Reported / Citable
Background
Curtis Pedersen and Beverly Leutloff, longtime employees of ANR Company, challenged changes to retirement benefits following a series of corporate transactions involving Coastal Corporation, El Paso Corporation, TransCanada, and Kinder Morgan. They alleged that Kinder Morgan’s plans improperly reduced benefits accrued under predecessor plans, including by using a denominator exceeding 30 years when calculating benefits and by denying certain early-retirement and unreduced age-62 benefits.
The plaintiffs asserted six claims on behalf of themselves and a proposed class of participants in Kinder Morgan Retirement Plans A and B. Their theories included violations of ERISA’s anti-cutback and disclosure provisions, improper interpretation of grandfathered benefit terms, and use of allegedly outdated mortality and interest assumptions that produced benefits not actuarially equivalent to benefits payable at normal retirement age. The defendants moved for judgment on the pleadings.
The Court’s Holding
The court held that claims seeking interpretation and enforcement of the plan as written must proceed under ERISA Section 502(a)(1)(B), not the equitable-relief provision in Section 502(a)(3). It therefore granted judgment on Claim I and on Claim V to the extent those claims were brought under Section 502(a)(3), while permitting Claim V to proceed under Section 502(a)(1)(B). Claims II, III, IV, and VI could proceed under Section 502(a)(3) because they sought relief unavailable through straightforward enforcement of the existing plan terms.
The court rejected the defendants’ remaining arguments against Claims III, IV, and VI. Conflicting communications and the continued payment of unreduced benefits until mid-2018 prevented dismissal of Claims IV and VI as untimely. The plaintiffs also plausibly alleged inadequate disclosures concerning the benefit formula and a violation of ERISA’s actuarial-equivalence requirement.
Kinder Morgan Inc. was dismissed from claims under Section 502(a)(1)(B) and from claims asserting fiduciary liability because benefit administration had been delegated to the fiduciary committee. The individual committee members remained proper defendants, however, and the named Plan A participants could continue representing participants transferred to Plan B. The court denied the motion in all other respects.
Key Takeaways
- An ERISA claimant cannot use Section 502(a)(3) when Section 502(a)(1)(B) adequately remedies the same injury through enforcement of the plan as written.
- Conflicting plan communications and payment practices may delay claim accrual when participants lack clear notice that their asserted benefits have been repudiated.
- A challenge to outdated actuarial assumptions plausibly states a claim where those assumptions allegedly prevent early-retirement benefits from being actuarially equivalent to normal-retirement benefits.
Why It Matters
The decision distinguishes benefit-enforcement claims from claims requiring equitable remedies such as plan reformation. That distinction affects not only the available relief but also the applicable standard of review and the potential scope of discovery.
The ruling also permits participants to test whether inherited pension terms, disclosures, and actuarial assumptions complied with ERISA after multiple corporate transactions, while limiting claims against a corporate plan sponsor that did not control benefit determinations.