Supreme Court rules district court must defer to retirement plan administrator

[JURIST] The US Supreme Court [official website; JURIST news archive] on Wednesday ruled [opinion, PDF] 5-3 in Conkright v. Frommert [Cornell LII backgrounder; JURIST report] that a district court has an obligation to defer to an Employee Retirement Income Security Act (ERISA) [text] plan administrator's reasonable interpretation of the terms of the plan if the plan administrator arrived at the interpretation outside the context of an administrative claim for benefits. The US Court of Appeals for the Second Circuit ruled [opinion, PDF] that a district court is under no obligation to defer to an ERISA plan administrator's interpretation and that a district court has "allowable discretion" to adopt any "reasonable" interpretation of the terms of the plan. In reversing the opinion below, Chief Justice John Roberts wrote:


We held in Firestone Tire & Rubber Co. v. Bruch 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.

Justice Stephen Breyer filed a dissenting opinion, joined by Justices John Paul Stevens and Ruth Bader Ginsburg. Justice Sonia Sotomayor took no part in the consideration of the case.

The case was brought by former Xerox [corporate website] employees who left the company in the 1980s and were later rehired. The employees challenged the method used to calculate their retirement benefits. The district court deferred to the method used by the plan administrator, but the Second Circuit reversed.

 

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