Good morning, ERISA Watchers!  There were several appellate court decisions this past week, but I want to highlight a district court case that presents a good lesson for employers and plan participants alike when it comes to changes to plan benefits.  In Boyles, Jr. v. American Heritage Life Insurance Company, et al., No. 3:15-CV-274, 2019 WL 1767565 (W.D. Pa. Apr. 22, 2019), Plaintiff Boyles brought suit for the denial of disability benefits against his former employer, St. Marys Insurance Agency; the president of his former employer, Jeffrey Azzato; the employer’s former long-term disability insurer, Allstate; and the employer’s current LTD insurer, Unum.  He also alleged that Azzato and St. Marys breached their fiduciary duties to him.

It all started when Boyles contacted Azzato in December 2012 to say he was considering applying for disability benefits.  In the year prior, Boyles had four surgeries related to the implant of a spinal stimulator to address his history of back problems.  Azzato instead offered to pay Boyles’s full salary while he recovered and encouraged him to “keep going.”  During their conversation Boyles did not request, and Azzato did not offer, any advice regarding whether Boyles should pursue a disability claim with Allstate.  Boyles did not pursue disability and he received his full salary while working limited hours in the office.  During this time, effective August 1, 2013, St. Marys changed disability insurers from Allstate to Unum.  Defendants did not counsel Boyles about the impact of this change.

Thirteen months after Boyles began working a reduced schedule, Azzato told him that he was not producing at the level needed to in order to continue receiving his full salary.  The last day Boyles was paid a full salary was November 22, 2013 and he filed a disability claim with Allstate on December 19, 2013.  Allstate denied the claim on the basis that his condition resulted from a workplace accident.  Allstate denied his subsequent appeals on the basis that he continued to receive his full salary and did not meet the definition of disability under the policy while the policy was in effect.

Boyles then filed a disability claim with Unum.  Unum denied the claim because Boyles was not in “active employment” on August 1, 2013 since he was not working the requisite number of hours prior to the start of coverage.  

In what some might say is “no good deed goes unpunished,” Boyles sued Azzato and St. Marys for breach of fiduciary duty in failing to adequately apprise him of his rights resulting from the switch of insurers.  The court granted Defendants’ motion for summary judgment on this claim.  

First, on the issue of whether Defendants were fiduciaries, the court found that they were not.  Allstate and Unum were the plan administrators in this case with the discretion to make benefit determinations.  Defendants were not acting as administrators or fiduciaries because they did not have discretionary control over the plans that would implicate fiduciary obligations.  Further, they were not acting as fiduciaries when Azzato gave Boyles the option of receiving his full salary instead of filing for disability and when Azzato failed to tell Boyles about the change in insurers.

Second, the court determined that Azzato did not misrepresent Boyles’ benefits when he made the full-salary offer.  Defendants did not have any fiduciary obligations to inform Boyles of the anticipated change in disability insurers.  Boyles unsuccessfully attempted to rely on Third Circuit precedent, which the court distinguished.  In Fischer v. Phila. Elec. Co., 994 F.2d 130 (3d Cir. 1993), the court held that a plan administrator may not make an affirmative material misrepresentation to plan participants about changes to a benefit plan.  Here, Boyles never asked Defendants about a potential switch in disability insurers or about their disability coverage in general.  The court also found that Bixler v. Cent. Pa. Teamsters Health & Welfare Fund, 12 F.3d 1292 (3d Cir. 1993), and Jordan v. Fed. Express Corp., 116 F.3d 1005 (3d Cir. 1997) do not apply to this case.  Those cases place an affirmative duty on fund administrators to provide participants with information regarding existing benefits and Boyles did not allege that Defendants failed to provide him information about his existing benefits.

Lastly, the court found that there is a genuine dispute precluding a determination on the element of detrimental reliance.  A reasonable factfinder could conclude that Boyles would have completed his disability paperwork were it not for Azzato’s offer and that the denial of benefits was reasonably foreseeable at the time of the full-salary offer.  However, the court found that summary judgement to Defendants is appropriate based on the elements of fiduciary capacity and material misrepresentation or omission.  

Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.

Attorneys’ Fees

Second Circuit

Verdier v. Thalle Construction Company, Inc., No. 18-868-CV, __F.App’x__, 2019 WL 1873418 (2d Cir. Apr. 25, 2019) (Present: Calabresi, Livingston, Lohier, Jr., Circuit Judges).  This case involved a dispute of benefits under a deferred compensation arrangement.  The court held that the district court did not abuse its discretion in cutting Plaintiff’s requested fees by 20% across-the-board based on the level of success achieved.  The district court also did not abuse its discretion in refusing to award fees for work done on Plaintiff’s behalf in the 1990s since the work lacked any description, was done 20 years before the lawsuit, and does not constitute work “in relation” to the lawsuit.  Lastly, the district court did not abuse its discretion in denying prejudgment interest on the fee award.

Cohen v. Life Insurance Company of North America, No. 17-CV-9270 (JPO), 2019 WL 1785095 (S.D.N.Y. Apr. 24, 2019) (Judge J. Paul Oetken).  LINA reinstated Plaintiff’s long-term disability benefits during the course of litigation and Plaintiff moved for an award of “$57,910 in attorney’s fees, with $47,278.75 made up of fees accrued in litigating the underlying action and the remaining $10,631.25 made up of fees accrued in litigating the instant motion for fees, costs, and prejudgment interest.”  The court agreed with LINA that the timesheets reflect an unreasonable amount of time devoted to basic ministerial tasks, in part, because time was recorded in quarter-hour segments.  The court identified forty-six time entries totaling $11,763.75 that are too vague or incomplete to allow the Court to assess their reasonableness.  Disallowing these fees is comparable to a slightly more than 20% across-the-board reduction that the Court might have otherwise applied.  The court awarded a total of $46,146.25 in fees and $710.49 in costs for filing fees, service of process, and research.  The court awarded 5% in prejudgment interest with reference to a date midway through LINA’s delinquency period, for a total of $9,357.53.  The court chose 5% since that was the federal prime interest rate as of the date the parties settled the case.

Sixth Circuit

Canter v. Alkermes Blue Care Elect Preferred Provider Plan, No. 1:17-CV-399, 2019 WL 1760175 (S.D. Ohio Apr. 22, 2019) (Magistrate Judge Karen L. Litkovitz).  Following the court’s grant, in part, of Plaintiff’s motion to compel discovery in a long-term disability matter, the court issued a report and recommendation denying Plaintiff’s motion for attorneys’ fees under Fed. R. Civ. P. 37(a)(5)(A) seeking $20,852.50 as compensation for the time his attorney spent to obtain the discovery sought by the motion to compel.  The court explained that Fed. R. Civ. P. 37(a)(5)(C) applies here, not (a)(5)(A).  Further, the circumstances of this case do not justify an award of fees:  (1) it was not clear whether plaintiff was entitled to discovery in this matter and, if so, the scope of discovery; (2) there is no indication that Defendant acted in bad faith or with culpability in objecting to the discovery requests; and (3) several of the objections were valid and successful.  

Breach of Fiduciary Duty

Third Circuit

Boyles, Jr. v. American Heritage Life Insurance Company, et al., No. 3:15-CV-274, 2019 WL 1767565 (W.D. Pa. Apr. 22, 2019) (Judge Kim R. Gibson).  See Notable Decision summary above.

Sixth Circuit

Bustetter v. CEVA Logistics U.S., Inc., No. CV 18-58-DLB-EBA, 2019 WL 1867430 (E.D. Ky. Apr. 25, 2019) (Judge David L. Bunning).  In settlement negotiations related to Plaintiff’s lawsuit regarding Defendant’s failure to produce plan documents fell apart, Plaintiff attempted to amend his complaint to add a breach of fiduciary duty claim based on a position Defendant took during settlement negotiations by demanding that Plaintiff release his claims against the CEVA Welfare Benefit Plan and the CEVA 401(k) Plan—neither of which are parties to the present action.  Plaintiff alleged that this conduct is self-dealing.  The Magistrate Judge denied leave to amend for four reasons.  The court sustained three of Plaintiff’s objections but denied the motion for leave.  The court found that Plaintiff did exercise due diligence because given the timing of settlement discussions, he could not have possibly met the original amendment deadline.  Also, good cause for the amendment exists and it would not be unduly prejudicial to CEVA.  Plaintiff filed his motion one day after receiving confirmation of CEVA’s demand so his filing after the deadline to move for an amended complaint is due to excusable neglect.  However, the court found that the amendment would be futile because he fails to state a claim under ERISA upon which relief may be granted.  The facts do not indicate that CEVA received anything as a result of its alleged self-dealing since Plaintiff did not accede to the demand.  Because CEVA did not receive any type of benefit as a result of its demand, ERISA was not violated.

Ninth Circuit 

Acosta v. City Nat’l Corp., No. 17-55421, __F.3d__, 2019 WL 1770032 (9th Cir. Apr. 23, 2019) (Before: A. Wallace Tashima and Paul J. Watford, Circuit Judges, and Eduardo C. Robreno, District Judge).  “We conclude that the district court’s grant of summary judgment in favor of the DOL as to liability was proper because the “reasonable compensation” exemption under ERISA § 408(c)(2) does not apply to self-dealing by a fiduciary. Therefore, we affirm the district court’s grant of summary judgment as to liability.”  The court also found that City National failed to establish its entitlement to claimed offsets against the damages award for its prohibited self-dealing and affirmed the district court’s grant of summary to the DOL.  However, the court reversed and remanded the award of prejudgment interest which was calculated on the gross amount of the employer’s recordkeeping compensation rather than after deduction of the unopposed offsets.

Tenth Circuit

Ramos, et al. v. Banner Health, et al., No. 15-CV-2556-WJM-NRN, 2019 WL 1777524 (D. Colo. Apr. 23, 2019) (Judge William J. Martinez).  Defendant Jeffrey Slocum & Associates, Inc. (“Slocum”) moved for summary judgment on Plaintiff’s claims that it breached its fiduciary duties related to the management of Defendant Banner Health’s employee 401(k) plan (the “Plan”), which the court granted in part.  With respect to the fiduciary duty to provide prudent investment advice, the court found that no reasonable fact finder could conclude that Slocum was a fiduciary with respect to the “Level 3 Funds” because the term “Investment Fund” in the Investment Policy Statements did not include the Level 3 Funds and the evidence supports that Slocum had no duties with respect to these funds under the Contracts.  But, Plaintiffs “raised sufficient evidence to show a genuine dispute of material fact as to whether the timing and nature of Slocum’s recommendations to replace the Freedom Funds breached Slocum’s fiduciary duty.”  There is also a genuine dispute over the amount of losses related to the Freedom Funds.  The court found that no reasonable finder of fact could conclude that Slocum was a fiduciary with respect to the recordkeeping fees of the Plan.  Plaintiffs have failed to show that they have taken adequate steps to act in a representative capacity so they may only recover their individual Plan losses allegedly attributable to Slocum, but not losses for the Plan as a whole.  Lastly, ERISA’s statute of repose bars Plaintiffs’ claims or losses arising prior to November 9, 2010.

Teets v. Great-W. Life & Annuity Ins. Co., No. 18-1019, __F.3d__, 2019 WL 1760113 (10th Cir. Mar. 27, 2019) (Before Matheson, Bacharach, And McHugh, Circuit Judges).  The court denied Appellant’s Petition for Panel Rehearing and Rehearing En Banc of its decision to affirm the district court’s grant of summary judgment for Great-West, “holding that (1) Great-West was not a fiduciary and (2) Mr. Teets had not adduced sufficient evidence to impose liability on Great-West as a non-fiduciary party in interest.”  The panel did sua sponte make some changes to the opinion to address Appellant’s argument that the panel erroneously concluded that Great-West never imposed a 12-month wait for Class members to receive their savings from the fund.  According to Law360, the panel expanded a quote from the lower court concerning the 12-month delay and added the clause “if exercised” to a statement saying the delay could make Great-West a fiduciary.  The panel also removed the statement that Great-West argued it never imposed the wait as well as a clause that stated Great-West had never done so.

Class Actions

Ninth Circuit

Hurtado v. Rainbow Disposal Co., No. 817CV01605JLSDFM, 2019 WL 1771797 (C.D. Cal. Apr. 22, 2019) (Judge Josephine L. Staton).  The court granted the following Class under Rule 23(b)(1), with Plaintiffs Antonio Hurtado, Christopher Ortega, Jose Quintero, Maritza Quintero, Jorge Urquiza, and Maria Valadez as Class Representatives, and Joseph Barton of Block & Leviton LLP and Joseph A. Creitz of Creitz & Serebin LLP as Class Counsel:

“All persons who were vested participants in the Rainbow Disposal Co., Inc. Employee Stock Ownership Plan as of October 1, 2014 and the beneficiaries of any such participants, excluding Defendants and persons who were named fiduciaries of the Rainbow Disposal Co., Inc. Employee Stock Ownership Plan, who are alleged in this action to have engaged in prohibited transactions or breaches of corporate fiduciary duties, or who had decision-making or administrative authority relating to the administration, modification, funding, or interpretation of the Rainbow Disposal Co., Inc. Employee Stock Ownership Plan, or who had such authority relating to the decision to sell assets of the Rainbow Disposal Co., Inc. Employee Stock Ownership Plan on or about October 1, 2014.”

Disability Benefit Claims

Third Circuit

Baker v. Sun Life and Health Insurance Company, No. 17-2048, __F.App’x__, 2019 WL 1857063 (3d Cir. Apr. 25, 2019) (Before: McKee, Ambro, and Scirica, Circuit Judges).  The court affirmed the district court’s determination that Sun Life’s decision to terminate benefits because Plaintiff’s cognitive impairment did not prevent him from performing the duties of “Any Occupation” was not “without reason.”  “Sun Life relied primarily upon two sources for its decision that Baker was able to perform the duties of any occupation: (1) the conclusions of its experts, Dr. Barr, Dr. Ross, and Dr. Pier, whose testing concluded that Baker was not cognitively impaired; and (2) surveillance which showed Baker working from home, going on-site to conduct business, and meeting with employees behind the counter at a Dunkin’ Donuts location.”  In addition, Sun Life’s vocational evaluation concluded he could work as a business owner, operations manager, and retail store manager.  

Sixth Circuit

Bruton v. American United Life Insurance Co., No. 2:16-CV-928, 2019 WL 1856275 (S.D. Ohio Apr. 25, 2019) (Judge James L. Graham).  The court reviewed Plaintiff’s long-term disability claim denial under de novo review because the Plan did not permit AUL to delegate its discretionary authority to decide claims to an agent (Disability Reinsurance Management Services, Inc.) and there is no evidence that AUL was involved in the claims decision process.  The court agreed with Defendant that Plaintiff did not meet the “Regular Attendance” requirement for total disability because he did not personally visit a physician according to standard medical practice to effectively manage and treat his back pain.  Further, Plaintiff did not receive the most appropriate treatment and care to maximize his medical improvement and aid his return to work.  The court also agreed with Defendant’s experts that Plaintiff was not receiving care by a physician whose specialty or clinical experience was appropriate for his back pain.  His pain was being managed with increasing doses of narcotics by a PCP who was not a specialist in chronic pain.  The court concluded that Plaintiff did not establish by a preponderance of the evidence that he was totally disabled from his regular occupation due to his back condition.  The court also found that Plaintiff was not disabled as a result of the side effects of his various medications. 

Claerhout v. Nexteer Auto. Corp., No. 18-12556, 2019 WL 1779570 (E.D. Mich. Apr. 23, 2019) (Judge Thomas L. Ludington).  Plaintiff alleged that MetLife, the short-term disability (“STD”) plan claims administrator, found that he was disabled and due STD benefits payable by the employer.  MetLife cited to ERISA in its communications to Plaintiff.  The employer had refused to turn over the plan documents to Plaintiff, claiming that they are proprietary, and denied that he was due any STD benefit payments despite MetLife’s determinations.  Plaintiff brought a breach of fiduciary duty claim against the former employer.  Defendant moved to dismiss, claiming that the plan is not an ERISA plan, but a payroll practice, and that Plaintiff cannot state a claim under 29 U.S.C. § 1132(a)(3).  The Magistrate Judge’s Report and Recommendation concluded that there is ambiguity in this case regarding the operation and funding source for the plan, and the relationship between MetLife and Nexteer. These issues cannot be decided on a motion to dismiss.  Also, in relying on Cigna Corp. v. Amara, the Magistrate Judge found that Plaintiff could recover compensatory damages for a breach of fiduciary duty by misrepresentation and recommended denial of Defendant’s motion on that basis.  The district court overruled Defendant’s objections, adopted the R&R, and denied the motion to dismiss.

Ninth Circuit

Odd v. Delta Air Lines, Inc., No. 218CV02523WDKMRW, 2019 WL 1786869 (C.D. Cal. Apr. 23, 2019) (Judge William D. Keller).  In this dispute over long-term disability benefits under the Delta Family Care Disability and Survivorship Plan (“Plan”), the court found that Sedgwick, the third-party administrator with discretionary authority, did not abuse its discretion in denying Plaintiff’s claim under the Plan’s Customary Occupation standard.  The court noted that Plaintiff did not appear to testify at trial and no testimony was offered at trial to provide a foundation for, or basis of admissibility of, any evidence offered by Plaintiff outside of the administrative record.  Defendants argued that the decision should be considered as if brought in the Eleventh Circuit based on the Plan terms.  But, the court noted that “it need not do so because the law of the Eleventh and Ninth Circuits is effectively the same.”  Sedgwick’s decision essentially relied on medical opinions, including an in-person independent evaluation, that discounted Plaintiff’s self-report of headache pain due to lack of supportive clinical findings.  The court also described third-party witness statements as “anecdotal by non-professionals, and not related to any medical or Plan criteria.”


Fifth Circuit

Chavez v. Standard Insurance Company, No. 3:18-CV-2013-N, 2019 WL 1767000 (N.D. Tex. Apr. 22, 2019) (Judge David C. Godbey).  In this dispute over long-term disability benefits, the court denied Plaintiff’s motion to compel Standard to respond to discovery responses aimed at determining the contractual and financial arrangements of its medical consultants who reviewed his claim.  “[B]ecause the Court will apply a de novo standard, such conflict and procedural unreasonableness discovery is unwarranted.”  The court found that Plaintiff is entitled to Standard’s internal claim procedures, which Standard agreed to produce subject to the form protective order in this case.

Tenth Circuit

Regional District Council, et al. v. Mile High Rodbusters, Inc., No. 13-CV-00214-REB-KLM, 2019 WL 1856743 (D. Colo. Apr. 24, 2019) (Magistrate Judge Kristen L. Mix).  In this dispute to collect delinquent fringe benefit contributions, the court denied The Reinforcing Company, Inc.’s Motion to Quash FRCP Rule 45 Subpoena Issued to The Reinforcing Company.  “The Subpoena requests that The Reinforcing Company, at the deposition, produce a series of contract, financial, property, and meeting records.”  The court found that the subpoena request is necessary and relevant to determining whether The Reinforcing Company constitutes Defendant’s alter ego and the subpoena request is not unduly burdensome.

ERISA Preemption

Second Circuit

Handlowitch v. Verizon Commc’ns, Inc., No. 18-CV-617(RJS), 2019 WL 1789708 (S.D.N.Y. Apr. 24, 2019) (Judge Richard J. Sullivan).  The court granted Plaintiff’s motion to remand his lawsuit against his former employer to state court.  Although Plaintiff’s accusation that Defendant discharged him to interfere with his “Rule of 75” benefits under a compensation program for older managers –which can be construed as a colorable claim for benefits pursuant to § 502(a)(1)(B) – his claim does not meet the second prong of the Davila test.  “Here, several of Plaintiff’s claims are largely unrelated to pension plan benefits, and are principally focused on Plaintiff’s damages resulting from Defendant’s age-discrimination in violation of the [New York City Human Rights Law].”  The court found that Plaintiff has sufficiently alleged that Defendant’s actions implicate a legal duty independent of ERISA.

Third Circuit

Associated Builders and Contractors, et al. v. County of Northampton, No. CV 18-2552, __F.Supp.3d__, 2019 WL 1858636 (E.D. Pa. Apr. 25, 2019) (Judge Edward G. Smith).  Plaintiffs allege, among other things, that plaintiffs argue that ERISA preempts contractor ordinances which specify certain criteria that a contractor must satisfy to be eligible to perform work valued over a certain value for four municipalities.   The court agreed with Defendants “that ERISA does not preempt the ordinances because they do not ‘refer to’ or have a ‘connection with’ ERISA-covered plans under the Supreme Court’s holding in California Division of Labor Standards Enforcement v. Dillingham Construction, N.A., Inc., 519 U.S. 316 (1997).”  Though the Third Circuit has yet to decide if the market participant exception applies in the ERISA context, the court agreed with the Ninth Circuit and other courts that have held that ERISA preemption is inapplicable under the market participation exception, and that it would preclude preemption here.  The court denied Defendants discovery into whether Defendants are acting as market participants as opposed to market regulators.  The court dismissed the ERISA claim with prejudice.  

Tenth Circuit

Sutton v. Heartland Payment Systems, LLC, No. 1:18-CV-00723-PJK-KK, 2019 WL 1795536 (D.N.M. Apr. 24, 2019) (Judge Paul Kelly, Jr.).  The court denied Plaintiff’s motion to remand her lawsuit against her former employer and her ex-husband due to complete ERISA preemption of at least one of her claims.  The court determined that the nature of Plaintiff’s “claim is that, as a beneficiary created by a QDRO, she is entitled to additional benefits from an ERISA-governed plan from the plan’s administrator. This is a paradigmatic ERISA claim.”  Plaintiff’s claim for additional benefits from her ERISA plan “strikes at the heart of the remedial scheme defined by § 502.”

Exhaustion of Administrative Remedies

Fourth Circuit

Morgart v. Allscripts Healthcare Sols., Inc., No. 5:18-CV-524-BO, 2019 WL 1810975 (E.D.N.C. Apr. 24, 2019) (Judge Terrence W. Boyle).  In this suit seeking alleged unpaid severance benefits, the court granted Defendants’ motion to dismiss because Plaintiff does not allege that he exhausted administrative remedies before filing suit.  Though Plaintiff claimed to have written a letter to the HR department concerning his severance pay and received a response from Defendants’ corporate counsel, he does not allege that he submitted a claim following the severance plan’s claim and review procedures.

Pension Benefit Claims

Second Circuit

Verdier v. Thalle Construction Company, Inc., No. 18-868-CV, __F.App’x__, 2019 WL 1873418 (2d Cir. Apr. 25, 2019) (Present: Calabresi, Livingston, Lohier, Jr., Circuit Judges).  The court found that Plaintiff is only entitled to 42.5% of his retirement benefit under a deferred compensation agreement, which is the same result reached by the district court, but the Second Circuit rested its decision on a different reading of the agreement.  It concluded that the agreement provides that employees who reach the age of 65 while employed by Thalle are entitled to their full retirement benefits, rejecting Plaintiff’s argument that all employees are entitled to the same retirement benefit regardless of how long they worked at Thalle, so long as they wait until 65 to claim it.

Plan Status

Third Circuit

Weller v. Linde Pension Excess Program, et al., No. CV 16-4254 (JLL), 2019 WL 1789462 (D.N.J. Apr. 24, 2019) (Judge Jose L. Linares).  Defendant Program specifically states that it “is a non-qualified deferred compensation plan” and “is intended to be a plan maintained for a select group of management or highly compensated employees.”  The court found that it is not subject to ERISA because its express purpose is not to provide retirement benefits but rather to avoid certain tax liabilities by deferring income until the following year for currently working highly compensated employees.  Though the Program deferred income, the court could not conclude that the deferral extended until the end of covered employment or beyond.  Unlike the ERISA-governed plan in Tolbert v. RBC Capital Mkts. Corp., 758 F.3d 619 (5th Cir. 2014), the Program did not allow its participants to choose at the outset to defer income until retirement and provide any amount of benefits that would only fully vest after the end of a participant’s employment.

Ninth Circuit

Murray, et al. v. Provident Trust Group, LLC, and Ascensus, LLC, No. 218CV01382MMDGWF, 2019 WL 1779567 (D. Nev. Apr. 23, 2019) (Judge Miranda M. Du).  Plaintiffs seek to represent a class of investors whose self-directed individual retirement accounts (“SDIRAs”) lost money when they invested in the Woodbridge real-estate Ponzi scheme.  The court found that Plaintiffs cite to ERISA throughout their Complaint but there is no allegation the SDIRAs at issue were established or maintained by an employer or employee organization.  Thus, any ERISA claim is dismissed for failure to state a claim.

Pleading Issues & Procedure

Ninth Circuit

Michael v. ConAgra Brands, Inc. Pension Plan for Hourly Prod. Workers, No. 4:18-CV-00277-DCN, 2019 WL 1781406 (D. Idaho Apr. 23, 2019) (Judge David C. Nye).  In this putative class action challenging the application of a 35-year service cap under a pension plan, including two counts alleging breach of fiduciary duty, the court granted Defendants’ motion for a more definite statement since the Complaint does not fairly notify the Defendants of the nature of the claims against them and the demand for the relief sought. 


Second Circuit

Verdier v. Thalle Construction Company, Inc., No. 18-868-CV, __F.App’x__, 2019 WL 1873418 (2d Cir. Apr. 25, 2019) (Present: Calabresi, Livingston, Lohier, Jr., Circuit Judges).  In this dispute over deferred compensation benefits, the court found that the district court did not err by denying Plaintiff’s motion to amend the complaint to add a claim for punitive damages.  The case law is clear that punitive damages are not available under ERISA.

Statute of Limitations

Sixth Circuit

Saginaw Chippewa Indian Tribe of Michigan, el al. v. Blue Cross Blue Shield of Michigan, No. 16-CV-10317, 2019 WL 1876813 (E.D. Mich. Apr. 26, 2019) (Judge Thomas L. Ludington).  “Count I of the Amended Complaint alleges that BCBSM violated its fiduciary duties under ERISA by failing to secure the [Medicare-Like Rates] discount for services obtained by the group members eligible for care purchased by Indian health care programs.”  Defendant alleges that the statute of limitations began to run on July 5, 2007 when the MLR regulation became effective.  The court denied Defendant’s motion to dismiss.  The court noted that the Amended Complaint does not identify any specific date upon which Defendant first breached its fiduciary duty.  The date the MLR regulations were passed is not the same date that Defendant acted imprudently on the Tribe’s behalf.

Ensley v. Whobrey, et al., No. 18-5459, __F.App’x__, 2019 WL 1857121 (6th Cir. Apr. 25, 2019) (Before: Batchelder, Cook, and Kethledge, Circuit Judges).  The court affirmed the district court’s decision finding that Plaintiff’s lawsuit for surviving-spouse pension benefits was time-barred.  Plaintiff’s legal claim began to accrue, at the latest, on May 24, 2010 when her first appeal was denied.  She did not sue until April 25, 2017, which is well past Tennessee’s six-year statute of limitations for contract actions. The court found that there was no basis for equitable tolling.  The statute of limitations is not tolled during the administrative process.  The Fund did not waive any statute-of-limitations defense by not raising it in his December 19, 2016 denial letter.


Seventh Circuit

SCCI Hospitals of America LLC v. Auto-Owners Insurance Company et al., No. 318CV00863PPSMGG, 2019 WL 1785535 (N.D. Ind. Apr. 23, 2019) (Judge Michael G. Gotsch, Sr.).  The plaintiff healthcare provider sued an auto insurance company and employee benefit plan for payment of services rendered to its patient following an auto accident that occurred in Michigan, but where the patient was treated by Plaintiff in Indiana.  The auto insurance company moved to transfer venue to the Western District of Michigan.  The court denied the motion.  It found that jurisdiction and venue are proper in either the Northern District of Indiana or the Western District of Michigan. However, Plaintiff “chose to file its claims in this Court and that choice deserves substantial deference because [Defendant] has not established that a transfer to Michigan would be more convenient for the parties and witnesses or would better serve the interests of justice.” 

Withdrawal Liability & Unpaid Contributions

Second Circuit

Trustees of New York City Dist. Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund, & Apprenticeship, Journeyman Retraining, Educ. & Indus. Fund v. Antonelli Masonry, Inc., No. 18 CIV. 11127 (KPF), 2019 WL 1755413 (S.D.N.Y. Apr. 19, 2019) (Judge Katherine Polk Failla).  The court granted Petitioners’ unopposed motion seeking confirmation of an arbitration award issued under Section 301 of the Taft-Hartley Labor Management Relations Act (the “LMRA”), 29 U.S.C. § 185 and motion to recover the attorney’s fees and costs they have incurred in seeking to confirm the award.

Bricklayers Ins. & Welfare Fund v. McGovern & Co., LLC, No. 17-CV-6067 (SJ) (ST), 2019 WL 1772399 (E.D.N.Y. Apr. 23, 2019) (Judge Sterling Johnson).  “The Court awards damages to Plaintiffs against Defendant McGovern & Co., LLC in the total amount of $41,646.68.1 Defendant Daniel McGovern is jointly and severally liable for damages in the amount of $18,067.84.”