Foster v. PPG Industries, Inc.
693 F.3d 1226
| 10th Cir. | 2012Background
- Foster sued his former employer PPG and the Plan under ERISA seeking plan benefits after his ex-wife withdrew his account.
- Foster’s benefits were paid initially; the plan later denied reimbursements due to allegations of safeguarding failures and third-party fraud.
- The district court upheld the Plan Administrator’s determination that the Plan was not liable to reimburse Foster.
- Foster’s account loss occurred via his ex-wife, who used his Social Security number and a newly issued password after Foster’s address change was not updated.
- The Plan followed procedures requiring use of User IDs/PINs and sent the new password to Foster’s permanent address; Foster’s ex-wife exploited this to withdraw funds.
- Foster argued that ERISA’s nonforfeitability provision and the Plan’s procedures mandate reimbursement, while the Plan argued no abuse of discretion and no forfeiture under ERISA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard of review for the administrator’s decision | Foster argues de novo review; his claim deserves full merits consideration | Plan contends deferential abuse-of-discretion review with conflict-of-interest consideration | Deferential, with conflict weighed as a factor; no abuse of discretion found |
| Nonforfeitability under ERISA in third-party fraud | Nonforfeitability means plan must reimburse when funds are fraudulently withdrawn | Nonforfeitability not violated; loss caused by third-party fraud and participant’s address failure | No forfeiture under ERISA; nonforfeitability not violated by third-party fraud |
| Plan Administrator did not abuse discretion in denying reimbursement | Procedures and SPD were ambiguous or failed to account for fraud risk | Disbursements were made per established procedures; no indication of abuse | No abuse of discretion; plan properly denied reimbursement based on procedures and protections |
Key Cases Cited
- Holcomb v. Unum Life Ins. Co. of Am., 578 F.3d 1187 (10th Cir. 2009) (standard for reviewing administrator’s decision in ERISA cases)
- Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (U.S. 2008) (conflict of interest as a factor in abuse-of-discretion review)
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (U.S. 1989) (establishes standard of review framework for ERISA plans)
- Nachman Corp. v. Pension Benefits Guar. Corp., 446 U.S. 359 (U.S. 1980) (nonforfeitability interpretation and purpose of ERISA provisions)
- Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504 (U.S. 1981) (nonforfeitable meaning and purpose of vesting provisions)
- Amara v. Cigna Corp., 131 S. Ct. 1866 (S. Ct. 2011) (Supreme Court on SPD as communication, not plan terms)