U.S. Court of Appeals for the Second Circuit

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Second Circuit affirms district court holding dismissing surcharge claim as moot

February 13, 2014

The Second Circuit agreed with the U.S. Chamber and with Foot Locker on plaintiffs’ Section 204(h) notice claim, affirming the district court’s dismissal of the surcharge claim as moot. The court, however, disagreed that plaintiffs’ disclosure claims were time barred and that there was no genuine dispute of material fact that the plaintiffs were entitled to the remedies of either surcharge or contract reformation on his disclosure claims. Hence, the court remanded for further proceedings on the disclosure claims. It was a summary order, so it received no press.

U.S. Chamber files amicus brief

September 06, 2013

The U.S. Chamber urged the Second Circuit to affirm the district court in this Employee Retirement Income Security Act (“ERISA”) class action. Years after Foot Locker converted its retirement plan from a defined-benefits plan to a cash-balance plan, a purported class of former Foot Locker employees sued the company arguing that it did not adequately explain the impact of the change or notify participants that periods of “wear-away” might be possible. In its brief, the Chamber argued that ERISA does not require companies to inform employees of possible periods of “wear-away” (a “common and lawful” period when a pension benefit does not increase). Furthermore, any attempt to “set forth how and why a participant’s pattern of benefit accruals might rise or fall or plateau” in varying situations would not only pose “an administrative and stochastic nightmare” but would contravene the well-established purpose of the summary plan descriptions to communicate plan benefits clearly and simply.

The Chamber further argued that the court should reject the plaintiffs' demand for equitable remedies of surcharge and judicial reformation of the contract. As the Chamber noted, “reformation is an 'extraordinary' remedy to be 'exercised with great caution.'” Without clear evidence of mutual mistake or fraud, reformation is entirely inappropriate. Surcharge, on the other hand, is available to remedy breaches of trust with a direct impact on trust assets. It is not available to remedy alleged nondisclosures or misstatements.

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