23-25 Pessin v. JPMorgan Chase

In the United States Court of Appeals For the Second Circuit

August Term, 2023 No. 23-25

JOSEPH PESSIN, on behalf of himself and all others similarly situated, Plaintiff-Appellant,

v.

JPMORGAN CHASE U.S. BENEFITS EXECUTIVE, as Plan Administrator of the JPMorgan Chase Retirement Plan, BOARD OF DIRECTORS OF JPMORGAN CHASE BANK AND J.P. MORGAN CHASE & COMPANY, JPMORGAN CHASE RETIREMENT PLAN, Defendants-Appellees.

On Appeal from a Judgment of the United States District Court for the Southern District of New York.

ARGUED: SEPTEMBER 28, 2023 DECIDED: AUGUST 13, 2024

Before: PARKER, NARDINI, Circuit Judges, and RAKOFF, District Judge. ∗

Judge Jed S. Rakoff, United States District Judge for the Southern District ∗

of New York, sitting by designation. Plaintiff-Appellant Joseph Pessin brought suit on behalf of himself and all others similarly situated against JPMorgan Chase & Company (“JPMC”), the JPMorgan Chase Retirement Plan and its appointed fiduciaries, asserting various claims under the Employee Retirement Income Security Act of 1974 (“ERISA”),

et seq. Pessin contends that the Defendants made insufficient disclosures to pension plan participants following the retirement plan’s conversion from a traditional defined benefit plan to a cash balance plan. The United States District Court for the Southern District of New York (Denise L. Cote, District Judge) granted the Defendants’ motion to dismiss Pessin’s amended complaint in its entirety for failure to state a claim, concluding that the Defendants provided adequate disclosures that explained how the retirement plan worked and did not mislead plan participants about the potential effect of the conversion on a plan participant’s accrued benefits. We agree that the Defendants sufficiently disclosed an aspect of the cash balance plan known as “wear-away,” and that the summary plan descriptions clearly and accurately explained how a plan participant’s benefits would be calculated. But we disagree with the district court’s determination that the Defendants complied with ERISA § 105(a) by providing annual pension benefit statements that properly indicated a plan participant’s total benefits accrued. We therefore also conclude that Pessin adequately alleged that the Board of Directors of JPMC breached its fiduciary duty through its failure to monitor the performance of the JPMC Benefits Executive with respect to the benefit statements, and that the district court therefore erred in dismissing Pessin’s ERISA § 404(a) claim against the Board to that extent. Accordingly, we AFFIRM IN PART, REVERSE IN PART, and REMAND for further proceedings consistent with this opinion.

2 TERESA S. RENAKER (David S. Preminger, Jeffrey G. Lewis, and Chris N. Ryder, Keller Rohrback LLP, New York, NY, Oakland, CA, and Seattle, WA, on the brief), Renaker Scott LLP, San Francisco, CA, for Plaintiff- Appellant.

JEREMY P. BLUMENFELD (Sari M. Alamuddin, Eric L. Mackie, Stephanie R. Reiss, and Michael E. Kenneally, on the brief), Morgan, Lewis & Bockius LLP, Philadelphia, PA, Chicago, IL, Pittsburgh, PA, and Washington, DC, for Defendants-Appellees.

WILLIAM J. NARDINI, Circuit Judge:

Plaintiff-Appellant Joseph Pessin, on behalf of himself and all

others similarly situated, appeals from a judgment of the United

States District Court for the Southern District of New York (Denise L.

Cote, District Judge), entered in favor of the Defendants-Appellees

JPMorgan Chase & Company (“JPMC”), JPMorgan Chase U.S.

Benefits Executive (“JPMC Benefits Executive”), the Board of

Directors of JPMC (“JPMC Board”), and the JPMorgan Chase

Retirement Plan (“JPMC Plan”) (together, “Defendants”). In his

3 amended complaint (“Amended Complaint”), Pessin asserted claims

under the Employee Retirement Income Security Act of 1974

(“ERISA”),

et seq., arising out of the Defendants’

allegedly inadequate disclosures following JPMC’s decision to

convert its employee retirement plan from a traditional defined

benefit plan into a cash balance plan. The district court dismissed the

suit under Federal Rule of Civil Procedure 12(b)(6), concluding that

the Amended Complaint failed to allege facts supporting a plausible

inference that the JPMC Benefits Executive and JPMC Board violated

their fiduciary duties under ERISA. See generally Pessin v. JPMorgan

Chase U.S. Benefits Exec., No. 22-cv-2436 (DLC),

(S.D.N.Y. Dec. 9, 2022).

As explained below, we conclude that the Defendants complied

with ERISA § 404(a) by sufficiently disclosing an aspect of the plans

known as “wear-away,” and that they complied with ERISA § 102

because the relevant summary plan descriptions (“SPDs”) clearly and

4 accurately explained how a plan participant’s benefits would be

calculated. We disagree, however, with the district court’s

determination that the Defendants complied with ERISA § 105(a),

which requires much more specifically that a plan provide annual

pension benefit statements (“Benefit Statements”) that

unambiguously indicate a plan participant’s “total benefits accrued.”

The Defendants here sent statements to Pessin and the putative class

members that included only one of two alternative calculations of

their benefits, and the calculation they provided to Pessin did not

reflect the amount he was actually entitled to receive. We also

conclude that Pessin adequately alleged that the JPMC Board

breached its fiduciary duty through its failure to monitor the

performance of the JPMC Benefits Executive with respect to the

Benefit Statements. The district court therefore erred in dismissing

Pessin’s ERISA § 404(a) claim against the JPMC Board in that narrow

regard. Accordingly, we AFFIRM IN PART, REVERSE IN PART, and

5 REMAND for further proceedings consistent with this opinion.

I. Background

The following facts are drawn from the well-pleaded

allegations in Pessin’s Amended Complaint, which we must accept as

true for purposes of evaluating the Defendants’ motion to dismiss.

Harvey v. Permanent Mission of the Republic of Sierra Leone to the United

Nations,

(2d Cir. 2024).

A. The Pension Plans and Related Disclosures

1. The Pension Plans

Pessin began working for J.P. Morgan & Co. (“Morgan”) in 1987

and participated in the Retirement Plan for Employees of Morgan

Guaranty Trust Company of New York and Affiliated Companies for

United States Employees (“Morgan Plan”). The Morgan Plan was a

traditional defined benefit pension plan that provided a benefit,

beginning at retirement, in the form of a lifetime annuity or lump sum

payment. The benefit was calculated using a final average pay benefit

6 formula and based on certain factors, including a participant’s

retirement age, compensation, and years of service. 1 The Morgan

Plan also provided an early retirement benefit for certain participants

who elected to commence benefits between the ages of fifty-five and

sixty.

On December 31, 1998, the Morgan Plan transitioned to using a

cash balance formula and was renamed the Cash Balance Plan of

Morgan Guaranty Trust Company of New York and Affiliated

Companies for United States Employees (“Cash Balance Plan”). The

Cash Balance Plan remained a defined benefit plan but began

displaying participants’ benefits as hypothetical “account balance[s].”

J. App’x at 14, ¶ 18. These account balances periodically earned “pay

The Morgan Plan utilized a normal retirement age of 65 and provided “a 1

retirement benefit for the life of the member alone in an annual amount equal to the product of (x) and (y), plus, if applicable, (z) where (x) is the sum of (i) 1.6% of the computed average salary of the member not in excess of his covered compensation plus (ii) 1.9% of such salary in excess of his covered compensation, and (y) is his years of credited service up to 30 years and (z) is, for a member in service on December 31, 1986, .5% of his computed average salary for each year of credited service in excess of 30 but not more than 40.” J. App’x at 13, ¶ 14.

7 credit[s],” based on a participant’s compensation, along with “interest

credits,” derived from annual interest rates.

As part of the

transition to the Cash Balance Plan, participants who had accrued

benefits under the old Morgan Plan were assigned a hypothetical

opening account balance as of December 31, 1998.2 Further, under the

Cash Balance Plan, former Morgan Plan participants’ benefits would

continue to accrue under both the final average pay formula and the

cash balance formula until December 30, 2003. Thereafter, pension

plan participants accrued benefits only under the cash balance

formula.

ERISA’s “anti-cutback” rule provides, in relevant part, that

“[t]he accrued benefit of a participant under a plan may not be

decreased by an amendment of the plan . . . .”

(g)(1).

To ensure compliance with this rule, the Cash Balance Plan provided

2 Former Morgan Plan participants’ accrued benefits were converted into account balances using certain actuarial assumptions, including a six percent interest rate and a mortality assumption.

8 that “a participant’s accrued benefit shall not be less than the

participant’s accrued benefit as of December 30, 2003.” J. App’x at 15,

¶ 24. In other words, at retirement, former Morgan Plan participants

would be entitled to the greater of either (1) their accrued benefits

under the original traditional defined benefit plan, which was

calculated using the final average pay formula, or (2) their accrued

benefits under the Cash Balance Plan’s recently adopted cash balance

formula. Under this “greater of” comparison, the final average pay

benefit as of December 30, 2003, became the minimum benefit former

Morgan Plan participants would receive regardless of when they left

employment and began receiving benefits.

Due to this benefit comparison, under the Cash Balance Plan,

former Morgan Plan participants accrued no new benefits until their

cash balance caught up to and surpassed their December 31, 2003,

accrued benefit under the final average pay formula. This concept is

9 known as “wear-away.” 3 During the wear-away period, former

Morgan Plan participants’ actual benefits were effectively frozen,

despite their continued employment, until they accrued enough pay

and interest credits to exceed their previously accrued benefits under

the traditional defined benefit plan.

On December 31, 2000, Morgan merged into Chase Manhattan

Bank, creating JPMC. The Cash Balance Plan also merged into the

Retirement Plan of The Chase Manhattan Bank and Certain Affiliated

Companies, creating the JPMC Plan. The JPMC Plan continued the

wear-away effect of the Cash Balance Plan, because former Morgan

Plan participants still accrued no additional benefits until their cash

balance benefits exceeded, if ever, their accrued benefits under the

final average pay formula.

3 This Court has previously explained that within the benefits industry, “wear-away” describes the period when “any pay and interest credits earned by a participant would not increase his or her actual benefits, but merely reduce the gap between the value of the participant’s cash balance account and the participant’s old benefits.” Osberg v. Foot Locker, Inc.,

(2d Cir. 2017).

10 2. The Summary Plan Descriptions

After the conversion to a cash balance formula, Morgan and

then JPMC (following the merger) issued several summary plan

descriptions to plan participants. The Amended Complaint focuses

on three of those SPDs.

First, in January 1999, Morgan issued an SPD (“1999 SPD”) that

described how a plan participant’s benefit is determined and

received. The 1999 SPD also explained Morgan’s transition to the

Cash Balance Plan and how benefits would be calculated during the

transition:

[B]enefits will be calculated using two formulas – the prior formula and the Cash Balance Formula – during the five-year period from January 1, 1999 through December 31, 2003. If you leave Morgan during this period and are vested, you will receive the larger of the two benefits. After December 31, 2003, your accrued benefit under the prior formula will be frozen and will continue to act as a minimum benefit. When you leave Morgan, you will receive the larger of the minimum benefit or your balance under the Cash Balance Plan.

If you leave Morgan after December 31, 2003, your

11 additional years of age and service will count toward your eligibility for early retirement benefits under the prior formula. However, the amount of your benefit will be calculated using your service and final average earnings through December 31, 2003.

J. App’x at 51.

Second, the following year, Morgan issued an SPD, effective

September 18, 2000 (“2000 SPD”), that made substantially similar

disclosures as the 1999 SPD regarding the operation of the Cash

Balance Plan and the minimum benefit former Morgan Plan

participants might receive.

Third, in 2005, after the Cash Balance Plan became the JPMC

Plan, JPMC issued an SPD (“2005 SPD”). In a section titled

“Important Terms,” the 2005 SPD defined “minimum benefit”:

In general, when a pension plan changes as a result of a plan merger or modification, participants cannot receive less than any amounts they had accrued or earned under that plan prior to the date of the merger or modification. This amount is referred to as the “minimum benefit.” When you request a distribution, that minimum benefit will be compared to your accrued benefit under the Retirement Plan and you will receive the greater of the

12 two amounts. If you participated in the retirement plan of a heritage organization, please see the appropriate Appendix in this summary plan description for more information on minimum benefits.

Id. at 119. For plan participants who participated in the Cash Balance

Plan as of December 31, 2001, the 2005 SPD directed them to review

“Appendix C.”

Appendix C confirmed that former Morgan Plan participants

would have “a minimum benefit which is determined under a prior

plan benefit formula.” Id. at 156. It specified that the “minimum

benefit [is] equal to your accrued benefit under the final average pay

formula as of the earlier of your termination of employment or

December 31, 2003.” Id. at 158. Appendix C further explained to

JMPC Plan participants that “[e]ach of these minimum benefits will

be compared to your cash balance benefit under the [JPMC Plan] at

the time you elect to receive payment. If one of the minimum benefits

exceeds your cash balance benefit, you will receive that minimum

benefit.” Id. at 159. It cautioned that “the amount shown on your

13 account statement . . . reflects only the benefit earned under the cash

balance formula and does not take into account this minimum

benefit.” Id. Thus, Appendix C advised plan participants who

wanted to compare their benefits to contact Human Resources

because “[benefit] projections prepared through accessHR will reflect

the greater of your cash balance formula or your benefit provided

under the final average pay formula.” Id.

3. The Benefit Statements

Beginning in 2002, the JPMC Benefits Executive—the JPMC

Plan administrator—provided Benefit Statements to all participants

in the JPMC Plan. As noted in the SPDs, the Benefit Statements

displayed only a plan participant’s benefit earned under the cash

balance formula. For example, using the cash balance formula,

Pessin’s 2019 Benefit Statement showed his opening account balance

as of January 1, 2019, and his closing account balance as of December

31, 2019. According to the 2019 Benefit Statement, Pessin’s cash

14 account balance purportedly increased that year from pay credits and

interest credits. However, directly below the cash balance amounts,

the statement notes: “This statement does not reflect any minimum

benefit that you might have accrued under a prior plan formula. If

you would like more information about minimum benefits, you can

call HR Answers.” Id. at 173. The Benefit Statement provided the

contact information for HR Answers on the following page.

B. Pessin’s Investigation Into His Accrued Benefits

In 2019, Pessin left his employment with JPMC. Not long after,

on March 27, 2019, Pessin received a pension benefit election packet.

In April 2021, Pessin requested a new pension election packet, as well

as additional information about how his pension benefit was

calculated. JPMC provided Pessin with the requested calculation

worksheets, which showed that Pessin was entitled to receive the

“minimum benefit” because his accrued benefits under the final

average pay formula as of December 31, 2003, were still higher than

15 the current amount in his cash balance account.

C. Procedural History

On March 25, 2022, after receiving his benefit calculations,

Pessin brought suit against the Defendants on behalf of himself and a

proposed class of similarly situated plan participants and

beneficiaries, claiming that the Defendants violated their fiduciary

duties and statutory obligations under ERISA,

et seq.

Pessin amended his complaint on July 27, 2022. Specifically, Pessin

claimed that (1) the JPMC Benefits Executive breached its fiduciary

duties under ERISA § 404(a),

(a), by “failing to

disclose that the[ class’s] pension benefits were frozen and

intentionally concealing the fact that they were not accruing

additional pension benefits through their continued employment,” J.

App’x at 27, ¶ 81; (2) the JPMC Board breached its fiduciary duties

under § 404(a) by failing to monitor the performance of the JPMC

Benefits Executive; (3) the JPMC Benefits Executive violated ERISA

16 § 105(a),

(a), by failing to provide pension benefit

statements that meet the standards of that section; and (4) the JPMC

Benefits Executive violated ERISA § 102,

, by failing

to provide SPDs that meet the standards of that section and the

regulations promulgated under that section. The Defendants moved

to dismiss the Amended Complaint pursuant to Federal Rule of Civil

Procedure 12(b)(6), arguing, among other things, that they made

proper disclosures in the SPDs and Benefit Statements following the

JPMC Plan’s conversion from a final average pay formula to a cash

balance formula.

On December 9, 2022, the district court granted the Defendants’

motion to dismiss as to all claims, reasoning that the Defendants had,

in fact, provided sufficient disclosures that explained both the

transition to the cash balance formula and how plan participants

could compare their benefits under the cash balance formula and final

average pay formula during the wear-away period. Pessin,

17551993, at *7–8. The district court also concluded that the JPMC

Benefits Executive and JPMC Board did not breach the Defendants’

fiduciary duties under ERISA.

at *5–7. Pessin appealed.

II. Discussion

On appeal, Pessin principally argues that the district court

erred in concluding that the Defendants made adequate disclosures

about the JPMC Plan’s conversion from a traditional defined benefit

plan to a cash balance benefit plan and its impact on his accrued

benefits.

“We review de novo the district court’s dismissal of the

Amended Complaint for failure to state a claim under Rule 12(b)(6).”

City of Pontiac Police & Fire Ret. Sys. v. BNP Paribas Sec. Corp.,

, 390 (2d Cir. 2024). In reviewing a motion to dismiss, “[w]e accept

the Amended Complaint’s well-pleaded factual allegations as true

and construe them in the Plaintiff[‘s] favor.”

We may also

consider “documents attached to the complaint as exhibits, and

18 documents incorporated by reference in the complaint.” Revitalizing

Auto Communities Env’t Response Tr. v. Nat’l Grid USA,

(2d Cir. 2024) (quoting DiFolco v. MSNBC Cable L.L.C.,

(2d Cir. 2010)).

A. Section 404(a) Claim Against the JPMC Benefits Executive

Pessin challenges the district court’s dismissal of his claim that

the JPMC Benefits Executive breached its fiduciary duties under

ERISA § 404(a). He argues that the SPDs and Benefit Statements did

not sufficiently disclose the consequences of wear-away and misled

plan participants into “believing that they were earning additional

benefits when they were not.” Appellant’s Br. at 18.

ERISA § 404(a) provides that “a fiduciary shall discharge his

duties with respect to a plan solely in the interest of the participants

and beneficiaries and . . . with the care, skill, prudence, and diligence

under the circumstances then prevailing that a prudent man acting in

a like capacity and familiar with such matters would use in the

19 conduct of an enterprise of a like character and with like aims.”

(a)(1). ERISA’s fiduciary duties of loyalty and prudence

are “the highest duties known to law.” Rothstein v. Am. Int’l Grp., Inc.,

(2d Cir. 2016) (citation, emphasis, and quotation

marks omitted). “When a plan administrator affirmatively

misrepresents the terms of a plan or fails to provide information when

it knows that its failure to do so might cause harm, the plan

administrator has breached its fiduciary duty to individual plan

participants and beneficiaries.” Devlin v. Empire Blue Cross & Blue

Shield,

(2d Cir. 2001) (citation and quotation marks

omitted). Thus, a plan administrator’s failure to sufficiently explain

the consequences of wear-away can qualify as a breach of fiduciary

duty. See, e.g., Osberg v. Foot Locker, Inc.,

(S.D.N.Y. 2015), aff’d,

(2d Cir. 2017).

We agree with the district court that here, the JPMC Benefits

Executive provided disclosures sufficient to comply with its fiduciary

20 duties. While the term “wear-away” was not explicitly used in the

relevant disclosures, the 1999 and 2000 SPDs explained the plan’s

transition to a cash balance formula and its potential consequences on

plan participants. They disclosed that plan participants as of

December 31, 1998, would continue to accrue benefits under the final

average pay formula through December 31, 2003. The disclosures

also noted that, “[a]fter December 31, 2003, [their] accrued benefit

under the prior formula [would] be frozen and [would] continue to

act as a minimum benefit.” J. App’x at 51.

The Amended Complaint defines wear-away as the possibility

that “the [frozen] benefit [the participant] had accrued through

December 30, 2003, [would] exceed[] the benefit that he accrued over

the subsequent years . . . .” Id. at 10. The 1999 and 2000 SPDs

disclosed this possibility, stating that when plan participants

terminated their employment with Morgan, their frozen benefit

would continue to act as a minimum benefit that they would receive

21 if it exceeded the cash balance benefit. Thus, Pessin fails to show how

these class-wide communications do not adequately describe the

potential implications of wear-away.

In addition, the 1999 and 2000 SPDs underscored that the final

average pay benefit would “includ[e] any early retirement subsidies.”

Id. at 51, 88. Due to his age and substantial years of service, Pessin

learned that he was eligible for early retirement subsidies, and he

therefore received certain additional benefits because of his continued

employment with JPMC. As a result, following the 1999 and 2000

SPDs, Pessin should have been aware that his final average pay

benefit might exceed his cash balance benefit. Accordingly, we agree

with the district court that both the 1999 and 2000 SPDs sufficiently

disclosed to plan participants the consequences of wear-away on

Pessin’s accrued benefits.

The 2005 SPD provides further information on the effect of

wear-away and its impact on a plan participant’s benefits. Published

22 after the merger that formed JPMC, the 2005 SPD advised those who

had “participated in the retirement plan of a heritage organization”

to consult the appropriate appendix. Id. at 119. For Pessin, this was

Appendix C. Similar to the 1999 and 2000 SPDs, Appendix C

explained that Pessin would have a minimum benefit determined

under the final average pay formula. Appendix C then clarified that

“[i]f . . . the minimum benefit[] exceeds your cash balance benefit, you

will receive that minimum benefit.” Id. at 159. As the district court

correctly acknowledged, this is exactly what happened here. See

Pessin,

, at *6 (“[Pessin’s] cash balance benefit was

lower than his minimum benefit under the prior formula, so, as

previously explained to plaintiff in the SPDs, he was entitled to the

minimum benefit when he requested benefits election packets in 2019

and 2021.”). 4

4 There are a couple of reasons why Pessin’s minimum benefit would be greater than his cash balance benefit. As previously explained, Pessin’s age and service qualified him for early retirement benefits, and, as a result, it was possible

23 Pessin argues that the appendices in the 2005 SPD are confusing

for several reasons, none of which are persuasive. First, he argues

that it is not clear that Appendix C applied to him because the

“appendices did not apply after December 31, 2004.” Appellant’s Br.

at 29. However, the 2005 SPD was issued in Fall 2005 and the

“Important Terms” section at the beginning of the document clearly

directs all plan participants to review the relevant appendices.

Second, Pessin contends that both Appendix A and Appendix C

applied to him. The 2005 SPD explained that Appendix A is for plan

participants who were part of the JPMC Plan between 2002 and 2004.

While this period might capture certain plan participants (including

Pessin) who were hired by Morgan and Chase, Appendix A directs

plan participants to consult different appendices depending on their

that his final average pay benefit (which included the early retirement benefits) would exceed his cash balance benefit at distribution. Additionally, the 2005 SPD describes how interest rates could also affect the value of a plan participant’s cash balance benefit at the time it is calculated. If interest rates were low at the time Pessin received his election packet, his cash benefit could have been significantly lower than his final average pay benefit.

24 individual circumstances. In that regard, the 2005 SPD noted that

Appendix C is applicable to those plan participants, like Pessin, who

became part of the Cash Balance Plan as of the end of 2001. Third,

Pessin argues that Appendix C does not illustrate how his cash

balance benefit is calculated. But these details are explained in the

main body of the 2005 SPD, just as they were also described in the

1999 and 2000 SPDs.

Lastly, Pessin argues that the 2005 SPD does not properly

address two potential reasons for why his final average pay benefit

might have exceeded the cash balance benefit: (1) that his cash balance

plan had an inappropriately low opening balance at the start of 1999,

or (2) that there were comparatively high additional accruals in the

final average pay formula during the five-year period between 1999

and 2003. Pessin, however, does not allege in the Amended

Complaint that either of these possibilities actually occurred. The

2005 SPD explained that interest rates and early retirement benefits

25 are two potential explanations for why a plan participant’s final

average pay benefit might be greater than their cash balance benefit.

This was sufficient to put someone in Pessin’s position on notice that

they might receive the minimum benefit rather than the cash balance

benefit.

Furthermore, all three SPDs gave plan participants specific

instructions, if needed, to learn more about their benefits. The 1999

and 2000 SPDs, for instance, state on the first page, “[f]or questions

about your cash balance plan benefits, call Morgan Direct” at the

phone number provided. J. App’x at 38, 74. The 2005 SPD advised

plan participants to direct questions to “accessHR” at the phone

number provided.

. The 2005 SPD also explained that

“projections prepared through accessHR” were available and would

“reflect the greater of your cash balance formula or your benefit

provided under the final average pay formula.”

. Similarly,

while the 2019 and 2020 Benefit Statements included only each plan

26 participant’s cash balance amounts, the Benefit Statements expressly

stated that they did not “reflect any minimum benefit that you might

have accrued under a prior plan formula” and that plan participants

who wanted “more information about minimum benefits . . . can call

HR Answers.”

. The Benefit Statements included the

same toll-free number that the 2005 SPD had given. Thus, Pessin had

several opportunities to learn more about his specific benefit package

and receive additional information. The JPMC Benefits Executive

therefore met its fiduciary duties by providing accurate disclosures

about Pessin’s pension benefits. The Benefit Statements and SPDs

told plan participants how to access more information about their

minimum benefits and to what extent wear-away might impact their

pension benefits at disbursement.

Pessin draws our attention to two recent decisions of district

courts in this Circuit to support his contention that Defendants’

disclosures are insufficient, but neither case is apposite. First, he relies

27 on Osberg v. Foot Locker, Inc.,

(S.D.N.Y. 2015),

aff'd,

(2d Cir. 2017). In that case, following the conversion

from a defined benefit plan to a cash balance plan, pension plan

participants brought suit against the plan’s fiduciaries under ERISA.

. The Plaintiffs argued, among other things, that

the defendants failed to articulate changes to the retirement plan in

the SPDs and that the plan participants were led to believe that they

would receive their frozen traditional benefit plus their cash balance

accounts.

The district court determined that the plan participants’

understanding was reasonable because inaccurate information was

provided in the SPDs including, specifically, that the disclosure

conflated the plan participants’ cash balance accounts with their final

accrued benefits. See

. Here, however, the SPDs and Benefit

Statements accurately outlined the difference between a plan

participant’s cash balance account and their final accrued benefit

upon termination of employment, and advised plan participants on

28 how to access more information about their minimum benefits and

obtain a benefit comparison. Plan participants in Osberg, in contrast,

were not told how to obtain the necessary information to compare

their accrued benefits under their prior plan to their cash balance

accounts. See

.

Likewise, in Amara v. CIGNA Corp., the plan participants

alleged that their employer prevented them from learning the amount

of their traditional defined benefits.

(D.

Conn. 2008), aff’d,

(2d Cir. 2009), vacated and remanded

on other grounds,

(2011), on remand,

(D. Conn. 2012), aff’d,

(2d Cir. 2014). The district court

found that the defendants directed their benefits department “not to

provide benefits comparisons under the old and new plans . . . even

though employees explicitly requested such a comparison.” Amara,

775 F.3d at 530–31 (cleaned up); see Amara,

.

Pessin does not make similar allegations here. The SPDs and Benefit

29 Statements, in this case, explained in detail how plan participants

could learn more information about their frozen final average pay

benefit and advised that plan participants should call certain direct

access “help lines” for more information about their benefit

comparisons. Additionally, Pessin does not dispute that when he

requested additional information regarding his benefit calculations,

he received calculation worksheets that accurately displayed his

minimum benefits along with the cash account balance. There is no

evidence that the Defendants withheld any information about his

benefits.

B. Section 102 Claim

Next, Pessin argues that the JPMC Benefits Executive violated

ERISA § 102,

, by failing to provide SPDs that

sufficiently disclosed wear-away to plan participants and by

allegedly misleading participants into believing that their accrued

benefits were growing instead of frozen during the wear-away

30 period. Section 102 “requires covered employee benefit plans to

furnish summary plan descriptions . . . of a plan’s terms to

participants.” Cooper v. Ruane Cunniff & Goldfarb Inc.,

(2d Cir. 2021). The SPDs need to be “sufficiently accurate and

comprehensive to reasonably apprise such participants and

beneficiaries of their rights and obligations under the plan.”

(quoting

(a)). For example, the disclosures must

describe circumstances that might result in the loss of benefits, and

“[t]he advantages and disadvantages of the plan[,] . . . without either

exaggerating the benefits or minimizing the limitations.”

(b). SPDs must be “written in a manner calculated to be

understood by the average plan participant.”

(a).

As explained when addressing Pessin’s § 404(a) claim, see supra

Section II.A, the SPDs in this case adequately disclosed wear-away to

plan participants and did not contain misleading information about

the effect of wear-away on Pessin’s benefits. The 1999 and 2000 SPDs

31 explained that (i) the JPMC Plan transitioned from using a final

average pay formula to a cash balance formula; (ii) plan participants’

benefits would continue to accrue using both formulas through

December 31, 2003; (iii) after December 31, 2003, a plan participant’s

accrued benefit under the final average pay formula would be frozen

and act as a minimum benefit; and (iv) following termination of

employment, plan participants would receive the larger of the

minimum benefit or the balance under the Cash Balance Plan, but not

both. The 2005 SPD reiterated these points and for further

clarification directed plan participants to appendices that detailed the

minimum benefit calculation and its comparison to the cash balance

calculation. Accordingly, we conclude that the relevant SPDs did

more than just describe the “greater of” formula but, in fact, described

wear-away and its consequences on plan participants’ accrued

benefits. Therefore, the district court properly dismissed Pessin’s

§ 102 claim because the JPMC Benefits Executive complied with its

32 requirements.

C. Section 105 Claim

Pessin also challenges the district court’s dismissal of his

distinct claim alleging that the JPMC Benefits Executive violated

ERISA § 105(a),

(a), by providing plan participants

subject to wear-away with Benefit Statements that showed their cash

balance benefits but not their accrued benefits under the final average

pay formula. Section 105(a) requires a pension benefit administrator

to provide periodic pension benefit statements that are individualized

for each plan participant. Among other information, the “pension

benefit statement . . . shall indicate, on the basis of the latest available

information . . . the total benefits accrued.”

(a)(2)(A)(i)(I). ERISA does not define the phrase “total benefits

accrued.” However, the statute does define the distinct phrase

“accrued benefit” to mean (as relevant here) “the individual’s accrued

benefit determined under the plan and . . . expressed in the form of

33 an annual benefit commencing at normal retirement age.”

§ 1002(23)(A).

The Defendants contended at oral argument that the term

“accrued benefit” has a technical meaning in the context of ERISA,

citing Hirt v. Equitable Retirement Plan for Employees, Managers, &

Agents,

(2d Cir. 2008). In Hirt, this Court was called on

to interpret the phrase “rate of benefit accrual,” as used in ERISA’s

prohibition on age-based reductions in benefit awards.

; see

(b)(1)(H)(i). The plaintiffs in that case cited the

definition of “accrued benefits” as offering partial support for their

reading of the phrase “rate of benefit accrual,” but the Hirt Court

rejected the comparison, invoking the rule that “[w]hen Congress

uses particular language in one section of a statute and different

language in another, we presume its word choice was intentional.”

Hirt,

(citation and quotation marks omitted). Thus, as

relevant here, Hirt stands for the narrow proposition that the

34 definition of “accrued benefit” should not be imported wholesale in

construing the distinct phrase “total benefits accrued.” The absence

of a definition for “total benefits accrued” does not help the

Defendants, however, as we find no case that offers a definitive or

contextual interpretation of “total benefits accrued” for purposes of

ERISA. We therefore interpret “total benefits accrued” consistent

with its ordinary meaning. See BP P.L.C. v. Mayor & City Council of

Balt.,

(2021) (“When called on to interpret a statute,

this Court generally seeks to discern and apply the ordinary meaning

of its terms at the time of their adoption.”).

Under a plain reading of “total benefits accrued,” Pessin has

stated a claim. Pessin alleges that the account statements he received

contained only the benefit he had accrued under the cash balance

formula and that this violated § 105(a) because the amount accrued

under the cash balance formula was not the benefit he was entitled to

receive. Rather, according to the Amended Complaint, from 2003 to

35 2019 his “total benefit[] accrued” was the amount he was entitled to

under the frozen final average pay formula. And yet that amount

never appeared on his account statements. The Defendants suggest

that the exact amount of a plan participant’s final average pay benefit

fluctuated even after it was frozen in 2003 due to changes in interest

rates, but this is not relevant at this stage of the litigation because

Pessin alleges that “his cash balance benefit never exceeded his final

average pay benefit,” an allegation that must be taken as true. J.

App’x at 20, ¶ 47. Thus, the account statements consistently failed to

provide Pessin with his “total benefits accrued,” in violation of

§ 105(a).

This reading is not only consistent with the text of ERISA, but

also makes sense in practice. “Congress’ purpose in enacting the

ERISA disclosure provisions [was to] ensur[e] that the individual

participant knows exactly where he stands.” Firestone Tire & Rubber

Co. v. Bruch,

(1989). ERISA was meant “to provide

36 specific data to participants and beneficiaries concerning the rights

and benefits they are entitled to under the plans and the

circumstances which may result in their not being entitled to

benefits.” S. Rep. No. 93-127, at 27 (1974). Pessin’s disclosure claim

does not raise some complex or technical argument about the esoteric

mechanisms behind his pension plan. He simply claims that the

Defendants had to tell him the amount of pension benefits he had

earned to date, information that lies at the very core of what a plan

participant would want to know.

The Defendants offer three counterarguments in contending

that the pension benefit administrator provided Benefit Statements

that properly indicated Pessin’s total benefits accrued under § 105(a).

First, the Defendants point to the following disclaimer on the pension

benefit statements that Pessin received: “This statement does not

reflect any minimum benefit that you might have accrued under a

prior plan formula. If you would like more information about

37 minimum benefits, you can call HR Answers.” J. App’x at 173. The

Defendants argue “[t]his was enough to ‘indicate’ Pessin’s total

benefits because it provided the amount in the participant’s cash

balance account while also pointing to a possibly higher minimum

benefit and the opportunity to obtain more information about that

minimum benefit.” Appellees’ Br. at 36. But the Defendants’ reading

of “indicate” stretches that verb well past its breaking point. Even

accepting the Defendants’ preferred definition of “indicate” as

meaning “to point out or to,” id. (quoting Webster’s New

International Dictionary of the English Language 1265 (2d ed. 1953)),

the Defendants did not “point out” the “total benefits accrued” by

Pessin, but rather indicated where that information might be obtained.

Section 105(a) plainly requires a statement of the amount of benefits

an individual has accrued to date. This is confirmed by the

requirement that the statement be based “on the basis of the latest

available information.”

(a)(2)(A)(i). This phrase, and

38 the requirement to provide benefit statements, would be rendered

meaningless if it could be satisfied by the mere suggestion that an

unspecified higher minimum benefit “might” apply.

Second, the Defendants observe that “ERISA allows the

administrator of a defined benefit plan to satisfy its obligations under

without providing any pension benefit statement at

all.” Appellees’ Br. at 37. It is true that, as an alternative to providing

periodic pension benefit statements, a defined benefit plan

administrator may provide the participant with a “notice of the

availability of the pension benefit statement and the ways in which

the participant may obtain such statement.”

(a)(3)(A).

This provision does not help the Defendants here, however, because

the documents that the Defendants periodically provided to Pessin

were plainly intended to be Pessin’s Benefit Statements. Pessin

alleges these were, in fact, Benefit Statements and, more importantly,

that he understood them to be his Benefit Statements. By electing to

39 provide these statements, the Defendants plainly triggered the

disclosure requirements of § 105(a). While penalizing the Defendants

for providing more information than is strictly required may seem

counterintuitive at first glance, upon reflection this rule makes perfect

sense. If Pessin had simply received a piece of paper in the mail every

year stating, “your pension benefit statement is available, call this toll-

free number to get it,” there is a good chance that he (and any other

reasonably prudent pensioner) would have been curious about what

his benefits were and would have called to get a copy of the statement.

At this point, he would have learned that his benefits were effectively

frozen and had been since 2003. Instead, Pessin received documents

titled “Account Statement[]” that, by including a steadily growing

cash account balance, led him to incorrectly believe his pension

benefits were growing when they were not. Pessin thus had no reason

to inquire further about what his benefits were beyond a suggestion

that some alternative minimum “might” apply. In short, the JPMC

40 Benefits Executive may not have been under a duty to provide Pessin

with a Benefit Statement, but once it did so, it was obligated to

provide a Benefit Statement that accurately reflected his total benefits

accrued. See Est. of Becker v. Eastman Kodak Co.,

, 8 (2d Cir.

1997) (explaining that an ERISA fiduciary has “not only a duty not to

misinform, but also ‘a duty upon inquiry to convey to a lay

beneficiary . . . correct and complete material information about his

status and options’”).

Third, the Defendants argue that calculating the alternative

minimum benefit for every plan participant would be unduly

burdensome, and that listing two figures on account statements

would have risked confusing participants. As a threshold matter,

given the clarity of Congress’s direction that benefit statements

include the “total benefits accrued,” it is not at all clear that this Court

should look past ERISA’s plain text to consider these policy

arguments. See Nat’l Ass’n of Mfrs. v. Dep’t of Def.,

, 131

41 (2018) (concluding that policy arguments did not “obscure what the

statutory language makes clear”).

As to the burden of calculating both figures, the Benefit

Statements were individualized statements, and the Defendants do

not dispute that they could have calculated the final average pay

benefit any time an individual requested it. Thus, it is not clear why

providing that alternative minimum as of some fixed date would

have imposed a materially greater expense. Ultimately, the risk of

confusion that might result from including two numbers on the

Benefit Statements does not outweigh the risk of confusion from what

the Defendants did, which was to include only one number, which

did not reflect how much Pessin would receive if he left the company.

At bottom, the language of § 105(a) is clear. The Benefit Statements

provided to Pessin were required to contain Pessin’s “total benefits

accrued” and yet they did not. Accordingly, we conclude that the

district court erred in dismissing Pessin’s § 105(a) claim.

42 D. Section 404(a) Claim Against the JPMC Board

Turning to Pessin’s § 404(a) claim, he argues that the JPMC

Board breached its fiduciary duties through its failure to monitor the

performance of the JPMC Benefits Executive. ERISA allows for plan

fiduciaries to allocate their fiduciary responsibilities.

(c). The appointing fiduciary, however, continues to have a

fiduciary duty to monitor the activities of its appointees. See

§§ 1104(a)(1), 1105(a), (c).

The parties do not dispute that Pessin’s failure to monitor claim

is a derivative claim and therefore requires an underlying breach. See

Coulter v. Morgan Stanley & Co.,

(2d Cir. 2014). The

district court determined that Pessin could not maintain a claim for

breach of the duty to monitor, because he did not allege any

underlying breach of the JPMC Benefits Executive’s duties under

ERISA. Because, as explained above, Pessin plausibly alleges that the

JPMC Benefits Executive breached its duties under ERISA § 105(a),

43 the district court erred in dismissing Pessin’s failure to monitor claim.

E. Defendants’ Alternative Arguments

The Defendants reiterate that, in their motion to dismiss, they

argued in the alternative that Pessin’s claims are barred because

(i) they are untimely and (ii) he released them in exchange for

severance payments. The district court did not rule on either issue.

Because “[w]e are ‘a court of review, not of first view,’” Havens v.

James,

(2d Cir. 2023) (quoting Decker v. Nw. Env't Def.

Ctr.,

(2013)), we leave these issues for the district

court to consider in the first instance.

III. Conclusion

In sum, we hold as follows:

(1) The district court did not err in granting the Defendants’

motion to dismiss Pessin’s ERISA § 404(a) claim against the

JPMC Benefits Executive. The Defendants’ written

disclosures sufficiently disclosed to plan participants how

the pension plan works and the effect of wear-away on a

44 participant’s accrued benefits after a traditional defined

benefit plan is converted to a cash balance plan.

(2) The district court did not err in granting the Defendants’

motion to dismiss Pessin’s ERISA § 102(a) claim against the

JPMC Benefits Executive. The JPMC Benefits Executive

issued SPDs that adequately apprised plan participants of

their rights under the pension plan and did not mislead

participants into thinking that their frozen benefits were

increasing during the wear-away period.

(3) The district court erred in granting the Defendants’ motion

to dismiss Pessin’s ERISA § 105(a) claim against the JPMC

Benefits Executive, because pension plan administrators are

required to provide plan participants with annual benefit

statements that inform them of their total accrued benefits,

and Pessin’s Benefit Statements showed only the cash

balance benefit even though that was less than the benefit to

45 which Pessin would actually be entitled.

(4) The district court erred in dismissing Pessin’s ERISA

§ 404(a) claim against the JPMC Board. Pessin adequately

alleged an underlying breach by the JPMC Benefits

Executive pursuant to § 105(a) with respect to the Benefit

Statements, and accordingly, Pessin adequately alleges a

failure to monitor claim against the JPMC Board in that

respect.

Accordingly, we AFFIRM IN PART and REVERSE IN PART

the judgment of the district court, and REMAND the case for further

proceedings consistent with this opinion.

46