<nobr>May 21, 2007</nobr>

ERIC Files Amicus Brief Supporting Deferential Standard of Review

ERIC and the American Benefits Council on May 17, 2007, filed an amicus brief to the U.S. Supreme Court in AT&T Pension Benefit Plan, as successor to the Ameritech Management Pension Plan v Linda Call. The Seventh Circuit Court of Appeals decided the case in January and denied a petition for rehearing a month later. The case concerns the requirement of deference to interpretation by plan administrators of ambiguous language in ERISA plans. At issue is the application of actuarial changes to lump-sum benefit determinations and interpretation of anti-cutback language in the plan. The case raises an issue regarding the discretion given to plan administrators in interpreting plan provisions as a result of Firestone Tire & Rubber Co. v. Bruch, which found that plans may vest discretion in plan administrators to interpret ambiguous terms. ERIC filed an extensive brief in the Firestone case.

The Seventh Circuit failed to apply this deferential standard, and instead invoked the canon of contra proferentem, under which contractual ambiguities are resolved against the drafter.

The brief contends that this approach, which is used in contract interpretation, makes no sense in the ERISA context because ERISA is based on trust law rather than contract, and trusts are construed to determine the intent of the settlor. The effect of the Seventh Circuit's approach is to jeopardize the deference to the plan sponsor/settlor required under Firestone.

Text Files:

Amicus Brief

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