991 F.3d 697
6th Cir.2021Background
- In 2002 DTE amended its pension plan and offered employees a voluntary transfer from a traditional defined‑benefit (DB) pension to a cash‑balance DB plan. The plan materials (a Decision Guide and an Ayco presentation) described the traditional benefit as “frozen and protected” and showed hypothetical accounts growing with contribution and interest credits.
- Nolan, a transferred employee with 22½ years of service at conversion, elected the cash‑balance option. She relied on an implied “A+B” promise: the converted traditional benefit (A) would be preserved plus new contribution/interest credits (B).
- Cash‑balance conversions can produce a “wear‑away” period in which the participant’s actual payable annuity does not increase for years; also conversions can devalue the converted opening balance if later annuity conversion rates fall.
- Upon retiring in 2017, DTE paid Nolan the larger of the traditional accrued annuity and the cash‑balance annuity, not the sum she expected; Nolan asserted the Guide misled participants about wear‑away and interest‑rate devaluation.
- Nolan sued in 2018 as a putative class: Count I (benefits breach under ERISA §502(a)(1)(B)), Count II (ERISA §102 disclosure defects), Count III (ERISA §204(h) failure). The district court dismissed; the Sixth Circuit reversed as to Counts I and II, affirmed as to Count III (procedural §204(h) claim), and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When did the statute of limitations accrue for the breach‑of‑plan (A+B) claim? | Nolan: accrual occurred in 2017 when she learned DTE would not pay A+B. | DTE: accrual ran from 2002 when the Guide was distributed — a clear repudiation. | Court: No clear, unequivocal repudiation in 2002; Count I timely (accrual in 2017). |
| When did disclosure claims (ERISA §102 and §204(h)) accrue? | Nolan: substantive defects unknown until 2017 when she obtained the Plan. | DTE: Guide put participants on notice in 2002; claims time‑barred. | Court: Substantive §102 claim timely; procedural §204(h) late (Nolan knew/should have known in 2002). |
| Whether the Guide plausibly violated ERISA §102 (substantive disclosure) | Nolan: Guide misled/failed to explain wear‑away and risk of devaluation of the opening balance; reasonable participants could believe in an A+B outcome. | DTE: Guide and examples were adequate; any warnings were sufficient. | Court: Plausible §102 violation; Guide could mislead average participant — claim survives dismissal. |
| Whether Nolan pleaded a §204(h) violation entitling her to special relief (timing and good‑faith standard) | Nolan: §204(h) notice was substantively defective and procedurally late; seeks relief. | DTE: Even if inadequate, it made a good‑faith effort under the transitional 2001–2003 rule; procedural claim time‑barred. | Court: Procedural §204(h) claim time‑barred; substantive §204(h) allegation remains but dismissal affirmed as to relief under the good‑faith standard (no egregious failure pleaded). |
Key Cases Cited
- Morrison v. Marsh & McLennan Cos., 439 F.3d 295 (6th Cir.) (clear‑repudiation accrual rule for ERISA benefit claims)
- Winnett v. Caterpillar, Inc., 609 F.3d 404 (6th Cir.) (accrual when participant knew or should have known effect of amendment)
- Amara v. CIGNA Corp., 775 F.3d 510 (2d Cir.) (cash‑balance disclosures can be misleading; wear‑away and conversion‑rate effects must be disclosed)
- Osberg v. Foot Locker, Inc., 862 F.3d 198 (2d Cir.) (summary materials that imply A+B while actual entitlement is the larger‑of are misleading under ERISA)
- Jensen v. Solvay Chemicals, Inc., 625 F.3d 641 (10th Cir.) (contrast where notice expressly explained wear‑away and interest‑rate effects)
- Register v. PNC Fin. Servs. Grp., Inc., 477 F.3d 56 (3d Cir.) (description of cash‑balance plan mechanics)
- Hill v. Snyder, 878 F.3d 193 (6th Cir.) (standard of review for motion to dismiss)