Court Allows Participants to Seek Plan Reformation Relief

A federal appellate court has determined that retirement plan participants’ equitable relief claims under ERISA are not duplicative of their benefit claims.

Citing the Supreme Court decision in Amara v. CIGNA Corp., the 9th U.S. Circuit Court of Appeals has moved forward equitable relief claims of plan participants who say they were misled about the pension benefits they would receive.

While a district court found the plan participants’ benefit claims and equitable relief claims under the Employee Retirement Income Security Act (ERISA) duplicative, the appellate court noted that under Amara, if the participants cannot get relief with their benefit claims under U.S. Code Section 1132(a)(1)(B), they can seek an equitable remedy for breach of fiduciary duty to disclose under U.S. Code Section 1132(a)(3).

In its opinion, the 9th Circuit noted that in the current case, Moyle v. Liberty Mutual Retirement Benefit Plan, as well as in the Amara case, there was a material lack of disclosure about the terms of the plan, and participants sought relief under 1132(a)(1)(B) as well as equitable remedies under 1132(a)(3). The high court found that if participants are not able to recover benefits based on interpretation and enforcement of the retirement plan document, they can receive reformation of the retirement plan as an equitable remedy under 1132(a)(3).

The 2nd and 6th Circuits have also allowed participants to seek a plan reformation remedy.

In the Moyle case, participants were employees of Old Golden Eagle Insurance Company when it was sold to Liberty Mutual Insurance Company. Liberty Mutual’s pension plan document entitled them to past service credit for purposes of eligibility, vesting, early retirement and spousal benefits, but not retirement benefits accrual. However, the summary plan description (SPD) was silent on the issue, and participants claimed they were told in benefit meetings that their past service did count towards benefits accrual.

After seeking claims for benefits they thought were due from Liberty Mutual and denied, the participants filed a lawsuit. A district court dismissed all claims. The 9th Circuit agreed the participants could not get benefits recovery due to the plain language of the plan document; however, it remanded their claims for equitable relief to the district court for consideration in light of Amara.

The district court’s opinion is here.