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Birmingham Bar Association Bulletin - Fall 2013

to recover that amount from the at-fault third party. The district court rejected both arguments and granted summary judgment to U.S. Airways. The Third Circuit vacated the district court’s decision, holding that traditional “equitable doctrines and defenses” applied to suits brought pursuant to § 502(a)(3). U.S. Airways, Inc. v. McCutchen, 663 F.3d 671, 676 (3d Cir. 2011). In reaching that conclusion, the court found specifically that the principle of unjust enrichment overrode U.S. Airways’ reimbursement provision because the provision would have left McCutchen with less than full payment of his medical bills and would have resulted in U.S. Airways having obtained a windfall. 663 F.3d at 679. The Supreme Court vacated the Third Circuit’s decision, finding McCutchen’s two equitable arguments to be “doomed” by the logic of Sereboff equating a plan reimbursement provision with the historical “equitable lien by agreement” discussed in that case. U.S. Airways, __ U.S. at __, 133 S. Ct. at 1546. Citing Sereboff, the Court declared that this type of lien “both arises from and serves to carry out a contract’s provisions. So enforcing the lien means holding the parties to their mutual promises. Conversely, it means declining to apply rules – even if they would be ‘equitable’ in a contract’s absence – at odds with the parties’ expressed commitments.” Id. (citations omitted). The Court found McCutchen “cannot rely on theories of unjust enrichment to defeat U.S. Airways’ appeal to the plan’s clear terms.” Id. The Court also was not persuaded by the government’s amicus argument that a different rule should apply in the context of the common-fund doctrine. The Supreme Court’s answer was simple: “If the agreement governs, the agreement governs: The reasons we have given … for looking to the contract’s terms do not permit an attorney’s-fees exception.” Id. at 1547. The Court acknowledged that the common fund doctrine “has deep roots in equity,” but concluded that “if a contract abrogated the common-fund doctrine, the insurer is not unjustly enriched by claiming the benefit of its bargain.” Id. at 1548. “In my years on the bench, I recognized that appellate practice is a discrete and highly specialized area and that there are significant advantages to bringing in experienced appellate counsel with a fresh set of eyes. This is what our practice group seeks to provide our clients.” Thomas A. Woodall, former Alabama Supreme Court Justice Chair, Appellate Practice Group Sirote & Permutt, PC For a Fresh Look at Your Case. The Answer Is Sirote. ® Appellate Consulting & Litigation | Mediation | Arbitration Birmingham Huntsville Mobile Fort Lauderdale Pensacola 205-930-5100 • sirote.com No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers. than he had actually received. McCutchen refused the demand and U.S. Airways filed suit under ERISA § 502(a)(3). In his defense, McCutchen responded to U.S. Airways’ assertion of an equitable lien with the equitable defense of unjust enrichment. McCutchen’s unjust enrichment defense was based on two different doctrines. McCutchen argued first that U.S. Airways’ recovery was barred under what sometimes is referred to as the “made whole” doctrine. For this part of his defense, McCutchen contended that U.S. Airways was not entitled to equitable relief because he had recovered only a fraction of his total damages, and that absent an over-recovery on his part, U.S. Airways had no equitable right to reimbursement. For his second argument, McCutchen averred that under the equity-based “common fund” doctrine, U.S. Airways at the very least had to contribute a proportional share of the costs he incurred in obtaining a recovery which benefitted the plan, meaning that its reimbursement had to be marked down by 40% to cover the contingency fee paid L to R: Ryan Daugherty  Tony Smith  Kristen Cross  Barry Ragsdale  Justice Tom Woodall  Charles Driggars Birmingham Bar Bulletin/ Fall 2013 31


Birmingham Bar Association Bulletin - Fall 2013
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