Filed: October 19, 2004
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 03-1985
(CA-98-17-7-F)
JOSEPH D. GRIGGS,
Plaintiff - Appellee,
versus
E.I. DUPONT DE NEMOURS & COMPANY,
Defendant - Appellant.
O R D E R
The court amends its opinion filed September 29, 2004, as
follows:
On page 25, first line of footnote * -- “Griggs” is corrected
to read “DuPont” and “his” is corrected to read “its.”
For the Court - By Direction
/s/ Patricia S. Connor
Clerk
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
JOSEPH D. GRIGGS,
Plaintiff-Appellee,
v.
No. 03-1985
E. I. DUPONT DE NEMOURS &
COMPANY,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of North Carolina, at Wilmington.
James C. Fox, Senior District Judge.
(CA-98-17-7-F)
Argued: June 4, 2004
Decided: September 29, 2004
Before WILKINS, Chief Judge, and NIEMEYER and
TRAXLER, Circuit Judges.
Affirmed in part, vacated in part, and remanded by published opinion.
Judge Traxler wrote the majority opinion, in which Judge Niemeyer
joined. Chief Judge Wilkins wrote a concurring and dissenting opin-
ion.
COUNSEL
ARGUED: Raymond Michael Ripple, E. I. DU PONT DE
NEMOURS & COMPANY, Wilmington, Delaware, for Appellant.
Michael Murchison, MURCHISON, TAYLOR & GIBSON, P.L.L.C.,
2 GRIGGS v. E. I. DUPONT DE NEMOURS
Wilmington, North Carolina, for Appellee. ON BRIEF: David F.
Dabbs, MCGUIREWOODS, L.L.P., Richmond, Virginia; Donna L.
Goodman, E. I. DU PONT DE NEMOURS & COMPANY, Wilming-
ton, Delaware, for Appellant.
OPINION
TRAXLER, Circuit Judge:
At the heart of this case, which is before us for a second time, see
Griggs v. E.I. DuPont de Nemours & Co., 237 F.3d 371 (4th Cir.
2001) ("Griggs I"), are questions about the propriety of a rescission-
ary remedy in an action governed by the Employee Retirement
Income Security Act of 1974 ("ERISA"), 29 U.S.C.A. §§ 1001-1461
(West 1999 & Supp. 2004). We conclude that, in general, rescission
is a remedy traditionally available in equity and that rescission is
therefore a proper remedy under ERISA. As to this case, however, we
conclude that the district court erred with regard to certain aspects of
the equitable relief that it fashioned. Accordingly, we affirm in part,
vacate in part, and remand.
I.
Joseph Griggs, a long-time employee of E.I. DuPont de Nemours
& Co., took early retirement in 1994 after learning that he was eligi-
ble to participate in DuPont’s temporary pension system ("TPS"), a
program that paid eligible employees one month’s salary for every
two years of service. All of the TPS information that DuPont provided
to eligible employees stated that the TPS benefit could be taken in the
form of a lifetime annuity with monthly payments that would be sub-
ject to federal tax or as a lump sum that could be rolled over tax-free
into an IRA or other qualified retirement account. Griggs elected the
lump-sum distribution, which was calculated to be $132,900. Before
Griggs officially retired, however, DuPont learned that because of
Griggs’s salary level, his lump sum TPS benefit could not be rolled
over and would be subject to federal tax. DuPont never corrected the
information it had given Griggs and never told Griggs that his lump-
sum TPS benefit would be taxed. When Griggs retired, DuPont gave
GRIGGS v. E. I. DUPONT DE NEMOURS 3
him a check for the amount of his TPS benefit, less approximately
$50,000 in federal taxes. Griggs ultimately paid approximately
$58,000 in taxes on his TPS benefit, leaving Griggs with a net TPS
distribution of $74,627.
Griggs filed an action in North Carolina state court, claiming that
DuPont negligently misrepresented to him the tax consequences of his
TPS election. Because Griggs’s state-law claims were preempted by
ERISA, DuPont removed the case to federal court. The district court
concluded that DuPont breached its fiduciary duty by failing to tell
Griggs that he was ineligible for a tax-free lump sum distribution, but
that ERISA provided no remedy for DuPont’s wrong.
On appeal, this court concluded that some equitable remedy might
be available to Griggs, perhaps reinstatement of Griggs to his prior
position, or reinstatement to the benefit plan so that he could make a
new TPS election. Accordingly, we remanded for further proceedings
before the district court:
[W]e remand for further factual development with respect to
whether the reinstatement of the parties to the pre-election
status quo is appropriate. In determining whether such relief
is appropriate, the district court’s consideration should be
broader than the question of whether it would be appropri-
ate, or even possible at this point, to reinstate Griggs to his
job. The district court should also consider whether it would
be appropriate, or even possible, to return Griggs to his pre-
election position so that he could make an alternate TPS dis-
tribution election. In either event, we note that because rein-
statement is equitable in nature, Griggs is not entitled to a
windfall; if he is reinstated, we agree with the district court
that he must return his TPS benefit. Indeed, Griggs concedes
that he would be required to return at least part of his TPS
distribution. We will leave it to the sound discretion of the
district court to consider the subtleties that will surely arise,
including what portion of Griggs’s benefit he must return if
equitable relief is appropriate, i.e., on whom the loss occa-
sioned by the tax liability should fall.
Griggs I, 237 F.3d at 385-86.
4 GRIGGS v. E. I. DUPONT DE NEMOURS
After remand, the district court concluded that reinstating Griggs
to his prior position would not be appropriate. The court noted that
Griggs had been out of the work force since 1994, and that the
changes in the company and technological advancements in the indus-
try "would render Griggs’s efficacy in his former position question-
able, at best." J.A. 288. Moreover, reinstating Griggs "would require
the displacement of an incumbent employee." J.A. 287. Thus, the
court declined to order reinstatement. Because Griggs has not
appealed this aspect of the district court’s order, we will not consider
whether reinstatement of Griggs to his prior position would have been
proper.
The court did, however, conclude that it would be appropriate to
allow Griggs to rescind his election to take his TPS benefit as a lump-
sum and to instead select the lifetime annuity option.1 The court
ordered DuPont to pay Griggs a lump sum of the monthly annuity
payments, retroactive to the date of his original TPS election—
$78,861. Because the monthly annuity payment is fully taxable, the
court determined that Griggs would be taxed twice on the same
money if he were required to repay DuPont the gross amount of the
TPS benefit he recovered. The district court therefore ordered Griggs
to repay only the amount he actually received, net of taxes—$74,627.
The court ordered Griggs to pursue all available avenues for recover-
ing the state and federal taxes paid on the original TPS lump-sum dis-
tribution, and the court required Griggs to involve DuPont in this
process, for example, by submitting his proposed tax filings to
DuPont 30 days before filing with the IRS and conferring with
DuPont about any communication he might receive from the IRS.
Any money that Griggs recovered was to be turned over to DuPont.
By separate order, the district court awarded Griggs more than
$40,000 in attorney’s fees and costs.
DuPont appeals. DuPont first contends that the rescissionary rem-
edy ordered by the district court is not proper in an ERISA action.
Alternatively, DuPont argues that even if rescission might, in general,
1
This rescissionary relief is what we characterized in Griggs I as rein-
statement to Griggs’s pre-election position for purposes of making a new
TPS election. We will continue the practice of the district court and the
parties and refer to this remedy as rescission.
GRIGGS v. E. I. DUPONT DE NEMOURS 5
be an appropriate remedy in some ERISA cases, it is not appropriate
in this case, because the parties cannot be fully restored to their prior
positions. Finally, DuPont challenges the award of attorney’s fees and
costs.
II.
A.
Griggs is proceeding under section 502(a)(3) of ERISA, which
authorizes a beneficiary or participant to bring a civil action "(A) to
enjoin any act or practice which violates any provision of this sub-
chapter or the terms of the plan, or (B) to obtain other appropriate
equitable relief (i) to redress such violations or (ii) to enforce any pro-
visions of this subchapter or the terms of the plan." 29 U.S.C.A.
§ 1132(a)(3) (West 1999). Griggs is not seeking an injunction, but is
instead seeking "other appropriate equitable relief" under section
502(a)(3)(B). The question, then, is whether the relief Griggs sought
and was awarded is "appropriate equitable relief."
In Mertens v. Hewitt Associates, 508 U.S. 248 (1993), the Supreme
Court considered the scope of relief available under section
502(a)(3)(B). While recognizing that ERISA’s roots are grounded in
the law of trusts, the Court rejected the argument that "appropriate
equitable relief" under section 502(a)(3)(B) should mean whatever
relief a common-law court of equity could have granted in a breach
of trust case. The Court noted that with regard to trust actions, courts
of equity could award monetary damages, the quintessential legal
remedy, and that courts of equity in other situations could "establish
purely legal rights and grant legal remedies which would otherwise
be beyond the scope of its authority." Id. at 256 (internal quotation
marks omitted). Given the broad powers available to equity courts,
particularly in breach of trust actions, the Supreme Court explained
that to read section 502(a)(3)(B) as authorizing "all relief available for
breach of trust at common law" would render meaningless Congress’
attempt to limit relief to appropriate equitable relief:
Since all relief available for breach of trust could be
obtained from a court of equity, limiting the sort of relief
obtainable under § 502(a)(3) to "equitable relief" in the
6 GRIGGS v. E. I. DUPONT DE NEMOURS
sense of "whatever relief a common-law court of equity
could provide in such a case" would limit the relief not at
all. We will not read the statute to render the modifier super-
fluous.
Id. at 257-58 (internal footnote omitted). The Court therefore con-
cluded that under section 502(a)(3), relief was limited "to those cate-
gories of relief that were typically available in equity (such as
injunction, mandamus, and restitution, but not compensatory dam-
ages)." Id. at 256.
Relying on Mertens, this court in Griggs I concluded that the rem-
edy sought by Griggs was typically available in equity and thus gen-
erally permissible under section 502(a)(3). See Griggs I, 237 F.3d at
384-85. In this appeal, DuPont seeks to re-argue this point, contend-
ing that it is inconsistent with the Supreme Court’s opinion in Great-
West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204 (2002),
which was issued after this court’s decision in Griggs I. As we
explain below, we do not believe that Great-West requires us to reject
the conclusion we reached in Griggs I.
In Great-West, Janette Knudson, a beneficiary of an ERISA-
governed employee welfare benefit plan, was injured in a car acci-
dent. The plan included a reimbursement provision that provided the
plan with "the right to recover from the beneficiary any payment for
benefits paid by the Plan that the beneficiary is entitled to recover
from a third party." Great-West, 534 U.S. at 207 (internal quotation
marks and alteration omitted). The Great-West plan covered more
than $400,000 of Knudson’s medical expenses, and Great-West
brought an action under section 502(a)(3) seeking restitution of the
medical expenses it had paid on Knudson’s behalf.
Relying on Mertens, the Supreme Court noted that Great-West’s
claim could be brought under ERISA only if the relief it was seeking
fell within those categories of relief that were typically available in
equity. See Great-West, 534 U.S. at 210. The Court explained that
restitution claims can sound in equity or at law, depending on the
nature of the relief sought in the particular case:
[A] plaintiff could seek restitution in equity, ordinarily in the
form of a constructive trust or an equitable lien, where
GRIGGS v. E. I. DUPONT DE NEMOURS 7
money or property identified as belonging in good con-
science to the plaintiff could clearly be traced to particular
funds or property in the defendant’s possession. A court of
equity could then order a defendant to transfer title (in the
case of the constructive trust) or to give a security interest
(in the case of the equitable lien) to a plaintiff who was, in
the eyes of equity, the true owner. But where the property
sought to be recovered or its proceeds have been dissipated
so that no product remains, [the plaintiff’s] claim is only
that of a general creditor, and the plaintiff cannot enforce a
constructive trust of or an equitable lien upon other property
of the defendant. Thus, for restitution to lie in equity, the
action generally must seek not to impose personal liability
on the defendant, but to restore to the plaintiff particular
funds or property in the defendant’s possession.
Id. at 213-14 (internal citations, quotation marks, and alterations omit-
ted). The Supreme Court then noted that the funds sought by Great-
West were not in Knudson’s possession, but instead had been dis-
bursed into a special needs trust to pay for Knudson’s future medical
expenses. Great-West thus was not seeking equitable relief under sec-
tion 502(a)(3)(B), because it was not claiming "particular funds that,
in good conscience, belong to petitioners," but was instead arguing
that it was "contractually entitled to some funds for benefits that they
conferred." Id. at 214. The Court therefore concluded that "[b]ecause
petitioners are seeking legal relief—the imposition of personal liabil-
ity on respondents for a contractual obligation to pay money—
§ 502(a)(3) does not authorize this action." Id. at 221.
At one level, the Supreme Court in Great-West simply applied the
rule announced in Mertens to a specific category of equitable claim—
namely, a claim for restitution. Great-West did not alter the rule
announced in Mertens, and this court in Griggs I reached its conclu-
sion by applying the Mertens rule. To that extent, then, Griggs I can-
not be viewed as inconsistent with Great-West.
The Great-West Court did, however, expand upon the Mertens rule
in a way that is relevant to this case, by focusing for the first time on
the differences between restitution at law and restitution in equity
"[i]n the days of the divided bench." Great-West, 534 U.S. at 212.
8 GRIGGS v. E. I. DUPONT DE NEMOURS
Because Griggs I was decided before Great-West, we did not then
consider whether, in the days of the divided bench, the rescission
claim asserted by Griggs would have fallen on the law or equity side
of the divide. We consider that question now.
B.
"A rescission is an avoidance of a transaction. . . . Except as the
parties might agree to the contrary, rescission will normally be
accompanied by restitution on both sides." Dan B. Dobbs, Handbook
on the Law of Remedies § 4.3 at 254 (West 1973). Like the restitution
claim involved in Great-West, a rescission claim can sound in law or
in equity.2
Broadly speaking, rescission at law occurs when the plaintiff has
a right to unilaterally avoid a contract. The rescission itself is effected
when the plaintiff gives notice to the defendant that the transaction
has been avoided and tenders to the defendant the benefits received
by the plaintiff under the contract. See Handbook on Remedies, § 4.3
at 255.
Once the plaintiff has rescinded, he is entitled to recover
back what he gave under the contract. If the defendant does
not give it back voluntarily, the plaintiff may sue for it . . . .
Thus the court in cases of rescission "at law" does not effect
the rescission and the court’s only role is to get back the
plaintiff’s property or its value.
Id. § 4.8 at 293; see also Acton v. J.B. Deliran Corp., 737 P.2d 996,
2
In United States v. Scruggs, 356 F.3d 539 (4th Cir.), cert. denied, 124
S. Ct. 2429 (2004), this court noted the various meanings that historically
have been associated with the term "rescission" and that the Uniform
Commercial Code and the Restatement (Second) of Contracts "now
employ different words to distinguish among the various causes of con-
tract termination—all of which have been characterized, at one time or
another, as ‘rescission.’" Id. at 545. Because Great-West requires us to
resolve this ERISA case by considering the law in existence "[i]n the
days of the divided bench," Great-West, 534 U.S. at 212, we will believe
it is proper to refer to the cause of action here as one seeking rescission.
GRIGGS v. E. I. DUPONT DE NEMOURS 9
999 n.5 (Utah 1987) ("Rescission at law is accomplished without the
aid of a court. It is completed when, having grounds justifying rescis-
sion, one party to a contract notifies the other party that he intends to
rescind the contract and returns that which he received under the con-
tract.").
An action for rescission in equity, however, "is not a suit based
upon the rescission already accomplished by the plaintiff, but a suit
to have the court decree a rescission." Handbook on Remedies § 4.8
at 294. Thus,
[i]n equity . . ., the rescission is effected by the decree of the
equity court which entertains the action for the express pur-
pose of rescinding the contract and rendering a decree grant-
ing such relief. In other words, a court of equity grants
rescission or cancellation, and its decree wipes out the
instrument, and renders it as though it does not exist.
Haumont v. Security State Bank, 374 N.W.2d 2, 7 (Neb. 1985); see
also Maumelle Co. v. Eskola, 865 S.W.2d 272, 274 (Ark. 1993)
("With rescission in equity the affirmative powers of the court of
equity are used to rescind, or undo, the contract."); Omlid v. Sweeney,
484 N.W.2d 486, 490 (N.D. 1992) ("A rescission action at law is
essentially an action for restitution based upon a party’s prior unilat-
eral rescission whereas an action in equity seeks to have the court ter-
minate the contract and order restoration."). Resort to a court of
equity is typically required if effective restitution can be obtained
only through the cancellation or amendment of a document. See
Handbook on Remedies § 4.3 at 255.
Here, Griggs cannot unilaterally "unretire" by returning his TPS
benefit and returning to work. Instead, Griggs seeks to amend his TPS
election to select a monthly annuity rather than lump sum payment.
Thus, in this case, it is clear that the type of rescission involved is
equitable, not legal.3
3
We note that both before and after Great-West was decided, other
courts have likewise concluded, albeit under different factual circum-
stances, that actions seeking rescission are equitable actions that may be
10 GRIGGS v. E. I. DUPONT DE NEMOURS
C.
DuPont, however, contends that because the district court did not
require Griggs to repay the gross amount of the TPS lump sum bene-
fit, this case actually involves partial rescission, which DuPont con-
tends is a remedy that was not typically available in a court of equity.
Thus, DuPont argues that Great-West prohibits Griggs’s claim.
This argument is premised on an assumption that courts of equity
always required full or complete restoration of the benefits exchanged
in every case where a plaintiff sought rescission of an instrument. We
acknowledge that support for such a proposition can be found in some
of the leading commentaries on the subject. See Handbook on Reme-
dies § 9.4 at 622 ("The general rule . . . is that the adult plaintiff must
make restoration of what he got under the contract in order to get
rescission, and his inability to do so will not excuse such restoration.
In such a case, he may be permitted to recover damages, but rescis-
sion will be barred by his inability to make restoration to the defen-
dant."); Richard A. Lord, Williston on Contracts § 69:50 (4th ed.)
("Ordinarily, one cannot in equity seek to rescind a contract on the
ground of fraud and, at the same time, retain the benefits derived from
that contract . . . . [T]he decree in such a suit will provide, not simply
for the return by the defendant of what was wrongfully acquired, but
for the restoration of the consideration by the plaintiff."). Similar lan-
guage also appears in many cases discussing equitable rescission. See
Pinter v. Dahl, 486 U.S. 622, 641 n.18 (1988) (noting that equitable
rescission provides "for restoration of the status quo by requiring the
buyer to return what he received from the seller"); Rexford v. South-
ern Woodland Co., 208 F. 295, 314 (D.S.C. 1913) ("The duty of one
party to a contract, who seeks to rescind, to restore to the other party
pursued under ERISA. See Provident Life & Accident Ins. Co. v. Sharp-
less, 364 F.3d 634, 639-40 (5th Cir. 2004) (concluding that ERISA per-
mits an action seeking rescission of an ERISA-governed insurance policy
if a beneficiary makes a material misrepresentation when applying for
the policy); accord Shipley v. Arkansas Blue Cross & Blue Shield, 333
F.3d 898, 902-03 (8th Cir. 2003); Security Life Ins. Co. of Am. v. Meyl-
ing, 146 F.3d 1184, 1191 (9th Cir. 1998) (per curiam); Davies v. Centen-
nial Life Ins. Co., 128 F.3d 934, 943-44 (6th Cir. 1997).
GRIGGS v. E. I. DUPONT DE NEMOURS 11
the amount received by him in part performance, or on account of the
contract, is well settled and always enforced."); Rudman v. Cowles
Communications, Inc., 30 N.Y.2d 1, 13-14 (N.Y. 1972) (explaining
that rescission is an equitable remedy that should be invoked "where
the status quo may be substantially restored . . . . [If] damages appear
adequate and it is impracticable to restore the status quo," rescission
is inappropriate); National Life Ins. v. Hanna, 7 S.E.2d 52, 54 (W. Va.
1940) ("‘[A]ny person demanding the rescission of a contract to
which he is a party must restore or offer to restore to the other party
whatever he may have received under the contract in the way of
money, property, or other consideration or benefit.’" (quoting 3 Black
on Rescission and Cancellation (2d ed.) § 617)); Hegarty v. American
Commonwealths Power Co., 163 A. 616, 619 (Del. Ch. 1932)
(explaining that for rescission to be granted, "there must be a restora-
tion of the status quo ante, not only of the complainant but as well of
the defendant. It is therefore necessary that the rescinding party
should offer or tender such a restoration to the other, and that the
court should be able to effectuate it by decree. This is the settled law."
(citation omitted)).4
A closer review of the relevant authorities, however, reveals that
the complete-restoration requirement is a general one that is subject
to certain exceptions. Various standards have been articulated when
an exception to the complete-restoration rule is warranted. While a
few courts speak in formal terms of very specifically delineated
4
Because no statutory provision addresses the contours of the rescis-
sionary remedy that we have concluded is proper under section
502(a)(3), the question is one of federal common law. See United McGill
Corp. v. Stinnett, 154 F.3d 168, 171 (4th Cir. 1998) ("In enacting ERISA,
Congress intended for the judiciary to develop a body of federal common
law to supplement the statute’s express provisions."). When fashioning
federal common law, "we may look to state law for guidance to the
extent that state law does not conflict with ERISA or its underlying poli-
cies." Shipley v. Arkansas Blue Cross & Blue Shield, 333 F.3d 898, 902
(8th Cir. 2003); see Singer v. Black & Decker Corp., 964 F.2d 1449,
1452 (4th Cir. 1992) ("While it is inappropriate to use state common law
to re-write ERISA, it is also inappropriate to hold that state common-law
causes of action that have been preempted by ERISA may not be used
to assist in shaping a body of federal common law." (citation and internal
quotation marks omitted)).
12 GRIGGS v. E. I. DUPONT DE NEMOURS
exceptions to the general rule requiring complete restoration of benefits,5
it appears that what is most often applied is some form of a require-
ment to consider the equities of the situation and apply an exception
to the general rule where required. See Grymes v. Sanders, 93 U.S.
55, 62 (1876) ("A court of equity is always reluctant to rescind, unless
the parties can be put back in statu quo. If this cannot be done, it will
give such relief only where the clearest and strongest equity impera-
tively demands it."); Kobatake v. E.I. DuPont de Nemours & Co., 162
F.3d 619, 626 (11th Cir. 1998) (explaining that "in order to rescind,
the defrauded party must . . . restore or offer to restore to the other
party whatever he has received by virtue of the contract if it is of any
value. However, a party need not tender back what he is entitled to
keep, and need not offer to restore where the defrauding party has
made restoration impossible, or when to do so would be unreason-
able." (citation and internal quotation marks omitted; emphasis
added)); Ghidoni v. Stone Oak, Inc., 966 S.W.2d 573, 587 (Tex. App.
1998) ("[R]escission may be allowed without complete restoration
where the particular circumstances indicate that to be the more equita-
ble result."); Braman Dodge, Inc. v. Smith, 515 So. 2d 1053, 1054
(Fla. Dist. Ct. App. 1987) ("Where restoration to the status quo is
impossible, however, a court may still grant rescission, provided the
equities between the parties can be balanced."); Rafferty v. Heath, 78
5
For example, Maryland courts appear to apply a rigid set of excep-
tions to the complete-restoration rule:
[W]here on the particular facts it seems equitable to allow rescis-
sion without complete or perfect restoration of consideration, the
modern tendency is to allow the relief . . . . Equity will in an
appropriate case order rescission without restoration if: (1) the
performance by the one against whom rescission is sought has
become worthless, or (2) the respondent has prevented its return,
or (3) the performance conferred only an intangible benefit upon
the complainant, or (4) only a promise was given, or (5) the com-
plaint can properly retain it irrespective of the voidable transac-
tion, or (6) it is in possession of or is subject to the order of a
person having a right superior to the complainant, or (7) restora-
tion is impossible for some reason not hereinbefore mentioned
and the clearest and strongest equity demands that rescission be
granted (sometimes with a monetary substitute for restoration).
Funger v. Mayor of Somerset, 223 A.2d 168, 173-74 (Md. 1966).
GRIGGS v. E. I. DUPONT DE NEMOURS 13
S.E. 641, 642 (Va. 1913) ("If . . . in a particular case a court of equity
finds that a condition exists which renders it impossible to restore the
parties substantially to their original position, and that to rescind the
contract would result in an injustice, the rescission will be refused."
(emphasis added)); Fairbanks, Morse & Co. v. Walker, 92 P. 1129,
1131 (Kan. 1907) ("We understand the rule to be that the person who
rescinds must always return all benefits received from the contract,
and the status quo restored, not absolutely, but so far as possible, or
the merits demand."); Williston on Contracts § 69:51 ("The require-
ment of restoration, however, is subject to several exceptions . . . .
[W]here on the particular facts it seems equitable to allow rescission
without complete or perfect restoration of the consideration, the grow-
ing tendency favors the relief, and courts of law adopting the more
liberal rule in equity no longer adhere to the strict construction gener-
ally upheld in the earlier decisions."). Thus, it is clear to us that courts
of equity did not automatically deny relief to a plaintiff seeking
rescission in cases where complete restoration of benefits could not
be accomplished. Instead, courts of equity would order rescission
where the equities of the situation so demanded.
Although this formulation of the exception is somewhat broad, we
believe that it gives federal courts the flexibility necessary to appro-
priately balance the interests of participants and beneficiaries of
ERISA plans against the interests and obligations of ERISA employ-
ers and fiduciaries. See United McGill Corp. v. Stinnett, 154 F.3d 168,
171 (4th Cir. 1998) ("In enacting ERISA, Congress intended for the
judiciary to develop a body of federal common law to supplement the
statute’s express provisions."); Thomason v. Aetna Life Ins. Co., 9
F.3d 645, 647 (7th Cir. 1993) ("Where the statute is silent, courts
must construct a common law that effectuates the policies underlying
ERISA."). A rule generally requiring full restoration of benefits to
accompany a grant of rescission protects the financial integrity of
ERISA plans, while permitting an exception to this rule when the
equities of the situation demand provides a necessary incentive for
ERISA fiduciaries to take seriously their obligations to protect the
interests of the participants and beneficiaries. Because we conclude as
a matter of federal common law that rescission in the ERISA context
may be granted even if a full restoration of the benefits conferred in
the transaction cannot be accomplished, we cannot agree with
14 GRIGGS v. E. I. DUPONT DE NEMOURS
DuPont’s contention that the "partial rescission"6 ordered in this case
means that the remedy is not one typically available in equity within
the meaning of Great-West.
D.
In light of these conclusions, what remains for our consideration is
whether the partial rescission (or, perhaps more accurately, the rescis-
sion accompanied by less than complete restoration of benefits)
ordered by the district court was appropriate. See 29 U.S.C.A.
§ 1132(a)(3)(B) (authorizing a beneficiary or participant to bring a
civil action "to obtain other appropriate equitable relief" (emphasis
added)); Griggs I, 237 F.3d at 385 (explaining that "even if the
redress sought by a beneficiary under ERISA § 502(a)(3) is a classic
form of equitable relief, it must be appropriate under the circum-
stances"). As we explain below, we agree with DuPont that it has
been prejudiced by Griggs’s delay in seeking a judicial rescission of
his TPS election. In our view, that prejudice to DuPont renders inap-
propriate the relief fashioned by the district court.
If a plaintiff unreasonably delayed seeking rescissionary relief,
courts of equity typically denied relief to the plaintiff. Although the
authorities are not entirely consistent on this point, the delay must
generally have been prejudicial to the defendant to justify denial of
relief. See Restatement (First) of Restitution § 64 (1937) ("An unrea-
sonable delay in manifesting an avoidance of a transaction after the
6
In this case, the ultimate question is whether, as a result of DuPont’s
breach of its fiduciary duty, Griggs is entitled to rescind his original TPS
election. The district court permitted a full rescission of that election, but
in return required only a partial restoration (or restitution) of the benefits
received by Griggs. Thus, we are not certain that the partial restoration
ordered by the court transforms the remedy into one of "partial rescis-
sion," as DuPont describes it. Cf. Lummus Co. v. Commonwealth Oil Ref.
Co., 280 F.2d 915, 927-28 (1st Cir. 1960) (in case where plaintiffs appar-
ently sought to rescind only certain clauses of a contract, explaining that
"there cannot be a partial rescission. It is fundamental that a single agree-
ment cannot be rescinded in part and affirmed in part."). This case, how-
ever, does not turn on whether the remedy is described as involving
partial rescission or rescission with partial restoration.
GRIGGS v. E. I. DUPONT DE NEMOURS 15
acquisition of knowledge of the facts terminates the power of rescis-
sion for fraud or mistake, and the consequent right to restitution, if the
interests of the transferee or of a third person are harmed or were
likely to be harmed by such delay."); see also Allen v. Westpoint-
Pepperell, Inc., 945 F.2d 40, 47 (2d Cir. 1991) ("An action for rescis-
sion must be initiated without unreasonable delay, unless the delay is
caused by the party against whom rescission is sought." (citation
omitted)); Baumel v. Rosen, 412 F.2d 571, 574-75 (4th Cir. 1969)
(explaining that "[r]escission is a radical move, and the law exacts the
election of that course to be asserted without wait," and concluding
that 18-month delay precluded plaintiffs’ request to rescind a stock
sale); Hay v. Albrecht, 523 N.E.2d 211, 213-14 (Ill. App. Ct. 1988)
("The defense of laches [in an action seeking rescission] is only appli-
cable if there has been unreasonable delay in asserting a right coupled
with prejudice to the opposing party as a result of the delay."); Dent
v. Long, 7 So. 640, 642 (Ala. 1890) ("Though a party has the right to
determine whether or not he will rescind a contract, so long as he has
made no election, if, while considering, the position of the other party
is materially affected or changed, . . . he will be precluded from exer-
cising his right to rescind.").
As discussed above, any exception to the general rule of full resto-
ration is dependent upon a determination that the equities of the situa-
tion demand making such an exception. If Griggs unreasonably
delayed seeking rescission and that delay prejudiced DuPont, then it
would be difficult for us to conclude that the less than complete resto-
ration of benefits ordered by the district court was appropriate.
Griggs became aware of DuPont’s breach of fiduciary duty in the
fall of 1994, when he received his TPS distribution and learned that
he could not avoid the tax consequences of the lump-sum distribution.
He did not file suit until January 1998, and even then he did not seek
rescission of his TPS election—he sought legal damages for DuPont’s
negligent misrepresentation of the tax consequences of the TPS elec-
tion. It was not until March 1999, after the district court ruled that
Griggs’s state-law claim was preempted by ERISA, that Griggs first
sought equitable relief from DuPont. Thus, more than four years
elapsed between the time that DuPont breached its fiduciary duty to
Griggs and Griggs notified DuPont that he intended to renounce his
TPS election.
16 GRIGGS v. E. I. DUPONT DE NEMOURS
As DuPont points out, federal law requires that an action seeking
a refund or credit for overpaid taxes must be filed within three years
after the tax return was filed or two years after the tax was actually
paid, whichever is later. See 26 U.S.C.A. § 6511(a) (West 2002).
Assuming that Griggs filed his 1994 tax return and paid the taxes on
April 15, 1995, the statute of limitations under section 6511(a) would
have expired on April 15, 1998. If the action contemplated by section
6511 were Griggs’s only means of recourse with regard to the federal
taxes, then the district court’s requirement that Griggs try to recover
the taxes paid on the distribution would be largely meaningless and
DuPont quite clearly would have been prejudiced by Griggs’s delay
in seeking rescission.
At a June 2002 hearing before the district court after our first
remand, however, a tax specialist for DuPont explained that even at
that date there was another avenue that Griggs could pursue in the
event that rescission were ordered—Griggs could seek relief under
the mitigation provisions of the Internal Revenue Code. See 26
U.S.C.A. §§ 1311-14 (West 2002); Longiotti v. United States, 819
F.2d 65, 67-68 (4th Cir. 1987) ("The mitigation provisions permit the
correction of an error made in a prior tax year even though the ordi-
nary limitations period has run."). We need not decide whether Griggs
would in fact be entitled to recoup his tax payments under the mitiga-
tion provisions, and the record is not sufficiently developed to allow
such a determination to be made even if we were so inclined. For pur-
poses of this opinion it is sufficient to note the time has expired on
what would have been Griggs’s most direct path to recoupment of the
taxes and that full recovery of the taxes paid is now an uncertain pros-
pect at best. This uncertainty of recovery, which is borne solely by
DuPont, suggests that Griggs’s delay in seeking rescission has worked
to the detriment of DuPont.
We should note, however, that Griggs complained to DuPont about
the amount of his TPS distribution immediately upon receiving it.
Thus, it cannot be said that DuPont had no knowledge of a potential
problem with the transaction until Griggs filed suit. Moreover, the
record indicates that around the time that the TPS distribution was
made, DuPont itself considered the possibility of "unscrambl[ing] the
omelet" by re-wiring the money and changing Griggs’s TPS election
from lump-sum to monthly annuity. J.A. 163. DuPont decided against
GRIGGS v. E. I. DUPONT DE NEMOURS 17
that course of action and took the position throughout the litigation
that Griggs’s TPS election was irrevocable.
Nonetheless, even with these considerations that weigh in Griggs’s
favor, we are constrained to conclude that Griggs delayed unreason-
ably in seeking judicial relief. If Griggs had promptly filed suit
against DuPont, the preemptive force of ERISA would have been rec-
ognized sooner and Griggs’s claims could have been whittled down
to the only claim viable under ERISA (rescission of the TPS election
for the purposes of making a new election) at a point when the surest
means of recouping the tax payments would not have been faced with
limitations problems. Under the district court’s order, DuPont bears
the entire (and very real) risk that Griggs will not recover the full
amount of his tax payments. We see no way to view that risk, borne
solely by DuPont, as anything but a real and significant prejudice
caused by Griggs’s failure to promptly seek rescission of his TPS
election.
Accordingly, we conclude that the relief fashioned by the district
court in this case is not appropriate equitable relief, as required by
ERISA section 502(a)(3)(B), because the relief fails to account for the
prejudice that Griggs’s delay has worked upon DuPont. But contrary
to DuPont’s argument, we do not believe that this conclusion compels
us to deny Griggs any form of rescissionary relief.
Griggs’s delay in seeking rescission has made the ultimate recov-
ery of the taxes paid on the TPS distribution much more difficult and
uncertain, and it therefore is not appropriate to require DuPont to bear
the risk that the taxes will not be recovered. Griggs’s delay, however,
has prejudiced DuPont only because the district court’s order requires
DuPont to bear the risk that Griggs will be unable at this late date to
recoup the full amount of the taxes paid on the TPS distribution. That
is, DuPont has identified no way in which Griggs’s delay has preju-
diced it with regard to the most important aspect of the district court’s
order—the requirement that Griggs’s original TPS election be
rescinded and that Griggs be permitted to elect a monthly distribution
instead. To refuse to grant rescission to Griggs because one aspect of
the district court’s order was inappropriate, as DuPont would have us
do, would be unduly punitive to Griggs and would permit DuPont to
skirt all responsibility for its breach of fiduciary duty, all without
18 GRIGGS v. E. I. DUPONT DE NEMOURS
serving any of ERISA’s goals. What we must instead consider is
whether a rescissionary remedy can be fashioned that will eliminate
the prejudice to DuPont stemming from Griggs’s delay in seeking
rescission. See Williston on Contracts § 69:51 ("Where circumstances
permit, some courts also have allowed as a substitute for restoration
of the consideration a deduction of the amount of it from the recovery
against the wrongdoer. This is the most practicable and satisfactory
disposition of many cases."); Henson v. James M. Barker Co., 555 So.
2d 901, 909 (Fla. Dist. Ct. App. 1990) ("In the event restoration to the
status quo is impossible, rescission may be granted if the court can
balance the equities and fashion an appropriate remedy that would do
equity to both parties and afford complete relief."); cf. Restatement
(First) of Restitution § 65 (1937) ("The right of a person to restitution
for a benefit conferred upon another in a transaction which is voidable
for fraud or mistake is dependent upon his return or offer to return to
the other party anything which he received as part of the transaction
or, where specific restoration is not required under the rule stated in
§ 66, its value, except where such thing . . . (f) consists of money
which can be credited if restitution is granted.").
In our view, such a result can be accomplished by revising the dis-
trict court’s order in the following respects. First, Griggs must repay
to DuPont the net amount of TPS distribution received by Griggs. In
return, Griggs must be allowed to rescind his initial TPS election and
opt for a monthly annuity payment instead of a lump-sum distribu-
tion. The amount of that monthly annuity payment, however, must be
determined by reference to the TPS distribution net of all taxes paid
by Griggs ($74,627), rather than by the gross amount of the TPS dis-
tribution ($132,900). That is, those actuarial assumptions that yielded
an annuity payment of $796.58 per month based on a lump-sum dis-
tribution amount of $132,700 should be applied to calculate a
monthly payment amount based on the $74,627 that Griggs must
repay. Because the monthly benefit that DuPont must pay is reduced
to an amount reflective of the net TPS distribution that Griggs must
repay, the effect of the potential tax loss is borne by Griggs, not
DuPont. Thus, under this plan, there would be no reason to require
Griggs to take steps to recover his tax payments (although it is cer-
tainly in his interest to do so), and Griggs would have no obligation
to turn over to DuPont any amount that he might recover from the
taxing authorities. All other aspects of the district court’s order would
GRIGGS v. E. I. DUPONT DE NEMOURS 19
remain in effect, including the requirement that DuPont’s obligation
to make the monthly payments is retroactive to Griggs’s original 1994
retirement date.
We raised the prospect of this form of relief at oral argument, and
we permitted the parties to file supplemental briefs addressing the
issue. DuPont’s primary argument against this proposal is that the
proposed relief is simply another form of partial rescission, which
DuPont contends is not a typical equitable remedy. However, as we
have already explained, the inability to compel full restoration of ben-
efits received under the instrument to be rescinded does not automati-
cally preclude the granting of equitable rescission. DuPont’s
argument, therefore, is without merit.
In our view, the relief we have described above is the most equita-
ble remedy available for these unfortunate circumstances. Because
Griggs’s delay in seeking rescission has lessened the likelihood that
he will be able to recover the tax payments made on the lump-sum
distribution, our remedy properly forces Griggs, not DuPont, to bear
the risk that the tax payments will not be fully recovered. Under these
circumstances, Griggs’s delay in seeking rescission works no preju-
dice on DuPont, thus making it proper and equitable to grant rescis-
sion without requiring Griggs to make complete restoration of the
benefits he received in connection with his initial lump-sum election.
At the same time, because the relief we describe allows Griggs to
rescind his lump-sum election and instead receive a monthly payment
for life (albeit in a lesser amount), DuPont’s breach of fiduciary duty
does not go unremedied.7
In his supplemental brief Griggs counters the arguments made by
DuPont and contends that the remedy we proposed is a proper form
of equitable relief that is appropriate under ERISA. Griggs, however,
is less than enthusiastic about the prospect of the district court’s order
being modified in such a manner. As we have explained in detail
7
DuPont’s claim that the proposed relief would impermissibly re-write
its benefits plan is without merit. Neither ERISA nor the benefit plan
addresses a participant’s right to rescission based on DuPont’s breach of
fiduciary duty. It is thus entirely proper for us to develop federal com-
mon law to fill in these gaps. See Stinnett, 154 F.3d at 171.
20 GRIGGS v. E. I. DUPONT DE NEMOURS
above, we believe that Griggs’s delay in seeking rescission makes it
inequitable for DuPont to bear the risk that the tax payments will not
be fully recovered. Thus, the district court’s order as it stands cannot
be affirmed. DuPont, of course, could be relieved of this inappropriate
risk by our amending the district court’s order to require that Griggs
repay the gross amount of the TPS distribution, an option that would
likewise eliminate the need to require Griggs to try to recover the tax
payments or to turn over any such recovery to DuPont. Although
there is no indication in the record that Griggs would find this remedy
preferable to the one we proposed at oral argument, there is no reason
to foreclose that possibility at this stage of the proceedings. Thus, on
remand Griggs will have the option of choosing from the two alterna-
tives we have outlined above. Griggs may elect to repay the gross
amount of the TPS lump-sum benefit and to receive a monthly annu-
ity based on that amount, or Griggs may elect to repay the net amount
of the TPS lump-sum benefit and receive a reduced monthly payment.
Accordingly, while we affirm the district court’s decision to
rescind Griggs’s TPS election, we conclude that it was inappropriate
in this ERISA action to place upon DuPont the entire risk that Griggs
will be unable to recover the full amount of the taxes paid on the
lump-sum distribution. We therefore vacate the district court’s order
and remand. On remand, the district court shall conduct additional
proceedings as necessary to enter a revised order and judgment con-
sistent with the option elected by Griggs.
III.
Finally, we turn to DuPont’s challenge to the district court’s award
of attorney’s fees to Griggs. ERISA provides that in an action brought
"by a participant, beneficiary, or fiduciary, the court in its discretion
may allow a reasonable attorney’s fee and costs of action to either
party." 29 U.S.C.A. § 1132(g)(1). Although the statute is silent in this
regard, we have interpreted section 1132 as authorizing an award of
attorney’s fees only to a prevailing party. See Martin v. Blue Cross
& Blue Shield of Va., Inc., 115 F.3d 1201, 1210 (4th Cir. 1997)
("[O]nly a prevailing party is entitled to consideration for attorneys’
fees in an ERISA action.").
On appeal, DuPont contends that Griggs was not a prevailing party.
Relying on a statement made by Griggs during discovery, DuPont
GRIGGS v. E. I. DUPONT DE NEMOURS 21
argues that Griggs himself has declared that he would derive "no
material benefit" from the relief fashioned by the district court.
DuPont claims that if the district court’s remedy would give Griggs
no material benefit, then Griggs cannot be viewed as a prevailing
party. This argument is without merit.
We first note that DuPont’s argument depends upon a mischarac-
terization of Griggs’s statement. Griggs did not indicate that he would
receive no material benefit from the remedy ordered by the district
court; he indicated that he would perceive no material benefit if he
were required to repay the gross amount of the TPS lump-sum distri-
bution. More importantly, however, whether or not Griggs is person-
ally happy with the verdict he receives is not determinative of the
legal question of whether he is a prevailing party. See Smyth v.
Rivero, 282 F.3d 268, 274 (4th Cir. 2002) ("The designation of a
party as a prevailing party . . . is a legal determination which we
review de novo.").
As noted above, section 1132 does not include any "prevailing
party" language. We believe, however, that our implied prevailing-
party requirement must carry the same meaning as the phrase does
when it is an explicit part of a fee-shifting statute. "[T]he term ‘pre-
vailing party’ [is] a legal term of art." Buckhannon Bd. & Care Home,
Inc. v. West Va. Dep’t of Health & Human Resources, 532 U.S. 598,
603 (2001). "Our respect for ordinary language requires that a plain-
tiff receive at least some relief on the merits of his claim before he
can be said to prevail. We have held that even an award of nominal
damages suffices under this test." Id. (citation, internal quotation
marks, and alteration omitted).
Applying this standard, we conclude that Griggs is a prevailing
party under the district court’s original order and under either of the
revised orders that we have outlined in our opinion today. Griggs has
succeeded in rescinding his original TPS election and will now
receive a monthly annuity payment rather than a taxable lump-sum
distribution. This clearly amounts to some relief on the merits of his
claim, thus satisfying the Buckhannon definition of a prevailing party.
Although Griggs may not personally be satisfied with the extent of his
victory, that fact is simply irrelevant to the question of whether he
achieved some success on the merits of his claim. Accordingly, we
22 GRIGGS v. E. I. DUPONT DE NEMOURS
reject DuPont’s claim that Griggs’s general disgruntlement prevents
him from being considered a prevailing party.
As to the award of attorney’s fees and costs, DuPont challenges
only Griggs’s status as a prevailing party. DuPont does not argue that
even as a prevailing party, Griggs is not entitled to an award of fees,
see Martin, 115 F.3d at 1209-10; Denzler v. Questech, Inc., 80 F.3d
97, 104 (4th Cir. 1996), nor does DuPont challenge the amount of
attorney’s fees awarded. Because we conclude that Griggs is a pre-
vailing party, we affirm the district court’s award of attorney’s fees.8
IV.
For the foregoing reasons, we affirm in part, vacate in part, and
remand for further proceedings consistent with this opinion.
AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED
WILKINS, Chief Judge, concurring in part and dissenting in part:
I concur in the majority opinion except to the extent that it affirms
the attorney’s fee award. I would vacate that award and direct the dis-
trict court to reconsider on remand the issue of Griggs’ entitlement to
attorney’s fees.
From the beginning of this suit, the primary disputed issue has been
Griggs’ entitlement to compensation for the unanticipated tax burden
8
During oral argument, we raised the possibility of modifying the dis-
trict court’s remedy in the manner set forth in this opinion, and at
DuPont’s request, we permitted the parties to file supplemental briefs
addressing that proposal. In its supplemental brief, DuPont did not
address the attorney’s fees question at all and thus did not make even an
alternative argument that a remand for reconsideration of the amount of
attorney’s fees award would be required if this court were to adopt the
proposed remedy. Accordingly, we believe that our consideration of the
attorney’s fees question is properly limited to the single issue raised by
DuPont—whether Griggs is a prevailing party.
GRIGGS v. E. I. DUPONT DE NEMOURS 23
he incurred when he received the lump sum distribution. DuPont has
steadfastly maintained that Griggs is not entitled to such compensa-
tion or to any other remedy that shifts the risk of tax loss to DuPont.
When the district court awarded Griggs just such a remedy, it also
awarded him attorney’s fees.
In exercising its discretion to award attorney’s fees to Griggs as a
prevailing party under ERISA, the district court considered five fac-
tors, including "the relative merits of the parties’ positions," which the
court ruled "unquestionably favor[ed] Griggs." J.A. II 302, 304. In
determining the amount of fees to award, the district court considered
12 factors, "the most critical" being "the amount in controversy and
the results obtained." Id. at 306 (internal quotation marks omitted).
The district court concluded that "Griggs was fully successful in this
litigation" and therefore "decline[d] to reduce Griggs’s attorney’s fee
award to account for limited success in the litigation." Id. at 307.
Based on all of these factors, the district court awarded Griggs
$39,878 in attorney’s fees, the full amount that Griggs had requested.
On appeal, we now hold that the district court erred in shifting the
risk of tax loss to DuPont, and we therefore vacate the order granting
relief and direct the district court to provide an alternative remedy. In
so doing, we reverse the district court ruling on the critical issue in
this case. Indeed, given an opportunity to comment on the alternative
remedy that we first proposed at oral argument, Griggs stated that
because it left the tax loss burden with him, it "would fail to restore
[him] to the status quo ante and would place him effectively in the
same position" he would be in without any relief. Griggs’ Supplemen-
tal Br. at 7. Suffice it to say that, if Griggs has succeeded in any real
sense on the merits of his case after our opinion, it is to a far lesser
degree than he did in the district court.
In my view, the fee award is nullified by our vacatur of the merits
remedy on which the fee award was based. See Martin v. Blue Cross
& Blue Shield of Va., Inc., 115 F.3d 1201, 1210 (4th Cir. 1997)
("[W]e have often indicated that reversal of a judgment under ERISA
also requires reversal of any attendant award of attorneys’ fees.");
Pedigo v. P.A.M. Transp., Inc., 98 F.3d 396, 398 (8th Cir. 1996)
("[A]n order awarding attorney’s fees based on a party having pre-
vailed in a trial court cannot survive the reversal of that party’s judg-
24 GRIGGS v. E. I. DUPONT DE NEMOURS
ment on appeal."). I would so hold and direct the district court to
reconsider the question of Griggs’ entitlement to attorney’s fees in
light of his now-reduced degree of success. See Larez v. Holcomb, 16
F.3d 1513, 1522-23 (9th Cir. 1994) (holding that appellate court order
of new trial on damages warranted vacatur of attorney’s fee award
and reconsideration of the fee issue by the district court); Huemmer
v. Mayor of Ocean City, 632 F.2d 371, 373 (4th Cir. 1980) (per
curiam) (holding that when district court awarded attorney’s fees to
plaintiff after ruling that ordinance plaintiff challenged was unconsti-
tutional but that the city and mayor were not liable for damages, our
reversal of the damages ruling operated to vacate the fee award and
allow plaintiff to reapply for fees once the amount of damages had
been determined). By deciding the fee award issue ourselves, we are
effectively usurping the authority of the district court to decide the
issue in the first instance. See Quesinberry v. Life Ins. Co. of N. Am.,
987 F.2d 1017, 1028 (4th Cir. 1993) (en banc) ("ERISA places the
determination of whether attorneys’ fees should be awarded in an
ERISA action completely within the discretion of the district court.");
Dague v. City of Burlington, 976 F.2d 801, 804 (2d Cir. 1992) (hold-
ing that "when questions are presented such as the amount of recovery
[and] the extent to which a plaintiff is a prevailing party, . . . determi-
nation of a reasonable attorney’s fee under the fee-shifting statutes
should normally be decided by the district court in the first instance").
The majority apparently concludes that DuPont waived any right it
had to vacatur of the attorney’s fee award because its only specific
argument challenging the fee award was that the remedy provided by
the district court did not entitle Griggs to prevailing party status. See
ante, at 22 ("As to the award of attorney’s fees and costs, DuPont
challenges only Griggs’s status as a prevailing party. DuPont does not
argue that even as a prevailing party, Griggs is not entitled to an
award of fees, nor does DuPont challenge the amount of attorney’s
fees awarded." (citations omitted)). But this conclusion overlooks that
DuPont is entitled to vacatur of the fee award because of its success-
ful merits argument on appeal; its argument specifically challenging
the fee award based on the judgment of the district court is thus irrele-
vant. See Smiddy v. Varney, 665 F.2d 261, 268 (9th Cir. 1981) (reject-
ing all of defendants-appellants’ arguments regarding attorney’s fee
award but ordering that "if damages are substantially reduced on
GRIGGS v. E. I. DUPONT DE NEMOURS 25
remand the [district] court should reconsider the amount of the attor-
ney’s fees award").*
In essence, the majority penalizes DuPont for not challenging the
ruling that our new remedy could support the fee award—even though
no court had ever made that ruling at the time DuPont filed its briefs.
Even if DuPont had some duty to object in anticipation of our reason-
ably foreseeable rulings, I still would find no waiver. For the reasons
I have discussed, DuPont could not have been expected to predict that
despite reversing the district court on the critical issue in this case and
vacating the order on which the fee award was based, we would none-
theless leave the fee award intact.
For all the foregoing reasons, I would vacate the attorney’s fee
award and direct the district court to revisit the fee issue on remand.
*In any event, DuPont specifically argued in its initial brief that if we
vacate the merits relief awarded by the district court, we must also vacate
the fee award. See Br. for Appellant at 38 (asserting that "if this Court
agrees that the relief ordered by the district court violates applicable prin-
ciples of limitation on appropriate equitable relief under ERISA, . . . and
accordingly reverses leaving Griggs with no remedy, then Griggs will
obviously not be a prevailing party and would not be entitled to his fees
or costs," and quoting Martin, 115 F.3d at 1210, for the proposition that
"reversal of a judgment under ERISA also requires reversal of any atten-
dant award of attorneys’ fees" (internal quotation marks omitted)). While
this argument does not address the specific scenario in which this court
vacates the district court remedy and awards substitute relief, DuPont
certainly cannot be blamed for failing to anticipate that particular sce-
nario in preparing its initial brief.
After oral argument, DuPont, noting the alternative remedy that we
had proposed during oral argument, moved successfully for leave to file
a supplemental brief addressing "whether partial rescission is an avail-
able and otherwise appropriate equitable remedy." Appellant’s Mot. for
Leave to File Supplemental Br., at 2. The majority apparently rests its
waiver holding, at least in part, on DuPont’s failure to address the attor-
ney’s fee issue in that brief. See ante, at 22 n.8. However, because
DuPont was not granted leave to address the additional issue of what
legal effect our granting partial rescission would have on the attorney’s
fee award, DuPont was not authorized to address that issue. Conse-
quently, it should not be penalized for not doing so.