     18-1591
     Sullivan-Mestecky v. Verizon


 1                                              In the
 2                     United States Court of Appeals
 3                                 For the Second Circuit
 4                                             ________
 5
 6                                       AUGUST TERM, 2019
 7
 8                                     ARGUED: MAY 15, 2019
 9                                     DECIDED: JUNE 1, 2020
10
11                                          No. 18-1591-cv
12
13       KRISTINE SULLIVAN-MESTECKY, individually and as the beneficiary of the
14              life insurance policy of Kathleen Sullivan, deceased,
15                                   Plaintiff-Appellant,
16
17                                                 v.
18
19           VERIZON COMMUNICATIONS INC. and THE PRUDENTIAL INSURANCE
20                         COMPANY OF AMERICA,
21                            Defendants-Appellees. *
22                                  ________
23
24                        Appeal from the United States District Court
25                           for the Eastern District of New York.
26                                         ________
27
28   Before: WALKER, CABRANES, and HALL, Circuit Judges.

29
30                                            ________



     *   The Clerk of the Court is respectfully requested to amend the caption as set forth above.
           2                                                                 No. 18-1591


 1         Plaintiff-Appellant   Kristine   Sullivan-Mestecky     brought    this   action
 2   individually and as the beneficiary of the life insurance policy of her mother,
 3   Kathleen Sullivan, under the Employee Retirement Income Security Act of 1974
 4   (ERISA), 29 U.S.C. § 1001 et seq., following the denial of Sullivan’s life insurance
 5   benefits by Defendants-Appellees Verizon Communications Inc. (Verizon) and
 6   The Prudential Insurance Company of America (Prudential). On appeal, Sullivan-
 7   Mestecky argues that the district court (Sandra J. Feuerstein, Judge) erred in
 8   granting summary judgment to Verizon and Prudential on her claim for benefits
 9   under ERISA § 502(a)(1)(B) and in dismissing her fiduciary breach claim under
10   ERISA § 502(a)(3). We conclude that the district court did not err in dismissing
11   Sullivan-Mestecky’s § 502(a)(1)(B) claim against both defendants and her
12   § 502(a)(3) claim against Prudential. We conclude, however, that the district court
13   did err in dismissing her § 502(a)(3) claim against Verizon. We therefore AFFIRM
14   the district court’s dismissal of Sullivan-Mestecky’s § 502(a)(3) claim against
15   Prudential and its ruling granting Verizon and Prudential summary judgment on
16   Sullivan-Mestecky's § 502(a)(1)(B) claim, VACATE the district court’s dismissal of
17   Sullivan-Mestecky’s § 502(a)(3) claim against Verizon, and REMAND for further
18   proceedings consistent with this opinion.

19                                           ________
20                      JOHN STOKES (Peter K. Stris, on the brief), Stris & Maher LLP, Los
21                      Angeles, CA, for Appellant.

22                      JAMES P. HOLLIHAN, Duane Morris LLP, Pittsburgh, PA, and
23                      KIRSTEN MCCAW GROSSMAN (Robin H. Rome and Kristine V.
24                      Ryan, on the brief), Nukk Freeman & Cerra, P.C., Chatham, NJ,
25                      for Appellees.
           3                                                                No. 18-1591


 1                                           ________

 2         JOHN M. WALKER, JR., Circuit Judge:

 3         Plaintiff-Appellant   Kristine   Sullivan-Mestecky    brought    this   action
 4   individually and as the beneficiary of the life insurance policy of her mother,
 5   Kathleen Sullivan, under the Employee Retirement Income Security Act of 1974
 6   (ERISA), 29 U.S.C. § 1001 et seq., following the denial of Sullivan’s life insurance
 7   benefits by Defendants-Appellees Verizon Communications Inc. (Verizon) and
 8   The Prudential Insurance Company of America (Prudential). On appeal, Sullivan-
 9   Mestecky argues that the district court (Sandra J. Feuerstein, Judge) erred in
10   granting summary judgment to Verizon and Prudential on her claim for benefits
11   under ERISA § 502(a)(1)(B) and in dismissing her fiduciary breach claim under
12   ERISA § 502(a)(3). We conclude that the district court did not err in dismissing
13   Sullivan-Mestecky’s § 502(a)(1)(B) claim against both defendants and her
14   § 502(a)(3) claim against Prudential. We conclude, however, that the district court
15   did err in dismissing her § 502(a)(3) claim against Verizon. We therefore AFFIRM
16   the district court’s dismissal of Sullivan-Mestecky’s § 502(a)(3) claim against
17   Prudential and its ruling granting Verizon and Prudential summary judgment on
18   Sullivan-Mestecky's § 502(a)(1)(B) claim, VACATE the district court’s dismissal of
19   Sullivan-Mestecky’s § 502(a)(3) claim against Verizon, and REMAND for further
20   proceedings consistent with this opinion.

21


22                                   BACKGROUND

23         Kathleen Sullivan was employed by the New York Telephone Company, a
24   predecessor entity to Verizon, from 1970 until 1978, during which period her
              4                                                              No. 18-1591


 1   annual income was $18,600. Sullivan received various benefits from the New York
 2   Telephone Company and other predecessor companies of Verizon, both
 3   individually and through her husband, who was also employed by the New York
 4   Telephone Company. Upon Sullivan’s husband’s death in January 2005, Verizon
 5   terminated all of Sullivan’s benefits, which Sullivan challenged over subsequent
 6   years.

 7            Pursuing her challenge, in June 2011, Sullivan contacted the Verizon
 8   Benefits Center, which at that time was administered on behalf of Verizon by the
 9   Aon Hewitt Company.             The Verizon Benefits Center responded by sending
10   Sullivan a “Retirement Enrollment Worksheet” on Verizon letterhead.1           The
11   worksheet said that Sullivan was eligible for life insurance option “1 x Pay” of
12   Verizon’s Group Life Insurance plan, which provided coverage in the amount of
13   $679,700. 2        Following the instructions on the worksheet, Sullivan called the
14   Verizon Benefits Center to enroll in “1 x Pay.”

15            After enrolling and designating her daughter, Kristine Sullivan-Mestecky,
16   as the beneficiary of the life insurance policy, Sullivan received various mailings
17   from Verizon, as plan administrator, that confirmed the existence and coverage
18   amount of the policy. Some of these mailings prompted Sullivan to call the
19   Verizon Benefits Center for more information. On these calls, Sullivan expressed
20   her understanding, and even surprise, about the extent of her benefits. However,
21   Center representatives repeatedly confirmed the existence and coverage amount
22   of the policy. As one example, during a call on December 19, 2011, Sullivan told a

              1   App’x at 346.
              2   Id. at 349.
           5                                                                 No. 18-1591


 1   representative, “And hell. I have benefits I didn’t even know existed.” 3 The
 2   representative informed Sullivan, “Okay what I’m showing here, your retiree—
 3   retiree life is currently [$]679,700.” 4 The representative confirmed the coverage
 4   amount three more times on the call, explaining further how the amount would
 5   decline as Sullivan aged.
 6
 7         Sullivan’s calls raised questions internally at Aon Hewitt about her coverage
 8   amount. On July 26, 2011, one Aon Hewitt employee wrote to a colleague that
 9   Sullivan “was not salaried when active she was hourly. . . . The dollar amount
10   seems high is there a possibility that [our software] could be giving a higher figure
11   than what [Sullivan] is eligible for?” 5 The next day, another Aon Hewitt employee
12   wrote back that Sullivan’s annual income had been “$970920,” approximately 52
13   times her actual annual income, and confirmed (erroneously) that the software
14   “shows the correct amount of life insurance.” 6 It turned out that Aon Hewitt had
15   coded Sullivan’s annual $18,600 income as her weekly income, but did not catch
16   the mistake until after she died.
17
18         Sullivan-Mestecky, understanding herself to be the beneficiary of a
19   generous life insurance policy, allowed her aging mother to live rent-free at her
20   home, covered her mother’s living expenses, and paid off her mother’s debts.
21   Sullivan-Mestecky also took an extended unpaid leave of absence from work to


           3   Id. at 362.
           4   Id. at 363.
           5   Id. at 383.
           6   Id.
            6                                                                          No. 18-1591


 1   care for Sullivan while Sullivan was living with her. On November 17, 2012,
 2   Sullivan died. Based on Sullivan’s age at the time of her death, Sullivan-Mestecky
 3   believed that her life insurance policy was worth $582,600. Sullivan-Mestecky
 4   submitted a claim to Prudential, as claims administrator, for $582,600 in death
 5   benefits under the policy. In response, Prudential paid $11,380 for Sullivan’s
 6   funeral expenses and sent Sullivan-Mestecky a check for $20, which Prudential
 7   said was the remainder of Sullivan’s death benefits.
 8
 9          Sullivan-Mestecky disputed the non-payment of her benefits, which she
10   expected to be in line with what her mother had been told. Verizon responded
11   that “Hewitt operating under the title Verizon Benefits Center” had mistakenly
12   calculated Sullivan’s large coverage amount and thus “provided Ms. Sullivan with
13   incorrect information” about her life insurance policy. 7 Verizon and Prudential
14   rejected Sullivan-Mestecky’s claim. Sullivan-Mestecky then filed this suit in state
15   court. The defendants removed the case to the Eastern District of New York, and
16   Sullivan-Mestecky           filed   an   amended     complaint     adding      claims    under
17   §§ 502(a)(1)(B) and 502(a)(3) of ERISA. On July 7, 2016, the district court granted
18   Verizon’s and Prudential’s motion to dismiss the § 502(a)(3) claim on the
19   pleadings, under Rule 12(b)(6). 8 And on May 16, 2018, the district court granted
20   summary judgment to Verizon and Prudential on the § 502(a)(1)(B) claim.




            7   Id. at 334–35.
            8 In the same opinion, the district court found that most of Sullivan-Mestecky’s state law
     claims were preempted by ERISA and dismissed them. It allowed Sullivan-Mestecky to pursue
     one state law claim based on an alleged settlement agreement between Sullivan and Verizon.
     Because Sullivan-Mestecky could not locate the alleged settlement agreement during discovery,
            7                                                                            No. 18-1591


 1                                              DISCUSSION

 2          On appeal, Sullivan-Mestecky challenges both decisions. “We review a
 3   grant of summary judgment de novo, examining the evidence in the light most
 4   favorable to, and drawing all inferences in favor of, the non‐movant.”9 Similarly,
 5   “[w]e review de novo a district court’s dismissal of a complaint pursuant to Rule
 6   12(b)(6), construing the complaint liberally, accepting all factual allegations in the
 7   complaint as true, and drawing all reasonable inferences in the plaintiff’s
 8   favor.” 10

 9   I.     Sullivan-Mestecky’s § 502(a)(1)(B) claim.

10          Section 502(a)(1)(B) of ERISA empowers “a participant or beneficiary” to
11   bring a civil action “to recover benefits due to him under the terms of his plan.” 11
12   After reviewing the plan documents and communications between Sullivan,
13   Verizon, and Prudential that emerged during discovery, the district court
14   concluded that the terms of Verizon’s Group Life Insurance plan did not entitle
15   Sullivan-Mestecky to benefits in excess of $11,400 and granted summary judgment
16   in favor of Verizon and Prudential. On appeal, Sullivan-Mestecky argues that the




     the district court ultimately granted summary judgment for Verizon on that claim. None of the
     state law claims are at issue in this appeal.
            9Burke v. Kodak Ret. Income Plan, 336 F.3d 103, 109 (2d Cir. 2003) (internal quotation marks
     omitted).
            10   Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002).
            11   29 U.S.C. § 1132(a)(1)(B).
            8                                                                            No. 18-1591


 1   district court erred in allowing Verizon and Prudential to reduce her mother’s
 2   benefits after they had vested upon her death.

 3          Sullivan-Mestecky misunderstands the district court’s ruling. The Group
 4   Life Insurance plan expressly granted discretionary authority to Verizon and
 5   Prudential to interpret the plan’s terms. Because the plan granted such authority
 6   to Verizon and Prudential, the district court could not overturn their interpretation
 7   of the plan unless it was “arbitrary and capricious.” 12 The district court found that
 8   Verizon and Prudential’s interpretation of the plan—that Sullivan-Mestecky was
 9   entitled to no more than $11,400—was based on substantial evidence and not
10   arbitrary or capricious.          Notwithstanding the clerical error reflected on the
11   Retirement Enrollment Worksheet and other documents, Section 5.4.1 of the plan
12   clearly explained that its “1 x Pay” option entitles beneficiaries to a percentage of
13   the participant’s annual salary, to be reduced as the participant ages. None of the
14   mailings Sullivan received from Verizon or Prudential purported to displace
15   Section 5.4.1. Under the terms of Section 5.4.1, Sullivan-Mestecky was entitled to
16   a fraction of Sullivan’s annual income of $18,600. Verizon and Prudential chose,
17   in their discretion, to interpret Sullivan’s plan consistent with Section 5.4.1, not
18   with her Retirement Enrollment Worksheet and other documents. Deferring to
19   that reading, the district court found that Verizon and Prudential provided
20   Sullivan-Mestecky with the benefits that the plan had always promised: $11,400.

21          On appeal, Sullivan-Mestecky does not challenge Verizon and Prudential’s
22   interpretation of Section 5.4.1 or expressly take the position that their
23   interpretation of the plan as a whole was arbitrary and capricious. Instead, she

            12   Pagan v. NYNEX Pension Plan, 52 F.3d 438, 441 (2d Cir. 1995) (internal quotation marks
     omitted).
           9                                                                   No. 18-1591


 1   implies that the terms of the plan entitled her to the more generous death benefits
 2   and argues that Verizon and Prudential’s interpretation resulted in an
 3   impermissible retroactive amendment to Sullivan’s plan after her death. She cites
 4   Blackshear v. Reliance Standard Life Ins. Co., 13 but Blackshear is inapposite.     In
 5   Blackshear, the Fourth Circuit found that a fiduciary could not correct a clerical
 6   error that appeared in a participant’s ERISA plan and summary plan description
 7   after that participant died, causing the benefits as set forth in the plan to vest with
 8   the beneficiary. 14 The outcome in Blackshear was premised on the fact that the
 9   erroneous terms in the plan and its description unambiguously provided for the
10   benefits at issue. Here, terms limiting Sullivan’s death benefits to a percentage of
11   her annual income were accurately stated in the plan and its description. The
12   generous benefits Sullivan-Mestecky seeks never vested under the terms of the
13   plan. We find no reason to disturb the district court’s grant of summary judgment
14   on Sullivan-Mestecky’s § 502(a)(1)(B) claim.

15   II.   Sullivan-Mestecky’s § 502(a)(3) claim.

16         Sullivan-Mestecky’s § 502(a)(3) claim requires an entirely different analysis
17   because, where circumstances allow, ERISA provides for equitable remedies that
18   transcend the plan. Section 502(a)(3) authorizes a “participant, beneficiary, or
19   fiduciary” of an employee benefit plan to bring a civil action to obtain “appropriate
20   equitable relief” to redress violations of ERISA Subchapter I, including, as relevant
21   here, fiduciary breaches. 15 Without addressing whether Verizon and Prudential


           13   509 F.3d 634 (4th Cir. 2007).
           14   Id. at 641–42.
           15   29 U.S.C. § 1132(a)(3).
            10                                                                     No. 18-1591


 1   had breached their fiduciary duties under ERISA Subchapter I, as opposed to the
 2   terms of Sullivan’s plan and summary plan description, the district court
 3   dismissed the § 502(a)(3) claim for failure to state a claim under Rule 12(b)(6) on
 4   the basis that Sullivan-Mestecky sought an impermissible remedy. The district
 5   court concluded that Sullivan-Mestecky, despite framing her claim as one for
 6   injunctive relief, could be “entirely compensated by damages allowing her to
 7   recover the value of [Sullivan’s] death benefits” and had therefore brought a claim
 8   for money damages rather than for equitable relief. 16

 9          Sullivan-Mestecky argues, however, that the district court’s classification of
10   her claim as one for damages rather than for equitable relief conflicts with the
11   Supreme Court’s decision in CIGNA Corp. v. Amara. 17 She contends that Amara
12   undermines the district court’s reasoning with its holding that “the fact that . . .
13   relief takes the form of a money payment does not remove it from the category of
14   traditionally equitable relief” because “[e]quity courts possessed the power to
15   provide relief in the form of monetary ‘compensation.’” 18 Amara details three
16   different kinds of equitable relief that historically provided a “kind of monetary
17   remedy” even “prior to the merger of law and equity” 19: estoppel, surcharge, and
18   reformation. 20 Sullivan-Mestecky argues that her claim satisfies the requirements
19   of each. For the reasons we now set forth, we agree that Sullivan-Mestecky is

            16Sullivan-Mestecky v. Verizon Commc’ns Inc., No. 14-CV-1835, 2016 WL 3676434, at *25
     (E.D.N.Y. July 7, 2016).
            17   563 U.S. 421 (2011).
            18   Id. at 441.
            19   Id. at 442.
            20   Id. at 440–43.
            11                                                                               No. 18-1591


 1   appropriately seeking equitable relief and hold that her § 502(a)(3) claim can
 2   proceed against Verizon but not Prudential.

 3                    A.      Appropriate Equitable Relief

 4                            1.      Estoppel

 5          The Restatement (Second) of Contracts provides that promissory estoppel is
 6   an appropriate equitable remedy when a “promisor should reasonably expect [his
 7   promise] to induce action or forbearance on the part of the promisee,” the promise
 8   actually “does induce such action or forbearance,” and “injustice can be avoided
 9   only by enforcement of the promise.” 21 We have previously found that “principles
10   of estoppel can apply in ERISA cases,” albeit only “under extraordinary
11   circumstances.” 22 We have required a showing of extraordinary circumstances “to
12   lessen the danger that commonplace communications from employer to employee
13   will routinely be claimed to give rise to employees’ rights beyond those contained
14   in formal benefit plans.” 23 As a result, to make a claim for estoppel under
15   § 502(a)(3), a plaintiff must plausibly allege five elements: “(1) a promise, (2)
16   reliance on the promise, (3) injury caused by the reliance, . . . (4) an injustice if the
17   promise is not enforced,” and (5) extraordinary circumstances. 24



            21   Restatement (Second) of Contracts § 90(1) (Am. Law Inst. 1981).
            22   Schonholz v. Long Island Jewish Med. Ctr., 87 F.3d 72, 78 (2d Cir. 1996).
            23   Aramony v. United Way Replacement Benefit Plan, 191 F.3d 140, 151 (2d Cir. 1999).
            24Weinreb v. Hosp. for Joint Diseases Orthopaedic Inst., 404 F.3d 167, 172–73 (2d Cir. 2005)
     (quoting Schonholz, 87 F.3d at 79).
            12                                                                         No. 18-1591


 1          The district court held that Sullivan-Mestecky had not plausibly alleged the
 2   requisite elements of an ERISA estoppel claim. It found that, “[t]o the extent
 3   plaintiff relies upon alleged oral representations by defendants as the basis for her
 4   promissory estoppel claim, her claim fails ‘because oral promises are
 5   unenforceable under ERISA and therefore cannot vary the terms of an ERISA
 6   plan.’” 25 It then determined that Sullivan-Mestecky’s “amended complaint is
 7   bereft of any factual allegations from which ‘extraordinary circumstances’ may
 8   reasonably be inferred” because none of the documents sent by Verizon or
 9   Prudential “were sent in order to induce Sullivan or plaintiff to take any particular
10   action for the benefit of the defendant who sent the particular document.” 26

11          We disagree with the district court’s reasoning in two respects. First,
12   although the district court correctly recited the law of this circuit that “oral
13   promises are unenforceable under ERISA,” 27 it went beyond that proposition in
14   declining to consider whether the Verizon Benefits Center’s repeated oral
15   representations collectively supported Sullivan-Mestecky’s estoppel claim as an
16   extraordinary circumstance.             There is daylight between considering an oral
17   representation simply as the requisite promise in an estoppel analysis and
18   considering an oral representation as a fact exacerbating, if not supplying, the
19   extraordinary circumstances under which the requisite promise was made, was
20   relied upon, caused injury, or would lead to injustice if unenforced. We see no


            25 Sullivan-Mestecky, 2016 WL 3676434, at *30 (quoting Perreca v. Gluck, 295 F.3d 215, 225
     (2d Cir. 2002)).
            26   Id. at *30.
            27   Perreca, 295 F.3d at 225.
           13                                                                            No. 18-1591


 1   conflict between considering as an extraordinary circumstance the Verizon
 2   Benefits Center’s oral misrepresentations, here coupled with misrepresentations
 3   in written documents, and ERISA’s demand that “[e]very employee benefit
 4   plan . . . be established and maintained pursuant to a written instrument.” 28 We
 5   therefore examine the Verizon Benefits Center’s repeated oral assurances to
 6   Sullivan about the value of her life insurance policy in determining whether
 7   Sullivan-Mestecky has pled extraordinary circumstances.

 8         Second, we take issue with the district court’s implication that extraordinary
 9   circumstances arise only when the requisite promise was made for the purpose of
10   inducing certain employee conduct. In Devlin v. Empire Blue Cross and Blue Shield,
11   we expressly disavowed the existence of such a rule and left open the possibility
12   that “extraordinary circumstances other than intentional inducement would
13   suffice” for an ERISA estoppel claim. 29                 And while Verizon highlights our
14   statement in Greifenberger v. Hartford Life Ins. Co. that “the ‘extraordinary
15   circumstances’ necessary [for] equitable estoppel in the context of an ERISA plan
16   require conduct tantamount to fraud,” 30 the Supreme Court has long recognized
17   that “[f]raud has a broader meaning in equity (than at law) and intention to
18   defraud or to misrepresent is not a necessary element.” 31 “Fraud” in a “court of
19   equity properly includes all acts, omissions and concealments which involve a
20   breach of legal or equitable duty, trust, or confidence, justly reposed, and are

           28   29 U.S.C. § 1102(a)(1).
           29   274 F.3d 76, 86 (2d Cir. 2001).
           30   131 F. App’x 756, 759 (2d Cir. 2005) (non-precedential summary order).
           31   SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 193 (1963).
           14                                                                                No. 18-1591


 1   injurious to another.” 32 The breadth of courts’ power in equity has led at least one
 2   circuit, the Sixth, to allow ERISA estoppel claims regarding “such gross negligence
 3   as to amount to constructive fraud.” 33 We now join the Sixth Circuit in finding
 4   that estoppel can be plausibly pled as an appropriate equitable remedy by an
 5   ERISA plaintiff alleging gross negligence in the absence of intentional inducement.

 6         Sullivan-Mestecky has plausibly pled the five elements required to make a
 7   claim for estoppel against Verizon. In June 2011, Verizon’s agent sent Sullivan the
 8   Retirement Enrollment Worksheet indicating that Sullivan was eligible for a life
 9   insurance policy valued at $679,700. Following that initial document, Verizon’s
10   agents sent Sullivan a Retirement Confirmation of Enrollment, a Confirmation of
11   Coverage on Demand, a Beneficiary Confirmation Notice, and a W-2, all of which
12   represented that Verizon was providing her with this generous life insurance
13   policy. 34 These written documents, taken together, constitute and reflect the
14   promise that Sullivan-Mestecky seeks to enforce.

15         Sullivan-Mestecky has amply pled that reliance and injury followed upon
16   this promise. In response to Verizon’s written promise, Sullivan enrolled in
17   Verizon’s offered plan, paid taxes based on the plan’s taxable imputed income,
18   and forwent procuring an alternative life insurance policy. 35 Sullivan-Mestecky
19   also paid her mother’s debts and took an unpaid leave of absence from work to
20   take care of her mother, anticipating that her short-term financial losses would be


           32   Id. at 194 (internal quotation marks omitted).
           33   Bloemker v. Laborers’ Local 265 Pension Fund, 605 F.3d 436, 444 (6th Cir. 2010).
           34   App’x at 179–82.
           35   Id. at 179, 183.
           15                                                               No. 18-1591


 1   more than covered by Sullivan’s life insurance payout. It would be unjust to allow
 2   these losses and forbearances, traceable to Verizon’s gross negligence, to be borne
 3   by Sullivan and her daughter Sullivan-Mestecky, both of whom believed Verizon’s
 4   repeated misrepresentations.    Altogether, Sullivan-Mestecky has satisfied the
 5   standard requirements of promissory estoppel.

 6         The final requirement of ERISA estoppel—extraordinary circumstances—is
 7   also met here based on Verizon’s conduct amounting to gross negligence, as
 8   follows.   Verizon’s agents sent numerous mailings informing and assuring
 9   Sullivan that she was entitled to a life insurance policy in the amount of $679,000.
10   She relied on these representations only after diligently and repeatedly confirming
11   their veracity and meaning with the Verizon Benefits Center. On calls with the
12   Verizon Benefits Center, Sullivan expressed her surprise at the stated value of her
13   life insurance policy, effectively alerting Verizon to the fact that it may have
14   miscalculated the value. Not only did Sullivan draw attention to the high coverage
15   figure, but an Aon Hewitt employee flagged the policy amount, writing in an
16   email to a colleague that the amount seemed high and asking if the company’s
17   software was somehow computing the wrong amount. Another Aon Hewitt
18   employee then responded, erroneously, that the amount was correct. Instead of
19   opening an investigation that likely would have uncovered the clerical error that
20   led Sullivan and her daughter to believe that she had procured a generous life
21   insurance policy, Verizon representatives reassured Sullivan that her beneficiary
22   would receive, after the age discount, more than half a million dollars in death
23   benefits. It was only after Sullivan’s death, when the purchase of alternative life
24   insurance to support Sullivan-Mestecky was impossible, that Verizon attempted
25   to correct its clerical error. In contravention of what it had repeatedly and
26   unambiguously represented to Sullivan in writing and on calls, Verizon paid
           16                                                               No. 18-1591


 1   Sullivan-Mestecky a total of $11,400, less than two percent of what Verizon had
 2   promised. Verizon’s acts of gross negligence present circumstances far “beyond
 3   the ordinary.” 36 The persistence and size of Verizon’s error, notwithstanding the
 4   ample inquiry notice provided by Sullivan’s calls to the Verizon Benefits Center,
 5   were “remarkable.” 37           We find that Sullivan-Mestecky satisfactorily pled
 6   extraordinary circumstances.

 7         That Sullivan-Mestecky pled estoppel as “appropriate equitable relief” is
 8   sufficient to determine that the district court erred in dismissing her § 502(a)(3)
 9   claim against Verizon. Still, we briefly address Sullivan-Mestecky’s argument that
10   her § 502(a)(3) claim alternatively merits the remedy of surcharge or reformation.
11   While our circuit’s law on these remedies is somewhat less developed than it is on
12   estoppel in the ERISA context, we believe that Sullivan-Mestecky also has
13   adequately pled facts meeting their requirements.

14                           2.     Surcharge

15         In Amara, also a § 502(a)(3) case, the Supreme Court described surcharge
16   historically as “relief in the form of monetary ‘compensation’ for a loss resulting
17   from a trustee’s breach of duty.” 38 Amara continued, “The surcharge remedy
18   extended to a breach of trust committed by a fiduciary” whose role is “analogous
19   to [that of] a trustee” and “encompass[ed] any violation of a duty imposed upon



           36   Aramony, 191 F.3d at 152.
           37   Id. (internal quotation marks omitted).
           38   563 U.S. at 442.
            17                                                                              No. 18-1591


 1   that fiduciary.” 39 Inasmuch as ERISA imposes fiduciary duties on parties who
 2   manage employee benefit plans, 40 the Supreme Court has recognized that “these
 3   fiduciary duties draw much of their content from the common law of trusts, the
 4   law that governed most benefit plans before ERISA’s enactment.” 41 In this regard,
 5   Sullivan-Mestecky’s § 502(a)(3) claim is dependent on her allegation of fiduciary
 6   breach, specifically that Verizon and Prudential failed to act “with the care, skill,
 7   prudence, and diligence under the circumstances then prevailing that a prudent
 8   man acting in a like capacity and familiar with such matters would use,” as ERISA
 9   requires. 42 As outlined above, Sullivan-Mestecky plausibly pled that Verizon
10   breached its fiduciary duties through its gross negligence in its management of
11   Sullivan’s life insurance policy by consistently failing to “provide complete and
12   accurate information” about Sullivan’s “status and options” “in response to
13   [Sullivan’s] questions about plan terms and/or benefits.” 43 This fiduciary breach
14   is sufficient to support the equitable remedy of surcharge. 44


            39  Id.; see also Morrissey v. Curran, 650 F.2d 1267, 1282 (2d Cir. 1981) (“[W]e see no reason
     not to permit a surcharge, when warranted by the facts, against one occupying any fiduciary
     status.”).
            40   29 U.S.C. § 1104 (entitled “Fiduciary duties”).
            41   Vanity Corp. v. Howe, 516 U.S. 489, 496 (1996).
            42   29 U.S.C. § 1104(a)(1)(B).
            43Estate of Becker v. Eastman Kodak Co., 120 F.3d 5, 8 (2d Cir. 1997) (internal quotation marks
     omitted) (describing ERISA fiduciaries’ duties).
            44 Like other circuits that have considered surcharge in ERISA cases post-Amara, we
     recognize a plaintiff’s non-procurement of alternative coverage as a loss resulting from a
     fiduciary’s material misrepresentation of the plaintiff’s extent of, or eligibility for, coverage.
     Joining those circuits, we think it appropriate for a plaintiff to seek relief in the amount of the
            18                                                                                 No. 18-1591


 1                             3.      Reformation

 2          Finally, Amara describes “[t]he power to reform contracts (as contrasted
 3   with the power to enforce contracts as written)” as “a traditional power of an
 4   equity court, not a court of law.” 45 It notes that “‘equity would reform [a] contract,
 5   and enforce it, as reformed, if . . . mistake or fraud were shown.’” 46 Following the
 6   Supreme Court’s remand in Amara, the Second Circuit elaborated that “[a] contract
 7   may be reformed due to the mutual mistake of both parties, or where one party is
 8   mistaken and the other commits fraud or engages in inequitable conduct.”47
 9   Reformation does not require a showing of actual harm. 48 We need not discuss
10   mutual mistake because Sullivan-Mestecky has adequately pled that Verizon
11   committed equitable fraud by misrepresenting that Sullivan was entitled to a life
12   insurance policy in the amount of $679,000. As a result of Verizon’s fraudulent
13   representations, Sullivan reasonably but mistakenly expected that Sullivan-
14   Mestecky would receive the generous death benefits. Sullivan-Mestecky has
15   thereby adequately pled circumstances that would permit the district court to
16   equitably reform the terms of her plan with Verizon, sufficient to bind Verizon to




     promised policy, not just in the amount of wrongly-accepted premiums or wrongly-paid taxes,
     under the equitable remedy of surcharge. See, e.g., Kenseth v. Dean Health Plan, Inc., 722 F.3d 869,
     881–82 (7th Cir. 2013); McCravy v. Metropolitan Life Ins. Co., 690 F.3d 176, 181 (4th Cir. 2012).
            45   563 U.S. at 440.
            46   Id. (citing Baltzer v. Raleigh & Augusta R. Co., 115 U.S. 634, 645 (1885)).
            47   Amara v. CIGNA Corp., 775 F.3d 510, 525 (2d Cir. 2014).
            48   Id. at 525 n.12.
            19                                                                     No. 18-1591


 1   its fraudulent representations. Reforming the plan to accord with Sullivan’s
 2   reasonable expectations is an appropriate equitable remedy. 49

 3          Although we find that Sullivan-Mestecky has plausibly pled circumstances
 4   that would entitle her to “appropriate equitable relief” against Verizon under
 5   § 502(a)(3), her arguments do not carry the same force against Prudential. Unlike
 6   Verizon and its agents, Prudential sent only one letter to Sullivan, informing her
 7   how the value of her policy would decrease as she aged. Neither Prudential nor
 8   its agents fielded questions from Sullivan regarding her policy and repeatedly
 9   misrepresented its benefits. We are reluctant to say that Prudential’s single
10   mailing was even negligent. As the plan administrator, Verizon, not Prudential,
11   was responsible for assessing Sullivan’s eligibility for and enrolling Sullivan in her
12   benefits plan. The core of Sullivan’s dispute was therefore with Verizon. Even if
13   Prudential could have checked Verizon’s work to confirm that Sullivan had been
14   properly enrolled, it had no duty to do so and any failure in that regard pales in
15   comparison to Verizon’s gross negligence and does not rise to the level of
16   extraordinary circumstances or equitable fraud.

17          B.     Fiduciary Breach

18          Unable to provide a compelling rationale for why Sullivan-Mestecky is not
19   able to pursue equitable relief, Verizon makes two arguments to support its denial
20   that it committed a fiduciary breach. Verizon first claims that its agents, not
21   Verizon itself, ran the Verizon Benefits Center and provided the misinformation

            49 Prudential suggests that granting Sullivan-Mestecky relief would require the
     reformation of the Group Life Insurance plan for all plan participants. Prudential, however,
     provides no authority for this suggestion, and we see no basis for adopting it.
           20                                                                       No. 18-1591


 1   about which Sullivan-Mestecky complains. Verizon then argues that, in any event,
 2   our   In         re   DeRogatis      decision   precludes   liability   for   unintentional
 3   misrepresentations when the pertinent terms of the employee benefits plan are
 4   clear. 50 Neither argument is persuasive.

 5         First, as In re DeRogatis held, plan administrators, like Verizon, “act as
 6   fiduciaries when they communicate with plan members and beneficiaries about
 7   plan benefits.” 51 As that case explained, plan administrators “may perform a
 8   fiduciary function through ministerial agents,” such as Aon Hewitt in this case,
 9   even “without converting those individual agents themselves into fiduciaries.” 52
10   Accordingly, when Verizon arranged for Aon Hewitt to communicate with
11   Sullivan about her plan benefits, Verizon was performing a fiduciary function and
12   was bound by its fiduciary duty to properly administer the plan. Although
13   Verizon makes much of the fact that the district court “unequivocally ruled that
14   Hewitt was not a plan administrator or fiduciary” for Sullivan’s benefits plan, 53
15   this finding, based on Aon Hewitt’s status as a ministerial agent, does not prevent
16   us from imputing Aon Hewitt’s gross negligence to Verizon, Aon Hewitt’s
17   principal. Indeed, Aon Hewitt’s status as a ministerial agent allows us to do so. 54




           50   904 F.3d 174 (2d Cir. 2018).
           51   Id. at 192.
           52   Id.
           53   Defendant-Appellee Verizon’s Br. at 40.
           54   In re Derogatis, 904 F.3d at 192.
           21                                                                  No. 18-1591


 1   Verizon cannot hide behind Aon Hewitt’s actions to evade liability for the
 2   fiduciary breach that occurred here.

 3         Nor can Verizon hide behind Sullivan’s plan documents, which it
 4   characterizes as “clear, unambiguous, and in no way lack[ing in] clarity.” 55
 5   Verizon urges us to read In re DeRogatis as foreclosing liability for unintentional
 6   misrepresentations when a fiduciary has provided a plan participant with a clear
 7   and unambiguous summary plan description.               But In re DeRogatis expressly
 8   declined to answer the question of whether “an ERISA fiduciary may breach a
 9   duty because of unintentional misrepresentations even when the SPD [summary
10   plan description] is clear if there is no evidence that the plaintiff knew or should
11   have known of the applicable SPD provisions at the time of the relevant
12   conduct.” 56 In re DeRogatis found that the plaintiff had every reason to know of
13   the applicable, clear plan terms because even though the fiduciary’s agents had
14   provided ambiguous responses to the plaintiff’s queries, they had also sent the
15   plaintiff a copy of the terms with specific citations to the relevant sections on
16   pension and survivor benefits. 57           Under such circumstances, In re DeRogatis
17   concluded that the agents’ ambiguous responses to the plaintiff did not rise to the
18   level of materially misleading information. 58

19         This case differs from In re DeRogatis in three respects: (1) as pled, Verizon,
20   through its agents, directly and repeatedly informed Sullivan that she had a life


           55   Defendant-Appellee Verizon’s Br. at 47.
           56   904 F.3d at 196 n.27.
           57   Id.
           58   Id. at 195–96.
            22                                                                   No. 18-1591


 1   insurance policy in the amount of $679,000; (2) in responding to Sullivan’s queries
 2   about her policy, Verizon never referred Sullivan to clear plan terms that would
 3   have alerted her to her ineligibility for the promised benefits; and (3) Sullivan’s
 4   plan was far from clear and unambiguous because it expressly incorporated her
 5   “enrollment materials, and other such communications relative to the Plan,”
 6   including the Retirement Enrollment Worksheet indicating Sullivan’s eligibility
 7   for a $679,000 life insurance policy and other documents of similar import. 59 When
 8   all is considered, Sullivan-Mestecky has plausibly alleged that Verizon breached
 9   its fiduciary duty to act “with . . . care, skill, prudence, and diligence” 60 when it
10   failed to provide Sullivan with “complete and accurate information” on her
11   benefits. 61

12


13                                               CONCLUSION

14          For the reasons stated above, we AFFIRM the district court’s dismissal of
15   Sullivan-Mestecky’s § 502(a)(3) claim against Prudential and its ruling granting
16   Verizon and Prudential summary judgment on Sullivan-Mestecky's § 502(a)(1)(B)
17   claim, VACATE the district court’s dismissal of Sullivan-Mestecky’s § 502(a)(3)




            59Sullivan’s plan stated, “This Plan document hereby incorporates by reference any
     summary plan descriptions, summaries of material modifications, enrollment materials, and
     other such communications relative to the Plan as may be approved from time to time by
     Verizon.” App’x at 288.
            60   29 U.S.C. § 1104(a)(1)(B).
            61   Estate of Becker, 120 F.3d at 10.
          23                                                         No. 18-1591


1   claim against Verizon, and REMAND for further proceedings consistent with the
2   opinion.
