In Devlin v. Transp. Communications Int'l Union,
173 F.3d 94, 102 (2d Cir. 1999), the Second Circuit explained that the
"extraordinary circumstances" element of ERISA estoppel
requires, at a minimum, "defendants' use of promised . . .
benefits as an inducement to persuade" an employee to take a
particular course of action. That was the case in Schonholz v.
Long Island Jewish Med. Ctr., 87 F.3d 72 (2d Cir. 1996), in
which plaintiff was specifically induced to resign as
defendant's chief operating officer by a letter promising
particular severance benefits. By contrast, in Devlin, the
appeals court refused to apply estoppel in the case of a
plaintiff who had relied on promised medical benefits in timing
his retirement since no evidence indicated that defendant
actually "sought the retirement of" or used the promise of
benefits "to intentionally induce any particular behavior on
[plaintiffs] part." Devlin v. Transp. Communications Int'l
Union, 173 F.3d at 102. Similarly in Aramony v. United Way
Replacement Benefit Plan, 191 F.3d at 151-53, the court ruled
that defendant was not estopped from challenging benefit
projections made by its agent to plaintiff since no evidence
demonstrated "`remarkable consideration' such as the use of a
promise of benefits to induce certain behavior" by plaintiff.
In this case there is no evidence before the court that
Treacy, Local 30, or the defendant Trustees ever promised to
continue benefit contributions for Flynn for the specific
purpose of inducing him to leave his position with the Local and
to assume the responsibilities of an International
representative. To the contrary, the undisputed evidence is that
Treacy viewed Flynn as a valuable asset to Local 30, someone
whom he was reluctant to see leave. See Treacy Dep. at 80.
Treacy may well have wished to help his friend avoid the
diminution in benefits that would occur if he accepted the
International job offer, but well-intentioned mistakes are not
enough to establish the extraordinary circumstances required for
ERISA estoppel. See Cerasoli v. Xomed, Inc., 47 F. Supp.2d 401,
411 (W.D.N.Y. 1999) ("arguments that negligent
misrepresentations `estop' sponsors or administrators from
enforcing the plans' written terms have been singularly
unsuccessful" (quoting Decatur Mem'l Hosp. v. Connecticut Gen.
Life Ins. Co., 990 F.2d 925, 926-27 (7th Cir. 1993))).
Similarly, the mere fact that Flynn relied to his detriment on
Treacy's representations in changing jobs is not enough to
render a case "extraordinary." See Devlin v. Transp.
Communications Int'l Union, 173 F.3d at 102. Neither is it
enough to show that Treacy reasonably expected Flynn's reliance.
A "reasonable expectation of reliance," which some courts treat
as a component of the "promise" element of an estoppel claim,
see Schonholz v. Long Island Jewish Med. Ctr., 87 F.3d at 79
(and authorities cited therein), must not be confused with the
"specific intent to induce" referred to in Devlin as the
minimum necessary to establish extraordinary circumstances.
Indeed, some courts go further and suggest that plaintiff must
prove "affirmative acts of fraud or similarly inequitable
conduct" to secure ERISA estoppel. Kurz v. Philadelphia Elec.
Co., 96 F.3d 1544, 1553 (3d Cir. 1996). Because Flynn has not
adduced evidence of either intentional inducement or fraud by
Treacy or defendant Trustees, he fails to establish the
extraordinary circumstances necessary to support a claim of
A further defect in Flynn's estoppel claim is his inability to
demonstrate that it was "unjust" for the Trustees to deny him
benefits for years when he was not eligible under federal law to
participate in the Local's pension plans. See generally
Schonholz v. Long Island Jewish Med. Ctr., 87 F.3d at 80
(element of injustice is
equitable one for the court and not the jury). As already
discussed at length in Point IIA2b, Flynn was not a common law
employee of Local 30 after 1977 and, thus, under federal law, he
was ineligible to participate in its pension plans.
Nevertheless, what Flynn seeks in his estoppel claim is an order
requiring defendant Trustees to pay him the benefits of a
full-time Local 30 employee at the same time that he collects
benefits as a full-time International employee. It may be, as
plaintiff contends, that the International pension plan is less
generous than that of Local 30, but that hardly supports the
contention that it would be "unjust" to deprive Flynn of the
ability to collect both pensions for years when he only worked
for one employer.*fn8 To the contrary, what would be unjust
is the use of estoppel to compel the Trustees to award Flynn
benefits to which he is not entitled under federal labor law.
See Thurber v. W. Conference of Teamsters Pension Plan,
542 F.2d 1106, 1109 (9th Cir. 1976) (where employee made
supplemental payment to pension plan at direction of plan
administrator to qualify for early retirement benefits, but
where such payment was not authorized by law, estoppel could
"not be invoked to compel an illegal act," specifically, the
payment of benefits in violation of federal labor law); Moglia
v. Geoghegan, 403 F.2d 110 (2d Cir. 1968) (where employer's
failure to enter into a collective bargaining agreement made its
contributions to union pension fund illegal under federal law,
estoppel would not intervene to require payment of benefits to
employees, even though they had engaged in no wrongdoing).
In sum, although it is far from clear that Treacy's "promise"
of future benefits is even attributable to defendant Trustees,
the court finds that plaintiff is nonetheless not entitled to
estoppel since he has failed to demonstrate that it would be
unjust for defendants to deny him full Local 30 pension benefits
for the same years that he is collecting International benefits,
and because this case does not present the sort of extraordinary
circumstances required for equity to dictate the payment of
ERISA benefits. Defendants' motion for summary judgment on the
estoppel claim is hereby granted.
D. Equitable Restitution
In opposing defendants' motion for summary judgment, Flynn
asserts for the first time that if his benefits claims fail, he
is at least entitled to equitable restitution of the
contributions erroneously made on his behalf to these plan
funds. This court disagrees.
29 U.S.C. § 1103 permits an ERISA plan to return to an
employer any contribution overpayments it may have made to a
pension plan. See Frank L. Ciminelli Constr. Co. v. Buffalo
Laborers Supplemental Unemployment Benefit Fund, 976 F.2d 834,
834 (2d Cir. 1992). Refunds are not required by ERISA; rather, a
pension fund "is permitted" to make a refund "in accordance with
its own policy." Brown v. Health Care & Ret. Corp. of America,
25 F.3d 90, 93 (2d Cir. 1994). If a plan refuses to refund an
overpayment, the contributing employer may sue for equitable
restitution, but such an award will be made only upon a showing
that the "refusal to repay was arbitrary or capricious and `the
equities favor restitution.'"
Frank L. Ciminelli Constr. Co. v. Buffalo Laborers Supplemental
Unemployment Benefit Fund, 976 F.2d at 835 (quoting Dumac
Forestry Servs. v. Int'l Bhd. of Elec. Workers, 814 F.2d 79, 83
(2d Cir. 1987)). Federal courts review such claims with
considerable deference to the judgment of fund administrators,
recognizing that they "are in the best position to determine
whether the equities of a particular case require a refund."
Brown v. Health Care & Ret. Corp. of America, 25 F.3d at 94 n.
Plainly, Flynn is not an employer suing for restitution of
monies erroneously paid by him into a pension fund. Thus,
whatever claim Local 30 may have to the restitution of
overpayments it made on plaintiffs behalf, it hardly appears
that equity demands restitution of these monies to Flynn. Cf.
Chase v. Trs. of W. Conference of Teamsters Pension Trust Fund,
753 F.2d 744 (9th Cir. 1985) (holding that taxicab drivers who
were among the owners of a cooperative that had made
contributions to defendant fund in the mistaken belief that
drivers qualified as "employees" could sue for
restitution);*fn9 Peckham v. Bd. of Trs. of Int'l Bhd. &
Allied Trades Union, 724 F.2d 100 (10th Cir. 1983) (holding
that union members who were sole proprietors of business that
made benefit contributions on their behalf to defendant fund
could sue for restitution).
Flynn nevertheless pursues his restitution claim pointing to
the award made to his union colleague, James Thomas, by the
district court for the Eastern District of Pennsylvania. See
Thomas v. Bd. of Trs. of Int'l Union of Operating Eng'rs, Local
542, 1998 WL 334627, 1998 U.S.Dist.LEXIS 9210. As already
discussed in the Factual Background section of this Memorandum,
Local 542 also contributed to its pension plan on behalf of
former employees who went to work for the International. When
the IRS concluded that these contributions were inconsistent
with the tax-exempt status of the Local 542 fund, the trustees
agreed to return the overpayments to the local to avoid an
adverse tax ruling. Thereafter, Thomas sued Local 542, its fund
trustees, and various individuals for wrongful denial of ERISA
benefits. The district court granted summary judgment in favor
of the trustees on Thomas's claims that they had wrongfully
denied him benefits. Id. 1998 WL 334627 at *6-7. Similarly, it
granted summary judgment in their favor on Thomas's breach of
fiduciary duty and estoppel claims. Id. at *8-9. But on
Thomas's claim of equitable restitution, the court held that
plaintiff was entitled to the compensation overpayments that had
been returned to Local 542 by the pension funds.
In 1978, as part of its inducement to Thomas to
accept a position with the International, Local 542
agreed to continue making contributions to the
Pension Fund on his behalf. For the next fourteen
years, the Local kept its promise. To now permit
Local 542 to retain the retirement contributions that
Thomas bargained for and earned would constitute a
windfall to which the Local has no equitable claim.
Id. 1998 WL 334627 at *12 (citation to record omitted).