Narrative Opinion Summary
This case involves a class action lawsuit filed by former employees of Sperry Corporation against Unisys, following the termination of post-retirement medical benefits after a corporate merger. The retirees argued that Unisys breached its fiduciary duty under ERISA by misleading them into believing their medical benefits were 'vested' for life, despite a reservation of rights clause allowing plan termination. The district court initially granted summary judgment for Unisys on the breach of fiduciary duty claim but later reversed this decision, citing misleading assurances about lifetime benefits. The court certified the case for interlocutory appeal due to its complex legal issues related to fiduciary duty under ERISA. The appellate court upheld that individual plan participants could seek equitable relief under ERISA Section 502(a)(3) for fiduciary breaches, distinguishing these claims from contract disputes. The court emphasized that fiduciaries must act in the interest of plan participants, avoiding material misrepresentations. The case was remanded for further proceedings, with the district court tasked with determining appropriate equitable remedies, which may include injunctions and restitution, for the retirees.
Legal Issues Addressed
Breach of Fiduciary Duty under ERISAsubscribe to see similar legal issues
Application: The claim for breach of fiduciary duty under ERISA was upheld due to Unisys's misleading representations about 'lifetime' medical benefits despite having a reservation of rights clause.
Reasoning: The court found that Unisys misrepresented that medical benefits would continue for life after retirement, despite plan terms allowing benefit termination. Such misrepresentation is considered material if it could mislead a reasonable employee regarding retirement decisions.
Class Certification in ERISA Litigationsubscribe to see similar legal issues
Application: The court certified the case as a class action, representing approximately 21,000 former non-union employees from Sperry, Burroughs, and Unisys.
Reasoning: On June 9, 1993, the district court certified the case as a class action under Fed. R. Civ. P. 23(b)(2), representing approximately 21,000 former non-union employees from Sperry, Burroughs, and Unisys.
Equitable Relief under ERISA Section 502(a)(3)subscribe to see similar legal issues
Application: The court concluded that the retirees' claim for equitable relief is permissible under section 502(a)(3) of ERISA, allowing for remedies like injunctions and restitution.
Reasoning: The court concludes that the retirees' claim for equitable relief is permissible under section 502(a)(3) of ERISA, contrary to the district court's prior ruling. Citing Mertens, the court emphasizes that while Mertens limited the types of relief to traditional equitable remedies, it did not exclude individual claims for such relief.
Reservation of Rights Clause in Employee Benefit Planssubscribe to see similar legal issues
Application: Unisys's defense rested on the reservation of rights clause in the SPDs, but the court found that this did not absolve them of the fiduciary duty to prevent misleading communications.
Reasoning: Unisys denied having created vested medical benefits despite using the term 'lifetime' and sought summary judgment to dismiss claims from regular retirees, citing clear reservation of rights clauses in the plans.