Pearce v. Chrysler Grp. LLC Pension Plan

• Decision Date: 20 June 2018
• Docket Number: No. 17-1431,17-1431
• Citation: 893 F.3d 339
• Parties: Randy D. PEARCE, Plaintiff–Appellant, v. CHRYSLER GROUP LLC PENSION PLAN, Defendant–Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

893 F.3d 339

Randy D. PEARCE, Plaintiff–Appellant,

v.CHRYSLER GROUP LLC PENSION PLAN, Defendant–Appellee.

No. 17-1431

United States Court of Appeals, Sixth Circuit.

Argued: May 4, 2018

Decided and Filed: June 20, 2018

ARGUED: Lawrence J. Breskin, Detroit, Michigan, for Appellant. William E. Altman, THE MURRAY LAW GROUP, P.C., Bingham Farms, Michigan, for Appellee. Eirik Cheverud, UNITED STATES DEPARTMENT OF LABOR, Washington, D.C., for Amicus Curiae. ON BRIEF: Lawrence J. Breskin, Detroit, Michigan, for Appellant. William E. Altman, THE MURRAY LAW GROUP, P.C., Bingham Farms, Michigan, for Appellee. Eirik Cheverud, UNITED STATES DEPARTMENT OF LABOR, Washington, D.C., for Amicus Curiae.

Before: MOORE, THAPAR, and BUSH, Circuit Judges.

KAREN NELSON MOORE, Circuit Judge.

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 the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. Pearce 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). For the reasons set forth below, we REVERSE the district court’s grant of summary judgment to the Plan on Pearce’s request for reformation, AFFIRM summary judgment on Pearce’s request for equitable estoppel, and REMAND for further proceedings consistent with this opinion.

I. FACTS AND PROCEDURE

In October 2008, facing insolvency, Chrysler offered certain employees buyouts with incentives to take early retirement, in addition to the benefits they had already earned under the Plan. Pearce v. Chrysler Grp., L.L.C. Pension Plan (Pearce I) , 615 F. App’x 342, 343 (6th Cir. 2015) ; R. 89–4 (2008 Separation Incentive Ltr. at 1) (Page ID #3133). At the time of the buyout offer, Pearce was sixty years old and had worked for Chrysler for more than thirty-three years. Pearce I , 615 F. App’x at 343. This made him eligible for the buyout offer as well as the Plan’s 30-and-Out benefits, which were a monthly pension supplement "designed to help early retirees make ends meet until eligible for Social Security benefits." Id.

"Chrysler provided Pearce with Pension Statements to help him decide whether to accept the buyout...." Id. These statements repeatedly advised him to consult the SPD for further details about his benefits. R. 12–5 (All Plans Summary at 2) (Page ID #589); R. 12–5 (CPP Pension Estimate at 2) (Page ID #597); R. 12–5 (AMC Salary Plan Pension Estimate at 2) (Page ID #603). Although Pearce was directed multiple times to the SPD for further explanation of his benefits, the SPD twice cautioned its readers that "it is only a summary of Plan Provisions" and "[i]f there is a conflict between this summary and the Plan document and trust agreement, the Plan document and trust agreement will govern." R. 12 (SPD at 2) (Page ID #116); see also id. at 29 (Page ID #143).

With respect to the Plan’s 30-and-Out benefits, the SPD stated: "You do not need to be actively employed at retirement to be eligible for a supplement. However, you must retire and begin receiving pension benefits within five years of your last day of work for the Company in order to receive any supplements for which you are eligible." Id. at 12 (Page ID #126). Based on this explanation, Pearce believed that he could not lose his 30-and-Out benefits if he lost his job. R. 89–6 (Pearce Dep. at 36) (Page ID #3158).

"[O]n November 25, 2008, after discussing the terms of the SPD and his likely future with other employees of Chrysler, Pearce declined the buyout offer." Pearce I , 615 F. App’x at 343. Chrysler terminated him that same day.¹ "Pearce [then] applied to Chrysler’s benefit manager, Benefit Express/Hewitt LCC (‘Benefit Express’), for the pension benefits he had earned under the Pension Plan." Id. ; R. 12–5 (Benefit Express Customer Service Log) (Page ID #576). Benefit Express informed Pearce that, because he had been terminated prior to his retirement, under the Plan’s terms he was ineligible for the 30-and-Out benefits.² R. 12–5 (Benefit Express Customer Service Log) (Page ID #581); R. 12 (Mar. 20, 2009 Ltr. at 1) (Page ID #105). It provided Pearce another copy of the SPD for him to review. R. 12 (Mar. 20, 2009 Ltr. at 2) (Page ID #106). In response, Pearce asked Benefit Express to identify where in the SPD he could "find what you have stated and you have written." R. 12 (Mar. 21, 2009 Email) (Page ID #151). "There is no indication in the record that Pearce received a response." Pearce I , 615 F. App’x at 344.

In September 2009, Pearce filed a claim with Benefit Express’s Determination Review Team pursuant to ERISA § 503, 29 U.S.C. § 1133, contesting the decision to deny him the 30-and-Out benefits. R. 12 (Claim Initiation Form) (Page ID #158–63). The Review Team affirmed the denial in March 2010. R. 12 (Review Team Denial at 1) (Page ID #166). Pearce appealed that decision to the Chrysler Employee Benefits Committee in May 2010. R. 12–6 (Admin. Appeal) (Page ID #615–21). The Committee failed to respond to Pearce’s appeal.

Pearce then filed a complaint in Michigan state court asserting a claim under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) ; Chrysler removed the case to federal court. R. 1 (Notice of Removal) (Page ID #9). As the federal court proceedings progressed, the Committee belatedly denied Pearce’s administrative appeal. R. 12–6 (Mar. 29, 2011 Appeal Denial) (Page ID #658–60). Because "this matter involve[d] both a procedural defect [the untimeliness of the administrative decision] and an incomplete record," the district court remanded Pearce’s claim back to the Committee for reconsideration. R. 30 (2012 Dist. Ct. Order at 4) (Page ID #1131). The Committee reaffirmed the denial of Pearce’s claim, stating that the provisions of the Plan document, not the SPD, controlled. R. 36 (Sept. 20, 2012 Appeal Denial) (Page ID #1228). Pearce moved the district court to reopen his federal case, which it did. R. 31 (Pl. Mot. to Reopen) (Page ID #1133–39); R. 33 (Or. Granting Pl. Mot. to Reopen) (Page ID #1146).

During this time, the Supreme Court held that statements in summary documents "do not themselves constitute the terms of the plan for purposes of § 502(a)(1)(B)" and therefore could not be enforced under this section. CIGNA Corp. v. Amara (Amara III) , 563 U.S. 421, 438, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011) (emphasis in the original). But the Supreme Court stated that ERISA § 502(a)(3) empowered a court to provide equitable relief in a situation in which the beneficiaries had been provided false or misleading information about plan provisions. Id. at 440–42, 131 S.Ct. 1866.

After the district court reopened Pearce’s federal case, he moved for leave to amend his complaint to add a request for equitable relief under ERISA § 502(a)(3). R. 50 (Mot. to Amend) (Page ID #1559–63). The parties also filed cross-motions for judgment on the record. R. 60 (2013 Dist. Ct. Op. at 4) (Page ID #1845). The district court granted judgment in favor of Chrysler and denied as futile Pearce’s motion for leave to amend his complaint. Id. Pearce timely appealed. R. 62 (Oct. 11, 2013 Notice of Appeal) (Page ID #1847–48).

A panel of this court "affirm[ed] the grant of summary judgment on Pearce’s claim under ERISA § 502(a)(1) ; reverse[d] the denial of Pearce’s motion to amend to add equitable claims under ERISA § 502(a)(3) ; and remand[ed] for consideration of the ERISA § 502(a)(3) claims." Pearce I , 615 F. App’x at 351. The panel held that "it is clear that Pearce is not eligible for 30-and-Out benefits under terms of the Plan, and thus he cannot recover under ERISA § 502(a)(1)(B)." Id. at 346 (citing Amara III , 563 U.S. at 438, 131 S.Ct. 1866 ). But we further held that there was "a conflict between the SPD and the Pension Plan ... because the [SPD] misleads or fails to state additional requirements contained in the plan document." Id. at 347 (alteration in original) (internal quotation marks omitted). Because of "[t]his material conflict between the Pension Plan and the SPD," Pearce could "seek equitable relief under ERISA § 502(a)(3)." Id. at 349. Thus, his motion to amend his complaint to add a request for equitable relief under ERISA § 502(a)(3) was not futile.³ Id.

On remand, Pearce filed an amended complaint. R. 68 (Amend. Compl.) (Page ID #1876–88). In Count 1, Pearce sought equitable relief in the form of reformation, equitable estoppel, and surcharge under ERISA § 502(a)(3) for a violation of ERISA § 102(b), 29 U.S.C. § 1022(b). Id. at 8–12 (Page ID #1883–87). In Count 2, Pearce renewed his claim for relief under ERISA § 502(a)(1)(B). Id. at 12 (Page ID #1887). The parties then filed cross-motions for summary judgment. R. 72 (Chrysler Mot. for SJ) (Page ID #1906–43); R. 73 (Pearce Mot. for SJ) (Page ID #2195–27).

The magistrate judge recommended that the district court deny Pearce’s motion for summary judgment and grant Chrysler’s motion for summary judgment, R. 87 (2017 R&R at 34–35) (Page ID #3047–48), and the district court adopted the magistrate judge’s report and recommendation in full, R. 91 (2017 Dist. Ct. Op. at 10) (Page ID #3269). The plaintiff timely appealed the grant of summary judgment with respect to...