Pell v. EI DuPont de Nemours ( 2008 )

Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit
8-8-2008
Pell v. EI DuPont de Nemours
Precedential or Non-Precedential: Precedential
Docket No. 06-5006
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 06-5006 and 06-5088
MELVYN PELL; ELLEN PELL
Appellants No. 06-5088
v.
E. I. DUPONT DE NEMOURS
& COMPANY INCORPORATED,
Individually and in its capacity as Administrator
of the DuPont Pension and Retirement Plan;
THE BOARD OF BENEFITS AND PENSIONS
OF E. I. DUPONT DE NEMOURS,
Appellants No. 06-5006
On Appeal from the United States District Court
for the District of Delaware
(D.C. No. 02-cv-00021)
District Judge: Honorable Kent A. Jordan
Argued April 15, 2008
Before: AMBRO, FISHER and MICHEL,* Circuit Judges.
(Filed: August 8, 2008)
Robert Jacobs (Argued)
Jacobs & Crumplar
2 East 7th Street
P.O. Box 1271
Wilmington, DE 19899
Attorney for Melvyn Pell and Ellen Pell
Donna L. Goodman
E.I. DuPont de Nemours & Company
Legal Department
Suite D-7017A
1007 Market Street
Wilmington, DE 19898
*
The Honorable Paul R. Michel, Chief Judge of the
United States Court of Appeals for the Federal Circuit, sitting by
designation.
2
Raymond M. Ripple (Argued)
E.I. DuPont de Nemours & Company
Legal Department
Suite D-7012
1007 Market Street
Wilmington, DE 19898
Attorneys for E. I. Dupont de Nemours
& Company Incorporated and the
Board of Benefits and Pensions of
E. I. Dupont de Nemours
OPINION OF THE COURT
FISHER, Circuit Judge.
Retired employee Melvyn Pell and his wife, Ellen Pell
(collectively, “Pell”) initiated this litigation against E.I. DuPont
de Nemours and Co. and its Board of Benefits and Pensions
(collectively, “DuPont”) under the Employee Retirement Income
Security Act (“ERISA”). Pell claimed that his pension benefit
is lower than DuPont had led him to expect. After a bench trial,
the District Court enjoined DuPont to use a “credited service
date” of August 1, 1972, when calculating Pell’s future benefits,
resulting in a higher monthly pension benefit. The parties cross
appealed.
For the reasons that follow, we will affirm the District
Court’s ruling that Pell is entitled to relief under ERISA. We
3
will reverse the District Court’s ruling that Pell is not entitled to
restitution for his past unduly low pension payments.
Additionally, we will reverse the District Court’s injunction
insofar as it requires DuPont to calculate Pell’s benefit using the
August 1, 1972 service date, because we conclude that DuPont
must use a service date of February 10, 1971.
I. BACKGROUND
On February 10, 1971, Consol, a wholly-owned
subsidiary of Conoco, Inc., hired chemical engineer Melvyn Pell
to work at its facility in Pittsburgh, Pennsylvania. According to
the terms of the Consol Pension Plan, Pell was not eligible to
participate in the Consol Plan until the first day of the month
following his thirtieth birthday. Pell turned thirty in July 1972,
and thus his pension benefit calculation date was August 1,
1972. In 1981, Conoco and Consol merged with DuPont. In
1982, Pell accepted a temporary position with DuPont in
Wilmington, Delaware. Under the temporary assignment, Pell
remained a Consol employee and continued to receive his salary
and benefits from Consol.
In 1983, DuPont, Consol, and Conoco jointly created a
policy covering the transfer of employees between the
companies. The transfer guidelines were not meant for general
distribution, since relatively few employees transferred between
the companies. All three companies followed the guidelines
when effecting permanent employee transfers. The guidelines
explained how pensions would be calculated for transferred
employees:
4
“Continuity of Service
DuPont will recognize a transferred
Conoco/Consol employee’s service to the same
extent Conoco/Consol recognized it at the transfer
date. . . . This service will be used for benefit
eligibility, vesting, and pension computation. . . .
Consol service for DuPont pension calculation
purposes will be recognized only from 11/1/75
forward.1 (Although all service recognized by
Consol will be used to determine pension and
other plan eligibility.)”
The transfer guidelines also contained a provision stating
that when DuPont received a transferred employee,
Conoco/Consol would furnish a letter to the transferred
employee indicating the employee’s years of service, adjusted
service date, beneficiary designations, creditable service, and
eligibility for and participation in benefit plans. A sample of
this letter contained in the guidelines stated that the company
receiving the transferred employee “will recognize [the
employee’s] service to the same extent that [the sending
company] recognized it at the time of transfer. This service will
1
On November 1, 1975, the Consol pension plan changed
so that it no longer had optional contributory features. The
DuPont Board of Directors adopted the 1975 cutoff date for
pension computations in order to prevent inequities that could
have arisen based on whether transferred Consol employees had
participated in the contributory feature.
5
be used for eligibility, vesting and benefit computation in the
[receiving company’s] benefit plans.”
In late 1983, Pell’s DuPont manager asked Pell to
permanently transfer from Consol to DuPont. Pell was
concerned that his salary would decrease upon transferring to
DuPont but believed that DuPont’s more generous pension plan
would offset the lower salary. Pell’s principal concern about his
prospective DuPont pension was whether he would be credited
for his time employed with Consol. Pell’s DuPont manager and
supervisor both assured him that his Consol service time would
be counted under the DuPont pension plan.
While Pell was considering whether to permanently
transfer to DuPont, he received a letter from William Waddell,
the Director of Employee Compensation and Benefits at Consol
(the “Waddell letter”). That letter, dated January 13, 1984,
closely followed the transfer guidelines. It listed Pell’s
“Retirement Plan Credited Service Date” as August 1, 1972,
which was the same date that Consol recognized as the start date
under the Consol Plan. Waddell’s letter further stated:
“Retirement Plan: Your transfer will not be
considered a termination of employment for
retirement purposes. Both creditable service and
earnings used in calculating your benefit under
Consol’s Retirement Plan will be ‘frozen’
effective with your date of transfer to DuPont.
Service with DuPont will be deemed membership
service within the terms of the Consol Plan and
counts only for vesting purposes. Compensation
6
earned during your employment with DuPont will
be used in determining your final average
compensation for benefit purposes under the
DuPont Plan. The Pension you receive will be
calculated under the DuPont Plan based on your
total combined service. This retirement benefit
will be offset by any payment you receive from
the Consol Plan as a result of your accrued benefit
as of the date of transfer.”
After receiving these oral and written assurances about his
pension benefit, Pell accepted the permanent transfer to DuPont
with a retroactive transfer date of January 1, 1984.
In 1991, Pell received a document from DuPont
indicating that his adjusted service date was 1975. Pell was
concerned and contacted Doris Uhde, a pre-retirement counselor
for DuPont, who assured him via email that his adjusted service
date was “2/10/71, not 1975 and DuPont [would] use this date
for [Pell’s] years of service under their formula when calculating
[his] pension.” 2
In 1992, Pell requested from DuPont two estimates of his
pension benefits, and each of these estimates listed February 10,
2
Although Consol employees did not become eligible to
participate in the Consol Plan until after their thirtieth birthdays,
DuPont employees were eligible to participate in the DuPont
plan beginning on their first day of employment. February 10,
1971, was Pell’s first day of employment with Consol.
7
1971, as his adjusted service date. In 1998, Pell requested
another pension estimate, and this estimate also stated that his
adjusted service date was February 10, 1971. In 1999, Pell
received a benefit resources statement from DuPont indicating
that he had 28.5 years of service as of August 31, 1999, which
was consistent with an adjusted service date of February 10,
1971. Each estimate contained text at the bottom of the page
indicating that it was an estimate subject to review and
individual adjustments.
In August 2000, Pell inquired what his pension benefits
would be if he retired on December 31, 2000. On December 14,
2000, DuPont informed Pell that it was changing his adjusted
service date to August 1, 1972, thus reducing his recognized
service by 1.475 years. Pell requested a reconsideration of his
adjusted service date, and DuPont’s Benefit Administration
department provided him with a final pension estimate via email
on December 19, 2000.
According to the final estimate, Pell would receive (1) a
pension benefit for his Consol employment that would be
“exactly the same . . . as if Consol had calculated and paid it,”
and (2) a pension benefit for his DuPont employment based on
his service from November 1, 1975 until retirement, partially
offset by the payments under the Consol Plan. The email to Pell
from the Benefit Administration department also noted:
“All of your previous documentation does use
Adjusted Service Date (ASD) equal to 2/10/71.
However, ASD is not a pension date - it is used
for many business specific uses (such as vacation
8
entitlement, service awards, etc.). The ASD is
also used to determine vesting and eligibility
service under the plans, but may need to be
adjusted to reflect pension benefit accrual service,
and in your case it is . . . . [T]he estimate
provided to you about eight years ago . . . . was in
error.”
Upon receiving his final pension estimate, Pell responded that
he “may not be able to retire as scheduled.”
Pell appealed his pension estimate to the DuPont Board
of Benefits and Pensions, which upheld the determination. He
retired on May 31, 2001.
In 2002, Pell filed a complaint against DuPont in the
District Court for the District of Delaware. He requested an
injunction ordering DuPont to pay the higher pension amount.
After a bench trial, the District Court ruled that Pell was entitled
to relief under ERISA based on the theory of equitable estoppel.
The Court further determined that under § 502(a)(3) of ERISA
(codified at 29 U.S.C. § 1132(a)(3)), Pell was not entitled to
restitution for the past pension payments that had been too low.
The Court issued an injunction requiring DuPont to use August
1, 1972 as the service date for calculating Pell’s future pension
benefits. DuPont filed a timely Notice of Appeal and Pell filed
a timely Notice of Cross Appeal.
9
II. DISCUSSION
The District Court had jurisdiction under 28 U.S.C.
§ 1331 and ERISA, 29 U.S.C. § 1001 et seq. We have
jurisdiction under 28 U.S.C. § 1291.
A. Standing 3
ERISA provides that “[a] civil action may be brought . . .
by a participant or beneficiary . . . .” 29 U.S.C. § 1132(a)(3). A
“participant” is “any employee or former employee . . . who is
or may become eligible to receive a benefit of any type from an
employee benefit plan.” 29 U.S.C. § 1002(7). DuPont argues
that the actions or omissions forming the basis of Pell’s claim
took place in 1983 and 1984 before he was employed by
DuPont. Because Pell was neither a “participant” in nor a
“beneficiary” of DuPont’s plan at that time, DuPont asserts that
he does not have standing under ERISA’s civil enforcement
provision.
DuPont’s argument does not take into account Pell’s
retroactive DuPont employment date. The Waddell letter, dated
January 13, 1984, misled Pell about the amount of his pension
3
This issue was not raised in the District Court.
However, “[l]ike any jurisdictional requirement, standing cannot
be waived.” Pub. Interest Research Group of N.J., Inc. v.
Magnesium Elektron, Inc., 123 F.3d 111, 117 n.5 (3d Cir. 1997).
“We have plenary review over questions of standing.” Miller v.
Rite Aid Corp., 334 F.3d 335, 340 (3d Cir. 2003).
10
benefits. Pell accepted employment with DuPont after January
13, 1984, with a retroactive effective date of January 1, 1984.
Using Pell’s retroactive employment start date, he received the
Waddell letter during his time as an “employee” of DuPont who
“may become eligible to receive a benefit.” 29 U.SC. § 1002(7).
Therefore, he has standing to sue under ERISA.
In addition, the District Court determined that Pell
“reasonably and detrimentally relied on the informational
statements estimating his pension benefits and showing
February 10, 1971 as his service date.” These estimates
indisputably occurred while Pell was a DuPont employee in
1992, 1998, and 1999. Therefore, the estimates – in addition to
the Waddell letter – confer standing upon Pell.
B. Equitable Estoppel under ERISA
The District Court correctly concluded that Pell is entitled
to relief under ERISA based on an equitable estoppel theory.
“On appeal from a judgment entered after a non-jury trial, we
review findings of fact for clear error and conclusions of law de
novo.” Hooven v. Exxon Mobil Corp., 465 F.3d 566, 572 (3d
Cir. 2006) (internal citations omitted).
A beneficiary may “obtain . . . appropriate equitable relief
. . . to redress [ERISA] violations or . . . to enforce any
provisions of [ERISA].” 29 U.S.C. § 1132(a)(3). A beneficiary
can make out a claim for “appropriate equitable relief,” id.,
based on a theory of equitable estoppel. Curcio v. John
Hancock Mut. Life Ins. Co., 33 F.3d 226, 235 (3d Cir. 1994).
“To succeed under this theory of relief, an ERISA plaintiff must
11
establish (1) a material representation, (2) reasonable and
detrimental reliance upon the representation, and
(3) extraordinary circumstances.” Id.
1. Material Misrepresentation
“[A]ny provision of a plan subject to ERISA that
establishes a benefit is a material term of the plan.” Id. at 237.
“[A] misrepresentation is material if there is a substantial
likelihood that it would mislead a reasonable employee in
making an adequately informed decision about if and when to
retire.” Fischer v. Phila. Elec. Co., 994 F.2d 130, 135 (3d Cir.
1993).
The District Court correctly determined that, under our
case law, DuPont’s representations about Pell’s pension benefit
calculation date were material. Pell v. E.I. DuPont de Nemours
& Co., No. 02-00021, 2006 WL 2864604, at *6-7 (D. Del.
2006). When evaluating whether he can afford to retire, a
reasonable employee would consider the amount of his pension,
which in Pell’s case depended on his pension benefit calculation
date.
Previously, we have concluded that representations were
material where they led an employee to wrongly believe that
accidental death and dismemberment insurance was available.
Curcio, 33 F.3d at 236-37. We have also determined that
representations could be material where an employer stated that
no early retirement incentives were on the horizon, when in fact
management was considering such a program. Fischer, 994
F.2d at 134-35. As in Curcio and Fischer, DuPont’s
12
representations to Pell about his pension benefit calculation date
misled Pell as he attempted to make an adequately informed
decision about his benefits.
DuPont argues that its misrepresentations about Pell’s
pension calculations were not material because Pell discovered
the errors before making his final retirement decisions. This
argument is unpersuasive. The test for materiality does not
depend on when an employee discovers the misrepresentations.
The test is whether the information “would mislead a reasonable
employee in making an adequately informed decision” about
retirement. Id. In this case, it is clear that the information –
misreporting about the amount of a pension benefit – would
mislead a reasonable employee. The misleading nature of the
information was demonstrated by the fact that Pell changed his
retirement plans, retiring on May 31, 2001, rather than
December 31, 2000. That Pell discovered the error while he still
had time to alter his plans does not change the fact that
DuPont’s statements were material.
2. Reasonable and Detrimental Reliance
As the phrase “reasonable and detrimental reliance”
implies, in order to prevail, Pell must show (1) reasonableness
and (2) injury. Curcio, 33 F.3d at 237. The District Court
correctly concluded that Pell reasonably and detrimentally relied
on the Waddell letter and the pension estimates he received
throughout the 1990s.
13
a) Reasonable Reliance
We have determined that when an individual acts with
apparent authority to determine an employee’s status in
relationship to a benefit plan, the plan fiduciary can be
responsible for the individual’s material misstatements. Taylor
v. Peoples Natural Gas Co., 49 F.3d 982, 989 (3d Cir. 1995). In
Taylor, a former employee claimed that the Supervisor of
Employee Benefits led him to believe that an early retirement
incentive plan would apply to him retroactively. Id. at 985.
When deciding whether the employee had reasonably relied on
the Supervisor’s statements, we invoked the doctrine of apparent
authority, which “(1) results from a manifestation by a person
that another is his agent and (2) exists only to the extent that it
is reasonable for the third person dealing with the agent to
believe that the agent is authorized.” Id. at 989 (internal
quotation marks and citation omitted).
The Supervisor in Taylor had apparent authority because
(1) he had actual authority to perform ministerial functions such
as advising employees of their rights and preparing reports, and
(2) “the plan participants . . . reasonably believed that [the
Supervisor] specifically had the authority to counsel plan
participants about possible amendments to the plan.” Id.
Therefore, under ERISA, the plan fiduciary was responsible for
the Supervisor’s material misstatements. Id.
DuPont argues that Pell’s reliance on the letter from
William Waddell, Consol’s Director of Employee Compensation
and Benefits, was unreasonable because Waddell “had no
authority to speak for DuPont.” The District Court correctly
14
determined, however, that as in Taylor, Waddell acted with
“apparent authority.” The transfer guidelines were a
manifestation by DuPont that Waddell was its agent. The
guidelines stated that when an employee transferred from
Consol to DuPont, Consol would provide a letter to the
employee and to DuPont describing in detail the employee’s
status with regard to both Consol and DuPont benefit plans.
Waddell, therefore, acted as DuPont’s agent when he wrote the
letter to Pell.
It was reasonable for Pell to believe that Waddell was
authorized to speak on DuPont’s behalf. As the District Court
stated:
“Mr. Pell received the Letter from Mr. Waddell,
the Director of Employee Compensation and
Benefits of his employer Consol, which was
owned and controlled by DuPont . . . . Mr.
Waddell . . . was an appropriate person to
promulgate that information . . . . The Letter
indicated on its face that it had been copied to
DuPont management, including the division head
of Personnel and Employee Relation[s], and Mr.
Herron [a supervisor in the Employee
Compensation Benefits Division] testified that he
believed that he received the Letter in the ordinary
course of his position. It was reasonable for Mr.
Pell to understand that Mr. Waddell was
communicating on behalf of all the subparts of
DuPont’s corporate structure the information that
15
DuPont intended for him to act upon in deciding
whether to accept a transfer.”
Pell, 2006 WL 2864604 at *9 (internal quotation marks and
citation omitted). In sum, the District Court correctly
concluded, based on the elements of the Taylor apparent
authority test, that Pell reasonably relied on the Waddell letter.
Taylor, 49 F.3d at 989.
The District Court found that it was also reasonable for
Pell to rely on the pension estimates he received during the
1990s. Pell, 2006 WL 2864604 at *9. DuPont asserts that
because each estimate contained a disclaimer clearly labeling the
calculation as an “estimate” that was subject to “review and
correction,” 4 Pell could not have reasonably relied on the
estimates. DuPont’s argument fails because it does not take into
account Pell’s 1991 email exchange with Doris Uhde, a DuPont
pre-retirement counselor. In that exchange, Pell inquired what
4
Specifically, the disclaimers included language such as:
“The calculation is a broad estimate . . . . It does not account for
prior plans, prior distributions, or other individual adjustments”;
“This is an ESTIMATE and is not the final calculation of your
pension benefit . . . . The historical data used in this estimate
(pension base earnings, FICA earnings, and adjusted service
date) are subject to review and confirmation at time of formal
application for pension”; “THIS IS AN ESTIMATE. Data used
in this estimate are subject to review and correction in
determining your benefit at retirement.”
16
date would be used for his pension calculation, and Uhde
replied:
“Consol pension will be calculated on their
formula and their SS offset. Your adjusted
service date is 2/10/71 not 1975 and Du Pont will
use this date for your years of service under their
formula when calculating your pension. The
‘Pension’ booklet in your green Benefits Binder
explains the Du Pont formulas; however, nothing
written re offsets as each would be different.”
After this exchange, Pell’s subsequent pension estimates (in
1992, 1998, and 1999) listed 1971 as the date from which his
benefit would be calculated.
For the same reasons that it was reasonable for Pell to
rely on the Waddell letter, it was reasonable for him to rely on
Uhde’s apparent authority to act on DuPont’s behalf. By giving
Uhde responsibility for assisting DuPont employees with their
retirement planning, DuPont manifested that she was its agent.
See Taylor, 49 F.3d at 989. It was reasonable for Pell to believe
that Uhde had the authority to determine his adjusted service
date. Id. Moreover, it was reasonable for Pell to believe, going
forward, that his conversation with Uhde had set the record
straight. Having clarified his adjusted service date (or so he
thought), Pell reasonably believed that his employment records
had been corrected and that his pension benefit would be
calculated based on the 1971 date.
17
If we were to accept DuPont’s argument that Pell could
not rely on his pension estimates, employees such as Pell would
be required to continually question their benefits calculations,
even if they agreed with their employers’ estimates. We decline
to formulate such a burdensome rule. In the context of Pell’s
exchange with Uhde and his subsequent pension estimates that
reflected a 1971 adjusted service date, it was reasonable for him
to rely on the estimates, despite their disclaimer language.
b) Detrimental Reliance
In order to show detriment, or injury, a plaintiff must
demonstrate that he relied upon the employer’s representations
in a way that later led to injury. Curcio, 33 F.3d at 237. Pell
detrimentally relied on the Waddell letter when he decided to
transfer permanently from Consol to DuPont. He did not
finalize the transfer until after he had received the letter’s
confirmation of his pension benefit calculation date. Pell was
injured because he accepted a lower salary and he permanently
moved his family to Delaware, despite concerns about the cost
of living and the quality of his children’s schools.
DuPont argues that Pell did not detrimentally rely on the
pension estimates, because he did not take any actions based on
the information they contained. However, our case law
recognizes that refraining from taking action can constitute
detrimental reliance.
In Curcio, we said that the plaintiffs’ detrimental reliance
was “giving up an opportunity to accommodate their insurance
needs through an independent insurance carrier.” 33 F.3d at
18
237. In Smith v. Hartfod Insurance Group, 6 F.3d 131, 137 (3d
Cir. 1993), we concluded that there was detrimental reliance,
even though the reliance could be expressed as a failure to act
(not converting to an individual health care policy that would
have provided adequate coverage) or an action (signing up for
a new group health care plan that provided inadequate
coverage). DuPont’s argument does not convince us to draw a
new distinction between active and inactive detrimental reliance.
Pell relied to his detriment on the pension estimates he
received in the 1990s by refraining from taking certain actions.
Pell testified that if he had known how his pension would be
calculated, he would have explored whether he could return to
Consol, get another job with a better pension, or retire sooner
and start a consulting business. He was injured because he did
not take any of these actions that might have benefitted him.5
Pell has shown that the second element of equitable
estoppel – reasonable and detrimental reliance – is present in
this case. As the District Court concluded, Pell demonstrated
that his reliance on the Waddell letter and the 1990s pension
5
It is reasonable to believe that Pell, an engineer with a
Ph.D., an MBA, and an employment history with Consol and
DuPont, could have found alternative employment or could have
opened his own consulting business. Cf. Smith v. Hartford Ins.
Group, 6 F.3d 131, 137 (3d Cir. 1993) (rejecting theories of
detrimental reliance because the plaintiffs produced no evidence
that the actions they would have taken were realistically
possible).
19
estimates was reasonable and caused him injury. See Curcio, 33
F.3d at 237.
3. Extraordinary Circumstances
The District Court determined that Pell met the third
element of the equitable estoppel theory, concluding that the
circumstances of his case are extraordinary and thus warrant
relief under 29 U.S.C. § 1132. DuPont claims that the District
Court erred, because a finding of extraordinary circumstances
usually results from the employer’s acts of bad faith and not
from mere reporting errors.
In the past, we have determined that extraordinary
circumstances existed in a variety of factual scenarios. Kurz v.
Phila. Elec. Co. (Kurz II), 96 F.3d 1544, 1553 (3d Cir. 1996)
(collecting cases). Extraordinary circumstances can arise where
there are “affirmative acts of fraud,” where there is a “network
of misrepresentations . . . over an extended course of dealing,”
or where particular plaintiffs are especially vulnerable. Id.
In this case, the District Court ruled in Pell’s favor
because of DuPont’s “repeated misrepresentations over an
extended course of dealings.” Pell, 2006 WL 2864604 at *10
(citing Kurz II, 96 F.3d at 1553; Smith, 6 F.3d 131). As the
District Court explained:
“[R]epeated misrepresentations over an extended
course of dealings between an employer and an
employee are sufficient to demonstrate the
existence of extraordinary circumstances, when,
20
as here, it is clear that the employee has been
diligent in inquiring into the employer’s
representations, in seeking clarifications about
those representations, and in obtaining
reaffirmations of those representations.”
Pell, 2006 WL 2864604 at *10. We agree with the District
Court that there were extraordinary circumstances.
In the Kurz cases, Kurz and other employees claimed that
their employer had made material misrepresentations about the
terms of an early retirement plan. Kurz v. Phila. Elec. Co. (Kurz
I), 994 F.2d 136, 139 (3d Cir. 1993). The employees had
attended individual retirement interviews in which some of them
asked whether changes to the retirement plan were forthcoming.
Id. The employer’s retirement counselors answered in the
negative, but in fact, management was actively considering an
early retirement incentive plan. Id. at 137-38. The plan was
instituted shortly after the employees retired and did not apply
to them retroactively. Id. at 138. We concluded that despite the
inaccurate information given by the retirement counselors, there
were no extraordinary circumstances. Kurz II, 96 F.3d at 1553-
54. We explained: “There is no conduct suggesting that [the
employer] sought to profit at the expense of its employees, no
showing of repeated misrepresentations over time, [and] no
suggestion that plaintiffs are particularly vulnerable.” Id. at
1553.
DuPont argues that Pell’s case is like Kurz, and “simple
ERISA reporting errors or disclosure violations,” id., do not
constitute extraordinary circumstances. Contrary to DuPont’s
21
argument, Kurz is distinguishable from this case. DuPont did
not commit a simple ERISA reporting error. Instead, it made
affirmative misrepresentations to Pell over an extended period
of time. This case is therefore not like Kurz, where the
misrepresentation to each employee took place in a single
conversation. Id.
Pell’s case, as the District Court concluded, is more like
Smith. 6 F.3d 131. In Smith, the employee’s husband sought
information regarding the employer’s new health insurance plan
and received multiple inaccurate assurances that the coverage
his wife needed would be available. Id. at 134-35. We
concluded that on remand, “a factfinder could find . . . [that
extraordinary] circumstances are established, in light of the
[employer’s] repeated oral and written misrepresentations to [the
husband], his diligence in attempting to obtain accurate answers
regarding his wife’s coverage, as evidenced by his persistent
questioning of [human resources and insurance company]
personnel, and the immense coverage expenses at stake.” Id. at
142.
Like the Smith plaintiffs, Pell was “diligent” and engaged
in “persistent questioning” about the significant benefits at
stake. Relying on Smith, the District Court correctly determined
that DuPont’s repeated affirmative misrepresentations,
combined with Pell’s diligence, demonstrate that there are
extraordinary circumstances.6
6
DuPont argues that the special vulnerability of the Smith
plaintiff, who had suffered a cerebral hemorrhage and needed
22
In sum, we agree with the District Court that Pell has
established the elements of an equitable estoppel claim under
ERISA. DuPont made material misrepresentations about the
amount of Pell’s pension benefit, Pell reasonably and
detrimentally relied on those misrepresentations, and DuPont’s
inaccuracies over an extended course of dealing constitute
extraordinary circumstances warranting relief.
C. Remedies
Having determined that Pell is entitled to relief under
ERISA based on an equitable estoppel theory, we turn to the
parties’ disputes over remedies. DuPont argues that the District
Court’s injunction was an impermissible form of relief under
ERISA. In addition, DuPont asserts that the relief Pell was
granted goes beyond the terms of the pension plan and thus
constitutes an impermissible “informal amendment” to the plan.
Pell, for his part, argues that the District Court should
have awarded him restitution for his past unduly low pension
benefit payments. He also claims that the District Court erred
skilled inpatient nursing care, was crucial to the finding of
extraordinary circumstances. 6 F.3d at 133. Our subsequent
case law shows that the vulnerability of the plaintiff is just one
factor and is not necessary to demonstrate extraordinary
circumstances. See, e.g., Int’l Union, United Auto., Aerospace
& Agric. Implement Workers of Am. v. Skinner Engine Co., 188
F.3d 130, 152 (3d Cir. 1999).
23
when it determined that DuPont should calculate his benefits
based on the 1972 adjusted service date rather than 1971.
Determining what remedies are available under a statute
is a question of statutory interpretation that requires de novo
review. Daniel S. v. Scranton Sch. Dist., 230 F.3d 90, 97 (3d
Cir. 2000). Therefore, we review de novo the District Court’s
grant of an injunction and its denial of restitution for past low
benefit payments. Id. The District Court’s determination that
1972 is the appropriate adjusted service date is a mixed
conclusion of law and fact. See Interfaith Cmty. Org. v.
Honeywell Int’l, Inc., 399 F.3d 248, 269-70 (3d Cir. 2005). We
break down such conclusions into their components and apply
the appropriate standard of review to each component.
Universal Minerals, Inc. v. C. A. Hughes & Co., 669 F.2d 98,
103 (3d Cir. 1981). “We must accept the trial court’s findings
of historical or narrative facts unless they are clearly erroneous,
but we must exercise a plenary review of the trial court’s choice
and interpretation of legal precepts and its application of those
precepts to the historical facts.” Id.
The District Court correctly concluded that an injunction
was an appropriate remedy, but it erred when it refused to award
Pell restitution for his past unduly low pension benefits. In
addition, the Court erred when it determined that 1972, not
1971, was the appropriate adjusted service date.
1. Injunctive Relief Under ERISA
DuPont argues that the injunction requires it to pay Pell
more money than it would have otherwise. DuPont claims that
24
the injunction is therefore a legal rather than an equitable
remedy, and that such relief is not available under ERISA.
In light of ERISA’s detailed enforcement scheme, courts
are “especially reluctant to . . . [create] remedies not specifically
authorized by its text.” Great-West Life & Annuity Ins. Co. v.
Knudson, 534 U.S. 204, 209 (2002) (internal quotation marks
and citation omitted). ERISA provides for the issuance of
injunctions in order to grant “appropriate equitable relief” to
aggrieved employees such as Pell. Id. (quoting 29 U.S.C.
§ 1132(a)(3)). The Supreme Court has reasoned that
“[e]quitable relief must mean something less than all relief,” and
therefore it has explained that § 1132(a)(3) authorizes only
“those categories of relief that were typically available in
equity.” Id. at 210 (quoting Mertens v. Hewitt Assocs., 508 U.S.
248, 256, 258 n.8 (1993)). Thus, the main question in assessing
injunctions such as the one before us is whether the injunction
constitutes a permissible equitable remedy or an impermissible
legal one. See Eichorn v. AT&T Corp., 484 F.3d 644, 654-55
(3d Cir. 2007).
Great-West could be read as providing facial support for
DuPont’s argument that Pell’s injunction actually constitutes a
legal, rather than an equitable, remedy. But the injunction
effectively creates a constructive trust on particular property in
DuPont’s possession, rather than imposing personal liability on
DuPont. Therefore, as subsequent Supreme Court case law
confirms, the injunction falls within the type of equitable relief
that ERISA authorizes.
25
In Great-West, Mrs. Knudson was rendered quadriplegic
in an auto accident, and her husband’s employer-provided health
plan paid her medical expenses. 534 U.S. at 207. A
reimbursement provision gave the plan the right to recover its
benefit payments from Mrs. Knudson if she recovered them
from a third party. Id. After the Knudsons received a $650,000
settlement from the auto manufacturer, Great-West initiated
legal action under ERISA to enforce the reimbursement
provision. Id. at 207-08. The Supreme Court examined whether
the remedy Great-West sought would have been available from
a court of equity “[i]n the days of the divided bench.” Id. at 212.
The Court noted that equitable restitution was historically
available “where money or property identified as belonging in
good conscience to the plaintiff could clearly be traced to
particular funds or property in the defendant’s possession.” Id.
at 213.
The Court denied relief to Great-West because the
Knudsons’ settlement proceeds were not in their possession, but
had been distributed to attorneys, a Special Needs Trust, and
other parties. Id. at 214. Therefore, “[t]he kind of restitution
[Great-West sought was] . . . not equitable – the imposition of
a constructive trust or equitable lien on particular property – but
legal – the imposition of personal liability for the benefits that
[Great-West] conferred upon [the Knudsons].” Id.
Sereboff v. Mid Atlantic Medical Services, 547 U.S. 356
(2006), followed and amplified upon Great-West. Sereboff’s
basic facts are identical to Great-West. ERISA plan
beneficiaries (the Sereboffs) were injured in an auto accident
and received a settlement from a third party. Id. at 359-60. The
26
health plan (Mid Atlantic) took legal action to claim part of the
settlement proceeds pursuant to a reimbursement provision. Id.
at 360. The facts differed from Great-West in that the parties
entered into a “stipulation . . . under which the Sereboffs agreed
to preserve $74,869.37 of the settlement funds in an investment
account, until the [District] Court rule[d] on the merits of [the]
case and all appeals . . . [were] exhausted.” Id. at 360 (internal
quotation marks and citation omitted). The Supreme Court
decided that the “impediment to characterizing the relief in
[Great-West] as equitable [was] not present.” Id. at 362.
Because the funds in question had been set aside and were
specifically identifiable in the Sereboffs’ investment accounts,
Mid Atlantic could recover through the traditional equitable
remedies of constructive trust or equitable lien. Id. at 362-63.
Sereboff shows that a remedy cannot be classified as legal
merely because it consists of payments. Id. A remedy involving
payments is permissible so long as those payments would have
historically been available in courts of equity. Id. In fact, prior
to Sereboff, we had already determined that ERISA relief may
include payments of money if those payments are properly
characterized as an equitable remedy. Skretvedt v. E.I. DuPont
De Nemours, 372 F.3d 193, 211-12 (3d Cir. 2004). In Skretvedt,
we noted:
“[Some have] perceived in Great-West a per se
pronouncement that where a plaintiff seeks an
award that ultimately involves money . . . , such
an award is a claim for legal relief and is not
available under § [1132](a)(3)(B). . . . Our
reading, however, is that Great-West did not
27
adopt such a rule. Instead, the Supreme Court
indicated that, to determine whether a specific
form of underlying relief requested is available
under § [1132](a)(3)(B), we must consider
whether [the] relief was typically available at law
or in equity and, in the case of restitutionary
relief, whether the relief requested was in fact a
form of equitable restitution.”
Id.
In this case, the relief is an injunction to calculate Pell’s
future pension payments using an earlier adjusted service date.
Injunctions are legal remedies if they “compel the payment of
money past due under a contract, or specific performance of a
past due monetary obligation, [a remedy that] was not typically
available in equity.” Great-West, 534 U.S. at 210-11. The
injunction imposed by the District Court in this case is forward-
looking and entitles Pell to an amount of money that cannot be
calculated with specificity (since it is unknown how long he will
survive and be entitled to benefits). Therefore, the injunction is
an equitable remedy that is permissible under ERISA.
In addition to attacking the form of the remedy that Pell
received, DuPont argues that ERISA provides a cause of action
only to recover the benefits that are due under the terms of an
employee benefit plan. DuPont states that because Pell is
already receiving the pension payment to which he is entitled
under the terms of the plan, he is without relief under ERISA.
Relying on Great-West, 534 U.S. 204, and Sereboff, 547 U.S.
356, DuPont claims that an employee such as Pell cannot
28
receive relief beyond that specified by the plan terms. DuPont
argues that the District Court’s injunction renders DuPont’s
erroneous representations to Pell an impermissible “informal
amendment” to the plan. Confer v. Custom Eng’g Co., 952 F.2d
41, 43 (3d Cir. 1991).
We have previously considered and rejected this
argument. See In re Unisys Corp. Retiree Med. Benefit ERISA
Litig., 57 F.3d 1255, 1264-65 (3d Cir.1995). Although Unisys
dealt with a breach of fiduciary duty claim, our rationale for
providing relief beyond a plan’s terms encompassed equitable
estoppel as well:
“Imposing upon an employer a fiduciary duty in
this case does not threaten or contradict our
well-established policy disfavoring informal plan
amendments . . . . [O]ur equitable theories of
relief under ERISA (breach of fiduciary duty and
estoppel) are not to be construed as conflicting
with our precedent precluding oral or informal
amendments to ERISA benefit plans.
The retirees here do not argue that Unisys’
misrepresentations modified their retiree medical
benefit plans. Rather, for purposes of their breach
of fiduciary [duty] claim, they assume the plans
did not contractually vest benefits, and claim
instead that the company breached its fiduciary
duty by leading employees to believe that the
plans did. This claim is distinct from a claim for
benefits under the terms of the plan because it
29
requires different proof . . . than would be
required for a contract claim that the plans had
been modified.
In recognizing the retirees’ breach of
fiduciary [duty] claim here, we do not intend to
create a precedent for any beneficiary to make
claims beyond those provided in a plan.”
Id. (internal quotation marks and citations omitted).
As in Unisys, the District Court in this case “assumed” or
acknowledged that the plan terms did not entitle Pell to the
higher pension amount. Pell, 2006 WL 2864604 at *14. The
Court explained: “As [Pell has] met the elements of [his]
equitable estoppel claim, it is appropriate to estop DuPont from
asserting its right to rely on the terms of the DuPont Plan as a
basis for asserting that . . . Pell’s adjusted service date is
November 1, 1975.” Id. Thus, the District Court’s injunction
neither rewrote nor informally amended the plan. The
injunction left the plan intact while acknowledging that equity
requires DuPont to pay Pell a higher pension amount.
Our case law clearly establishes the right of a plaintiff
such as Pell to receive relief beyond the benefits specified in the
plan, and the District Court injunction did not rewrite or
informally amend the plan. DuPont’s argument fails.7
7
Subsequent to Great-West Life & Annuity Ins. Co. v.
Knudson, 534 U.S. 204, 210 (2002), we have confirmed the
30
2. Restitution for Past Low Pension Benefit Payments
Having determined that it was permissible for the District
Court to order DuPont to pay a higher pension benefit going
forward, we must examine whether the Court correctly declined
to order DuPont to pay restitution for the unduly low payments
Pell had already received. Because the pension funds are held
in trust by DuPont and thus are specifically identifiable property,
viability of the equitable estoppel theory to obtain relief for
misrepresentations about the availability of benefits. See
Hooven v. Exxon Mobil Corp., 465 F.3d 566, 578 (3d Cir.
2006). Eichorn v. AT&T Corp., 484 F.3d 644 (3d Cir. 2007), is
not to the contrary. In that case, AT&T sold a subsidiary, with
the result that the subsidiary’s employees were no longer AT&T
employees. Id. at 646-47. These employees later alleged that
they were wrongfully prevented from returning to AT&T and
regaining their entitlement to AT&T pension benefits because
of a “no-hire” agreement. Id. at 647. The employees sought to
be awarded the benefits they would have received had they
remained AT&T employees. Id. We concluded that because the
plaintiffs were not seeking to enforce the terms of the plan,
relief was not available under 29 U.S.C. § 1132(a)(1)(B). Id. at
651-53. Unlike Pell, the Eichorn plaintiffs’ requested relief was
based on a hypothetical situation (the possibility that but for the
no-hire agreement, they could have returned to AT&T) and was
a claim for benefits that they had not earned. Id. Here, Pell was
a DuPont employee and had earned pension benefits. The logic
of Eichorn does not affect our conclusion that in this case the
relief Pell requests is available under ERISA.
31
the District Court erred when it determined that restitution was
not available.
“[A] plaintiff [may] seek restitution in equity, ordinarily
in the form of a constructive trust or an equitable lien, where
money or property identified as belonging in good conscience to
the plaintiff [can] clearly be traced to particular funds or
property in the defendant’s possession.” Great-West, 534 U.S.
at 213. The difference between the pension payments Pell
actually received and the payments he should have received
belongs, “in good conscience,” to him. Therefore, Pell can
receive restitutionary payments for the difference if the funds
can “clearly be traced to particular funds” in DuPont’s
possession. Id.
ERISA says: “Except as provided . . . , all assets of an
employee benefit plan shall be held in trust by one or more
trustees.” 29 U.S.C. § 1103(a). Therefore, ERISA plan funds
are, as a matter of law, “held in trust” and are not available to
the employer for general use. Our case law, both before and
after Great-West, treats employee benefit plan funds as trust
funds. We have noted that ERISA “requir[es] the application of
traditional trust law in the administration of the statute.” Coar
v. Kazimir, 990 F.2d 1413, 1422 (3d Cir. 1993) (citing Firestone
Tire & Rubber Co. v. Bruch, 489 U.S. 101, 110 (1989)).
We applied trust law principles in Skretvedt, a case where
a DuPont employee had previously litigated, and won, the right
to disability benefits. 372 F.3d at 198. Skretvedt moved for an
award of interest on the wrongfully withheld benefits. Id. at
199. We concluded that Skretvedt could be entitled to interest
32
under a restitutionary theory and remanded for further
proceedings.8 Id. at 215. We determined that such an award
would not make DuPont “‘personally liable’ for ‘interest’ . . . in
violation of Great-West [, because] . . . . Skretvedt’s cause of
action under § [1132](a)(3)(B) is against the relevant ERISA
plans whereby he seeks restitution by way of a constructive trust
over the actual funds wrongfully earned by those plans.” Id. at
214.
We also determined that the funds in question could be
“clearly traced”:
“[T]o find the funds Skretvedt alleges belong to
him . . . , we need look no further than the ERISA
plans that withheld Skretvedt’s benefits for
several years and profited with respect to the
withholding of those benefits. . . . Skretvedt has
8
Although Pell requested an award of interest on the
amount of pension benefits wrongfully withheld, he did not
mention this request until he filed his reply brief. The argument
is thus waived. Skretvedt v. E.I. DuPont de Nemours, 372 F.3d
193, 202-03 (3d Cir. 2004) (“[A]n issue is waived unless a party
raises it in its opening brief, and for those purposes a passing
reference to an issue will not suffice to bring that issue before
this court.”). We do not cite Skretvedt here for the proposition
that an ERISA litigant can receive interest (although he may),
but rather for the proposition that “restitution by way of a
constructive trust” is an appropriate and available remedy. Id.
at 214.
33
sufficiently identified specific funds traceable to
the defendant ERISA plans that belong in good
conscience to him.”
Id. We added in a footnote: “[A]s several circuit courts have
noted, the Senate Finance Committee, in its report on ERISA,
specifically contemplated that ‘appropriate equitable relief’
under § [1132](a)(3)(B) would include, ‘[f]or example, . . . a
constructive trust [to] be imposed on the plan assets . . . .’” Id.
at 214 n.28 (citations omitted).
The ruling in Skretvedt did not violate Great-West, nor
would a ruling that Pell is entitled to restitution for his unduly
low prior pension payments.9 During Pell’s employment,
DuPont made contributions to its pension fund to cover the
aggregate future pensions of its current employees. The
amounts of these contributions were calculated through a
formula that specifically took Pell into account. Therefore, the
restitution Pell seeks for his unduly low past pension payments
is clearly traceable to the plan trust funds in DuPont’s
possession.
The District Court made an error of law when it assumed
that it could not order DuPont to pay Pell for the difference
9
In some cases, Great-West will foreclose the plaintiff’s
remedies because the plan funds will not be clearly traceable.
534 U.S. at 213. This is because ERISA provides exceptions to
the requirement that plan funds be held in trust. 29 U.S.C.
§ 1103(b).
34
between the benefit amounts he received and the amounts he
should have received.10 Under Skretvedt, it is appropriate to
impose a constructive trust on the DuPont plan funds to obtain
restitution for the portions of the past pension payments that
were wrongfully withheld from Pell. 372 F.3d at 214.
3. Adjusted Service Date
The District Court enjoined DuPont to calculate Pell’s
pension benefits using the date of August 1, 1972. There are
two potential dates that could be used: Pell’s first day of
employment at Consol (February 10, 1971) or the date on which
he became eligible to participate in Consol’s pension plan
(August 1, 1972). Pell argues that the District Court erred when
it determined that the correct date is August 1, 1972. We agree.
The 1991 email from DuPont pre-retirement counselor Doris
Uhde, combined with the pension benefit estimates Pell received
during the 1990s, constitute a material misrepresentation about
Pell’s adjusted service date.
10
Again, we note that this case is distinguishable from
Eichorn. The Eichorn plaintiffs sought to be awarded the
benefits they would have received had they remained AT&T
employees. 484 F.3d at 648. The relief they requested was in
the nature of “back pay” and was legal rather than equitable, so
it was unavailable under ERISA. Id. at 656. Pell’s requested
relief is not “back pay,” but consists of the benefits that DuPont
told him he had earned.
35
The District Court chose August 1, 1972 on the basis of
the Waddell Letter. Directly below the salutation “Dear Mr.
Pell,” the letter provided the following information:
“RE: SALARY BENEFIT PLANS
Social Security Number: [omitted]
Date of Birth: 07-11-42
Employment Date: 02-10-71
Retirement Plan
Credited Service Date: 08-01-72”
In the second paragraph, under the heading “Retirement Plan,”
the letter stated: “The Pension you receive will be calculated
under the DuPont Plan based on your total combined service.
This retirement benefit will be offset by any payment you
receive from the Consol Plan as a result of your accrued benefit
as of the date of transfer.”
The District Court concluded that Pell should have
known that the correct date was his eligibility date for
participation in the Consol plan, and not his initial Consol
employment date. Pell, 2006 WL 2864604 at *14 n.13. This
conclusion does not take into account D uPont’s
misrepresentations over an “extended course of dealing.” Kurz
II, 96 F.3d at 1553.
Neither the Waddell letter nor the emails from DuPont’s
benefits administrators explained unambiguously how Pell’s
pension would be calculated. But DuPont communicated
repeatedly to Pell, in the Uhde email and the 1990s pension
36
estimates, that his adjusted service date was February 10, 1971.
In the analysis above, we explained that Pell has made out a
claim for equitable estoppel because the Uhde email and the
subsequent pension estimates were material misrepresentations,
Pell reasonably and detrimentally relied on the
misrepresentations, and there were extraordinary circumstances.
For these same reasons, DuPont is liable to Pell for benefit
payments that reflect a pension calculation date of February 10,
1971.
III. CONCLUSION
Pell has standing to sue under ERISA, and the District
Court correctly determined that he made out a claim for relief
based on the theory of equitable estoppel. The Court properly
enjoined DuPont to pay Pell an increased pension benefit going
forward. However, the Court made an error of law when it
determined that Pell could not receive equitable restitution for
the amount of his past pension payments that was wrongfully
withheld. In addition, the Court erred when it determined that
DuPont should use an adjusted service date of 1972. Because
of DuPont’s repeated misrepresentations to Pell over an
extended course of dealing, it should use his first day of Consol
employment (February 10, 1971) as his adjusted service date.
We will affirm the District Court’s rulings that Pell is
entitled to relief and that DuPont must pay him a higher pension
benefit going forward. We will reverse the District Court’s
ruling that restitution for past low payments is unavailable, as
well as its ruling that DuPont must use an adjusted service date
37
of August 1, 1972. We will remand for the entry of an order
consistent with this opinion.
38