# Opposition Brief — Kannapapien v. Quaker Oats Co Co (No. 07-1386)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2008

## Text

No. 07-1886 4
gerice oF mie cen

IN THE
Supreme Court of the United States

GERI KANNAPIEN AND JANICE ROZHON,

Petitioners,
v.
QUAKER OATS COMPANY AND PEPSICO,
Respondenis.

On Petition for a Writ of Certiorari
to the United States Court of Appeals
for the Seventh Circuit

RESPONDENTS QUAKER OATS COMPANY’S 4
AND PEPSICO’S BRIEF IN OPPOSITION a

CONSTANTINE L. TRELA, JR.*
PRISCILLA E. RYAN

ERIN E. KELLY

JULIE M. WEBER

SIDLEY AUSTIN LLP

One South Dearborn Street
Chicago, Illinois 60603
(312) 853-7000

Counsel for Respondents Quaker Oats Company
and PepsiCo

July 7, 2008 * Counsel of Record
EE as SRR OE RRR REEL ENT ~ SERN UR RR LUNE
WiLson-Eres Pravriva Co., nc. — (202) 780-0008 — Wastanaron, D.C. 20002

EO ee ae ee oe tk See oe
SM Ley Bis Tx.

QUESTION PRESENTED

Whether an estoppel claim can be established with
respect to an unambiguous ERISA pension plan
based upon an admittedly innocent oral misstate-
ment by ah employee who was neither an administra- 4
tor nor a fiduciary of the plan and who directed the -
claimants to consult the appropriate source for 4
information concerning the benefits to which they 4
would be entitled if they elected to accept early
retirement.

(i)

il

CORPORATE DISCLOSURE STATEMENT

Pursuant to Supreme Court Rule 29.6, PepsiCo,
Inc. is the parent corporation of Quaker Oats
Company. PepsiCo, Inc. has no parent corporation.
PepsiCo, Inc. owns 100% of the stock of Quaker Oats
Company. No publicly held company owns 10% or
more of the stock of PepsiCo, Inc.

TABLE OF CONTENTS

QUESTION PRESENTED ....................cccccssesseeees 1
CORPORATE DISCLOSURE STATEMENT ...... ll
TABLE OF AUTHORITIES .................cocssseseseseees iv

III. The Decision Of The Court Of Appeals........
REASONS FOR DENYING THE PETITION .....

I. THE QUESTION ON WHICH PETITION-
ERS SEEK REVIEW IS NOT PROPERLY

]
4
II. The District Court Proceedings .................... 5
5
6

PRESENTED IN THIS CASE ...................... f
A. Petitioners Failed To Establish Any
Element Of Their Estoppel Claims........... 8

B. Even Under Petitioners’ Characteriza-
tion Of The Standards In Other Circuits,
Their Claims Would Fail .......................... 9

IJ. THERE IS NO CONFLICT AMONG THE
CIRCUITS CONCERNING THE APPLI-
CATION OF ERISA ESTOPPEL TO THE
CLAIMS ASSERTED BY PETITIONERS... 12

EPP osc nielccncivicdecisntdad denicascpesuiebacneness 18

(iii)

1V
TABLE OF AUTHORITIES
CASES Page

Aramony uv. United Way Replacement
Benefit Plan, 191 F.3d 140 (2d Cir.

EB IRE S SPEEA LEISURE POM EMO NEE NS Crean 10
Armistead v. Vernitron Corp., 944 F.2d a
SIF CR Ga OE) oo onsets ccngssssesassenienoes 15 4
Busby v. JRHBW Realty, Inc., 513 F.3d :
REG Fi BP) wicvvoscceseccpcccesncascecesecsee 15 <
Coker v. Trans World Airlines, Inc., 165 3
F.3d 579 (7th Cir. 1999)......................00:..- 8 4
Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d a
L267 CIE Cee, BOD) vii niccacsicsccncdecceccacscesse 14 a
Crosby v. Rohm & Haas Co., 480 F.3d 423 a
ee, Re a enn ae 15 a
Curcio v. John Hancock Mut. Life Ins. Co., 4
33 F.3d 226 (Sd Cir. 1994) .............5cc..c0000-- 13
Devlin v. Transp. Commc'ns Intl Union, a
17S Fk ek A LS) oo ssn cncegncvescncsnvnsse 16 4
Egelhoff uv. Egelhoff ex rel. Breiner, 532 q
EF ee Be pais ns kc os hays cc div an ewconvees 6 3
Gillis v. Hoechst Celanese Corp., 4 F.3d
peg ee oS. = 5 a ae an oreo rn 13
Greany v. W. Farm Bureau Life Ins. Co.,
973 F.2d 812 (9th Cir. 1992)................. eee 14
Greifenberger v. Hartford Life Ins. Co., 131
F. App’x 756 (2d Cir. 2005)...............cccceceees 16
Gridley v. Cleveland Pneumatic Co., 924
F 2b Boe CGE CAE: BO) nin snns cscs aces cccesccesss 13

HealthSouth Rehab. Hosp. v. Am. Nat'l
Red Cross, 101 F.3d 1005 (4th Cir. 1996). 12
High v. E-Sys. Inc., 459 F.3d 573 (5th Cir.

SEERA LISP FRI IU pnt te Re elec tn 17
Kane v. Aetna Life Ins, 893 F.2d 1283 (11th
INL I hig d carga saccnca nob aaibaee aicnatpdealiideoks 14

Vv
TABLE OF AUTHORITIES -— continued
Page
Kurz v. Phila. Elec. Co., 96 F.3d 1544 (3d
PU tte oils ores oo ae eae eres eee ce 13
Law v. Ernst & Young, 956 F.2d 364 (1st
RoR RII add dai cokre <ossuaad ss! ssatuuhmnbaciounienans 11
Livick v. The Gillette Co., 524 F.3d 24 (1st
SR cana achios vacua sce sous dsennneadcnasconasianct 16
Mauser v. Raytheon Co. Pension Plan for
Salaried Employees, 239 F.3d 51 (1st Cir.
ME ils i ade acs on ic Sin wget ep nipakiivens 16
Pisciotta v. Teledyne Indus., Inc., 91 F.3d
TR CO ae FO) ian onc sees scceseseccescies cen 14
Schonholz v. Long Island Jewish Med. Ctr.,
OT Foe Fae Gee it, 1996) 5 oo... ccs ssc... 16
Spink v. Lockheed Corp., 125 F.3d 1257
CON els SIE Sickie po cists. ccapenvavsdavagereinieetcarens 14
Trs. of Mich. Laborers’ Health Care Fund
v. Gibbons, 209 F.3d 587 (6th Cir. 2000)... 15
Vallone v. CNA Fin. Corp., 375 F.3d 623
RO ON CNN hires tics Sensacsicsacyusernsioudienses 8
STATUTES
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IN THE
Supreme Court of the United States

GERI KANNAPIEN AND JANICE ROZHON,
Petitioners,
Vv.

QUAKER OATS COMPANY AND PEPSICO,
Respondents.

On Petition for a Writ of Certiorari
to the United States Court of Appeals
for the Seventh Circuit

RESPONDENTS QUAKER OATS COMPANY'S
AND PEPSICO’S BRIEF IN OPPOSITION

Quaker Oats Company (“Quaker”) and PepsiCo,
Inc. respectfully submit this brief in opposition to the
petition for a writ of certiorari filed by Geri
Kannapien and Janice Rozhon.

COUNTERSTATEMENT OF THE CASE

Petitioners, former employees of Quaker, brought
this action under the Employee Retirement Income
Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et
seq., and Illinois state law seeking additional pension
benefits under the Quaker Retirement Plan. The
district court granted summary judgment dismissing
petitioners’ claims. The Court of Appeals for the
Seventh Circuit affirmed, finding that petitioners had
failed to establish any of the required elements of an
estoppel claim under ERISA. Petitioners assert that
the Seventh Circuit’s decision as to one of those
elements -— that a knowing or intentional

MR a ME Meee ee hE GT Ty eg BIRR SUR ONC gy Sa & ST CRE ae ea Te MER SN Tt TRE he Foe Peace re Te ROPES oe Bie 3
° iat Bh! AR eal aie Mee MT Sard Sree pt Bate ail ee eee eee eat el BSH NO ge Na ET Ra Oy. NOOR Oia

2

misrepresentation have been made — creates a
conflict among the circuits and should be reviewed by
this Court. No conflict is created by this case,
however, because petitioners’ failure to establish any
of the elements of their claim required dismissal
regardless of whether an intentional
misrepresentation is required. Moreover, petitioners
could not prevail under any of the formulations of the
requirements for an ERISA estoppel claim which
petitioners contend are used in other circuits. The
petition should be denied.

I. The Facts

In early 2003, the Quaker Oats Company offered
certain salaried employees who worked at a plant in
Bridgeview, Illinois an opportunity for voluntary
early retirement. If an employee accepted this
opportunity, Quaker would treat the employee’s early
retirement as an involuntary termination, which
would permit the employee to receive two types of
benefits in addition to her normal retirement
benefits. First, the employee would receive severance
benefits under the terms of Quaker’s Severance Pay
Plan (the “Severance Plan”). Second, the employee
would receive additional pension benefits under the
change in control provisions of the Quaker
Retirement Plan (referred to herein as “CIC”
benefits). Under the terms of the Quaker Retirement
Plan, the CIC benefits were payable to employees of
Quaker whose employment was _ involuntarily
terminated within two years after a change in control
of Quaker, and a change in control had occurred
when the stockholders of Quaker voted to approve a
merger of Quaker into a subsidiary of PepsiCo, Inc.
on May 1, 2001.

Petitioners were salaried, at-will employees at
Quaker’s Bridgeview plant. They volunteered for

yi,

3

early retirement pursuant to Quaker’s offer, and
Quaker terminated their employment in response.
Petitioners’ severance benefits were calculated under
the terms of the Severance Plan, and their pension
benefits, including their CIC benefits, were calculated
under the terms of the Quaker Retirement Plan. The
amounts payable under the Severance Plan and the
amounts payable under the Retirement Plan depend
in part upon a participant’s years of credited service
under each plan. Under the express terms of the
Severance Plan, petitioners’ employment at the
Golden Grain Company, a company Quaker acquired
in 1986, was included in the calculation of their
credited service for severance pay purposes. In
contrast, under the express terms of the Quaker
Retirement Plan, petitioners’ credited service for
pension purposes began on July 1, 1990, the date
they became participants in that plan.!

a

Petitioners do not dispute that their employment at
Golden Grain was not credited service under the
terms of the Quaker Retirement Plan. Instead,
petitioners point to conversations they had with
Jeffrey Satterlee, a manager at the Bridgeview plant,
in which Satterlee mistakenly told them that the CIC
benefits were to be calculated based on their years of
employment with both Quaker and Golden Grain. It
is undisputed that Satterlee’s mistake was entirely
innocent and that he did not intend to’ mislead
petitioners. It is also undisputed that Satterlee, who
was neither a plan fiduciary nor administrator (see

1As the court of appeals explained, the pre-existing Golden
Grain Profit Sharing Plan remained in effect for some time
following Quaker’s acquisition of Golden Grain and provided
former Golden Grain employees with retirement benefits for the
period prior to their 1990 enrollment in the Quaker Retirement
Plan. Pet. App. 3a-4a, 9a.

th Fay Lt. a's 4
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Ne OE EEE a OS MPa Se ERY tow Ae OF

4

Pet. App. 19a-21a), instructed petitioners to contact
the Quaker Employee Administration Center to
obtain their actual benefits estimates, because, he
explained, he could not compute their benefits for
them. Satterlee at no time suggested that the early
retirement offer would change any of the terms of the
Quaker Retirement Plan. Jd. at 7a.

Petitioners also point to a benefits estimate
statement each had received some months prior to
the announcement of the early retirement offer,
which listed their credited service date as the date
they were originally hired by Golden Grain. It is
undisputed that this was an inadvertent clerical
error. E.g., Pet. App. 12a. It is also undisputed that
the estimated pension benefit amounts provided in
these statements were calculated using the correct
credited service starting date of July 1, 1990, and
thus accurately reflected the pension benefits
actually payable to petitioners under the Quaker
Retirement Plan.

In connection with the early retirement offer itself,
each petitioner was given a,written summary of the
elements of the offer, which explained that the CIC
and other pension benefits were to be paid from the
Quaker Retirement Plan. The written summary also
explained that the benefits were to be based on “years
of service,” a defined term in the Retirement Plan
tt equates to credited service, which began on July
i, 1990 for petitioners.

After they left Quaker, petitioners realized that
their pension benefits were calculated based upon
their credited service beginning on July 1, 1990, as
required under the Quaker Retirement Plan, and
that their pension benefits did not take into account
their prior employment with Golden Grain. They
filed this lawsuit in response.

i
4
&
ra
-
s;
a

5
Il. The District Court Proceedings

Petitioners’ original complaint alleged estoppel and
breach of fiduciary duty claims under ERISA. After
petitioners were denied leave to amend their
complaint to add a claim for violation of ERISA’s
“anti-cutback” provision, 29 U.S.C. § 1054(g)(1), they
moved for (and were granted) leave to file a Second
Amended Complaint. Petitioners subsequently
sought (and were granted) leave to file their last
complaint, the Third Amended Complaint, which
added two Illinois state law claims to their
previously-asserted ERISA estoppel and fiduciary
duty claims.

The district court granted respondents’ motion for
summary judgment on all claims asserted in the
Third Amended Complaint and _ entered final
judgment. The district court held that petitioners
had failed to support any elements of their claims
under ERISA and that their newly-added state law
claims were preempted. Pet. App. 23a-49a.

Ill. The Decision Of The Court Of Appeals

On appéal, the Seventh Circuit affirmed. Pet. App.
la-22a, reported at Kannapien v. Quaker Oats Co.,
507 F.3d 629 (7th Cir. 2007). In accordance with
long-settled law, the court of appeals noted that to
prevail on an estoppel claim under ERISA, plaintiffs
must show:

(1) a knowing misrepresentation; (2) made in
writing; (3) reasonable reliance on that repre-
sentation by them; (4) to their detriment.

Id. at 1la-12a. The court then reviewed the facts in
the light most favorable to petitioners and found that
“they failfed] to satisfy any required element of an
ERISA-—estoppel claim.” Jd. at 12a. As the court

— a ee nn Pe
~~

6

explained, “the Retirement Plan unambiguously
defines ‘credited service’ as commencing on July 1,
1990 for both women, and ... neither Kannapien nor
Rozhon can prove that she relied on any knowing
written misrepresentation by Quaker.” Jd. at 19a.
And, the court observed, it was undisputed that
petitioners had received all benefits to which they
were entitled under the Quaker Severance and
Retirement Plans. Id. at 2a, lla, 16a. With respect
to the Illinois state law claims, the Seventh Circuit
affirmed the district court’s determination that those
claims were preempted by ERISA because petitioners
were “pursu[ing] benefits to be paid from the ERISA
Retirement Plan.” Jd. at 2la-22a.2 The Seventh
Circuit subsequently denied petitioners’ petition for
rehearing and rehearing en banc, id. at 50a-51a, and
their motion to stay issuance of the mandate.

REASONS FOR DENYING THE PETITION

The petition purports to present two questions for
review by this Court — one regarding the scope of
ERISA preemption, and the other the knowledge or
intent element of a claim of estoppel under ERISA.
Pet. i. As to the first question, petitioners present no
analysis or argument whatsoever, offering only a
single short restatement of the question itself. Id. at
4. No assertions of a circuit split or any other bases
for review of this question are presented. In light of
petitioners failure to address this question, and
particularly in light of the “clearly expansive” nature
of ERISA’s preemption of state law (see Egelhoff v.
Egelhoff ex rel. Breiner, 532 U.S. 141, 146 (2001)),

»? The court also affirmed the summary judgment dismissing
petitioners’ fiduciary duty claims under 29 U.S.C.
§ 1132(a)(3)(B), Pet. App. 19a-21a, a ruling not addressed in the
petition.

7

further consideration of this question is unwarranted,
and respondents therefore will address only
petitioners’ second question, relating to ERISA
estoppel.

As to this question, petitioners do present an
argument for review, but their argument is wrong.
Petitioners claim that the Seventh Crrcuit’s
determination that a plaintiff asserting an ERISA
estoppel claim must establish a knowing or
intentional misrepresentation is in conflict with
decisions of the First, Second, Third, Fourth, Fifth,
Sixth, Ninth, and Eleventh Circuits. Pet. 5-7, 9, 11-
13. But, petitioners failed to establish any element of
their estoppel claims, not merely a knowing or
intentional misrepresentation, and they do _ not
challenge the lower courts’ findings in that regard.
Therefore, whether ERISA estoppel does or does not
require a knowing misrepresentation is irrelevant to
the disposition of this case. Moreover, because of
their failure to establish any element of an estoppel
claim, petitioners could not prevail under any of the
alternative standards they propose. Finally, and in
any event, the conflicts plaintiffs see among the
circuits are illusory — nothing more than differences
in wording that have no substantive effect upon the
claims asserted here.

I. THE QUESTION ON WHICH PETITIONERS
SEEK REVIEW IS NOT PROPERLY
PRESENTED IN THIS CASE.

As a threshold matter, the issue petitioners ask this
Court to review, t.e., whether a misrepresentation
must be knowing or intentional to create an estoppel
under ERISA, was not necessary to the decision of
the Seventh Circuit, and thus the disposition of that
issue can have no impact on the ultimate result in
this case. Moreover, even under petitioners’

8

characterization of the requirements for ERISA
estoppel in other circuits, they could not prevail
under any conceivable standard. For both of these
reasons, the question raised in the petition is not
properly presented for review.

A. Petitioners Failed To Establish Any
Element Of Their Estoppel Claims.

To establish an estoppel claim under ERISA,
plaintiffs were required to show (1) a knowing
misrepresentation; (2) made in_ writing; (3)
reasonable reliance on that representation; (4) to
their detriment. Pet. App. lla-12a (citing Vallone v.
CNA Fin. Corp., 375 F.3d 623, 639 (7th Cir. 2004);
Coker v. Trans World Airlines, Inc., 165 F.3d 579, 585
(7th Cir. 1999)). The Seventh Circuit applied these
requirements in determining that petitioners had
failed to establish their ERISA estoppel claims.

Petitioners argue that one of the requirements
imposed by the court of appeals — a knowing
misrepresentation — is unwarranted and inconsistent
with the law in other circuits. But, the court did not
rest its decision solely on the admitted absence of any
knowing or intentional misrepresentations. To the
contrary, the court found, and petitioners do not
dispute, that none of the other elements of ERISA
estoppel had been established. The only alleged
written misrepresentation was the erroneous credited
service date on the benefits estimate statements
delivered months before any mention of the early
retirement opportunity. Because the _ benefits
statements correctly calculated and reported the
actual amount of each petitioner’s estimated benefits,
the court found that this was not a
misrepresentation, but merely a clerical error. Pet.
App. 14a. While Satterlee did make an oral
misstatement, albeit a concededly innocent one, the

9

court held that because the terms of the Quaker
Retirement Plan were not ambiguous or misleading,
the oral misstatement could not form the basis for an
estoppel claim. Jd. at 14a. Finally, the court found
no evidence of “any reliance -— detrimental or
otherwise — by [either petitioner]” on any alleged
written misrepresentation. Jd. at 16a; see also id. at
33a-34a & n.4 (no reasonable, detrimental reliance on
any misstatements, oral or written). Therefore,
regardless of any need to show a knowing or
intentional misrepresentation, petitioners failed to
establish an estoppel claim.

B. Even Under Petitioners’ Characteriza-
tion Of The Standards In Other Circuits,
Their Claims Would Fail.

While petitioners largely mischaracterize the
ERISA estoppel standards in other circuits or provide
incomplete descriptions of those standards (see
section II, infra), even under petitioners own
characterizations of the standards, their claims would
fail. The requirement, or lack thereof, of a knowing
or intentional misrepresentation would have no
bearing on the disposition of petitioners’ claims under
any of the standards they present. -

The undisputed facts here show nothing more than
an innocent oral misstatement by a single Quaker
employee, who told petitioners he could not compute
their benefits and who instructed them to consult the
designated internal source for information concerning
employee benefit plans, the Quaker Employee
Administration Center, to obtain a benefits estimate.
Pet. App. 12a-13a. It is undisputed that the Quaker
Retirement Plan itself and the Summary Plan
Description are clear and unambiguous (id. at 13a-
15a), and that the written description of the early
retirement opportunity given’ to _ petitioners

10

accurately described its terms and made clear that
the early retirement benefits were governed by the
Retirement Plan (id. at 14a-15a). And, it is
undisputed that petitioners received all benefits to
which they were entitled under that Plan. Jd. at 2a,
lla, 16a. On this record, petitioners cannot establish
a claim for ERISA estoppel no matter how the test
may be articulated in a particular circuit.

Petitioners place heavy reliance, for example, on
what they say is the standard in the Second Circuit.
According to petitioners, that circuit requires “(1) a
promise, (2) reliance on the promise, (3) injury caused
by the reliance, (4) injustice if the promise is not
enforced, and (5) ‘extraordinary circumstances.” Pet.
6 (citing Aramony v. United Way Replacement Benefit
Plan, 191 F.3d 140, 151 (2d Cir. 1999)). Putting the
other elements to one side for the moment,
petitioners cannot establish the threshold element —
that respondents made a “promise” to them regarding
the calculation of their benefits. The benefits
estimate statements petitioners received had nothing
to do with the early retirement opportunity and, in
any event, correctly calculated petitioners’ benefits
based on the correct years of service. Nor was
Satterlee’s innocent misstatement a promise
concerning petitioners’ benefits. in: fact, i “is
undisputed that Satterlee told each petitioner that he
could not calculate the amount of her benefits and
that she should contact the Quaker Employee
Administration Center to obtain a benefits estimate.
Id. at 12a-13a. Far from being a “promise,”
Satterlee’s conversations with petitioners are exactly
the type of “commonplace communication from
employer to employee” that the Second Circuit has
made clear cannot form the basis for an estoppel
claim. Aramony, 191 F.3d at 151.

11

As petitioners concede, one of the required elements
in each of the Third, Fifth, Sixth, and Ninth Circuits
is reasonable and detrimental reliance. Pet. 7-10. As
the lower courts found in this case, petitioners failed
to establish any reasonable reliance — detrimental or
otherwise — on any alleged misrepresentation. Pet.
App. 16a, 33a-34a. With respect to the innocent oral
misstatement by Satterlee in particular, petitioners
cannot show that reliance would have _ been
reasonable in light of the undisputed fact that the
Quaker Retirement Plan is unambiguous and in light
of Satterlee’s caution that he could not calculate
petitioners’ benefits. Jd. at 12a-13a, 33a-34a.

In the Ninth and Eleventh Circuits, a plaintiff must
show that the plan terms were ambiguous and that
the misrepresentation concerned an oral
interpretation of that ambiguity. See Pet. 8-9, 11.
Similarly, petitioners assert that the First Circuit has
“noted that a narrow window for estoppel recovery
might be possible where the representation relied
upon reflected an interpretation of ambiguous plan
terms.” Jd. at 14 (citing Law v. Ernst & Young, 956
F.2d 364, 370 n.9 (1st Cir. 1992)). Here, petitioners
have conceded that the terms of the Quaker
Retirement Plan were neither ambiguous nor
misleading (Pet. App. 14a, 15a).

3 The Third, Fifth, and Ninth Circuits, like the Second! Circuit,
also require “extraordinary circumstances” (Pet. 7-9), and
petitioners have established nothing more than an innocent
misstatement by a Quaker employee, who told petitioners that
he could not compute their benefits. These circumstances are
not “extraordinary” under any formulation of that element.
Indeed, as petitioners point out (id. at 8 n.3), the Fifth Circuit
has refused to find extraordinary circumstances where an oral
representation was inconsistent with the clear terms of the plan.

12

Finally, petitivmers acknowledge that estoppel is
unavailable in the Fourth Circuit when “it would
effect an amendment to a written ERISA plan.” Pet.
12 (citing HealthSouth Rehab. Hosp. v. Am. Nat'l Red
Cross, 101 F.3d 1005, 1010-12 (4th Cir. 1996)). Given
that the unambiguous terms of the Quaker
Retirement Plan provide that petitioners’ credited
service began on July 1, 1990, a fact petitioners
concede (Pet. App. 14a), petitioners’ claims for
benefits using earlier credited service dates, if
successful, would necessarily “effect an amendment
to 4 written ERISA plan.”

In the end, this case, involving an innocent oral
misstatement concerning the calculation of credited
service pursuant to the terms of an unambiguous
ERISA plan, does not present the question on which
petitioners seek review — whether an ERISA estoppel
claim requires proof that a misrepresentation was
knowing or intentional. Because petitioners cannot
prevail under any standard, regardless of the answer
to this question, the petition should be denied.

II. THERE IS NO CONFLICT AMONG THE
CIRCUITS CONCERNING THE APPLICA-
TION OF ERISA ESTOPPEL TO THE
CLAIMS ASSERTED BY PETITIONERS.

As noted above, the elements of an ERISA estoppel
claim as articulated by the Seventh Circuit are (1) a
knowing misrepresentation, (2) made in writing, (3)
on which the plaintiffs reasonably relied, (4) to their
detriment. Pet. App. lla-12a. These are the same
elements recognized and applied in every circuit cited
by petitioners. While different circuits use different
verbal formulations when articulating ’§ the
requirements for an ERISA _ estoppel claim,
petitioners have not identified any differences that
matter for purposes of their claims. In particular,

13

although some _ circuits use the rubric of
“extraordinary circumstances,” while others
articulate a separate, stand-alone element, every
circuit that has squarely addressed the question
requires some form of knowing or intentional
misrepresentation as a predicate for an estoppel
claim under ERISA. Those circuits that have not
imposed that requirement simply have not confronted
the issue.

The Third Circuit, for example, requires a plaintiff
to establish “extraordinary circumstances” in
addition to the other elements of an estoppel claim
(i.e., material misrepresentation, reasonable reliance,
detriment to plaintiff). See, e.g., Curcio v. John
Hancock Mut. Life Ins. Co., 33 F.3d 226, 235 (3d Cir.
1994), cited at Pet. 8. The Third Circuit explained
the “extraordinary circumstances” requirement in
Kurz v. Phila. Elec. Co., 96 F.3d 1544, 1553 (3d Cir.
1996), where it held that “extraordinary
circumstances” ordinarily require “affirmative acts of
fraud or similarly inequitable conduct by an
employer.” An estoppel claim will not lie for “simple
ERISA reporting errors or disclosure violations,”
including even omissions that cause employees to lose
or to fail to qualify for benefits. Jd. (citing Gillis v.
Hoechst Celanese Corp., 4 F.3d 1137, 1142 (8d Cir.
1993); Gridley v. Cleveland Pneumatic Co., 924 F.2d
1310, 1319 (38d Cir. 1991)). An innocent, one-time

4The Third Circuit noted in Kurz that it also has found
extraordinary circumstances based on a “network of
misrepresentations that arises over an extended course of
dealing between parties” and that it considers “the vulnerability
of particular plaintiffs” (e.g., hospital patients erroneously told,
while hospitalized, that they had adequate medical coverage).
96 F.3d at 1553. Neither a “network of misrepresentations” nor
particular vulnerability was alleged or sown here.

14

misstatement, such as that at issue here, cannot
support an ERISA estoppel claim in the Third
Circuit.

Nor can it do so in the Ninth Circuit, which also
requires “extraordinary circumstances.” The Ninth
Circuit decisions cited by petitioners, Spink v.
Lockheed Corp., 125 F.3d 1257 (9th Cir. 1997), and
Pisciotta v. Teledyne Indus., Inc., 91 F.3d 1326 (9th
Cir. 1996) (per curiam), both rest on that court’s
earlier decision in Greany v. Western Farm Bureau
Life Insurance Co., 973 F.2d 812 (9th Cir. 1992),
which set out the elements of an equitable estoppel
claim concerning an ERISA plan. See Spink, 125
F.3d at 1261; Pisciotta, 91 F.3d at 1331. Those
elements include proof that “the party to be estopped”
— that is, the party who made the alleged
misrepresentation — “must know the facts.” Greany,
973 F.2d at 821. In other words, a knowing
misrepresentation is required.

Eleventh Circuit precedent is to the same effect.
Petitioners cite Cotton v. Massachusetts Mutual Life
Insurance Co., 402 F.3d 1267 (11th Cir. 2005), for the
proposition that the Eleventh Circuit “requires only
an oral statement and _ representation which
constitutes an oral interpretation of the plan, without
requiring intent to deceive,” Pet. 11, but petitioners’
description of the required elements is incomplete.
The standard for ERISA estoppel was first
articulated in the Eleventh Circuit in Kane v. Aetna
Life Insurance, 893 F.2d 1283 (llth Cir. 1990). In
that case, the court held that where the provisions of
the ERISA plan are ambiguous, and representations
are made that constitute an interpretation of the
ambiguity as opposed to oral amendments or
modifications of the plan, then “{t]he federal common
law of equitable estoppel may be applied to the facts

15

of [the] case.” Id. at 1286. “The elements of equitable
estoppel, as defined by federal common law,” include
“(1) the party to be estopped misrepresented material
facts; [and] (2) the party to be estopped was aware of
the true facts ....”. Busby v. JRHBW Realty, Inc., 513
F.3d 1314, 1326 (11th Cir. 2008). Thus, again, an
estoppel can arise only where a_e knowing
misrepresentation is shown.

The Sixth Circuit’s formulation is_ virtually
identical. That court requires, among other things,
conduct or language amounting to a
misrepresentation of material fact and an awareness
of the true facts by the party to be estopped. See
Armistead v. Vernitron Corp., 944 F.2d 1287, 1298
(6th Cir. 1991), cited at Pet. 10; see also Trs. of Mich.
Laborers’ Health Care Fund v. Gibbons, 209 F.3d 587,
591 (6th Cir. 2000). If the party making the
misrepresentation, t.e., the party to be estopped, is
aware of the true facts, then that party has made a
knowing misrepresentation. See also Crosby v. Rohm
& Haas Co., 480 F.3d 423, 431 (6th Cir. 2007) (“Far
from trying to deceive Allred.... [aJt most, Crosby has
shown that the company made an honest mistake,
that in other words it was guilty of misfeasance, not
the malfeasance that estoppel requires.”).

Although petitioners also point to the First, Second,
Fourth, and Fifth Circuits as having adopted rules
that conflict with the Seventh Circuit’s decision, in
reality only the Second Circuit has considered ERISA
estoppel in any depth. As petitioners note, the
Second Circuit requires “extraordinary
circumstances” — in particular, that a promise be
made with the specific intent to induce the employee
to take action favorable to the employer. Pet. 6-7. As
that court has explained, the “extraordinary
circumstances” element “require[s] conduct

16

tantamount to fraud,” making clear that reliance on
an employer’s innocent misstatement will not suffice.
Greifenberger v. Hartford Life Ins. Co., 131 F. App’x
756, 759 (2d Cir. 2005) (citing Devlin v. Transp.
Comme'ns Int'l Union, 173 F.3d 94, 101-02 (2d Cir.
1999)).5

The remaining circuits listed by petitioners — the
First, Fourth, and Fifth — simply have not addressed
in any fashion whether the misrepresentation that
forms the basis for an ERISA estoppel claim must
have been made with knowledge of falsehood or
intent to deceive. Petitioners acknowledge as much
concerning the First Circuit, noting that it “has not
yet definitively chosen a position.” Pet. 13 (citing
Livick v. The Gillette Co., 524 F.3d 24 (1st Cir.
2008)).6 The First Circuit has suggested in dictum
that, if it were to consider an ERISA estoppel claim,
it would require “definite misrepresentations of
fact,” Mauser v. Raytheon Co. Pension Plan for
Salaried Employees, 239 F.3d 51, 57 (1st Cir. 2001),
but it has not yet considered such a claim, and what
constitutes a “definite misrepresentation of fact” is
therefore unknown. The Fourth Circuit, as noted
supra at 12, does not permit an estoppel claim where
the requested estoppel would effect an amendment to

5 Greifenberger is consistent with Schonholz v. Long Island
Jewish Medical Center, 87 F.3d 72 (2d Cir. 1996), the case in
which the Second Circuit first articulated the “extraordinary
circumstances” requirement. There, as the court explained in
Devlin, the employer had “intentionally used the promise of
severance benefits to win Schonholz’s resignation, and then
reneged once she resigned.” Devlin, 173 F.3d at 102.

6 Petitioners assert that First Circuit panels have recognized
“the direct split among circuits,” Pet. 14, but the discussion they
cite concerns whether an ERISA estoppel claim should be
permitted at all, not the elements of such a claim.

17

a written ERISA plan. Finally, the Fifth Circuit, like
the Second, Third, and Ninth Circuits, requires
“extraordinary circumstances.” See High v. E-Sys.
Inc., 459 F.3d 573, 579 (5th Cir. 2006). The Fifth
Circuit has not addressed whether a knowing or
intentional misstatement is required for an ERISA
estoppel claim. It has, however, looked to Third
Circuit caselaw for guidance concerning
“extraordinary circumstances,” see id. at 580 & n.3.
In the Third Circuit, as noted above, a negligent
misstatement will not suffice.

So, far from showing a clear conflict warranting
this Court’s attentiun, petitioners have established
only that some circuits have addressed the knowing
misrepresentation question and others have not and
that, among those that have, differences in phrasing
can be found. That such differences exist is hardly
surprising in light of the fact-specific nature of
estoppel claims. What matters for present purposes
is that, substantively, there is neither conflict nor
confusion in the lower federal courts concerning any
question properly presented here. Under no
circumstances can a claimant prevail on an ERISA
estoppel claim based on an _ innocent oral
misstatement by a non-fiduciary, non-administrator
who directs claimants to the proper source for
information concerning an unambiguous ERISA
pension plan.

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18

CONCLUSION

The petition for writ of certiorari should be denied.
Respectfully submitted,

CONSTANTINE L. TRELA, JR.*
PRISCILLA E. RYAN

ERIN E. KELLY

JULIE M. WEBER

SIDLEY AUSTIN LLP

One South Dearborn Street
Chicago, Illinois 60603
(312) 853-7000

Counsel for Respondents Quaker Oats Company
and PepsiCo

July 7, 2008 * Counsel of Record

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386020_1435%3A2. Public record. Not legal advice.