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Correcting Scriveners Error How Helpful Will Courts Be?

November 17, 2009

Ethan Lipsig and Suzi Sabogal

On November 2, 2009, a district court magistrate ordered reformation of Verizons 1996 and 1997 Cash Balance Plan documents to correct a scriveners error, saving Verizon more than $1 billion. Young v. Verizons Bell Atl. Cash Balance Plan, No. 05-c-7314, 2009 WL 3677350 (N.D. Ill. Nov. 2, 2009). The error was to use a transition factor in the benefit formula twice, when it was clearly intended only to be used once. Because drafting mistakes are common and the courts had not been particularly helpful in the past, this decision has received a lot of attention. We do not think it augurs a new judicial willingness to permit plan sponsors to fix drafting errors.

Verizon discovered and fixed the drafting error long before Ms. Young sued to require the transition factor to be used twice. In an earlier decision, the district court magistrate had ruled that the factor had to be used twice unless Verizon filed a claim seeking reformation to cure the error, and the court ordered that remedy.

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