2011 Daily Journal - California's Largest Legal…
surcharge. of Foley & Lardner LLP; Corey Field of Ballard
Spahr LLP who currently serves as president of
The [U.S. Supreme] Court's ruling may well the Copyright Society of the USA; Joseph C.
Gratz of Durie Tangri LLP; Y akub Hazzard of
lead to a significant expansion of equitable Robins, Kaplan, Miller & Ciresi LLP; Susan J.
remedies available to employees who are Kohlmann of Jenner & Block LLP in New Y ork
City; and Diana Torres of Kirkland & Ellis LLP.
covered under pension plans and life, health
and disability insurance plans.
Criminal
The Supreme Court turned to the specific issue on which certiorari was granted: Defendant in FCPA Trial May Walk
Whether the district court applied the correct legal standard - namely a "likely harm" Prosecutors have agreed to allow one of the three
standard - in determining that CIGNA's notice violations caused its employees defendants convicted in the a significant foreign
sufficient injury to warrant legal relief. While the Court declined to make a specific bribery trial to walk away for time-served in prison
ruling on the standard of harm the CIGNA plan beneficiaries were required to rather than seeking harsher punishments.
demonstrate, it did provide guidance as to the required level of harm that would need to
be demonstrated for each equitable remedy:
Real Estate
For the equitable remedy of reformation, a showing of detrimental reliance is not Lawyers See Tactic in Trade Group Win
necessary; instead a plan beneficiary only needs to show that the contract does not did A Northern California builders group won attorney
not meet the "mutual understanding of the contracting parties." For the equitable fees against the city of Santa Rosa, atop
remedy of estoppel, detrimental reliance would be necessary. And for the equitable successfully beating back a local measure creating
remedy of surcharge, while a showing of detrimental reliance is not necessary, there higher taxes for owners of newly constructed
does need to be a showing of "actual harm" by a preponderance of the evidence. subdivision homes.

Thus, while the Supreme Court rejected CIGNA's argument that plan beneficiaries
must always show detrimental reliance to obtain relief for violations of the notice Solo and Small Firms
provisions, it did emphasize that the class members were required to make some Small Firm Is Minority-Owned Business
showing of actual harm. The Court determined that it was unclear which form of Becoming certified as a minority-owned business is
equitable relief had been awarded by the district court. Therefore, it vacated the court's not an instant recipe for success for small law
order and remanded the case for the district court to decide whether it was appropriate firms, but it can lead to greater opportunities.
to exercise its discretion under Section 502(a)(3), and which standard for determining
harm it would apply.
Judges and Judiciary
While some are calling this ruling a victory for employers and plan administrators, Oakland Federal Judge to Take Senior
this is not necessarily the case. Prior to this case, it is true that in the 9th U.S. Circuit Status
Court of Appeals, a plan participant could argue that the more favorable terms of the Oakland U.S. District Judge Saundra Brown
summary plan description controlled over the plan documents because the summary Armstrong will take senior status next March after
plan description was the only document received. See Bergt v. The Retirement Plan For nearly 21 years on the bench.
Pilots Employed By Markair Inc., 293 F.3d 1139 (9th Cir. 2002).

For a majority of employers, the summary plan description is simply part of the plan Education
documents with a "wrapper" that includes the certificate of insurance and language Litigating Peer Harassment Claims Against
required by ERISA. Thus, very often, especially with respect to life, health and disability Educational Institutions
insurance plans, there is no difference between the terms of the summary plan A recent investigation into Y ale University's policy
description and that of the plan. Further, while the Court did not specifically address for sexual harassment and sexual assault claims
this situation, if the summary plan description is referred to participants as a plan highlights a split of authority in federal law. By
document or a part of the plan document, presumably a claim under Section 502(a)(1) Michael H. Leb
(B) can still be maintained.

Amara, however, may be very beneficial to employees because the Supreme Court Labor/Employment
gave very broad meaning to the term "appropriate equitable relief," and clearly Boon or Bust for Employee Rights Under
recognized that it may include promissory estoppel, reformation and surcharge. Also, ERISA Plans?
the Department of Labor's public statements have embraced the majority opinion as a A U.S. Supreme Court ruling may provide more
landmark expansion of ERISA remedies. equitable remedies to employees covered under
pension, life, health and disability insurance plans.
Finally, one unintended consequence of this ruling could be the loss of discretion for By Robert J. McKennon of McKennon Schindler
many claims administrators. Quite often, the language granting the claims LLP
administrator discretion to make decisions and interpret the terms of the plan is
contained only in the summary plan description and not in the plan documents. If the
summary plan description is not a plan document, it cannot offer discretion, and thus Health Care & Hospital Law
an adverse claim decision would be reviewed de novo, rather than under the more US Government’s Crackdown on Corruption
lenient abuse of discretion standard of review. Targets Health Care Industry
The trend of greater focus on the health care
Whether, and to what extent, the Amara decision heralds a new era of expansion of industry for Foreign Corrupt Practices Act
employee rights relative to employee benefit plans will, for the time being, be in the violations may significantly impact California. By
hands of the lower courts as they interpret this landmark ruling. Thomas W. McNamara of Ballard Spahr LLP

Technology & Science

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E-Discovery: Why Not Mediate the Process

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6/3/2011 Daily Journal - California's Largest Legal…
to Satisfy the 'Meet and Confer’
Requirement?
When it comes to electronically stored
information, it is never too early to develop a
discovery plan with your client. By A. Marco
Turk of California State University of Dominguez
Hills

Perspective
The Story Behind Southern California’s
Indian Casinos
A look at how tribal gaming in Southern California
came to be. By Ralph A. Rossum of Claremont
McKenna College

Judicial Profile
Jose R. Benavides
Kern County (Mojave and Lake Isabella)

Government
Riverside Considers Ban on Courthouse
Auctions
On Tuesday Riverside County's Board of
Supervisors will consider becoming one of just a
handful of counties statewide to bar solicitation on
county property without approval.

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