ERIC Argues that Court Should Not Rewrite Plan Documents

The ERISA Industry Committee (ERIC), along with the U.S. Chamber of Commerce, on September 6 filed with the U.S. Court of Appeals for the Second Circuit an amicus brief in Osberg v. Foot Locker, Inc. The brief urged the Court to uphold the decision of the district court which dismissed the claims of plaintiffs seeking reformation of the plan and surcharge (effectively money damages) against a plan sponsor regarding the communication of their retirement plan amendment from a traditional defined benefit plan to a cash balance plan.

The case involves alleged misleading summary plan description (SPD) explanations of the conversion of the sponsor’s pension plan from a traditional formula to a cash balance formula. The plan conversion itself, which is not at issue in this case, provided for possible wear-away of the old formula benefit and guaranteed the greater of the old formula benefit earned to the date of conversion and the new cash balance account. Participants claimed that: (1) the plan sponsor was required to inform employees about the possible period of “wear-away” after the traditional defined benefit plan was converted to a cash balance plan; (2) its alleged failure to do so was a breach of the fiduciary duty rules for SPDs; and (3) the plan should be reformed or the sponsor surcharged for a monetary reward.

Prepared by Covington & Burling LLP, the brief argues that the plan sponsor’s SPD and other plan communications properly summarized the plan amendment, did not give rise to any right to equitable remedies (of the type found available by the U.S. Supreme Court in Amara v. Cigna, which is also before the Second Circuit on remand), and that the applicable statute of limitations had expired prior to the filing of the lawsuit.

For more information on the brief, click here.

See Covington & Burling LLP's coverage of the brief here.