Although the beneficiary designation in a 401(k) plan was old, and tied to a previous relationship, a federal court concluded that it was nonetheless valid.
The case involves the balance—some $754,006.54—accumulated by one Jeffrey Rolison in the Proctor & Gamble 401(k) from his date of enrollment (4/27/87) through his death (12/14/15). At the time of his enrollment in the plan, Rolison named his-then-girlfriend and cohabitant (Margaret M. Sjostedt, now Margret Losinger) as the sole beneficiary. The couple broke up in 1989—but Rolison never changed the beneficiary designation.[i]
Multiple Notifications
According to the decision (The Procter & Gamble U.S. Business Services Co. et al. v. Estate of Jeffrey Rolison et al., case number 3:17-cv-00762, in the U.S. District Court for the Middle District of Pennsylvania) by U.S. District Judge Karoline Mehalchick, on “numerous occasions” between 1989 and 2015, P&G notified Rolison that he could change his beneficiary designation for the Plan, that he was sent information about the company’s transition to an online beneficiary designation system, which started as an option in 2007, before fully transitioning online in 2015. She noted that those notifications often included a recommendation that Rolison review his beneficiary designation. In fact, she explained that “this Court previously found that P&G “routinely informed” Rolison “of his option to designate an online beneficiary or, otherwise, his previous paper designated beneficiary would receive his benefits.”
Judge Mehalchick noted that Rolison was aware of how to change his beneficiary designation, but that “even with notice and directions how to do so, Rolison never designated a new beneficiary for his P&G investment plan.”
Those familiar with such things can anticipate the outcome—and yet Judge Mehalchick observed that “this case has a long procedural history with multiple motions for summary judgment, a denied motion for certification to appeal, and multiple motions for reconsideration.”
Summary Judgement Motion
In considering the most recent motion for summary judgement (a decision without actually going to trial), she explained that the party seeking summary judgment “bears the initial responsibility of informing the district court of the basis for its motion,” and demonstrating the absence of a genuine dispute of any material fact. That if that is established, the non-moving party “must go beyond the pleadings with affidavits or declarations, answers to interrogatories or the like in order to demonstrate specific material facts which give rise to a genuine issue”—a reason to proceed to trial.
That party “must produce evidence to show the existence of every element essential to its case which it bears the burden of proving at trial, because “a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.” She also noted that “mere conclusory allegations and self-serving testimony, whether made in the complaint or a sworn statement, cannot be used to obtain or avoid summary judgment when uncorroborated and contradicted by other evidence of record.”
Rollison’s estate—which was a party to the proceedings here—alleged that P&G violated its fiduciary duty under ERISA to disclose material information to Rolison—specifically that P&G should have provided Rolison with specific information regarding his designated beneficiary. Rather, they contended that P&G “has indolently pursued for at least 25 years a policy of only providing generic beneficiary information to its employees and never informing them of their specific beneficiary status.”
Not surprisingly, P&G disagreed with this assessment, “arguing that this Court has already determined P&G fulfilled its disclosure requirements and that ‘the Estate [ ] fails to marshal any evidence disproving that P&G consistently and adequately informed Jeff Rolison about the status of, and how to change, his beneficiary designation.’” A stance with which Judge Mehalchick agreed.
Fiduciary Breach
Judge Mehalchick then noted that in order for the estate to succeed on a breach of fiduciary duty claim under ERISA, it had to show that:
(1) P&G was acting in a fiduciary capacity;
(2) P&G failed to adequately inform Rolison of his beneficiary designation;
(3) P&G knew of the confusion generated by its silence; and
(4) detrimental reliance by Rolison on that status.
She then noted “while it is undisputed that P&G acted as a fiduciary to Rolison, thus satisfying element one, the Estate has failed to put forth any evidence establishing any of the additional elements of its breach of fiduciary claim.”
In addition to the previously noted conclusions with regard to Rolison’s beneficiary designation, and subsequent reminders, Judge Mehalchick explained that this Court also previously found:
“Indeed, the Estate further recognizes that Rolison logged into his online account multiple times prior to his death, realized he had not designated an online beneficiary, and chose not to designate such. These admissions further undercut the Estate's claims as it shows that Rolison knew that he needed to take affirmative steps to change his previous beneficiary, and was aware that he could change his beneficiary online, but simply failed to do so.”
Not surprisingly, “courts tend not to revisit issues already decided, a tendency named the ‘law of the case’ doctrine.” Indeed, considering all the determinations already made (and stated above), one thing that might be surprising is that we have yet another round of arguments essentially making the same claims.
Confusing Disclosures?
That said, and “setting aside the Court’s previous findings, the Estate has failed to put forward any evidence that Rolison was confused by P&G’s numerous disclosures or that P&G knew or should have known that their disclosures were confusing,” Judge Mehalchick wrote. “Instead, as this Court previously found, the record supports that Rolison was affirmatively and consistently notified for 13 years that his online account lacked the designation of a beneficiary and that, without an online beneficiary, his paper beneficiary designation would remain valid.”
She continued by noting that, “Nothing the Estate points to provides otherwise or suggests confusion on Rolison’s part. Likewise, based on the record before it, the Court cannot conclude that P&G’s failure to provide employees with specific beneficiary information in the manner suggested by the Estate creates a substantial likelihood that reasonable P&G employees will be misled in making adequately informed retirement decisions. Accordingly, the Estate has failed to establish the second and third elements of its ERISA breach of fiduciary duty claim. Even if the Estate was able to satisfy elements two and three, it has failed to establish the fourth element of their claim, detrimental reliance by Rolison,” she concluded.
In fact, she explained that “there no record evidence in this case that supports the Estate’s position that Rolison failed to change his beneficiary status because of any misrepresentation or omission on P&G’s part. Instead, again, the record reflects that P&G warned Rolison to check and change his beneficiary designation numerous times between 1987 and 2015 and that “Rolison knew that he needed to take affirmative steps to change his previous beneficiary status,” but that he “simply failed to do so.”
In sum, she noted that the actions (or lack thereof) by Rolison “do not reflect detrimental reliance and no reasonable fact finder could not conclude otherwise,” and granted P&G’s motion for summary judgement, and dismissed the Estate’s cross-claims against P&G.
What This Means
The outcome in this case is not nearly as surprising as the notion that an individual could accumulate a 401(k) balance this size, and still have listed as beneficiary an individual with whom his relationship ended nearly two decades earlier. It is possible, of course, that this is what he intended—but this result, and any number of other cases that have actually proceeded to litigation should remind us all that while beneficiary designations may be out of sight—they should NOT be out of mind…
[i] In 2002, Rolison began a relationship with his co-worker, Mary Lou Murray. She was listed as a beneficiary of Rolison’s life insurance and health benefits at each annual enrollment window during the relationship, though that ended in 2014. However, at no point during the course of their relationship or after, was Murray designated as a beneficiary of the Plan, and her interests in this case were dismissed on Dec. 15, 2021.
