ERISA-Sixth Circuit Applies Provision Of SPD Granting A Benefit, Despite An Exclusionary Clause In The Plan Under Which The Benefit Is Not Provided To A Terminated Employee, On The Grounds Of Equitable Estoppel

In Pearce v. Chrysler Group LLC Pension Plan, No. 17-1431 (6th Cir. 2018), Randy Pearce, a long-time employee of Chrysler Group LLC, was a participant in the Chrysler Group LLC Pension Plan (“Plan”).  Under the Plan’s terms, Pearce had earned an early retirement supplement, called “30-and-Out benefits.”  He relied on the Summary Plan Document (“SPD”), provided by Chrysler to Plan participants, which stated he did not need to be “actively employed at retirement” to remain eligible for these benefits.  But the SPD omitted an exclusionary clause contained in the Plan document itself, which said that an employee who was terminated was ineligible for the early retirement supplement.  After Pearce was terminated, he applied for his retirement benefits and was denied the 30-and-Out benefits.

After unsuccessfully appealing this denial administratively, Pearce brought suit under ERISAPearce seeks to hold the Plan to its representations in the SPD, notwithstanding the exclusionary provision in the Plan document, via the equitable remedies available under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3).

Upon reviewing the case, the Sixth Circuit Court of Appeals (the “Court”) reversed the district court’s grant of summary judgment to the Plan on Pearce’s request for reformation, affirmed summary judgment on Pearce’s request for equitable estoppel under which the provisions of the SPD would be applied, and remanded the case for further proceedings consistent with its opinion.

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