# Appendix — Young v. Verizon's Bell Atlantic Cash Balance Plan > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_2854%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 2011 - **Citation:** 563 U.S. 1007 ## Text APPENDIX TABLE OF CONTENTS Appendix A: Opinion of the United States Court of Appeals for the Seventh Circuit (Aug. 10, 2010) .......... la Appendix B: Opinion of the United States District Court for the Northern District of Illinois (Nov. 2, 2009) ....... -..... 29a Appendix C: Opinion of the United States District Court for the Northern District of Illinois (Aug. 28, 2008) ......-... .. 144a Appendix D: Order of the United States Court of Appeals for the Seventh Circuit Denying Petition for Rehearing or Rehearing En Banc (Sept. 8, 2010) ............ 19la Appendix E: Statutory Provisions Involved . 193a Appendix F: Excerpts, Bell Atlantic Cash Balance Plan ............. 224a Appendix G: [ixcerpts, Summary Plan Descrip- tlon ........0 ee eee ee een 229a APPENDIX A In the United States Court of Appeals For the Seventh Circuit Nos. 09-3872 & 09-3965 [Filed August 10, 2010] CYNTHIA N. YOUNG, on behalf of herself and others similarly situated, Cross-Appellee, VU. ) ) ) Plaintiff-Appellant / ) ) ) 4 VERIZON'S BELL ATLANTIC CASH ) BALANCE PLAN, et al., ) ) Defendants-Appellees / Cross-Appellants. ) Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 05 C 07314— Morton Denlow, Magistrate Judge. ARGUED JUNE 1, 2010 DECIDED AUGUST 10, 2010 Before BAUER, FLAUM, and TINDER, Circuit Judges. TINDER, Circuit Judge. “People make mistakes. Even administrators of ERISA plans.” Conkright v. Frommert, 130 S. Ct. 1640, 1644 (2010). This introduction was fitting in Conkright, which dealt with a single honest mistake in the interpretation of an ERISA plan. It is perhaps an understatement in this case, which involves a devastating drafting error in the multi-billion-doliar plan administered by Verizon Communications, Inc. (“Verizon”). Verizon’s pension plan contains erroneous language that, if enforced literally, would give Verizon pensioners like plaintiff Cynthia Young greater benefits than they expected. Young nonetheless seeks these additional benefits based on ERISA’s strict rules for enforcing plan terms as written. Although Young raises some forceful arguments, we conclude that ERJSA’s rules are not so strict as to deny an employer equitable relief from the type of “scrivener’s error” that occurred here. We will accordingly affirm the district court’s judgment granting Verizon equitable reformation of its plan to correct the scrivener’s error. Ja I. Background A. Bell Atlantic’s Pension Plans Bell Atlantic, the predecessor of Verizon, operated the Bell Atlantic Management’ Pension Plan (“BAMPP”) until 1996. The BAMPP expressed an employee’s retirement benefit as a defined annuity, but employees also had the option of receiving a lump sum if they retired during specified “cashout windows.” For certain employees who retired during the 1994 1995 cashout window, the BAMPP provided a lump sum equal to the “actuarial equivalent present value” of the employce’s pension benefit, but calculated using an enhanced discount rate. Specifically, section 4.19 of the BAMPP required the use of a discount rate of “120% of the applicable . . . PBGC [Public Benefit Guarantee Corporation| interest rate in effect” at the time of severance. In 1996, Bell Atlantic adopted the Bell Atlantic Cash Balance Plan to replace the BAMPP. ‘The new Plan expressed an employee’s benefit as a cash balance that grew steadily with the employee’s age and years of service. Under the Cash Balance Plan, employees still had the option of receiving their retirement benefit as either an annuity or a lump sum. Key to this transition to the Cash Balance Plan was converting the value of employees’ benefits under the old BAMPP to cash balances under the new Plan. The Plan used “transition factors,” a series of multipliers that increased with employees’ age and years of service, to make the conversion. The Plan language describing this conversion is critical, so we reproduce it in some detail (the emphasis is ours): 16.5 Opening Balance 16.5.1 Pension Conversions is ot the Transition Date Where a present value must be determined under this Section 16.4 |sic, should read “Section 16.5", the present value shall be determined as follows: (a) using the PBGC interest rates which were in effect for September of 1995 16.5.1(a) 1995 Active Participants and 1995 Former Active Participants the opening balance of the Participant’s Cash Balance Account on January 1, 1996 shall be the amount described in subsection (1) or (2) below, as applicable: 16.5.l(a)(1) If Eligible for Service Pension 16.5.1(a)(2) Not Eligible for Service Pension In the case of a Participant who is not eligible for a Service Pension under the 1995 BAMPP Plan as of the Transition Date, the amount described in this paragraph (2) is the product of multiplying (A) the Participant's applicable Transition Factor described in Table I of this Section, times (B) the lump sum cashout value of the Accrued Benefit payable at age 65 under the 1995 BAMPP Plan, determined as if the Participant had a Severance From Service Date on December 31, 1995, based on Compensation paid through December 31, 1995, multiplied by the applicable transition factor described in Table 1 of this Section. B. Young’s Administrative Claim Cynthia Young worked for Bell Atlantic from 1965 to 1997. When the Cash Balance Plan took effect. in 1996, Young was not eligible for a service pension under the BAMPP—that is, her age and service level did not qualify her for full retirement benefits—so her opening cash balance was calculated using § 16.5.1(a)(2), for a resulting balance of $240,127. By the time Young retired in 1997, her cash balance had grown to the point that she received a lump-sum benefit of $286,095. Several years later, in 2004, Young filed a claim with the Claims Review Unit of Verizon (which by then had taken over Plan administration as Bell Atlantic’s successor). Young claimed that Bell Atlantic made two errors in calculating her opening cash balance, and hence her ultimate pension benefit, under the Cash Balance Plan. First, Young read the language of § 16.5.1(a)(2) to require that the “applicable transition factor” be multiplied twice to convert her lump-sum cashout under the BAMPP to her opening cash balance under the new Plan. Bell Atlantic, however, multiplied the transition factor only once when making the conversion. Second, Young claimed that Bell Atlantic improperly applied the 120% PBGC discount rate used in the 1995 BAMPP to determine the “lump-sum 6a cashout value” under § 16.5.1(a)(2). Young contended that Bell Atlantic should have used a discount rate of simply 100% of the PBGC rate. Verizon’s Claims Review Unit denied Young's clams, and on appeal, Verizon’s Claims Review Committee affirmed. The Committee concluded that the intended meaning of § 16.5.1(a)(2) was to use only a single transition factor to calculate opening cash balances; the section’s second reference to the “applicable transition factor” was a drafting mistake. As for Young’s discount rate claim, the Committee concluded that § 16.5.1(a)(2) incorporated the 120% PBGC rate used in the 1995 BAMPP by referring to “the lump-sum cashout value ... under the 1995 BAMPP Plan.” C. Young’s Federal Court Class Action In 2005, Young brought a federal court action under ERISA § 502(a), 29 U.S.C. § 1132(a), against Verizon and its Cash Balance Plan (collectively “Verizon”). Young asserted the same claims she raised in Verizon’s administrative process, arguing that Verizon improperly applied only a single transition factor and the 120% PBGC discount rate to calculate her opening cash balance. The parties agreed to treat the case as a class action, and the district court certified a class of some 14,000 Bell Atlantic/Verizon pensioners similarly situated to Young. Young's class action presented the district court, acting through Magistrate Judge Denlow, with a challenge. The court was confronted with a convoluted ERISA plan that seemed to contain a costly drafting error, but an uncertain state of law on the scope of the fa court’s review of such an error. So the court decided to bifureate the trial into two phases and apply alternative standards of review. In the first phase, the court assumed that it was limited to examining the administrative record and reviewing the Verizon Review Committee’s denial of benefits under a deferential standard. (The Cash Balance Plan granted Verizon, as plan administrator, broad discretion to interpret the Plan, so judicial review was constrained to an “arbitrary and capricious” standard. Black v. Long Term Disability Ins., 582 F.3d 738, 743-44 (7th Cir. 2009).) Under this standard, the district court upheld the Committee's denial of Young's discount rate claim. Conversely, on Young’s transition factor claim, the court concluded that the Committee abused its discretion in unilaterally disregarding the second reference to the transition factor in § 16.5.1(a\2) asa drafting mistake. If Verizon wished to avoid that mistake, it would have to seek a court order for equitable reformation of the Plan. Taking the district court's cue, Verizon counterclaimed for equitable reformation of the Plan to remove the second transition factor in § 16.5.1(a)(2) as a “scrivener’s error.” The court took up Verizon's counterclaim in the second phase of the trial, in which the court conducted a de novo review of the Plan and allowed the parties to introduce extrinsic evidence on the intended meaning of § 16.5.1(a)(2). And that evidence overwhelmingly showed that the inclusion of the second transition factor was indeed a scrivener’s error. The drafting history of the 1996 Plan revealed how the second, erroneous transition factor came to be. Six drafts of the Plan were prepared prior to the final version. The first three drafts were prepared by Mercer Human Resources Consulting, an outside firm hired by Bell Atlantic, and contained no mention of a second transition factor. It was not until one of Bell Atlantic’s in-house attorneys, Barry Peters, took over drafting responsibility that the second transition factor appeared. In working on the fourth draft, Peters restructured the conversion formula under § 16.5.1(a)(2) into a more readable “A times B” format, but in doing so, neglected to delete a trailing clause from the previous draft that referred to “the applicable Transition Factor.” Testifying in the district court, Peters admitted that he made this mistake in failing to delete the trailing clause in § 16.5.1(a)(2), thereby duplicating the transition factor. Peters’s mistake survived unnoticed in the fifth, sixth, and final drafts of the Plan. In addition to the drafting history, the correspondence between Bell Atlantic and plan participants showed an expectation that only a single transition factor would be used to calculate opening cash balances. In October 1995, Bell Atlantic sent participants a brochure entitled, “Introducing Your Cash Balance Plan,” which clearly depicted opening cash balances as the product of an employee’s lump- sum value under the 1995 BAMPP and a single transition factor. In November 1995, Bell Atlantic sent participants personalized statements of their estimated opening account balances, which also illustrated the use of a single transition factor. Following the implementation of the Plan, Bell Atlantic sent participants personalized statements of their actual opening balances, and thereafter quarterly cash balance statements, which, again, reflected the use of only one transition factor. Notably, though, Qa these Plan-related communications contained “plan trumps” provisions cautioning that. in the event of discrepancies between those communications and the Plan, the Plan would govern. Also convincing was the course of dealing between Bell Atlantic/Verizon and plan participants. Bell Atlantic consistently calculated opening cash balances using a single transition factor and paid benefits accordingly. Taking Young's case as an example, her transition factor was 2.659. The estimated opening balance statement that Young received illustrated the multiplication of this 2.659 transition factor by her BAMPP lump-sum cashout value of $90,027, for an estimated opening balance of $90,027 x 2.659 = $239,381. The actual opening balance statement that Young received in 1996 apphed the same, singie transition-factor formula to slightly different numbers: $90,307 x 2.659 = $240,127. Prior to Young’s lawsuit, no employee complained that opening balances should have been increased by an additional transition factor. For her part, Young admitted that she never relied on the transition factor language in § 16.5.1(a)(2) prior to this litigation. Based on this evidence of the intended meaning of the Plan, the district court found that the second transition factor in § 16.5.1(a)(2) was a scrivener’s error and granted Verizon’s counterclaim for equitable reformation. The court aiso resolved a host of other arguments raised by the parties, many of which we discuss below. But suffice it to say, the district court’s treatment of the issues presented by this case was exhaustive Over the course ofa four-year, multi-phase litigation, the court built a complete record, fully explored alternative bases of decision, and sharply 10a honed the issues for appellate review. These commendable efforts by the district court, as well as the fine advocacy by both sides, have greatly assisted this court in deciding this complex ERISA case. [. Analysis A. Statute of Limitations Before reaching the merits, we must address each side’s argument that the other’s claims are barred by the statute of limitations. ERISA does not provide a limitations period for actions brought under § 502, 29 U.S.C. § 1132, so we borrow the most analogous statute of limitations from state law. Berger v. AXA Network LLC, 459 F.3d 804, 808 (7th Cir. 2006). We do not automatically borrow the forum state’s limitations period; if another state has a significant connection to the dispute and its limitations period is more consistent with federal ERISA policies, that state’s limitations period should apply. /d. at 813. For actions such as this one to enforce ERISA plans under § 502(a), we have previously borrowed state limitations periods for suits on written contracts. Leister v. Dovetail, Inc., 546 F.3d 875, 880-81 (7th Cir. 2008); Daill v. Sheet Metal Workers’ Local 73 Pension Fund, 100 F.3d 62, 65 (7th Cir. 1996). The parties agree that Pennsylvania’s four-year statute of limitations for breach of contract actions, 42 Pa. Cons. Stat. § 5525, should apply to this ERISA case. Pennsylvania hasthe most significant connection to this dispute, since Bell Atlantic was headquartered and drafted the Cash Balance Plan there. Also, more class members currently live in Pennsylvania than any other state, and while a few class members live in the lla forum state of Illinois, Young has never lived or worked there. We further note that the Plan contains a choice of law provision stating that Pennsylvania law will fill any gaps left by federal ERISA law. See Berger, 459 F.3d at 813-14 (considering choice of law clause as a non-controlling but relevant factor in selecting a limitations period). The real point of contention is the accrual date of the parties’ claims, that is, when Pennsylvania’s four- year limitations period started to run. Although federal courts borrow state limitations periods for certain ERISA claims, the accrual of those claims is governed by federal common law. Daill, 100 F.3d at 65. Beginning with Young’s ERISA claim, we have held that a claim to recover benefits under § 502(a) accrues “upon a clear and unequivocal repudiation of rights under the pension plan which has been made known to the beneficiary.” Jd. at 66. In this case, Young did not receive a clear repudiation of her claim for additional] benefits until 2005, when Verizon’s Review Committee resolved her administrative appeal. (Actually, the Committee denied Young’s claim with respect to the discount rate issue 1n 2005 but took until 2007 to deny her claim with respect to the transition factor issue. Since it is obvious that Young’s entire federal court action, filed in 2005, would be timely using a 2005 accrual date, this distinction is immaterial.) Prior to denying Young’s administrative claim, Verizon did not inform Young that it rejected her interpretation of the Plan calling for two transition factors and a 100% PBGC discount rate. Cf. id. at 66 (claim accrued upon correspondence from plan _ disagreeing with participant’s understanding of benefits). 12a Verizon argues that Young’s claim accrued in February 1998, when she received her lump-sum benefit computed under Verizon’s interpretation of the Cash Balance Plan. At that time, however, the parties’ dispute over the correct interpretation of the Plan had not developed. And nothing suggests that the $286,095 payment that Young received should have been a red flag that she was underpaid. Cf Redmon v. Sud- Chemie Inc. Ret. Plan for Union Employees, 547 F.3d 531, 539 (6th Cir. 2008) (finding a clear repudiation when the plan stopped making payments entirely, but not earher when the payment amount was merely inconsistent with the plaintiffs understanding of benefits). The 1998 payment that Young received was not so inconsistent with her current claim for additional benefits as to serve as a clear repudiation. Moving to Verizon’s counterclaim, Seventh Circuit precedent provides less guidance on the accrual of a claim for equitable reformation under ERISA § 502(a)}—understandably so, since the cognizance of such a claim is an issue of first impression for this court. The general federal common law rule is that an ERISA claim accrues when the plaintiff knows or should know of conduct that interferes with the plaintiffs ERISA rights. See Berger, 459 F.3d at 815-16 (accrual when beneficiaries learned of change in employer’s method for determining benefit eligibility); Teumer v. Gen. Motors Corp., 34 F.3d 542, 550 (7th Cir. 1994) (“Once an unlawful action is taken, a claim accrues when the putative plaintiff discovers the injury that results.”). Applying this rule to Verizon’s reformation action, we consider when Verizon should have known that the scrivener’s error in the Cash Balance Plan, if left unreformed, would impede its rights under the Plan. 13a The district court found, and Verizon does not dispute, that Verizon’s predecessor Bell Atlantic learned of the scrivener’s error in 1997. Indeed, Bell Atlantic removed the second, erroneous transition factor from the 1998 plan that it adopted to replace the 1997 version of the Cash Balance Plan. Still, we conclude that this 1997 discovery did not give Verizon notice of the need to reform the scrivener’s error, given a course of dealing consistent with Verizon’s interpretation of the Plan. Verizon always treated the Plan’s second transition factor as a drafting mistake, and _ through correspondence with plan participants, it communicated that only a single transition factor would be used to calculate opening cash balances. Verizon consistently paid benefits using this formula, and prior to Young’s administrative claim, no employee communicated a contrary understanding that Plan benefits should be calculated using two transition factors. Cf Tolle v. Carroll Touch, Inc., 977 F.2d 1129, 1141 (7th Cir. 1992) (employee’s ERISA unlawful discharge claim accrued when employer communicated discharge decision); Bowes v. Travelers Ins. Co., 173 F. Supp. 2d 342, 346 (E.D. Pa. 2001) (applying Pennsylvania law, claim for reformation of written contract accrued when conflicting oral statements underlying the dispute were made). Under these circumstances, although Verizon discovered the drafting mistake in 1997, it did not then know that this mistake would give rise to a controversy requiring it to raise an equitable reformation claim. See Inti Union v. Murata Erie N. Am., Inc., 980 F.2d 889, 901 (3d Cir. 1992) (ERISA claim did not accrue when plan sponsor amended plan absent evidence that participants knew of any potential controversy over l4a amended language). Instead, it was not before Young put the transition factor language at issue in her 2005 federal court action that Verizon’s counterclaim for equitable reformation accrued. None of the parties’ claims accrued before 2005 when Young brought her federal court ERISA action, so these claims are timely under the applicable Pennsylvania four-year limitations period. We may proceed to the merits of Verizon’s claim for equitable reformation and Young’s claim for additional benefits under ERISA § 502(a). B. Equitable Reformation Due to Scrivener’s Error ERISA is a comprehensive statute designed to uniformly regulate employee benefit plans. Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004). To achieve uniformity, ERISA contains numerous requirements for adopting and administering plans. Plans must be “established and maintained pursuant to a written instrument.” 29 U.S.C. § 1102(a)(1). The plan terms must be communicated to participants through an easily understood “summary plan description,” as well as a “summary of any material modification” to the plan. Jd. § 1022(a). These ERISA required writings are given primary effect and strictly enforced, and plan administrators must adhere to “the bright-line requirement to follow plan documents in distributing benefits.” Kennedy v. Plan Adm’r for DuPont Sav. & Inv. Plan, 129 S. Ct. 865, 876 (2009). While ERISA’s strict requirements “ensure|[ | fair and prompt enforcement of rights under a plan,” Songress was careful not to make those requirements Ja so onerous “that administrative costs, or litigation expenses, unduly discourage employers from offering plans in the first place.” Conkright v. Frommert, 130 S. Ct. 1640, 1649 (2010) (quotations omitted). So ERISA also allows some flexibility in plan administration and enforcement to achieve fair, equitable results. In particular, employers may grant plan administrators broad discretion in interpreting plan terms. /d. “Deference promotes efficiency by encouraging resolution of benefits disputes through internal administrative proceedings rather than _ costly litigation.” Id. Another ERISA provision that promotes equitable plan enforcement—and the statute important here—is § 502(a)(3), which allows a_ plan _ participant, beneficiary, or fiduciary to bring a civil action for “appropriate equitable relief.” 29 U.S.C. § 1132(a)(3)(B). The Supreme Court has explained that the statute authorizes “those categories of relief that were typically available in equity” during the days when common law courts were divided as courts of law or of equity. Mertens v. Hewitt Assocs., 508 U.S. 248, 256 (1993); see also Kenseth v. Dean Health Plan, Inc., No. 08-3219, 2010 WL 2557767, at *24 (7th Cir. June 28, 2010) (describing categories of equitable relief available under 29 U.S.C. § 1132(a)(3)). The issue in this case, then, is whether Verizon’s claim for equitable reformation of its Cash Balance Plan is the type of equitable relief authorized by § 502(a)(3). We have: never considered whether § 502(a)(3) authorizes equitable reformation of an ERISA plan due to a scrivener’s error, but our case law addressing the related problem of ambiguous plan language suggests that such relief may be appropriate. loa In Mathews v. Sears Pension Plan, 144 F.3d 461 (7th Cir. 1998), we put the parties’ reasonable expectations ahead of the literal text of an ERISA plan. Although the plain language of the plan suggested a benefits formula more favorable to employees, the employer offered objective, extrinsic evidence showing an “extrinsic ambiguity” in this language. Jd. at 466-67. The summary plan documents and the parties’ course of dealing were consistent with the employer’s reading of the plan, so we declined to adopt the employees’ contrary reading under “rigid and archaic” rules of contract interpretation. Jd. at 469. We reached a different result in Grun v. Pneumo Abex Corp., 163 F.3d 411, 420-21 (7th Cir. 1998), refusing to set aside unambiguous plan language based on an employer’s claim of “mutual mistake.” Still, we acknowledged that such relief would be available in “the rare case where literal application of a text would lead to absurd results or thwart the obvious intentions of its drafters.” /d. at 420 (quotation omitted). Reformation was inappropriate in Grun because the employee relied on the literal plan language to predict his right to severance compensation. Id. at 421; cf. Mathews, 144 F.3d at 469 (noting absence of claim that any beneficiary actually relied on plan language). Other circuits have directly addressed claims for equitable reformation of an ERISA plan. Using reasoning similar to that in Mathews and Grun, these courts have either concluded that ERISA authorizes such relief or does not foreclose the possibility. Verizon’s strongest case is Int’l Union v. Murata Erie N. Am., Inc., 980 F.2d 889, 907 (3d Cir. 1992), in lVa which the Third Circuit recognized an employer's § 502(a)(3) claim to correct a “scrivener’s error” in a plan provision on the distribution of excess funds. The court found equitable reformation appropriate because holding the employer to the scrivener’s error would produce “what is admittedly a ‘windfall’ ”—“an excess remaining in the Plans” that the plaintiffs could not have reasonably expected. Jd. The Eighth Circuit applied a similar rationale in Wilson v. Moog Auto., Ince. Pension Plan, 193 F.3d 1004, 1008-10 (8th Cir. 1999), to conclude that an ERISA plan’s failure to provide a minimum age for retirement benefits was a reformable mistake. Reformation was possible because extrinsic evidence showed that none of the plaintiffs actually relied on the erroneous plan language or believed that they would be eligible for early retirement. /d. at 1009-10. The Ninth Circuit distinguished Murata in Cinelli v. Sec. Pac. Corp., 61 F.3d 1437, 1444-45 (9th Cir. 1995), rejecting an employee’s claim that the absence of a plan provision entitling him to vested life insurance benefits was a_emistake. Although reformation of a scrivener’s error was appropriate in Murata to avoid a “windfall” and uphold employees’ reasonable expectations of benefits, those factors were lacking in Cinelli. Id. at 1445. Likewise, in Blackshear v. Reliance Standard Life Ins. Co., 509 ¥.3d 634, 643- 44 (4th Cir. 2007), abrogated on other grounds as stated in Williams v. Metro. Life Ins. Co., Nos. 09-1025 & 09- 1568, 2010 WL 2599676, at *5 (4th Cir. June 30, 2010), the Fourth Circuit declined to equitably reform an ERISA plan under the circumstances, where the plan language was clear and neither the summary plan description nor other plan documents supported the employer’s claim of a scrivener’s error. 18a From this authority, we conclude that ERISA § 502(a)(3) authorizes equitable reformation of a plan that is shown, by clear and convincing evidence, to contain a scrivener’s error that does not reflect participants’ reasonable expectations of benefits. Though complex in design, ERISA maintains the basic goal of “protecting employees’ justified expectations of receiving the benefits their employers promise them.” Cent. Laborers’ Pension Fund v. Heinz, 541 U.S. 739, 743 (2004). It would thwart this goal to enforce erroneous plan terms contrary to those expectations, even if doing so would increase employees’ benefits. The “appropriate equitable relief’ authorized by § 502(a)(3) allows a court to reform an ERISA plan to avoid such an unfair result. See Cent. Pa. Teamsters Pension Fund v. McCormick Dray Line, Inc., 85 F.3d 1098, 1105 n.2 (3d Cir. 1996) (“[I}]n circumstances where a court can establish that no plan participants were likely to have relied upon the scrivener’s error in question . . . allowing reformation of the scrivener’s error does not thwart ERISA’s statutory purpose ....”); Murata, 980 F.2d at 907 (“[T)he alleged error relates to what is admittedly a ‘windfall’. . . that neither side could have reasonably expected.”); cf Mathews, 144 F.3d at 469 (“We cannot see how ERISA beneficiaries or anyone else . . . would be benefited by the adoption of principles of contractual interpretation so rigid and archaic as to permit the class to reap the pure windfall here sought to the potential prejudice of other beneficiaries.”). We acknowledge, like the Third Circuit in Murata, 980 F.2d at 907, that equitable reformation of an ERISA plan creates some tension with the “written instrument” requirement of 29 U.S.C. § 1102(a)1), also known as the “plan documents rule,” Kennedy, 19a 129 S. Ct. at 877. This rule ensures “that every employee may, on examining the plan documents, determine exactly what his rights and obligations are under the plan,” Murata, 980 F.2d at 907, without complicated “enquiries into nice expressions of intent” behind plan language, Kennedy, 129 S. Ct. at 875. Young cautions that allowing equitable reformation of ERISA plans will undermine the efficient, easily enforceable plan documents rule and encourage protracted, discovery-intensive litigation over the intended meaning of a plan. Even so, since we interpret § 502(a)(3) to authorize the equitable reformation claim asserted here, we cannot simply reject such a claim based on the added litigation burden that it might represent. Moreover, we see little difference between the intent-based inquiry that took place in this reformation case and what must occur in the related case of an ambiguous ERISA plan. In each case, the court must look beyond the plan document to extrinsic evidence to determine the parties’ understanding of the plan. See Mathews, 144 F.3d at 467. We do not think that the availability or scope of this judicial inquiry should turn on whether the error in an ERISA plan is deemed an “ambiguity” or a “scrivener’s error.” Drafting mistakes in ERISA plans may take many forms; some involve language that is ambiguous on its face while others, like the mistake here, involve language that is not intrinsically ambiguous but still misstates participants’ benefits. It would not further the purposes of ERISA to allow courts to correct one type of mistake but not the other. Also, other limitations on the equitable reformation claim that we recognize under § 502(a)(3) will mitigate its impact on the plan documents rule. Only those who 20a can marshal “clear and convincing” evidence that plan language is contrary to the parties’ expectations will have a viable claim. Murata, 980 F.2d at 908. This standard of proof is rigorous, requiring evidence that is “clear, precise, convincing and of the most satisfactory character that a mistake has occurred and that the mistake does not reflect the intent of the parties.” /d. at 907 (quotation omnutted); accord Blackshear, 509 F.3d at 642. The evidence also must be “objective” and not dependent “on the credibility of testimony (oral or written) of an interested party.” Mathews, 144 F.3d at 467. These high standards of proof should deter an employer from seeking to reform plan language simply because it has_ proven unfavorable. In this case, though, we agree with the district court that Verizon presented enough objective, convincing evidence to show that the second reference to the transition factor in § 16.5.1(a)(2) of the Cash Balance Plan was a scrivener’s error inconsistent with participants’ expected benefits. The drafting history left little doubt that the second transition factor in § 16.5.1(a\2) was a mistake. It first appeared in the fourth draft of the Plan, the first draft prepared by Bell Atlantic attorney Barry Peters. This draft reformatted the multiplication formula in § 16.5.1(a)(2), but in doing so, failed to omit the prior draft’s trailing clause that referred to the transition factor. thereby duplicating the transition factor. We need not rely on Peters’s arguably self-serving testimony to conclude that this botched reformatting led to the second transition factor; so much is clear by comparing the fourth draft with the prior version. And given the absence of any evidence contemporaneous to Pla the fourth draft suggesting that Bell Atlantic was reworking the Plan to increase benefits, it is evident that duplicating the transition factor was a drafting mistake. The communications and course of dealing between Bell Atlantic/Verizon and plan participants further illustrate that the parties intended a single-transition factor formula. Young and other participants received a Plan brochure that described their opening cash balances as the product of their lump-sum values under the 1995 BAMPP and a single transition factor. Although the brochure did not explicitly state that a “single” transition factor would be used, the formula depicted in the brochure makes clear that only one multiplier would apply. That was confirmed in the personalized statements sent to participants of their estimated and actual opening cash balances, which reported values based on the use of a single transition factor. By way of illustration, Young received an estimated opening balance statement that reported her transition factor of 2.659 and her BAMPP lump-sum cashout value of $90,027, for an estimated opening balance of $239,381. Her actual opening balance reported in a later statement, $240,127, was calculated similarly. If a second 2.659 transition factor were applied to these figures, Young’s estimated and actual opening balances would have been $636,514 and $638,498, respectively. Bell Atlantic/Verizon never squared transition factors in this manner but instead calculated benefits using only a single transition factor, consistent with the Plan communications. Prior to Young’s claim, no employee complained that cash balances should have been increased by an additional transition factor. 222 Granted, many of the Plan communications, including the Plan brochure and opening balance statements, are less compelling because they contain what Young describes as “plan trumps” provisions, which stated that the communications were subordinate to any contrary language in the Plan. As Young points out, were the situation reversed and the employee-favorable language contained in a Plan communication rather than the Plan itself, Verizon no doubt would contend that these plan trumps provisions barred Young from relying on the communication. See Kolentus v. Aveo Corp., 798 F.2d 949, 958 (7th Cir. 1986) (““{W]hen the summary booklet expressly states that it is merely an outline of the pension plan and that the formal text of the plan governs in the event a question arises, the plaintiffs cannot rely on the general statements of the booklet but must look to the plan itself.”). Young’s point is well-taken, but we cannot agree that the mere existence of plan trumps provisions precludes Verizon from reforming the Plan consistent with Plan communications. At issue is whether Verizon has established by clear and convincing evidence that the intended meaning of § 16.5.1(a)(2) was to apply only a single transition factor to calculate opening cash balances. Verizon may include all the Plan communications describing a single-transition-factor formula as part of that evidence, even though they contain plan trumps provisions. Based on this evidence of the intended meaning of the Plan, the district court correctly found that the second transition factor in § 16.5.l(a)(2) was a scrivener’s error inconsistent with plan participants’ expected benefits. Under these circumstances, 23a equitable reformation of the Plan to remove the error is appropriate. We close our discussion of Verizon’s reformation claim by considering additional defenses to equitable relief. Because Verizon’s claim is one for “appropriate equitable relief” under ERISA § 502(a)(3)(B), 29 U.S.C. § 1132(a)(3)(B), it is subject to the traditional equitable defenses at common law, provided that they are not inconsistent with ERISA. Young raises the defense of “good faith” and “fair dealing,” under which a contracting party may be precluded from reforming a mistake caused by the party's own “gross” negligence. Restatement (Second) of Contracts § 157 & cmt. a (1981). As the district court put it, Bell Atlantic/Verizon’s failure +o prevent the drafting mistake in § 16.5.1(aX2) was “profound” negligence. Bell Atlantic charged a single in-house attorney, Barry Peters, with revising a _ critical provision of a miulti-billion-dollar pension plan, apparently without critical review by another ERISA expert. It is baffling that a major corporation would not invest greater resources to ensure accuracy in the drafting of such an important document. Still, we cannot agree with Young that this institutional failure showed a lack of good faith. Verizon never misrepresented its intended meaning of the Cash Balance Plan, and indeed, based on the extrinsic evidence examined above, it made great efforts to accurately communicate how participants’ benefits would be calculated. Cf id. cmt. a, illustration 2 (misrepresentation that party verified bid for accuracy was failure to act in good faith). 24a For similar reasons, we do not accept Young’s “unclean hands” defense, under which “equitable relief will be refused if it would give the plaintiff a wrongful gain.” Scheiber v. Dolby Labs., Inc., 293 F.3d 1014, 1021 (7th Cir. 2002). A plaintiff who acts unfairly, deceitfully, or in bad faith may not through equity seek to gain from that transgression. See Packers Trading Co. v. Commodity Futures Trading Comm’n, 972 F.2d 144, 148-49 (7th Cir. 1992). Verizon made a mistake, and a big one at that, in drafting the Cash Balance Plan, but Verizon did not attempt to deceive plan participants regarding their benefit rights under the intended meaning of § 16.5.1(a)(2). Cf id. (barring relief for a plaintiff who concealed his knowledge of the defendant’s mistake and then attempted to recover based on that mistake). On the contrary, Verizon’s Pian administration and communications reflected its consistent view that opening cash balances would be calculated using only a single transition factor. Finally, Young raises the equitable defense of laches, or unreasonable delay, by Verizon in seeking equitable reformation. Laches means “culpable delay in suing” and may apply if the plaintiff commits an unreasonable, prejudicial delay in bringing the suit. Teamsters & Employers Welfare Trust of Ill. v. Gorman Bros. Ready Mix, 283 F.3d 877, 880 (7th Cir. 2002). For reasons explained above in our discussion of the statute of limitations, Verizon did not unreasonably delay in bringing its equitable reformation claim. Although Verizon learned of the scrivener’s error in the Cash Balance Plan in 1997, at that time it had no reason to believe that this error would lead to a benefits dispute. Instead, the parties’ correspondence and course of dealing were consistent with Verizon’s understanding that only a single transition factor i oe 20a would be used to calculate benefits. By 1998, Verizon had corrected the Plan to reflect this understanding, and no employee communicated a_ contrary interpretation before Young brought her admin- istrative claim in 2004. Since this course of conduct reinforced Verizon’s interpretation of the Cash Balance Plan, Verizon did not “sleep on [its] rights,” Hot Wax, Inc. v. Turtle Wax, Inc., 191 F.3d 813, 820 (7th Cir. 1999), by not bringing an equit2ble reformation claim before Young’s lawsuit. In sum, no equitable defenses bar Verizon's equitable reformation claim under ERISA § 502(a)(3), and the district court properly granted that claim to remove the scrivener’s error from the Cash Balance Plan. C. Discount Rate for Opening Cash Balances In addition to her argument regarding the second transition factor in § 16.5.1(a)(2), Young claimed that Verizon improperly applied the enhanced, 120% PBGC discount rate used in the 1995 BAMPP to calculate her opening balance under the Cash Balance Plan. Verizon’s Review Committee denied Young’s discount rate claim, and because the Plan grants the administrator broad discretion to interpret Plan provisions, we review the Committee’s decision for an abuse of discretion. See Black v. Long Term Disability Ins., 582 F.3d 738, 744 (7th Cir. 2009). The interpretation of ERISA plans is governed by federal common law, which draws on_ general principles of contract interpretation to the extent they are consistent with ERISA. Mathews, 144 F.3d at 465. Under these principles, contract language is given its 26a plain and ordinary meaning. Pitcher v. Principal Mut. Life Ins. Co., 93 F.3d 407, 411 (7th Cir. 1996). Contracts must be read as a whole, and the meaning of separate provisions should be considered in light of one another and the context of the entire agreement. Taracorp, Inc. v. NL Indus., Inc., 73 F.3d 738, 745 (7th Cir. 1996). Contract interpretations should, to the extent possible, give effect to all language without rendering any term superfluous, id. at 746, but if both a general and a speci"c provision apply to the subject at hand, the specific provision controls, Medcom Holding Co. v. Baxter Travenol Labs., Inc., 984 F.2d 223, 227 (7th Cir. 1993). The use of a discount rate to calculate opening balances under the Cash Balance Plan occurs by operation of § 16.5.1(a)(2). That section defines opening cash balances as the product of two variables (assuming, of course, one ignores the _ second “transition factor” that we have disregarded as a scrivener’s error): “(A) the Participant’s applicable Transition Factor described in Table 1 of this Section, times (B) the lump-sum cashout value of the Accrued Benefit payable at age 65 under the 1995 BAMPP Plan .... Under § 4.19 of the BAMPP, which was attached to the Cash Balance Plan as an appendix, lump-sum payments for employees who retired during the 1994- 1995 cashout window were calculated using a discount rate of 120% of “the applicable PBGC interest rate.” Reading the language of § 16.5.1(a)(2) in the context of the entire Cash Balance Plan—including the attached 1995 BAMPP—the best interpretation is one that applies the 120% PBGC discount rate used in the 1995 BAMPFP to calculate opening cash balances. The plain meaning of the “(B)” variable in § 16.5.1(a)(2)—“the lump-sum cashout value . . . payable .. . under the 1995 BAMPP Plan”—is the lump-sum value as calculated under the 1995 BAMPP. Since the BAMPP used a 120% PBGC discount rate, that same methodology carries over to calculating opening balances under the Cash Balance Plan. Young points to the umbrella section 16.5.1, which provides that any “present value” that “must be determined under this Section 16.[5] shall be determined . . . using the PBGC interest rates which were in effect for September of 1995.” Young would apply this present value definition, which uses a discount rate of simply 100% of the PBGC rate, to determine the “lump-sum cashout value” in § 16.5.1(a)(2). Young’s interpretation ignores the explicit reference in § 16.5.1(a)(2) to the cashout value “under the 1995 BAMPP Plan.” Because § 16.5.1(a)(2) specifically uses the 1995 BAMPP formula for discounting lump-sum values, the more general present value formula in § 16.5.1 does not apply to that section. We also disagree with Young that incorporating the 1995 BAMPP, 120% PBGC formula into § 16.5.1(a)(2) in this manner renders the 100% PBGC formula in § 16.5.1 superfluous. The latter formula applies broadly to calculate present values under “this Section 16.[5].”. Notably, unlike § 16.5.1(a), provisions in § 16.5.2(a) use the “present value” term defined in § 16.5.1 to determine opening cash balances for employees covered by those sections. So it harmonizes all the language in § 16.5 to give effect to the 120% PBGC rate incorporated into § 16.5.1(a)(2) for that specific provision, while giving effect to the general 100% PBGC rate for other provisions in § 16.5. 20a The most reasonable reading of § 16.5.1(a)(2) is one that applies the 120% PBGC discount rate to calculate opening cash balances. At the very least, Verizon’s Review Committee did not abuse its discretion in adopting this interpretation. Ill. Conclusion ERISA’s rules for written plans are strictly enforced, but they are not so strict as to prevent equitable reformation of a plan that is shown, by clear and convincing evidence, to contain a scrivener’s error that is inconsistent with participants’ expected benefits. AFFIRMED 29a APPENDIX B / IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION Case No. 05 C 7314 Magistrate Judge Morton Denlow [Filed November 2, 2009] CYNTHIA N. YOUNG, on behalf of herself and others similarly situated, Plaintiff VERIZON'S BELL ATLANTIC CASH BALANCE PLAN, formerly known as Bell Atlantic Cush Balance Plan, formerly known ) as Bell Atlantic Management Pension Plan, and VERIZON COMMUNICATIONS, INC as successor in interest to Bell Atlantic Corporation Detendant: MEMORANDUM OPINION AND ORDER This ERISA class action presents the issue of whether a billion dollar scrivener’s error should be 30a reformed or enforced as written. Plaintiff Cynthia N. Young (“Plaintiff or “Young”) alleges that Defendants Verizon's Bell Atlantic Cash Balance Plan (the “Plan”) and Verizon Communications, Inc. (“Verizon”) (collectively “Defendants”) improperly calculated her pension benefits, and those of similarly situated employees. Plaintiff seeks judicial review of the final decision of the Plan Administrator denying her claims for additional benefits. In their counterclaim, Defendants seek reformation of the Plan to correct an alleged scrivener’s error. This Court previously considered these issues applying a deferential) standard of review to the Plan administrators’ decisions to deny Plaintiffs claims based upon the administrative record. Young ov. Verizon's Bell Atlantic Cash Balance Plan, 575 ¥ Supp 2d 892 (N.D. Il). 2008). (“Phase I Trial.”) Because this case raises novel issues under ERISA and will likely proceed to the Seventh Circuit Court of Appeals, the Court now reviews these issues applying a de novo standard of review, while permitting the parties to introduce additional evidence. It is the Court’s intention to decide all issues in such a way that the reviewing court can finally resolve the case without the necessity for a later remand The Court conducted a second trial on September | and 2, 2009 and heard closing arguments on October 5, 2009. (“Phase II Trial.”) The Court has carefully considered the testimony of the two witnesses who testified at the trial, the deposition excerpts of the witnesses included in the parties’ exhibits, the parties’ trial exhibits, the parties’ agreed statement of facts, the parties’ proposed findings of fact and conclusions ola of law, the parties’ briefs and the closing arguments of counsel. The following constitute the Court’s findings of fact and conclusions of law in accordance with Rule 52(a) of the Federal Rules of Civil Procedure. To the extent certain findings of fact may be deemed conclusions of law, they shall also be considered conclusions of law. Similarly, to the extent matters contained in the conclusions of law may be deemed findings of fact, they shall also be considered findings of fact. 1. ISSUES PRESENTED 1. Whether the Defendants properly used an interest rate of 120% of the PBGC rate, rather than 100% of the PBGC rate, in calculating Plaintiffs opening balance (“Discount Rate Issue”) ANSWER: Yes 2. Whether there was a scrivener's error in Plan § 16.5.1(a)(2) by reason of a second reference to the transition factor in the calculation of the opening balance (“Transition Factor Issue”) ANSWER: Yes 3. Whether the Defendants are entitled to reformation of the Plan to eliminate the second reference to the transition factor in Plan § 16.5. 1(a)(2). ANSWER: Yes 4. Whether Plaintiffs claims are barred by the statute of limitations ANSWER: No. 5. Whether Defendants’ claims are barred by the statute of limitations. ANSWER: No. Il. FINDINGS OF FACT A. The Parties. 1. Plaintiff Cynthia N. Young is the Class representative for the Class in this action. AG ¥ 1.’ She testified by means of a deposition. (DX 58.) a Young worked at Bell Atlantic (or one of its acquired subsidiaries) from 1965 through 1997. During the course of her career, she was a telephone operator, service representative, administrative assistant, communications representative, assistant manager, and manager, and she finished her career as a project manager. AG { 2. 3. Young was a participant in a series of defined benefit pension plans, including the Bell ‘The Parties’ Agreed Statement of Facts (hereinafter,“AG]___*) (Dkt. 178.) References to “PX __” and “DX __” are references to Plaintiffs and Defendants’ trial exhibits, respectively. The parties prepared a Joint Index of Trial Exhibits with cross references to Bates numbers. (Dkt. 186.) Reference to“Dkt. __” are references to docket entnes. References to “T. _” are references to the September 1 and 2, 2009 trial transcript. The Court has provided selected citations to the factual record. These are intended to be representative citations and there may be other factual support in the record that is not specifically cited. 33a Atlantic Management Pension Plan (“BAMPP”), and then the 1996 and 1997 Bell Atlantic Cash Balance Plan (“Cash Balance Plan”). Young retired in 1997 when the 1997 Bell Atlantic Cash Balance Plan was the operative plan and received a lump-sum payment of her benefit on February 2, 1998, in the amount of $286,094.89. AG { 3. 4. Young later received another payment of $9,558.70 related to her participation in the Cash Balance Plan due toa settlement by the Plan with the Equal Employment Opportunity Commission (““EEQC”"). AG ¥ 4. 5. Defendant Verizon Communications, Inc. (“Verizon”)is a Delaware corporation with its principal place of business in Basking Ridge, New Jersey. Verizon is the successor-in-interest to Bell Atlantic Corporation (“Bell Atlantic”). Bell Atlantic was one of seven regional telephone operating companies created on January 1, 1984 as a result of the divestiture of AT&T. It represented one of 22 local operating companies that AT&T owned and served the northern Atlantic states. Bell Atlantic was headquartered in Philadelphia and consisted of telephone companies in Pennsylvania, New Jersey, Delaware, Maryland, Virginia, West Virginia and the District of Columbia. An agreement to merge Bell Atlantic and NYNEX, the regional telephone operating company for New York and New England, was announced in April 1996 and became final on August 14, 1997. The combined company took the name of Bell Atlantic, with headquarters in New York City and a workforce of 130,000 employees. On July 27, 1998, Bell Atlantic announced an agreement to merge with GTE, and this merger was effective on June 30, 2000, with the new ota company taking the name of Verizon Communications, Inc. AG J 5. 6. The merger of Bell Atlantic and NYNEX, and the subsequent merger of Bell Atlantic and GTr, were both large mergers. Bell Atlantic after the first merger and Verizon after the second merger amended their numerous benefit plans, including pension plans and a variety of welfare plans. Bell Atlantic/Verizon implemented these two major mergers and transformed its business from regional telephone operations to a leading provider of national] and international wireless telephone and high-speed internet services. AG q 6. Z. Verizon is “both the plan sponsor and the plan’s administrator.” You ng v. Verizon’s Bell Atlantic Cash Balance Plan, 575 F. Supp. 2d 892, 907 (N.D. IIL. 2008). AG J 6. In 2008. Verizon earned $6.4 billion in profits on revenues of $97.4 billion. (PX 204 and 205.) B. The Class. 8. The parties stipulated to the treatment of this action as a class action. On January 16, 2007, the Court certified a Class pursuant to Rule 23, Fed. R. Civ. P., with two subclasses. AG 7 8: Dkt. 61. 9. Subclass 1 is defined as follows: All participants in the Bell Atlantic Management Pension Plan whose opening balances for the Bell Atlantic Cash Balance Plan were purportedly calculated using section 16.5.1 of the Bel] IIA Atlantic Cash Balance Plan and using 120% of the applicable PBGC rate. Dkt. 61. 10. The class claim associated with Subclass ] (hereinafter called the “Discount Rate Issue”) is defined as follows: Whether, in determining the benefits afforded by the Bell Atlantic Cash Balance Plan to the plaintiff and the Class, it was improper to use 120% of the applicable PBGC interest rate when calculating the “Opening balances,” and. if proper, the remedy therefor Dkt. 61. L1. Subclass 2 js defined as follows All participants in the Bell Atlantic Management Pension Plan whose opening balances for the Bell Atlantic Cash Balance Plan Were purportedly calculated using section 16.5.1(a)\(2) of the Bell Atlantic Cash Balance Plan. Dkt. 61] iz. The class claim associated with Subclass 2 (hereinafter called the “Transition Factor Issue”) is defined as follows: Whether, in determining the benefits afforded by the Bell Atlantic Cash ap ova Balance Plan to plaintiff and the Class, i was proper to apply the cash balance transition factor found in Table 1 of Section 16 of the Cash Balance Plan once rather than twice when calculating the “opening balances,” and if improper, the remedy therefor. Dkt. 61. 12. Young is the class representative for both Subclasses, which taken together are referred to asthe “Class.” The Class, consisting of both Subclasses, includes approximately 13,784 former and current management employees of Bell Atlantic and later Verizon. AG ¥ 13. C. The Pension Plans and the Transition to the Cash Balance Plan. 14. The Verizon Management Pension Plan is the successor plan to Verizon’s Bell Atlantic Cash Balance Plan. (PX 206 at VZ432.) Verizon's Bell Atlantic Cash Balance Plan was the successor plan to the Bell Atlantic Cash Balance Plan (the foregoing are hereinafter referred to as the “Cash Balance Plan” or the “Plan”). The Bell Atlantic Cash Balance Plan is the successor plan to the Beil Atlantic Management Pension Plan “BAMPP”). (DX 18 at VZ1053). All of these plans are defined benefit pension plans as defined by ERISA. The effective dates of these plans were as follows: ¢ BAMPP - for decades prior to December 21, 1995 "7, ofa e Bell Atlantic Cash Balance Plan 7/6/96 - effective 12/31/95 e Bell Atlantic Cash Balance Plan 9/3/07 Restatement - effective 12/31/95 e Bell Atlantic Cash Balance Plan - 10/8/98 effective 1/1/98 e Bell Atlantic Cash Balance Plan 7/6/99 effective 1/1/98 e¢ Merged Bell Atlantic & Bell Atlantic-North Plan 12/1/99 - effective 1/1/99 e Verizon's Bell Atlantic Cash Balance Plan 12/31/01 - effective 1/1/99 e Vernzon Management Pension Plan 1/1/02 effective 1/1/02 15. Thislitigation principally involves the events surrounding the adoption and completion of the Bel! Atlantic Cash Balance Plan on July 6, 1996 to replace the BAMPP effective December 31, 1995. D. Benefits Under the BAMPP. 16. The BAMPP was the principal pension plan that applied to non-union management employees of Bell Atlantic. (T.81.) Salaried management employees of Bell Atlantic participated in the BAMPP, a defined benefit pension plan, for decades until December 31, 1995. A participant’s benefit under the BAMPP was expressed in the form of an annuity commencing at age 65. The BAMPP provided that participants who NO oO0a attained specified age and service levels were eligible for a “Service Pension.” (DX 17, BAMPP 8§ 4.2-4.3, at VZ110-12.) The Service Pension permitted an eligible participant to begin receiving an annuity before age 65 without a full actuarial reduction to reflect the early commencement of the participant’s pension. (/d., BAMPP § 4.3, at VZ111-12.) AG { 14. 17. TheBAMPP was structured to provide a very significant increase in the value of the benefit once a participant reached a long-term service point, referred to as a “cliff,” which gave an incentive for employees to spend their entire careers with the company. (T. 81.) This took place when the participant became eligible for a Service Pension. (DX 17, BAMPP 8§§ 4.2-4.4, at VZ 110-13; DX 1 at VZ 10391). 18. Although a participant’s retirement benefit was traditionally paid as an annuity, the BAMPP also included certain “windows,” during which participants could elect to receive their retirement benefits in the form of a one-time lump sum payment, instead of the traditional annuity. (DX 17 at VZ130—32 & VZ133--35, BAMPP §8§ 4.16, 4.19.) AG ¥ 15. E. Use of Pension Benefit Guaranty Corporation (“PBGC”) Interest Rate. 19. Section 4.19 of the BAMPP was one such cash-out “window.” It provided for a lump-sum payment (and an accompanying method to calculate that lump-sum) to any vested participant who was an “Active Participant on his Severance from Service Date which occurs on or after December 31,1993 and prior to December 31, 1995.” (DX 17 at VZ133.) 39a 20. The lump-sum formula for those who retired between December 31, 1993, and December 30, 1995 was as follows: (2) Lump-sum Form of Payment. (A) Service Pension Cash-Outs. The lump-sum payable to a Window-Eligible Employee who is eligible for a Normal or Early Retirement Service Pension shall equal the Actuarial Equivalent present value (calculated using the assumptions in subsection (c)(2)(C)) of the Service Pension otherwise payable to the Participant in the Normal Form commencing on his Annuity Startign Date, as determined under the provisions of the Plan other than this Section 4.19. (B) Deferred Vested Pension Cash-Outs. The lump-sum payable to a Window-Eligible Employee who is eligible for a Deferred Vested Pension shall equal the Actuarial Equivalent present value (calculated using the assumptions in subsection (c)2)(C)) of the Deferred Vested Pension otherwise payable to the Participant in the Normal Form commencing at Normal Retirement Age (or age at Severance from Service Date, if later), as determined under the provisions of the Plan other than this Section 4.19. (DX 17 at VZ134.) 21. Section 4.19 of the BAMPP uses three assumptions for determining a lump- sum cashout value (DX 17 at VZ134): 40a (a) The discount rate is 120% of the “PBGC interest rate in effect on the last day of the calendar month immediately preceding the first month of the calendar quarter in which the Severance from Service Date occurs.” (DX 17 at VZ134-35); (b) A participant’s expected life span is determined using the “Non-Insured Unisex Pension 1984 (UP84) Mortality Table.” (DX 17 at VZ135); and (c) A participant’s age is to be “years, months and days. . . measured as of the 15" day of the middle of the month of the calendar quarter containing the Severance from Service Date, and that age shall be rounded down to a number of whole months.” (/d.) 22. The Court incorporates by reference its discussion of the background facts to the selection of the appropriate Pension Benefit Guaranty Corporation (“PBGC”) interest rate (“Discount Rate Issue”) from its prior decision. Young v. Verizon’s Bell Atlantic Cash Balance Plan, 575 F.Supp. 2d 892 at 899-903. 23. Bell Atlantic consistently applied the same PBGC formula under the BAMPP to determine the actuarial equivalent amount, namely “using 120% (or 100% if your cashout is under $25,000) of the Pension Benefit Guaranty Corporation (PBGC) rates that were in effect ...” (T. 170; DX 70 at VZ10374 for 1993: DX 71 at VZ10380 for the1994-95 Cashout Option Period.) 4la 24. In converting the BAMPP to the Cash Balance Plan, Bell Atlantic communicated to its participants that it would continue to use the “same conversion method used in calculating a cashout payment under the old plan.” (DX 1 at VZ10392.) Bell Atlantic sent Estimated Opening Account Balance Statements to each participant in the Cash Balance Plan, which explained in Step 2: Step 2: Your accrued benefit is converted to a lump-sum value applying the same method used today to determine lump-sum cashouts and is based on the PBGC interest rate of 5%. (DX 11 at VZ10476.) 25. The Cash Balance Plan planning documents also reveal an intention to use the same PBGC methodology as before. In the September 26, 1995 memo from Rob Maienshein at Mercer Human Resources Consulting (“Mercer”) to Bell Atlantic, he explains: “The beginning account balance as of 1/1/96 will be determined using the lump-sum cashout value of accrued benefits based on the PBGC graded rate structure with an immediate rate of 5.0% (120% of the rate structure will be used for cashout values over $25,000) and the UP-84 mortality table.” (DX 5 at VZ10229. See also, 9/27/95 memo from Maienshein, DX 6 at MER4684; 10/22/96 memo from Maienshein, DX 7 at MER4806.) 26. This formula was consistently applied thereafter. In a memo from Robert Moreen (“Moreen”), the Mercer Partner in charge of the Bell Atlantic assignment, dated November 14, 1997, he reviews the three steps 1n calculating the initial account balances 42a in the Cash Balance Plan. At step two, he explains: “Determine the lump-sum value of the accrued benefit as of December 31, 1995, using interest (5% PBGC rates, including 120% rates) and mortality (UP-84) assumptions, and calculation procedures, established for use in lump-sum payments from the [BAMPP].” (DX 8 at VZ13307; PX 54 at 238-39.) Moreen testified by means of a deposition. (PX 54.) 27. This formula was made more explicit in the 1998 Cash Balance Plan adopted on October 8, 1998. (DX 31 at 11712-1383.) (“. . . and using the deferred PBGC rates for individuals who were not then eligible for a Service Pension or 120% of the PBGC rate if the present value, using the PBGC rate, is $25,000 or more.”) This clarifying language also appeared in the April 22, 1998 draft of the 1998 Cash Balance Plan. (PX 471 at MLB 547; T. 162 - 63.) F. The Development of the Transition Factors. 28. In 1994, Bell Atlantic began to consider a new pension plan design. (‘T. 82.) Bell Atlantic hired Mercer to start from scratch, analyze the current Plan, and come up with a new plan that “employees could believe in and is fair.” (T. 83.) Mercer worked with the Bell Atlantic design team to interview employees, conduct focus groups and to perform an immense amount of statistical analysis to help design a plan consistent with Bell Atlantic’s new business model. (T. 83-84.) Mercer ultimately recommended a cash balance plan with gradually and predictably increasing values, thereby eliminating the “cliffs” present in the BAMPP. (T. 84-85.) One of the big challenges facing Bell Atlantic was to develop a transition formula to fairly 43a treat participants in the BAMPP as they were transitioned to the Cash Balance Plan. (T. 85-87.) 29. Mercer assisted in developing the cash balance formula, including the formula for establishing the opening balances of participants who had previously earned pension benefits under the BAMPP. (T.83-86; DX 54 at 30.) Mercer also assisted in preparing the specifications for the calculation of the opening balances. Coopers & Lybrand was retained by Bell Atlantic to perform the opening balance calculations. (DX 54 at 102-03, 135-36.) AG J 22. 30. OnSeptember 26, 1995, Mercer submitted a memorandum to Bell Atlantic, which included a copy of the plan’s transition factor table and a 15-year projection of liabilities. (DX 5, DX 54 at 213-26.) AG { 23. The projected liabilities were based on the transition factor being multiplied once, not twice. (DX 54 at 243-44). Mercer’s cover memorandum submitting its final recommendation for the Cash Balance Plan explained that the transition factor was to be multiplied only once by the lump-sum cashout value: The following items should be noted about the calculation of initial cash balance accounts as of January 1, 1996 using the attached recommended final transition tables: ms Me The lump sum cash out value is then multiplied by the transition factor provided on the attached transition tables to calculate the actual opening balance under the cash balance plan. 44a (DX 5 at VZ 10229; T. 88-89.) The projected liabilities were predicated on multiplying the transition factor only once. (Jd.) 31. OnSeptember 27, 1995, Mercer sent Coopers & Lybrand the specifications to calculate the opening balances as of December 31, 1995. (DX 6 at MER4684- 85; DX 54 at 102-112, 221-228.) AG ¥ 24. Those specifications provided for multiplying the lump-sum cashout value times the transition factor only once, not twice. (/d.) 32. ‘The transition factors in the table attached to Mercer’s September 26, 1995 memorandum to Be!! Atlantic and its September 27 memorandum to Coopers & Lybrand were the same ones used to calculate the actual opening balances in January 1996 and the same ones contained in the tables attached to the July 1996 Cash Balance Plan. (Compare DX 18, 1996 Plan Art. 16, at VZ 1102-03 with DX 5 at VZ 10233-34 and DX 6 at MER 4686-87.) These documents and the related testimony by Moreen, the Mercer Partner in charge of the Bell Atlantic engagement, and Barry Peters, the in-house counsel responsible for drafting the Cash Balance Plan, fully support a finding that Defendants intended to multiply the transition factor only once. (DX 54 at 234-44; T. 88- 89.) 33. Mercer created two additional memoranda, dated October 22, 1996, and November 14, 1997, relating to and describing the methodology that had been used to calculate opening balances. (DX 7, DX 8.) AG {J 25. Mercer’s description confirmed its continued understanding that the lump-sum cash-out value ADa under the BAMPP had been multiplied only once by the transition factor. (/d.; DX 54 at 244-44.) 34 According to Moreen, during the development of the Cash Balance formula, “the idea of multiplying twice by the transition factor was never once discussed.” (DX 54 at 105-06, 125, 243-44.) 35 Multiplying the lump-sum cashout value by the transition factor twice would have “vitiated” the goals that guided the construction of the transition factor table because it would have given participants benefits that were far more valuable than the benefits they could have earned under the BAMPP. Ud., DX 54 at 230-32.) On October 22, 1996, Mercer provided Bell Atlantic with a detailed explanation of how the transition multipliers were developed. (DX 7.) Mercer begins the explanation as follows: the Transition Multiphers were developed in order to provide a smooth transition between the ultimate retirement benefit level of the old Bell Atlantic Management Pension llan (BAMPP) and the new Bell Atlantic Cash Balance Plan. The Multipliers were developed to be applied to the 12/31/95 lump sum value of the BAMPP accrued benefit producing the opening account balance under the Cash Balance Account (id. at MER 4806; DX 54 at 232-37.) A6a G. The Corporate Approval of the Cash Balance Plan Design. 36. Bell Atlantic’s Corporate Employee Benefits Committee (““CEBC”) adopted a resolution in October 1995 authorizing the transition from the BAMPP to the Cash Balance Plan. (DX 3.) AG J 26. The resolution specified that a= participant’s opening balance in the Plan would equal “the product of the cashout value of the participant’s accrued benefit on the Effective Date (determined under the existing rules of BAMPP as of 12/31/95) times a transition factor (greater than or equal to 1.0) according to the table presented to this meeting...” (DX 4 at VZ 1039.) The table presented at. the meeting was the Transition Factor table submitted by Mercer in September 1995. (DX 5 at VZ10233-34.) mY p In November 1995 the Iluman Resources Committee (“HRC”) of Bell Atlantic’s Board of Directors approved the amendment of the BAMPP, effective December 31, 1995, to create the Cash Balance Plan. (DX 4.) AG ¥ 27. H. Pre-Conversion Communications to Participants. 38. Bell Atlantic clearly and_ consistently communicated to its employees that the transition factor would be multiplied only once in establishing the employees’ opening balances. 39. In or around October 1995, Bell Atlantic created a communication plan relating to the Cash Balance Plan. (PX 431, VZ10534-36.) AG J 28. Oue of the objectives of the communications plan was to AVa “provide clear understanding of the plan = design provisions, while placing special emphasis on the plan’s transition features.” (PX 431 at VZ10534). The communications plan also called for all management employees who were participants as of 1/1/96 to receive a retirement planning guide in March 1996 “to show employees their plan balances as of 12/31/95.” Ud. at 10535). 40. In October 1995, Bell Atlantic sent all BAMPP participants a brochure entitled “Introducing Your Cash Balance Plan.” (DX 1.) AG 4 29. The brochure contains a graph to show the differece between the BAMPP with its “cliff and the Cash Balance Plan, which provides steadily growing benefits. (DX 1 at VZ10391.) The brochure described the provisions of the new cash balance formula, including the formula for calculating the opening balances of participants who had earned pension entitlements under the BAMPP. (DX 1.) “Introducing Your Cash Balance Plan” constituted a Summary of Material Modifications (“SMM”) under’ ERISA § 104(b)(1) and 29 C.F_R. § 2520.104b-3 (2009) because it described material changes in the plan and was “written in a manner calculated to be understood by the average plan participant.” The document was intended to be a SMM and was designed to accurately and visually communicate the summary of changes to the Plan participants. (T. 102-105, 182). The SMM used the following formula to show how a participant’s lump-sum cashout benefit under the BAMPP would be converted to the opening balance under the new Cash Balance Plan: LUMP SUM VALUE xX |MULTIPLIER | =| BALANCE ASa OLD PLAN Step 1: Your current pension benefit will be calculated based on your age, service and pay as of December 31, 1995. Step 2: Next, your current benefit) will be converted to a lump-sum cash-out value, using the same conversion method used in calculating a cash-out payment under the old plan. Step 3: Finally, to make sure the new Plan continues to provide you with a fair benefit, your account balance may be increased by multiplying the lump-sum cash-out value determined in Step 2 times a special transition multiplier to arrive at your opening account balance. Lump-Sum Cash Out. Full payment of the value of your cash balance account at one time. Transition Multiplier. TRANSITION OPENING ACCOUNT (DX1 at VZ10392.) The SMM also explained the benefit conversion in words: Ud.) The terms “lump-sum cash out” and “transition multiplier” were defined in the SMM as follows: 4AYa A number used to figure your opening account balance in the Cash Balance Plan on January 1, 1996. This number is based on your age and service. Your multiplier may increase your initial account balance to ensure equitable treatment during the transition to the Cash Balace Plan (id. at 10386.) Al. The SMM provided hypothetical examples of the impact of “the transition multipher” on Plan participants. (DX 1 at VZ10393-94.) One example, “Alison,” was a 47 year-old employee with 27 years of Bell Atlantic service on the conversion date. Ud. at VZ10394.) The SMM explained Her transition multiplier of 2.680 increases her opening account balance so that, together with future pay credits and interest credits, the gap between the old plan and the new Cash Balance Plan will be filled. (id.) If Bell Atlantic had intended to multiply the transition factor twice, “Alison’s” transition multiplier would have been 7.1824 (2.68 x 2.68), not 2.68, and her opening balance would nearly triple 42. The SMM also contained the following disclaimer in small print on the back page: “If there is any conflict between the Plan document and this brochure, the text of the Plan decument is controlling.” Ud. at VZ10396). 43. In letters to plan participants in October 1995, November 1995 and May 1996, Bell Atlantic 50a repeatedly instructed participants to “please be sure to read” and “please refer to” the SMM, “Introducing Your Cash Balance Plan” (which Bell Atlantic referred to as “the Cash Balance brochure”), for an accurate statement of the Plan’s opening balance and transition factor provisions. (DX10 at VZ10553; DX11 at VZ10476, DX13 at VZ10519.) These documents also contained disclaimers that in the event there were discrepancies between these communications and the Plan, the Plan would govern. (DX11 at VZ10477; DX13 at VZ10490.) 44 In October 1995, Bell Atlantic prepared a video for BAMPP participants, entitled “Changes,” to describe the transition to the Cash Balance Plan. (DX 10.) AG ¥ 30. In the video, Bell Atlantic explained that the participants would receive a statement with an opening account balance and an explanation of how the transition factor applied to their account. (Ud. at VZ 10553.) 45. In November 1995, Bell Atlantic sent estimated “opening account balance” statements to BAMPP participants. (DX 11.) AG ¥ 31. These statements provided each participant with an estimate of his or her opening balance in the Cash Balance Plan, provided a_ step-by-step description of the opening balance formula, and contained a table of the Plan’s transition factors. (/d. at VZ10475-76.) Asample statement for a 36-year, 9-month old employee with 14 years and 3 months of service as of January 1, 1996 stated: 5la SLEEP 1: Your monthly Age 65 Deferred Pension benefit as a Single Life Annuity estimated at 12/31/1995 is... . $1,520. STEP 2: Your monthly pension converted to a lump sum cash-out value at 12/31/1995 is $35,812. STEP 3 Your lump-sum amount’ times your transition multipher of 1.480 is your Mstimated Opening Account Balance. $53,001. Ud. at VZ10476.) The statement explains that the Step 2 calculation uses “the same method used today to determine lump-sum cash outs and is based on the PBGC interest rate of 5%.” Ud.) I. Implemention of the Cash Balance Plan as of January 1, 1996. 46. Bell Atlantic amended and restated the BAMPP effective December 31, 1995, and changed its name to the “Bell Atlantic Cash Balance Plan.” (DX 3, 4, 18). The Cash Balance Plan expressed a participant’s benefit as a lump-sum balance, to which pay and interest credits were added on a monthly basis. (DX 18, 1996 Plan Art. IV, at VZ1064—66.) AG { 16. Upon severance from the company, a participant could receive his or her pension benefit as either a lump sum or an annuity. (/d., 1996 Plan, § 5.2, at VZ 1067-68). Bell Atlantic began implemention of the 52a Cash Balance Plan as of January 1, 1996, however, the Plan document was not finalized until July 6, 1996. 47. The Cash Balance Plan provided opening balances for each participant. Those opening balances were established for all 13,784 active BAMPP participants retroactive to January 1, 1996. (DX 62). AG J 17. These included 2,271 participants who were already eligible for a Service Pension and 11,513 who were not eligible for a Service Pension. (DX 62). These opening balances were based on their pension entitlement earned under the BAMPP. (DX 18, 1996 Plan § 16.5 at VZ 1100-03; DX 1 at VZ 10392). 48. All of the calculations were performed by multiplying the transition factor only once. Of the 11,513 participants not eligible for a Service Pension, 10,808 had transition factors greater than 1.000. Most of them—approximately 8,600—had transition factors of 1.5 or higher, and 4,750 had transition factors ef 2.000 or higher. The 2,271 Service Pension eligible participants for whom opening balances were established included 762 with transition factors ereater than 1.000. (DX51, DX62.) 49. One variable in the calculation of opening balances was the annuity that participants had earned under the BAMPP. (DX 18, 1996 Plan § 16.5 at VZ1100-03; DX 1 at VZ10392). AG ¥ 18. 50. The formula toestablish the opening balance consisted of two steps: (1) calculating the lump-sum cashout value of the participant’s annuity under the BAMPP; and (2) multiplying the lump-sum cashout value by a transition factor. (DX 18, 1996 Plan § 16.5.1(a) at VZ 1100; DX 1 at VZ10392.) The opening 53a balances of the Cash Balance Plan participants thereafter grew through the addition of pay credits and interest credits. (DX 18, 1996 Plan §§ 4.4-4.5 at VZ 1065; DX 1 at VZ10389-90.) 51. The transition factors were designed so that participants who were close to reaching the age and service thresholds for a Service Pension under the BAMPP, and thus were expecting to see an upward spike in the value of their BAMPP accrued benefit, would receive a retirement benefit that approximated the expected cashout value of their Service Pension under the BAMPP. (T. 83-87; DX 1 at VZ 1391-94; DX 7 at MER 4806-09; DX 8 at VZ13307-08.) Transition factors were carried to three decimal places and ranged from 1.000 to 3.105. (DX 18, 1996 Plan Art. 16, at VZ 1102-03.) The applicable transition factor depended on the participant’s age and service. (/d.) Young participants with relatively little service had a transition factor of 1.000. Ud.) The closer a participant was to qualifying for a Service Pension under the BAMPYP, the higher the participant’s transition factor. (/d.) For participants 40-46 years old with 16-20 years of service, for example, the transition factors were as follows: YEARS OF SERVICE AGE 16 17 18 19 20 54a YEARS OF SERVICE AA 1618 | 1.655 {1.691 | 1.719 | 1.737 45 1.625 | 1.664 | 1.699 | 1.730 | 1.751 46 1.632 | 1.672 | 1.707 | 1.741 {1.764 (id. at VZ 1102.) Most participants who had already become eligible for a Service Pension under the BAMPP, and had already experienced the upward spike in the value of their BAMPP accrued benefit, had a transition factor of 1.000. Ud. at VZ 1103.) Transition factors were carried to three decimal places and ranged from 1.000 to 3.105 depending on a participant’s age and service. (DX 18, 1996 Plan Art. 16, at VZ1102—03.) AG J 19. 52. Multiplying the transition factors twice, rather than once, for the participants who were not eligible for a Service Pension would have increased their opening balances by $1.67 billion. The opening balances of the 4,750 participants with transition factors greater than 2.000 would have been at least doubled, and in many cases nearly tripled, if their transition factors had been squared. More than 5,780 participants would have received increases in the opening balances of $100,000 or more — increases that would have given them opening balances that exceeded the opening balances of many of the 2,271 participants whose longer service or higher age had already qualified them for a Service Pension. (DX51, DX62.) 53. Young was a salaried employee of Bell Atlantic. As of January 1, i996, Young was approximately 48 years-old and had 27.8 years of Bell 55a Atlantic net credited service. Her transition factor was 2.659. (DX 14 at Y811.) AG J 20. 54. The average Class member’s years of service at Bell Atlantic as of year-end 1995 was 20 years. (DX at VZ27114-323.) AG J 21. J. Post-Conversion Employee Communications. 55. Following the conversion, Bell Atlantic and Verizon consistently communicated to the participants that the transition factor would be multiplied only once in determining the participant’s opening account balance and the same BAMPP method for determining the lump-sum cash out value was being used in the Cash Balance Plan. 56. In May 1996, Bell Atlantic provided each participant in the Cash Balance Plan with a customized retirement planning guide, “A Look at Your Future Today: Your Retirement Planning Guide.” (DX13.) AG ¥ 32. This guide included a personalized “opening balance” statement setting forth each participant’s actual opening balance calculation. (/d. at VZ10519.) These actual opening balance statements explained that each participant’s lump sum cash-out value would be multiplied by the applicable transition factor only once. (/d.) The sample page further explains at Step 3: “Your account balance may have been increased by applying a transition multiplier to the lump-sum value of your pension benefit at 12/31/95. Transition multipliers vary by age and service.” (/d.) The Retirement Planning Guide contained the following disclaimer: “If there are any discrepancies between the information in this guide 56a and official Plan documents, the Plan documents will always govern.” (DX 13 at VZ10490.) 57. Starting June 30, 1996, Bell Atlantic sent participants a quarterly statement that, among other information, set forth the participant’s current balance in the cash balance plan. (Eg., DX 15.) AG 7 33. By June 30, 1996, Bell Atlantic had completed more than 50,000 separate mailings to participants, each of which made clear that the lump-sum cash out was multiplied by the transition factor just once. (DX1, DX11, DX13.) 58. In August 1996, Bell Atlantic issued a summary plan description for the Cash Balance Plan as part of a document entitled “The Big Picture.” (PX 232 at 678-96.) K. Communications to Plaintiff. 59. There is no evidence that the Plaintiff or any class member ever relied upon the transition factor being multiplied more than once in determining t’ e participant’s opening balance. Prior to this litigation, no class member ever claimed the transition factor was to be multiplied more than once in determining their opening balance. 60. Plaintiff does not assert that she ever reviewed or relied on the mistaken language in the 1996 and 1997 Plans. She never looked at the Plans until 2008, when her lawyers were preparing her for deposition, at which time she merely “glanced” at them. (DX 58 at 84-87.) 61. The 1996 version of the Cash Balance Plan, including appendices, was nearly 150 pages because Kila the Appendix included the BAMPP. ( DX17, DX18.) Except in the event of a specific request by a Plan participant, Bell Atlantic did not distribute to participants the restated document containing the erroneous description of the § 16.5.1(a\(2) opening balance formula. (DX9 at VZ10400.) Although Bell Atlantic regularly provided participants with information on how to obtain a copy of the Plan, few requests were received for copies of the Plan document. (DX67 at 11-12.) 62. Plaintiff received from Bell Atlantic and retained in her. personal files numerous communications plainly stating that her opening balance would be calculated based on a one-time multiplication by the transition factor. (DX 58 at 28- 46.) One of the documents Plaintiff received, reviewed and kept in her files was the October 1995 SMM, “Introducing Your Cash Balance Plan.” (DX12.) Plaintiff wrote her name on this document and kept it in her files for more than 10 years with other “important” documents relating to her employment. (DX58 at 28-37.) 63. Plaintiff also produced from her files the Estimated Opening Account Balance Statement (“Specially prepared for: Cynthia Young”), which was distributed in November 1995. (DX12.) This document explained the calculation of Plaintiffs opening balance as follows: STEP 1: Your monthly age 65 Deferred Pension benefit as a Single Life Annuity estimated at 12/31/95 is... $2,160. 58a STEP 2: Your monthly pension converted to a lump-sum cash-out value at 12/31/95 is . . . $90,027. STEP 3: Your lump-sum amount times your transition multiplier of 2.659 is your Estimated Opening Account Balance. . . $239,381. Ud. at Y842.) 64. Plaintiff produced from her files the May 1996 booklet, “A Look at Your Future Today,” which was sent to her home and described the actual calculation of her opening account balance on January 1, 1996 as follows: STEP 1: Your monthly Age 65 Deferred Pension benefit as a Single Life Annuity at 12/31/95 was .. . $2,166.70. STEP 2: Your monthly pension converted to a lump-sum cash-out value at 12/31/95 was. . . $90,307.16 STEP 3: Your lump-sum amount times your transition multiplier of 2.659 is your Opening Account Balance on 1/1/96 . . . $240,126.74. (DX14 at Y811; DX58 at 48-51). 65. Plaintiff produced from her files’ the quarterly statements she received showing her Cash Balance Plan Account status at the start of each 59a quarter and the amount it increased through pay and interest credits. (DX15, DX58 at 56-57.) Following her retirement, she cashed out her account in February 1998. (DX 58 at 68, DX15, DX 64.) 66. Squaring the transition factor would have produced balances far greater than the amounts communicated to Plaintiff in November 1995, in May 1996, and quarterly from June 30, 1996 until she cashed out in early 1998. Squaring the transition factor would have increased the estimated opening balance communicated to Plaintiff in November 1995 from $239,581 to $636,516. L. The Actuarial Report. 67. The Plan actuary, Towers Perrin, prepared an actuarial report for the Cash Balance Plan in January 1997, in which Towers Perrin attempted to determine the Plan’s lhabilities and assets as of January 1, 1996. (DX16.) AG 51. This report was based on the understanding that the Plan’s opening balances for BAMPP participants were calculated by multiplying each participant’s lump sum cash-out value by the transition factor one time. (Ud. at VZ13295-96.) 68. Ifthe opening balances were to be calculated by multiplying each participant’s lump sum cash-out value by the square of the transition factor, the Plan’s liabilities would have increased by at least $1.67 billion above the amount reported by ‘Towers Perrin. Ud. at VZ13263, VZ13270, VZ13274; DX51, DX62.) 60a M. Drafting History of the July 1996 Cash Balance Plan. 69. ‘The drafting history of the Cash Balance Plan demonstrates by clear and convincing evidence that a scrivener’s error and mistake were made in the drafting of the restated Plan document. by including two references to the transition factor in § 16.5.1(a)(2) of the Plan. 70. The restated Plan document was finalized on July 6, 1996, and was effective December 31, 1995. (DX 18.) AG J 35. The restated Plan document was finalized after Bell Atlantic calculated the actual opening balances and communicated them to ail 13,784 plan participants. (DX18.) 71. Barry Peters (“Peters”) joined Bell Atlantic in 1986 to serve as in-house counsel responsibie for all ERISA matters and employee benefit issues. (‘T. 76-80; DX 56 at 13.) Although the Bell Atlantic in-house legal department consisted of over 100 attorneys from 1986- 1998, Peters was the only attorney at Bell Atlantic with extensive experience and knowledge of ERISA during that time. Ud.) His duties at Bell Atlantic included preparing governance documentation for the board of directors and its Human _ RKesources Committee regarding all benefit plans, benefits matters, and being the company’s ERISA expert. (DX 56 at 11-14.) Peters left Bell Atlantic in 2001 to work at Mercer Human Resources Consulting until he retired in 2007. (Ud. 14-15). Peters testified at trial and by means of two depositions. (T. 73-199, DX 56-57.) 72. Peters was also highly involved in work dealing with compensation and benefits of the 61a corporate executives in mergers and acquisitions that Bell Atlantic engaged in during the 1990s. (T. 78-79; DX 56 at 14.) 73. Peters was the Bell Atlantic employee responsible for coordinating and steering the plan documentation process. (DX 56 at 50.) Peters was located in the Philadelphia headquarters of Bell Atlantic, and he was counsel to the Corporate Employees Benefits Committee (““CEBC.”) (T. 77-78; DX 56 at 12-14, 149.) Peters was “the person authorized by resolutions of the CEBC to maintain and publish the benefits plans adopted and amended by the Committee .. .” (PX 219 at VZ14438.) 74. Peters was the only person at Bell Atlantic charged with the responsibility of ensuring that the 1996 Plan conformed to the intent of Bell Atlantic in converting the BAMPP to a cash balance design. (DX 57 at 18-19.) He never assigned anyone else the responsibility to review the plan document in general or the transition rules specifically to avoid drafting errors. Ud. at 19.) AG J 43. 75. The conversion of the BAMPP to the Cash Balance Plan was the single most complicated plan drafting assignment Peters ever faced in his career. (DX 56 at 78:7—25.) It involved converting a decades- old traditional pension plan to a new formula that looked more like a defined contribution plan and reviewing and accounting for numerous intricate additional plan options and amendments. (/d. at 78.) The BAMPP (and the Cash Balance Plan) covered tens of thousands of employees and over $5 billion in liabilities. (VZ22019.) AG J 44. 62a 76. Robert Abramowitz (“Abramowitz”), a partner in the law firm of Morgan Lewis and Bockius (“Morgan Lewis”) was hired to provide outside legal assistance in the drafting of the Cash Balance Plan. (T. 205-06.) Abramowitz is an expert in ERISA. (‘T. 204-05; DX 55 at 33-34.) He has been involved in the drafting and amendment of hundreds of emloyee benefit plans, including 10 to 26 plans that were converted to a cash balance design. (DX 55 at 37). He testified at trial and by deposition. (T. 203-59, DX 55.) ei. Abramowitz was assisted by Kathy Capone, an ERISA paralegal, Vivian McCardell, a senior associate, and Marianne Grey, a benefits analyst. (‘T. 206-207.) Ms. Capone testified by means of a deposition. (DX 59.) 78. Paul Strella (“Strella”) was a principal at Mercer and an attorney who “knew the law surrounding cash balance plans very well.” (DX 54 at 212; DX 21 at VZ11119.) Strella was the head of the document drafting working group on the team Mercer assembled for the Bell Atlantic cash balance conversion. (PX 222 at MER20675.) 79. Six drafts of the Cash Balance Plan exist. Mercer was engaged to prepare the initial drafts “to have a high level of confidence that it would reflect the design that Mercer had been so intimately involved in.” (T. 57 at 20.) Strella prepared the first three drafts, completing the first in August 1995, the second in September 1995, and the third in October 1995. (T. 90, 93; DX 19, 20, 21; DX 56 at 51-53). The three Mercer drafts express the opening balance formulas for Service Pension eligible and non-Service Pension eligible participants in similar terms, using a single 7. | OSA transition factor. (DX 19 at VZ10804 -05: DX 20 at VZ10971 -77; DX 21 at VZ11144-45.) AG J 37. The relevant language in the third draft of the Plan prepared by Mercer states: (i) 1995 Active Participants and 1995 Former Active Participants. In the case of a 1995 Active Participant or 1995 Former Active Participant, the opening balance of the Participant’s Cash Balance Account on January 1, 1996 shall be the amount described in (1) or (II) below, as applicable: (lI) lf, as of December 31, 1995, the Participant was eligible for a Normal Retirement Service Pension or an Early Retirement Service Pension under the 1995 Plan, then the amount described in this paragraph (I) is the present value of the immediate benefit payable commencing on January 1, 1996 under the 1995 Plan, determined as if the participant had retired on December 31, 1995, based on Compensation paid through December 31, 1995, or the date of status change to a non-Eligible Employee category, if earlier, multiplied by the applicable transition factor described in Schedule D. (II) In the case of a Participant not described in (1) above, the amount described in this paragraph (IT) is the present value as of January 1, 1996 of the Accrued Pension Benefit payable at age 65 under the 1995 Plan, determined as if the Participant had a Severance From Service Date on December 31, 1995, based on Compensation paid through 64a December 31, 1995, or the date of status change to a non-Eligible Employee category, if earlier, multiplied by the applicable transition factor described in Schedule D. (DX 21 at VZ11145 (emphasis added).) 80. Beginning with Draft 4, Mercer was no longer responsible for preparing revisions to the draft plan. (T. 93; DX 56 at 149.) Peters prepared Draft 4 of the Cash Balance Plan, dated April 15, 1996. (T. 95, DX 56 at 53; see also DX 22.) Draft 4 is the first draft of the Plan that contains a second reference to the transition factor in the opening balance formula for nonservice pension eligible participants. (DX 22 at VZ11248.) AG J 38. 81. The introduction of the second reference to the transition factor in the opening balance formula was a scrivener’s error made by Peters. Peters edited and reorganized the language’ governing the calculation of the opening balances in an effort to make the text more clear. (DX56 at 73-74, T. 97-100.) As revised, Draft 4 expressed the opening balance as “the product” of one number “times” another, setting off the two components of the opening balance formula with a capital “A” and “B” in parentheses, and with “times” in italics to emphasize that “[ylou multiply block ‘A’ times block ‘B.”” (DX56 at 58-60; 62-64; 73-75.) The draft also made the transition factor a defined term, and highlighted this through the use of initial capitals — “Transition Factor.” (DX56 at 58-59.) Peters’ Draft 4 also reversed the order of the two components of the opening balance formula, placing the more succinctly described term, the Transition Factor, first, so that the “(A) times (B)” structure was more obvious, 65a and used a Bell Atlantic term of art, “lump-sum cashout value” for the other component of the formula. (DX56 at 59, 62-63.) Peters also changed the format of the transition factor table by splitting it in two, with one table for those eligible for a service pension and the other for those not eligible. (DX 22 at VZ 11248.) It was Peters’ practice to perform all drafting and make all changes “on screen on the word processor.” (T. 130- 31.) 82. Thus, Peters revised § 4.3.1l(a)(1) (the predecessor to Plan § 16.5.1(a)(1)) in draft 4 as follows: 4.3.1(a)(1) If Eligible for Service Pension: If, as of December 31, 1995, the Participant was eligible for a Normal Retirement Service Pension or an Early Retirement Service Pension under the 1995 BAMPP Plan, then the amount described in this paragraph (1) is the product of multiplying (A) the _ Participant’s applicable Transition Factor described in Schedule C, times (B) the lump-sum cashout value of the immediate annuity benefit under the 1995 BAMPP Plan, determined as if the Participant had retired on December 31, 1995. (DX22 at VZ11248 (bold emphasis added). 83. Peters revised § 4.3.1(a)(2) (the predecessor of Plan § 16.5.1(a)(2)) and mistakenly inserted the second reference to the transition factor into the Fourth draft: 66a 4.3.1.(a)(2) Not Eligible for Service Pension: In the case of a Participant who is not eligible for a Service Pension under the 1995 BAMPP Plan as of the Transition Date, the amount described in this paragraph (2) is the product of multiplying (A) the Participant’s applicable Transition Factor described in Schedule D, times (B) the lump-sum cashout value of the Accrued Benefit payable at age 65 under the 1995 BAMPP Plan, determined as if the Participant had a Severance From Service Date on December 31, 1995, based on Compensation paid through December 31, 1995, or the date of status change to a non-Eligible Employee category, if earlier, multiplied by the applicable transition factor described in Schedule C. (DX 22 at VZ11248 (bold emphasis added).) 84. In revising § 4.3.1(a)(2), Peters made a drafting error in one of the most important provisions in the Plan. Working on a word processor, and attempting to make the same revisions in § 4.3.1(a)(2) as he did in § 4.3.1(a)(1), Peters neglected to delete the “trailing clause” at the end of the paragraph, “multiplied by the applicable transition factor described in Schedule C.” (DX22, DX56 at 58-64, 70, 73-75, 78; T. 100-01.) 85. As a result of Peters’ mistake, the formula in § 4.3.1(a)(2) called for the lump sum cashout value to be multiplied by the transition factor twice; rather than once as intended. (DX 22 at VZ11248: T. 100-01.) 67a 86. The Court accepts Peters’ testimony that he made a drafting mistake that was inconsistent with the authorization he was given. (“I made an error ... I failed to delete the words at the very end of the second paragraph.”); (T. 100-01) (“I failed to delete this trailing clause at the end of the paragraph that says “Multiplied by the applicable transition factor described in Schedule C.’ I know that’s an error because it’s contrary to the terms of the plan that were approved. ... This is the first draft that I had a hands- on role in doing and this is an error that I, therefore, made.”) (DX 56 at 74); (“I believe I made an error that was unintentional and I did not know I made the error. ...It was a good faith error which I regret.”); (7d. at 111) (“I never knew of the error that I had made and I never heard anyone tell me that that text problem existed.”) (/d. at 78); (“I was always working electronically so that I could share my work more efficiently with both people in my company and elsewhere, and I must not have seen clearly the words that had been left at the end of that paragraph ... It was unfortunately my own mistake by my own hand.”) (T. 101.) 87. On April 9, 1996, Peters stated in an e-mail memo to Susan McClain, Joseph Ronan Jr., and rordon Downing at Bell Atlantic and Abramowitz at Morgan Lewis that the Fourth draft “reflects my review and changes of the 3rd draft that had been presented to us by Paul Strella of Mercer.” (PX 226 at VZ11226.) In his e-mail, Peters asked McClain to review the document and “share it with Kwasha Lipton [the company performing the _ intricate computer programming to calculate the benefits], to make sure they review it with an eye to assuring that it accurately reflects the mechanics and programming 68a that has been built into the administration of the plan.” (/d.) Peters noted in his e-mail that Abramowitz and Grey, his paralegal, were “standing by to assist in finalizing the drafting process, and assisting us with the eventual submission of the document to the IRS.” (Id.) He also instructed Abramowitz “not to begin any revision work until you [McClain] and Kwasha have had a chance to make any changes to fix any problems that you find.” (U/d.) Finally, Peters noted that one of the “pieces that still remain to be completed” was “physically moving” the transition-related provisions “to a Section at the back of the plan that is solely devoted to transition rules.” (/d.) 88. Abramowitz reviewed the Fourth draft and made written notes on the document. (T. 223-25; PX 225 at VZ11248.) Significantly, he underlined a portion of the sentence immediately preceding the second transition factor reference in Section 4.3.1(a)(2). Ud.) He clearly read this entire paragraph but did not notice an error. (T. 225.) Abramowitz understood that responsibility for the transition factors rested with Mercer and Bell Atlantic. (T. 215.) 89. Peters was negligent in failing to notice and correct the scrivener’s error in the Fifth draft. Like the Fourth draft, the Fifth draft of the Cash Balance Plan contains a second reference to the transition factor in Section 4.3.1(a)(2). (PX 227 at VZ11379.) The changes suggested by Abramowitz in Section 4.3.1(a)(2) were made and blackline versions were prepared. (PX 228 at VZ11447.) Changes were noted immediately before and immediately after the second reference to the transition factor. (/d.) 69a 90. Peters also prepared the Fifth draft dated June6 1996 (DX 23), which he sent to Marianne Grey, a benefits analyst at Morgan Lewis, on June 7, 1996. (PX228 at VZ11446-47.) AG J 39. The “blackline” version of the Fifth draft shows that Peters: (1) changed the first transition factor reference from “described in Schedule D” to “described in Schedule C,” (2) immediately before the second reference to the transition factor, he deleted the text “or the date of status change to a non Eligible Employee category, if earlier,” and (3) immediately after the second reference to the transition factor, he added the sentence “For a 1995 Former Active Participant, the date on which the individual ceased to be an Eligible Employee shall be substituted for December 31, 1995 in the last phrase of the previous sentence.” (PX 228 at VZ11446—47.) Despite all of the changes made immediately before and immediately after the second reference to the transition factor, Peters claims no one brought the issue of the second transition factor to his attention. (T. 140-41; PX 228 at VZ11446-47.) Peters made approximately 240 changes to the Fourth draft in preparing the Fifth draft. (T. 133.) 91. Specifically, Section 4.3.1(a)(2) of the blackline version of the Fifth draft reads as follows: 4.3.1(a)(2) Not Eligible for Service Pension In the case of a Participant who is not eligible for a Service Pension under the 1995 BAMPP Plan as of the Transition Date, the amount described in this paragraph (2) is the product of multiplying (A) the Participant’s applicable Transition Factor described in Schedule DC times (B) the lump-sum cashout value of the Accrued Benefit payable at age 65 under the 70a 1995 BAMPP Plan, determined as if the Participant had a Severance From Service Date on December 31, 1995, based on Compensation paid through December 31, 1995, orthe-date-of status—change—to—a_non-Ehgrbte Employee eategory;—if—earlier, multiplied by the applicable transition factor described in Schedule C. For _a_1995 Former Active Participant, the date on which the ‘individual ceased_ to be an Eligible Employee shall be substituted for December 31, 1995 in the last phrase of the previous sentence. (PX 228 at VZ11446-47.) (Emphasis added.) 92. Inahandwritten note to Grey on the cover of the blacklined version of the Fifth draft, Peters noted that “[t]his is blacklined to show changes from the prior draft that you and Bob reviewed and commented (PX 228 at VZ11423.) Peters’ handwritten note asks Grey to print a copy for Abramowitz. (/d.) 93. On or around June 7, 1996, Peters asked Abramowitz to execute the “physical move” of the transition rules to a separate section at the back of the Cash Balance Plan. (PX 448, DX 55 at 132-33.) Peters did not expect Morgan Lewis to review the transition factor formula. (T. 143.) 94. On July 1, 1996, Abramowitz sent a Sixth draft of the Cash Balance Plan to Peters. (DX 24.) This was the first draft prepared by Morgan Lewis. (T. 229.) As Peters requested, the cash balance transition provisions were moved to a separate section, Appendix B, in the Sixth draft. (DX 24 at VZ11561-68.) The Sixth draft also includes the second reference to the Tla transition factor. Ud. at VZ11565.) Abramowitz does not recall anyone at Morgan Lewis ever bringing the second transition factor reference to his attention. (T. 225- 26.) 95. The Sixth draft is dated 6/25/96. (DX 24 at VZ11505.) Abramowitz noted in his cover letter to the Sixth draft his understanding that “your [Peters’| office will take care of blacklining the document.” (/d. at VZ11503.) He also noted that “(t]he majority of our changes are self-explanatory or have been previously discussed with you.” U/d. at VZ11503.) 96. Peters used the Sixth draft to create a final plan document entitled “Bell Atlantic Cash Balance Plan Effective December 31, 1995 (7/6/96 edition)” (DX 18 at VZ1046-1106) (the “1996 Plan”). AG 741. Peters finalized the 1996 Plan at his office in Bell Atlantic’s corporate headquarters in Philadelphia, Pennsylvania, on July 6, 1996. (DX 56 at 149.) 97. In the 1996 Plan, Appendix B of the Sixth draft was moved to a new § 16, entitled December 31, 1995 Transition Plan, but § 16.5.1(a)(2) of the 1996 Plan is substantially the same as Section 3.2.1(a)(2) of Appendix B of the Sixth draft. (T. 135-36.) 98. The final, adopted version of §§ 16.5.1(a)(1) and (a)(2) state: 16.5.1(a)(1) If Eligible for Service Pension If, as of December 31, 1995, the Participant was eligible for a Normal Retirement Service Pension or an Early Retirement Service Pension under the 1995 BAMPP Plan, then the amount described in this paragraph (1) is the product of T2a multiplying (A) the Participant’s applicable Transition Factor described in Table 2 of this Section, times (B) the lump-sum cashout value of the immediate annuity benefit under the 1995 BAMPP Plan, determined as if the Participant had retired on December 31, 1995, ignoring any compensation paid after the date of the last paycheck for salary earned in December 1995. For a 1995 Former Active Participant, the date on which the individual ceased to be an Eligible Employee shall be substituted for December 31, 1995 in the last phrase of the previous sentence. 16.5.1(a)(2) Not Eligible for Service Pension In the case of a Participant who is not eligible for a Service Pension under the 1995 BAMPP Plan as of the Transition Date, the amount described in this paragraph (2) is the product of multiplying (A) the Participant’s applicable Transition Factor described in Table 1 of this Section, limes (B) the lump- sum cashout value of the Accrued Benefit payable at age 65 under the 1995 BAMPP Plan, determined as if the Participant had a Severance From Service Date on December 31, 1995, based on Compensation paid through December 31, 1995, multiplied by the applicable transition factor described in Table 1 of this Section. For a 1995 Former Active Participant, the date on which the individual ceased to be an Eligible Employee shall be substituted for December 31, 1995 in the last phrase of the previous sentence. (DX 18 at VZ1100) (emphasis added). This was a key provision for anyone who had an opening cash balance. T3a (T. 236.) According to Abramowitz, this provision on a scale of 1 to 10 ranks as a 10 in terms of importance. (Id.) 99. In practice, the CEBC and the HRC never reviewed plan documents to ensure they were consistent with Bell Atlantic’s intent. (DX 57 at 17-18.) It was primarily Peters’ responsibility to ensure that final plan documents were consistent with Bell Atlantic’s intent. (/d. at 18.) Bell Atlantic did not have a practice of executing its final plan documents. (DX 56 at 65-66.) In other words, no one ever signed the plan document when it was finalized. (/d.) Instead, Peters was delegated the task of deciding when a_ plan document was final. (/d.) Peters finalized the 1996 Plan document on July 6, 1996 pursuant to a grant of authority given to him by the HRC and Bell Atlantic’s Vice President — Human Resources. Ud. at 57, 65-66.) AG ¥ 45. 100. Mercer did not review the final 1996 Plan document. (DX 54 at 87.) Peters never asked Mercer to review his work on the Cash Balance Plan after he generated the Fourth draft. (DX 57 at 20-22.) AG ¥ 48. Peters did request Susan McLanin to ask Kwasha Lipton to review the Plan “to confirm that it stated how the plan was being administered.” (‘T. 125-26.) He is not certain that it happened. (T. 131-32.) Abramowitz has no recollection of seeing a second reference to the transtion factor in the 1996 or 1997 Plans. (T. 218-19.) 101. April 1996 was also the time when Peters and his wife had set aside to vacation in China. (T. 128-29; DX 56 at 160—61.) Peters went to China for four weeks, but he did not assign anyone to take over 14a his responsibilities with respect to the Bell Atlantic cash balance conversion while he was in China. (/d.) AG {| 47. 102. The Cash Balance Plan was not negotiated at arms-length between multiple parties. (DX 56 at 66 67.) AG ¥ 49. N. Corcoran Litigation. 103. A putative class action lawsuit entitled Corcoran v. Bell Atlantic Corp., No. 97-cv-510 (E.D. Pa.), was filed against Bell Atlantic Corporation, the Bell Atlantic Management Pension Plan, and the Bell Atlantic Cash Balance Plan, among others, on January 23, 1997. AG J 52. In Count II of the amended complaint in Corcoran, plaintiffs alleged that Bell Atlantic violated its fiduciary duty by adopting the new Cash Balance Plan which (1) did not use a four-year age set-back for its mortality assumptions, and (2) used a PBGC interest rate for September 1995, rather than December 1995, in calculating opening balances. (PX 475 at VZ22890.) The district court did not reach the merits, but dismissed the claim because the decisions did not have fiduciary ramifications. (/d.) The Third Circuit affirmed, holding that the opening cash balance assumptions constituted “a design function and non-fiduciary in light of Lockheed (Corp. v. Spink, 517 U.S. 882, 890 (1996).”] Ud. at VZ22891.) 104. The only record of anyone noticing the erroneous second reference to the transition factor in § 16.5.1(a)(2) is footnote 2 in a brief filed by the plaintiffs in the Corcoran case which reads as follows: Tda By its terms, Section 16.5.1(a)(2) appears to require that participants whose cash balance account was calculated on the basis of their deferred vested pension under the Management Pension Plan receive their transition multiplier twice. Literal application of this provision would be highly advantageous to those Plaintiffs and class members who had their opening account balance calculated on the basis of the deferred vested pension. For example, under a literal application of this provision, plaintiff Pierce, who was assigned a transition multiplier of 2.928, would receive an opening account balance of 5.8 times the lump-sum cash-out value of his pension rights under the Management Pension Plan. However, given the overall context of the Plan document, Plaintiffs assume that this represents a scrivener’s error. (DX 37 at VZ22557-58.) (Emphasis added.) For these six Corcoran plaintiffs, the potential advantage of multiplying the transition factors twice would be an aggregate increase in the operating balances of approximately $2 million, from $1.1 million to $3.1 million. (DX62.) The Corcoran plaintiffs and their counsel acknowledged in the footnote, however, that the Plan document contains “a scrivener’s error” and they expected to receive no more than the opening balance resulting from multiplying the participant’s lump-sum cashout value by the transition factor only once. (DX37 at VZ22558.) 105. Bell Atlantic hired Morgan Lewis to defend the Corcoran litigation. Abramowitz was the billing attorney at Morgan Lewis for all Bell Atlantic benefit 76a matters, including the Corcoran litigation. (DX 56 at 227-29; Peters Dep. Ex. 15.) AG 7 53. 106. On June 17, 1997, Bell Atlantic moved to dismiss the Corcoran complaint. for failure to state a claim. AG 54. 107. The Corcoran Plaintiffs’ Memorandum of Law in Opposition to Defendants’ Motion to Dismiss, which contained the footnote referenced above, was served on Michael L. Banks, Bell Atlantic’s attorney at Morgan Lewis, in Philadelphia, Pennsylvania, by hand delivery on August 6, 1997. AG { 55. 108. On or about August 8, 1997, Peters, Abramowitz, and Morgan Lewis attorneys Steven Spencer, Richard Rosenblatt, and Erin Mulhollan, received the Plaintiffs’ Memorandum of Law in Opposition to the Motion to Dismiss. (DX 56 at 174—75; VZ24230.) AG ¥ 56. Abramowitz received and reviewed the brief; he probably read footnote 2, but he has no specific recollection. (T. 217-18, 251.) In his cover letter, Banks asks Peters to review the memorandum and to call him to discuss it. (PX 246 at VZ24230.) Peters denies he read a footnote because, as the scrivener, “bells would have gone off for me,” and he would have taken action, including notifying the chair of the benefits committee and his human resources department clients, and he would have corrected the error. (T. 171-72, 177; DX 56 at 181.) Peters claims that he first learned of the mistake several years ago during the course of this litigation when he was contacted by a Morgan Lewis paralegal. (T. 112-13.) 109. On August 22, 1997, Bell Atlantic filed a reply brief in response to the Plaintiffs’ Memorandum of Law in Opposition to the Motion to Dismiss. (VZ23309-32.) AG J 57. 110. Bell Atlantic prevailed on its motion to dismiss. Corcoran v. Bell Atlantic Corp., No. 97-510, 1997 WL 602859 (E.D. Pa. Sept. 23, 1997). AG ¥ 58. 111. The Corcoran plaintiffs appealed the decision to the Third Circuit Court of Appeals. AG J 59. 112. Bell Atlantic’s attorneys at Morgan Lewis forwarded a copy of the plaintiffs’ brief filed with the Third Circuit to Peters on or about February 24, 1998. AG J 60. 113. OnJune 30, 1998, the Third Circuit affirmed the decision of the district court. (PX 475 at VZ22883- 93.) AG J 61. 114. It was Bell Atlantic’s practice in 1997 to allow Peters to correct discovered errors in the text of the final plan documents. (T. 174; DX 56 at 181-84.) Bell Atlantic’s practice was not necessarily to formally amend or notify participants regarding a discovered alleged drafting error. Ud. at 181-84, 190-91.) O. The 1997 Plan Amendment. 115. Defendants knew or should have known of the existence of the drafting error in Plan § 16.5.1(a)(2) in early or mid-August, 1997. No corrective action was taken at that time. 116. On September 3, 1997, the Cash Balance Plan was restated in a document entitled “Bell Atlantic Cash Balance Plan Effective December 31. 1995 (9/3/97 78a edition)” (the “1997 Plan”). (VZ13856.) The 1997 Plan contains a second reference to the transition factor in the opening balance formula for non-Service Pension eligible employees. (/d.) The 1997 Plan was finalized by Peters. (DX 56 at 196-97.) AG J 62. Section 16.5.1(a)(2) of the 1997 Plan is identical to § 16.5.1(a)(2) of the 1996 Plan. Both contain a second reference to the transition factor. 117. The September 1997 restatement incorporated a single amendment clarifying the Plan’s anti-cutback provision that was adopted in response to the Corcoran htigation. (DX 79 at VZ14925-29.) The amendment was drafted and reviewed by Peters and Morgan Lewis, and was authorized by the CEBC on June 26, 1997. (PX 276 at MLB372-78; DX 79 at VZ14928.) AG 1 63. 118. Drafting of the 1997 Plan began sometime around February 3, 1997, when Morgan Lewis became involved in the drafting process. (PX 279 at MLB2041.) Peters and Morgan Lewis worked on drafting and reviewing the 1997 Plan during the summer and fall of 1997. (DX56 at 77.) P. Submission of the Plan to the IRS. 119. On November 24, 1997, Bell Atlantic formally submitted the 1996 Plan to the IRS for a favorable determination of its tax-advantaged status. (VZ21386—492.) AG J 64. 120. The submission included a copy of the 1996 Plan and the 1997 Plan amendment. (T. 186; VZ21387; VZ21417—77.) AG J 65. 79a 121. On March 26, 1998, the IRS made a favorable determination of tax-exempt qualification of the Cash Balance Plan. (PX 285 at HA420—-21.) AG 4 66. That determination included both the 1996 Plan and the 1997 Plan. (PX 285 at HA 420.) Q. NYNEX Merger and Bell Atlantic-North Plan. 122. The negotiations over the NYNEX/Bell Atlantic merger began just a few months before April 1996, anda key point in the negotiations was occurring in April 1996, at the same time as Peters worked to complete the fourth draft of the Pian. (DX 56 at 160.) Additionally, Peters was responsible at this time for researching all of the potential employment agreements with NYNEX and Bell Atlantic executives to ensure synergies from the merger. Ud. at 160-61.) Furthermore, Bell Atlantic’s Human _ Resources Department, which was charged with administering dozens of Bell Atlantic pension plans, was due to lose a number of jobs at the combined entity, and Peters was also at this time very concerned and active in the process of determining how to retain institutional knowledge of the various NYNEX and Bell Atlantic benefit plans after the merger. Ud.) AG ¥ 46. 123. Bell Atlantic merged with NYNEX effective August 14, 1997. (DX50) AG J 67. The merger began with negotiations early in 1996, culminating in a merger agreement in the first half of 1996, and finally closed as a merger in August, 1997. (T. 108.) In September 1997 Bell Atlantic’s CEBC adopted a resolution authorizing the amendment of the NYNEX Management Pension Plan (“NYNEX Plan”) to provide for a cash balance formula (“Bell Atlantic-North Plan” or “BA-North Plan”) for salaried employees formerly SOa with NYNEX. (DX26.) AG J 68. In other words, the NYNEX Plan would be amended and become the Bell- Atlantic North Plan. The CEBC resolution stated that one purpose of the amendment was “conforming the design of the BA-North Plan to the benefit design approved by this Committee in 1995 for the Bell Atlantic Cash Balance Plan.” (Ud. at VZ13469.) The Human Resources Committee of Bell Atlantic’s Board of Directors adopted a parallel amendment on September 5, 1997, stating that the BA-North Cash Balance Plan was to be “substantially identical!” to the Bell Atlantic (South) Cash Balance Plan, “including without limitation .. . to provide for a reasonable methodology for a one-time transition from the [INYNEX Plan’s}] prior benefit design to an opening account balance ....” (DX27 at VZ13472; DX57 at 37.) 124. Outside counsel, Morgan, Lewis & Bockius LLP, drafted the BA-North Plan document for Bell Atlantic starting in late 1997 and continuing through the first half of 1998. (DX 56 at 118, DX 57 at 30.) The BA-North Plan was completed in the summer of 1998, and was effective retroactively to December 31, 1997. AG { 69. Peters claims that despite receving black-line copies of the BA-North Plan comparing the document to the Cash Balance Plan, he did not see the error in the Cash Balance Plan. (T. 157-59: PX 289.) Somewhere along the line, the reference to the second transition factor was removed from the Cash Balance Plan. (T. 160.) 25. Bell Atlantic sent a number of communications to participants in the NYNEX Plan regarding the conversion to the BA-North Plan. (DX 29, 30.) AG ¥ 70. Sla 126. The final Bell Atlantic-North Plan contains only one reference to the transition factor in the opening balance formula for non-service pension eligible participants. (DX 28, BA-North Plan § 16.5.1(b)(2), at VZ13650.) AG J 71. R. The 1998 Plan. 127. lit preparation for the merger of the plans of Bell Atlant ¢ and BA-North, an amended and restated Bell Atlantic Plan was completed on October 8, 1998 (“1998 Plan”). (DX 31.) The 1998 Plan contained only one reference to the transition factor in its recitation of the opening balance formula for non-Service Pension eligible participants. (DX 31, 1998 Plan, § 16.5.1(b)(2), at VZ11713; DX 57 at 26-28; DX 56 at 103-06, 120-21.) A subsequent 1999 restatement, issued prior to the plan merger, also stated the opening balance formula for non-Service Pension eligible participants using a single transition factor. (DX 32 at VZ11848.) AG J 72. The effective date of the 1998 Plan was January 1, 1998. (DX 31.) 128. Bell Atlantic eliminated the second reference to the transition factor in § 16.5.1(b)(2) of the 1998 Plan (which corresponds to § 16.5.1(a)(2) of the 1997 Plan). (DX31 at VZ11713.) The second reference to the transition factor in § 16.5.1(b)(2) was in an April 22, 1998 draft of the 1998 Plan. (PX 472 at MLB 548; T. 163-64.) 129. Verizon claims it does not know how the second reference to the transition factor was removed from the 1998 Plan. (DX 57 at 24-25.) (“I, neither I [Peters] nor anyone else at Bell Atlantic has any idea how that phrase disappeared from a document draft.”) 82a The Court finds that it was removed intentionally to correct the mistake that appeared in the 1996 and 1997 Plans. 130. Numerous document drafts were created during 1997 and 1998, leading up to the merger of the 1997 Plan with BA-North Plan that would have shown how the second transitio [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_2854%3A2. Public record. Not legal advice.