ERISA-Fifth Circuit Rules That A Fiduciary Breached Its Duties By Failing To Provide Plan Documents and a Rollover Election Form To A Participant

In Kujanek v. Houston Poly Bag I, Limited, No. 10-20664 (5th Cir. 2011), the plaintiff, Kenneth Kujanek (“Kujanek”), sued his former employer, Houston Poly Bag I, Ltd. (“Houston Poly”), under ERISA to recover retirement benefits that were allegedly withheld from him. During Kujanek’s employment with Houston Poly, he accrued a significant amount of vested benefits in a profit-sharing plan that Houston Poly offered to its employees (the “Plan”). After resigning from Houston Poly, Kujanek made multiple attempts to obtain plan documents and the necessary forms for electing a “rollover” distribution of his benefits. When his attempts were unsuccessful, he brought this suit against Houston Poly. The district court granted summary judgment for Kujanek on his claims that Houston Poly breached its fiduciary duty of loyalty and violated ERISA’s disclosure requirements. The district court also awarded Kujanek statutory penalties. Houston Poly appealed.

In analyzing the case, the Court noted that Houston Poly was the Plan Administrator of the Plan, and as such it had an obligation to provide Kujanek with the plan documents. Kujankek never made a formal, written claim for those documents. However, Houston Poly was aware that Kujanek sought information about the Plan and how he might obtain his benefits, and that Kujanek did not already have the crucial information and rollover election form in his possession. The Court held that, by withholding plan documents and the rollover election form, Houston Poly failed to act in Kujanek’s best interest and for the exclusive purpose of providing benefits to participants, in breach of its duties under section 404(a)(1)(A) of ERISA. The loss and depreciation in Kujanek’s Plan benefit (that is, the decrease in the value of his under the Plan) during the period that the documents and election form were withheld is the appropriate measure of relief.

As to the statutory penalties, under section 104(b)(4) of ERISA, upon written request, a participant may obtain from the plan a copy of the “bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated.” ERISA section 502(c)(1) provides the applicable remedy-in the form of a $110/day penalty- for the failure to provide those documents when requested. Here, Kujanek’s written request for documents was in the form of a discovery request made during earlier, unrelated state court litigation. The discovery request is not a “written request”, within the meaning of section 104(b)(4), so the section 502(c)(1) penalty cannot be imposed at this point. However, the Court remanded the case back to the district court for further findings on whether Houston Poly had failed to provide Kujanek with Plan documents, justifying the imposition of the penalty.

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