What effect do a plan administrator's written representations to an employee have when the administrator later attempts to change and reduce the employee's pension benefits? The plan administrator's written representations coupled with extraordinary circumstances can give rise to equitable estoppel on behalf of the employee the Sixth Circuit ruled in Bloemker v. Laborers' Local 265 Pension Fund, No 09-3536 (May 19, 2010).
Bloemker was a participant in Laborers' Local 265 Pension Plan. Bloemker applied for early retirement benefits and was advised in writing that he would receive $2,339.47 per month for life and his wife would receive $1,169.75 per month if she survived him. Based on this information Bloemker proceeded to retire and began receiving benefits. Subsequently, Bloemker was advised that a "computer programming error" had caused an incorrect calculation in his early retirement benefits, that his monthly benefit payment would be reduced to $1,829.71 per month and that he would be required to repay $11,215.16 in benefits previously overpaid him. Bloemker filed suit, claiming, among other things, that the pension plan was equitably estopped from reducing his benefits.
The Sixth Circuit ruled in Bloemker's favor, ruling as follows:
We hold that a plaintiff can invoke equitable estoppel in the case of unambiguous pension plan provisions where the plaintiff can demonstrate the traditional elements of estoppel, including that the defendant engaged in intended deception or such gross negligence as to amount to constructive fraud, plus (1) a written representation; (2) plan provisions which, although unambiguous, did not allow for individual calculation of benefits; and (3) extraordinary circumstances in the the balance of equities strongly favors the application of estoppel.
The Sixth Circuit, in this ruling, joined a number of other circuits in holding that estoppel principles applied in ERISA pension cases where the plan administrator made written representations regarding the employee's benefits and extraordinary circumstances were demonstrated. See Kannapien v. Quaker Oats Company, 507 F.3d 629 (7th Cir. 2007); Bonovich v. Knights of Columbus, 146 F.3d 57 (2nd Cir. 1998); Pell v. E.I. DuPont de Nemours & Co., 539 F.3d 292 (3d Cir. 2008); Mello v. Sara Lee Corp., 431 F.3d 440 (5th Cir 2005); Spink v Lockheed Corp, 125 F3d 1257 (9th Cir 1997).
