Skinner v. Northrop Grumman Retirement

There are no equitable remedies of reformation or surcharge available when an administrative committee provides retirement summary plan descriptions that are inconsistent with the plan master documents unless there is evidence of fraud, mistake, unjust enrichment, or actual harm.

Charles D. Skinner ("Skinner") and Gregory A. Stratton ("Stratton") participated in their employer’s Litton Industries, Inc. Retirement Plan B, replaced by Northrop Grumman Retirement Plan B. Before retirement, Skinner received a pension calculation packet ("PCP") in June 2004, December 2004, and April 2005, each with “annuity equivalent offset” formulas. Before his retirement, Stratton received his first PCP in February 2005, followed by a “summary of material modifications” in December 2005, and another PCP in May 2006; each contained the annuity equivalent offset. Both testified that they understood the pension calculations with the offset. The original claim was under Employee Retirement Income Security Act of 1974 (ERISA) § 502(a)(1)(B) “to enforce their understanding of their rights . . .” The Court concluded that, because of ambiguity between summary plan descriptions ("SPDs") and enforced plan master documents, there was a genuine issue of material fact and reversed and remanded the district court’s summary judgment for Northrop. The district court again granted summary judgment, so Skinner and Stratton appealed and focused on equitable remedies under ERISA § 502(a)(3). Skinner and Stratton sought "reformation and surcharge." The Court provided no reformation because it found no evidence “that Northrop Plan B contains terms that fail to reflect that drafter’s true intent” or “that Northrop Plan B contains terms that were induced by fraud, duress, or undue influence.” The Court provided no surcharge remedy because it found no fiduciary duty breached “by failing to enforce the terms of the 2003 SPD instead of the terms of the plan master document” and “no evidence that the committee gained a benefit by failing to ensure that participants received an accurate SPD.” The Court held that Plaintiffs were not entitled to compensatory relief because they did not establish harm or reliance on the inaccurate SPD. AFFIRMED.