Appellate Court Overturns Document Production Fine

May 18, 2007 (PLANSPONSOR.COM) - A federal appellate court has thrown out a $9,800 fine against an employer for not providing plan documents to a participant, finding that the participant's information request was not specific enough.

In a case involving plaintiff Gerald Kollman, the 3 rd  U.S. Circuit Court of Appeals reversed a lower court ruling that Rohm and Haas was liable for a fine of up to $100 per day for not providing Kollman with the company’s Plan Document and Summary Plan Description (SPD) within thirty days of his request (See   Court Slaps Employer with $100 Daily Fine over Document Production).


Kollman was employed by Rohm and Haas as a Field Research and Development Manager in Rohm and Haas’ AgroFresh unit in Springhouse, Pennsylvania, and sued his employer over a lump-sum benefits distribution.

U.S. District Judge Michael M. Baylson of the U.S. District Court for the Eastern District of Pennsylvania had rejected the employer’s argument that the participant’s document request was not precise enough. Baylson ruled thatthe plan administrator had knowledge of the surrounding circumstances that was specific enough to create “clear notice” of the documents sought.

In the appellate opinion written by   Circuit Judge Dolores K. Sloviter, the 3rd Circuit judges articulated the standard for the specificity of the request required by the Employee Retirement Income Security Act (ERISA).

“We do not hold that a future request for documents is per se inadequate because it fails to specifically name the documents sought,” Sloviter wrote. “Rather, the touchstone is whether the request provides the necessary clear notice to a reasonable plan administrator of the documents which, given the context of the request, should be provided.”

The appellate judges, however, agreed with Baylson’s resolution of   Kollman’s second legal issue – that Hewitt Associates was guilty of professional malpractice because a Web site developed and maintained by Hewitt had generated an inaccurate figure for the amount of lump-sum benefits to which Kollman would be entitled upon his retirement.  

The site’s original amount of $522,043 had actually been reduced to take into account a portion of the benefits that was to be payable to Kollman’s ex-wife as part of their divorce proceedings leaving a correct amount of $419,917.72. Both Baylson and the appellate judges decided that Kollman would have to pursue any such legal claim against Hewitt as part of ERISA suit and not as part of a claim citing state law.

“Any adjudication of Kollman’s state law malpractice claim would necessarily require a court to consider the Plan in detail in order to properly address Kollman’s arguments outside the mechanism prescribed by ERISA,” Sloviter wrote. “Such an outcome is precisely what Congress sought to avoid in developing a nationwide scheme for ERISA plans.”

The appellate opinion is  here