Curtiss-Wright Corp. v. Schoonejongen
Headline: Standard employer clause that lets a company amend employee benefit plans is upheld as an adequate amendment procedure, making it harder for retirees to void changes unless corporate decision-makers lacked authority.
Holding:
- Validates standard employer reservation clauses as acceptable amendment procedures under ERISA.
- Shifts disputes to corporate‑law fact questions about who within a company had authority to amend.
- Leaves lower courts to determine if this specific amendment was properly authorized or later ratified.
Summary
Background
Curtiss-Wright voluntarily ran a postretirement health plan for employees who retired from one of its facilities. The company issued a revised Summary Plan Description (SPD) adding a provision that coverage would end if the facility closed. After the company announced the Wood-Ridge facility would close and sent letters terminating benefits, retirees sued. The District Court found the SPD change was an amendment, concluded the plan lacked a valid amendment procedure under ERISA §402(b)(3), and awarded substantial back benefits, a ruling the Court of Appeals affirmed.
Reasoning
The Court focused on §402(b)(3), which requires plans to have a procedure to amend the plan and to identify who may amend it. The Court explained ERISA does not create a right to welfare benefits and that employers generally may change or end such plans. It held that a reservation clause naming “the Company” as the amending party satisfies §402(b)(3): it both identifies the amending “person” and sets forth a procedure — a unilateral company decision — and corporate law provides rules to determine which officers or bodies can act for the company. The Court rejected the idea that the statute requires listing specific individuals or internal bodies on the face of the plan documents.
Real world impact
By upholding the common reservation clause, the Court preserved widely used amendment language and avoided invalidating many plans. The Court did not decide whether Curtiss-Wright actually followed its amendment procedure; it remanded for fact-specific inquiry under corporate law into who had authority and whether the SPD provision was authorized or later ratified.
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