by Michael Fox
Chalk it up as a moral victory for Frank Mello, who has the honor of being the employee who got the 5th Circuit to specifically adopt the doctrine of ERISA estoppel -- which under the right circumstances might allow an employee to obtain greater benefits under an ERISA plan. Unfortunately, for Mello his circumstances were not the right ones.
Judge Edith Clement Brown, on an earlier Supreme Court short list, spelled out the elements:
To establish an ERISA- estoppel claim, the plaintiff must establish: (1) a material misrepresentation; (2) reasonable and detrimental reliance upon the representation; and (3) extraordinary circumstances. McCall, 237 F.3d at 513; Weir, 123 F.3d at 290.
Mello v. Sara Lee Corp. (5th Cir. 11/22/05)[pdf].
Mello got a second moral victory as the Court agreed with the lower court that informal communications, even those with disclaimers, can be the source of material misrepresentations.
But Sara Lee was the ultimate victor as the Court disagreed with the lower court that Mello's reliance on the admittedly erroneous communications was reasonable. The communications (which had to do on Mello's proper service date) were contrary to the express terms of the Plan. Summarizing the law from other circuits, the Court found "Mello’s claim cannot surmount the clear and consistent case law forbidding recognizing reasonable reliance on informal documents in the face of unambiguous Plan terms."
The key remains -- make sure you have clear plan documents.
Interestingly, the court's conclusion that Mello can't demonstrate reasonable reliance renders its purported "holding" adopting ERISA estoppel dicta. ERISA lawyers take note of this potential means of limiting this case.