Happy Sunday, ERISA Watchers!  I’m glad to be able to report some good news in the post-Tackett world of retiree medical.  In this week’s notable decision, Kelly v. Honeywell Int’l, Inc., No. 17-2075, __F.3d__, 2019 WL 3673139 (2d Cir. Aug. 7, 2019), the Second Circuit affirmed the district court’s grant of summary judgment in favor of the retirees, and their surviving spouses, whose medical benefits it determined had vested before the expiration of the effects bargaining agreement (“EBA”).  The court also affirmed the district court’s order preliminarily enjoining Honeywell from terminating medical benefits vested after the EBA expired.

All of this started after the Supreme Court’s decision in M&G Polymers USA, LLC v. Tackett, ––– U.S. –––, 135 S. Ct. 926, 190 L.Ed.2d 809 (2015), which prompted Honeywell to review its collective bargaining agreements.  Believing it was justified to terminate the retiree medical coverage it had been providing Plaintiffs for over 15 years, Honeywell announced that it was doing so effective December 31, 2016.  As a result of the various lower court proceedings, however, Honeywell has continued to provide medical coverage to the retirees.

The court analyzed relevant provisions of three documents:  the EBA, the Collective Bargaining Agreement (“CBA”), and the Supplemental Agreement.  The EBA, which expired on June 6, 1997, provides that 

“All past and future retired employees and surviving spouses shall continue to receive … full medical coverage as provided in the … Group Insurance Agreement, as now in effect or as hereafter modified by the parties for the life of the retiree or surviving spouse.”

Id. at *2 (emphasis added).  The CBA, which explicitly incorporates the EBA as a supplemental agreement, contains a durational clause that permits the agreement to renew year to year until written notice to terminate or amend the agreement is given by either parties.  The CBA also incorporates the Supplemental Agreement which provides a description of the details of the group insurance benefits specified in the CBA.  The Supplemental Agreement also has a cancellation clause that states: “If the Collective Bargaining Agreement is canceled in whole or in part benefits hereunder will immediately cease.”

The court determined that the EBA’s language stating that the retires and their surviving spouses shall continue to receive full medical coverage for the life of the retiree or surviving spouse manifests the intent to secure medical coverage for qualifying retirees’ lifetimes.  The court rejected Honeywell’s argument that the cancellation clause in the Supplemental Agreement permits it to terminate Plaintiffs’ vested medical benefits.  This is because the EBA expressly prohibits Honeywell from unilaterally cancelling retiree medical benefits and the Supplemental Agreement does not clearly reserve Honeywell’s rights to amend retiree’s medical benefits.  Further, the cancellation clause language does not operate as a reservation of rights to terminate benefits like the other court decisions which relied on general durational provisions to set the lifespan of welfare benefits.  Because the EBA’s language is unambiguous about its promise of lifetime medical coverage, the contracts’ general durational clauses do not prevent the benefits from vesting.

With respect to retirees who retired after the EBA expired (“Post-Expiration Plaintiffs”), the court found that they are entitled to a preliminary injunction because the EBA is ambiguous as to the term “future retired employees” and the Post-Expiration Plaintiffs have presented a plausible interpretation of the contract provision that entitles them to vested benefits. “Interpreting the term ‘future’ as calling for an indefinite duration that exceeds the duration of the EBA is particularly plausible in light of the anticipatory purpose of the EBA.”  The court considered extrinsic evidence which showed that Honeywell believed the EBA conferred lifetime medical benefits to retirees who retired after the EBA expired.

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

Attorneys’ Fees

First Circuit

Doe v. Harvard Pilgrim Health Care, Inc., No. CV 15-10672, 2019 WL 3573523 (D. Mass. Aug. 6, 2019) (Judge Denise J. Casper).  The court found that Plaintiff is not entitled to attorneys’ fees where the First Circuit asked the district court to reconsider the merits on a record that includes post-filing review documents previously considered by the plan administrator in denying the underlying benefits claim and the court did not find in favor of Plaintiff on the merits.  The court determined that Gross v. Sun Life Assurance Co., 763 F.3d 73 (1st Cir. 2014) does not apply since it involved a “second chance” review of a claim by the plan administrator.  And even if Plaintiff was entitled to fees, the court found that a review of the five-factor test does not balance in favor of an award of fees.

Ninth Circuit

Smith v. Aetna Life Insurance Co., No. 18-CV-1463 JLS (WVG), 2019 WL 3562212, (S.D. Cal. Aug. 6, 2019) (Judge Janis L. Sammartino).  The court overruled Defendant’s objections to Magistrate Judge Gallo’s order denying Aetna’s motion to compel production of Plaintiff’s attorneys’ fee agreement.  The court reviewed the order under the “clearly erroneous” standard and found that Judge Gallo was not clearly erroneous in interpreting Ninth Circuit precedent to find that a contingency agreement is irrelevant to a court’s determination of what is a reasonable fee.  “Pursuant to binding Ninth Circuit precedent, even if the Agreement were to show evidence of windfall, the Agreement is irrelevant, as it cannot be used either way to inform the amount of attorney’s fees.” 

Cheap Easy Online Traffic School v. Peter L. Huntting & Co., Inc., No. 16CV2644-WQH-MSB, 2019 WL 3532079 (S.D. Cal. Aug. 2, 2019) (Judge Hayes).  The court previously found in favor of Defendants on Plaintiff’s various claims alleging that Defendants breached their fiduciary duties in the actuarial and administrative services they provided to Plaintiff’s pension plans.  The court denied Defendants’ motion for reconsideration of the court’s previous denial of attorney’s fees and statutory costs of action under ERISA § 502(g)(1).  “Defendants have provided no authority supporting the conclusion that the Court was required to separately address and rule on the requests for costs and fees pursuant to ERISA. Defendants have identified no substantive difference between costs and fees with respect to the Court’s analysis of the Hummel factors in this case.”

Breach of Fiduciary Duty

Second Circuit

Lutz v. Kaleida Health, et al., No. 1:18-CV-01112 EAW, 2019 WL 3556935 (W.D.N.Y. Aug. 5, 2019) (Judge Elizabeth A. Wolford).  The court denied Defendants’ motion to dismiss on the basis that Vallance and the Retirement Committee are not fiduciaries with respect to the alleged conduct.  The court found that the allegations sufficiently allege that they exercise discretionary authority or control respecting management and/or administration of the Plans.  Plaintiffs allege that Vallance “has numerous responsibilities with respect to the Plans, including to ‘[r]esearch, design, develop, negotiate, communicate and implement new or enhanced benefit programs, including retirement and pension plans,’ and to ‘[m]anage [the] corporate benefits department, including retirement program areas.’”  Plaintiffs allege that the Retirement Committee is the Plan Administrator of the Plans responsible for the management and administration of the Plans, and has discretionary authority to fix omissions, to resolve ambiguities regarding the Plans and to construe terms of the Plans, as well as to approve or disapprove funding vehicles under the plans.  The court also found that Plaintiffs state a breach of fiduciary duty claim where they allege “that the same shares are available to Defendants without any 12b-1 fees, and that Defendants breached their fiduciary duty by instead choosing share class options that cause the Plans to pay any amount of fees.”

Fourth Circuit

Remy v. Lubbock National Bank, No. 5:17-CV-460-FL, 2019 WL 3753194 (E.D.N.C. Aug. 8, 2019) (Judge Louise W. Flanagan).  In this dispute alleging breaches of fiduciary duty with respect to the ESOP’s purchase of stock from the Sharma parties, Defendant filed a third-party complaint against Stout, an individual advisory firm, and the Sharma parties.  The court held that ERISA provides for a right to contribution among co-fiduciaries.  But, it does not provide the right of contribution among fiduciaries and non-fiduciaries.  Since Stout is a nonfiduciary, the court dismissed Lubbock’s claim for contribution with prejudice.  The court also found that the allegations do not support that Swarma was a fiduciary.  He was not a named fiduciary nor did he have any specific fiduciary responsibility with regard to the transaction in dispute. “Additionally, the allegations that Sharma ‘heavily influenced’ the future financial projections, without more, do not raise Lubbock’s right to relief above the speculative level.”

Lee v. Argent Trust Company, No. 5:19-CV-156-BO, 2019 WL 3729721 (E.D.N.C. Aug. 7, 2019) (Judge Terrence W. Boyle).  Plaintiff alleges breach of fiduciary duty related to the Choate ESOP’s purchase of 8 million shares of Choate stock for $198 million.  The court granted Defendants’ motion to dismiss because Plaintiff has not demonstrated that she has suffered a concrete and particularized injury.  Although a valuation subsequent to the purchase showed the shares valued at only $64.8 million, “it is better to conceive of this transaction, as defendants have argued, as being comparable to the purchase of a mortgage-financed house.”  The court explains:

“Like the hypothetical buyer, the Choate ESOP obtained its 8 million shares of Choate at a discount. The purchase price was $198 million and the Choate ESOP took on $198 million in debt to obtain the stock. The expected value of the Choate ESOP’s shares—at least in the short term—would be $0. Instead, the $64.8 million valuation at the end of December 2016 reflects the fact that the Choate ESOP, like the hypothetical buyer, realized an immediate equitable benefit. That benefit has only grown since, as the Choate ESOP’s value was pegged at $107.2 million by the end of 2017. [DE 31-3, p. 25]. In other words, the Choate ESOP actually bought the 8 million Choate shares in December 2016 at a discount (or the shares actually appreciated in value, approximately 33%, in less than a month).”

Because the court found that the ESOP purchased the 8 million shares in 2016 at discount, and there was an immediate equitable benefit, Plaintiff has not alleged an injury sufficient to confer Article III standing.

Pizzella v. Vinoskey, et al., No. 6:16-CV-00062, 2019 WL 3539813 (W.D. Va. Aug. 2, 2019) (Judge Norman K. Moon).  The court conducted a week-long bench trial in this case involving an ESOP and claims that the ESOP fiduciaries violated their fiduciary duties and caused a violation of § 1106(a)(1)(A).  The court held that Evolve Bank and Trust, an independent transactional trustee, violated § 1106(a)(1)(A) by approving a prohibited party-in-interest transaction for more than adequate consideration when it caused the ESOP to purchase Adam Vinoskey’s 51,000 shares of Sentry’s stock for $406.00 per share.  The court concluded that Evolve failed to notice several red flags in the appraisal done by Napier, president of an appraisal company, Capital Analysts, who was retained to conduct annual appraisals of Sentry’s stock.  Evolve also failed to adequately follow through on errors it noticed and discussed with Napier.  Overall, Evolve failed to live up to ERISA’s stringent duties of prudence and loyalty.  The court also determined that Adam Vinoskey is jointly liable for the losses caused by Evolve’s breaches as a knowing participant in a prohibited transaction and as a co-fiduciary of the ESOP. Evolve, Adam Vinoskey, and the Adam Vinoskey Trust are jointly and severally liable for the amount that the ESOP overpaid, or $6,502,500.00.

Sixth Circuit

Disselkamp, et al. v. Norton Healthcare, Inc., et al., No. 3:18-CV-00048-GNS, 2019 WL 3536038 (W.D. Ky. Aug. 2, 2019) (Judge Greg N. Stivers).  Plaintiffs allege that Defendants breached their duty of prudence in their selection of and failure to replace higher cost share classes when identical shares with lower costs were available, and in their selection of and failure to replace the Principal Fixed Income Option as its sole stable value fund.  As to the former, the court denied dismissal of that claim since on a motion to dismiss the court cannot determine whether Defendants prudently investigated the higher share class investments before subjecting Plan participants to those higher fees.  As to the latter, the court also found that Plaintiffs stated a claim since “it is reasonable to conclude that if a predictable investment continues to chronically underperform, one could draw a conclusion that the fiduciaries overseeing that fund have breached their duty.”  The court also denied dismissal of the excessive administrative fee claim, finding that Plaintiffs alleged a cognizable failure to engage in a competitive bidding process.  Here, Plaintiffs also alleged that the average per participant fee was $50 but the fee for the Norton Plan was around $70.  Because Plaintiffs fail to allege that Defendants were engaged in self-dealing, the court dismissed the duty of loyalty claim.  The court also declined to dismiss the failure to diversify, failure to monitor, and failure to supply requested information claims.  The court granted Defendants’ motion to strike Plaintiffs’ jury demand since their prayer contemplates remedies in the form of damages and potential prospective injunctive relief as well.  Lastly, the court denied dismissing the breach of fiduciary duty claims against the Plan’s primary investment advisor since its fiduciary status is a fact-intensive inquiry and should not be decided at the outset.  

Disability Benefit Claims

Ninth Circuit

Speca v. Aetna Life Insurance Company, No. 218CV00835MMDGWF, 2019 WL 3754210 (D. Nev. Aug. 8, 2019) (Judge Miranda M. Du).  On de novo review of Aetna’s short-term disability claim determination, the court remanded the claim to Aetna for further investigation on the basis that Plaintiff was “effectively deprived of an administrative appeal when Defendant initially—and quickly—denied his claim on the procedural ground that he produced no medical records to support his claim.”  Plaintiff submitted medical evidence in support of his claim for the first time on appeal, but this did not allow for a full and fair review of his claim.  “Defendant’s decision to essentially collapse its review of Plaintiff’s claim from two levels into one violates the spirit of both ERISA and the Policy.”  The court also ordered Aetna to consider Plaintiff’s eligibility for LTD benefits.


Sixth Circuit

Detroit Carpenters Fringe Benefit Funds v. Crawford Pile Driving, LLC, No. CV 18-10932, 2019 WL 3729480 (E.D. Mich. Aug. 8, 2019) (Judge Linda V. Parker).  In this dispute over delinquent fringe benefits, the court adopted the Magistrate Judge’s R&R and found Defendants in civil contempt for their failure to comply with the Court’s discovery orders.  The court ordered Defendants to pay $560 in attorneys’ fees incurred by Plaintiffs in filing their Petition for Order to Show Cause and to immediately produce any outstanding discovery “without objection, or face additional, and possibly more severe sanctions.”

ERISA Preemption

Fifth Circuit

S.J. Louis Construction of Texas, Ltd., v. Hernandez, No. 4:19-CV-353-A, 2019 WL 3740625 (N.D. Tex. Aug. 7, 2019) (Judge John McBryde).  Plaintiff brought suit seeking a declaration that the forfeiture provisions of the deferred compensation plan are enforceable and that it properly forfeited defendant’s benefits. Defendant brought counterclaims for unlawful covenant not to compete, fraudulent inducement, and unjust enrichment.  The court found that these counterclaims are preempted by ERISA since they “address matters such as the right to receive benefits that directly affect the relationship among the employer, the plan and its fiduciaries, and the beneficiaries and participants in the plan.”

Seventh Circuit

Smith v. Smith, No. 19-CV-241-WMC, 2019 WL 3537214 (W.D. Wis. Aug. 2, 2019) (Judge William M. Conley).  Plaintiff is the designated beneficiary under an ERISA Plan and the parties dispute her right to receive or use those funds. The court denied Defendants’ motion to dismiss for lack of subject matter jurisdiction, finding that it has jurisdiction over this ERISA matter pursuant to 28 U.S.C. § 2201.  Specifically, there appears to be a good-faith dispute about whether ERISA precludes Defendants from pursuing a claim for a constructive trust over the disbursement of the Plan assets under Wisconsin law. The court reserved on abstention so that the state court can decide how estate assets should be allocated.

Eighth Circuit

Manley v. UnitedHealth Grp. Inc., No. 5:19-CV-05078, 2019 WL 3577683 (W.D. Ark. Aug. 6, 2019) (Judge P.K. Holmes, III).  In this putative class action where Plaintiff alleges that Defendant violated Arkansas law by improperly collecting subrogation or reimbursement from her without first determining whether she had been made whole by a settlement with a third-party, the court granted Plaintiff’s motion for remand to state court.  Defendant argued that her claims are preempted since at least 44 possible class members are participants in ERISA plans.  “Fatal to Defendants’ position, however, is their speculation that these 44 putative class members will eventually be class members in this action. For Defendants’ argument to succeed, the ERISA participants must become part of the action and their ERISA plans must be implicated by the adjudication of Manley’s claims.”  The court found that her claims on behalf of the potential plaintiffs would not fall within the scope of ERISA § 502(a) and are not completely preempted.

Eleventh Circuit

Sarasota Anesthesiologists, P.A. v. Blue Cross & Blue Shield of Fla., Inc., No. 19-CV-1518-T-02JSS, 2019 WL 3683796 (M.D. Fla. Aug. 6, 2019) (Judge William F. Jung).  Plaintiff, a group of anesthesiologists providing services to Sarasota Memorial Hospital, seeks several Florida-law remedies including unjust enrichment and implied contract against Defendant for paying only $40 per value unit.  The court determined that there was no complete ERISA preemption because there is an independent legal duty supporting Plaintiff’s claim and it’s questionable whether Plaintiff could have sued under ERISA.  The court granted Plaintiff’s motion to remand due to lack of federal subject matter jurisdiction.

Medical Benefit Claims

First Circuit

Doe v. Harvard Pilgrim Health Care, Inc., No. CV 15-10672, 2019 WL 3573523 (D. Mass. Aug. 6, 2019) (Judge Denise J. Casper).  In this dispute over residential treatment services, the First Circuit held that the administrative record included documents considered as part of HPHC’s review of the claim after the lawsuit was filed. On remand, the district court concluded that Doe’s residential treatment after February 12, 2013 was not medically necessary.  “The Court’s inquiry requires focusing not on whether Jane took advantage of and/or benefited from the structure and support offered in residential treatment, but, rather, whether such level of care was medically necessary.”  It found that her symptoms could be safely managed in a less restrictive setting and there was not an imminent risk of psychosocial triggers that would undermine a lower level of care.

Second Circuit

Kelly v. Honeywell Int’l, Inc., No. 17-2075, __F.3d__, 2019 WL 3673139 (2d Cir. Aug. 7, 2019) (Before: Cabranes, Pooler, and Droney, Circuit Judges).  See Notable Decision summary above.

Estate of Carol A. Kenyon v. L + M Healthcare Health Reimbursement Account et al., No. 3:19-CV-00093 (JAM), 2019 WL 3574919 (D. Conn. Aug. 5, 2019) (Judge Jeffrey Alker Meyer).  In this dispute over air ambulance services alleging claims under ERISA and Connecticut state law, the court dismissed all claims against Triple S because it did not have the discretion to make it a proper defendant in its capacity as a claims administrator.  The other claims except for the ERISA claims are dismissed against the other defendants based on ERISA preemption.  The court also found that the allegations do not plausibly allege the existence of extraordinary circumstances for a viable estoppel claim under ERISA.  

Third Circuit

Guariglia v. United Food & Commercial Workers Local 464A Union Welfare Service Benefit Fund, No. 18-2224, __F.App’x__, 2019 WL 3564456 (3d Cir. Aug. 6, 2019) (Before: Ambro, Hardiman, and Fuentes, Circuit Judges).  The district court dismissed Plaintiff’s lawsuit seeking payment of medical expenses on the grounds of res judicata.  The Third Circuit affirmed but on completely different grounds.  It explained that a condition to receiving a reimbursement of medical expenses from the Fund was an agreement that Plaintiff would first seek those expenses from third parties who may be liable for them. Plaintiff sued third parties for her injuries but did not seek medical expenses from them.  “In other words, by her own admission, she did not fulfill her promises under the reimbursement agreement and, accordingly, was not entitled to receive payer-of-last-resort benefits under the Plan. In these circumstances, the Fund was clearly within its discretion to deny her claim.”

Ninth Circuit

Devers v. Carpenters Health and Welfare Trust Fund for California, et al., No. 18-CV-04215-EMC, 2019 WL 3718596 (N.D. Cal. Aug. 7, 2019) (Judge Edward M. Chen).  Plaintiff filed suit against Defendants seeking coverage for a prescription drug known as Chemet, which she asserts is the only effective way to treat skin lesions she has from Grover’s disease.  The Trustees denied the claim based on medical necessity.  Several weeks earlier, the Plan’s pharmacy benefit manager, Express Scripts, denied coverage on the basis of off-label use without prior permission but the court did not consider this rationale since the Trustees decided the appeal without considering Express Scripts’ decision.  The court found that “the Trustees’ denial of the appeal did not provide an explanation of the scientific or clinical judgment for the determination as required by law [29 C.F.R. § 2560.503-1(g)(1)(v)(B)] and the SPD.”  The court found that there is nothing in the record to support the Trustees’ decision, thus, it is unreasonable under any standard of review and Plaintiff is entitled to benefits.  The court granted Plaintiff’s motion for judgment.

Pension Benefit Claims

Third Circuit

Bergamatto v. Bd. of Trustees of the NYSA- ILA Pension Fund, No. 18-2811, __F.3d__, 2019 WL 3558980 (3d Cir. Aug. 6, 2019) (Before: Smith, Jordan, and Matey, Circuit Judges).  The court considered two issues:  (1) whether Plaintiff is entitled to benefit accruals under the New York Shipping Association-International Longshoremen’s Association Pension Trust Fund and Plan for the years he worked before October 2004; and (2) whether Ward, an Executive Director, should be viewed as a de facto administrator of the pension plan subject to liability for failing to timely respond to Plaintiff’s correspondence.  The court answered “no” to both questions and affirmed the judgment of the district court.  As to the first issue, the court determined that the plan language is unambiguous.  The 2015 plan states expressly that “[t]he provisions of the Plan in effect during the Participant’s last Year of Credited Service shall be applied to determine the Participant’s right to benefit and the amount thereof.”  The original 2010 plan (the year he last worked) contains the same “last year of credited service” clause and states that workers hired between October 1996 and September 2004 cannot earn benefit accruals for pre-October 2004 work.  As to the second issue, the court rejected the de facto administrator theory for three reasons:  (1) the Supreme Court has taught that courts should avoid reading remedies into ERISA; (2) Section 502(c) is a penal provision that should be narrowly construed; and (3) the Court has consistently construed this statutory penalty narrowly and there is no reason to depart from that approach.

Plan Status

Third Circuit

Dixon, et al. v. Washington, et al., No. CV 18-2838, 2019 WL 3759475 (E.D. Pa. Aug. 7, 2019) (Judge Michael M. Baylson).  Plaintiffs, congregants and former congregants, brought breach of fiduciary duty claims against their former pastor and others.  Defendants argued that there was no ERISA plan because there is no employer-employee relationship present between Plaintiffs and the church; the congregants are “volunteers.”   The court determined that “Plaintiffs’ Second Amended Complaint has not demonstrated that an employee benefit plan was present in this case. Even more fundamentally, there is no employer or employee organization present. If there were, the scholarship program may not constitute a welfare plan that could be covered under ERISA.”

Pleading Issues & Procedure

First Circuit

Tracey, et al. v. Massachusetts Institute of Technology, et al., No. CV 16-11620-NMG, 2019 WL 3755948 (D. Mass. Aug. 8, 2019) (Judge Nathaniel M. Gorton).  The court affirmed the Magistrate Judge’s order striking Plaintiffs’ jury demand.  The court agrees that Amara controls this action because plaintiffs’ breach of fiduciary claim pursuant to § 502(a)(2) is a form of monetary relief against a fiduciary similar to that of a loss resulting from the trustee’s breach of duty.  Thus, the claim is equitable in nature and one for which the Seventh Amendment to the U.S. Constitution does not guarantee a right to a jury trial. Plaintiffs were apparently in possession of most of the documents and deposition testimony needed for their duty of loyalty claim before the end of November, 2018. Nevertheless, plaintiffs waited several more months before filing their motion to amend. Although plaintiffs did not take the deposition of Michael Howard until March, 2019, they were aware of enough colorable evidence to assert their purported claim for breach of the duty of loyalty before that time. Plaintiffs have not, therefore, demonstrated good cause for their failure to seek diligently an amendment to their complaint once they were in possession of the relevant evidence.

Tracey, et al. v. Massachusetts Institute of Technology, et al., No. CV 16-11620-NMG, 2019 WL 3755949 (D. Mass. Aug. 8, 2019) (Judge Nathaniel M. Gorton).  The court denied Plaintiffs’ motion for leave to file a third amended complaint because at 45 days prior to filing motions for summary judgment, it would be unduly prejudicial to Defendants who would be required to rebut an additional legal theory without the opportunity to develop additional facts in their defense.  In addition, the court found that Plaintiffs were in possession of most of the documents and deposition testimony needed for their duty of loyalty claim before the end of November 2018, but they waited several more months before filing their motion to amend.

Third Circuit

Roma Concrete Corp., v. Pension Associates, No. CV 19-1123, 2019 WL 3683561 (E.D. Pa. Aug. 6, 2019) (Judge Michael M. Baylson).  Plaintiff, Roma Concrete Corporation, and Robert Scarduzio, one of Roma’s owners, filed an original complaint against Defendant alleging various state law violations related to Defendant’s reports and accountings for Roma’s Defined Benefit Plan.  Defendant previously moved to dismiss Scarduzio’s claims against it, which the court granted based on ERISA preemption.  It did not move to dismiss Roma’s claims.  Plaintiff filed an amended complaint removing Scarduzio as a plaintiff and Defendant moved to dismiss on the basis that the claims were preempted by ERISA.  The court denied the motion on the basis that “Rule 12(g)(2) procedurally bars Defendant’s successive Motion to Dismiss because Defendant could have easily argued that ERISA preempted both Scarduzio and Roma’s claims in the prior Motion.” 

Ninth Circuit

Wise v. Maximus Federal Services, Inc., et al., No. 18-CV-07454-LHK, 2019 WL 3554376 (N.D. Cal. Aug. 5, 2019) (Judge Lucy H. Koh).  Plaintiff sued Defendants regarding a denied health insurance claim and Defendant Monterey County Hospitality Association Health and Welfare Trust cross-complained against United HealthCare Services for indemnity.  The court granted United’s motion to compel arbitration of the cross-claim.  The court determined that the arbitration agreement encompasses the dispute at issue in the cross-claim.  The court rejected Trust’s argument that as a categorial matter, an ERISA cross-claim is not arbitrable.  The court distinguished the present matter from Munro v. Univ. of S. Cal., 896 F.3d 1088, 1091 (9th Cir. 2018) and Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir. 1984).  “ERISA claims are not subject to special treatment under the FAA.”  The court cannot exercise its discretion to deny a meritorious motion to compel arbitration.

Provider Claims

Tenth Circuit

IHC Health Services, Inc. v. Citibank NMTC Corporation, No. 2:18-CV-695, 2019 WL 3752506 (D. Utah Aug. 8, 2019) (Judge Jill N. Parrish).  The court determined that Plaintiff does not have derivative standing to assert a claim under § 1132(c)(1) because the Assignment of Benefits only assigns to it the right to payment for treatment provided by Plaintiff and the ability to employ all legal remedies to obtain payment.  

Statute of Limitations

Seventh Circuit

Harris v. Central States Pension Fund, No. 1:18-CV-284-TLS, 2019 WL 3562157 (N.D. Ind. Aug. 5, 2019) (Judge Theresa L. Springmann).  The court denied the pro se plaintiff’s motion for reconsideration of the Court’s previous determination that her lawsuit is time-barred because “the statute of limitations began to run when the Plaintiff was notified in September 2004 that she must submit a QDRO in order to receive a portion of her ex-husband’s pension benefits because the September 2004 letter provided her with actual knowledge of the alleged breach of fiduciary duty.”  The court rejected Plaintiff’s argument that the statute of limitations should run from the date that she learned of the 90-day period in the Plan governing when a married participant may change an election made at retirement.  Here, Plaintiff and her husband were divorced at retirement.  Additionally, Plaintiff could have challenged the Court’s legal analysis on a timely direct appeal and Rule 60(b) is not the proper vehicle. 

Withdrawal Liability & Unpaid Contributions

First Circuit

New England Carpenters Cent. Collection Agency v. Whipple Constr. Inc., No. 15-CV-13721-ADB, 2019 WL 3573483 (D. Mass. Aug. 6, 2019) (Judge Burroughs).  The court granted Plaintiffs Renewed Motion for Entry of Default Judgment and awarded $18,071.36, comprised of: (i) $9,195.79 in principal, (ii) $3,043.57 in interest, (iii) $1,839.16 in liquidated damages; (iv) $3,515.00 in attorney’s fees, and, (v) $477.84 in costs. 

Second Circuit

Flanagan, et al. v. Xander Environmental Corp., No. 217CV3382ADSARL, 2019 WL 3557690 (E.D.N.Y. Aug. 5, 2019) (Judge Arthur D. Spatt).  The court adopted the R&R in its entirety and granted Plaintiffs’ motion for default judgment as to defendant Xander.  The court awarded Plaintiffs’ request for $20,588.08 in unpaid contributions; $2,864.53 for interest on the unpaid contributions; $4,117.61 for liquidated damages; reimbursement of the costs of the independent audit in the amount of $ 4,941.00; and $1,750.00 in attorneys’ fees and $730.00 in costs.

Sixth Circuit

Board Of Trustees Of The Ohio Laborers’ Fringe Benefit Programs v. Masonry Contracting Corp., No. 2:18-CV-280, 2019 WL 3543085 (S.D. Ohio Aug. 5, 2019) (Judge Sarah D. Morrison).  The court affirmed and adopted the Magistrate Judge’s R&R recommending that the Court grant Plaintiffs’ pending Motion for Default Judgment and enter judgment against Defendant in the amount of $17,599.00, plus interest from the time of judgment at the rate of 1% per month, and the costs of this action.

Seventh Circuit

Mid Cent. Operating Engineers Health & Welfare Fund v. Zoie, LLC, No. 1:19-CV-1150, 2019 WL 3573660 (C.D. Ill. Aug. 6, 2019) (Judge David W. Stuckel).  The court granted Plaintiff’s Motion for Default Judgment and awarded $34,535.39 in unpaid contributions, liquated damages, and interest and $1,156.00 in attorney fees and court costs.

Eighth Circuit

Johnson v. Allied Excavating, Inc., No. CV 15-3237 (JRT/DTS), 2019 WL 3750896 (D. Minn. Aug. 8, 2019) (Judge John R. Tunheim).  “This case is before the Court on the Funds’ Motion for Summary Judgment on three issues: (1) whether Defendants can maintain a termination of CBA defense; (2) how much, if any, unpaid contributions exist; and (3) whether Mr. Jewison is personally liable for any unpaid contributions.  The Court will grant the Motion in part and deny it in part, finding that Defendants failed to establish contract termination as a matter of law; a genuine dispute of material facts remains as to the amount of unpaid contributions; and Mr. Jewison is personally liable for certain unpaid contributions.”

Raines v. Allied Constr. Servs., Inc., No. 18-CV-1804-JNE-KMM, 2019 WL 3545889 (D. Minn. Aug. 5, 2019) (Magistrate Judge Katherine Menendez).  In this dispute where the Trustees alleged that Allied breached the CBAs by failing to make contributions for subcontracted work, the court granted in part and denied in part Plaintiff’s motion to compel discovery and Defendant’s motion for a protective order.  

Ninth Circuit

Boards of Trustees of Alaska Pipe Trades U.A. Local 367 Health & Sec. Tr. Fund v. Polar Refrig & Rest. Equip, Inc., No. 3:18-CV-00050 JWS, 2019 WL 3604591 (D. Alaska Aug. 5, 2019) (Judge John W. Sedwick).  The court granted the Trust Funds’ motion for summary judgment and ordered Polar to pay $36,450.24 (constituting $23,015.92 in unpaid contributions, $5,174.36 in interest on the missed payments totals, $4,647.46 in liquidated damages, and an audit fee of $3,612.50), plus attorneys’ fees and costs. 

Your ERISA Watch authored by Michelle L. Roberts, Esq., Partner