How Do You Win an ERISA Estoppel Claim in the First Circuit?

I wanted to take advantage of the cold, dark, peaceful days of mid-January (do New Englanders still grow up reading Ethan Frome, with its perfect depiction of a classic, pre-global warming New England winter?) to talk briefly about an important First Circuit decision that slid somewhat under the radar when it was issued just before commencement of the holiday frenzy.

In Guerra-Delgado v. Popular, Inc., issued December 18th, the First Circuit continued its unwillingness to actually adopt estoppel claims in the context of ERISA as viable causes of action, a topic I discussed in detail here. The Court continued, in Guerra-Delgado, its tradition of deciding such claims by finding that, if such a claim could hypothetically exist, the plaintiff in the case before it had failed to make out its elements, a tradition I previously attributed to a desire to wait for a case that truly calls for adoption of the cause of action before acknowledging its existence. The Court, though, gave its clearest description yet of just what such a claim can and should look like; in essence, it described what the case will look like in the future that will finally get the First Circuit to formally acknowledge such a cause of action.

The Court explained that an equitable estoppel claim can be based on statements extrinsic to the plan documents where they concern an ambiguous term in the plan, but not otherwise. Thus, the first hurdle for proving an estoppel claim in the First Circuit – if you are lucky enough to be the lawyer or participant in the case where the Court finally agrees that such a claim exists under the law – is to demonstrate that the plan is ambiguous with regard to a provision related to the extrinsic statement in question. The Court declared (I don’t think we can say the Court “held,” since the Court effectively decided only a hypothetical, as it did not acknowledge the existence of such a claim) that ambiguity exists for these purposes “if the ‘terms are inconsistent on their face’ or the language ‘can support reasonable differences of opinion as to [its] meaning.’” The Court then proceeded to find that neither of these were true with regard to the plan terms at issue in the case before it.

And why should this be the rule (if and when the First Circuit finally approves of such a claim)? The Court gave a cogent explanation:

representations that interpret rather than modify the plan may provide “a narrow window for estoppel recovery.” Law, 956 F.2d at 370. We have observed that “a plan beneficiary might reasonably rely on an informal statement interpreting an ambiguous plan provision; if the provision is clear, however, an informal statement in conflict with it is in effect purporting to modify the plan term, rendering any reliance on it inherently unreasonable.” Livick, 524 F.3d at 31. We have explained that “[t]his is why courts which do recognize ERISA-estoppel do so only when the plan terms are ambiguous.” Id.

Even though it slipped in under the radar, Guerra-Delgado is not a case to be ignored if you are litigating an ERISA estoppel claim in the district courts of the First Circuit. It nicely ties together years of decisions in this circuit related to this topic, at both the appellate and district court levels, that are not always inherently consistent with one another, and gives you the road map for winning such a claim.