The Supreme Court has asked the U.S. Solicitor General to weigh in on whether it should hear arguments in Smith vs. Aegon Companies Pension Plan.
Last November, the 6th Circuit Court of Appeals upheld a lower court decision in favor of Aegon, a global investment and insurance company with U.S. headquarters in Des Moines, Iowa.
On March 1, 2000, Robert Smith, an employee of Commonwealth General Corporation, which merged with Aegon, USA at the end of Smith’s career, retired with what he thought would be a lifetime monthly benefit of about $2,200, from two company-sponsored plans, as well as a lump-sum payment of about $155,000.
In 2007, Aegon amended its retirement plan to add a “venue provision,” which said that a participant “shall only bring action in connection with the plan in Federal District Court in Cedar Rapids, Iowa.”
Then, in 2011, Aegon informed Smith, retired for more than a decade, that he had been receiving $1,122 in extra pension payments a month. The company stopped paying his monthly benefit, informing Smith it would do so until it recouped more than $153,000 in what the company claimed were extra benefits.
Smith ultimately brought a claim against Aegon in U.S. District Court for the Western District of Kentucky.
The case was dismissed, not on the merits of Smith’s claim, but because of the venue clause Aegon has amended in its retirement plan documents.
Secretary of Labor Thomas Perez filed an amicus brief to the 6th Circuit as it considered Smith’s appeal, arguing that venue selection clauses are incompatible with ERISA, according to court documents.
In a split decision, the 6th Circuit upheld the lower court, dismissing Perez’s argument, because it was not made “with the force of law.”
ERISA’s statutory scheme is built around the reliance on the face of written plan documents,” wrote Justice Alice Batchelder.
Plan sponsors are “generally free under ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans,” added Batchelder.
In his dissenting opinion, Justice Eric Clay argued that in enacting ERISA, Congress intended to eliminate “jurisdictional and procedural” obstacles to participants’ right to bring claims against plan fiduciaries.
In papers filed this April with the Supreme Court, Aegon argued the case should not be certified, because there is no dispute on the matter in Circuit Courts, given that the decision on venue selection in ERISA from the 6th Circuit is the first of its kind.
But Smith’s attorneys argue that reason supports why the Supreme Court should hear the case.
“Very few appellate courts ever see this frequently recurring issue because it often (and easily) evades appellate review. The Court should take this opportunity to weigh in now,” according to the argument filed on behalf of Smith with the Supreme Court.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
