DB Notice Suit Survives Challenge

April 1, 2008 (PLANSPONSOR.com) - A federal judge in Texas has ruled that the statute of limitations clock has not expired for defined benefit plan participants' assertions relating to the required plan amendment notice.

U.S. District Judge Xavier Rodriguez of the U.S. District Court for the Western District of Texas issued the ruling in a suit alleging a violation of the notice mandate from the Employee Retirement Income Security Act (ERISA).

Noting that the participants had given up any claim for breach of fiduciary duty, Rodriguez found that the participants had put forward only a claim for benefits, which meant that their claim was subject to the 10-year state statute of limitations connected to Section 502. ERISA’s three-year time limit for bringing fiduciary breach claims does not apply in this case, Rodriguez contended.  

Rodreguez turned away SBC Pension Benefit Plan’s request to throw out the participant suit with the claim that the plan violated the notice requirements of Section 204(h). He asserted that the Section 204(h) claim was similar to a claim for benefits under ERISA Section 502 and was not similar to a Section 413 fiduciary breach allegation.

According to the ruling, at issue are a series of amendments AT&T Corp. made to a defined benefit plan formerly sponsored by SBC Communications Inc. in 1997, 1998, and 2000.   Two plaintiff participants contested the calculation of their benefits using these amendments, but did not specifically raise during their administrative appeals the issue of whether AT&T gave proper notice of the amendments.

“[N]ot all claims for benefits that somehow relate to a breach of a plan administrator’s duty are solely claims for breach of fiduciary duty. Instead, they can be either, or both,” Rodriguez noted. “[J]ust because Plaintiffs’ claim could be a claim for breach of fiduciary duty if Plaintiffs chose to cast it as such does not mean that it necessarily is a claim for breach of fiduciary duty to the exclusion of a claim for benefits. Here, Plaintiffs have expressly disavowed any claim for breach of fiduciary duty, and assert only a claim for benefits.”

Rodriguez also refused to dismiss the participants’ lawsuit for their failure to exhaust administrative remedies. The case isCalder v. SBC Pension Benefit Plan,   W.D. Tex., No. SA-07-CA-340-XR, 3/27/08.