Just before Thanksgiving the United States Supreme Court decided not to hear the appeal of the plaintiff in Teets v. Great-West Life & Annuity Ins. Co., (U.S., No. 19-382, certiorari denied 11/25/190). The issue in the case was whether Great-West entered into a prohibited transaction when contracting with plans to permit participants to invest their accounts in Great-West’s guaranteed rate fund that provided a guaranteed rate of return for assets invested. Great-West had the discretion to set the guaranteed rate of return under the contracts quarterly, and the plaintiff alleged it made millions on the spread between the guaranteed rate and Great-West’s actual investment returns in its general account. The plaintiff, who invested in the fund through his employer’s plan, sought disgorgement of the profits on behalf of a class representing 270,000 participants in 13,000 plans.
Originally, the plaintiff also maintained that Great-West was a fiduciary for having discretion over the investments in the fund and thus, its compensation. Both parties moved for summary judgment. The District Court granted summary judgment for Great-West and the U.S. Court of Appeals for the Tenth Circuit affirmed the decision. Both courts found that Great-West was not acting as a fiduciary when setting the guaranteed rate quarterly. The plaintiff did not request the Supreme Court to hear this issue. With the high court passing on the prohibited transaction issue, the decision of the Tenth Circuit affirming summary judgment in favor of Great-West stands.
The Tenth Circuit ruled that the plaintiff failed to show that the relief it sought was equitable relief allowed under ERISA. Plaintiff failed to show that Great-West possessed particular property that rightfully belonged to him or in which he could assert title or right to possession and unless the profits he sought to disgorge were generated from property over which he could assert title or right to possession, an order to disgorge them is a legal remedy unavailable under ERISA. Therefore, disgorgement of profits as equitable relief was unavailable to the plaintiff-class.