                              In the

United States Court of Appeals
               For the Seventh Circuit

Nos. 09-3872 & 09-3965

C YNTHIA N. Y OUNG, on behalf of
herself and others similarly situated,
                                                  Plaintiff-Appellant/
                                                      Cross-Appellee,
                                  v.



V ERIZON’S B ELL A TLANTIC C ASH
B ALANCE P LAN, et al.,
                                               Defendants-Appellees/
                                                   Cross-Appellants.


            Appeals from the United States District Court
        for the Northern District of Illinois, Eastern Division.
         No. 05 C 07314—Morton Denlow, Magistrate Judge.



       A RGUED JUNE 1, 2010—D ECIDED A UGUST 10, 2010




  Before B AUER, F LAUM, and T INDER, Circuit Judges.
  T INDER, Circuit Judge. “People make mistakes. Even
administrators of ERISA plans.” Conkright v. Frommert,
130 S. Ct. 1640, 1644 (2010). This introduction was fitting
2                                  Nos. 09-3872 & 09-3965

in Conkright, which dealt with a single honest mistake
in the interpretation of an ERISA plan. It is perhaps an
understatement in this case, which involves a devastating
drafting error in the multi-billion-dollar plan admin-
istered by Verizon Communications, Inc. (“Verizon”).
  Verizon’s pension plan contains erroneous language
that, if enforced literally, would give Verizon pensioners
like plaintiff Cynthia Young greater benefits than they
expected. Young nonetheless seeks these additional
benefits based on ERISA’s strict rules for enforcing plan
terms as written. Although Young raises some forceful
arguments, we conclude that ERISA’s rules are not so
strict as to deny an employer equitable relief from the
type of “scrivener’s error” that occurred here. We will
accordingly affirm the district court’s judgment granting
Verizon equitable reformation of its plan to correct the
scrivener’s error.


                      I. Background
    A. Bell Atlantic’s Pension Plans
  Bell Atlantic, the predecessor of Verizon, operated the
Bell Atlantic Management Pension Plan (“BAMPP”) until
1996. The BAMPP expressed an employee’s retirement
benefit as a defined annuity, but employees also had
the option of receiving a lump sum if they retired during
specified “cashout windows.” For certain employees
who retired during the 1994-1995 cashout window, the
BAMPP provided a lump sum equal to the “actuarial
equivalent present value” of the employee’s pension
Nos. 09-3872 & 09-3965                                       3

benefit, but calculated using an enhanced discount rate.
Specifically, section 4.19 of the BAMPP required the use
of a discount rate of “120% of the applicable . . . PBGC
[Public Benefit Guarantee Corporation] interest rate in
effect” at the time of severance.
  In 1996, Bell Atlantic adopted the Bell Atlantic Cash
Balance Plan to replace the BAMPP. The new Plan ex-
pressed an employee’s benefit as a cash balance that grew
steadily with the employee’s age and years of service.
Under the Cash Balance Plan, employees still had the
option of receiving their retirement benefit as either an
annuity or a lump sum.
  Key to this transition to the Cash Balance Plan was
converting the value of employees’ benefits under the old
BAMPP to cash balances under the new Plan. The Plan
used “transition factors,” a series of multipliers that
increased with employees’ age and years of service, to
make the conversion. The Plan language describing this
conversion is critical, so we reproduce it in some detail
(the emphasis is ours):
   16.5 Opening Balance
   ....
       16.5.1 Pension Conversions as of the Transition
       Date
       Where a present value must be determined under this
       Section 16.4 [sic, should read “Section 16.5”], the
       present value shall be determined as follows: (a) using
       the PBGC interest rates which were in effect for Septem-
       ber of 1995 . . . .
4                                    Nos. 09-3872 & 09-3965

            16.5.1(a) 1995 Active Participants and 1995
            Former Active Participants
            . . . the opening balance of the Participant’s
            Cash Balance Account on January 1, 1996 shall
            be the amount described in subsection (1) or (2)
            below, as applicable:
                16.5.1(a)(1) If Eligible for Service Pension
                ....
                16.5.1(a)(2) Not Eligible for Service Pen-
                sion
                In the case of a Participant who is not
                eligible for a Service Pension under the
                1995 BAMPP Plan as of the Transition
                Date, the amount described in this para-
                graph (2) is the product of multiplying (A) the
                Participant’s applicable Transition Factor
                described in Table 1 of this Section, times
                (B) the lump-sum cashout value of the Accrued
                Benefit payable at age 65 under the 1995
                BAMPP Plan, determined as if the Partici-
                pant had a Severance From Service Date
                on December 31, 1995, based on Compen-
                sation paid through December 31, 1995,
                multiplied by the applicable transition factor
                described in Table 1 of this Section. . . .


    B. Young’s Administrative Claim
  Cynthia Young worked for Bell Atlantic from 1965 to
1997. When the Cash Balance Plan took effect in 1996,
Nos. 09-3872 & 09-3965                                    5

Young was not eligible for a service pension under the
BAMPP—that is, her age and service level did not qualify
her for full retirement benefits—so her opening cash
balance was calculated using § 16.5.1(a)(2), for a resulting
balance of $240,127. By the time Young retired in 1997,
her cash balance had grown to the point that she
received a lump-sum benefit of $286,095.
  Several years later, in 2004, Young filed a claim with
the Claims Review Unit of Verizon (which by then had
taken over Plan administration as Bell Atlantic’s suc-
cessor). Young claimed that Bell Atlantic made two
errors in calculating her opening cash balance, and hence
her ultimate pension benefit, under the Cash Balance
Plan. First, Young read the language of § 16.5.1(a)(2)
to require that the “applicable transition factor” be multi-
plied twice to convert her lump-sum cashout under the
BAMPP to her opening cash balance under the new
Plan. Bell Atlantic, however, multiplied the transition
factor only once when making the conversion. Second,
Young claimed that Bell Atlantic improperly applied the
120% PBGC discount rate used in the 1995 BAMPP
to determine the “lump-sum cashout value” under
§ 16.5.1(a)(2). Young contended that Bell Atlantic
should have used a discount rate of simply 100% of the
PBGC rate.
  Verizon’s Claims Review Unit denied Young’s claims,
and on appeal, Verizon’s Claims Review Committee
affirmed. The Committee concluded that the intended
meaning of § 16.5.1(a)(2) was to use only a single transi-
tion factor to calculate opening cash balances; the
6                                  Nos. 09-3872 & 09-3965

section’s second reference to the “applicable transition
factor” was a drafting mistake. As for Young’s discount
rate claim, the Committee concluded that § 16.5.1(a)(2)
incorporated the 120% PBGC rate used in the 1995 BAMPP
by referring to “the lump-sum cashout value . . . under
the 1995 BAMPP Plan.”


    C. Young’s Federal Court Class Action
   In 2005, Young brought a federal court action under
ERISA § 502(a), 29 U.S.C. § 1132(a), against Verizon and
its Cash Balance Plan (collectively “Verizon”). Young
asserted the same claims she raised in Verizon’s admin-
istrative process, arguing that Verizon improperly
applied only a single transition factor and the 120%
PBGC discount rate to calculate her opening cash balance.
The parties agreed to treat the case as a class action, and
the district court certified a class of some 14,000 Bell
Atlantic/Verizon pensioners similarly situated to Young.
  Young’s class action presented the district court, acting
through Magistrate Judge Denlow, with a challenge. The
court was confronted with a convoluted ERISA plan
that seemed to contain a costly drafting error, but an
uncertain state of law on the scope of the court’s review
of such an error. So the court decided to bifurcate the
trial into two phases and apply alternative standards of
review. In the first phase, the court assumed that it was
limited to examining the administrative record and
reviewing the Verizon Review Committee’s denial of
benefits under a deferential standard. (The Cash Balance
Plan granted Verizon, as plan administrator, broad dis-
Nos. 09-3872 & 09-3965                                    7

cretion to interpret the Plan, so judicial review was con-
strained to an “arbitrary and capricious” standard. Black
v. Long Term Disability Ins., 582 F.3d 738, 743-44 (7th
Cir. 2009).) Under this standard, the district court upheld
the Committee’s denial of Young’s discount rate claim.
Conversely, on Young’s transition factor claim, the court
concluded that the Committee abused its discretion
in unilaterally disregarding the second reference to the
transition factor in § 16.5.1(a)(2) as a drafting mistake.
If Verizon wished to avoid that mistake, it would have
to seek a court order for equitable reformation of the Plan.
  Taking the district court’s cue, Verizon counterclaimed
for equitable reformation of the Plan to remove the
second transition factor in § 16.5.1(a)(2) as a “scrivener’s
error.” The court took up Verizon’s counterclaim in the
second phase of the trial, in which the court conducted a
de novo review of the Plan and allowed the parties to
introduce extrinsic evidence on the intended meaning
of § 16.5.1(a)(2). And that evidence overwhelmingly
showed that the inclusion of the second transition
factor was indeed a scrivener’s error.
  The drafting history of the 1996 Plan revealed how the
second, erroneous transition factor came to be. Six drafts
of the Plan were prepared prior to the final version. The
first three drafts were prepared by Mercer Human Re-
sources Consulting, an outside firm hired by Bell Atlantic,
and contained no mention of a second transition factor. It
was not until one of Bell Atlantic’s in-house attorneys,
Barry Peters, took over drafting responsibility that the
second transition factor appeared. In working on the
8                                     Nos. 09-3872 & 09-3965

fourth draft, Peters restructured the conversion formula
under § 16.5.1(a)(2) into a more readable “A times B”
format, but in doing so, neglected to delete a trailing
clause from the previous draft that referred to “the ap-
plicable Transition Factor.” Testifying in the district
court, Peters admitted that he made this mistake in
failing to delete the trailing clause in § 16.5.1(a)(2), there-
by duplicating the transition factor. Peters’s mistake
survived unnoticed in the fifth, sixth, and final drafts
of the Plan.
  In addition to the drafting history, the correspondence
between Bell Atlantic and plan participants showed an
expectation that only a single transition factor would be
used to calculate opening cash balances. In October 1995,
Bell Atlantic sent participants a brochure entitled, “Intro-
ducing Your Cash Balance Plan,” which clearly depicted
opening cash balances as the product of an employee’s
lump-sum value under the 1995 BAMPP and a single
transition factor. In November 1995, Bell Atlantic
sent participants personalized statements of their esti-
mated opening account balances, which also illustrated
the use of a single transition factor. Following the imple-
mentation of the Plan, Bell Atlantic sent participants
personalized statements of their actual opening balances,
and thereafter quarterly cash balance statements, which,
again, reflected the use of only one transition factor.
Notably, though, these Plan-related communications
contained “plan trumps” provisions cautioning that, in
the event of discrepancies between those communica-
tions and the Plan, the Plan would govern.
Nos. 09-3872 & 09-3965                                    9

  Also convincing was the course of dealing between Bell
Atlantic/Verizon and plan participants. Bell Atlantic
consistently calculated opening cash balances using a
single transition factor and paid benefits accordingly.
Taking Young’s case as an example, her transition factor
was 2.659. The estimated opening balance statement
that Young received illustrated the multiplication of this
2.659 transition factor by her BAMPP lump-sum cashout
value of $90,027, for an estimated opening balance of
$90,027 × 2.659 = $239,381. The actual opening balance
statement that Young received in 1996 applied the same,
single-transition-factor formula to slightly different
numbers: $90,307 × 2.659 = $240,127. Prior to Young’s
lawsuit, no employee complained that opening balances
should have been increased by an additional transition
factor. For her part, Young admitted that she never
relied on the transition factor language in § 16.5.1(a)(2)
prior to this litigation.
  Based on this evidence of the intended meaning of
the Plan, the district court found that the second transi-
tion factor in § 16.5.1(a)(2) was a scrivener’s error
and granted Verizon’s counterclaim for equitable refor-
mation. The court also resolved a host of other argu-
ments raised by the parties, many of which we discuss
below. But suffice it to say, the district court’s treatment
of the issues presented by this case was exhaustive. Over
the course of a four-year, multi-phase litigation, the
court built a complete record, fully explored alternative
bases of decision, and sharply honed the issues for appel-
late review. These commendable efforts by the district
court, as well as the fine advocacy by both sides, have
10                                     Nos. 09-3872 & 09-3965

greatly assisted this court in deciding this complex
ERISA case.


                         II. Analysis
  A. Statute of Limitations
  Before reaching the merits, we must address each side’s
argument that the other’s claims are barred by the
statute of limitations. ERISA does not provide a limita-
tions period for actions brought under § 502, 29 U.S.C.
§ 1132, so we borrow the most analogous statute of limita-
tions from state law. Berger v. AXA Network LLC, 459
F.3d 804, 808 (7th Cir. 2006). We do not automatically
borrow the forum state’s limitations period; if another
state has a significant connection to the dispute and its
limitations period is more consistent with federal
ERISA policies, that state’s limitations period should
apply. Id. at 813. For actions such as this one to enforce
ERISA plans under § 502(a), we have previously bor-
rowed state limitations periods for suits on written con-
tracts. Leister v. Dovetail, Inc., 546 F.3d 875, 880-81 (7th Cir.
2008); Daill v. Sheet Metal Workers’ Local 73 Pension Fund,
100 F.3d 62, 65 (7th Cir. 1996).
  The parties agree that Pennsylvania’s four-year statute
of limitations for breach of contract actions, 42 Pa. Cons.
Stat. § 5525, should apply to this ERISA case. Pennsylvania
has the most significant connection to this dispute, since
Bell Atlantic was headquartered and drafted the Cash
Balance Plan there. Also, more class members currently
live in Pennsylvania than any other state, and while a
Nos. 09-3872 & 09-3965                                   11

few class members live in the forum state of Illinois, Young
has never lived or worked there. We further note that
the Plan contains a choice of law provision stating that
Pennsylvania law will fill any gaps left by federal ERISA
law. See Berger, 459 F.3d at 813-14 (considering choice
of law clause as a non-controlling but relevant factor
in selecting a limitations period).
  The real point of contention is the accrual date of the
parties’ claims, that is, when Pennsylvania’s four-year
limitations period started to run. Although federal
courts borrow state limitations periods for certain ERISA
claims, the accrual of those claims is governed by
federal common law. Daill, 100 F.3d at 65.
  Beginning with Young’s ERISA claim, we have held
that a claim to recover benefits under § 502(a) accrues
“upon a clear and unequivocal repudiation of rights
under the pension plan which has been made known to
the beneficiary.” Id. at 66. In this case, Young did not
receive a clear repudiation of her claim for additional
benefits until 2005, when Verizon’s Review Committee
resolved her administrative appeal. (Actually, the Com-
mittee denied Young’s claim with respect to the dis-
count rate issue in 2005 but took until 2007 to deny
her claim with respect to the transition factor issue.
Since it is obvious that Young’s entire federal court
action, filed in 2005, would be timely using a 2005 accrual
date, this distinction is immaterial.) Prior to denying
Young’s administrative claim, Verizon did not inform
Young that it rejected her interpretation of the Plan
calling for two transition factors and a 100% PBGC dis-
12                                  Nos. 09-3872 & 09-3965

count rate. Cf. id. at 66 (claim accrued upon correspon-
dence from plan disagreeing with participant’s under-
standing of benefits).
   Verizon argues that Young’s claim accrued in Feb-
ruary 1998, when she received her lump-sum benefit
computed under Verizon’s interpretation of the Cash
Balance Plan. At that time, however, the parties’ dispute
over the correct interpretation of the Plan had not devel-
oped. And nothing suggests that the $286,095 payment
that Young received should have been a red flag that
she was underpaid. Cf. Redmon v. Sud-Chemie Inc. Ret. Plan
for Union Employees, 547 F.3d 531, 539 (6th Cir. 2008)
(finding a clear repudiation when the plan stopped
making payments entirely, but not earlier when the
payment amount was merely inconsistent with the plain-
tiff’s understanding of benefits). The 1998 payment
that Young received was not so inconsistent with her
current claim for additional benefits as to serve as a
clear repudiation.
   Moving to Verizon’s counterclaim, Seventh Circuit
precedent provides less guidance on the accrual of a
claim for equitable reformation under ERISA
§ 502(a)—understandably so, since the cognizance of
such a claim is an issue of first impression for this
court. The general federal common law rule is that an
ERISA claim accrues when the plaintiff knows or
should know of conduct that interferes with the plain-
tiff’s ERISA rights. See Berger, 459 F.3d at 815-16 (accrual
when beneficiaries learned of change in employer’s
method for determining benefit eligibility); Teumer v. Gen.
Nos. 09-3872 & 09-3965                                      13

Motors Corp., 34 F.3d 542, 550 (7th Cir. 1994) (“Once
an unlawful action is taken, a claim accrues when the
putative plaintiff discovers the injury that results.”).
Applying this rule to Verizon’s reformation action, we
consider when Verizon should have known that the
scrivener’s error in the Cash Balance Plan, if left unre-
formed, would impede its rights under the Plan.
  The district court found, and Verizon does not dispute,
that Verizon’s predecessor Bell Atlantic learned of the
scrivener’s error in 1997. Indeed, Bell Atlantic removed
the second, erroneous transition factor from the 1998 plan
that it adopted to replace the 1997 version of the Cash
Balance Plan. Still, we conclude that this 1997 discovery
did not give Verizon notice of the need to reform the
scrivener’s error, given a course of dealing consistent
with Verizon’s interpretation of the Plan.
  Verizon always treated the Plan’s second transition
factor as a drafting mistake, and through correspondence
with plan participants, it communicated that only a
single transition factor would be used to calculate
opening cash balances. Verizon consistently paid
benefits using this formula, and prior to Young’s admin-
istrative claim, no employee communicated a contrary
understanding that Plan benefits should be calculated
using two transition factors. Cf. Tolle v. Carroll Touch, Inc.,
977 F.2d 1129, 1141 (7th Cir. 1992) (employee’s ERISA
unlawful discharge claim accrued when employer com-
municated discharge decision); Bowes v. Travelers Ins.
Co., 173 F. Supp. 2d 342, 346 (E.D. Pa. 2001) (applying
Pennsylvania law, claim for reformation of written con-
14                                  Nos. 09-3872 & 09-3965

tract accrued when conflicting oral statements under-
lying the dispute were made). Under these circum-
stances, although Verizon discovered the drafting
mistake in 1997, it did not then know that this mistake
would give rise to a controversy requiring it to raise
an equitable reformation claim. See Int’l Union v. Murata
Erie N. Am., Inc., 980 F.2d 889, 901 (3d Cir. 1992) (ERISA
claim did not accrue when plan sponsor amended
plan absent evidence that participants knew of any poten-
tial controversy over amended language). Instead, it
was not before Young put the transition factor language
at issue in her 2005 federal court action that Verizon’s
counterclaim for equitable reformation accrued.
  None of the parties’ claims accrued before 2005 when
Young brought her federal court ERISA action, so these
claims are timely under the applicable Pennsylvania four-
year limitations period. We may proceed to the merits
of Verizon’s claim for equitable reformation and Young’s
claim for additional benefits under ERISA § 502(a).


  B. Equitable Reformation Due to Scrivener’s Error
  ERISA is a comprehensive statute designed to uniformly
regulate employee benefit plans. Aetna Health Inc. v. Davila,
542 U.S. 200, 208 (2004). To achieve uniformity, ERISA
contains numerous requirements for adopting and ad-
ministering plans. Plans must be “established and main-
tained pursuant to a written instrument.” 29 U.S.C.
§ 1102(a)(1). The plan terms must be communicated to
participants through an easily understood “summary plan
description,” as well as a “summary of any material
Nos. 09-3872 & 09-3965                                  15

modification” to the plan. Id. § 1022(a). These ERISA-
required writings are given primary effect and strictly
enforced, and plan administrators must adhere to “the
bright-line requirement to follow plan documents in
distributing benefits.” Kennedy v. Plan Adm’r for DuPont
Sav. & Inv. Plan, 129 S. Ct. 865, 876 (2009).
   While ERISA’s strict requirements “ensure[ ] fair and
prompt enforcement of rights under a plan,” Congress
was careful not to make those requirements so onerous
“that administrative costs, or litigation expenses, unduly
discourage employers from offering plans in the first
place.” Conkright v. Frommert, 130 S. Ct. 1640, 1649
(2010) (quotations omitted). So ERISA also allows some
flexibility in plan administration and enforcement to
achieve fair, equitable results. In particular, employers
may grant plan administrators broad discretion in inter-
preting plan terms. Id. “Deference promotes efficiency
by encouraging resolution of benefits disputes through
internal administrative proceedings rather than costly
litigation.” Id.
  Another ERISA provision that promotes equitable plan
enforcement—and the statute important here—is
§ 502(a)(3), which allows a plan participant, beneficiary,
or fiduciary to bring a civil action for “appropriate
equitable relief.” 29 U.S.C. § 1132(a)(3)(B). The Supreme
Court has explained that the statute authorizes “those
categories of relief that were typically available in
equity” during the days when common law courts were
divided as courts of law or of equity. Mertens v. Hewitt
Assocs., 508 U.S. 248, 256 (1993); see also Kenseth v. Dean
16                                  Nos. 09-3872 & 09-3965

Health Plan, Inc., No. 08-3219, 2010 WL 2557767, at *24 (7th
Cir. June 28, 2010) (describing categories of equitable
relief available under 29 U.S.C. § 1132(a)(3)). The issue
in this case, then, is whether Verizon’s claim for
equitable reformation of its Cash Balance Plan is the
type of equitable relief authorized by § 502(a)(3).
  We have never considered whether § 502(a)(3) author-
izes equitable reformation of an ERISA plan due to a
scrivener’s error, but our case law addressing the
related problem of ambiguous plan language suggests
that such relief may be appropriate.
  In Mathews v. Sears Pension Plan, 144 F.3d 461 (7th Cir.
1998), we put the parties’ reasonable expectations ahead
of the literal text of an ERISA plan. Although the plain
language of the plan suggested a benefits formula
more favorable to employees, the employer offered ob-
jective, extrinsic evidence showing an “extrinsic ambigu-
ity” in this language. Id. at 466-67. The summary plan
documents and the parties’ course of dealing were con-
sistent with the employer’s reading of the plan, so we
declined to adopt the employees’ contrary reading
under “rigid and archaic” rules of contract interpreta-
tion. Id. at 469.
  We reached a different result in Grun v. Pneumo Abex
Corp., 163 F.3d 411, 420-21 (7th Cir. 1998), refusing to set
aside unambiguous plan language based on an em-
ployer’s claim of “mutual mistake.” Still, we acknowl-
edged that such relief would be available in “the rare
case where literal application of a text would lead to
absurd results or thwart the obvious intentions of its
Nos. 09-3872 & 09-3965                                   17

drafters.” Id. at 420 (quotation omitted). Reformation
was inappropriate in Grun because the employee relied
on the literal plan language to predict his right to sever-
ance compensation. Id. at 421; cf. Mathews, 144 F.3d at
469 (noting absence of claim that any beneficiary
actually relied on plan language).
  Other circuits have directly addressed claims for equi-
table reformation of an ERISA plan. Using reasoning
similar to that in Mathews and Grun, these courts have
either concluded that ERISA authorizes such relief or
does not foreclose the possibility.
  Verizon’s strongest case is Int’l Union v. Murata Erie N.
Am., Inc., 980 F.2d 889, 907 (3d Cir. 1992), in which the
Third Circuit recognized an employer’s § 502(a)(3) claim
to correct a “scrivener’s error” in a plan provision on the
distribution of excess funds. The court found equitable
reformation appropriate because holding the employer
to the scrivener’s error would produce “what is ad-
mittedly a ‘windfall’ ”—“an excess remaining in the
Plans” that the plaintiffs could not have reasonably
expected. Id. The Eighth Circuit applied a similar
rationale in Wilson v. Moog Auto., Inc. Pension Plan, 193
F.3d 1004, 1008-10 (8th Cir. 1999), to conclude that an
ERISA plan’s failure to provide a minimum age for retire-
ment benefits was a reformable mistake. Reformation
was possible because extrinsic evidence showed that
none of the plaintiffs actually relied on the erroneous
plan language or believed that they would be eligible
for early retirement. Id. at 1009-10.
  The Ninth Circuit distinguished Murata in Cinelli v. Sec.
Pac. Corp., 61 F.3d 1437, 1444-45 (9th Cir. 1995), rejecting
18                                   Nos. 09-3872 & 09-3965

an employee’s claim that the absence of a plan provision
entitling him to vested life insurance benefits was a
mistake. Although reformation of a scrivener’s error
was appropriate in Murata to avoid a “windfall” and
uphold employees’ reasonable expectations of benefits,
those factors were lacking in Cinelli. Id. at 1445. Likewise,
in Blackshear v. Reliance Standard Life Ins. Co., 509 F.3d
634, 643-44 (4th Cir. 2007), abrogated on other grounds as
stated in Williams v. Metro. Life Ins. Co., Nos. 09-1025 & 09-
1568, 2010 WL 2599676, at *5 (4th Cir. June 30, 2010), the
Fourth Circuit declined to equitably reform an ERISA
plan under the circumstances, where the plan language
was clear and neither the summary plan description
nor other plan documents supported the employer’s
claim of a scrivener’s error.
   From this authority, we conclude that ERISA § 502(a)(3)
authorizes equitable reformation of a plan that is shown,
by clear and convincing evidence, to contain a scrivener’s
error that does not reflect participants’ reasonable ex-
pectations of benefits. Though complex in design, ERISA
maintains the basic goal of “protecting employees’ justified
expectations of receiving the benefits their employers
promise them.” Cent. Laborers’ Pension Fund v. Heinz,
541 U.S. 739, 743 (2004). It would thwart this goal to
enforce erroneous plan terms contrary to those expecta-
tions, even if doing so would increase employees’ bene-
fits. The “appropriate equitable relief” authorized by
§ 502(a)(3) allows a court to reform an ERISA plan to
avoid such an unfair result. See Cent. Pa. Teamsters Pension
Fund v. McCormick Dray Line, Inc., 85 F.3d 1098, 1105 n.2
(3d Cir. 1996) (“[I]n circumstances where a court can
Nos. 09-3872 & 09-3965                                   19

establish that no plan participants were likely to have
relied upon the scrivener’s error in question . . . allowing
reformation of the scrivener’s error does not thwart
ERISA’s statutory purpose . . . .”); Murata, 980 F.2d at
907 (“[T]he alleged error relates to what is admittedly a
‘windfall’ . . . that neither side could have reasonably
expected.”); cf. Mathews, 144 F.3d at 469 (“We cannot see
how ERISA beneficiaries or anyone else . . . would be
benefited by the adoption of principles of contractual
interpretation so rigid and archaic as to permit the class
to reap the pure windfall here sought to the potential
prejudice of other beneficiaries.”).
  We acknowledge, like the Third Circuit in Murata, 980
F.2d at 907, that equitable reformation of an ERISA plan
creates some tension with the “written instrument”
requirement of 29 U.S.C. § 1102(a)(1), also known as the
“plan documents rule,” Kennedy, 129 S. Ct. at 877. This
rule ensures “that every employee may, on examining
the plan documents, determine exactly what his rights
and obligations are under the plan,” Murata, 980 F.2d
at 907, without complicated “enquiries into nice expres-
sions of intent” behind plan language, Kennedy, 129 S. Ct.
at 875. Young cautions that allowing equitable reforma-
tion of ERISA plans will undermine the efficient, easily
enforceable plan documents rule and encourage pro-
tracted, discovery-intensive litigation over the intended
meaning of a plan.
  Even so, since we interpret § 502(a)(3) to authorize the
equitable reformation claim asserted here, we cannot
simply reject such a claim based on the added litigation
20                                    Nos. 09-3872 & 09-3965

burden that it might represent. Moreover, we see
little difference between the intent-based inquiry that
took place in this reformation case and what must occur
in the related case of an ambiguous ERISA plan. In
each case, the court must look beyond the plan document
to extrinsic evidence to determine the parties’ under-
standing of the plan. See Mathews, 144 F.3d at 467. We do
not think that the availability or scope of this judicial
inquiry should turn on whether the error in an ERISA
plan is deemed an “ambiguity” or a “scrivener’s error.”
Drafting mistakes in ERISA plans may take many
forms; some involve language that is ambiguous on its
face while others, like the mistake here, involve language
that is not intrinsically ambiguous but still misstates
participants’ benefits. It would not further the purposes
of ERISA to allow courts to correct one type of mistake
but not the other.
   Also, other limitations on the equitable reformation
claim that we recognize under § 502(a)(3) will mitigate
its impact on the plan documents rule. Only those who
can marshal “clear and convincing” evidence that plan
language is contrary to the parties’ expectations will
have a viable claim. Murata, 980 F.2d at 908. This stand-
ard of proof is rigorous, requiring evidence that is
“clear, precise, convincing and of the most satisfactory
character that a mistake has occurred and that the
mistake does not reflect the intent of the parties.” Id. at 907
(quotation omitted); accord Blackshear, 509 F.3d at 642.
The evidence also must be “objective” and not dependent
“on the credibility of testimony (oral or written) of an
interested party.” Mathews, 144 F.3d at 467. These high
Nos. 09-3872 & 09-3965                                  21

standards of proof should deter an employer from
seeking to reform plan language simply because it has
proven unfavorable.
  In this case, though, we agree with the district court
that Verizon presented enough objective, convincing
evidence to show that the second reference to the transi-
tion factor in § 16.5.1(a)(2) of the Cash Balance Plan was
a scrivener’s error inconsistent with participants’
expected benefits.
  The drafting history left little doubt that the second
transition factor in § 16.5.1(a)(2) was a mistake. It first
appeared in the fourth draft of the Plan, the first
draft prepared by Bell Atlantic attorney Barry Peters.
This draft reformatted the multiplication formula in
§ 16.5.1(a)(2), but in doing so, failed to omit the prior
draft’s trailing clause that referred to the transition
factor, thereby duplicating the transition factor. We
need not rely on Peters’s arguably self-serving testimony
to conclude that this botched reformatting led to the
second transition factor; so much is clear by comparing
the fourth draft with the prior version. And given the
absence of any evidence contemporaneous to the fourth
draft suggesting that Bell Atlantic was reworking the
Plan to increase benefits, it is evident that duplicating
the transition factor was a drafting mistake.
  The communications and course of dealing between
Bell Atlantic/Verizon and plan participants further illus-
trate that the parties intended a single-transition-
factor formula. Young and other participants received a
Plan brochure that described their opening cash balances
22                                   Nos. 09-3872 & 09-3965

as the product of their lump-sum values under the 1995
BAMPP and a single transition factor. Although the
brochure did not explicitly state that a “single” transition
factor would be used, the formula depicted in the
brochure makes clear that only one multiplier would
apply. That was confirmed in the personalized state-
ments sent to participants of their estimated and actual
opening cash balances, which reported values based on
the use of a single transition factor. By way of illustration,
Young received an estimated opening balance state-
ment that reported her transition factor of 2.659 and her
BAMPP lump-sum cashout value of $90,027, for an esti-
mated opening balance of $239,381. Her actual opening
balance reported in a later statement, $240,127, was
calculated similarly. If a second 2.659 transition factor
were applied to these figures, Young’s estimated and
actual opening balances would have been $636,514
and $638,498, respectively. Bell Atlantic/Verizon never
squared transition factors in this manner but instead
calculated benefits using only a single transition factor,
consistent with the Plan communications. Prior to Young’s
claim, no employee complained that cash balances
should have been increased by an additional transition
factor.
  Granted, many of the Plan communications, including
the Plan brochure and opening balance statements, are
less compelling because they contain what Young
describes as “plan trumps” provisions, which stated that
the communications were subordinate to any contrary
language in the Plan. As Young points out, were the
situation reversed and the employee-favorable language
Nos. 09-3872 & 09-3965                                  23

contained in a Plan communication rather than the Plan
itself, Verizon no doubt would contend that these plan
trumps provisions barred Young from relying on the
communication. See Kolentus v. Avco Corp., 798 F.2d 949,
958 (7th Cir. 1986) (“[W]hen the summary booklet ex-
pressly states that it is merely an outline of the pension
plan and that the formal text of the plan governs in the
event a question arises, the plaintiffs cannot rely on the
general statements of the booklet but must look to the
plan itself.”). Young’s point is well-taken, but we
cannot agree that the mere existence of plan trumps
provisions precludes Verizon from reforming the Plan
consistent with Plan communications. At issue is
whether Verizon has established by clear and con-
vincing evidence that the intended meaning of
§ 16.5.1(a)(2) was to apply only a single transition
factor to calculate opening cash balances. Verizon may
include all the Plan communications describing a single-
transition-factor formula as part of that evidence, even
though they contain plan trumps provisions.
  Based on this evidence of the intended meaning of the
Plan, the district court correctly found that the second
transition factor in § 16.5.1(a)(2) was a scrivener’s error
inconsistent with plan participants’ expected benefits.
Under these circumstances, equitable reformation of
the Plan to remove the error is appropriate.
  We close our discussion of Verizon’s reformation claim
by considering additional defenses to equitable relief.
Because Verizon’s claim is one for “appropriate equi-
table relief” under ERISA § 502(a)(3)(B), 29 U.S.C.
24                                   Nos. 09-3872 & 09-3965

§ 1132(a)(3)(B), it is subject to the traditional equitable
defenses at common law, provided that they are not
inconsistent with ERISA.
   Young raises the defense of “good faith” and “fair
dealing,” under which a contracting party may be pre-
cluded from reforming a mistake caused by the party’s
own “gross” negligence. Restatement (Second) of
Contracts § 157 & cmt. a (1981). As the district court put
it, Bell Atlantic/Verizon’s failure to prevent the drafting
mistake in § 16.5.1(a)(2) was “profound” negligence.
Bell Atlantic charged a single in-house attorney, Barry
Peters, with revising a critical provision of a multi-billion-
dollar pension plan, apparently without critical review
by another ERISA expert. It is baffling that a major corpo-
ration would not invest greater resources to ensure ac-
curacy in the drafting of such an important document.
Still, we cannot agree with Young that this institutional
failure showed a lack of good faith. Verizon never misrep-
resented its intended meaning of the Cash Balance
Plan, and indeed, based on the extrinsic evidence
examined above, it made great efforts to accurately com-
municate how participants’ benefits would be calcu-
lated. Cf. id. cmt. a, illustration 2 (misrepresentation
that party verified bid for accuracy was failure to act
in good faith).
  For similar reasons, we do not accept Young’s “unclean
hands” defense, under which “equitable relief will be
refused if it would give the plaintiff a wrongful gain.”
Scheiber v. Dolby Labs., Inc., 293 F.3d 1014, 1021 (7th Cir.
2002). A plaintiff who acts unfairly, deceitfully, or in bad
Nos. 09-3872 & 09-3965                                    25

faith may not through equity seek to gain from that
transgression. See Packers Trading Co. v. Commodity
Futures Trading Comm’n, 972 F.2d 144, 148-49 (7th Cir.
1992). Verizon made a mistake, and a big one at that, in
drafting the Cash Balance Plan, but Verizon did not
attempt to deceive plan participants regarding their bene-
fit rights under the intended meaning of § 16.5.1(a)(2).
Cf. id. (barring relief for a plaintiff who concealed his
knowledge of the defendant’s mistake and then at-
tempted to recover based on that mistake). On the con-
trary, Verizon’s Plan administration and communica-
tions reflected its consistent view that opening cash
balances would be calculated using only a single transi-
tion factor.
  Finally, Young raises the equitable defense of laches,
or unreasonable delay, by Verizon in seeking equitable
reformation. Laches means “culpable delay in suing” and
may apply if the plaintiff commits an unreasonable,
prejudicial delay in bringing the suit. Teamsters & Employers
Welfare Trust of Ill. v. Gorman Bros. Ready Mix, 283 F.3d
877, 880 (7th Cir. 2002). For reasons explained above in
our discussion of the statute of limitations, Verizon did
not unreasonably delay in bringing its equitable refor-
mation claim. Although Verizon learned of the scrivener’s
error in the Cash Balance Plan in 1997, at that time it
had no reason to believe that this error would lead to
a benefits dispute. Instead, the parties’ correspondence
and course of dealing were consistent with Verizon’s
understanding that only a single transition factor would
be used to calculate benefits. By 1998, Verizon had
corrected the Plan to reflect this understanding, and
26                                  Nos. 09-3872 & 09-3965

no employee communicated a contrary interpretation
before Young brought her administrative claim in 2004.
Since this course of conduct reinforced Verizon’s inter-
pretation of the Cash Balance Plan, Verizon did not “sleep
on [its] rights,” Hot Wax, Inc. v. Turtle Wax, Inc., 191 F.3d
813, 820 (7th Cir. 1999), by not bringing an equitable
reformation claim before Young’s lawsuit.
  In sum, no equitable defenses bar Verizon’s equitable
reformation claim under ERISA § 502(a)(3), and the
district court properly granted that claim to remove the
scrivener’s error from the Cash Balance Plan.


  C. Discount Rate for Opening Cash Balances
  In addition to her argument regarding the second
transition factor in § 16.5.1(a)(2), Young claimed that
Verizon improperly applied the enhanced, 120% PBGC
discount rate used in the 1995 BAMPP to calculate her
opening balance under the Cash Balance Plan. Verizon’s
Review Committee denied Young’s discount rate claim,
and because the Plan grants the administrator broad
discretion to interpret Plan provisions, we review the
Committee’s decision for an abuse of discretion. See
Black v. Long Term Disability Ins., 582 F.3d 738, 744 (7th
Cir. 2009).
  The interpretation of ERISA plans is governed by
federal common law, which draws on general principles
of contract interpretation to the extent they are con-
sistent with ERISA. Mathews, 144 F.3d at 465. Under these
principles, contract language is given its plain and ordi-
Nos. 09-3872 & 09-3965                                  27

nary meaning. Pitcher v. Principal Mut. Life Ins. Co., 93
F.3d 407, 411 (7th Cir. 1996). Contracts must be read as a
whole, and the meaning of separate provisions should
be considered in light of one another and the context of
the entire agreement. Taracorp, Inc. v. NL Indus., Inc.,
73 F.3d 738, 745 (7th Cir. 1996). Contract interpretations
should, to the extent possible, give effect to all language
without rendering any term superfluous, id. at 746, but
if both a general and a specific provision apply to the
subject at hand, the specific provision controls, Medcom
Holding Co. v. Baxter Travenol Labs., Inc., 984 F.2d 223,
227 (7th Cir. 1993).
  The use of a discount rate to calculate opening balances
under the Cash Balance Plan occurs by operation of
§ 16.5.1(a)(2). That section defines opening cash balances
as the product of two variables (assuming, of course,
one ignores the second “transition factor” that we have
disregarded as a scrivener’s error): “(A) the Participant’s
applicable Transition Factor described in Table 1 of this
Section, times (B) the lump-sum cashout value of the
Accrued Benefit payable at age 65 under the 1995
BAMPP Plan . . . .” Under § 4.19 of the BAMPP, which
was attached to the Cash Balance Plan as an appendix,
lump-sum payments for employees who retired during
the 1994-1995 cashout window were calculated using a
discount rate of 120% of “the applicable PBGC interest
rate.”
  Reading the language of § 16.5.1(a)(2) in the context of
the entire Cash Balance Plan—including the attached 1995
BAMPP—the best interpretation is one that applies the
28                                   Nos. 09-3872 & 09-3965

120% PBGC discount rate used in the 1995 BAMPP to
calculate opening cash balances. The plain meaning of the
“(B)” variable in § 16.5.1(a)(2)—“the lump-sum cashout
value . . . payable . . . under the 1995 BAMPP Plan”—is the
lump-sum value as calculated under the 1995 BAMPP.
Since the BAMPP used a 120% PBGC discount rate, that
same methodology carries over to calculating opening
balances under the Cash Balance Plan.
  Young points to the umbrella section 16.5.1, which
provides that any “present value” that “must be deter-
mined under this Section 16.[5] shall be determined . . .
using the PBGC interest rates which were in effect for
September of 1995.” Young would apply this present
value definition, which uses a discount rate of simply
100% of the PBGC rate, to determine the “lump-sum
cashout value” in § 16.5.1(a)(2). Young’s interpretation
ignores the explicit reference in § 16.5.1(a)(2) to the
cashout value “under the 1995 BAMPP Plan.” Because
§ 16.5.1(a)(2) specifically uses the 1995 BAMPP formula
for discounting lump-sum values, the more general
present value formula in § 16.5.1 does not apply to that
section.
  We also disagree with Young that incorporating the
1995 BAMPP, 120% PBGC formula into § 16.5.1(a)(2) in
this manner renders the 100% PBGC formula in § 16.5.1
superfluous. The latter formula applies broadly to cal-
culate present values under “this Section 16.[5].” Notably,
unlike § 16.5.1(a), provisions in § 16.5.2(a) use the “present
value” term defined in § 16.5.1 to determine opening
cash balances for employees covered by those sections.
Nos. 09-3872 & 09-3965                                  29

So it harmonizes all the language in § 16.5 to give effect
to the 120% PBGC rate incorporated into § 16.5.1(a)(2)
for that specific provision, while giving effect to the
general 100% PBGC rate for other provisions in § 16.5.
  The most reasonable reading of § 16.5.1(a)(2) is one
that applies the 120% PBGC discount rate to calculate
opening cash balances. At the very least, Verizon’s
Review Committee did not abuse its discretion in
adopting this interpretation.


                     III. Conclusion
  ERISA’s rules for written plans are strictly enforced,
but they are not so strict as to prevent equitable reforma-
tion of a plan that is shown, by clear and convincing
evidence, to contain a scrivener’s error that is inconsis-
tent with participants’ expected benefits.
                                                A FFIRMED.




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