What ERISA Means by "Equitable": The Supreme Court's Trail of Error in Russell, Mertens and Great-West
In a pair of cases decided by 5-4 majorities (Mertens, 1993; Great-West, 2002) interpreting the scope of remedy for wrongdoing under ERISA, the Supreme Court has construed the statute's grant of "appropriate equitable relief" to prevent the victims of ERISA-prohibited conduct from being compensated for consequential injury. The Court read ERISA's authorization of "appropriate equitable relief" to have disinterred the law/equity division from the era before the two systems were fused in the 1930s, and the Court treated equity as not having awarded monetary relief. As a consequence, lower courts have held ERISA to preclude remedy in a host of situations in which wrongful plan administration (almost always in violation of ERISA's fiduciary rules) has caused expense, physical harm, or other suffering.
This paper explains why and how the Court's interpretation of ERISA remedy law went wrong, beginning with the Court's earlier encounter with the field in Russell (1985). The main theme is that the reach of trust-law principles in ERISA is far deeper and more controlling than the opinions Mertens and Great-West allow. When federalizing the administration of pension and employee benefit plans in ERISA, Congress made a deliberate choice to subject these plans to the pre-existing regime of trust law rather than to invent a new regulatory structure. In its most important dimension, ERISA is federal trust law. Congress intended ERISA remedy law to replicate the core principles of trust remedy law in the regulation of pension and benefit plans, including the long-familiar make-whole standard of trust remedy law.