In a seminal appellate decision, the Ninth Circuit defined the parameters of the “surcharge” and “reformation” remedies that were offered up by the United States Supreme Court in CIGNA Corp. et al. v. Amara et al., 131 S. Ct. 1866 (2011) as potential relief under ERISA Section 502(a)(3). In Amara, the Supreme Court ruled that a summary plan description, or “SPD,” is not a “Plan” subject to enforcement under ERISA Section 502(a)(1)(B). The Supreme Court posited, however, that an employer’s issuance of an intentionally misleading SPD might be remedied under ERISA Section 502(a)(3), under the equitable doctrines of estoppel, reformation and/or surcharge.

In Skinner et al. v. Northrop Grumman Retirement Plan B et al., No. 10-55161 (9th Cir. Mar. 16, 2012), the Ninth Circuit became the first Circuit Court of Appeals to clarify the contours of the reformation and surcharge remedies. The case involved an ambiguity in an SPD that had been issued to retirees (by a predecessor of Northrop). The ambiguity involved the definition of an “annuity equivalent offset” that was used to reduce annual benefit amounts payable to retirees based on the age of retirees at retirement. However, the plaintiffs in Skinner admitted that they had not relied on the SPD in making their retirement decisions. Rather, each had received accurate descriptions of the annuity equivalent offset, including in the pension calculation packets they received in anticipation of their retirements.

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