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Compliance March 19, 2012
Employer Wins Case Regarding Mistaken SPD Information
Former Northrop Grumman employees failed to prove
that the company intended to mislead employees with a contradiction from plan
terms in its summary plan description (SPD).
Reported by Rebecca Moore
In addition, the plaintiffs conceded that they did not rely on any of the misleading information in the SPD when deciding whether to retire, the 9th U.S. Circuit Court of Appeals found.
The appellate court had previously sent the case back to a federal district court after finding the ambiguity between the SPD and the plan document being enforced by plan administrators created a triable issue. The district court again granted summary judgment for Northrop Grumman (see “Participants not Due Additional Benefits Based on Defective SPD”).
On appeal, the 9th Circuit noted that the Supreme Court’s resolution of CIGNA Corp. v. Amara in 2011 overruled, in relevant parts, its two prior decisions that had treated SPD language as if it were an enforceable part of the retirement plan. In holding that the SPD language was not part of the plan, the high court made it clear that “summary documents, important as they are, provide communication with beneficiaries about the plan, but that their statements do not themselves constitute the terms of the plan for purposes of the Employee Retirement Income Security Act (ERISA) § 502(a)(1)(B), the 9th Circuit pointed out in its opinion.
The appellate court concluded that the committee may have a duty to enforce the terms of the plan, but the terms of an SPD are not the terms of the plan.
The opinion is available at http://www.ca9.uscourts.gov/datastore/opinions/2012/03/16/10-55161.pdf.