ERISA-Third Circuit Rules That Claim For Pension Benefits Under Theory Of Equitable Estoppel Fails

In Jenkins v. Union Labor Life Company, No. 12-4310 (Third Cir. 2013), Karen Jenkins and eleven other former employees (the “Employees”) of The Amalgamated Life Insurance Company (“ALICO” ) appeal a grant of summary judgment to ALICO by the District Court on their claims for ERISA violations, on the grounds of equitable estoppel, stemming from the denial of benefits to them under Alico’s defined benefit pension plan.

In analyzing the case, the Third Circuit Court of Appeals (the “Court”) noted that ERISA § 502(a)(3) allows a beneficiary to obtain appropriate equitable relief to redress ERISA violations, and that a beneficiary can make out a claim for appropriate equitable relief based on a theory of equitable estoppel. But to succeed on such theory, the beneficiary must establish: (1) a material misrepresentation, (2) reasonable and detrimental reliance upon the representation, and (3) extraordinary circumstances. The beneficiary bears the burden of proving that each of these conditions are met. Here, there may have been misrepresentation about the Employees participation in the pension plan.

However, the Court continued, the Employees have not met their burden as to condition (2) or (3). Based on the documents received about the pension plan and the fact that they were not participating in it, the Employees could not have reasonably relied on any misrepresentation about plan participation. Therefore, condition (2) is not met. As to condition (3), extraordinary circumstances can arise where there are affirmative acts of fraud, where there is a network of misrepresentations over an extended course of dealing, or where particular plaintiffs are especially vulnerable. The Court found no extraordinary circumstances here, so prong (3) is not met. As such, the Court affirmed the district court’s summary judgment.

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