US Airways, Inc. v. McCutchen (11-1285)

argument 11-1285

US Airways, Inc. v. McCutchen

Supreme Court of the United States 1h 1m 7 speakers 8 chapters transcribed 4 days ago official recording ↗

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What is the central ERISA issue presented in US Airways v. McCutchen?

John G. Roberts 0:02

We'll hear argument this morning in Case 11-1285, U.S. Airways v. McCutcheon. Mr. Cotill.

Donald B. Verrilli Jr. 0:08

Thank you, Mr. Chief Justice, and may it please the Court. ERISA permits planned fiduciaries to seek appropriate equitable relief to enforce the terms of the plan. Six years ago, this Court in Saraboff concluded that reimbursement actions by ERISA plans, such as the one at issue here, seek equitable liens by agreement. And because the plan's claim here is one for an equitable lien by agreement, that means one parcel of equitable defenses, those derived from adjustment enrichment, offer no help to respondents. If you go to equity. Why

Elena Kagan 0:45

aren't you bound by equity?

Donald B. Verrilli Jr. 0:46

MR. We certainly are, Justice Sotomayor, bound by equity. Our contention is not that once you say the magic words equitable lien by agreement that somehow transforms into a we win as plaintiffs rule at all. JUSTICE SOTOMAYOR. Well, but that's exactly

Elena Kagan 1:00

what your bottom line is, which is you have someone else do the work for you and you don't pay

Donald B. Verrilli Jr. 1:06

them. MR. Quite to the contrary, Justice Sotomayor. Our position is that the rules of equity bind equitable liens by agreement. just as they bind anything else. We're not trying to say that the equity does — So why

Elena Kagan 1:17

does your lien have priority to the attorney's lien that is normally created at the commencement of a litigation? Why is the attorney bound by the agreement you signed with the beneficiary?

Donald B. Verrilli Jr. 1:34

So our position is that the attorney doesn't — there is no lien created with the attorney, that once Mr. Saraboff entered into an agreement with U.S. Air, that agreement said — provided for a 100 percent reimbursement right. And there is no — essentially what happened is Mr. Saraboff — excuse me, Mr. McCutcheon double promised his money. He promised it first to — first to the U.S. Airways Plan, and then he promised it to his attorneys. And that's a problem that he might have with his attorneys, although, as I understand the facts here, maybe that debt has been forgiven. But it is not something that creates an independent lien on the money that's at issue here. That is, the rules in equity say that it is the agreement that controls when we're talking about an equitable lien by agreement.

Ruth Bader Ginsburg 2:30

Ms. Saraboff, that you referred to, that certainly describes the lien you rely on, but there's a footnote toward the end. that leaves open the make-hold doctrine and I assume also the common fund doctrine. So it's an open question.

Donald B. Verrilli Jr. 2:54

All right. So our position is not that Saraboff's letter controls this case. We do think the reasoning of Saraboff essentially does decide the question. Because what Saraboff said, Justice Ginsburg, and this is at page 368 of the opinion in the text, It said the Sarabost had argued a make-whole doctrine. And in response, what this Court said is, quote, Mid-Atlantic's claim is not considered equitable because it is a subrogation claim. Mid-Atlantic's action qualifies as an equitable remedy because it is indistinguishable from an action to enforce an equitable lien established by agreement of the sort epitomized by our decision in Barnes. Mid-Atlantic need not characterize its action as a freestanding action for equitable subrogation.

Donald B. Verrilli Jr. 3:39

Accordingly, the parcel of equitable defenses that Saraboff's claim accompany any such action are beside the point, beside the point. And our position is once the Court has decided that the type of action that is at issue here is an equitable lien by agreement, the relevant doctrine, and this is a further answer to you, Justice Sotomayor, that the Court is to look to is how are equitable liens by agreement evaluated in equity? And those rules in equity say that that, again, the general rules of equity apply and govern that. But the one place, the one set of defenses that aren't governed are those that sound an unjust enrichment. I

Anthony M. Kennedy 4:18

recognize that we're talking about a matter of Federal law here. What about the law of most of the States? Suppose there's an agreement with an insurer and an insured. that says the insured gets 100 percent of the proceeds.