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Conkright v. Frommert

Supreme Court of the United States

January 20, 2010, Argued; April 21, 2010, Decided

No. 08-810

Opinion

 [*509]  Chief Justice Roberts delivered the opinion of the Court.

People make mistakes. Even administrators of ERISA plans. That should come as no surprise, given that the Employee Retirement Income Security Act of 1974 is “an enormously  [****7] complex and detailed statute,” Mertens v. Hewitt Associates, 508 U.S. 248, 262, 113 S. Ct. 2063, 124 L. Ed. 2d 161 (1993), and the plans that administrators must construe can be lengthy and complicated. (The one at issue here runs to 81 pages, with 139 sections.) We held in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S. Ct. 948, 103 L. Ed. 2d 80 (1989), that an ERISA plan administrator with discretionary authority to interpret a plan is entitled to deference in exercising that discretion. The question here is whether a single honest mistake in plan interpretation justifies stripping the administrator of that deference for subsequent related interpretations of the plan. We hold that it does not.

As in many ERISA matters, the facts of this case are exceedingly complicated. Fortunately, most of the factual details are unnecessary to the legal issues before us, so we cover them only in broad strokes. This case concerns Xerox Corporation's pension plan, which is covered by ERISA, 88 Stat. 829, as amended, 29 U.S.C. § 1001 et seq. Petitioners are the plan itself [**1645]  (hereinafter Plan), and the Plan's current  [*510]  and former administrators (hereinafter Plan Administrator). See § 1002(16)(A)(i); App. 32a. Respondents are Xerox employees who left the company  [****8] in the 1980's, received lump-sum distributions of retirement benefits they had earned up to that point, and were later rehired. See 328 F. Supp. 2d 420, 424 (WDNY 2004); Brief for Respondents 9-10. The dispute giving rise to this case concerns how to account for respondents' past distributions when calculating their current benefits--that is, how to avoid paying respondents the same benefits twice.

The Plan Administrator initially interpreted the Plan to call for an approach that has come to be known as the “phantom account” method. 328 F. Supp. 2d, at 424. Essentially, that  [***474] method calculated the hypothetical growth that respondents' past distributions would have experienced if the money had remained in Xerox's investment funds, and reduced respondents' present benefits accordingly. See id., at 426-428; App. to Pet. for Cert. 146a. After the Plan Administrator denied respondents' administrative challenges to that method, respondents filed suit in federal court under ERISA, 29 U.S.C. § 1132(a)(1)(B). See 328 F. Supp. 2d, at 428-429. The District Court granted summary judgment for the Plan, applying a deferential standard of review to the Plan Administrator's interpretation. See id., at 430-431, 439.  [****9] The Second Circuit vacated and remanded, holding that the Plan Administrator's interpretation was unreasonable and that respondents had not been adequately notified that the phantom account method would be used to calculate their benefits. See 433 F.3d 254, 257, 265-269 (2006).

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559 U.S. 506 *; 130 S. Ct. 1640 **; 176 L. Ed. 2d 469 ***; 2010 U.S. LEXIS 3479 ****; 78 U.S.L.W. 4282; 48 Employee Benefits Cas. (BNA) 2569; 22 Fla. L. Weekly Fed. S 232

SALLY L. CONKRIGHT, et al., Petitioners v. PAUL J. FROMMERT et al.

Subsequent History: On remand at, Motion denied by, Motion granted by, in part, Motion denied by, in part, Motion granted by, Motion denied by, Without prejudice, Sanctions disallowed by Frommert v. Conkright, 825 F. Supp. 2d 433, 2011 U.S. Dist. LEXIS 132703 (W.D.N.Y., Nov. 17, 2011)

Prior History:  [****1] ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT.

Frommert v. Conkright, 535 F.3d 111, 2008 U.S. App. LEXIS 15585 (2d Cir. N.Y., 2008)

Disposition: Reversed and remanded.

CORE TERMS

deference, phantom, retirement, calculated, treatise, deferential, accrued, pension, Curiae, craft, discretionary, actuarial, equitable, lump-sum, annuity, rehired, Amicus, complicated, honest, strip, predictability, column, notice

Pensions & Benefits Law, Fiduciaries, Fiduciary Responsibilities, General Overview, Judicial Review, Standards of Review