ERISA Substantial Compliance Requires Plan-Similar “Positive Action”; Unauthorized Fax Request Is Insufficient

Case: Packaging Corporation of America Thrift Plan for Hourly Employees v. Dena Langdon
Court: United States Court of Appeals for the Seventh Circuit
Date: February 2, 2026

Introduction

This appeal arose from a beneficiary dispute over an ERISA-governed retirement account after the participant, Carl Kleinfeldt, died. Kleinfeldt had designated his then-wife, Dená Langdon, as primary beneficiary and his sister, Terry Scholz (and another sister, later deceased), as contingent beneficiaries. After Kleinfeldt and Langdon divorced in September 2022, Kleinfeldt directed that a fax be sent to the PCA Benefits Center asking that Langdon be removed “as a beneficiary” from his “401(k), pension[,] and life insurance accounts,” and asking that any needed paperwork be faxed back. PCA removed Langdon from certain insurance coverages but did not remove her as primary beneficiary on the retirement account, instead changing her status from “spouse” to “ex-spouse.”

When Kleinfeldt died in January 2023, competing claims followed. PCA filed an interpleader under Federal Rule of Civil Procedure 22, deposited the funds, and was dismissed. The district court later joined Scholz’s estate as a necessary party under Rule 19(a), then granted summary judgment sua sponte to Scholz’s estate, reasoning that Kleinfeldt had “substantially complied” with the Plan’s beneficiary-change procedures and therefore removed Langdon, leaving Scholz as the contingent beneficiary. Langdon appealed.

The central issue on appeal was whether Kleinfeldt’s fax constituted “substantial compliance” with Plan procedures for changing beneficiaries—especially the doctrine’s “positive action” requirement—such that a beneficiary change could be recognized despite nonconformity with plan formalities.

Summary of the Opinion

The Seventh Circuit reversed. While the fax clearly showed Kleinfeldt’s intent to remove Langdon, the court held he did not take the required positive action “for all practical purposes similar to” the action demanded by the Plan. The Plan instructed participants to change beneficiaries by contacting the PCA Benefits Center or updating beneficiaries online; it did not permit change by fax. Kleinfeldt’s request also asked for additional paperwork, signaling he understood further steps might be needed, but he did not follow up. Therefore, he did not satisfy substantial compliance, and Langdon remained the primary beneficiary.

The court assumed without deciding that the substantial compliance doctrine remains viable after Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, concluding that Langdon prevailed even if the doctrine applied.

Analysis

1) Precedents Cited

A. Summary judgment framework

  • Metro. Life Ins. Co. v. Johnson, 297 F.3d 558 (7th Cir. 2002): Cited for the de novo review of summary judgment and (more substantively) as a key Seventh Circuit substantial-compliance decision.
  • Celotex Corp. v. Catrett, 477 U.S. 317 (1986) and Fed. R. Civ. P. 56(a): Cited for the standard that summary judgment is appropriate when there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law.
  • Hendricks-Robinson v. Excel Corp., 154 F.3d 685 (7th Cir. 1998): Used to frame how courts view the record when reviewing cross-motions for summary judgment—construing inferences in favor of the party against whom the motion under consideration is made.

B. Standard of review in ERISA beneficiary disputes and interpleader posture

  • Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989) and Butler v. Encyclopedia Britannica, Inc., 41 F.3d 285 (7th Cir. 1994): Langdon cited these for deferential (arbitrary-and-capricious) review when a plan grants administrator discretion and the administrator makes a benefits determination. The Seventh Circuit distinguished them on the facts: here, the plan administrator did not exercise discretion to a final beneficiary determination and instead interpleaded the funds.
  • Sellers v. Zurich Am. Ins. Co., 627 F.3d 627 (7th Cir. 2010) and Meyer v. Duluth Bldg. Trades Welfare Fund, 299 F.3d 686 (8th Cir. 2002): Cited for the principle that legal questions (interpretation of controlling law) are reviewed de novo, reinforcing de novo review of the substantial compliance question.
  • Alliant Techsystems, Inc. v. Marks, 465 F.3d 864 (8th Cir. 2006): The Seventh Circuit used Alliant both as a contrast and as support for de novo review here. Even under Alliant’s framework, judicial review is de novo where the administrator did not exercise its discretion or failed to decide an issue. The court emphasized that, unlike the plan in Alliant, PCA’s Plan did not grant discretion over “legal questions under the Plan,” and PCA never decided substantial compliance.

C. ERISA preemption, federal common law, and the post-Kennedy debate

  • Metro. Life Ins. Co. v. Johnson, 297 F.3d 558 (7th Cir. 2002): Quoted for the proposition that ERISA is silent on disputes between competing claimants to plan proceeds and on whether an insured effectively changed a beneficiary designation, necessitating federal common law.
  • Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989): Cited for the Supreme Court’s direction that courts develop “a federal common law of rights and obligations under ERISA-regulated plans.”
  • Thomason v. Aetna Life Ins. Co., 9 F.3d 645 (7th Cir. 1993): Cited for the method: where ERISA is silent, courts may develop federal common law using state common-law principles as a basis so long as consistent with ERISA’s policy concerns.
  • Davis v. Combes, 294 F.3d 931 (7th Cir. 2002): Cited as a foundational Seventh Circuit ERISA substantial compliance case and for the two-part test (intent + plan-similar positive action).
  • Bauwens v. Revcon Tech. Grp., Inc., 935 F.3d 534 (7th Cir. 2019): Cited to acknowledge the Seventh Circuit’s general reluctance to create federal common law remedies under ERISA, while distinguishing that substantial compliance is a doctrine applied in a gap-filling context.
  • Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285 (2009), and In re Radcliffe, 563 F.3d 627 (7th Cir. 2009): Cited to frame ERISA’s “plan documents rule”—administrators must pay benefits in conformity with plan documents and should not be forced into complex intent inquiries based on external documents (like divorce decrees or waivers). The court treated Kennedy as raising a serious question about substantial compliance’s continued role but ultimately did not decide the issue.
  • Fox Valley & Vicinity Constr. Workers Pension Fund v. Brown, 897 F.2d 275 (7th Cir. 1990) (Easterbrook, J., dissenting): Quoted in Kennedy (and then quoted here) for the administrative virtues of a clear rule: simple administration, avoiding double liability, and quick payment.
  • Standard Ins. Co. v. Guy, 115 F.4th 518 (6th Cir. 2024): Invoked to show that even after Kennedy, some judge-made exceptions to “pay the designated beneficiary” may survive (there, the “slayer rule”). This supported the Seventh Circuit’s openness to the possibility that substantial compliance may still operate in limited contexts.
  • Est. of Kensinger v. URL Pharma, Inc., 674 F.3d 131 (3d Cir. 2012) and Hall v. Metro. Life Ins. Co., 750 F.3d 995 (8th Cir. 2014): Used to suggest Kennedy’s administrative concerns are less implicated when courts resolve competing claims (e.g., interpleader, de novo review), potentially leaving room for doctrines like substantial compliance.
  • Post-distribution suit cases cited in footnote 3—Gelschus v. Hogen, 47 F.4th 679 (8th Cir. 2022); Andochick v. Byrd, 709 F.3d 296 (4th Cir. 2013); MetLife Life & Annuity Co. of Conn. v. Akpele, 886 F.3d 998 (11th Cir. 2018): These reinforce the idea that ERISA’s core objective is plan administrator simplicity and protection, and that disputes between private claimants may be handled outside the plan payment process.

D. The substantial compliance test’s source and application

  • Phoenix Mut. Life Ins. Co. v. Adams, 30 F.3d 554 (4th Cir. 1994): The Seventh Circuit reiterated that its federal common law substantial compliance test tracks the Phoenix Mutual formulation: (1) intent and (2) “positive action” for all practical purposes similar to the plan-required method.
  • Metro. Life Ins. Co. v. Johnson, 297 F.3d 558 (7th Cir. 2002) and Davis v. Combes, 294 F.3d 931 (7th Cir. 2002): These cases supplied the core comparison points: substantial compliance is met where the participant uses the required form/procedure but commits minor clerical errors (Johnson) or fails to sign/date an otherwise complete form that the administrator processed (Davis).
  • Aetna Life Ins. Co. v. Wise, 184 F.3d 660 (7th Cir. 1999): Used as an additional “participant did everything reasonably possible” example (there under Illinois law, noted to be essentially the same as the federal test). A key feature was that plan/employer error (not marking a section with an “X”) contributed to the omission, and the participant completed what he was instructed to complete.
  • Rendleman v. Metropolitan Life Insurance Co., 937 F.2d 1292 (7th Cir. 1991): Served as the negative comparator: mere intent plus unrelated benefit changes (dropping ex-spouse from health insurance) and oral statements, without pursuing the policy-required beneficiary-change procedure, is not substantial compliance—particularly where the insured knew the process.
  • Prudential Insurance Co. of America v. Schmid, 337 F. Supp. 2d 325 (D. Mass. 2004): Another negative comparator: a phone call expressing the desire to change beneficiaries, without attempting the required form, is not enough—even where an insurer’s agent incorrectly said the change was already in place.

2) Legal Reasoning

A. The court’s operative rule: “positive action” must be plan-similar in practice

The Seventh Circuit treated the dispute as turning on the second prong of substantial compliance. It accepted that the fax unequivocally showed intent, but held that intent alone does not effect a beneficiary change. The key move was to draw a boundary between:

  • Minor defects while substantially following the plan’s method (as in Metro. Life Ins. Co. v. Johnson and Davis v. Combes), and
  • Material deviation from plan-required procedures, where the participant does not even attempt to use the plan’s prescribed channel (here, contacting the Benefits Center as instructed or updating online).

The opinion effectively tightens the “for all practical purposes similar” requirement: an informal communication (fax) is not “similar” when the plan’s instructions do not authorize that medium and the participant does not pursue the plan’s stated methods.

B. The participant’s own language mattered as evidence of incompleteness

The court relied on the fax’s request—“Please feel free to fax any necessary paperwork ... that I may need to complete”—not to negate intent, but to underscore that Kleinfeldt understood additional steps might be required. That understanding, coupled with no follow-up, supported the conclusion that he did not undertake sufficient “positive action.”

C. Post-Kennedy question acknowledged but avoided

Langdon argued that Kennedy v. Plan Administrator for DuPont Savings & Investment Plan should foreclose substantial compliance altogether. The panel declined to decide that broad issue, noting authority suggesting Kennedy is chiefly concerned with plan administrator administration and double-liability risk—concerns less implicated where an administrator interpleads funds and a court resolves competing claims. But by resolving the case under substantial compliance and insisting on close adherence to plan procedures, the court’s reasoning aligns with Kennedy’s preference for administrable, rule-like approaches.

3) Impact

  • Narrower path to substantial compliance in the Seventh Circuit: Participants (and their advisors) should not assume that any written request will suffice. The decision signals that substantial compliance is most viable when the participant substantially uses the plan’s prescribed mechanism (forms/portal/required contact method) and errs only in details.
  • Greater protection for the beneficiary shown on plan records at death: In close cases, courts may treat the “positive action” requirement as a meaningful filter, preserving the integrity of plan administration records unless the participant closely tracked plan instructions.
  • Litigation posture matters (interpleader): The opinion also reinforces that when a plan administrator does not make a final discretionary decision and instead interpleads the benefits, courts are more likely to apply de novo review to legal questions such as substantial compliance.
  • Operational takeaway for plan administrators: While not imposing new duties, the case underscores the value of clear, exclusive procedures (e.g., online-only or authenticated channels) and consistent handling of informal communications (like faxes) to avoid participant confusion and later disputes.

Complex Concepts Simplified

  • ERISA: A federal statute governing most employer-sponsored benefit plans. It often preempts state laws that would otherwise control beneficiary disputes.
  • Plan documents rule: Under Kennedy, plan administrators generally must pay benefits according to plan documents (like beneficiary designations), rather than external documents (like divorce decrees), to ensure simple administration and avoid double liability.
  • Federal common law under ERISA: When ERISA is silent on a question (e.g., how to treat imperfect beneficiary-change attempts), courts may craft rules—often borrowing from state common law—so long as consistent with ERISA’s purposes.
  • Substantial compliance doctrine (as applied here): A judge-made rule that can validate an attempted beneficiary change that is not perfectly executed, but only if:
    1. the participant clearly intended the change, and
    2. the participant took “positive action” that is, in practical terms, similar to what the plan requires.
    In this case, the fax showed intent, but it was not a plan-similar action.
  • Interpleader (Rule 22): A procedure letting a stakeholder (here, the Plan) deposit disputed funds with the court and exit the case, forcing claimants to litigate among themselves, reducing the stakeholder’s risk of paying the wrong party.
  • QDRO (Qualified Domestic Relations Order): A specialized domestic-relations order that ERISA recognizes, allowing assignment/segregation of certain retirement benefits to an ex-spouse or dependent. Here, the QDRO allocated and paid Langdon a portion; the dispute concerned the remaining balance.

Conclusion

The Seventh Circuit’s decision establishes a practical but stricter guidepost for ERISA beneficiary disputes: even where intent is clear, substantial compliance fails unless the participant’s efforts meaningfully track the plan’s required method. An unauthorized fax requesting removal of a beneficiary—without using the plan’s specified channels and without follow-through—does not satisfy the “positive action” requirement. The opinion thus reinforces the primacy of plan-specified procedures and narrows the circumstances in which courts will rescue imperfect beneficiary-change efforts under federal common law.