Claim of Breach of Fiduciary Duty Under ERISA For Promised Plan Modification Requires Written Document

Former participants in a retirement plan in the case of Ladocuer, et al v. Credit Lyonnais (CA2, 9/30/09) claimed that oral representations made to them about pension plan credit they would receive for service in an entity being merged into another entity should serve as the basis for damages based on a breech of fiduciary duty under ERISA when the written plan was not changed in the manner alleged.

The individuals in question had been employees in Credit Lyonnais Rouse, a wholly owned subsidiary of Credit Lyonais. Effective 1/1/2001, the subsidiary was absorbed into the parent. The individuals in this suit allege that they were assured prior to the merger that they would get credit both for purposes of both funding and vesting in the parent’s retirement plan from the date they began to work for the subsidiary rather than the date they began working for the parent after the merger.

All of the individuals in this suit resigned their positions during 2001. However, in 2002 they were informed that while their vesting under the plan would be computed based on the date they began working for the subsidiary, the funding would only cover the very short period they had worked for the merged entity. There was no written document available to back up the claim that both vesting and funding were to be based on the subsidiary hire date.

The court held that oral promises cannot vary the written terms of an ERISA plan, and this logic applies just as much to allegations of breach of fiduciary duty based on the same oral promises. The Court notes that a cornerstone of ERISA is that the plans are to be governed by their written terms, since otherwise employers could remove benefits by the same oral modification provision.

While not holding for the broad position that no claim for breech of fiduciary duty under ERISA can be made without written evidence, the court does clearly state that “a party alleging a breach of fiduciary duty on the basis of a statement purporting to alter the terms of an ERISA benefit plan must point to a written document containing the alleged statement.”