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In Healthcare Strategies, Inc. v. ING Life Insurance & Annuity Co., [pdf.] the United States District Court for the District of Connecticut refused to strike a demand for jury trial with respect to a claim for relief it categorized as “legal” rather than “equitable.”
In this case, a plan administrator contracted with a service provider to obtain investment-related services for an ERISA plan and its participants. The plan administrator filed suit alleging that the service-provider breached ERISA’s fiduciary duties and engaged in prohibited transactions in the following ways: (1) by including certain mutual funds as investment options for the plan based on the revenue-sharing payments it would receive, rather than the funds’ benefit to the plan; (2) by receiving revenue-sharing payments; and (3) by charging excessive compensation. The service-provider moved to dismiss all three claims and sought to strike the plaintiff’s jury demand.
The court denied the motion to strike the jury demand with respect to the first claim, which sought plan losses resulting from the alleged improper selection of investment funds. Applying the rationale of Great-West Life & Annuity Insurance Co. v. Knudson, it concluded that such a claim sought money damages, which are a traditional form of legal relief. The court distinguished this claim from the plaintiff’s other two claims—seeking the disgorgement of revenue-sharing payments and excessive compensation—which the court characterized as seeking equitable relief under Knudson.
Lessons Learned . . .
It seems curious that the court relied exclusively on Knudson’s rationale in concluding that plan losses stemming from alleged investment breaches do not qualify as equitable relief. Albeit in dicta, the U.S. Supreme Court seemingly departed from that position in CIGNA Corp. v. Amara, where it suggested, instead, that such plan losses may fall within the scope of equitable surcharge. Amara’s impact on ERISA remedies has been the subject of heated debates since the decision was issued. It is likely that the question of whether ERISA jury trials survive Amara will surface in due course.