Just a fairly short post on a technical ERISA issue that the First Circuit ruled on a few days ago, namely the steps that have to be followed to terminate or amend a benefit plan, at least with regards to the documentation and formalities needed to do so. In Coffin v. Bowater, Inc., the First Circuit provides a clear and definitive road map to follow to effectuate such a termination, and the court makes clear that veering off of that road map will result in a finding that the benefit plan has not been terminated. While the legal rule itself presented in the case isn’t all that gripping, although it is certainly a technical point that is important to know, the context of the case and some of the discussion in it are interesting in and of themselves, for at least two reasons. The first is the fact pattern of the case itself, which involved the failure of a plan sponsor and an acquiring company to effectively terminate a benefit plan as part of a corporate acquisition, causing them to later have to try to convince a court – unsuccessfully – to create some sort of common law exception to the rules established by the courts and ERISA that would excuse their failure to follow the basic requirements for a plan termination. Its simply interesting to see this important issue poorly executed in a complex corporate transaction, and the end result of litigation and additional liability that results.
The second is that the panel ventures into the question of the standard of review – de novo or arbitrary and capricious – in this circuit with regard to benefit issues and interpretation of plan language. As certain judges of the First Circuit have done in a couple of earlier decisions, this panel suggests that the time may be right for the First Circuit to revisit this question en banc and reset the law in the First Circuit on this issue, although the panel makes clear that doing so is not necessary for purposes of Bowater because the result would be the same under any standard of review that could apply. One wonders how much more pot stirring of this nature on the issue of the standard of review there can be before the circuit chooses a case to fully review and possibly revise the law in this circuit on this issue.