RESPONDENT: Paul J. Frommert, et al.
LOCATION: U.S. Court of Appeals for the Second Circuit
DOCKET NO.: 08-810
DECIDED BY: Roberts Court (2009-2010)
LOWER COURT: United States Court of Appeals for the Second Circuit
CITATION: 559 US 506 (2010)
GRANTED: Jun 29, 2009
ARGUED: Jan 20, 2010
DECIDED: Apr 21, 2010
Matthew D. Roberts - Assistant to the Solicitor General, Department of Justice, for the United States, as amicus curiae
Peter K. Stris - for the respondents
Robert A. Long, Jr. - for the petitioners
Facts of the case
Current and former employees of Xerox Corp. sued the company in a New York federal district court under the Employee Retirement Income Security Act ("ERISA"). Plaintiffs had left the employer, been paid a lump sum, and after rehire had alleged Xerox improperly calculated their benefits. Xerox argued that release forms signed by some of the plaintiffs barred their ERISA claims. The district court disagreed and then crafted a remedy to compensate the plaintiffs for their lost benefits.
On appeal, the U.S. Court of Appeals for the Second Circuit held that the district court crafted an appropriate remedy, but erred in finding that the release forms signed by some plaintiffs were unenforceable. Rather, the court reasoned that the release forms were signed knowingly and voluntarily, making them enforceable.
1) Did the Second Circuit err in instructing the district court that it had no obligation to defer to the ERISA plan administrator's reasonable interpretation of the terms of the plan if the administrator reached its interpretation outside the context of an administrative claim for benefits?
2) Did the Second Circuit err in holding that the district court had "allowable discretion" to adopt any "reasonable" interpretation of the terms of the ERISA plan when the interpretation issue arose in the course of calculating additional benefits due as a result of ERISA violations?
Media for Conkright v. FrommertAudio Transcription for Oral Argument - January 20, 2010 in Conkright v. Frommert
Audio Transcription for Opinion Announcement - April 21, 2010 in Conkright v. Frommert
John G. Roberts, Jr.:
I have our Opinion this Morning in case 08-810, Conkright versus Frommert.
This is a case arising under a Federal Law known as the Employee Retirement Income Security Act or ERISA.
That law governs pension plans; under ERISA, the companies setting up such a plan can specify that the administrator of the plan has discretion to interpret its terms.
In such a case, the Court construing the plan must defer to the administrator's interpretation as long as it is reasonable.
Now here the Lower Courts determined that the administrator's interpretation of a plan provision was unreasonable and they explained the basis for that decision.
The question is whether the Courts should go ahead and decide the correct interpretation of the plan on their own, how the plan should be read once the erroneous interpretation is taken out of the plan or whether the issue should go back to the administrator to exercise his discretion anew, now that he has been told what was wrong with his original interpretation.
So in other words, is the rule one strike and you're out or try again, for the reasons set forth in an opinion filed with the clerk, we hold that the rule is for the administrator to try again.
We think such an approach is more consistent with the principles that cause us to defer to the reasonable interpretation of administrators in the first place.
Now of course, if there are signs of bad faith or an administrator just keeps adopting unreasonable interpretation, courts will not have to defer but one honest mistake should not mean that courts can take over the administrator's job.
The judgment of the Court of Appeals for the Second Circuit is reversed and the case is remanded it for further proceedings consistent with this opinion.
Justices Scalia, Kennedy, Thomas and Alito joined the opinion.
Justice Breyer has filed a dissenting opinion in which Justices Stevens and Ginsburg have joined.
Justice Sotomayor took no part in the consideration or decision of the case.