ERISA-Sixth Circuit Denies Claim For Higher Pension Benefits Based On Equitable Estoppel

In Stark v. Mars, Inc., No. 12-3956 (6th Cir. 2013) (Unpublished Opinion), for five months in 2009, plaintiff Virginia Stark (“Stark”) received benefits that were more than double what she was entitled to receive under her pension plan. She brought suit under ERISA to estop Mars Inc. U.S. Benefit Plans Committee (“the Committee”) from thereafter paying Stark her actual benefits instead of the higher benefits, on the grounds of equitable estoppel. The district court granted summary judgment against Stark, and Stark appealed.

In this case, Stark worked for Mars, Inc. (“Mars”) from 1982 to 2004, and was a participant in its Associate Retirement Plan (the “ARP”) by the time of her retirement in 2004. In August 2008, the Committee informed Stark that she had an account balance in the ARP of $378,763.58, which she could draw from at any time. On a website for the ARP, Stark received various estimates for her payout options, based on the foregoing account balance, including an estimate of $5,365 per month if she selects a five-year-certain annuity. Stark confirmed this amount by placing several calls to the Mars Benefits Service Center and receiving a number of benefit statements. The statements did include a disclaimer that Mars reserves the right to correct any errors, should the estimates on the statements conflict with properly calculated amounts.

Stark elected the five-year certain annuity option on February 24, 2009, on a form in which she acknowledged that she understood the disclaimers on the benefit statements. Stark collected monthly payments of approximately $5,365 beginning in March 2009 and running through July 2009. However, the Committee determined that a programming error in its software had resulted in an excessively high calculation for ARP participants. Stark’s monthly payment was recalculated to be about $2,303. When told of the recalculation, Stark filed a claim with the Committee, seeking to continue the monthly payments of $5,365. When the Committee denied the claim, Stark brought this suit under ERISA, on the grounds that equitable estoppel compels the Committee to continue the monthly payments in the requested amount.

In analyzing the case, the Sixth Circuit Court of Appeals (the “Court”) stated that an equitable estoppel claim under ERISA consists of the following elements: (1) conduct or language amounting to a representation of material fact; (2) the party to be estopped must be aware of the true facts; (3) the party to be estopped must intend that the representation be acted on, or the party asserting the estoppel must reasonably believe that the party to be estopped so intends; (4) the party asserting the estoppel must be unaware of the true facts; and (5) the party asserting the estoppel must reasonably or justifiably rely on the representation to his detriment. And when-as here-an equitable-estoppel claim arises in the context of an unambiguous pension plan, a plaintiff must further demonstrate: (6) a written representation; (7) plan provisions which, although unambiguous, did not allow for individual calculation of benefits; and (8) extraordinary circumstances in which the balance of equities strongly favors the application of estoppel. The Court found that Stark did not establish all of these elements. In particular Stark did not establish element (2), since the Committee made an honest mistake without actual knowledge of it, or element (5), as Stark did not change her lifestyle or spending habits or otherwise detrimentally rely on the estimates of her benefit. As such, the Court affirmed the district court’s summary judgment against Stark.

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