6th Circuit: ERISA Remedy for Wrongful Denial of Benefits May Include Disgorgement Remedy Under Section 502(a)(3)

gavelThanks to Mark DeBofsky for bringing to my attention a potentially game-changing ERISA legal remedies case, Rochow v. Life Insurance Co. of North America (6th Cir. Dec. 6, 2013).

Without seeking to lay out the byzantine world of ERISA remedial law, the important question in the case is whether a plaintiff can maintain both a Section 502(a)(1)(B) claim for benefits and Section 502(a)(3) claim for breach of fiduciary at the same time.  If so, the question remains whether disgorgement of profits is cognizable remedy under Section 502(a)(3) against the insurance company for failure to pay the benefits on a timely basis.

It seems like this is the important holding by the 2-1 majority: “[W]e hold that disgorgement is an appropriate equitable remedy under § 502(a)(3) and can provide a separate remedy on top of a benefit recovery.”  This is a welcome development for ERISA plaintiffs and their attorneys, as ERISA’s remedial scheme has been narrowly construed over the years to prevent plaintiffs from receiving full recovery for their losses.

The debate going forward is whether the Supreme Court’s Varity case allows this outcome.

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Wisconsin and the Repeal of Prohibition

prohibition_ends_at_lastThis past December 5 marked the 80th anniversary of the repeal of Prohibition, America’s experiment in the creation of an alcohol-free society.

Prohibition officially ended in 1933 with the ratification of the 21st Amendment to the United States Constitution. The new Amendment repealed the earlier 18th Amendment, which had made the sale and consumption of alcoholic beverages illegal in the United States.

The repeal of Prohibition is an event that has been celebrated daily in Wisconsin for the past eight decades.

Somewhat remarkably, Wisconsin, long associated with the production of alcoholic spirits, did actually vote for Prohibition. On January 17, 1919, in the wake of intense anti-German sentiment throughout the United States and in the aftermath of World War I, in which the U.S. government had used its war powers to sharply curtail the production of alcoholic beverages, the Wisconsin legislature approved the 18th Amendment by a majority vote. However, in “defense” of the legislature, Wisconsin’s approval did not come until after the Prohibition Amendment had already been ratified by the requisite number of states to bring it into law.

At the time of the Wisconsin vote, 39 other states had already ratified the proposed Amendment, three more than necessary. North Carolina, Utah, Nebraska, Missouri, and Wyoming had all ratified the Amendment the previous day (January 16), bringing the number of ratifying states to 38. (The 39th state, Minnesota, ratified the Amendment earlier the same day that Wisconsin voted for it.) That the Amendment was already set to take effect was known in Wisconsin at the time of the vote.

But having approved of Prohibition in 1919, the enthusiasm of Wisconsin residents for the “Noble Experiment” quickly waned, even though 45% of the state had actually enacted local option prohibition laws prior to the passage of the 18th Amendment.

Even the state’s highest ranking officials began to express their reservations. Republican Governor John James Blaine (of Wingfield, Wisconsin) began to publically question the wisdom of Prohibition as early as 1923, and by the middle of the decade state (as opposed to federal) enforcement of the anti-alcohol laws had come to a halt.

In 1926, advocates of repeal managed to get a measure on that year’s state ballot asking voters if they thought the 18th Amendment should be repealed or drastically modified, and just under 72% of participants voted “yes.” The following year the legislature adopted a statute legalizing beer, which was vetoed by new governor Fred Zimmerman (R. Milwaukee), but only on the grounds that it was clearly unconstitutional.

In 1928, Wisconsin went so far as to repeal all of its state laws enforcing Prohibition, and by 1932, the party platforms of both Republicans and Democrats openly called for repeal of the 18th Amendment.

Wisconsin eventually took the lead of the repeal movement when, on December 6, 1932, former Governor Blaine, now a United States Senator, introduced the original draft of the 21st Amendment into Congress. (Blaine himself was a lame duck senator at the time, having been defeated in the Republican primary in 1932, while running for a second term.) Although Blaine is largely forgotten today, he was once widely known among drinking Americans as the “Father of the 21st Amendment.”

Unlike other Constitutional Amendments, the terms of the 21st Amendment required that it be ratified by state constitutional conventions, rather than by the state legislatures. After the amendment was approved by both houses of Congress by the requisite 2/3 majorities, the Wisconsin legislature quickly scheduled an election of delegates to a state convention.

Not surprisingly, every seat in the April convention was won by an advocate of repeal. On April 25, 1933, the delegates assembled and voted unanimously to support the 21st Amendment. By doing so, they made Wisconsin the second state to ratify the Amendment. Michigan had beaten Wisconsin to the punch, but only by a mere ten days.

Within a week, a bill legalizing alcoholic beverages had been introduced into the Wisconsin legislature in anticipation of the Amendment’s impending passage. As it turned out, there was more resistance to repeal than some had anticipated (especially in rural areas and in the South), and ratification did not occur for another 7 ½ months. However, the new Amendment officially took effect on December 5, 1933, when Utah became the 36th state to ratify.

According to contemporary accounts, large crowds took to the streets in Milwaukee that day to celebrate the return of alcoholic beverages and the revival of the Brew City’s beer and liquor industries.

 

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Culture and Racism: Some Reflections on “Zwarte Piet”

PietitieI don’t think I will ever forget the look on my roommate’s face when I offered her some pepernoten.

It must have been late October or early November. I was an exchange student in New York and my parents had mailed some much-missed Dutch goodies, including pepernoten, the tiny spicy cookies associated with the Saint Nicholas (Sinterklaas) celebration. Saint Nicholas—not to be confused with Santa Claus even though both are white men with long beards who dress in red robes—is the patron saint of children. Historically he was a Greek bishop from Myra in present-day Turkey, but for unknown reasons Dutch children are told he hails from Spain. The Saint’s grand arrival in the Netherlands by steamboat is followed by a few weeks of fun and excitement, which culminate in a big celebration on the evening of December 5.

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