Mertens V. Hewitt Associates - Background

Background

According to John H. Langbein, Sterling Professor of Law and Legal History at Yale University the trouble got off to a bad start with Justice John Paul Stevens' dicta in Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134 (1985) a case where the plaintiff was an employee who after getting her improperly denied disability income insurance benefits paid in full also sought money damages for physical and emotional injury for the delay of six months while the employer had denied payment. Because Section 502(a)(2) of ERISA ran to the benefit of the employee benefit plan (rather than the employee) and because the Ninth Circuit gave the plaintiff victory based on that section instead of Section 502(a)(3) which ran to the employee, the case was presented to the High Court in an awkward procedural posture. This mistake in choosing which section of ERISA to base the claim would lead to an error by Justice Scalia later in Mertens.

Because the plaintiff in Russell won in the Ninth Circuit, and because all Ninth Circuit decisions must be reversed by the High Court, Justice Stevens' dicta said that "remedying consequential injury even under the authorization for 'appropriate equitable relief' in section 502(a)(3) would entail the creation of an implied cause of action, contrary to the Court's established constraints on the implication of causes of action under federal statutes." Langbein at 1341. Stevens then suggested that ERISA was only concerned with protecting employee benefit plans not employees. This error in construing that Section 502(a)(2) limit to plans into a limit to all of ERISA remedy led to the High Court in denying an effective remedy to employees under ERISA Section 502(a)(3) in Mertens.

When Mertens reached the High Court, Russell was already in the U.S. Reports suggesting that money damages for consequential injury sounding in ERISA is an implied right of action rather than an express right.

Read more about this topic:  Mertens V. Hewitt Associates

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