In Bloemaker v. Laborers’ Local 265 Pension Fund, No. 09-3536 (6th Circuit 2010), an employee became entitled to receive early retirement benefits under his employer’s ERISA-covered defined benefit pension plan. As part of the process of applying for these benefits, the plan had provided him with a benefit election form, stamped by the plan’s administrator, and certifying that he is entitled to receive $2,339.47 per month for his life (the “Certified Benefits Calculation”). After receiving benefit payments from the plan for nearly two years, the plan’s administrator notified the employee that the Certified Benefits Calculation was incorrect and his monthly payments should be $1,829.71 per month, that his future payments would be decreased to reflect the appropriate amount, and that he would be required to repay the excess amounts he had received. The employee filed suit, alleging in his complaint that the plan and the administrator had breached a contractual agreement with him, that he had detrimentally relied on the their misrepresentations, and that they breached their fiduciary duties under the plan.
Of particular interest is how the Court applied the doctrine of equitable estoppel to the case. The Court indicated that the employee’s complaint may be construed as stating a claim under ERISA for a pension benefit based on the federal common law rule of equitable estoppel (“equitable estoppel”). The Court began by noting it (the Sixth Circuit Court of Appeals) has recognized that equitable estoppel may be a viable theory in ERISA cases, although it had not yet applied this theory to a claim for a pension benefit, as opposed to a welfare benefit. However, the Court said that it-as have other circuits- would apply equitable estoppel when the representation as to the pension benefit was made in writing (so that an oral statement cannot vary plan terms) and the plaintiff can demonstrate extraordinary circumstances.
The Court further said that (at least in the Sixth Circuit) the elements of an equitable estoppel claim, when asserted by an employee against a plan and its administrator, are: (1) conduct or language amounting to a representation of material fact; (2) awareness of the true facts by the plan and its administrator; (3) an intention on the part of the plan and its administrator that the representation be acted on; (4) unawareness of the true facts by the employee; and (5) detrimental and justifiable reliance by the employee on the representation (this apparently being the extraordinary circumstances).
The Court went on to find that each of these elements was present in the instant case, so that the employee had established a claim for pension benefits based on equitable estoppel. The employee alleged that he received a document stating that he could receive a pension benefit of $2,339.40 per month, certified by the plan’s administrator, meeting element (1). Elements (2), (3), (4) and (5). are met, since the employee alleges that the plan and its administrator were aware of the true facts, that they intended for the employee to rely upon their representations, and the employee was unaware of the true facts, but relied on the misrepresentations when deciding to retire.