Deference Owed to Plan Reinterpretations Divide Industry Groups in United Refining Suit

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By Jacklyn Wille

Sept. 29 — A case asking whether an employer can reinterpret its pension plan to reduce retired workers' benefits has drawn the attention of multiple industry groups, with employer-side groups arguing that courts should defer to plan administrators and a participant-side group maintaining that employers should be barred from these “beyond cruel” actions.

In dueling amicus briefs, the groups seek to influence an upcoming decision of the U.S. Court of Appeals for the Third Circuit, which has been asked to consider a district court ruling forcing United Refining Co. to pay a class of terminated vested participants full early retirement benefits.

In 2013, the U.S. District Court for the Western District of Pennsylvania found that United Refining's “reinterpretation” of its pension plan to include actuarial reductions in early retirement benefits—and its subsequent actions reducing benefits and seeking reimbursement for overpaid benefits—violated the anti-cutback provisions of the Employee Retirement Income Security Act.

In a joint amicus brief, three employer-side industry groups—the American Benefits Council, the ERISA Industry Committee and the U.S. Chamber of Commerce—urged the Third Circuit to vacate this ruling, arguing that the district court wrongfully refused to defer to the plan administrator's reasonable interpretation of the plan.

Taking up the other side of the issue, the AARP argued that ERISA bars employers from cutting the benefits of vested participants who are currently receiving benefits, calling such actions “beyond cruel.”

In particular, the groups disagreed over the applicability of the U.S. Supreme Court's 2010 decision in Conkright v. Frommert, 559 U.S. 506, 48 EBC 2569 (U.S. 2010), which held that ERISA plan administrators won't be stripped of deferential judicial review when they make a “single honest mistake” in administrating their plans.

The Third Circuit is scheduled to hear oral arguments in the case Oct. 1.

Groups Urge Deference

In the joint brief filed by the ABC, ERIC and the Chamber of Commerce, the groups alleged that the district court's ruling against United Refining couldn't be reconciled with the Supreme Court's Frommert decision.

In particular, the groups contended that the district court wrongfully rejected the plan administrator's “current reasonable interpretation” of the plan without finding that such interpretation was arbitrary and capricious or “otherwise not entitled to deference.”

The groups said that this ruling by the district court was at odds with Frommert's pronouncement that, when a plan administrator's interpretation is entitled to deference by virtue of the terms of the plan, a court can't impose its own judgment just because the administrator previously interpreted the plan differently.

The district court's reasoning was “exactly backward” with respect to Frommert, the groups said, because Frommert “puts the burden on plaintiffs to show that the plan administrator's current interpretation of the plan is arbitrary and capricious.” It doesn't allow plaintiffs to “revive a prior interpretation” simply by showing that the prior interpretation “is not arbitrary and capricious,” the groups alleged.

Reinterpretation Versus Amendment

The employer-side industry groups also criticized the district court opinion for conflating a plan administrator's “reinterpretation” of the plan with a plan amendment.

The groups said that, although ERISA's anti-cutback provision prevents plan amendments that cut accrued benefits, “nothing prevents a plan administrator from returning to the express terms of the plan after discovering that he has mistakenly granted benefits greater than the plan permits.”

Further, this conflation “confuses the roles of the sponsor and the plan administrator,” the groups argued, because plan sponsors have the authority to determine plan terms, while plan administrators are charged with interpreting and applying plan terms.

It also “transformed the mistaken plan interpretation into an enforceable plan term,” the groups said, adding that this is “something ERISA simply does not permit.”

AARP Seeks to Affirm

In its brief, the AARP praised the district court's ruling in favor of the United Refining workers on their anti-cutback claims, calling the dispute “a very simple case.”

The AARP also argued that Frommert was inapplicable to the parties' dispute, because the plan terms at issue were unambiguous in favor of the workers, and thus there was no need to defer to the plan administrator's interpretation of such terms.

Further, the AARP urged the Third Circuit to give no deference to the favorable determination letter United Refining received from the Internal Revenue Service, or to the Voluntary Correction Procedure closing agreement United Refining received in connection with its reinterpretation of the plan's early retirement provisions.

These agency documents relate only to a plan's qualified status under the tax code and provide no shield from liability in ERISA actions, the AARP contended.

Anti-Cutback Claims

The class action was filed by two former United Refining workers who objected to the company's attempt to recoup a portion of their early retirement benefits based on a reinterpretation of the plan's provisions regarding actuarial reductions for early retirement benefits.

In April 2013, the district court found that this reinterpretation constituted a plan amendment that violated ERISA's anti-cutback provision by reducing participants' accrued benefits after they entered pay status.

Seven months later, the court granted class certification in the case and awarded the class injunctive relief, forcing plan administrators to provide unreduced early retirement benefits and reimbursement for any reduction in benefits already paid as a result of the administrators' prior interpretation of the plan documents.

The brief filed on behalf of the ABC, ERIC and the Chamber of Commerce was filed by Janet M. Jacobson of the ABC, Washington; Scott J. Macey and Debra Davis of ERIC, Washington; Kate C. Todd, Steven P. Lehotsky and Warren Postman of National Chamber Litigation Center Inc., Washington; and Craig C. Martin, Matthew J. Renaud, Amanda S. Amert and Jessica R. Amunson of Jenner & Block LLP, Chicago and Washington.

The brief filed on behalf of the AARP was filed by Mary Ellen Signorille and Anita Khushalani of the AARP, Washington.

To contact the reporter on this story: Jacklyn Wille in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

Text of the amicus brief filed on behalf of the ABC, ERIC and the Chamber of Commerce is at

Text of the amicus brief filed on behalf of the AARP is at