<nobr>Oct 8, 2003</nobr>

ERIC: Amicus Request (Kodak)

Oct. 8, 2003 -- Kodak has requested that ERIC file an amicus brief in support of a writ of certiorari in a case concerning detrimental reliance on an SPD. As is our practice, ERIC members concerned with the issue will be asked to provide financial support for the brief which we anticipate will cost approximately $30,000.

The petition for certiorari is due on October 15, 2003. An amicus curiae brief in support of the petition would be due on November 14, 2003. We need a response from members no later than October 20.

The district and circuit court opinions are attached as is a copy of ERIC criteria for filing briefs amicus curiae.

Kodak counsel has prepared the following memorandum of the case:

BACKGROUND: The Burke case presents the question whether, and under what circumstances, a plan participant or beneficiary may recover benefits based on language in a summary plan document (“SPD”) that differs from the terms of an ERISA plan. In particular, Burke presents the question whether a plan participant or beneficiary is entitled to recover benefits based on language in an SPD without showing that he relied, to his detriment, on the SPD.

The relevant facts are as follows. In 1991, the plaintiff began living with Kodak employee, Kenneth Burke. Unfortunately, Mr. Burke was diagnosed with lung cancer in March 1999. He and the plaintiff were married in May 1999, and Mr. Burke died approximately six months later. After Mr. Burke’s death, plaintiff’s request for pre-retirement survivor income benefits (“SIB”) from Kodak's pension plan ("Plan") was denied, as she had not satisfied the Plan's one-year marriage requirement.

Plaintiff then sought benefits as a domestic partner, but was denied as she and Mr. Burke had not satisfied the Plan's requirement to file a joint affidavit of domestic partnership. The affidavit requirement was described in sixteen places in the employee handbook that contained the Plan's SPD, but was not specifically referenced in the section that discussed SIB. The requirement had also been discussed with respect to eligible benefits, including SIB, in two corporate communications sent prior to the SPD to all employees in connection with Kodak's rollout of domestic partner benefits. Plaintiff sued nevertheless, claiming that the omission of the affidavit requirement in the SIB section of the SPD entitled her to benefits.

The district court found that, even if the SPD was deficient in failing to reference the affidavit requirement in connection with SIB, plaintiff, who had not read the SPD, failed to demonstrate that she relied to her detriment on it, and entered summary judgment for
Kodak.

The Court of Appeals for the Second Circuit reversed, holding that in order to recover in a case where there is a difference between the SPD and the plan text, it is not necessary for the plaintiff to show detrimental reliance on the deficient SPD and that it is sufficient to show “prejudice.” Moreover, the Second Circuit required, “for a showing of prejudice, that a plan participant was likely to have been harmed as a result of a deficient SPD. Where a participant makes this initial showing, . . . the employer may rebut it through evidence that the deficient SPD was in effect a harmless error.” The Court then went on to find that, even though the plaintiff never read the SPD and the Burkes received two other communications which indicated that the affidavit requirement applied with respect to SIB, the "conspicuous absence of the domestic partnership affidavit requirement in the self-contained SIB section [of the SPD] likely led the Burkes to believe that an affidavit was unnecessary for SIB benefits," and they were thus prejudiced by the omission.

The Second Circuit’s opinion indicates that this case meets the basic criteria for Supreme Court review. First, it acknowledges that there is a conflict among the circuits. A circuit conflict is one of the primary factors that the Supreme Court considers in evaluating petitions for certiorari. In this case, there is more than a split; this area of ERISA doctrine is in utter disarray. Most of the circuits are involved, and have split not only with respect to prejudice versus detrimental reliance, but two circuits have taken the position that neither is required for recovery. Further, the prejudice standard is not uniformly applied by the circuits that require it. In addition, some of the circuits apply different standards depending on whether there is an omission or affirmative misstatement involved. Accordingly, the area is in need of the Court's clarification. The other factors for Supreme Court review are also present, in that the issue is both important and recurring.

Attached are copies of the decisions of the U.S. Court of Appeals for the Second Circuit and the U.S. District Court for the Western District of New York to assist you in your review of this case.

ACTION REQUESTED: Please advise Mark Ugoretz by October 20, 2003

[1] whether you think ERIC should file an amicus brief in support ofKodak’s petition for a writ of certiorari and
[2] whether your company would be willing to contribute up to $2,000 (or more) for the cost of the brief.

If you have any comments on this issue or believe that a conference call would be helpful, please let me know.

Mark Ugoretz, President
The ERISA Industry Committee
1400 L Street, N.W., Suite 350
Washington, D.C. 20005
Tel.: 202-789-1400; Fax: 202-789-1120
http://www.eric.org

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