Company Breached Fiduciary Duty by Sending Incorrect Benefits Statements

March 15, 2005 ( - A federal appeals court has ruled that a company breached its fiduciary duty by providing incorrect pension statements to an employee, and also ruled that an equitable remedy must be paid to the worker.

>Although the US 4th Circuit Court of Appeals agreed with a lower court’s ruling that the employer was not obligated to include years of service with the employer’s subsidiary in calculating pension benefits, the appeals court did disagree with the ruling that no equitable relief existed. It has sent the case back to the US District Court for the District of South Carolina for the equitable relief to be determined.

>The case revolves around Danny Schaffer, who began working for Westinghouse Electric Corp in 1970, and then moved to another site – a subsidiary of Westinghouse – in 1989. Schaffer claims that when he moved, he was promised that his benefits would be based on his years at both Westinghouse and the subsidiary. From 1990 to 2000, Schaffer’s benefits statements stated that his benefits were based on the starting date of 1970. However, in 2001, the employee was informed that the previous benefits statements were incorrect and that his years at Westinghouse should be counted only for pension eligibility and not calculating the amount of pension benefits.

>Schaffer filed suit in which he claimed that he should be credited with his years at Westinghouse in calculating benefits, that even if plan documents did not explicitly state this, he was promised these terms and that the subsidiary that administered the plan has breached its fiduciary duty by giving incorrect benefits statements. While the lower court disagreed with the first two claims, it agreed with the third. However, it ruled that no equitable relief existed. Schaffer appealed and the appeals court agreed with the lower court on most counts, except in regards to the equitable relief issue.

>In sending the case back to the lower court, the appeals court stated that the record lacked any basis for determining whether this equitable remedy was appropriate. The district court should consider whether the pension Schaffer would have received had he returned to Westinghouse would have been greater than the combined value of the pension he will receive from WSRC for his years of service at the Savannah River site and the pension he will receive from Westinghouse at the former site, according to the appeals court.

>The appeal court decision is available  here .