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A Successful Reformation Action Requires a Showing of Intent

On March 16, 2012, in Skinner v. Northrop Grumman Retirement Plan B (US Court of Appeals – Ninth Circuit, No. 10-55161), the court found that master terms of a retirement plan document do not need to be reformed where the summary plan description does not match, so long as the participants do not show fraudulent intent or mistake.

In Skinner, the plaintiffs participated in Grumman's "Plan B Retirement Plan." After receiving summarized retirement plan documents that did not include accurate summary plan descriptions, the plaintiffs sued. The plaintiffs specifically alleged that the summaries were not comprehensive, correct and also failed to include statements that regular participants would reasonably expect to see included. Ultimately, the plaintiffs were seeking the summary plan descriptions to be released in conformity with prior terms used.

The US Court of Appeals for the Ninth Circuit found that reformation is only required where fraud and mistake have taken place. This means that the court placed great weight on the parties' intent when crafting the summary plan description. The plaintiffs fell short in this case because they were not able to demonstrate that the retirement plan's master documents demonstrated any sort of intent—whether fraudulent or not.

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