equitable relief

Dewberry Group, Inc. v. Dewberry Engineers, Inc.

Issues

Can a judge include the profits of corporate affiliates who are not named as defendants in a trademark infringement case when calculating damages under the Lanham Act?

This case asks the Supreme Court if a judge can include profits of corporate affiliates, not named as defendants in a trademark infringement case when calculating how much to award in damages. Dewberry Group argues that under the Lanham Act, only the profits of the named defendant can be used in this calculation. Dewberry Group further argues that if the non-party affiliates’ profits were to be used, there should be an opportunity to litigate the matter of corporate separateness. Dewberry Engineers, on the other hand, counters that the Lanham Act consists of a two-step process where the second step allows the judge to award a “just sum” that may include the non-party affiliates’ profits. Additionally, Dewberry Engineers contends that there is no need for a separate legal analysis to disregard corporate separateness because the Lanham Act allows a judge to consider all relevant evidence including the non-party affiliates’ profits. The Supreme Court’s decision in this case will impact future trademark infringement cases, particularly how the corporate form will be considered in awarding damages under the Lanham Act.

Questions as Framed for the Court by the Parties

Whether an award of the “defendant’s profits” under the Lanham Act can include an order for the defendant to disgorge the distinct profits of legally separate non-party corporate affiliates.

The Lanham Act protects trademark holders against other individuals and corporations from reproducing, counterfeiting, copying, or imitating their registered trademark by allowing the registrants to file a lawsuit against infringers. Dewberry Eng’rs v.

Acknowledgments

The authors would like to thank Professors Oskar Liivak and Charles K. Whitehead for their insights into this case.

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LaRue v. DeWolff, Boberg & Assoc.

Issues

1. May an individual bring a claim on behalf of the plan under ERISA section 502(a)(2) for failure to follow the individual's investment instructions, where the only recovery would be to the individual's personal account?

2. When ERISA section 502(a)(3) limits a participant to suing for equitable relief, does that include reimbursement by a fiduciary for lost profits to a 401(k) retirement plan?

 

James LaRue, an employee of the management consulting firm DeWolff, Bobert & Associates, sued his employer for improper management of his 401(k) pension plan. Under DeWolff's pension plan, LaRue could choose among a variety of investment options for his individual account. In his suit, LaRue alleged that DeWolff failed to follow his investment instructions. LaRue sued under sections 502(a)(2) and 502(a)(3) of the Employee Retirement Income Security Act (ERISA). The Fourth Circuit held that neither section authorized LaRue's claim because it was an individual claim and because LaRue sought compensatory damages. LaRue argues that his claim benefits the plan as a whole rather than himself individually, and that he seeks equitable relief rather than compensatory damages. The outcome of this case will determine whether an individual can use these provisions to sue an employer for improper management of a pension fund.

Questions as Framed for the Court by the Parties

1. Section 502(a)(2) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. 1132(a)(2), provides that a "civil action may be brought ... by a participant ... for appropriate relief under section 1109 of this title." 29 U.S.C. 1109 states that "a fiduciary with respect to a plan who breaches any ... duties imposed upon fiduciaries ... shall be personally liable to make good to such plan any losses to the plan resulting from each such breach."

The First Question Presented is:

Does ? 502(a)(2) of ERISA permit a participant to bring an action to recover losses attributable to his account in a "defined contribution plan" that were caused by a fiduciary breach? Hereinafter, this will be referred to as the "502(a)(2) Question."

2. Section 502(a)(3) of ERISA, 29 U.S.C. 1132(a)(3), provides that a "civil action may be brought ... by a participant ... to obtain other appropriate equitable relief ... to redress ... violations" of the statute.

The Second Question Presented is:

Does ? 502(a)(3) permit a participant to bring an action for monetary "make-whole" relief to compensate for losses directly caused by fiduciary breach (known in pre-merger courts of equity as "surcharge")? Hereinafter, this will be referred to as the "502(a)(3) Question."

James LaRue, an employee of the management consulting firm DeWolff, Boberg & Associates ("DeWolff"), brought suit against his employer and his employer's 401(k) plan for breach of fiduciary duty with respect to administration of the plan, in which LaRue was a participant. See LaRue v. DeWolff, Boberg & Assoc., Inc.

Acknowledgments

The authors would like to thank Professors Davidson Douglas and Emily Sherwin for their insights into LaRue v. DeWolff.

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Liu v. Securities and Exchange Commission

Issues

Do the federal securities law statutes authorize the Securities and Exchange Commission to obtain disgorgement for violations under the statutes?

This case asks the Supreme Court to determine whether the Securities and Exchange Commission (“SEC”) may obtain disgorgement in civil actions under its power to seek equitable relief, even though the Supreme Court has previously ruled that disgorgement is a penalty rather than an equitable remedy at least under some circumstances. Petitioners Liu and Wang contend that the Supreme Court ruled in Kokesh v. SEC that disgorgement was a penalty, and that therefore the SEC lacks the authority to order Liu and Wang to disgorge any ill-gotten gains in connection with their investment fund. The SEC counters that Kokesh held disgorgement to be a penalty only for statute of limitations purposes. The outcome of this case has implications on the SEC’s effectiveness in future civil actions at deterring financial crime and at making the victims of financial crime whole.

Questions as Framed for the Court by the Parties

Whether the Securities and Exchange Commission may seek and obtain disgorgement from a court as “equitable relief” for a securities law violation even though the Supreme Court has determined that such disgorgement is a penalty.

Petitioners Charles Liu (“Liu”) and his wife, Xin Wang (“Wang”), operated an investment fund under the EB-5 Immigrant Investor Program for Chinese investors. SEC v. Liu at 2. The United States Citizenship and Immigration Services (“USCIS”) manages and oversees the EB-5 Immigrant Investor Program.

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Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan (14-723)

Issues

Under the Employee Retirement Income Security Act (ERISA), is it “appropriate equitable relief” for an ERISA fiduciary to sue a beneficiary for reimbursement of an alleged overpayment if the fiduciary does not identify specific funds to recover?

The Supreme Court will determine whether it is “appropriate equitable relief” under the Employee Retirement Income Security Act of 1974 (ERISA) to require a person to reimburse his benefits plan for medical expenses even though his settlement proceeds are dissipated. See Brief for Petitioner, Robert Montanile at i. ERISA governs the administration of private pension funds. ERISA section 502(a)(3) provides that “[a] civil action may be brought . . . by . . . [a] fiduciary . . . to obtain . . . appropriate equitable relief.” See 29 U.S.C. § 1132(a)(3). Robert Montanile received a $500,000 settlement in connection with injuries he sustained when he was in an accident with a drunk driver. Pursuant to an agreement, the Board of Trustees (the “Board”) of Montanile’s insurance plan sought to recover $120,044.02 from the settlement proceeds to reimburse the plan for covering Montanile’s medical expenses. When the parties were unable to settle, the Board sued Montanile under section 502(a)(3). But Montanile argues that reimbursement is not an appropriate equitable remedy here, because his settlement fund has been dissipated and an equitable lien by agreement can only be enforced against identifiable property and not Montanile’s general assets. See Brief for Petitioner at 29-32. The Board maintains that reimbursement is appropriate equitable relief, because the insurance plan has a reimbursement provision requiring Montanile to repay medical expenses. See Brief for Respondent, Board of Trustees of the National Elevator Industry Health Benefit Plan at 19. The Board contends that dissipation of the settlement fund does not nullify the insurance plan’s reimbursement provision. See id. The Court’s decision in this case could change benefit plans’ method of reimbursement and may cause beneficiaries to incur additional costs. See Brief of Amicus Curiae National Coordinating Committee for Multiemployer Plans, in Support of Respondent at 9-10, 12-15.

Questions as Framed for the Court by the Parties

Does a lawsuit by an Employee Retirement Income Security Act (ERISA) fiduciary against a participant to recover an alleged overpayment by the plan seek “equitable relief” within the meaning of ERISA §502(a)(3), 29 U.S.C. § 1132(a)(3), if the fiduciary has not identified a particular fund that is in the participant’s possession and control at the time the fiduciary asserts its claim?

On December 1, 2008, a drunk driver injured Robert Montanile in a car accident. See Bd. of Trs. of the Nat’l Elevator Indus. Health Benefit Plan v. Montanile, 593 Fed. Appx. 903, 906 (U.S. App. 2014). Montanile suffered injuries to his neck and lower back that required surgery and other medical care.

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Sereboff v. Mid Atlantic Medical Services, Inc.

Issues

Does the limitation of remedies to “appropriate equitable relief” create a blanket prohibition against a claim for money owed in breach of a contract because such relief is traditionally not characterized as an equitable remedy?

 

With the passage of the Employee Retirement Security Act of 1974 (ERISA), Congress sought to regulate employee benefit plans, including employer-provided health care benefits. However, the particular scheme of remedies Congress created for both plan participants and plan providers has been a source of mischief for courts hearing claims of ERISA violations. Traditionally, the Supreme Court has held Congress to their particular word choice as to the remedies available to aggrieved parties, sometimes creating results that do not seem particularly fair to the lay observer. In Sereboff, the Court will again take up the issue of what remedies Congress contemplated when it envisioned “appropriate equitable relief” under ERISA.

Questions as Framed for the Court by the Parties

Can a plan fiduciary bring a civil action against a plan participant to obtain “appropriate equitable relief” under Section 502(a)(3) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132 (a)(3), where a term of the plan requires the participant to reimburse medical expenses advanced by the plan if the participant recovers money from a third party tortfeasor and possesses such payments in an identifiable fund?

Joel and Marlene Sereboff were injured in a car accident in the summer of 2000. They received almost $74,869.37 in payments for medical services from Mid Atlantic Medical Services, Inc. (“MAMSI”), their healthcare insurer under a plan provided through Marlene’s employer. 407 F.3d 212, 215 (4th Cir. 2005). Later, the Sereboffs recovered $750,000 from a third party they claimed was responsible for the accident. Id. at 216.

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Trump v. Cook

Issues

Whether the president’s removal of a member of the Federal Reserve comported with the relevant procedural requirements and whether the removal was for sufficient cause.

This case considers whether the removal of Lisa Cook, a member of the Federal Reserve Board of Governors, by President Donald J. Trump, comported with constitutional and statutory requirements. The Court must address a temporary restraining order leaving Cook in her position after President Trump sought the first-ever (attempted) presidential removal of a Federal Reserve Board of Governors member, citing an alleged incident of prior fraud by Cook. The parties disagree about what, if any, cause is required for a president to remove a Board member. Trump argues that he has broad discretion to remove a Board member, with only minimal procedural protections required, whereas Cook construes the presidential removal power narrowly, and argues for robust procedural protections against removal. This dispute could reshape the relationship between the president and the Federal Reserve, potentially limiting or ending the Federal Reserve’s longstanding independence in setting monetary policy.

Questions as Framed for the Court by the Parties

Whether the Supreme Court should stay a district court ruling preventing the president from firing a member of the Federal Reserve Board of Governors.

Congress established the Federal Reserve (“the Fed”) by the Federal Reserve Act of 1913. Cook v.

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Trump v. Slaughter

Issues

Does the separation of powers permit statutory removal protections for heads of multimember administrative agencies? If so, do federal courts have the authority to reinstate wrongfully discharged members of such agencies?

This case asks the Supreme Court to decide whether “for-cause” removal protections over members of multimember administrative agencies, like the Federal Trade Commission (“FTC”), violate the separation of powers and, even if they do, whether federal courts have the power to reinstate wrongfully removed officers. President Donald J. Trump claims that the Constitution vests the entire executive power in the president and, therefore, the president must be able to control officers who exercise power on his behalf through the threat of removal. Rebecca Kelly Slaughter argues that removal protections benefit the separation of powers and enable administrative agencies to function as Congress and the founders intended. This case implicates the amount of power that a president may constitutionally exert on agencies and the stability of such agencies, including, potentially, the Federal Reserve, going forward.

Questions as Framed for the Court by the Parties

(1) Whether the statutory removal protections for members of the Federal Trade Commission violate the separation of powers and, if so, whether Humphrey’s Executor v. United States should be overruled. 

(2) Whether a federal court may prevent a person’s removal from public office, either through relief at equity or at law.

Congress established the Federal Trade Commission (“FTC”) through the FTC Act of 1914. Slaughter v.

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