The U.S. 6th Circuit Court of Appeals has ruled once again on pension plan litigation filed by a former employee of Chrysler Group.

As with previous decisions in the case, the opinion filed by the 6th Circuit is something of a mixed bag. In short, this second appellate decision reverses the district court’s latest grant of summary judgment to the plan on the lead plaintiff’s request for reformation. On the other hand, the decision affirms summary judgment on the plaintiff’s request for equitable estoppel, and remands the matter again to district court for further proceedings consistent with the latest appellate opinion.

Background information in plan documents shows the plaintiff believes he is entitled to an early retirement supplement, called “30-and-Out benefits.” According to the original and amended complaints, this belief is based on the summary plan document (SPD) provided by Chrysler to plan participants, which stated the plaintiff did not need to be “actively employed at retirement” to remain eligible for these benefits. But the SPD omitted an exclusionary clause contained in the plan document itself, which said that an employee who was terminated was ineligible for the early retirement supplement.

After the plaintiff was terminated, he applied for his retirement benefits and was denied the 30-and-Out benefits. After unsuccessfully appealing this denial administratively, the plaintiff brought suit under the Employee Retirement Income Security Act (ERISA). The initial lawsuit sought to hold the plan to its representations in the SPD, notwithstanding the exclusionary provision in the plan document, via the equitable remedies available under ERISA Section 502(a)(3).

Latest action in the case

The case has reached the 6th Circuit for a second time on appeal from the U.S. District Court for the Eastern District of Michigan. In the first appellate decision, the circuit court sided with Chrysler on some matters, but it determined in favor of the plaintiff/appellee that the pension plan’s summary plan description (SPD) in fact failed to provide all the information required by ERISA about eligibility for supplemental benefits. At that juncture, the appellate court concluded a participant who relied on the SPD and expected those benefits may be due relief.

In that first appellate decision, the circuit court noted that under ERISA, the SPD must be “written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan.” In addition, the court stipulated that an SPD must include “the plan’s requirements respecting eligibility for participation and benefits; a description of the provisions providing for non-forfeitable pension benefits; and circumstances which may result in disqualification, ineligibility, or denial or loss of benefits.”

As part of its first appellate decision, the 6th Circuit remanded the matter of whether “a conflict exists between the SPD and the pension plan because the SPD misleads or fails to state additional requirements contained in the plan document.” In essence, the appellate court agreed that, because of the clear material conflict between the pension plan terms and the SPD, the plaintiff could seek equitable relief under ERISA Section 502(a)(3). Thus, his motion to amend his complaint to add a request for equitable relief under ERISA Section 502(a)(3) was not futile.

Finding himself again in district court, the plaintiff filed an amended complaint. In the first count, he sought equitable relief in the form of reformation, equitable estoppel, and surcharge under ERISA Section 502(a)(3) for a violation of ERISA Section 102(b). Further, in count two, the plaintiff renewed his claim for relief under ERISA Section 502(a)(1)(B). The parties subsequently filed cross-motions for summary judgment. In turn, the magistrate judge recommended that the district court deny the plaintiff’s motion for summary judgment and grant Chrysler’s motion for summary judgment, and the district court adopted the magistrate judge’s report and recommendation in full.

This turn of events resulted in yet another appeal to the 6th Circuit, resulting in the current decision. In particular, the plaintiff appealed the grant of summary judgment with respect to his request for equitable relief in the forms of reformation and equitable estoppel. Ultimately, this second appellate decision reverses the district court’s grant of summary judgment to the plan on the lead plaintiff’s request for reformation. On the other hand, the decision affirms summary judgment on the plaintiff’s request for equitable estoppel, and remands for further proceedings consistent with the latest opinion.

The full text of the decision is available here.