Sullivan-Mestecky v. Verizon

18-1591 Sullivan-Mestecky v. Verizon

1 In the 2 United States Court of Appeals 3 For the Second Circuit 4 ________ 5 6 AUGUST TERM, 2019 7 8 ARGUED: MAY 15, 2019 9 DECIDED: JUNE 1, 2020 10 11 No. 18-1591-cv 12 13 KRISTINE SULLIVAN-MESTECKY, individually and as the beneficiary of the 14 life insurance policy of Kathleen Sullivan, deceased, 15 Plaintiff-Appellant, 16 17 v. 18 19 VERIZON COMMUNICATIONS INC. and THE PRUDENTIAL INSURANCE 20 COMPANY OF AMERICA, 21 Defendants-Appellees. * 22 ________ 23 24 Appeal from the United States District Court 25 for the Eastern District of New York. 26 ________ 27 28 Before: WALKER, CABRANES, and HALL, Circuit Judges.

29 30 ________

• • The Clerk of the Court is respectfully requested to amend the caption as set forth above.

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1 Plaintiff-Appellant Kristine Sullivan-Mestecky brought this action 2 individually and as the beneficiary of the life insurance policy of her mother, 3 Kathleen Sullivan, under the Employee Retirement Income Security Act of 1974 4 (ERISA), 29 U.S.C. § 1001 et seq., following the denial of Sullivan’s life insurance 5 benefits by Defendants-Appellees Verizon Communications Inc. (Verizon) and 6 The Prudential Insurance Company of America (Prudential). On appeal, Sullivan- 7 Mestecky argues that the district court (Sandra J. Feuerstein, Judge) erred in 8 granting summary judgment to Verizon and Prudential on her claim for benefits 9 under ERISA § 502(a)(1)(B) and in dismissing her fiduciary breach claim under 10 ERISA § 502(a)(3). We conclude that the district court did not err in dismissing 11 Sullivan-Mestecky’s § 502(a)(1)(B) claim against both defendants and her 12 § 502(a)(3) claim against Prudential. We conclude, however, that the district court 13 did err in dismissing her § 502(a)(3) claim against Verizon. We therefore AFFIRM 14 the district court’s dismissal of Sullivan-Mestecky’s § 502(a)(3) claim against 15 Prudential and its ruling granting Verizon and Prudential summary judgment on 16 Sullivan-Mestecky's § 502(a)(1)(B) claim, VACATE the district court’s dismissal of 17 Sullivan-Mestecky’s § 502(a)(3) claim against Verizon, and REMAND for further 18 proceedings consistent with this opinion.

19 ________ 20 JOHN STOKES (Peter K. Stris, on the brief), Stris & Maher LLP, Los 21 Angeles, CA, for Appellant.

22 JAMES P. HOLLIHAN, Duane Morris LLP, Pittsburgh, PA, and 23 KIRSTEN MCCAW GROSSMAN (Robin H. Rome and Kristine V. 24 Ryan, on the brief), Nukk Freeman & Cerra, P.C., Chatham, NJ, 25 for Appellees.

³ No. 18-1591 1 ________ 2 JOHN M. WALKER, JR., Circuit Judge:

3 Plaintiff-Appellant Kristine Sullivan-Mestecky brought this action 4 individually and as the beneficiary of the life insurance policy of her mother, 5 Kathleen Sullivan, under the Employee Retirement Income Security Act of 1974 6 (ERISA), 29 U.S.C. § 1001 et seq., following the denial of Sullivan’s life insurance 7 benefits by Defendants-Appellees Verizon Communications Inc. (Verizon) and 8 The Prudential Insurance Company of America (Prudential). On appeal, Sullivan- 9 Mestecky argues that the district court (Sandra J. Feuerstein, Judge) erred in 10 granting summary judgment to Verizon and Prudential on her claim for benefits 11 under ERISA § 502(a)(1)(B) and in dismissing her fiduciary breach claim under 12 ERISA § 502(a)(3). We conclude that the district court did not err in dismissing 13 Sullivan-Mestecky’s § 502(a)(1)(B) claim against both defendants and her 14 § 502(a)(3) claim against Prudential. We conclude, however, that the district court 15 did err in dismissing her § 502(a)(3) claim against Verizon. We therefore AFFIRM 16 the district court’s dismissal of Sullivan-Mestecky’s § 502(a)(3) claim against 17 Prudential and its ruling granting Verizon and Prudential summary judgment on 18 Sullivan-Mestecky's § 502(a)(1)(B) claim, VACATE the district court’s dismissal of 19 Sullivan-Mestecky’s § 502(a)(3) claim against Verizon, and REMAND for further 20 proceedings consistent with this opinion.

21 22 BACKGROUND

23 Kathleen Sullivan was employed by the New York Telephone Company, a 24 predecessor entity to Verizon, from 1970 until 1978, during which period her

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1 annual income was $18,600. Sullivan received various benefits from the New York 2 Telephone Company and other predecessor companies of Verizon, both 3 individually and through her husband, who was also employed by the New York 4 Telephone Company. Upon Sullivan’s husband’s death in January 2005, Verizon 5 terminated all of Sullivan’s benefits, which Sullivan challenged over subsequent 6 years.

7 Pursuing her challenge, in June 2011, Sullivan contacted the Verizon 8 Benefits Center, which at that time was administered on behalf of Verizon by the 9 Aon Hewitt Company. The Verizon Benefits Center responded by sending 10 Sullivan a “Retirement Enrollment Worksheet” on Verizon letterhead.1 The 11 worksheet said that Sullivan was eligible for life insurance option “1 x Pay” of 12 Verizon’s Group Life Insurance plan, which provided coverage in the amount of 13 $679,700. 2 Following the instructions on the worksheet, Sullivan called the 14 Verizon Benefits Center to enroll in “1 x Pay.”

15 After enrolling and designating her daughter, Kristine Sullivan-Mestecky, 16 as the beneficiary of the life insurance policy, Sullivan received various mailings 17 from Verizon, as plan administrator, that confirmed the existence and coverage 18 amount of the policy. Some of these mailings prompted Sullivan to call the 19 Verizon Benefits Center for more information. On these calls, Sullivan expressed 20 her understanding, and even surprise, about the extent of her benefits. However, 21 Center representatives repeatedly confirmed the existence and coverage amount 22 of the policy. As one example, during a call on December 19, 2011, Sullivan told a

1 App’x at 346. 2 Id. at 349.

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1 representative, “And hell. I have benefits I didn’t even know existed.” 3 The 2 representative informed Sullivan, “Okay what I’m showing here, your retiree— 3 retiree life is currently [$]679,700.” 4 The representative confirmed the coverage 4 amount three more times on the call, explaining further how the amount would 5 decline as Sullivan aged. 6 7 Sullivan’s calls raised questions internally at Aon Hewitt about her coverage 8 amount. On July 26, 2011, one Aon Hewitt employee wrote to a colleague that 9 Sullivan “was not salaried when active she was hourly. . . . The dollar amount 10 seems high is there a possibility that [our software] could be giving a higher figure 11 than what [Sullivan] is eligible for?” 5 The next day, another Aon Hewitt employee 12 wrote back that Sullivan’s annual income had been “$970920,” approximately 52 13 times her actual annual income, and confirmed (erroneously) that the software 14 “shows the correct amount of life insurance.” 6 It turned out that Aon Hewitt had 15 coded Sullivan’s annual $18,600 income as her weekly income, but did not catch 16 the mistake until after she died. 17 18 Sullivan-Mestecky, understanding herself to be the beneficiary of a 19 generous life insurance policy, allowed her aging mother to live rent-free at her 20 home, covered her mother’s living expenses, and paid off her mother’s debts. 21 Sullivan-Mestecky also took an extended unpaid leave of absence from work to

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1 care for Sullivan while Sullivan was living with her. On November 17, 2012, 2 Sullivan died. Based on Sullivan’s age at the time of her death, Sullivan-Mestecky 3 believed that her life insurance policy was worth $582,600. Sullivan-Mestecky 4 submitted a claim to Prudential, as claims administrator, for $582,600 in death 5 benefits under the policy. In response, Prudential paid $11,380 for Sullivan’s 6 funeral expenses and sent Sullivan-Mestecky a check for $20, which Prudential 7 said was the remainder of Sullivan’s death benefits. 8 9 Sullivan-Mestecky disputed the non-payment of her benefits, which she 10 expected to be in line with what her mother had been told. Verizon responded 11 that “Hewitt operating under the title Verizon Benefits Center” had mistakenly 12 calculated Sullivan’s large coverage amount and thus “provided Ms. Sullivan with 13 incorrect information” about her life insurance policy. 7 Verizon and Prudential 14 rejected Sullivan-Mestecky’s claim. Sullivan-Mestecky then filed this suit in state 15 court. The defendants removed the case to the Eastern District of New York, and 16 Sullivan-Mestecky filed an amended complaint adding claims under 17 §§ 502(a)(1)(B) and 502(a)(3) of ERISA. On July 7, 2016, the district court granted 18 Verizon’s and Prudential’s motion to dismiss the § 502(a)(3) claim on the 19 pleadings, under Rule 12(b)(6). 8 And on May 16, 2018, the district court granted 20 summary judgment to Verizon and Prudential on the § 502(a)(1)(B) claim.

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1 district court erred in allowing Verizon and Prudential to reduce her mother’s 2 benefits after they had vested upon her death.

3 Sullivan-Mestecky misunderstands the district court’s ruling. The Group 4 Life Insurance plan expressly granted discretionary authority to Verizon and 5 Prudential to interpret the plan’s terms. Because the plan granted such authority 6 to Verizon and Prudential, the district court could not overturn their interpretation 7 of the plan unless it was “arbitrary and capricious.” 12 The district court found that 8 Verizon and Prudential’s interpretation of the plan—that Sullivan-Mestecky was 9 entitled to no more than $11,400—was based on substantial evidence and not 10 arbitrary or capricious. Notwithstanding the clerical error reflected on the 11 Retirement Enrollment Worksheet and other documents, Section 5.4.1 of the plan 12 clearly explained that its “1 x Pay” option entitles beneficiaries to a percentage of 13 the participant’s annual salary, to be reduced as the participant ages. None of the 14 mailings Sullivan received from Verizon or Prudential purported to displace 15 Section 5.4.1. Under the terms of Section 5.4.1, Sullivan-Mestecky was entitled to 16 a fraction of Sullivan’s annual income of $18,600. Verizon and Prudential chose, 17 in their discretion, to interpret Sullivan’s plan consistent with Section 5.4.1, not 18 with her Retirement Enrollment Worksheet and other documents. Deferring to 19 that reading, the district court found that Verizon and Prudential provided 20 Sullivan-Mestecky with the benefits that the plan had always promised: $11,400.

21 On appeal, Sullivan-Mestecky does not challenge Verizon and Prudential’s 22 interpretation of Section 5.4.1 or expressly take the position that their 23 interpretation of the plan as a whole was arbitrary and capricious. Instead, she

12 Pagan v. NYNEX Pension Plan, 52 F.3d 438, 441 (2d Cir. 1995) (internal quotation marks omitted).

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1 implies that the terms of the plan entitled her to the more generous death benefits 2 and argues that Verizon and Prudential’s interpretation resulted in an 3 impermissible retroactive amendment to Sullivan’s plan after her death. She cites 4 Blackshear v. Reliance Standard Life Ins. Co., 13 but Blackshear is inapposite. In 5 Blackshear, the Fourth Circuit found that a fiduciary could not correct a clerical 6 error that appeared in a participant’s ERISA plan and summary plan description 7 after that participant died, causing the benefits as set forth in the plan to vest with 8 the beneficiary. 14 The outcome in Blackshear was premised on the fact that the 9 erroneous terms in the plan and its description unambiguously provided for the 10 benefits at issue. Here, terms limiting Sullivan’s death benefits to a percentage of 11 her annual income were accurately stated in the plan and its description. The 12 generous benefits Sullivan-Mestecky seeks never vested under the terms of the 13 plan. We find no reason to disturb the district court’s grant of summary judgment 14 on Sullivan-Mestecky’s § 502(a)(1)(B) claim.

15 II. Sullivan-Mestecky’s § 502(a)(3) claim.

16 Sullivan-Mestecky’s § 502(a)(3) claim requires an entirely different analysis 17 because, where circumstances allow, ERISA provides for equitable remedies that 18 transcend the plan. Section 502(a)(3) authorizes a “participant, beneficiary, or 19 fiduciary” of an employee benefit plan to bring a civil action to obtain “appropriate 20 equitable relief” to redress violations of ERISA Subchapter I, including, as relevant 21 here, fiduciary breaches. 15 Without addressing whether Verizon and Prudential

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1 had breached their fiduciary duties under ERISA Subchapter I, as opposed to the 2 terms of Sullivan’s plan and summary plan description, the district court 3 dismissed the § 502(a)(3) claim for failure to state a claim under Rule 12(b)(6) on 4 the basis that Sullivan-Mestecky sought an impermissible remedy. The district 5 court concluded that Sullivan-Mestecky, despite framing her claim as one for 6 injunctive relief, could be “entirely compensated by damages allowing her to 7 recover the value of [Sullivan’s] death benefits” and had therefore brought a claim 8 for money damages rather than for equitable relief. 16

9 Sullivan-Mestecky argues, however, that the district court’s classification of 10 her claim as one for damages rather than for equitable relief conflicts with the 11 Supreme Court’s decision in CIGNA Corp. v. Amara. 17 She contends that Amara 12 undermines the district court’s reasoning with its holding that “the fact that . . . 13 relief takes the form of a money payment does not remove it from the category of 14 traditionally equitable relief” because “[e]quity courts possessed the power to 15 provide relief in the form of monetary ‘compensation.’” 18 Amara details three 16 different kinds of equitable relief that historically provided a “kind of monetary 17 remedy” even “prior to the merger of law and equity” 19: estoppel, surcharge, and 18 reformation. 20 Sullivan-Mestecky argues that her claim satisfies the requirements 19 of each. For the reasons we now set forth, we agree that Sullivan-Mestecky is

16Sullivan-Mestecky v. Verizon Commc’ns Inc., No. 14-CV-1835, 2016 WL 3676434, at *25 (E.D.N.Y. July 7, 2016). 17 563 U.S. 421 (2011). 18 Id. at 441. 19 Id. at 442. 20 Id. at 440–43.

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1 appropriately seeking equitable relief and hold that her § 502(a)(3) claim can 2 proceed against Verizon but not Prudential.

3 A. Appropriate Equitable Relief 4 1. Estoppel

5 The Restatement (Second) of Contracts provides that promissory estoppel is 6 an appropriate equitable remedy when a “promisor should reasonably expect [his 7 promise] to induce action or forbearance on the part of the promisee,” the promise 8 actually “does induce such action or forbearance,” and “injustice can be avoided 9 only by enforcement of the promise.” 21 We have previously found that “principles 10 of estoppel can apply in ERISA cases,” albeit only “under extraordinary 11 circumstances.” 22 We have required a showing of extraordinary circumstances “to 12 lessen the danger that commonplace communications from employer to employee 13 will routinely be claimed to give rise to employees’ rights beyond those contained 14 in formal benefit plans.” 23 As a result, to make a claim for estoppel under 15 § 502(a)(3), a plaintiff must plausibly allege five elements: “(1) a promise, (2) 16 reliance on the promise, (3) injury caused by the reliance, . . . (4) an injustice if the 17 promise is not enforced,” and (5) extraordinary circumstances. 24

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1 The district court held that Sullivan-Mestecky had not plausibly alleged the 2 requisite elements of an ERISA estoppel claim. It found that, “[t]o the extent 3 plaintiff relies upon alleged oral representations by defendants as the basis for her 4 promissory estoppel claim, her claim fails ‘because oral promises are 5 unenforceable under ERISA and therefore cannot vary the terms of an ERISA 6 plan.’” 25 It then determined that Sullivan-Mestecky’s “amended complaint is 7 bereft of any factual allegations from which ‘extraordinary circumstances’ may 8 reasonably be inferred” because none of the documents sent by Verizon or 9 Prudential “were sent in order to induce Sullivan or plaintiff to take any particular 10 action for the benefit of the defendant who sent the particular document.” 26

11 We disagree with the district court’s reasoning in two respects. First, 12 although the district court correctly recited the law of this circuit that “oral 13 promises are unenforceable under ERISA,” 27 it went beyond that proposition in 14 declining to consider whether the Verizon Benefits Center’s repeated oral 15 representations collectively supported Sullivan-Mestecky’s estoppel claim as an 16 extraordinary circumstance. There is daylight between considering an oral 17 representation simply as the requisite promise in an estoppel analysis and 18 considering an oral representation as a fact exacerbating, if not supplying, the 19 extraordinary circumstances under which the requisite promise was made, was 20 relied upon, caused injury, or would lead to injustice if unenforced. We see no

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1 conflict between considering as an extraordinary circumstance the Verizon 2 Benefits Center’s oral misrepresentations, here coupled with misrepresentations 3 in written documents, and ERISA’s demand that “[e]very employee benefit 4 plan . . . be established and maintained pursuant to a written instrument.” 28 We 5 therefore examine the Verizon Benefits Center’s repeated oral assurances to 6 Sullivan about the value of her life insurance policy in determining whether 7 Sullivan-Mestecky has pled extraordinary circumstances.

8 Second, we take issue with the district court’s implication that extraordinary 9 circumstances arise only when the requisite promise was made for the purpose of 10 inducing certain employee conduct. In Devlin v. Empire Blue Cross and Blue Shield, 11 we expressly disavowed the existence of such a rule and left open the possibility 12 that “extraordinary circumstances other than intentional inducement would 13 suffice” for an ERISA estoppel claim. 29 And while Verizon highlights our 14 statement in Greifenberger v. Hartford Life Ins. Co. that “the ‘extraordinary 15 circumstances’ necessary [for] equitable estoppel in the context of an ERISA plan 16 require conduct tantamount to fraud,” 30 the Supreme Court has long recognized 17 that “[f]raud has a broader meaning in equity (than at law) and intention to 18 defraud or to misrepresent is not a necessary element.” 31 “Fraud” in a “court of 19 equity properly includes all acts, omissions and concealments which involve a 20 breach of legal or equitable duty, trust, or confidence, justly reposed, and are

28 29 U.S.C. § 1102(a)(1). 29 274 F.3d 76, 86 (2d Cir. 2001). 30 131 F. App’x 756, 759 (2d Cir. 2005) (non-precedential summary order). 31 SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 193 (1963).

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1 injurious to another.” 32 The breadth of courts’ power in equity has led at least one 2 circuit, the Sixth, to allow ERISA estoppel claims regarding “such gross negligence 3 as to amount to constructive fraud.” 33 We now join the Sixth Circuit in finding 4 that estoppel can be plausibly pled as an appropriate equitable remedy by an 5 ERISA plaintiff alleging gross negligence in the absence of intentional inducement.

6 Sullivan-Mestecky has plausibly pled the five elements required to make a 7 claim for estoppel against Verizon. In June 2011, Verizon’s agent sent Sullivan the 8 Retirement Enrollment Worksheet indicating that Sullivan was eligible for a life 9 insurance policy valued at $679,700. Following that initial document, Verizon’s 10 agents sent Sullivan a Retirement Confirmation of Enrollment, a Confirmation of 11 Coverage on Demand, a Beneficiary Confirmation Notice, and a W-2, all of which 12 represented that Verizon was providing her with this generous life insurance 13 policy. 34 These written documents, taken together, constitute and reflect the 14 promise that Sullivan-Mestecky seeks to enforce.

¹⁵ Sullivan-Mestecky has amply pled that reliance and injury followed upon 16 this promise. In response to Verizon’s written promise, Sullivan enrolled in 17 Verizon’s offered plan, paid taxes based on the plan’s taxable imputed income, 18 and forwent procuring an alternative life insurance policy. 35 Sullivan-Mestecky 19 also paid her mother’s debts and took an unpaid leave of absence from work to 20 take care of her mother, anticipating that her short-term financial losses would be

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1 more than covered by Sullivan’s life insurance payout. It would be unjust to allow 2 these losses and forbearances, traceable to Verizon’s gross negligence, to be borne 3 by Sullivan and her daughter Sullivan-Mestecky, both of whom believed Verizon’s 4 repeated misrepresentations. Altogether, Sullivan-Mestecky has satisfied the 5 standard requirements of promissory estoppel.

6 The final requirement of ERISA estoppel—extraordinary circumstances—is 7 also met here based on Verizon’s conduct amounting to gross negligence, as 8 follows. Verizon’s agents sent numerous mailings informing and assuring 9 Sullivan that she was entitled to a life insurance policy in the amount of $679,000. 10 She relied on these representations only after diligently and repeatedly confirming 11 their veracity and meaning with the Verizon Benefits Center. On calls with the 12 Verizon Benefits Center, Sullivan expressed her surprise at the stated value of her 13 life insurance policy, effectively alerting Verizon to the fact that it may have 14 miscalculated the value. Not only did Sullivan draw attention to the high coverage 15 figure, but an Aon Hewitt employee flagged the policy amount, writing in an 16 email to a colleague that the amount seemed high and asking if the company’s 17 software was somehow computing the wrong amount. Another Aon Hewitt 18 employee then responded, erroneously, that the amount was correct. Instead of 19 opening an investigation that likely would have uncovered the clerical error that 20 led Sullivan and her daughter to believe that she had procured a generous life 21 insurance policy, Verizon representatives reassured Sullivan that her beneficiary 22 would receive, after the age discount, more than half a million dollars in death 23 benefits. It was only after Sullivan’s death, when the purchase of alternative life 24 insurance to support Sullivan-Mestecky was impossible, that Verizon attempted 25 to correct its clerical error. In contravention of what it had repeatedly and 26 unambiguously represented to Sullivan in writing and on calls, Verizon paid

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1 Sullivan-Mestecky a total of $11,400, less than two percent of what Verizon had 2 promised. Verizon’s acts of gross negligence present circumstances far “beyond 3 the ordinary.” 36 The persistence and size of Verizon’s error, notwithstanding the 4 ample inquiry notice provided by Sullivan’s calls to the Verizon Benefits Center, 5 were “remarkable.” 37 We find that Sullivan-Mestecky satisfactorily pled 6 extraordinary circumstances.

7 That Sullivan-Mestecky pled estoppel as “appropriate equitable relief” is 8 sufficient to determine that the district court erred in dismissing her § 502(a)(3) 9 claim against Verizon. Still, we briefly address Sullivan-Mestecky’s argument that 10 her § 502(a)(3) claim alternatively merits the remedy of surcharge or reformation. 11 While our circuit’s law on these remedies is somewhat less developed than it is on 12 estoppel in the ERISA context, we believe that Sullivan-Mestecky also has 13 adequately pled facts meeting their requirements.

14 2. Surcharge

15 In Amara, also a § 502(a)(3) case, the Supreme Court described surcharge 16 historically as “relief in the form of monetary ‘compensation’ for a loss resulting 17 from a trustee’s breach of duty.” 38 Amara continued, “The surcharge remedy 18 extended to a breach of trust committed by a fiduciary” whose role is “analogous 19 to [that of] a trustee” and “encompass[ed] any violation of a duty imposed upon

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1 that fiduciary.” 39 Inasmuch as ERISA imposes fiduciary duties on parties who 2 manage employee benefit plans, 40 the Supreme Court has recognized that “these 3 fiduciary duties draw much of their content from the common law of trusts, the 4 law that governed most benefit plans before ERISA’s enactment.” 41 In this regard, 5 Sullivan-Mestecky’s § 502(a)(3) claim is dependent on her allegation of fiduciary 6 breach, specifically that Verizon and Prudential failed to act “with the care, skill, 7 prudence, and diligence under the circumstances then prevailing that a prudent 8 man acting in a like capacity and familiar with such matters would use,” as ERISA 9 requires. 42 As outlined above, Sullivan-Mestecky plausibly pled that Verizon 10 breached its fiduciary duties through its gross negligence in its management of 11 Sullivan’s life insurance policy by consistently failing to “provide complete and 12 accurate information” about Sullivan’s “status and options” “in response to 13 [Sullivan’s] questions about plan terms and/or benefits.” 43 This fiduciary breach 14 is sufficient to support the equitable remedy of surcharge. 44

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1 its fraudulent representations. Reforming the plan to accord with Sullivan’s 2 reasonable expectations is an appropriate equitable remedy. 49

3 Although we find that Sullivan-Mestecky has plausibly pled circumstances 4 that would entitle her to “appropriate equitable relief” against Verizon under 5 § 502(a)(3), her arguments do not carry the same force against Prudential. Unlike 6 Verizon and its agents, Prudential sent only one letter to Sullivan, informing her 7 how the value of her policy would decrease as she aged. Neither Prudential nor 8 its agents fielded questions from Sullivan regarding her policy and repeatedly 9 misrepresented its benefits. We are reluctant to say that Prudential’s single 10 mailing was even negligent. As the plan administrator, Verizon, not Prudential, 11 was responsible for assessing Sullivan’s eligibility for and enrolling Sullivan in her 12 benefits plan. The core of Sullivan’s dispute was therefore with Verizon. Even if 13 Prudential could have checked Verizon’s work to confirm that Sullivan had been 14 properly enrolled, it had no duty to do so and any failure in that regard pales in 15 comparison to Verizon’s gross negligence and does not rise to the level of 16 extraordinary circumstances or equitable fraud.

17 B. Fiduciary Breach

18 Unable to provide a compelling rationale for why Sullivan-Mestecky is not 19 able to pursue equitable relief, Verizon makes two arguments to support its denial 20 that it committed a fiduciary breach. Verizon first claims that its agents, not 21 Verizon itself, ran the Verizon Benefits Center and provided the misinformation

49 Prudential suggests that granting Sullivan-Mestecky relief would require the reformation of the Group Life Insurance plan for all plan participants. Prudential, however, provides no authority for this suggestion, and we see no basis for adopting it.

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1 about which Sullivan-Mestecky complains. Verizon then argues that, in any event, 2 our In re DeRogatis decision precludes liability for unintentional 3 misrepresentations when the pertinent terms of the employee benefits plan are 4 clear. 50 Neither argument is persuasive.

5 First, as In re DeRogatis held, plan administrators, like Verizon, “act as 6 fiduciaries when they communicate with plan members and beneficiaries about 7 plan benefits.” 51 As that case explained, plan administrators “may perform a 8 fiduciary function through ministerial agents,” such as Aon Hewitt in this case, 9 even “without converting those individual agents themselves into fiduciaries.” 52 10 Accordingly, when Verizon arranged for Aon Hewitt to communicate with 11 Sullivan about her plan benefits, Verizon was performing a fiduciary function and 12 was bound by its fiduciary duty to properly administer the plan. Although 13 Verizon makes much of the fact that the district court “unequivocally ruled that 14 Hewitt was not a plan administrator or fiduciary” for Sullivan’s benefits plan, 53 15 this finding, based on Aon Hewitt’s status as a ministerial agent, does not prevent 16 us from imputing Aon Hewitt’s gross negligence to Verizon, Aon Hewitt’s 17 principal. Indeed, Aon Hewitt’s status as a ministerial agent allows us to do so. 54

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1 Verizon cannot hide behind Aon Hewitt’s actions to evade liability for the 2 fiduciary breach that occurred here.

3 Nor can Verizon hide behind Sullivan’s plan documents, which it 4 characterizes as “clear, unambiguous, and in no way lack[ing in] clarity.” 55 5 Verizon urges us to read In re DeRogatis as foreclosing liability for unintentional 6 misrepresentations when a fiduciary has provided a plan participant with a clear 7 and unambiguous summary plan description. But In re DeRogatis expressly 8 declined to answer the question of whether “an ERISA fiduciary may breach a 9 duty because of unintentional misrepresentations even when the SPD [summary 10 plan description] is clear if there is no evidence that the plaintiff knew or should 11 have known of the applicable SPD provisions at the time of the relevant 12 conduct.” 56 In re DeRogatis found that the plaintiff had every reason to know of 13 the applicable, clear plan terms because even though the fiduciary’s agents had 14 provided ambiguous responses to the plaintiff’s queries, they had also sent the 15 plaintiff a copy of the terms with specific citations to the relevant sections on 16 pension and survivor benefits. 57 Under such circumstances, In re DeRogatis 17 concluded that the agents’ ambiguous responses to the plaintiff did not rise to the 18 level of materially misleading information. 58

19 This case differs from In re DeRogatis in three respects: (1) as pled, Verizon, 20 through its agents, directly and repeatedly informed Sullivan that she had a life

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1 insurance policy in the amount of $679,000; (2) in responding to Sullivan’s queries 2 about her policy, Verizon never referred Sullivan to clear plan terms that would 3 have alerted her to her ineligibility for the promised benefits; and (3) Sullivan’s 4 plan was far from clear and unambiguous because it expressly incorporated her 5 “enrollment materials, and other such communications relative to the Plan,” 6 including the Retirement Enrollment Worksheet indicating Sullivan’s eligibility 7 for a $679,000 life insurance policy and other documents of similar import. 59 When 8 all is considered, Sullivan-Mestecky has plausibly alleged that Verizon breached 9 its fiduciary duty to act “with . . . care, skill, prudence, and diligence” 60 when it 10 failed to provide Sullivan with “complete and accurate information” on her 11 benefits. 61

12 13 CONCLUSION

14 For the reasons stated above, we AFFIRM the district court’s dismissal of 15 Sullivan-Mestecky’s § 502(a)(3) claim against Prudential and its ruling granting 16 Verizon and Prudential summary judgment on Sullivan-Mestecky's § 502(a)(1)(B) 17 claim, VACATE the district court’s dismissal of Sullivan-Mestecky’s § 502(a)(3)

59Sullivan’s plan stated, “This Plan document hereby incorporates by reference any summary plan descriptions, summaries of material modifications, enrollment materials, and other such communications relative to the Plan as may be approved from time to time by Verizon.” App’x at 288. 60 29 U.S.C. § 1104(a)(1)(B). 61 Estate of Becker, 120 F.3d at 10.

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1 claim against Verizon, and REMAND for further proceedings consistent with the 2 opinion.

Footnotes

[3] Id. at 362.

[4] Id. at 363.

[5] Id. at 383.

[6] Id.

[7] Id. at 334–35.

[8] In the same opinion, the district court found that most of Sullivan-Mestecky’s state law claims were preempted by ERISA and dismissed them. It allowed Sullivan-Mestecky to pursue one state law claim based on an alleged settlement agreement between Sullivan and Verizon. Because Sullivan-Mestecky could not locate the alleged settlement agreement during discovery, 1 DISCUSSION 2 On appeal, Sullivan-Mestecky challenges both decisions. “We review a 3 grant of summary judgment de novo, examining the evidence in the light most 4 favorable to, and drawing all inferences in favor of, the non‐movant.”9 Similarly, 5 “[w]e review de novo a district court’s dismissal of a complaint pursuant to Rule 6 12(b)(6), construing the complaint liberally, accepting all factual allegations in the 7 complaint as true, and drawing all reasonable inferences in the plaintiff’s 8 favor.” 10 9 I. Sullivan-Mestecky’s § 502(a)(1)(B) claim. 10 Section 502(a)(1)(B) of ERISA empowers “a participant or beneficiary” to 11 bring a civil action “to recover benefits due to him under the terms of his plan.” 11 12 After reviewing the plan documents and communications between Sullivan, 13 Verizon, and Prudential that emerged during discovery, the district court 14 concluded that the terms of Verizon’s Group Life Insurance plan did not entitle 15 Sullivan-Mestecky to benefits in excess of $11,400 and granted summary judgment 16 in favor of Verizon and Prudential. On appeal, Sullivan-Mestecky argues that the the district court ultimately granted summary judgment for Verizon on that claim. None of the state law claims are at issue in this appeal. 9Burke v. Kodak Ret. Income Plan, 336 F.3d 103, 109 (2d Cir. 2003) (internal quotation marks omitted).

[10] Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002).

[11] 29 U.S.C. § 1132(a)(1)(B).

[13] 509 F.3d 634 (4th Cir. 2007).

[14] Id. at 641–42.

[15] 29 U.S.C. § 1132(a)(3).

[21] Restatement (Second) of Contracts § 90(1) (Am. Law Inst. 1981).

[22] Schonholz v. Long Island Jewish Med. Ctr., 87 F.3d 72, 78 (2d Cir. 1996).

[23] Aramony v. United Way Replacement Benefit Plan, 191 F.3d 140, 151 (2d Cir. 1999). 24Weinreb v. Hosp. for Joint Diseases Orthopaedic Inst., 404 F.3d 167, 172–73 (2d Cir. 2005) (quoting Schonholz, 87 F.3d at 79).

[25] Sullivan-Mestecky, 2016 WL 3676434, at *30 (quoting Perreca v. Gluck, 295 F.3d 215, 225 (2d Cir. 2002)).

[26] Id. at *30.

[27] Perreca, 295 F.3d at 225.

[32] Id. at 194 (internal quotation marks omitted).

[33] Bloemker v. Laborers’ Local 265 Pension Fund, 605 F.3d 436, 444 (6th Cir. 2010).

[34] App’x at 179–82.

[35] Id. at 179, 183.

[36] Aramony, 191 F.3d at 152.

[37] Id. (internal quotation marks omitted).

[38] 563 U.S. at 442.

[39] Id.; see also Morrissey v. Curran, 650 F.2d 1267, 1282 (2d Cir. 1981) (“[W]e see no reason not to permit a surcharge, when warranted by the facts, against one occupying any fiduciary status.”).

[40] 29 U.S.C. § 1104 (entitled “Fiduciary duties”).

[41] Vanity Corp. v. Howe, 516 U.S. 489, 496 (1996).

[42] 29 U.S.C. § 1104(a)(1)(B). 43Estate of Becker v. Eastman Kodak Co., 120 F.3d 5, 8 (2d Cir. 1997) (internal quotation marks omitted) (describing ERISA fiduciaries’ duties).

[44] Like other circuits that have considered surcharge in ERISA cases post-Amara, we recognize a plaintiff’s non-procurement of alternative coverage as a loss resulting from a fiduciary’s material misrepresentation of the plaintiff’s extent of, or eligibility for, coverage. Joining those circuits, we think it appropriate for a plaintiff to seek relief in the amount of the 1 3. Reformation 2 Finally, Amara describes “[t]he power to reform contracts (as contrasted 3 with the power to enforce contracts as written)” as “a traditional power of an 4 equity court, not a court of law.” 45 It notes that “‘equity would reform [a] contract, 5 and enforce it, as reformed, if . . . mistake or fraud were shown.’” 46 Following the 6 Supreme Court’s remand in Amara, the Second Circuit elaborated that “[a] contract 7 may be reformed due to the mutual mistake of both parties, or where one party is 8 mistaken and the other commits fraud or engages in inequitable conduct.”47 9 Reformation does not require a showing of actual harm. 48 We need not discuss 10 mutual mistake because Sullivan-Mestecky has adequately pled that Verizon 11 committed equitable fraud by misrepresenting that Sullivan was entitled to a life 12 insurance policy in the amount of $679,000. As a result of Verizon’s fraudulent 13 representations, Sullivan reasonably but mistakenly expected that Sullivan- 14 Mestecky would receive the generous death benefits. Sullivan-Mestecky has 15 thereby adequately pled circumstances that would permit the district court to 16 equitably reform the terms of her plan with Verizon, sufficient to bind Verizon to promised policy, not just in the amount of wrongly-accepted premiums or wrongly-paid taxes, under the equitable remedy of surcharge. See, e.g., Kenseth v. Dean Health Plan, Inc., 722 F.3d 869, 881–82 (7th Cir. 2013); McCravy v. Metropolitan Life Ins. Co., 690 F.3d 176, 181 (4th Cir. 2012).

[45] 563 U.S. at 440.

[46] Id. (citing Baltzer v. Raleigh & Augusta R. Co., 115 U.S. 634, 645 (1885)).

[47] Amara v. CIGNA Corp., 775 F.3d 510, 525 (2d Cir. 2014).

[48] Id. at 525 n.12.

[50] 904 F.3d 174 (2d Cir. 2018).

[51] Id. at 192.

[52] Id.

[53] Defendant-Appellee Verizon’s Br. at 40.

[54] In re Derogatis, 904 F.3d at 192.

[55] Defendant-Appellee Verizon’s Br. at 47.

[56] 904 F.3d at 196 n.27.

[57] Id.

[58] Id. at 195–96.