Groups Urge Court to Give Judicial Deference to Plan Administrator

The case before the 2nd U.S. Circuit Court of Appeals involves an offset under the Xerox pension plan for former employees who return to work at Xerox and who previously received a lump-sum distribution of their benefit under the pension plan. The offset reflects the time value of the prior distribution.    

 The U.S. Supreme Court overturned a prior 2nd Circuit decision in 2010 in favor of plaintiffs and remanded the case for further proceedings (see “U.S. Supreme Court Orders More Respect Shown for Plan Admins”). “We held in Firestone Tire & Rubber Co. v. Bruch … that an ERISA [Employee Retirement Income Security Act] plan administrator with discretionary authority to interpret a plan is entitled to deference in exercising that discretion,” Chief Justice John Roberts wrote for the majority in that opinion.  

 On remand, the U.S. District Court for the Western District of New York ruled in favor of the defendants, holding that the plan administrator’s interpretation of the offset provision was reasonable and that there was no failure to properly notify the plaintiffs of such.   

The brief by the ERISA Industry Committee (ERIC), the U.S. Chamber of Commerce and the American Benefits Council argues that the plan administrator is entitled to deference in its determination regarding the calculation of an offset under the Xerox pension plan (so long as the interpretation is reasonable and there has been no abuse of discretion by the administrator). In addition, the fact that Xerox sponsors the plan and some of its employees administer it does not create a conflict, on its own, that should defeat deference; otherwise, most plan administrators would not be entitled to deference in most situations, the brief contends.