Oral Representations Did Not Modify Written Terms of a Plan

In an unpublished opinion, Watson v. Consolidated Edison Co. of New York, Inc., 2010 WL 1564654 (2nd Cir. Apr. 20, 2010), the Second Circuit Court of Appeals held that claims related to an employer's and plan administrator's oral promises failed because the oral promises contradicted the plan's unambiguous terms.

The court stated that because ERISA requires a written employee benefit plan, oral promises are unenforceable under ERISA and cannot vary the terms of the plan. 

Watson was decided in the context of a claim for breach of fiduciary duty based on an ERISA fiduciary making oral statements that misrepresented the terms of the plan.  The court stated, based on Second Circuit case law, that a plan administrator has a fiduciary duty to not make material misrepresentations regarding the availability of future plan benefits.  If an ERISA fiduciary makes guarantees regarding future benefits that misrepresents present facts, the statements are material if they would induce a reasonable person to rely on them.  The court stated based on Second Circuit case law that the party alleging a breach of fiduciary duty must point to a written statement purporting to alter the terms of the plan.  When a party instead points to an oral statement that contradicts the unambiguous terms of the plan, the party does not have a claim for a breach of fiduciary duty because it was not reasonable for them to rely on an oral statement that contradicts the terms of the plan.

 

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