This week’s notable decision is Card v. Principal Life Insurance Company, No. 18-6095, __F.App’x__, 2019 WL 5618182 (6th Cir. Oct. 31, 2019), where the Sixth Circuit concluded that Principal Life Insurance Company was arbitrary and capricious when it denied Plaintiff Card’s claim for disability benefits.  

Card was a registered licensed practical nurse who worked the night shift providing patient care and supervising nursing assistants.  In February 2013, a specialist in hematology/oncology diagnosed her with chronic lymphocytic leukemia, a type of blood and bone marrow cancer.  Over the following six months, Card began experiencing a worsening of symptoms, including night sweats, fatigue and exhaustion.  Bloodwork showed an increase in Card’s white blood cell count and lymphocytes.  She could not afford to see the specialist again nor afford more bloodwork as recommended by her primary care physician.  Though her doctor recommended disability, Card continued to work with accommodations.  She stopped working in December 2013 due to fatigue and weakness that left her feeling unable to perform her job.  

Card applied for short-term disability (“STD”) and long-term disability (“LTD”) benefits with Principal.  Principal denied her STD claim.  Card again saw her treating doctor who noted that Card’s blookwork looked better because she had not been working and allowing her body to heal.  He opined that due to chronic fatigue Card did not have any work capacity.  Card then moved to Kentucky to live with family since she lost her house to foreclosure.  She appealed the STD denial and informed Principal she was pursuing her LTD claim and the total disability claim (life insurance waiver claim).  Principal requested further medical records.  Once she was able to find doctors in her area who accepted Medicaid patients, Card saw two specialists, neither of whom opined in detail about Card’s functionality, limitations or restrictions, except to note that Card was at ECOG (Eastern Cooperative Oncology Group) grade 1.  

Principal upheld its STD claim denial upon finding that the information did not support Card’s impairment from her own job.  Principal denied her LTD claim because it found that she was not under the regular and appropriate care of a physician and also did not meet the definition of disability.  Card appealed the LTD denial, which Principal upheld.  However, the final denial did not cite to the lack of regular and appropriate care as a reason for denial.  The district court granted summary judgment to Principal.  Card appealed.

On the standard of review, the Sixth Circuit agreed with the district court that the proper standard of review is the deferential “arbitrary-and-capricious” standard of review.  First, the plan language explicitly grants Principal with discretion to determine eligibility for benefits.  Second, even if Principal may grant “exceptions” and pay benefits at the request of employers in certain circumstances, this does not require de novo review of the claims decision.  Card did not present any evidence that Principal is not the final decisionmaker.  Third, Principal’s conflict of interest is a factor in the review of the denial of benefits but there no basis here to find that the conflict had an adverse effect on Principal’s denial of benefits.

On the merits of the claim, the Sixth Circuit disagreed with the district court.  The court noted that Card had the burden to satisfy three different definitions of disability.  It found that Principal did not provide a reasoned explanation for rejecting Card’s treating physicians’ multiple opinions about her inability to work as a nurse based on the specific physical limitations they imposed.  For the STD claim, Principal did not consider Card’s physically demanding duties as a charge nurse or her ability to perform them.  The final denial did not mention what exertional level of full-time work Card could maintain, the actual duties of her job (which Principal previously classified as “heavy” work), or why it was rejecting her doctor’s specific restrictions despite that it had asked for them.  

Similarly, for the LTD and total disability claims, Principal erred by failing to relate Card’s condition to her expected job duties.  Specifically, Principal did not properly consider the strength level needed for Card to fulfill her duties as a charge nurse.  It was not clear to the court whether Principal’s medical reviewers had access to Card’s job duties or the normal duties of a licensed practical nurse.  “None of the reviewers critically assessed plaintiff’s specific health issue, with its attendant fatigue and low resistance to infection, against the actual demands of her job and the profession.”  Instead, Principal relied solely on Card’s lab reports.  Because the Court could not determine on the record whether Card is entitled to these benefits, it remanded the matter to Principal Life for further review.

Judge Larsen dissented.

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

Breach of Fiduciary Duty

First Circuit

In Re: G.E. ERISA Litigation, No. 17-cv-12123, 2019 WL 5592864 (D. Mass. Oct. 30, 2019) (Judge Indira Talwani). Plaintiffs brought suit under ERISA § 406(b)(1), which prohibits fiduciaries with respect to the Plan from “deal[ing] with the assets of the plan in his own interest or for his own account,” and ERISA § 406(b)(3), which prohibits a fiduciary from “receiv[ing] any consideration for his own personal account from any party dealing with such plan in connection with a transaction involving the assets of the plan.” Although ERISA does not contain a definition of “plan assets,” the First Circuit has found “persuasive” the Department of Labor’s formulation (also adopted by other Circuits) that “‘assets of a plan generally are to be identified on the basis of ordinary notions of property rights under non-ERISA law….’” Plaintiffs did not simply allege that Defendants received financial benefit from the fees they took for administering proprietary funds available under the Plan. Rather, Plaintiffs claim that as the proprietary funds failed to perform and as other outside investors left the funds, the number of Plan participants in the funds continued to increase. Because Plaintiffs’ claim is broader and also encompasses the shares of the funds that financially benefitted Defendants, Plaintiffs’ argument would not be precluded. Plaintiffs’ claim would properly fall under ERISA § 406(b)(1).

Ninth Circuit

Brandon v. Health Net Health Plan of Oregon, Inc., No. 3:19-cv-00356, 2019 WL 5712730  (D. Or. Oct. 29, 2019) (Judge John V. Acosta). In Findings and Recommendations, the court denied Health Net Health Plan of Oregon’s (“HNOR”) motion to dismiss Plaintiff’s claim for breach of fiduciary duty and also held that Plaintiff had adequately plead a plausible claim for surcharge. Plaintiff alleged that HNOR breached its fiduciary duties under ERISA when Plaintiff and his wife contacted a HNOR customer service representative to determine the total amount of financial responsibility—out-of-pocket-maximums (OOP max) and maximum allowable amount (MAA)—Plaintiff would have to pay for his out-of-network surgery. During the telephone call, the HNOR representative confirmed Plaintiff’s understanding of the meaning of OOP max but did not explain the meaning or effect of the MAA on Plaintiff’s bill for out-of-network services. At the conclusion of the call, Plaintiff believed the maximum possible bill for his out-of-network surgery was the OOP max of $4,000 and not a total bill of $71,868.03 for out-of-network services exceeding the MAA.  Although Plaintiff was covered under a self-funded health plan, the Court held that Plaintiff sufficiently plead that HNOR was a “functional fiduciary” and that the statements (or lack of clarifying and complete statements) of a customer service representative could give rise to a breach of fiduciary duty especially when there is ambiguity in applicable plan materials. The Court observed that the Plaintiff’s Member Handbook and Group Contract invited plan participants to call the customer care center should they have any questions. The Court also noted that the Handbook and Contract contained definitions and provisions pertaining to OOP max and MAA that were sufficiently complex and lacked the clarity that would foreclose a plausible theory of fiduciary breach. As such, the Court held that Plaintiff’s request for monetary relief does not automatically render such relief legal rather than equitable and, therefore, Plaintiff adequately plead a plausible claim for surcharge under 29 U.S.C. ¶ 1132(a)(3).  

Disability Benefit Claims

Second Circuit

Coyle v. New York City District Council of Carpenters Pension Fund, No. 19 Civ. 5000 (LGS), 2019 WL 5551862 (SDNY Oct. 28, 2019) (Judge Lorna G. Schofield).  On an arbitrary and capricious standard of review, the Court found that the pro se Plaintiff was not entitled to a disability pension because his total and permanent disability commenced after he was no longer an “active participant” in the Fund.  An “active participant” as defined in the New York District Council of Carpenters Pension Plan is someone who has worked in excess of 870 hours in two consecutive years, and who has not had a one-year break in service. Plaintiff submitted an application for disability pension in August 2017 after becoming totally and permanently disabled due to a back condition in April 2015. Plaintiff, however, did not dispute that effective January 1, 2014, he was no longer an “active participant” under the Plan because he did not work more than 870 hours in two consecutive years and had a one-year break in service in 2013.  Although the Court was sympathetic to the fact that Plaintiff’s back problems “go way back to the 2000s or longer,” the Court held that the Fund Office and Appeals Committee of the Board of Trustees’ determination that Plaintiff was ineligible for a disability pension because his total and permanent disability commenced after he ceased being an active participant in the Fund was not arbitrary and capricious. The Court granted the Fund’s unopposed motion to dismiss.

Sixth Circuit

Card v. Principal Life Insurance Company, No. 18-6095, __F.App’x__, 2019 WL 5618182 (6th Cir. Oct. 31, 2019) (Before: COLE, Chief Judge; MERRITT and LARSEN, Circuit Judges).  See Notable Decision summary above.

Seventh Circuit

Mathews v. The Northwestern Mutual Life Insurance Company, 18-cv-046-wmc, 2019 WL 5578333 (W.D. Wis. Oct. 29, 2019) (Judge William M. Conley). On de novo review, the court found that Plaintiff is entitled to short-term disability benefits but denied her motion for judgment seeking long-term disability (LTD) benefits on the basis that Northwestern Mutual (NWM) had not yet reviewed a claim for LTD benefits, thus the court could not award them.  NWM denied STD benefits based on its conclusion that Plaintiff was not disabled from her Own Occupation, however NWM had considered the wrong occupation – that of Finishing Inspector, as opposed to Plaintiff’s actual occupation, Material Handler. The court determined that NWM should have considered whether Plaintiff was disabled from the Material Duties of the regular and ordinary Material Handler job (as opposed to the modified job that her employer had briefly provided to accommodate her but that was no longer available). Because the standard of review is de novo, the court did not remand to NWM for a determination.  The court concluded that the medical record supports a finding by the preponderance of the evidence that Plaintiff’s chronic pain, both back and upper right extremity, impeded her physical abilities such that she could not perform the material duties of the actual Material Handler job.  The court granted Plaintiff’s motion for judgment and awarded STD benefits for the thirteen-week period following her termination.  The court found that Plaintiff was now entitled to apply for LTD benefits for NWM’s review.

Ninth Circuit

Clay v. AT&T Umbrella Benefit Plan No. 3, No. 217CV00749KJMKJNPS, 2019 WL 5682825 (E.D. Cal. Nov. 1, 2019) (Magistrate Judge Kendall J. Newman).  In Findings and Recommendations, the court applied abuse of discretion review without consideration of alleged conflicts of interest because the Plan is self-funded by an employee trust, rather than Sedgwick (the entity that decided the claim), and “[u]nder the law, Sedgwick has no conflict of interest when it denied Plaintiff’s claim for STD benefits.”  The court concluded that Sedgwick did not abuse its discretion when it denied Plaintiff’s claim for short-term disability benefits after June 11, 2017 because Plaintiff did not submit satisfactory medical evidence of his disability from his physicians.  The court also found that Defendant did not violate ERISA by failing to provide Plaintiff with information regarding his claim.  Nothing in the record supports that Plaintiff ever requested information regarding the Plan from Defendant.

ERISA Preemption

Eighth Circuit

Schicker v. Lincoln Financial Group., No. 8:19-CV-295, 2019 WL 5579530 (D. Neb. Oct. 29, 2019) (Judge Brian C. Buescher).  In this case arising out of a dispute regarding the proper life insurance beneficiary provided under a group life insurance policy, Plaintiff filed suit alleging tortious interference as well as violations under Nebraska’s Unfair Insurance Trade Practices Act based on alleged deceptive statements made by Lincoln during the claim process. Defendant removed to federal court and filed a Motion to Dismiss, claiming his claims were preempted by ERISA and thus failed to state a claim upon which relief can be granted.  In finding for Lincoln, the Court first concluded that this case did not present an exception to the rule that tortious-interference claims involving benefit plans are generally preempted by ERISA, as the cases finding state-law actions were not preempted by ERISA tend to involve only tangential connections to employee benefit plans. As such, because Plaintiff’s claim for tortious inference “relates to” an ERISA plan, it is preempted under 29 U.S.C. §1144(a). The court dismissed the claim under the Nebraska Unfair Insurance Trade Practices Act because it does not afford Plaintiff a right of action at all; rather, the statute vests powers and duties in the State Director of Insurance, who is in turn authorized to enjoin and penalize certain prohibited acts. 

Life Insurance & AD&D Benefit Claims

Ninth Circuit

National Insurance Crime Bureau v. Wagner, et. al., No. C19-00730, 2019 WL 5592862(W.D. Wash. Octo 30, 2019) (Judge James L. Robart).  In this action regarding the identification of the proper beneficiary of an Employee Savings Plan, Plaintiff National Insurance Crime Bureau moved for interpleader and to be dismissed from the case. The Court explained that once it is determined that the requirements for interpleader are met, disinterested stakeholders may be dismissed from the action. It also noted that the court has the power to delay or deny the discharge of the stakeholder if the interpleader action was commenced in bad faith; however it simultaneously cautioned that this exception to the interpleader rule is a narrow one. In this case, the court determined that interpleader was proper under Rule 22, dismissing Defendant’s argument that depositing the benefits into the court registry creates a taxable event. The court highlighted that deposit into the Court’s account is not a requirement of interpleader, and that in this case it would allow NICB to keep the money in its “current account” to avoid such a taxable event, and simultaneously moot Defendant’s argument. The Court refused to release NICB from the action, however, as Defendant expressed an intent to oppose the interpleader motion, which she was unable to do prior to this decision as a result of other outstanding procedural issues. The Court stated it could reevaluate NICB’s request for dismissal and fees after Defendant filed her opposition.

Eleventh Circuit

K.S.B. & K.T.B. ex rel. Nyisha Harris, v. Securian Life In. Co., No. 3:18-CV-146 (CDL), 2019 WL 5596410 (M.D. Ga. Oct. 29, 2019) (Judge Clay D. Land).  Plan participant Bennet died without filling out a beneficiary designation for his life insurance benefits under his employer-sponsored plan insured by Securian. Securian paid the benefits to Mr. Bennet’s parents, unaware Mr. Bennet had two surviving children. When the children’s attorney made a claim for the benefits, Securian responded that the benefits had already been paid and the claim was closed. Securian included with its response a document named “Appeal Rights: The Employee Retirement Income Security Act” that advised “[y]ou have the right to appeal an adverse benefit determination…” The minor children then filed a lawsuit against Securian without appealing. The court found that exhaustion was not required because it would have been futile (“Seeking reconsideration of a done deal was pointless”) and the document did not state the appeal was mandatory. The court found under the terms of the policy, the decedent’s children were the rightful beneficiaries and were entitled to the life insurance benefits. Partial summary judgment granted in favor of Plaintiffs.

Medical Benefit Claims

Sixth Circuit

Emch v. Community Insurance Co. d/b/a Anthem Blue Cross and Blue Shield, No. 1:17-CV-00856, 2019 WL 5538196 (S.D. Ohio Oct. 25, 2019) (Judge Michael R. Barrett). The court denied Defendant’s motion to dismiss because Plaintiff sufficiently pled that the Ohio Parity Act was incorporated into the terms of the plan. The Ohio Parity Act requires health insurance policies to cover the treatment of biologically based mental illnesses “on the same terms and condition as, and shall provide benefits no less extensive than” physical diseases and disorders. The court agreed with Plaintiff that the language of the Ohio Parity Act is incorporated into the plan itself which provides that Plaintiff may take action under ERISA to recover benefits, enforce his rights, clarify rights to future benefits, enjoin any act which violates the plan, or obtain other appropriate equitable relief. 

Pension Benefit Claims

Ninth Circuit

Black v. Greater Bay Bancorp Exec. Supplement Comp. Benefits Plan, et al., No. 18-15296, No. 18-15730, __F.App’x.__, 2019 WL 5541496 (9th Cir. October 28, 2019) (Before W. Fletcher and Paez, Circuit Judges, and Choe-Groves, Judge for the United States Court of International Trade, sitting by designation). A dispute arose over the amount of retirement benefits due to three former executive-level employees of Greater Bay Bancorp under a benefits plan administered by its successor, Wells Fargo Bank. The employee plaintiffs contend they are entitled to a guaranteed death benefit. The plan agreement states that the plan provides no death benefits except for any supplemental benefits provided through the secular trusts. The secular trust agreements, which are incorporated into the plan, do not mention any death benefits. Because the plan was unambiguous, and it contained no guaranteed death benefit, the court upheld a grant of summary judgment in favor of Defendants. The court reached this holding based on the law that summary plan documents and other extrinsic evidence cannot add benefits that appear nowhere in the plan documents themselves. 

Fifth Circuit

Fracalossi v. MoneyGram Pension Plan, No. 3:17-CV-00336-X, 2019 WL 5578561 (N.D. Tex. Oct. 29, 2019) (Judge Brantley Starr).  Plaintiff Fracalossi alleged Defendants Viad and Moneygram breached their fiduciary duties under ERISA by failing to notify her of material changes to her pension plan. While Fracalossi was an employee of Viad, Viad signed an amendment ending accrual of early retirement benefits for its employees. Shortly thereafter, Viad spun off its payment services into a separate entity, Moneygram, and Moneygram became the plan administrator and fiduciary.  Section 29 U.S.C. § 1024(b)(1)(B) requires plan fiduciaries to disclose material changes to its beneficiaries within 210 days after the end of the plan year in which the changes are adopted.  In this case, Viad had transferred the plan to Moneygram 15 days after the amendment was executed, so Viad was no longer a fiduciary.  The court dismissed the claims against Viad with prejudice because Fracalossi had “pled her way out of court” by pleading that Viad breached a duty that ERISA imposed on Viad’s successor.  With regard to Moneygram, the court considered Fracalossi’s allegation that she was harmed by losing opportunity to continue working and her demand for a remedy in the form of benefits or their money equivalent.  The court cited Supreme Court and Fifth Circuit precedents for the principle that “harm suffered and relief sought due to fiduciary breach must be identical.”  The court also noted that of the remedies ERISA affords, the chance to keep working is not one of them.  Because Fracalossi wanted a remedy that was not redressing the harm she claimed, the court determined that she failed to state a claim upon which relief can be granted and dismissed the claim against Moneygram without prejudice.

Plan Status

Second Circuit

Wegmann v. Young Adult Institute, Inc., et al., No. 15 Civ. 3815 (KPF), 2019 WL 5682666 (S.D.N.Y. Oct. 31, 2019) (Judge Katherine Polk Failla). The court previously determined that YAI’s Board of Trustees (the “Board”) was arbitrary and capricious when it denied Plaintiff’s claim for SERP benefits; specifically, when the Board found that Plaintiff could not be admitted to the SERP because she had not received Board approval because the SERP did not contain that requirement.  This decision comes from the court’s bench trial on Plaintiff’s eligibility for SERP benefits.  The court determined that Plaintiff was a participant in the SERP as of July 1, 2006 because the Board’s Executive Compensation Committee’s recommendation to limit benefit accruals under the SERP to YAI’s top five executives did not preclude Plaintiff from vesting in the SERP in 2006.  Of particular importance in informing the court’s decision was a decision in Levy v. Young Adult Institute, Inc., 744 F.App’x 12 (2d Cir. 2018) holding that the Board’s actions in 2005 (when YAI’s compensation committee recommended reductions to the plan’s annuity in order to “better align” YAI with industry practice), were invalid because the Board did not follow the plan’s specific amendment procedures.  With respect to Defendants’ affirmative defenses—statute of limitations, laches, equitable estoppel—which relate to Plaintiff’s understanding of her status as an actual or potential participant in the SERP, the court found that:  (1) Plaintiff satisfied the 1985 SERP’s eligibility criteria and believed board approval was necessary; (2) Plaintiff believed that Board approval was certain to be granted; (3) the 2008 Amendment to the SERP did not change Plaintiff’s believe that Board approval was certain; and (4) Plaintiff was not told she would not be in the SERP until 2014.  For these reasons, the Court rejected Defendants’ contentions that the claim was barred by statute of limitations, laches or equitable estoppel. 

Pleading Issues & Procedure

Sixth Circuit

Emch v. Community Insurance Co. d/b/a Anthem Blue Cross and Blue Shield, No. 1:17-CV-00856, 2019 WL 5538196 (S.D. Ohio Oct. 25, 2019) (Judge Michael R. Barrett).  The court granted Defendant’s motion to strike Plaintiff’s jury demand because claims under sections 502(a)(1)(B) and 502(a)(3) are equitable in nature, even if intertwined with equitable relief.

Ninth Circuit

Meyer v. UnitedHealthCare Insurance Company, No. CV 18-173-M-DLC, 2019 WL 5550338 (D. Mont. Oct. 28, 2019) (Chief Judge Dana L. Christensen). Plaintiff initially brought suit alleging claims against Defendant under ERISA. Defendant’s counsel told Plaintiff she believed that the group policies were not subject to ERISA, and Plaintiff agreed to dismiss his case without prejudice. He thereafter alleged three state law claims, and United moved for judgment on the pleadings arguing that ERISA governed the policies at issue and therefore, Plaintiff’s state law claims were preempted, and the court agreed. Plaintiff moved to reconsider the preemption issue, arguing that his failure to address it in his response brief was excusable neglect based on Defendant’s misrepresentation, misconduct, and fraud. The court analyzed the Pioneer-Briones factors and granted relief because it was unlikely that United would be prejudiced, and the length of delay was reasonable because Plaintiff filed his motion less than wo weeks after the court dismissed his case. While the court concluded that the reason for Plaintiff’s delay weighed against him, it did not show bad faith, and the lack of any prejudice to Defendant or to the interests of efficient judicial administration, combined with the good faith of Plaintiff, weighed strongly in favor of permitting reconsideration the merits of the preemption issue.

Retaliation Claims

Sixth Circuit

Spangler v. E. Kentucky Power Coop., Inc., No. 19-5034, __F.App’x.__, 2019 WL 5549483 (6th Cir. Oct. 28, 2019) (Before Guy, Bush, and Murphy, Circuit Judges). Plaintiff alleged a violation of §510, claiming that Defendant terminated her employment for the purpose of interfering with the attainment of her rights as a beneficiary of her deceased husband’s benefits, who was also Defendant’s employee until his death. Factually, Plaintiff alleged that she was terminated during a meeting related to death benefits. The district court dismissed Plaintiff’s claim, and the Sixth Circuit affirmed. The court explained that Plaintiff must prove that the adverse action (her termination) was taken with the specific intent of violating ERISA, and that in certain circumstances, temporal proximity between employer’s actions and the date of eligibility for benefits could support an inference that the action was taken with the intent of interfering with ERISA benefits. Here, Plaintiff did not allege that her discharge prevented her from receiving spousal death benefits, nor did she allege that her rights to those benefits depended on her own employment. The mere fact that she was terminated during a meeting about those benefits does not support an inference that the action was taken with the intent to interfere with her rights as beneficiary.

Williams v. Graphic Packaging Int’l, Inc., No. 18-5485, __F.App’x__, 2019 WL 5618238 (6th Cir. Oct. 31, 2019) (BEFORE: GIBBONS, ROGERS, and STRANCH, Circuit Judges). Williams was terminated from his job shortly after he returned from a medical leave of absence for using “manipulative and coercive tactics to control his employees” in violation of the company’s Core Values. Williams claimed his termination violated ERISA by discriminating against him for taking a medical leave of absence.  ERISA prohibits employers from terminating employees who choose to exercise a benefit to which they are entitled under their benefit plan. See, 29 U.S.C. § 1140. The 6th Circuit affirmed the decision of the district court that the employer’s stated reason for firing Williams was supported by the facts and Williams had not supported his burden of proving his employer had intended to interfere with his exercise of ERISA benefits.

Statute of Limitations

First Circuit

In Re: G.E. ERISA Litigation, No. 17-cv-12123, 2019 WL 5592864 (D. Mass. Oct. 30, 2019) (Judge Indira Talwani). This putative class action is brought by participants in a 401(k) plan against institutional and individual defendants alleging breaches of fiduciary duties and prohibited transactions in violation of ERISA. Eligible employees of GE and participating affiliates can participate in GE’s 401(k) Plan, a/k/a the GE Retirement Savings Plan (“the Plan”) by investing up to 30% of their eligible earnings in any of a number of investment options within the Plan. Plaintiffs allege that Defendants used the Plan participants to offset an investor exodus from the underperforming GE Funds despite the fact that the Plan participants could have been better served by investment options from unaffiliated companies that were cheaper and better performing. All of the Plan’s actively managed funds were managed and sponsored by GE’s wholly-owned subsidiary, GE Asset Management, until July 1, 2016, when GE sold the subsidiary to State Street for a reported $485 million. Plaintiffs allege that GE retained the poorly performing proprietary funds as a constant source of fees and to help inflate the market value of GE Asset Management prior to its sale to State Street. Defendants argue these claims are barred by the statute of limitations pursuant to 29 U.S.C. § 1113(2), which prohibits suits brought three years after the plaintiff had actual knowledge of the breach or violation. The court noted that the fact that these were proprietary funds would have been immediately known to Plaintiffs. Thus, to the extent that the basis of Plaintiffs’ claim is that Defendants only offered proprietary funds as the sole actively managed investment options of the Plan, Plaintiffs had actual knowledge the day Plaintiffs elected their Plan options, and the claims were barred by the statute of limitations. Although Plaintiffs could have easily discerned that the funds were proprietary funds, and even that they were paying fees to GE Asset Management, the question of whether Plaintiffs had actual knowledge of high costs and poor performance is much more complex. There are no facts in the complaint to suggest that Plaintiffs had actual knowledge that their funds were performing poorer and their fees cost higher compared to other funds. As such, because the sale to State Street occurred less than three years before the suit, these claims were not barred by the statute of limitations. 

Fifth Circuit

Jackson v. AT&T Ret. Sav. Plan, No. 6:19-CV-00116, 2019 WL 5617029 (W.D. La. Oct. 30, 2019) (Judge Michael J. Juneau). The district court adopted the Magistrate Judge’s report and recommendations to deny Defendant’s motion to dismiss but with additional clarification regarding statute of limitations for breach of fiduciary duty claims. The court found that the exception to the six-year time period for statute of limitations in the case of fraud or concealment did not apply because Plaintiff did not sufficient plead a claim for fraud. Although the Fifth Circuit has not addressed whether a continuing violation applies to ERISA statute of limitations, the dicta in the circuit weighs against applying such a theory. Plaintiff may amend the complaint to allege facts regarding whether she had actual knowledge and Defendant may address the issue of timeliness after the complaint is amended.


Fourth Circuit

Manuel-Clark v. Manpowergroup Short-Term Disability Plan, No. 5:19-CV-147-BO, 2019 WL 5558406 (E.D.N.C. Oct. 28, 2019) (Judge Terrence W. Boyle). Plaintiff sued in North Carolina for disability benefits under ERISA. However, the plan contained a clause that stated, “venue and forum shall only be proper in a federal court located in Milwaukee, Wisconsin.” The court granted the defendant’s motion to transfer to the Eastern District of Wisconsin, finding that ERISA’s forum selection statute, 29 U.S.C. § 1132(e)(2), does not preempt or invalidate forum selection provisions in benefit plans. The court further rejected the plaintiff’s argument that the provision was unenforceable because she was not informed of it in the denial of her claim, finding that the plan documents were available and not hidden or secret.

Fifth Circuit

Racca v. The Prudential Insurance Company of America, No. CV 19-12120, 2019 WL 5634600 (E.D. La. Oct. 31, 2019) (Judge Sarah S. Vance).  In this dispute over disability benefits, the court granted Prudential’s motion to transfer the matter to the Western District of Louisiana.  Consideration of the 28 U.S.C. § 1404(a) factors supports transfer and Plaintiff also consents to transfer.  Plaintiff could have filed suit in the Western District since she lived in that District and worked for a company in that District at the time Prudential terminated her claim. “The district where the plaintiff’s pension benefits were received or denied is the district where the breach took place.”

Withdrawal Liability & Unpaid Contributions

Second Circuit

Trustees of Leather Goods, Handbags, & Novelty Workers’ Union Local 1 Joint Ret. Fund v. New York Sewing Machine, Inc., No. 19-CV-1717(MKB)(LB), 2019 WL 5550622 (E.D.N.Y. Oct. 28, 2019) (Judge Margo K. Brodie). Plaintiff, a multi-employer plan under ERISA, sued sewing machine company for withdrawal liability under ERISA. The court adopted in its entirety a magistrate judge’s findings that the company owed $782,948 in outstanding withdrawal liability, as well as interest, liquidated damages, and attorneys’ fees.

Trustees for the Mason Tenders District Council Welfare Fund, Pension Fund, Annuity Fund, and Training Program Fund, et al. v. Super, LLC, No. 19 Civ. 5364, 2019 WL 5538032 (S.D.N.Y. October 25, 2019) (Judge Katherine Polk Failla).  The court granted Petitioners’ motion for summary judgment on their petition to confirm an arbitration award granted in favor of Petitioners. The court found that, given its deferential posture in reviewing arbitral awards under the LMRA (Labor Management Relations Act), that the Petitioners had adequately supported their petition. Specifically, that the Collective Bargaining Agreement and the Funds’ Trust Agreements required Respondent to pay benefit contributions and dues to the Funds which, Petitioners determined and proved Respondents had not paid. 

Fourth Circuit

Int’l Painters & Allied Trades Indus. Pension Fund v. Royal Int’l Drywall & Decorating, Inc., No. SAG-18-3648, 2019 WL 5576961 (D. Md. Oct. 29, 2019) (Judge Stephanie A. Gallagher).  Plaintiffs alleged that Defendants failed to pay incurred withdrawal lability to the pension fund.  The court denied Plaintiffs’ Motion for Default Judgment because of deficiencies in the complaint which did not permit the court to find that Plaintiffs’ unchallenged factual assertions constituted a valid cause of action.   

International Painters and Allied Trades Industry Pension Fund, et al. v. Madison Coatings Co., Inc., No. SAG-17-1559, 2019 WL 5625759 (D. Md. Oct. 31, 2019) (Judge Stephanie A. Gallagher).  The court granted summary judgment to Plaintiffs and awarded: $36,125.26 in delinquent contributions; 20% of that amount in liquidated damages, or $7,225.05; interest calculated in accordance with the CBA’s terms; and audit costs in the amount of $4,093.90.

Seventh Circuit

Operating Engineers Local 139 Health Benefit Fund, et al. v. Dane County Contracting LLC, No. 19-CV-230-JPS, 2019 WL 5595172 (E.D. Wis. Oct. 30, 2019) (Judge J.P. Stadtmueller).  The court found in favor of Plaintiffs, various union representatives and entities, against Defendant, for contributions and various penalties as follows:  1) $215,680.25 for delinquent contributions, interest, and liquidated damages in favor to Plaintiff Central Pension Fund of the International Union of Operating Engineers and Participating Employers and its CEO Michael Crabtree; 2) $173,969.69 for delinquent contributions, interest, and liquidated damages in favor of Plaintiff Operating Engineers Local 139 Health Benefit Fund and its Trustee Terrance McGowan; 3) $22,649.52 for delinquent contributions, interest, and liquidated damages in favor of Plaintiff Wisconsin Operating Engineers Skill Improvement and Apprenticeship Fund and its Trustee Terrance McGowan; 4) $7,146.96 for delinquent contributions, interest, and liquidated damages in favor of Plaintiff Joint Labor Management Work Preservation Fund and its Trustee Terrance McGowan; 5) $16,725.37 for administrative dues in favor of Plaintiff International Union of Operating Engineers Local 139; and 6) $6,565.75 in attorneys’ fees and costs.  The court approved entry of judgment in Plaintiffs’ favor for a total sum of $442,737.54, together with post-judgment interest.

Ninth Circuit

Board of Directors of the Motion Picture Industry Pension Plan et al. v. March On Productions. Inc., No. 2:19-CV-05885-CAS-JC, 2019 WL 5595045 (C.D. Cal. Oct. 29, 2019) (Judge Christina A. Snyder).  The court granted Plaintiffs’ motion for default judgment and awarded Plaintiffs a total amount of $8,766.70 ($6,735.49 in unpaid contributions, $252.86 in interest on those unpaid contributions, $1,347.10 in liquidated damages, and $431.25 in audit costs is appropriate).  The court also awarded plaintiffs $3,500.00 in attorneys’ fees and $667.00 in costs.

Trustees of The Operating Engineers Pension Trust et al. v. Smith-Emery Co., No. 219CV04058CASAFM, 2019 WL 5595047 (C.D. Cal. Oct. 28, 2019) (Judge Christina A. Snyder).  The SEC and Partridge request a declaration pursuant to the Declaratory Judgment Act that the Trustees’ claims to recover pension, health and welfare contributions and other employee benefits under SEC’s labor contracts with Local 12 are foreclosed by state public safety laws regulating the building and construction industry (the “Illegality Defense”).  The court dismissed the counterclaimants’ request for a declaration establishing the Illegality Defense as a bar to SEC’s obligation to make payments to the Trust Funds pursuant to the subcontracting provision of the CBA since this court (and the arbitrator in 2006 proceedings) in related actions stemming from the same principal dispute between the same parties considered and rejected the Illegality Defense.

Your ERISA Watch is made possible by the collaboration of the following Kantor & Kantor attorneys:  Brent Dorian BrehmBeth Davis, Sarah DemersElizabeth GreenAndrew Kantor, Monica Lienke, Susan Meter, Michelle RobertsTim Rozelle, Peter Sessions, and Zoya Yarnykh.