Randy Pearce v. Chrysler Grp. LLC Pension Plan
893 F.3d 339
| 6th Cir. | 2018Background
- Randy Pearce, a long-time Chrysler employee, was eligible for a Plan "30-and-Out" early retirement supplement but relied on the SPD which stated he did not need to be "actively employed at retirement" to remain eligible.
- The SPD omitted an exclusion in the formal Plan document that disqualified a "Vested Terminated Participant" (someone who ceased employment before retirement) from receiving the supplement.
- Pearce declined a buyout in 2008, was terminated the same day, applied for the supplement, and was denied under the Plan document’s exclusion; his administrative appeals were denied.
- Pearce sued under ERISA; the district court granted summary judgment to the Plan on statutory benefits and initially denied leave to add equitable claims; the Sixth Circuit reversed as to leave to amend and remanded for §502(a)(3) equitable claims (reformation, estoppel).
- On remand, the district court granted summary judgment to the Plan on Pearce’s equitable claims; on further appeal the Sixth Circuit reversed as to reformation (error in legal standard) but affirmed on equitable estoppel and remanded for proper reformation analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard of district court review of magistrate R&R | District court applied overly restrictive standard to objections | District court claims it addressed objections on the merits | Court reviewed de novo itself and proceeded to decide merits; no remand solely on this basis |
| Reformation available under §502(a)(3); required showing for fraud/inequitable conduct | Pearce: unilateral mistake + Chrysler’s inequitable conduct/fraud supports reformation under contract principles | Chrysler: Pearce must show misconduct in drafting the Plan and intent to deceive; district court required intent | Reversed grant of summary judgment; district court applied wrong law by requiring intent; remanded to analyze reformation under equitable fraud/inequitable-conduct standard (clear-and-convincing proof, not necessarily intent) |
| Whether fraud/inequitable conduct must have occurred in drafting the Plan | Pearce: SPD formed the parties’ operative agreement given information asymmetry; omission in SPD is actionable | Chrysler: SPD was post-draft and irrelevant to reforming Plan | Court rejected Chrysler’s limitation; SPD omission and information asymmetry are relevant to reformation analysis |
| Equitable estoppel under §502(a)(3) given unambiguous Plan language | Pearce: relied on SPD and could not reasonably detect omission; estoppel should apply | Chrysler: Bloemker elements not satisfied, Plan language unambiguous and beneficiaries could calculate eligibility | Affirmed summary judgment for Plan on estoppel: because Plan language unambiguous, Pearce could not show the Bloemker element that plan provisions prevented individual calculation of benefits (element 7) |
Key Cases Cited
- CIGNA Corp. v. Amara, 563 U.S. 421 (2011) (summary documents not enforceable under §502(a)(1)(B); equitable relief available under §502(a)(3))
- Capital Gains Research Bureau, Inc. v. SEC, 375 U.S. 180 (1963) (equitable fraud includes acts/omissions breaching a legal or equitable duty that produce undue advantage)
- Deschamps v. Bridgestone Americas, Inc. Salaried Emps. Ret. Plan, 840 F.3d 267 (6th Cir. 2016) (constructive fraud factors in ERISA misrepresentation cases and duty to correct)
- Bloemker v. Laborer’s Local 265 Pension Fund, 605 F.3d 436 (6th Cir. 2010) (elements for equitable estoppel and additional requirements where plan provisions are unambiguous)
- Haviland v. Metro. Life Ins. Co., 730 F.3d 563 (6th Cir. 2013) (plain, accessible plan language defeats estoppel by notice)
- Amara v. CIGNA Corp., 775 F.3d 510 (2d Cir. 2014) (reformation under §502(a)(3) analyzed with contract principles; discussion of fraud/inequitable-conduct standard)
- Simmons Creek Coal Co. v. Doran, 142 U.S. 417 (1892) (historic authority recognizing reformation for mutual mistake or unilateral mistake plus inequitable conduct)