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Second Circuit Upholds Equitable Reformation in Connection with Intentionally Concealing Wear-Away Period from Plan Participants

Foot Locker converted its traditional pension plan to a cash balance plan. In doing the conversion, Foot Locker provided smaller initial benefits which resulted in a wear-away period until the new plan?ÇÖs benefits actually equaled the value of the traditional pension plan?ÇÖs accrued benefits. Foot Locker went to great lengths to conceal the wear-away from participants, including in the subsequent SPD that excluded any description of the wear-away or any indication that the conversion would cause a benefits freeze. Consequently, participants were not aware that their benefits had been frozen. The district court found violations of ERISA ?º?º 102 and 404(a) and equitably reformed the plan under ERISA ?º 502(a)(3). On appeal, Foot Locker did not challenge the ERISA violations but argued the district court erred in (i) holding the participants?ÇÖ claims were not barred by the applicable statute of limitations; (ii) holding that individualized proof of detrimental reliance was… Continue Reading

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