Guenther et al v. BP Retirement Accumulation Plan et al

Filing 507

FINDINGS OF FACT AND CONCLUSIONS OF LAW. The Court finds that the plaintiffs are entitled to equitable relief under Section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3). The parties are ORDERED to file supplemental briefs regarding the appropriate form of that equitable relief. Each side may file a brief on or before May 1, 2024, and each side may respond to the other sides brief on or before May 15, 2024. (Signed by Judge George C Hanks, Jr) Parties notified. (bkt4)

United States District Court
Southern District of Texas

ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
FREDRIC A. GUENTHER, et al.,
Plaintiffs,
VS.
BP RETIREMENT ACCUMULATION
PLAN, et al.,
Defendants.

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March 28, 2024
Nathan Ochsner, Clerk

CIVIL ACTION NO. 4:16-CV-995

FINDINGS OF FACT AND CONCLUSIONS OF LAW
This case, “yet another in a long list of cases challenging an employer’s
conversion to a cash balance retirement plan under the Employee Retirement Income
Security Act (“ERISA”)[,]” 1 was tried to the bench for 14 days. The primary issue is the
sufficiency of the explanation of the conversion of a defined benefit pension plan from a
final average pay formula to a cash balance formula. The Court finds that the plaintiffs
are entitled to equitable relief under Section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3).
The parties are ORDERED to file supplemental briefs regarding the appropriate form
of that equitable relief on the schedule set forth below.
The following are the Court’s findings of fact and conclusions of law. See FED.
R. CIV. P. 52. Any conclusion of law more properly characterized as a finding of fact is
adopted as such, and any finding of fact more properly characterized as a conclusion of
law is adopted as such.

Amara v. CIGNA Corp., 534 F. Supp. 2d 288, 295, 343 & n.1 (D. Conn. 2008) (Amara I)
(collecting cases) (“Despite their popularity among employers, cash balance plans have spawned
considerable litigation . . . and in some cases, complaints by employees resulted in partial or
complete rollbacks of the proposed changes.”).

1

1

2

A. FINDINGS OF FACT
1.

BP America Inc. is a Delaware corporation that was incorporated on July

19, 1974.
2.

On June 23, 1987, all the outstanding shares of common stock of

Standard Oil of Ohio (“Sohio”) were transferred to BP America.
3.

Effective January 1, 1988, BP merged a number of other pension plans

into the Sohio Retirement Plan, and restated and amended the plan to be called the BP
America Retirement Plan. The plan merger was effectuated through the adoption and
restatement of an amended plan document. The plan’s name, which originally became
effective 10/01/1932, was changed from The Retirement Trust for Employees of the
Standard Oil Company and Subsidiaries Plan 001 to BP America Retirement Plan
(“ARP”).
4.

Under the ARP, participating employees did not bear the risk of

fluctuations in interest rates or the market. A participant’s retirement benefit under the
ARP was determined by multiplying a participant’s years of service by a specified factor.
The resulting product was then multiplied by the participant’s final average earnings,
with a specified portion of the participant’s expected Social Security benefit subtracted
from the product computed.
5.

Under the ARP, BP had to buy a retiring employee an annuity that paid a

specified sum irrespective of whether falling interest rates made it more expensive for
BP to pay for that annuity. And falling interest rates also meant that any sum BP set aside
to buy that annuity would grow more slowly over time, thereby requiring BP to set aside
more money to make any specific sum available at retirement.

3

6.

The ARP plan also contained an early retirement benefit commencing at

the age of 55 which was a significant benefit to older employees.
7.

BP America Inc., a Delaware corporation, was the Plan Sponsor.

8.

The ARP plan named BP America, Inc.’s Vice President - Human

Resources as the Plan Administrator.
9.

BP consolidated fourteen (14) other pension plans into the ARP effective

January 1, 1988.
10.
and

The Vice President of Human Resources did not execute the Restated
Amended plan until December 20, 1988. S.R. Robertson was the Plan

Administrator at this time.
11.

Effective January 1, 1989, BP amended the ARP and renamed it the BP

Retirement Accumulation Plan (“RAP”). BP replaced the final average pay formula in
the ARP with a “cash balance” benefit formula.
12.

Defendant BP Corporation North America Inc. (“BPCNA”) is a

subsidiary of BP America Inc. and is the current plan sponsor of the BP Retirement
Accumulation Plan (“RAP”).
13.

Leslie “Les” Owen began working for Sohio in 1970.

14.

Owen was employed by Sohio and was a participant in the Sohio

Retirement Plan at the time BP completed its acquisition of Sohio in 1987.
15.

Owen retired from employment with BP in 2011 and elected to receive a

lump sum distribution of his pension benefit.
16.

Fredric “Fritz” Guenther began working for Sohio in 1979.

4

17.

Guenther was employed by Sohio and was a participant in the Sohio

Retirement Plan at the time BP completed its acquisition of Sohio in 1987.
18.

Guenther retired from employment with BP in May 2018 and elected
to receive a lump sum distribution of his pension benefit.

19.

Walton Fujimoto began working for Sohio in 1977.

20.

Fujimoto was employed by Sohio and was a participant in the Sohio

Retirement Plan.
21.

Fujimoto retired from employment with BP in April 2014 and elected to

receive a lump sum distribution of his pension benefit.
22.

After retiring from BP, on December 31, 2014, Fujimoto was offered and

signed a settlement agreement.
23.

BP Exploration Inc. offered its employees who retired between April 15,

2014, and September 15, 2014, including Plaintiff Walt Fujimoto, a one-time $75,000per-employee payment in order to accomplish reductions in staffing that would be
necessitated by a divestiture. BP required the employee to sign a non-negotiable
Confidential Settlement and Release of Claims (Settlement Agreement) to receive this
payment.
24.

On December 15, 2014, at 2:57 p.m. Alaska Time, Senior BP Counsel

Helena Hall, referencing the $75,000 payment and Settlement Agreement, informed
Fujimoto through his counsel, “In sum, this offered payment is not related to any claims
the Fujimotos may feel they have related to their pension benefits.”
25.

In the Fall of 1987, Kwasha Lipton, a consulting firm, presented a

management briefing to BP America, Inc., for converting to a cash balance pension

5

formula. One of the listed reasons for converting was to reduce costs. One of the financial
objectives supporting conversion was control of inflation -related benefit costs and
liabilities.
26.

The Fall 1987 Kwasha Lipton management presentation materials

illustrated that, in comparing the current pension plan to a cash balance plan that at age
65, a participant would receive less under the RAP because the cash balance plan
repositioned costs and benefits.
27.

The record contains an agenda for a November 6, 1987 pension plan

design meeting.
28.

Following the November 6, 1987 meeting, a summary of the discussion

and conclusions reached during the meeting was prepared for BP by Kwasha Lipton.
These notes reveal employee reaction to the conversion was a factor considered by
management. The meeting minutes reflect that management understood the final average
pay formula was the “richest formula for all employees.”
29.

On March 28, 1988, Kwasha Lipton prepared a memorandum to Paul

McAuliffe, Liz Rossman and Ellen Collier entitled “Uniform Salaried Pension Plan
Study” wherein the general goals of a pension plan payment were discussed , particularly
“our goal of a uniform plan for all salaried employees of BP America without incurring
a substantial cost increase.”
30.

Paul McAuliffe joined Sohio from the Department of Labor as their labor

relations and employee benefits attorney, then switched to the human resources
department until he left BP at the end of 1990. Elizabeth Rossman was the manager of
the pension program in Mr. McAuliffe’s group. Ellen Collier joined BP as the conversion

6

commenced as the Senior Benefits Analysis at BP America, Inc.
31.

On April 12, 1988, Kwasha Lipton prepared another memorandum for

Paul McAuliffe, Liz Rossman and Ellen Collier entitled “Uniform Salaried Pension Plan
Study” that provided benefit comparisons under the then-current pension program and a
cash plan and a brief discussion of the relative costs of the two types of plans.
32.

On April 19, 1988, Kwasha Lipton faxed Ellen Collier a graphic

comparison of the two plans showing that at age 55 through approximately age 62, a fullcareer employee would receive more retirement benefits under the existing plan :

7

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33.

On April 20, 1988, McAuliffe sent a memorandum to the BP Chief

Executive Officer’s Committee, which consisted of the Chief Financial Officer, Lord
Edmund John Phillip Browne; the Chief Executive Officer of BP North America, James
Ross; and the head of human resources, Syd Robertson. In the memorandum, McAuliffe
highlighted that, since converting to a cash balance formula would be “a radical change
from past pension practice, thorough and skillful employee communication would be
essential to avoid confusion and suspicion.”
34.

In June 1988, materials were prepared by Kwasha Lipton for a BP

management briefing on the proposed cash balance plan design. These briefing
materials provided comparison charts of the two plan formulas that revealed that an
employee retiring at the average age of 60 would receive less pension benefits under the
cash balance plan formula than the employee would receive under the current pension
plan formula. Also included was a comparison of the current and cash balance plans
based upon the lump sum value of the benefit “earned,” indicating that at approximately
age 46, the current pension plan began outperforming the proposed cash balance plan:

9

35.

On July 13, 1988, Paul McAuliffe prepared a memorandum to the Chief

Executive Officer’s Committee. This memorandum sought approval to amend the plan
formula to the cash balance formula. The memorandum stated the plan conversion
provided BP with flexibility in managing costs because “’final pay’ plans” like the ARP
“build in an inflexible multiplier that can lead to significant ‘built-in’ increases in
pension cost, particularly as a work force ages.” McAuliffe’s memorandum suggested
that company-supported saving plans that allowed retirement accumulation outside the
pension plan were the vehicle BP should use for employee retirement inflation protection
rather than the final average pay plan. It also acknowledged that the cash balance formula
was “emerging[,]” was “not yet majority practice,” and “depart[ed] from the ‘final pay’
tradition which [wa]s still predominant practice with the BP Group.”
36.

On July 22, 1988, Kwasha Lipton prepared a management briefing that

10

discussed the plan design.
37.

On August 10, 1988, Kwasha Lipton prepared a comparison of the new

plan as a percentage of the old plan at various ages, service levels, and interest rates.
38.

On August 15, 1988, Mr. McAuliffe prepared a memorandum to Lord

Browne on the plan amendment noting that the current plan’s legal structure “entail[ed]
a significant degree of prefunding of the ultimate pension obligation” and tied up money
“within the pension trust that might be better used in other Company operations.” The
enclosed attachment projected that a plan conversion would reduce BP’s pre-funding
obligation by $5 million in 1989 and $11 million for each of the fiscal years 1990-1993.
39.

On August 19, 1988, Kwasha Lipton provided BP with details of the

proposed account balance plan formula.
40.

Kwasha Lipton prepared a memorandum to Elizabeth Rossman on

August 26, 1988, with materials for Ms. Rossman to present to Lord Browne regarding
the proposed conversion. The letter recognized a “problem group” of employees between
ages 40-49 who would not receive a comparable retirement benefit under the proposed
plan amendment when that “problem employee” retired. The design solution
recommended to Lord Browne was a “tradeoff” between the current plan benefits and
the amended plan benefits wherein the problem employee would receive less than 100%
of the current plan age 60 retirement to avoid giving the problem employee greater than
100% of the current plan benefit at an age 65 retirement.
41.

Tables enclosed with the Kwasha Lipton August 26, 1988 letter indicated

that 29.5% of the employees were in the “problem group” and most would receive benefits

11

under the amended plan formula that were less than the benefits under the current plan
formula between the retirement ages of 55 to 60, with or without service caps. Kwasha
Lipton further refined the analysis to each problem employee’s specific age at the time
of transition.
42.

One of the tables enclosed with the August 26, 1988 letter also demonstrated

that, when a service cap was retained, some of the age 30-39 employee group—an
age group that represented 41.6% of the workforce—also received benefits under the
amended plan formula that were less than the benefits under the current plan formula at
retirement age 55 and all of them received less at retirement age 60. Another of the tables
enclosed with the August 26, 1988 letter expressly identified the anticipated shortfalls
for employees aged 35 through 49 with different years of service:

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43.

On August 26, 1988, Kwasha Lipton also prepared a revised account plan

formula “[t]o address the tendency of the plan to over provide for employees with very
long service[.]”
44.

On September 1, 1988, Kwasha Lipton faxed BP lump sum benefits

comparisons at termination or retirement at several ages between 35 and 65 for two
example employees, one an employee hired at age 30 with a starting salary of $40,000.00
and the other an employee hired at age 40 with a starting salary of $40,000.00 . For both
employees, the value was significantly higher at retirement ages 60 and 62 under the
ARP than under the proposed RAP. For the employee hired at age 40, the value of the
retirement benefit was significantly higher at retirement age 65 under the ARP than
under the proposed RAP.
45.

On September 2, 1988, Kwasha Lipton illustrated benefits due at

retirement with a 35-year service cap for B.E Davies, age 47; W.J. Johnson, age 47; and
W.A Sears, age 54. Kwasha Lipton’s comparison showed that, for retirement ages 5561, all three workers received fewer pension benefits under the cash-balance RAP
formula than the ARP formula.
46.

On September 21, 1988, Mr. McAuliffe wrote a memorandum to the

Chief Executive Officer’s Committee to address two concerns it had expressed. In
explaining how the new plan worked, Mr. McAuliffe indicated that the employee’s
pension balance would grow based on “interest credits” which “would vary annually,

14

based upon market interest rate indicators.” Mr. McAuliffe also reported that the
financial impact of the new plan was positive for BP because liability growth associated
with the new plan “would be more controllable in the future as it would be less sensitive
to inflation” than liability growth under the ARP. One of the reasons Mr. McAuliffe
advanced for adopting the plan was that it assisted BP in managing its costs related to the
plan because it removed the risk to the Company associated with increases in inflation
and eliminated the “inflexible multiplier” found in “’final pay’ plans” like the ARP. In
his deposition under Federal Rule of Civil Procedure 30(b)(6), Clifford York, BP’s Head
of Pensions and Benefits for the Americas, acknowledged that “you could infer that” BP
shifted the inflation risk from itself to its employees.
47.

A chart dated October 1, 1988, showed one objective of the plan design

was to eliminate early retirement subsidies and avoid major expense increases.
Moreover, an “Adoption of Account Balance Pension Plan” management briefing paper
dated November 16, 1988, was prepared wherein the plan conversion was discussed, and
charts with features, financial impact, and restructuring comments were included. The
briefing indicated the principal objective in restructuring the plan design was to improve
employee understanding and appreciation of pension benefits, which was to be achieved
by communicating pension growth throughout an employee’s career as an increasing
lump sum account balance; and by accelerating the build-up of pension value during the
earlier career stages and younger ages. This paper acknowledged, “More rapid build-up of
pension accruals in early career generates a more adequate and portable benefit for the
employee who terminates before age 55. This is offset by scaling back the generous early

15

retirement subsidies currently provided to employees retiring between ages 55 and 60.”
This paper acknowledged that the cash balance was not yet a majority practice in the U.S.
and was an emerging pension plan design concept. The memorandum informed BP
management that there were benefits to BP for amending the plan, including a slightly
lower total pension liability. It also informed management that the conversion resulted
in more controlled pension liability in future years that was less sensitive to inflation and
improved funding flexibility. An accompanying exhibit indicated the plan amendment
was designed to “control costs[.]” This briefing also informed management that interest
credit accruals would vary annually according to changes in the one -year T-bill market.
48.

On November 17, 1988, Mr. McAuliffe prepared a memorandum to A. S.

Herbert, head of Group Pensions at BP plc in London, forwarding information provided
to the BP America CEO’s Committee concerning the proposed plan amendment. An
accompanying note indicated Mr. McAuliffe directed a staff member to assemble an extra
set of the same materials and send them to Syd Robertson, the Plan Administrator.
49.

On November 18, 1988, a draft Kwasha Lipton memorandum

summarized the plan design and indicated that an employee communication campaign
would be detailed in a separate memo. On December 13, 1988, the major features of the
RAP were set out in a memorandum stating that the plan would become effective January
1, 1989.
50.

In the “Adoption of Account Balance Pension Plan” management

briefing paper, BP acknowledged employee retention was one of its goals in
communicating the conversion to employees.

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51.

Before the formula was amended, the prior plan formula provided

participants with an early retirement benefit at age 55 and an unreduced retirement benefit
beginning at age 60. BP knew at adoption that the new cash balance plan formula would
accrue lower retirement benefits at age 55 than the existing average pay formula.
52.

Kwasha Lipton authored a letter dated November 17, 1988, directed to

Elizabeth Rossman, Manager of Pension Plans, acknowledging a meeting with Ms.
Rossman and others at Kwasha Lipton the previous week. This letter summarizes BP’s
objective in communicating and introducing the cash balance plan amendment. The stated
objectives included “market[ing] the features of the new plan” and “ensur[ing] a smooth
transition to the new plan” while “recognizing the existing climate within the employee
population[.]”
53.

To that end, on November 17, 1988, Kwasha Lipton outlined a

communication campaign for BP. Included in the communication campaign was the
recommendation for a letter from senior management introducing and endorsing the
amended plan “accompanied by a letter from the business head custom-tailored to suit a
particular segment of the organization[;] a highlights brochure providing a brief overview
of the plan; and employee meetings led by knowledgeable benefits experts.
54.

On November 18, 1988, a memorandum from O. T. Williams, BP’s

corporate attorney, was circulated to Ellen Collier and others, which included attachments
from Kwasha Lipton. These attachments outlined objectives for the new plan, including
that part of the plan’s purpose was to increase employee appreciation for pensions; ensure

17

BP maintained a “competitive position;” and “enhance the company’s flexibility in
managing costs.” The materials from Kwasha Lipton included a long list of “Suggested
Communication Elements[.]”
55.

On November 28, 1988, Kwasha Lipton prepared a letter to Liz Rossman

with a draft letter for senior management to use introducing the new account balance plan.
The letter pointed out that the proposed senior management letter might have a statement
that “[wa]s not entirely correct” for “a small group of employees[.]” The statement in the
proposed letter that was of concern stated, “[The RAP] is designed to provide a fair
transition to assure that benefits under [the RAP] will at least equal – if not exceed – what
you would have earned under your prior plan.”
56.

Consistent with the promotional campaign, BP prepared a uniform set of

materials to be used throughout the organization for use by the human resources
organization that included scripts and a slide deck so that human resources could deliver
information at the planned employee meetings. BP had training sessions with human
resource personnel within the organization called “train the trainer” seminars. The human
resource groups were trained to give presentations at the employee meetings, and the
presentation materials were designed to ensure uniform, consistent messaging throughout
BP.
57.

On December 5, 1988, Kwasha Lipton provided a second draft of a senior

management letter for BP’s suggestions and a first draft of a short highlights brochure. The
short brochure indicated that supplemental interest credits “are designed to ensure that your
retirement benefit under the new Plan will be comparable to the benefit you would have
received under your prior pension plan had it continued unchanged.”
58.

On December 5, 1988, Kwasha Lipton provided BP with a first draft of a
18

“long version” of the highlights brochure. The long version of the highlights brochure, like
the short version, indicated that supplemental interest credits “are designed to ensure that
your retirement benefit under the new Plan will be comparable to the benefit you would
have received under your prior pension plan had it continued unchanged.”
59.

On December 8, 1988, Kwasha Lipton provided a proposed form letter for

Syd Robertson, Vice President - Human Resources (the Plan Administrator at that time),
to send to employees that contained language stating that “[t]he Plan [wa]s designed to
provide a fair transition to assure that benefits under the new Plan will at least equal – if
not exceed – what you would have earned under your prior plan.”
60.

On December 9, 1988, Kwasha Lipton wrote Elizabeth Rossman and

provided a third draft of the senior management letter and a second draft of the short
highlights brochure.
61.

On April 11, 1989, Elizabeth Rossman utilized a form memorandum

directed to several human resource employees working in various locations and for
different BP subsidiaries, informing them of a significant revision to the ARP and
explaining that “[a] detailed communications campaign will begin in June to announce and
explain the Retirement Accumulation Plan to all participating employees.” The
memorandum explained that training sessions were scheduled to prepare human resources
staff members to review communications materials, explain the retirement plan revisions
in extensive detail, and define the human resources staff’s role in ensuring a smooth
transition to the revised plan.

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62.

On April 21, 1989, a sixth draft of the long highlights brochure was

prepared. It stated that “The plan is designed to provide a retirement benefit that is
comparable to - and, in most cases, better than - the benefit you would have received under
the prior pension formula.” In the “Supplemental Interest Credits” section, it stated that
“Supplemental interest credits are designed to provide a benefit under the Retirement
Accumulation Plan that is comparable to the benefit you would have received under the
prior pension formula had it continued unchanged.”
63.

On April 25, 1989, Kwasha Lipton provided the thirteenth draft of the short

highlights brochure. Therein, BP added a heading called “It’s Secure” that said, “Your
pension benefit will continue to be fully supported by contributions from the company. This
means that BP America - not you - bears all the risk associated with investments in the
Plan.”
64.

Guidelines for human resources leaders were included in a document

prepared by Kwasha Lipton entitled “Strategies for Conducting Successful Meetings.”
Management was given the goal to positively promote the conversion to employees so as
to retain the employees. The materials informed the human resources meeting leaders that
“[t]he degree of employees’ acceptance of the Retirement Accumulation Plan will
depend—in part—on how well it is communicated” and that “interaction at the meetings
will determine how well [employees] understand the Plan and how favorably they receive
it.” Meeting leaders were instructed to use a set of 35mm slides and a script provided to
them, including, if necessary, the script’s “Question and Answer section[.]” The leader was
to hand out a detailed brochure (the long highlights brochure) at the meeting that provided
a more detailed description of the plan. The scripted materials suggested that human
resource employees advise employees to review the long highlights brochure after the
20

meeting.
65.

Other management materials included slides for management to use during

the presentation. One slide informed employees that the long highlights brochure was
intended to be a lasting reference piece.
66.

The scripted presentation informed the participants that the opening account

balance included the early retirement benefit but did not explain that it was removed from
the plan or what it meant in terms of the retirement benefit paid between ages 55 and 65.
67.

The scripted presentation informed participants that the regular interest was

the average one-year treasury bill plus 1% but did not explain that interest rate fluctuation
was a new risk shifted to the employees.
68.

A set of slides illustrating the highlights of the RAP was also promulgated

as part of this management training. These slides illustrate that BP “bears investment risks”
and that the interest credits are tied to the prior year’s one-year treasury bill rate plus 1%
but did not explain that BP employees now bore the risk of interest rate variability.
69.

As part of the management training, BP provided anticipated questions and

required answers for the human resource managers. One of the anticipated questions about
work hours that counted towards accumulation benefits informed BP employees that those
with a normal work schedule in excess of 40 hours would continue to get credit for the
extra regular scheduled work hours. Another anticipated question on interest rates gave
interest rates from 1968 through 1988, many of which were below the current treasury bill
rate.
70.

A final draft of a video script relating to the RAP, dated May 2, 1989, was

prepared for Christopher Bratt, manager of video communications at BP America. This
script included language highlighting the ease of figuring out one’s benefit under the RAP
21

and how difficult other pension plans were to understand.
71.

A copy of the RAP Major Features slides and a script were given to BP

human resources representatives. None of the negative implications of the plan were
highlighted in any of these slides.
72.

Beginning in the summer of 1989, BP announced the amended plan formula

to its employees and issued several communications to them describing the new formula.
73.

On or about June 12, 1989, BP distributed a letter from James Ross , then

the Chief Executive Officer of BP America, to all BP employees. The parties refer to this
letter as “the Ross letter.”
74.

Included with the Ross letter was a copy of the short highlights brochure

entitled “Introducing the Retirement Accumulation Plan.” The parties refer to the short
highlights brochure included with the Ross letter as “the Short Brochure.”
75.

The Ross letter was printed on BP letterhead and addressed to “Dear

Colleague[.]” The Ross letter announced “a major overhaul of the BP America pension
program.” In the letter, Mr. Ross claimed the existing pension plan was “fully competitive”
but criticized it as having significant faults, including that “[i]ts formulae were extremely
complicated, and difficult to understand[,]” and touted the new plan formula as “much
simplified.” Mr. Ross further wrote that:
We have preserved the principal strengths of the former plan. BP America
pays the full cost. BP America is responsible for funding, and bears the full
investment risk. And the plan provides a retirement benefit to career
employees that is comparable to the fully competitive benefit under the prior
formula.
Mr. Ross explained the conversion was “not a cost-cutting exercise” and
expressed confidence that the employees would “share [his] enthusiasm” for the amended
plan.
22

76.

Consistent with Kwasha Lipton’s communication campaign, George

Nelson, President, BPX (Alaska) Inc., executed a letter dated June 12, 1989, on BP
Exploration (Alaska), Inc. letterhead to all staff that enclosed the James Ross memorandum
indicating it was a new pension plan called the Retirement Accumulation Plan, effective
January 1, 1989.
77.

Nelson’s letter enclosed the Short Brochure. The Short Brochure informed

participant employees that:
x

Pension plans were the least understood employee benefit based on complicated
formulas, “so most people do not understand how their pension works.”
x “[y]our pension benefit will continue to be fully supported by contributions from
the Company. This means that BP American – not you – bears all the risk
associated with investments in the Plan.”
x In the next few weeks, employee participants would be invited to attend a
meeting to introduce the Plan and learn more about how it worked.
78.

BP subsequently distributed the long highlights brochure at employee

meetings. The parties refer to the long highlights brochure as “the Long Brochure.”
79.

On July 19, 1989, C.M. Laird, Manager, Personnel Support, sent another

letter on BP Exploration (Alaska) Inc. letterhead to employees regarding the RAP and
informing them that employee presentations on the new plan would be held the week of
July 24th for Anchorage and North Slope employees. The Long Brochure was enclosed
with the letter. Mr. Laird noted the purpose of the meetings was for employees to gain “a
better understanding of the Plan’s enhancements.”
80.

The Long Brochure represented to employee participants that:

x unlike most pension plans, the RAP “is easy to understand[;]”
23

x “[t]he Plan is designed to provide a retirement benefit that is comparable to —
and, in most cases, better than — the benefit you would have received under the
prior pension formula.”;
x

BP America bears all the risk associated with Investments by the Plan;

x BP America pays the full cost of the Plan;
x The opening account balance included the value of the early retirement benefit
under the prior benefit formula;
x Supplemental interest credits on the opening balance were being provided
because the ARP formula provided lower benefits than would have been earned
under the RAP had it always been in effect; and
x The Long Brochure was a summary of the plan but not a summary plan
description.
81.

The average participant understood a comparable retirement benefit was

one that was at least equal to what they would have received under the prior benefit
formula.
82.

After the employee presentations, BP sent out opening balance letters that

did not compare the ARP and the RAP.
83.

On December 26, 1989, Mr. McAuliffe wrote to D. R. Bankowski, Vice-

President, Human Resources (and the Plan Administrator at that time), requesting approval
of the adoption of the RAP. Mr. Bankowski executed a concurrence to the approval of the
plan adoption.
84.

The final plan was adopted on December 28, 1989, but was retroactively

adopted effective January 1, 1989. Until this plan document was adopted, there was no plan
24

document for the participants to look at.
85.

The cash balance plan shifted the risk of a drop in interest rates and other

investment risks from BP to its employees. In contrast to the prior ARP plan, under the cashbalance RAP plan, the retirement income fluctuates depending upon the Interest Crediting
rate, the pattern of salary increases, current market rates, as well as other variables. Under
the cash balance plan, BP did not have to buy a retiring employee an annuity that paid a
specific sum as they had to do under the ARP. The employee would simp ly receive
whatever sum his “account” contained. And falling market interest rates meant that the
account’s lump sum would earn less money each year after the employee retired. Annuities,
for example, would become more expensive (any fixed purchase price p aying for less
annual income). At the same time falling interest rates meant that the individual account
would grow more slowly over time, leaving the employee with less money at retirement.
86.

The summary plan description for the RAP was published in July 1991. It

also was not available for plan participants to look at in 1989.
87.

BP never provided class members with a specific comparison of their

retirement benefit under the ARP and the RAP, even when requested.
88.

Nothing BP sent out to participants in the intervening years alerted plan

participants that BP’s promise of a comparable retirement benefit was false for the Class.
89.

BP was acting as a fiduciary during the 1989 communications campaign.

90.

Neither BP nor the Plan Administrator complied with the 1989 requirements

of ERISA § 102(a), 29 U.S.C. § 1022(a), to disclose to participants in a manner calculated
to be understood by the average plan participant the plan changes , including the removal
of the early retirement benefit subsidy and the circumstances by which the participant’s
retirement benefits might not be as good or better than under the final average plan as
25

promised.
91.

Neither BP nor the Plan Administrator complied with the 1989 requirements

of ERISA § 104(b), 29 U.S.C. § 1024(b), notifying participants of material modifications
to the plan.
92.

No ERISA § 204(h), 29 U.S.C. § 1054(h) notice of a significant reduction

in benefits was provided to employees by BP or the Plan Administrator.
93.

BP’s communication campaign violated BP’s fiduciary duty imposed

pursuant to ERISA § 404, 29 U.S.C. § 1104, to discharge his/her duties solely in the interest
of participants and their beneficiaries for the exclusive purpose of providing benefits to
participants in the following ways: 1) BP promoted only the positive aspects of the plan
change to employees for the purpose of retaining the employees, 2) BP made promises to
employees about comparative plan performance without warning employees about
circumstances that would cause the promise to fail; 3) BP did not share with employees
that BP realized benefits from the conversion other than immediate cost savings; 4) BP did
not share with employees that the converted plan introduced risk to the employees they had
not previously borne; and 5) BP did not explain it had removed the early retirement benefit,
and what that meant to employees as they reached age 55.
94.

The 1989 Form 5500, Schedule B, listed 13,025 active participants in the

RAP in 1989.
95.

For participants who were age 50 or older as of December 31, 1988, the

RAP plan contained a provision that provided their benefit would be calculated as the
greater of the benefit produced by their prior, final average pay formula, or the result of the
cash balance benefit calculation.
96.

For participants under the age of 50 as of December 31, 1988, the amended
26

RAP provides for the calculation of benefits under the cash balance formula.
97.

The named Plaintiffs—and all members of the Class—were under the age

of 50 as of December 31, 1988.
98.

142 employees were 50 years old or older on January 1, 1989, the effective

date of plan conversion.
99.

There were 3,571 Sohio Heritage Employees whose benefits were

converted in 1989 (though there may have been as many as 3,940), and a total of 8,221 BP
RAP participants were converted to the new plan in 1989.
100.

The Class is so numerous that the joinder of all members is impracticable.

101.

The Plaintiffs met the numerosity requirement.

102.

The questions about BP’s violation of ERISA’s notice and disclosure

requirements are common to the Class.
103.

The question of BP’s breach of ERISA § 404(a) fiduciary duty is common

to the Class.
104.

The Class members’ claims raised common factual and legal questions that

generated common questions.
105.

The Plaintiffs met the commonality requirement.

106.

The claims in this suit arise from the same course of conduct and are brought

under the same legal theory.
107.

Plaintiffs met the typicality requirement.

108.

The Plaintiffs possess a sufficient level of knowledge and understanding to

be capable of controlling or prosecuting this litigation.
109.

The Plaintiffs adequately represent the Class.

110.

There was an information asymmetry between BP and its employees.
27

111.

The employees were mistaken about their future benefits because of BP’s

Communication Campaign and the failure to comply with ERISA’s notice and disclosure
requirements.
112.

The Court finds persuasive the expert opinion of La wrence Deutsch, an

actuarial and pension-consulting expert, that BP’s plan conversion caused a substantial
reduction in benefits for the Class.
113.

BP’s violations of ERISA entitle the Class to equitable relief under ERISA

§ 502(a)(3).
114.

BP Exploration Inc. offered its employees who retired between April 15,

2014, and September 15, 2014, including Plaintiff Walt Fujimoto, a one-time $75,000-peremployee payment in order to accomplish reductions in force that would be necessitated
by a divestiture. BP required the employee to sign the non-negotiable Settlement
Agreement to receive this payment.
115.

BP Exploration (Alaska) assured Fujimoto that the execution of the

settlement agreement did not release the present ERISA claim. Helena Hall, in -house
counsel for BP Exploration (Alaska) Inc., stated to Fujimoto’s Counsel on December 15,
2014: “In sum, this offered payment is not related to any claims that the Fujimotos may
feel they have related to their pension benefits.”
116.

In reliance upon Ms. Hall’s representations, Fujimoto executed the

agreement and accepted payment.
117.

BP Exploration (Alaska) Inc. did not execute the agreement.

118.

Mr. Fujimoto did not release his claim in this matter.

119.

The claims of the class certified in this case are not based on the same

nucleus of operative facts as the claims brought in Nichols v. BP America Retirement
28

Accumulation Plan, which was closed on September 27, 2002. See Northern District of
Illinois case number 1:01-CV-6238 at docket entry 31.
120.

The operative facts of the Nichols class were whether BP improperly

projected the cash balance lump sum owed to employees at age 65 and then improperly
discounted it back to present value under the RAP, known as the “whipsaw” calculation.
121.

The Nichols release was limited explicitly to claims “based on or arising out

of, or related to, in whole or in part, the determination of lump sum distributions by the
Plan.”
122.

The Nichols plaintiff was not in privity with the Guenther plaintiffs.

123.

The operative facts of the Guenther litigation are whether BP and the RAP

violated the ERISA notice and disclosure requirements owed participants regarding
changes to the plan’s benefit formula imposed by ERISA §§ 102, 104, 204(h) and breached
fiduciary duties owed participants under ERISA § 404 in 1989 when converting from a
final average earnings formula to a cash balance formula.
124.

Res judicata does not preclude class members who received a lump sum

payment adjustment under the RAP in the Nichols case from participating in the Guenther
class. It may reduce the amount to which the class member is entitled.
125.

The Nichols settlement agreement did not release any portion of the

Guenther claim.
126.

In September 1999, BP announced in its Focus on Benefits newsletter that

it was transitioning its Amoco heritage employees to the RAP in the mid -2000s. In this
newsletter, BP told Amoco heritage employees, “[i]n general, while cash balance plans are
often more generous for employees who divide their careers among several employers an
employee who works for only one company through his or her career may earn a greater
29

benefit under a traditional plan.”
127.

Rick Dorazil, VP Total Reward, Western Hemisphere, sent an email to

heritage Sohio employees dated July 21, 2011, that indicated he was responding to queries
to the CEO’s office about pension changes to heritage Castrol, Arco, AMOCO and Toledo
Master Hourly employees. Mr. Dorazil assured employees the early retirement benefit was
factored into their opening account balances in 1989. He also explained why BP used the
interest rate projection in the communications. Mr. Dorazil assured Sohio employees that
BP had provided heritage Sohio employees with the pension formula they were promised
at conversion. He did not address whether the RAP pension formula provided Sohio
employees (or others) with a pension benefit comparable to, or in most cases better than, the
ARP pension formula. Mr. Dorazil concluded that BP would not be offering a similar
pension enhancement to Sohio heritage employees because of his earlier explanation in the
letter that Sohio employees would not experience a period of non-accrual similar to what
would happen to the other heritage groups.
128.

BP has an Office of the Ombudsman (“OoO”). BP contracted with retired

Judge Stanley Sporkin to be the Ombudsman and Billie Garde to serve as Deputy
Ombudsman.
129.

The Ombudsman was initially contacted by telephone by a Concerned

Employee (sometimes referred to by the parties as a “Concerned Individual” or “CI”)
regarding the discrepancy in enhancements between heritage groups, and a case was
opened.
130.

On October 15, 2011, Billie Garde, Deputy Ombudsman, reached out by

electronic mail to Jeff Heller, BP associate general counsel, informing him that the
Ombudsman had been contacted by a CI who raised concerns regarding “the inequity,
30

unfairness, and significant disparity between the retirement package deal for the Sohio
heritage employees and the ARCO/Amoco employees.” The CI further told the OoO that
the disparity in retirement benefits was creating “morale issues” that were “turning into
serious, potential[ly] safety significant, issues.”
131.

On October 24, 2011, Mr. Heller informed Judge Sporkin that after

conducting an internal and external legal review with ERISA counsel with expertise in
pension issues, BP determined it satisfied the legal requirements at the time of the 1989
conversion.
132.

The Ombudsman conducted an extensive investigation and received various

complaints from Concerned Individuals about the matter.
133.

On October 24, 2012, Fritz Guenther lodged a concern with the

Ombudsman that the enhancements to ARCO/Amoco heritage employees were unfair to
Sohio employees.
134.

On November 25, 2012, Walton Fujimoto provided a survey response to the

OoO, indicating he was concerned that the enhancements to ARCO/Amoco heritage
employees were unfair to Sohio employees.
135.

On October 27, 2012, Billie Garde sent an email to Clifford York seeking

information that would enable the OoO to compare heritage Sohio employees’ retirement
benefits with those of other heritage groups.
136.

On November 15, 2012, Ms. Garde clarified with Mr. Heller that the OoO

was not pursuing the legality of the conversion and was accepting BP’s representations at
face value that the actions taken were legal.
137.

In an electronic mail dated December 18, 2012, Mr. Heller told Ms. Garde

that BP had “kept its pension promise to these Sohio heritage employees in all respects.”
31

138.

On December 18, 2012, the OoO informed the Concerned Employees with

whom it had been in contact that it had reviewed BP’s legal analysis of their concerns and
had concluded that BP’s actions regarding other heritage groups’ retirement benefits “were
all within BP’s rights and implemented in accordance with appropriate and controlling
laws.”
139.

On January 29, 2013, in an email, when a CI contacted John Mingé,

President of BP America, about the length of time it was taking to complete the review of
the inequity issue, Mr. Mingé urged employees to be patient while the OoO completed its
review.
140.

In January 2013, Fritz Guenther bumped into Mr. Mingé at the airport, and

Mr. Mingé urged Mr. Guenther to await the outcome of the OoO investigation.
141.

BP had a hotline known as “Open Talk” that allowed employees to call in to

raise concerns, which were then forwarded to a BP case manager for response.
142.

On March 26, 2013, a Concerned Individual forwarded to the OoO a copy

of an Open Talk response from BP wherein BP’s case manager assured the CI on
November 16, 2011, “[F]or the past 22 years BP has provided the heritage Sohio employees
with the pension formula they were promised at conversion.”
143.

On April 2, 2013, Mr. Heller told Pasha Eatedali, an investigator with the

OoO, that the communication materials used in 1989 “did not promise any particular
outcome or pension benefit.” Mr. Heller asserted that the statements in the communications
were not “promises, commitments or guarantees” and went on to state that “some now
claim these are promises, commitments or guarantees, but legally they are not and more
importantly those terms were not used.”
144.

On April 19, 2013, Michael Brothers, a consultant used by Ms. Garde during
32

the investigation, who was an attorney and an engineer, indicated that employees had raised
with him that they were told the BP RAP plan would be “as good or better than the SOHIO
Original Plan.” Utilizing his calculations, Mr. Brothers concluded there was an apparent
pension disparity between the ARP and the RAP and attributed the failure of the promise
to the decline in interest rates experienced since 1989 to the present. Specifically, Brothers
stated that, “[b]ased upon the actual interest rates experie nced between 1989 and the
present, the BP RAP benefit is significantly less than the Sohio Original Plan.”
145.

On April 19, 2013, Ms. Garde forwarded Mr. Brothers’s materials to Mr.

Heller. She informed Heller that the OoO was working on 12 primary questions, one of
which was “the disparity allegations” concerning the difference between the ARP and the
RAP.
146.
delayed.
147.

Ms. Garde experienced some medical issues, and the investigation was
On June 17, 2013, a Concerned Employee sent an email to Cliff York asking

him to explain why the RAP benefits appeared to be lower than represented at the time of
the plan rollout. Mr. York responded, “Since your Sohio pension questions are currently
being reviewed by the BP ombudsman (Judge Stanley Sporkin), I’ve been advised by BP
Legal to direct you to his office for response.”
148.

On July 16, 2013, Fritz Guenther inquired regarding the status of the

investigation and was informed that the Ombudsman’s report to BP was still being
finalized.
149.

On August 29, 2013, Ms. Garde sent Mr. Heller an email asking if he

disagreed with Mr. Brothers’s disparity calculations and informing him this information
was critical to the OoO’s investigation conclusion.
150.

On August 30, 2013, Ms. Garde provided Mr. Heller with a “Q & A”
33

document to obtain BP’s answers to specific questions.
151.

On September 19, 2013, Ms. Garde informed the Concerned Employees

who had contacted the OoO that the OoO report was not yet final and that two of her staff,
Noshad Abbassi and Pasha Eatedali, were becoming BP employees within the Employees
Concerns Oversight team.
152.
On September 26, 2013, Mr. Heller expressed concern that a visit by Ms.
Garde to Concerned Employees in Alaska would generate “fallout” for BP. Ms. Garde
responded that she “was asked to meet personally with some Sohio [Concerned
Employees] to give them an update on our investigation progress,” something that she had
“done in the past[,]” and that she had spoken to Stan Bennion, who worked in BP’s Human
Resources Department in Alaska, about the visit.
153. On October 22, 2013, Mr. Heller responded to Ms. Garde’s request to
answer questions. In his email, Mr. Heller chastised the OoO for “believ[ing] it is
empowered to address the subject of BP pension benefits” and for “delving into issues for
which the Ombudsman has no real expertise or experience .” Mr. Heller provided an
analysis from BP’s actuary, Mercer, pertaining to Kwasha Lipton’s 1989 chart. Mercer
merely confirmed that Kwasha Lipton’s calculations were correct using the numbers
Kwasha Lipton input. In its answers to the OoO’s questions, BP maintained that “[t]he fact
remains that Sohio employees have received a pension benefit that is consistent with both
the governing plan terms and the formula described to them in the original
communications.”
154.

On February 21, 2014, after the OoO had submitted its report to BP

management, Mr. Heller emailed Ms. Garde regarding suggested changes to the report. Mr.
Heller took issue with the Ombudsman’s proposed finding that, in most cases, the ARP
plan was better and argued that portability made the RAP a better plan. Mr. Heller further
34

criticized the Ombudsman’s proposed findings that “BP’s use of an 8% interest rate in its
communications to Sohio employees was not reasonable” and that “[a]n 8% interest rate
was a high projection, based on a historical anomaly.”
155.

On March 7, 2014, Judge Sporkin wrote to John Mingé, Chairman and

President of BP America, Inc., about the OoO’s investigation. In his letter, Judge Sporkin
recommended that BP pay additional benefits to Sohio heritage staff, noting that “[t]here
are several ways such benefits could be provided to those individuals as a non -qualified
payment.” Judge Sporkin further asserted that:
The relevant facts of this matter are not in serious dispute. In 1989 BP made
statements to the Sohio heritage employees that the RAP plan would
provide “a retirement benefit that is comparable to—and in most cases,
better than” the retirement benefit that they would have received under the
prior pension formula. That prediction didn’t come true over the long term,
because the interest rate environment did not meet the hoped -for
expectations.
What is key here is that in the 1989 “conversion” there were certain risks
that the new retirement plan presented. These risks included what would
happen if the projected interest rates could not be sustained. This is what, in
fact, occurred. The employees simply were not told that the risks associated
with a decline in interest rates would be solely borne by the employees.
Simply put, there would be no allocation of these risks.
156.

The Confidential Investigation Final Report for Case No. 2011 -052

summarized the following conclusions. BP’s RAP formula did not provide a comparable
benefit to the prior pension formula because “the interest rate environment did not meet
the hoped-for expectations.” BP’s “employees simply were not told that the risks associated
with a decline in interest rates would be solely borne by the employees.” To the contrary,
the report concluded, “the statements made in the original promotional and explanatory
materials stated that the risks would be borne solely by BP.” Further, the report identified
that, for the “employees who have stayed with BP the longest, their situations have not been
comparable.” The report recommended that BP calculate the pension benefits affected
35

employees would have received under the prior formula and that BP determine a realistic
amount to offer these employees to bridge the difference, which could range between 50%
and 100% of the original benefits.
157.

On March 13, 2014, Ms. Garde reported to the Concerned Employees that

the OoO had submitted its final report, including its investigative findings and
recommendations, to Mr. Mingé, President of BP America. Ms. Garde further wrote that
“[t]he OoO has maintained an ongoing dialogue with BP about the Sohio issue and, prior
to formally submitting the report, the Ombudsman Judge Sporkin and I traveled to Houston
to meet with BP regarding our work.” Ms. Garde described the Houston meeting as
“productive” and added that she expected another meeting with “BP regarding our
findings” to “take place soon.”
158.

On March 21, 2014, Janet Weiss, President of BP Alaska, emailed Mr.

Guenther, informing him that the Office of Ombudsman had given its report to Mr. Mingé,
who forwarded it to BP management overseeing the Sohio matter. Mr. Guenther replied to
this email on March 26, 2014, and expressed his appreciation for Ms. Weiss’s interest.
159.

On March 28, 2014, a heritage Sohio employee named Todd Denman sent

a draft of a filing to Ms. Weiss via email that Mr. Denman intended to submit to BP’s Chief
Ethics and Compliance Officer regarding what Mr. Denman alleged were violations of the
BP Code of Conduct stemming from BP’s handling of the pension issue. On April 7, 2014,
Ms. Weiss responded to Mr. Denman’s email, informing him that she believed that the
Office of Ombudsman report was “a quality piece of work that is being reviewed and
considered” and that “letting this process progress is a constructive way forward.” On April
8, 2014, Ms. Weiss forwarded this email chain to BP attorney Helene Hall.
160.

Also, on April 7, 2014, Ms. Weiss responded to Mr. Guenther, informing
36

him, similarly, that the Ombudsman report was “a quality piece of work that is being
reviewed and considered” and “that this progressing process is a constructive way
forward.”
161.

On May 8, 2014, Ms. Garde reported to the Sohio heritage employees that

the OoO and BP had been in “continual contact” regarding the OoO’s report since the
report’s submission in March of 2014 and that she and Judge Sporkin had had a “respectful
meeting” in April of 2014 “with BP decision makers[.]” Ms. Garde explained that she
“d[id] not yet know what BP’s response w[ould] be to our recommendations[,]” nor could
she say “when BP w[ould] make a determination on our recommendations[.]”
162.

The OoO met again with BP on July 24, 2014. They were unable to resolve

the Sohio pension issue and agreed to meet again, tentatively in August of 2014.
163.

It is unclear from the record whether the OoO and Bp met in August of

2014. Ultimately, BP decided not to provide any additional benefits to the Sohio heritage
employees.
164.

On September 5, 2014, Mr. Heller provided Ms. Garde with a proposed

message to the Concerned Employees regarding BP’s final decision. Ms. Garde expressed
“a number of concerns” with Mr. Heller’s draft letter, foremost among them that Mr.
Heller’s draft letter “d[id] not factually set forth [the OoO’s] actual conclusions” and
mischaracterized the OoO’s report as being in agreement with BP. Ms. Garde further stated
in her email that the draft letter’s description of the shift to the RAP cash -balance program
as “ultimately successful” was “insensitive” and “ignore[d] the facts —that BP’s
commitment did not work out for many of the Sohio” heritage employees.
165.

On September 15, 2014, and September 16, 2014, Mr. Heller and Ms.

Garde exchanged often-heated emails regarding communications to employees about the
37

OoO’s report and BP’s decision. Mr. Heller took issue with the OoO’s characterization of
the 1989 conversion issues and requested language changes. For instance, Mr. Heller
complained that “[t]he report should include some acknowledgement that BP specifically
told Sohio employees that the projections of their pension future benefits were estimates
based on assumptions and were not a promise of what the actual benefit under th e plan
ultimately would be.” Ms. Garde indicated she and her law partner had “re-reviewed the
two primary documents provided to the Sohio heritage employees in 1989, and did not find
the representation that the words spoken were ‘estimations based on assumptions.’ As we
have discussed throughout this review, the exact words used in the RAP brochure were
quite clear: The plan is designed to provide a retirement benefit that is comparable to —
and, in most cases, better than—the benefit you would have received under the prior
pension formula.” Ms. Garde further noted that there could not be changes to the report as
it was complete, and BP had already reviewed and edited it.
166.

During the discussion of the Ombudsman’s investigation, BP circulated a

set of slides summarizing the pension issues. In these materials, BP acknowledged that
interest rates lower than the originally forecasted 8% impacted the actual pension accruals
among certain Sohio heritage employees. In these materials, BP reported that over 7,000
heritage Sohio retirees and employees were impacted by the conversion to the RAP.
167.

An “Ombudsman holding statement” was drafted, conveying that the

highest levels of BP’s organization reviewed the Office of Ombudsman findings.
168.

BP internally addressed the question of the Sohio employee discontent with

retirement benefits. BP acknowledged that the “low interest rate environment” exacerbated
the discontent of heritage Sohio employees.
169.

A communications plan was circulated within BP via email regarding the
38

Office of Ombudsman’s report.
170.

On September 15, 2014, Mr. Mingé, still Chairman and President of BP

America, Inc.., sent Concerned Employees who were still employed with BP a letter
referencing the OoO review and indicating, “[W]e now communicate to you BP’s final
decision on the matter.” Mr. Mingé expressed regret that “market conditions yielded an
unexpected outcome for you. The 1989 change was consistent with the continuing trend in
our industry toward cash balance-type plans. BP relied upon credible advisors in the
development of the RAP program….” Mr. Mingé never informed employees that the
OoO investigative report identified a potential discrepancy between the 1989 promise and
actual retirement benefits.
171.

On September 19, 2014, Judge Sporkin prepared his own letter to “Dear

Concerned Employee” and included a summary of the OoO’s report findings.
172.

The Investigation Final Report Summary for Case No. 2011-052 concluded

the RAP plan presented risks, including lower returns if projected interest rates could not
be sustained, which were not relayed at the time of conversion. In fact, Judge Sporkin noted
the materials were promotional and indicated BP America would bear the “full investment
risk.”
173.

On September 22, 2014, Mr. Mingé sent out an electronic message, which

was linked to his earlier letter informing employees of BP’s final decision.
174.

The Class did not have actual knowledge that BP would not honor its 1989

promise until Mr. Mingé communicated BP’s final decision on September 15, 2014.
175.

In 2011, BP prevaricated about whether the 1989 promise of a comparable

benefit was true by assuring those few employees with whom it communicated that they
received the plan formula that was promised to them in 1989.
39

176.

In 2014, when communicating its final decision, BP did not forthrightly

inform those employees with whom it was communicating that the 1989 promise of a
comparable benefit was untrue.
177.

The September 9, 2014, letter from retired federal Judge Stanley Sporkin to

Concerned Employees was the first time employees were forthrightly informed that the
ARP benefit might be greater than the RAP benefit for some employees, contrary to BP’s
promise.
178.

It was not until the assessment of their expert in this matter, after a review

of discovery materials, that any of the Plaintiffs had sufficient information to have actual
knowledge that BP’s promise was not true for the Class.
179.

One of BP’s actions that constituted part of the breach, and/or one of BP‘s

omissions, was the date BP made its “final decision” to not fulfill its promise that the RAP
would be as good or better than the ARP: the date Mr. Minge sent BP’s “final decision”
letter, September 15, 2014. Plaintiffs filed their Complaint on April 13, 2016, well within
six years of that date.
180.

There is no evidence the named plaintiffs had actual knowledge until their

expert determined their loss based on discovery responses. Defendants previously admitted
Plaintiffs could not have had actual knowledge until Plaintiffs actually retired and were able
to calculate whether they would have done better or worse under the RAP verses the ARP.
181.

BP concealed all along it had no intent to fulfill its promise by enhancing

the class members’ benefits to be as good or better than what the class would have received
under the ARP. BP encouraged class members to engage in the Ombudsman process and
await its outcome, and BP represented that it too was awaiting the outcome and at least
implied that it would follow the OoO’s recommendation. Ultimately, the evidence
40

indicates that BP never intended to follow the Ombudsman’s recommendation if the
Ombudsman found, as he did, that the employees’ benefits should be enhanced to fulfill
BP’s promise.

B. CONCLUSIONS OF LAW
1.

A participant’s right to maintain an action for violation of a provision of

ERISA arises exclusively under section 502(a), 29 U.S.C. § 1132, which specifies persons
“empowered to bring a civil action,” and identifies several such causes of action.
Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 139-140 (1985). Each of the
first three actions listed in §1132(a) authorizes a participant to maintain an action.
2.

ERISA §502(a)(3), 29 U.S.C. §1132(a)(3), exclusively allows injunctive relief

and other “appropriate equitable relief” to redress violations of ERISA or terms of the Plan.
The civil action may be brought:
by a participant, beneficiary, or fiduciary (A) to enjoin any act or
practice which violates any provision of this subchapter or the terms of
the plan, or (B) to obtain other appropriate equitable relief (i) to redress
such violations or (ii) to enforce any provisions of this subchapter or the
terms of the plan[.]
3.

ERISA §502(a)(3), 29 U.S.C. §1132(a)(3), “by its terms, only allows for

equitable relief.” Great-W. Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 220–21 (2002)
(emphasis in original); see also CIGNA Corp. v. Amara, 563 U.S. 421, 442 (2011) (“Section
502(a)(3) invokes the equitable powers of the District Court.”).
4.

In 1989, under ERISA §204(h), 29 U.S.C. §1054(h), a Plan Administrator was

required to issue notice when a plan change would result in a significant reduction in the rate
of future benefit accruals. Section 204(h) is a mandatory notice provision under ERISA. The
rule as in effect in 1989 required the §204(h) notice to be issued no less than 15 days before
41

the effective date of the plan amendment.
5.

Here, it is not disputed that BP failed to provide anything to participants 15

days before the effective date of January 1, 1989, the effective date of the amendment and
restatement of the BP America Retirement Plan to the Retirement Accumulation Plan (“RAP”
or “the Plan”).
6.

The failure of BP to provide an ERISA §204(h) notice prior to January 1, 1989

was a violation of ERISA. Plaintiffs have demonstrated by a preponderance of the evidence
that BP violated ERISA §204(h), 29 U.S.C. §1054(h)(1).
7.

In 1989, a Plan Administrator was required to issue an ERISA §102, 29 U.S.C

§1022, Summary Plan Description (“SPD”). SPDs are central to ERISA. Frommert v.
Conkright, 738 F.3d 522, 531 (2d Cir. 2013).
8.

SPDs are required to provide, among other things, the plan’s requirements

respecting eligibility for participation and benefits; a description of the provisions providing
for nonforfeitable pension benefits; and circumstances which may result in disqualification,
ineligibility, or denial or loss of benefits. 29 U.S.C. § 1022(b).
9.

SPDs are required to be furnished to participants and beneficiaries in a manner

described in 29 U.S.C. §1024(b). 29 U.S.C §1022(a).
10.

SPDs must be written in a manner calculated to be understood by the average

plan participant. 29 U.S.C §1022(a).
11.

SPDs must be sufficiently accurate and comprehensive to reasonably apprise

participants and beneficiaries of their rights and obligations under the plan. 29 U.S.C
§1022(a).
12.

Summaries of Material Modifications (“SMM”) are also called for in this

same section. 29 U.S.C §1022(a).
42

13.

SPDs and SMMs work in tandem: the SPD must “clearly identify” in an

understandable manner all the “circumstances which may result in disqualification,
ineligibility, or denial [or] loss of benefits” and the SMM must describe “any change” in
those circumstances. 29 U.S.C. §1022(a), (b); 29 C.F.R. §§ 2520.102–3(1) and 2520.104b–
3(a).
14.

Department of Labor regulations explain the role of SPDs and SMMs in

accurately and accessibly educating participants about how their plan works. See 29 C.F.R.
§ 2520.102–2, 102–3. In fulfilling the requirements of ERISA § 102, fiduciaries are
required to “exercise considered judgment and discretion by taking into account such factors
as the level of comprehension and education of typical participants in the plan and the
complexity of the terms of the plan.” 29 C.F.R. § 2520.102 –2(a). Consideration of these
factors will usually require fiduciaries to limit or avoid “technical jargon” and include
“clarifying examples and illustrations” of how the plan works in prac tice. Id.
15.

The regulations insist on a fiduciary’s affirmative duty to make participants

clearly “see” circumstances under which they will not receive the benefits described in the
summary that they might otherwise reasonably expect to receive. The SPD thus must:
[C]learly identif[y] circumstances which may result in disqualification,
ineligibility, or denial, loss, forfeiture, suspension, offset, [or] reduction, or
recovery ... of any benefits that a participant or beneficiary might otherwise
reasonably expect the plan to provide on the basis of the description of benefits
[provided elsewhere in the summary].
29 .F.R. § 2520.102–3(l).
16.

Underscoring this affirmative duty to warn participants of the circumstances

when they might not actually receive benefits the summary otherwise seems to be telling
them they can expect, the regulations specifically direct that “[a]ny description of
exception, limitations, reductions, and other restrictions of plan benefits shall not be
minimized, rendered obscure or otherwise made to appear unimportant.” 29 C.F.R. §
43

2520.102–2(b); see also id. (requiring further that “[s]uch exceptions, limitations,
reductions, or restrictions of plan benefits shall be described or summarized in a manner
not less prominent than the ... prominence used to describe or summarize plan benefits”).
Restrictive plan provisions must be clearly cross-referenced with the description of the
benefit. See id.
17.

The regulations expressly forbid fiduciaries from either playing up the positive

features of the plan or downplaying the negative: “[t]he advantages and disadvantages of
the plan shall be presented without either exaggerating the benefits or minimizing the
limitations.” Id.; see also id. (warning that the format of the SPD “must not have the effect
to misleading, misinforming or failing to inform participants and beneficiaries”).
18.

The SPD must explain the “full import” of the plan's material terms. See

Layaou v. Xerox Corp., 238 F.3d 205, 211 (2d Cir. 2001); see also Frommert v. Conkright,
433 F.3d 254, 260 (2d Cir. 2006) (requiring an SPD to “set out in full” the plan ’s benefit
calculation mechanics in a manner employees can appreciate); Wilkins v. Mason Tenders
Dist. Council Pension Fund, 445 F.3d 572, 584 (2d Cir. 2006) (“Here, the Fund’s SPD does
not even mention the Policy, let alone explain its full import. Obviously, it falls short of
the high standards of clarity and completeness to which SPDs are held.”).
19.

“[I]n addition to describing the individual provisions of the retirement plan

and their import, an employer must also describe the interaction among those provisions if
the result is likely to be material to plan participants.” Amara I, 534 F.Supp.2d at 345
(citations omitted); see also Layaou, 238 F.3d at 209–11 (finding violation where SPD
failed to warn employees about how an offset formula interacted with the plan’s other
formulas to reduce employees’ benefits).
20.

BP failed to provide participants with an SPD regarding the 1989 plan
44

amendment and restatement.
21.

BP’s failure to provide participants with an SPD regarding the 1989 plan

amendment and restatement was a violation of ERISA §102, 29 U.S.C. §1022(a).
22.

BP filed to provide participants with a SMM regarding the 1989 plan

amendment and restatement.
23.

BP’s failure to provide participants with a SMM regarding the 1989 plan

amendment and restatement was a violation of ERISA part 1 (§102, 29 U.S.C. §1022(a)).
24.

BP’s written communications to participants of the Plan in the summer of 1989

did not satisfy the requirements of ERISA § 102(a), 29 U.S.C. §1022(a).
25.

BP’s written communications to participants of the Plan in the summer of 1989

did not provide a “a statement clearly identifying circumstances which may result in
… denial, loss, forfeiture, ... [or] reduction ... of any benefits that a participant ... might
otherwise reasonably expect the plan to provide on the basis of the description of benefits [in
the SPD].” 29 C.F.R. § 2520.102-3(l).
26.

BP’s communications to participants of the Plan in the summer of 1989

included misleading and incomplete information and were not written in a manner reasonably
calculated to be understood by the average plan participant.
27.

The information BP presented to Plan Participants in 1989 was not written

clearly.
28.

The information provided—including comparisons to the benefits the previous

formula provided—communicated to the participants that the RAP “is an innovative pension
plan that provides retirement benefits participants can count on.” These benefits were
described as “comparable to- and, in most cases, better than- “the benefit you would have
received under the prior pension formula.” BP’s related correspondence represented the
45

revised formula “preserved the principal strengths of the former plan…. [T]he plan provides
a retirement benefit to career employees that is comparable to the fully competitive benefit
under the prior formula.”
29.

To reduce suspicion that the change might reflect a reduction in benefits, BP

represented to participants that “[t]he revised plan is not a cost-cutting exercise.”
30.

At the same time. BP told participants the changes had already been made, even

though the amendments to the Plan were not reflected in a Plan document until they were
adopted over six months later, on December 28, 1989. Whatever resistance to the changes
might have been voiced was chilled by BP’s representation that the changes had already been
made and were effective nearly six months earlier, as of January 1, 1989.
31.

These actions taken together demonstrate by a preponderance of the evidence

that BP violated ERISA part 1 (ERISA §102(a)).
32.

In addition to the specific notice and disclosure obligations ERISA imposes in

Parts 1 and 2, the general standard imposed on a fiduciary informs the requirements
imposed on a fiduciary’s communications with participants about their benefits.
33.

ERISA §404, 29 U.S.C §1104, sets forth general fiduciary duty standards under

ERISA. It provides, in pertinent part:
(a)

Prudent man standard of care

(1)
Subject to sections 1103(c) and (d), 1342, and 1344 of this title, a
fiduciary shall discharge his duties with respect to a plan solely in the interest of the
participants and beneficiaries and—
(A)

for the exclusive purpose of:
(i)

providing benefits to participants and their beneficiaries;

and
(ii)

defraying reasonable expenses of administering the plan;
46

(B) 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 conduct of an enterprise of a like
character and with like aims[.]
29 U.S.C. § 1104(a); see also Osberg v. Foot Locker, Inc., 138 F.Supp.3d 517, 550
(2015), aff’d, 862 F.3d 198 (2d Cir. 2017).
34.

“The Supreme Court has held that when an employer communicates with plan

participants about the contents of the plan, and when reasonable employees could have
thought that the employer was communicating with them both in its capacity as employer and
in its capacity as plan administrator, the employer is acting as a fiduciary under ERISA.”
Bouboulis v. Transp. Workers Union of Am., 442 F.3d 55, 65 (2d Cir. 2006) (citing Varity
Corp. v. Howe, 503 U.S. 489, 498 (1996) (internal quotation marks, brackets, emphasis, and
ellipsis omitted)).
35.

When an employer voluntarily chooses to communicate regarding the status of

an employee’s benefits, it assumes such a duty to do so in a manner calculated to avoid
confusion and misunderstanding, whether by omission or commission. Switzer v. Wal-Mart
Stores, 52 F.3d 1294, 1298–99 (5th Cir. 1995).
36.

ERISA requires that the fiduciary with two hats wear only one at a time and

wear the fiduciary hat when making fiduciary decisions. Pegram v. Herdrich, 530 U.S. 211,
225–26 (2000).
37.

Providing information about likely future plan benefits falls within ERISA’s

statutory definition of a fiduciary act. McCall v. Burlington Northern/Santa Fe Co., 237 F.3d
506, 510–11 (5th Cir. 2000), cert. denied, 534 U.S. 822 (2001).
38.

ERISA’s fiduciary standards of conduct are “the highest known to the law.”

LaScala v. Scrufari, 479 F.3d 213, 219 (2d Cir. 2007) (quoting Donovan v. Bierwirth, 680
F.2d 263, 272 n.8 (2d Cir. 1982)) (internal quotation marks omitted).
39.

Fiduciaries have an unswerving “duty of loyalty” that requires a fiduciary to
47

“discharge his duties with respect to a plan solely in the interest of the participants and
beneficiaries.” 29 U.S.C. § 1104(a); see also Harris Trust & Sav. Bank v. John Hancock Mut.
Life Ins. Co., 302 F.3d 18, 26 (2d Cir. 2002) (referring to this duty as a duty of loyalty).
40.

“To participate knowingly and significantly in deceiving a plan ’s beneficiaries

in order to save the employer money at the beneficiaries’ expense is not to act solely in the
interest of the participants and beneficiaries.” Varity, 516 U.S. at 506 (quotation marks
omitted).
41.

As the Judge Forrest of the Southern District of New York has explained:
ERISA § 404(a) also imposes a “duty of care” that requires fiduciaries to act
“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 conduct of an enterprise of a like character and with
like aims.” 29 U.S.C. § 1104(a)(1)(B). Prudence is “measured according to the
objective prudent person standard developed in the common law of trusts.”
Chao v. Merino, 452 F.3d 174, 182 (2d Cir. 2006) (quoting Katsaros v. Cody,
744 F.2d 270, 279 (2d Cir.1984)).
Proper execution of fiduciary duties requires that fiduciaries' decisions “be
made with an eye single to the interests of the participants and beneficiaries.”
Donovan v. Bierwirth, 680 F.2d 263, 271 (2d Cir. 1982). Under ERISA §
404(a)(1), a fiduciary is not permitted to balance the interests of plan
participants and the plan's sponsor: the focus on participants must be
“exclusive.” 29 U.S.C. § 1104(a)(1).
Osberg v. Foot Locker, Inc., 138 F. Supp. 3d 517, 551–52 (S.D.N.Y. 2015),
aff’d, 862 F.3d 198 (2d Cir. 2017).

42.

BP chose to communicate with participants in 1989 regarding the participants’

benefits and reasonable employees could have thought that BP was communicating with them
both as employer and plan administrator.
43.

BP was acting as a fiduciary when it chose to communicate to Participants

about their benefits under the RAP.
44.

BP communicated with participants in a manner in which it placed the

company’s interests above those of the participants in the plan.
48

45.

In failing to provide complete and accurate written explanations of the benefits

available to RAP participants, BP breached its duties under ERISA § 404(a), 29 U.S.C.
§1104(a).
46.

In providing inaccurate and incomplete explanations of benefits and

information about the RAP conversion and drawing specific comparisons to the benefits
provided previously by the ARP, BP breached its duties under ERISA § 404(a), 29 U.S.C.
§1104(a).
47.

Plaintiffs have demonstrated by a preponderance of the evidence that BP

planned for its Plan Participants to rely on its communications regarding the restatement and
amendment of the Plan to the RAP, including the comparisons BP made to the benefits
provided under the prior Plan formula, and BP specifically knew it shifted a number of
financial risks to Plan Participants, to their detriment and to the advantage of BP.
48.

Plaintiffs have demonstrated by a preponderance of the evidence that BP

obtained an undue advantage over Plan Participants when said Participants worked, year after
year, with the mistaken belief that the benefit they would receive at retirement under th e RAP
formula would equal the benefit that they would have been provided under the prior ARP
formula.
49.

Plaintiffs have demonstrated by a preponderance of the evidence that this

mistaken belief by participants worked to the actual detriment of participants who reached
retirement and later learned the benefit paid under the RAP was less than what they
understood they were earning during their career with BP (and what the Participant would
have earned under the ARP formula).
50.

Plaintiffs have demonstrated by a preponderance of the evidence that BP

breached its fiduciary duties under ERISA § 404(a), 29 U.S.C. §1104(a).
49

51.

BP’s ERISA violations are appropriately redressed by equitable relief under

Section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3). Plaintiffs have “show[n] by clear and
convincing evidence that [BP] committed fraud or similarly inequitable conduct, and that
such conduct caused [them] to be mistaken.” Turner v. Liberty Mutual Retirement Benefit
Plan, No. 20-11530, 2023 WL 5179194, at *9 (D. Mass. Aug. 11, 2023); see also Amara v.
CIGNA Corp., 775 F.3d 510, 525–26 (2d Cir. 2014).
52.

Plaintiffs have demonstrated by clear and convincing evidence that BP gained

an undue advantage through the inequitable conduct described above, when BP violated
ERISA parts 1, 2 and 4. Plaintiffs have demonstrated by clear and convincing evidence that
BP gained an undue advantage of retaining its workforce by violating its fiduciary duty to
communicate completely, accurately, and solely in the best interests of the Plan Participants
when it chose to communicate with participants in 1989 regarding the Plan amendment and
restatement and the Participants’ benefits.
53.

Plaintiffs have demonstrated by clear and convincing evidence that BP violated

its fiduciary duties to communicate completely, accurately, and solely in the best interests of
the plan participants when it chose to market and “sell” the plan amendment and restatement
to quell concerns from participants of a reduction in future benefit accruals.
54.

Plaintiffs have demonstrated by clear and convincing evidence that Plaintiffs

and the class were harmed by working under a mistaken understanding caused by lack of
proper information to inform them the benefits they would earn may be less than BP led them
to understand was the case.
55.

Plaintiffs have demonstrated that they were mistaken about the terms of their

employment agreement with BP due to BP’s ERISA violations.
56.

Plaintiffs have demonstrated that BP’s uniform communications and
50

misrepresentations concealed the true nature of the parties’ agreement.
57.

Plaintiffs have demonstrated that BP undertook efforts to conceal the true

nature of the parties’ agreement.
58.

Plaintiffs have demonstrated by clear and convincing evidence that based on

the nature of the communications and misrepresentations, there was class -wide reliance on
BP’s representations.
59.

Plaintiffs have demonstrated by clear and convincing evidence that BP’s

communications were uniform and given to participants.
60.

BP sought to avoid employee backlash and obtain acceptance of the new RAP

61.

BP’s misrepresentations resulted in class-wide mistakes about the terms of the

plan.

RAP as compared with the ARP.
62.

BP has failed to demonstrate that the release on behalf of claimants in the

Nichols matter bars Plaintiffs’ claims under ERISA § 502(a)(3).
63.

BP has not satisfied its burden of proof on its affirmative defense. Richardson

v. Wells Fargo Bank, N.A., 839 F.3d 442, 448 (5th Cir. 2016)
64.

BP has failed to demonstrate that the parties are in privity. Petro-Hunt, L.L.C.

v. United States, 365 F.3d 385, 395 (5th Cir. 2004).
65.

BP has failed to demonstrate that the claims of the class certified in this case

are based on the same nucleus of operative facts as the claims brought in the Nichols matter.
Id.
66.

The transactional test utilized in Petro-Hunt does not favor application of the

res judicata doctrine as to the pending claims.
67.

BP has failed to demonstrate that Plaintiffs are required to pursue an
51

administrative claim regarding conduct giving rise to an ERISA §502(a)(3) claim.
68.

Exhaustion is measured at the time of the filing of the Complaint. See Galvan

v. SBC Pension Benefit Plan, 204 Fed. Appx. 335, 340-41 (5th Cir. 2006).
69.

Exhaustion is not required to enforce statutory ERISA rights. Id. at 338–39.

70.

The claims asserted here are not “benefit” claims under ERISA 502(a)(1)(B).

See Milofsky v. Am. Airlines, Inc., 442 F.3d 311, 313 (5th Cir. 2006) (en banc) (noting that
fiduciary breach claims do not require exhaustion of administrative remedies).
71.

Before Plaintiffs filed their Complaint, the OoO thoroughly reviewed the

communications BP made to Plan Participants at the time of the 1989 amendment and
restatement of the ARP to the RAP and concluded that BP misled Plan Participants. The OoO
recommended BP provide Plan Participants with relief consistent with upholding the
promises BP made to Plan Participants at the time of these communications. BP rejected the
OoO’s proposal and subsequently dissolved its Ombudsman program. This was the first time
BP had not followed the OoO’s recommendation.
72.

At the time of the filing of the complaint, Mr. Guenther completed a formal

administrative claim with BP America Inc.’s ERISA Claims and Appeals Office, and his
claim for relief recommended by the Office of BP’s Ombudsman was rejected. Mr. Guenther
appealed that decision, and his appeal was again denied.
73.

BP’s rejection of the OoO recommendations of Judge Stanley Sporkin, its

rejection of Guenther’s claim and appeal, and its continued refusal to acknowledge the relief
requested pursuant to ERISA 502(a)(3) demonstrates further administrative efforts by
Plaintiffs or the Class would be futile.
74.

Moreover, BP’s denial of Mr. Guenther’s administrative claim, as well as its

rejection of any relief recommended by the Office of BP’s Ombudsman , makes clear that any
52

administrative claims of Mr. Fujimoto and others would be futile. See Taylor v. Prudential
Ins. Co. of America, 954 F. Supp. 2d 476, 483 (S.D. Miss. 2013) (finding futility established
without requiring a showing of hostility or bias by the plan administrator) ; see also Dozier v.
Sun Life Assurance Co. of Canada, 466 F.3d 532, 535 (6th Cir. 2006) (“Where as here a
plaintiff has exhausted one claim but not another, he may demonstrate futility by showing
that the two claims are so identical that the denial of one demonstrates with certainty that the
other will also be denied.”).
75.

BP has presented no evidence to this Court of a binding release that specifically

releases any Plaintiff’s or Class member’s ERISA § 502(a)(3) claim.
76.

BP’s argument that general releases can bar ERISA § 502(a)(3) claims would

violate the anti-alienation provision of ERISA, 29 U.S.C.§ 1056(d)(1).
77.

ERISA’s anti-alienation provision, 29 U.S.C.§ 1056(d)(1), makes void any

release seeking to release vested benefits. Rhoades v. Casey, 196 F.3d 592, 598 (5th Cir.
1999).
78.

BP has failed to demonstrate that any exception exists to ERISA’s anti -

alienation provision, 29 U.S.C.§ 1056(d)(1).
79.

BP has failed to demonstrate that any plaintiff or class member knowingly and

voluntarily waived its vested retirement benefits as part of a release to reach a settlement. See
Rhoades, 196 F.3d at 598.
80.

BP has failed to demonstrate that any Plaintiff or Class member intentionally

relinquished or abandoned a known ERISA right or privilege as part of a settlement or release.
Matter of HECI Exploration Co., Inc., 862 F.2d 513, 523 (5th Cir. 1988).
81.

BP has failed to demonstrate that any Plaintiff or Class member who BP claims

to have released their ERISA § 502(a)(3) claim received adequate consideration in doing so.
53

Clayton v. ConocoPhillips Co., 722 F.3d 279, 292 (5th Cir. 2013) (quoting Williams v.
Phillips Petroleum Co., 23 F.3d 930, 935 (5th Cir. 1994)).
82.

BP has failed to demonstrate that any Class members have signed releases.

83.

The totality of the circumstances demonstrates that the releases BP had

individuals sign were not intended to release ERISA § 502(a)(3) claims and do not release
the claims asserted in this action. O’Hare v. Global Natural Resources, Inc., 898 F.2d 1015,
1017 (5th Cir. 1990).
84.

BP bears the burden of proving the release bars any Plaintiff’s or Class

member’s claim. Chaplin v. NationsCredit Corp., 307 F.3d 368, 372 (5th Cir. 2002).
85.

BP has not demonstrated that the presence of a few releases, even assuming

their existence, is fatal to the Class’s ERISA § 502(a)(3) claims. Cf. Langbecker v. Elec. Data
Sys. Corp., 476 F.3d 299, 313 & n.26 (5th Cir. 2007) (“[O]rdinarily the fact that up to nine
thousand potential class members have signed releases of claims against EDS would defeat
typicality and preclude class certification[.]”).
86.

The Court concludes that Plaintiffs’ action is timely. ERISA § 502(a)(3) does

not include a statute of limitations and does not make reference to actions based on any
particular sections or Parts of ERISA. Moreover, ERISA §502(a)(3), 29 U.S.C. §1132(a)(3),
“by its terms, only allows for equitable relief.” Great-W. Life & Annuity Ins. Co. v. Knudson,
534 U.S. 204, 220–21 (2002) (emphasis in original); see also CIGNA Corp. v. Amara, 563
U.S. 421, 442 (2011) (“Section 502(a)(3) invokes the equitable powers of the District
Court.”).
87.

The Supreme Court has “held that in suits seeking solely equitable relief,

statutes of limitations do not apply.” Walker v. Epps, 550 F.3d 407, 411 (5th Cir. 2008) (citing
Holmberg v. Armbrecht, 327 U.S. 392, 396 (1946)). Accordingly, Fifth Circuit precedent
54

“stands for the proposition that wholly equitable actions are subject to the doctrine of laches,
not statutes of limitations.” Walker, 550 F.3d at 411 (citing Environmental Defense Fund,
Inc. v. Alexander, 614 F.2d 474, 478 (5th Cir. 1980) and Perry v. Allen, 239 F.2d 107, 114
(5th Cir. 1956)); see also United States v. Georgia Power Co., 474 F.2d 906, 923 n.22 (5th
Cir. 1973) (“Traditionally, statutes of limitations do not control such purely equitable
relief.”); Garrett v. Thaler, 560 Fed. App’x 375, 384 n.5 (5th Cir. 2014) (“The Supreme Court
has held that statutes of limitations do not apply to suits seeking solely equitable relief.”).
88.

To establish laches, a defendant must show inexcusable delay that causes undue

prejudice. In re Ryan, 88 F.4th 614, 628 (5th Cir. 2023). “Whether laches bars an action in a
given case depends upon the circumstances of that case and is a question primarily addressed
to the discretion of the trial court.” Id. (quotation marks omitted). Under the circumstances
of this case, the Court concludes that BP has failed to show either inexcusable delay or undue
prejudice.
89.

Finally, the Court is unpersuaded by BP’s contention that Plaintiffs cannot

recover under ERISA § 502(a)(3) because they are “attempt[ing] to impose liability on the
current plan sponsor [BP Corporation North America] for a breach of fiduciary duty alleged
to have been committed by the prior plan sponsor [BP America, Inc.] while it was acting as
a de facto fiduciary.” Plaintiffs explain that they named BP Corporation North America as a
defendant “to achieve the requested reformation” under ERISA § 502(a)(3) and further
explain that they did not name BP America, Inc. because it is no longer a plan sponsor or a
plan administrator and is accordingly in no position to effectuate the equitable relief that
Plaintiffs seek.
90.

“[T]he entity on which liability is imposed through § 502(a)(3) need not in all

circumstances be the exact same entity committing the acts leading to liability.” Amara v.
55

CIGNA Corp., 775 F.3d 510, 528 n.15 (2d Cir. 2014). As the Court has previously noted, the
remedies sought in this lawsuit are equitable, and “the traditional purpose of equity is to
redress wrongful conduct causing harm that would otherwise be uncompensated by a rigid
interpretation of the law.” Id. at 528. On this record, the Court sees no reason why liability
under ERISA § 502(a)(3) cannot be imposed on a BP entity that is currently serving as plan
sponsor for the actions of another BP entity that formerly served as plan sponsor. To conclude
otherwise would subvert the traditional purposes of equity for the sake of pure corporate
formalism.

56

C. CONCLUSION
The Court finds that the plaintiffs are entitled to equitable relief under Section
502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3). The parties are ORDERED to file supplemental
briefs regarding the appropriate form of that equitable relief. Each side may file a brief on or
before May 1, 2024, and each side may respond to the other side’s brief on or before May
15, 2024.
SIGNED in Houston, Texas this 28th day of March 2024.

________________________________
_________________________
____
GEORGE
GEOR
RGE C
C. HANKS
HANKS, JR
JR.
UNITED STATES DISTRICT JUDGE

57