The Ninth Circuit Court of Appeals upheld a district court’s decision to grant Northrop Grumman’s motion for summary judgment.
The appellants were retirees who participated in Northrop Grumman Retirement Plan B. The appellants sued under the Employee Retirement Income Security Act (ERISA) to enforce their understanding of their rights under the plan. The retirees alleged that their benefits should be calculated based on the summary plan descriptions issued to employees in earlier years, and not by the plan master documents that were actually being enforced by the plan administrators.
The court stated that reformation of a retirement plan is only proper where there is fraud or mistake. However, the court found that the retirees had not presented evidence that the plan contained terms that failed to reflect the drafters’ true intent, thus, there was no mistake. Furthermore, the court found that the retirees had not presented any evidence that the plan contained terms that were induced by fraud, duress or undue influence. The court also found that the remedy of surcharge was not available because the appellants did not properly illustrate that Northrop Grumman gained a benefit by failing to ensure that participants received an accurate summary plan description. Finally, the court held that compensatory damages were not available because the appellants did not rely on the inaccurate summary plan description.