Shook v. Avaya, Inc.
625 F.3d 69
| 3rd Cir. | 2010Background
- Shooks sue Avaya for breach of fiduciary duty under ERISA based on allegedly misleading pension communications.
- Avaya Pension Plan uses a Recognition of Prior Service (RPS) date and Net Credited Service (NCS) calculations; prior service from Octel counts for eligibility but not for pension calculations per MOU.
- Lucent/Octel history: prior service recognized for eligibility; for calculation, NCS date stayed at 9/1/1998 per MOU; after Avaya became independent, Avaya assumed the Lucent Pension Plan.
- November 2000 letter establishes an Adjusted NCS date of Oct. 30, 1980; Richard relies on this to estimate pension.
- Richard calculates pension based on 23 years of service and discusses retirement with Karen; Karen retires in 2003 based on financial considerations.
- District Court granted summary judgment for Avaya; Third Circuit affirms on grounds that the retirement decision by Karen (a non-employee) is not legally cognizable as detrimental reliance under ERISA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether there was detrimental reliance from misrepresentations. | Shook: misrepresentation caused retirement decision. | Avaya: no detrimental reliance; decision not tied to plan benefits. | Detrimental reliance not established; retirement of non-employee attenuated. |
| Whether the misrepresentation was material for ERISA liability. | Shooks contend misrepresentation affected benefits. | Avaya argues insufficient materiality given lack of impact on benefits. | Materiality not addressed because detrimental reliance lacking. |
| Whether Karen can be considered a beneficiary for ERISA claim and whether injury was cognizable. | Karen could be beneficiary due to spousal designation. | Beneficiary status unnecessary; injury insufficient regardless. | Injury from Karen’s retirement is too attenuated; beneficiary status not dispositive. |
Key Cases Cited
- In re Unisys Corp. Retiree Med. Benefit ERISA Litig., 579 F.3d 220, 579 F.3d 220 (3d Cir. 2009) (fiduciary may not materially mislead those owed loyalty and prudence)
- In re Unisys Corp. Retiree Med. Benefit ERISA Litig., 242 F.3d 497, 242 F.3d 497 (3d Cir. 2001) (detrimental reliance may cover retirement decisions relating to plan benefits)
- Adams v. Freedom Forge Corp., 204 F.3d 475 (3d Cir. 2000) (misrepresentation and reliance principles in ERISA fiduciary claims)
- Curcio v. John Hancock Mut. Life Ins. Co., 33 F.3d 226 (3d Cir. 1994) (detrimental reliance in widow/employee retirement scenarios)
- Bixler v. Central Pa. Teamsters Health & Welfare Fund, 12 F.3d 1292 (3d Cir. 1993) (reliance regarding COBRA/benefits among plan participants)
- Hooven v. Exxon Mobil Corp., 465 F.3d 566 (3d Cir. 2006) (reasonableness and foreseeability in fiduciary reliance)
- Unisys Corp. Retiree Med. Benefit ERISA Litig., 493 F.3d 393, 493 F.3d 393 (3d Cir. 2007) (summary of ERISA fiduciary duties and misrepresentation)