Ninth Circuit Revives ERISA Claims Against Northrop Grumman Over Inaccurate Pension Benefit Statements

In Bafford v. Admin. Comm. of Northrop Grumman Pension Plan, No. 22-55634, __F.4th__, 2024 WL 2067884 (9th Cir. May 9, 2024), decided by Circuit Judges Morgan Christen, Roopali H. Desai, and Anthony D. Johnstone, the Ninth Circuit again considered this dispute involving Northrop Grumman’s provision of inaccurate pension benefit statements to Plaintiffs Evelyn Wilson and Stephen Bafford. In the court’s first decision, Bafford v. Northrop Grumman Corp., 994 F.3d 1020 (9th Cir. 2021), the court held “that an online inquiry may qualify as a written request and trigger a plan administrator’s statutory duty to provide a pension benefit statement if the inquiry comprises an intentional recording of words in a visual form that conveyed a request for a pension benefit statement.” Id. at 1030 (cleaned up). In this second appeal, the Ninth Circuit held that “Plaintiffs adequately alleged facts that, if proved, triggered the duty to provide pension benefit statements, and that Plaintiffs stated a viable ERISA claim by alleging that the plan administrator provided substantially inaccurate pension benefit statements.”

Plaintiffs worked for Northrop Grumman Corporation and participated in the Northrop Grumman Pension Plan (the Plan), for which the Administrative Committee of the Northrop Plan (the Committee) is the Plan Administrator. Plaintiffs worked for the company during two separate periods and were entitled to a defined benefit that factored in their total years of service but only their average salaries from their first period of employment. Prior to their retirement, they made several requests for pension statements and received “Retirement Plan Pension Estimate Calculation Statement(s)” that showed their estimated pension benefits based on their anticipated employment termination date. They retired in reliance on these statements and received the promised benefits until the Committee switched its third-party contractor and performed an audit. The audit revealed that Plaintiffs were receiving twice the amount they were entitled to because the calculation factored in their salaries from their second period of employment. The Committee cut their benefits and sought repayment of past benefits. In response, Plaintiffs filed suit under ERISA and state law.

The court decided four issues in this appeal. The first issue is whether Plaintiffs adequately alleged their claim under § 1025(a)(1)(B)(i) that the Committee did not send triennial pension benefit statements or annual notices of the availability of such statements. The court concluded that Plaintiffs’ § 1025(a)(1)(B)(i) claim survives because Bafford I did not preclude the Plaintiffs from repleading this claim to allege that the Committee failed to comply with the alternative annual notice provision in § 1025(a)(3)(A), and the record does not establish that Plaintiffs received an SPD or Annual Funding Notice at least once year that they were employed at Northrop and participating in the Plan.

The second issue is whether Plaintiffs’ allegation that the Committee furnished inaccurate pension benefit statements stated a cognizable cause of action under § 1025(a)(1)(B)(ii). The court found that “Plaintiffs adequately alleged that the Committee violated § 1025(a)(1)(B)(ii) because they alleged that the Committee provided them with pension benefit statements that did not calculate their retirement benefits according to the Plan’s formula, and grossly overstated their benefits.”

The third issue is whether Plaintiffs adequately alleged that they made “written requests” for pension benefit statements. The court agreed with the district court that Plaintiffs’ online inquiries qualified as written requests for purposes of ERISA. The court also found that Plaintiffs adequately alleged that they requested pension benefit statements versus estimates of their future benefits or projections of future benefits.

The final issue is whether any remedies are available for the Committee’s alleged failure to provide compliant pension benefit statements. The court held that § 1132(c)(1)’s penalty provision applied to administrators who provide inaccurate pension benefit statements. Bad faith is not required for a plan administrator to be liable for a penalty. With respect to equitable remedies, the court noted that the district court did not reach this issue and it was not fully briefed before the district court. The court declined to decide this issue in the first instance. The court reversed the district court’s dismissal of Plaintiffs’ claims under 29 U.S.C. § 1025(a)(1)(B)(i)–(B)(ii).