Airtran Airways, Inc. v. Brenda Elem
767 F.3d 1192
| 11th Cir. | 2014Background
- Elem, an AirTran employee, benefited from AirTran's self-funded welfare plan which paid her medical costs after a car accident.
- The plan created an equitable lien by agreement on any third-party settlement funds and designated Elem as constructive trustee to reimburse the plan.
- Elem settled with the other driver for $500,000; AirTran sought reimbursement of $131,704.28 already spent on her care.
- Elem, through attorney Link, misrepresented the settlement as $25,000; two releases were prepared for $25,000 and $475,000 respectively, and funds were disbursed accordingly.
- Link later sent a $475,000 check copy to the plan administrator, exposing the deception; AirTran sued Elem, Link, and Link & Smith for ERISA violations and recovery.
- The district court granted summary judgment for AirTran and awarded fees; Rule 70 enforcement followed, but all issues became moot when payments were made.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether AirTran may obtain equitable relief under ERISA | Elem and Link contended no equitable relief; plan allowed equitable lien by agreement. | Elem/Link argued relief was legal damages, not equitable; no possession of funds by defendants persists. | Yes; plan's equitable lien by agreement attaches to specifically identifiable funds. |
| Whether the district court abused its discretion in awarding fees and costs | AirTran prevailed and the five Freeman factors favored fee award. | Defendants claim misapplication of law and lack of merit in AirTran's success. | No; district court acted within discretion; factors supported the award. |
| Whether Rule 70 order enforcement was proper or moot | Rule 70 enforcement was proper to compel compliance with judgment. | Rule 70 order misapplied; judgment may be treated as monetary, not an injunction. | Moot; but majority holds mootness; dissent argues Rule 70 order remains improper relief. |
| Whether Link and Link & Smith are proper defendants | Nonfiduciary third-party attorneys may be liable where they breach fiduciary duties. | They are not liable under ERISA for acts of Elem’s fiduciary breach. | Liability proper; nonfiduciary parties can be liable where they participate in the breach. |
Key Cases Cited
- Sereboff v. Mid Atl. Med. Servs., Inc., 547 U.S. 356 (U.S. 2006) (equitable lien by agreement does not require strict tracing)
- Knudson, 534 U.S. 204 (U.S. 2002) (strict tracing not required for equitable liens by agreement)
- Barnes v. Alexander, 232 U.S. 117 (U.S. 1914) (lien follows funds when identifiable and located in disposer’s hands)
- Popowski v. Parrott, 461 F.3d 1367 (11th Cir. 2006) (possession or control of funds affects availability of equitable relief)
- Freeman v. Continental Ins. Co., 996 F.2d 1116 (11th Cir. 1993) (five factors govern attorney’s fees under ERISA)