Sullivan v. Cuna Mutual Insurance Society, 649 F.3d 553

CUNA Mutual Insurance Society operated a retiree health-plan funded pay-as-you-go, with sick-leave balances used to subsidize retirees' health costs; balances were liabilities, not cash assets, on CUNA Mutual's books.
Pre-2008, union retirees could cash out unused sick leave or have it credited toward premiums; non-union retirees generally had no cash-out option, only credits against health costs.
At end of 2008, CUNA Mutual amended the Plan to stop employer contributions toward retirees’ health costs, using remaining sick-leave balances to fund coverage until exhausted, but did not transfer assets to retirees.
Plaintiffs—four retirees who never had a cash-out option and one who did—sued under ERISA § 502(a)(1) alleging a divestment of plan assets and misrepresentation of vested benefits.
The district court granted judgment on the pleadings for CUNA Mutual; the Seventh Circuit affirmed in part and dissenting judge disputed aspects of the holdings.
The case centers on whether the reserve-to-amend clause in the Plan allows wiping out promised benefits and whether promissory estoppel or vesting concepts can require a remedy.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Did ERISA §1106(a)(1)(D) prohibit transfer or use of Plan assets as the retirees allege?	Sick-leave balances were Plan assets diverted by CUNA Mutual.	Balances were not Plan assets; they were liabilities representing future contributions.	No; no assets changed hands and the amendment reduced future payments, not assets.
Are unused sick-leave credits vested welfare benefits under ERISA for non-union employees?	The plan promised lifetime or vested health-benefit support tied to sick leave.	Plans reserve the right to amend or terminate; no vested welfare benefits.	Majority: reservations trump, but dissent advocates middle-ground; issue resolved as captured by majority holdings.
Can reliance or silence in summaries override the plan's express terms?	Participants relied on promises; silence in summaries should not defeat enforceable terms.	ERISA allows terms to be enforced as written; silence cannot override plan terms.	No; plan terms govern; silence in summaries/election forms cannot override express terms.
Should courts craft a remedy under promissory estoppel when a plan reserves amendment rights?	Equitable relief is warranted to honor reliance on the promises.	ERISA allows modification; no remedy beyond plan terms should be created by courts.	Majority declines promissory estoppel relief; remand for further proceedings; dissent urges a middle-ground equitable remedy.

Vallone v. CNA Financial Corp., 375 F.3d 623 (7th Cir. 2004) (lifetime promises may be defeated by reservation-of-rights clauses)
Bidlack v. Wheelabrator Corp., en banc, 993 F.2d 603 (7th Cir. 1993 (en banc)) (vesting of welfare benefits may be defeated by plan language; weak vest rule discussed)
Cherry v. Auburn Gear, Inc., 441 F.3d 476 (7th Cir. 2006) (longevity promises not vested if reservation of rights exists)
UAW v. Rockford Powertrain, Inc., 350 F.3d 698 (7th Cir. 2003) (reservation-of-rights clauses control plan terms despite life-tenure wording)
CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011) (summary plan descriptions cannot override full plan terms; ambiguity not enough to alter terms)
Massachusetts v. Morash, 490 U.S. 107 (1989) (vacation leave not an ERISA welfare plan asset; preemption considerations)
Hughes Aircraft Co. v. Jacobson, 525 U.S. 432 (1999) (fiduciary duties favor employer interests in certain contexts; plan changes permitted)
Lockheed Corp. v. Spink, 517 U.S. 882 (1996) (employers may amend welfare benefits; plan terms govern)
Conkright v. Frommert, 130 S. Ct. 1640 (2010) (ERISA's structure and plan administrator duties; interpretive framework for plans)