Nolan v. Detroit Edison Co., No. 19-1867 (6th Cir. 2021)
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In 2002, Nolan’s employer, DTE, created a cash balance pension plan and invited its existing employees to transfer from their traditional defined benefit plan to the new plan. Nolan accepted. When she retired in 2017, DTE told Nolan that her monthly pension benefit would be what she had accrued as of 2002 under the old plan, despite her participation in the new cash balance plan. Nolan brought a class action under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001(a)–(b), alleging that DTE made misleading promises and failed to explain the new plan’s risks. The district court dismissed.
The Sixth Circuit affirmed in part, finding Nolan’s procedural claim untimely. Even accepting Nolan’s allegations as true, Nolan failed to state a claim under ERISA section 204(h); DTE satisfied the requirement to make a good faith effort to comply even though the notice provided to employees was ultimately inadequate under ERISA section 102. Reversing in part, the court found that Nolan stated a plausible claim that DTE’s notice was defective under section 102 because it failed to describe the plan in a manner understandable to the average participant that employees transferring to the new plan would not actually receive any new benefits if the benefit accrued under the new plan did not catch up to their frozen traditional plan benefit or the effect that interest rates could have on depreciating the already-earned benefits during conversion.
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