Phillips v. Boilermaker-Blacksmith Nat’l Pension Tr., No. 19-cv-02402-TC-KGG, 2023 WL 3020193 (D. Kan. Apr. 20, 2023) (Judge Toby Crouse)

Four union retirees who are participants of the Boilermaker-Blacksmith National Pension Trust (“Pension Trust”), a collectively-bargained multiemployer pension plan, brought this putative class action in which they allege that their early retirement benefits were improperly terminated under a “manufactured” and erroneous definition of retirement. In this decision, the district court largely agreed with the plaintiffs that defendants were not entitled to judgment on the pleadings on claims that defendants violated ERISA through “the guise of an interpretation” designed to eliminate plaintiffs’ right to receive early retirement benefits while they continued to work and to recoup the benefits already paid to them.

If the allegations sound familiar, it may be because the board members and trustees of the Boilermaker-Blacksmith plan reinterpreted the meaning of “retire” and used their new view of retirement in order to cease benefit payments, recoup previous payments, and create new annuity starting dates for the retirees with less favorable terms in a similar manner as the fiduciaries of the U.A. Plumbers & Steamfitters Local No. 22 Pension Fund in Metzgar v. U.A. Plumbers & Steamfitters Loc. No. 22 Pension Fund, No. 20-3791, 2022 WL 610340 (2d Cir. Mar. 2, 2022), cert. denied, 143 S. Ct. 1002 (2023). Apparently using the same playbook as the defendants in Metzgar, the defendants here justified their new standards by arguing that their previous interpretations and accompanying decades-long actions were erroneous because they failed to comport with IRS rules.

In this lawsuit the plaintiffs challenged the denial and recoupment decisions. They maintain that the fiduciaries of the Pension Trust created and began to utilize an unwritten “90-Day Rule,” under which the fiduciaries determined that a plan participant did not have the actual intent to retire and therefore did not qualify for benefits if that participant began any new employment within 90 days of retiring. Additionally, plaintiffs alleged that certain plan amendments were not properly disclosed to them. In one category of these amendments, the plan took steps to expand its ability to recoup overpayments. “These changes allowed the Plan to seek overpayments from participants regardless of whether their benefits were suspended or terminated. They also allowed the Plan to recoup overpayments, even after a participant’s death. They further allowed the Plan to recoup overpayments in any amount, whereas the Plan previously could deduct only 25 percent of monthly benefits.”

In the second category of amendments, the plan changed the name of the section defining retirement from “Retirement” to “Disqualifying Employment.” Plaintiffs argued that, despite this change, the plan’s definition of retirement in the plan remained “explicit and unambiguous” and that it therefore did not permit the fiduciaries to reinterpret its meaning, especially in ways that directly conflict with the plan language.

In addition to these actions with respect to the Pension Trust, plaintiffs also focused on the actions of the Union’s Health Fund with regard to one of the named plaintiffs. The Health Fund acted in concert with the Pension Trust to terminate retiree insurance coverage of this plaintiff, who had been paying premiums through automatic deductions from his monthly pension benefits. After the Pension Trust ceased making payments to the plaintiff, the fiduciaries of the Health Fund determined that he was also ineligible for retiree health insurance and so his health insurance coverage was terminated. When that happened, the Health Fund reimbursed the plaintiff his unused premium payments, but rather than pay almost $50,000 to the plaintiff directly, the Health Fund transferred that money to the Pension Trust, which then used it to offset the amount the Pension Trust claimed that the plaintiff owed it in overpayments due to his failure to retire. Accordingly, this plaintiff also sued the Health Fund and its trustees.

In total, plaintiffs asserted nine claims: (1) erroneous failure to pay benefits; (2) breaches of fiduciary duties (including a prohibited transaction); (3) violations of ERISA’s anti-cutback provision, Section 204(g); (4) failure to provide notice of plan amendments in violation of Section 204(h); (5) failure to maintain a written plan and provide accurate summary plan descriptions; (6) failure to provide a full and fair review; (7) violation of ERISA’s non-forfeitability provision, Section 203(a); (8) unlawful transfer and improper assignment of pension benefits in violation of Section 206(d); and (9) equitable estoppel. All defendants jointly moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c).

In this lengthy decision, the court mostly denied judgment to the Pension Trust defendants but granted entirely the Health Fund defendants’ motion for judgment on the pleadings.

With respect to the Health Fund claims, the court agreed that the Health Fund defendants did not make any benefit determinations, did not breach any fiduciary duty, and concluded that the transfer between the Health Fund and pension plan could not be viewed as “an alienation or improper assignment within the meaning of Section 206(d).” Finally, because the court granted the Health Fund defendants judgment with regard to the underlying ERISA violations, it also granted it judgment on the derivative equitable estoppel claim against this set of defendants. Essentially, the court viewed the allegations in the complaint as truly centering around the actions of the fiduciaries of the Pension Trust and as not directly implicating the Health Fund.

The court took a much dimmer view of the Pension Trust defendants’ actions. The court denied most of the Pension Trust defendants’ motion, concluding that their arguments largely depended “on a factual predicate – that Plaintiffs applied for retirement but subjectively intended to continue their work – that is contrary to what Plaintiffs alleged in their Amended Complaint.” The court was unwilling to adopt defendants’ position that the reinterpretations by these defendants did not constitute actual amendments, and that the reinterpretation could therefore not be an impermissible cutback under Section 204(g). To the contrary, the court stated that it was “not clear that Pension Defendants’ earlier interpretations were plainly erroneous.” The court found it both persuasive and plausible, as plaintiffs alleged, that defendants never violated IRS regulations by allowing plaintiffs to receive their early pension benefits, and instead were receiving favorable IRS determination letters for decades while they had previously allowed participants to perform certain non-union work. “Moreover, IRS rules and regulations do not override ERISA – a plan can violate ERISA even if its goal is tax compliance.”

The court distinguished the facts of this case from Metzgar because “the Plan here did define retire in Section 8.08.” The court also pointed out that, in this case, participants alleged that they relied on that definition and that the actual terms of the plan’s definition were changed by way of amendment.

The court was also willing to accept as plausible plaintiffs’ allegations that the Pension Trust fiduciaries violated ERISA’s non-forfeitability provision by requiring the retirees to re-apply for benefits, thereby imposing new conditions on eligibility and triggering new annuity start dates.

The court likewise denied the Pension Trust defendants’ judgment on the claims for benefits, the violation of Section 204(h) claim, the full and fair review claim, the non-forfeitability claim, and the equitable estoppel claim.

However, on two claims – the fiduciary breach claim and the anti-cutback provision claim – the court granted judgment in part and denied judgment in part to the Pension Trust defendants.

First, the court granted judgment to the Pension Trust defendants on the prohibited transaction claim asserted under Section 406(a)(1)(B), which alleged that “paying funds…constituted an extension of credit by the Health Plan to the Pension Plan.” The court’s reasoned that the Pension Trust defendants were not the party that extended credit; instead, they received funds they alleged had been improperly released, and as a result, the court held that plaintiffs had not stated a claim under this provision.

Nevertheless, the court allowed other aspects of the breach of fiduciary duty claim to proceed. These included allegations regarding defendants’ failure to provide notice of plan provisions, failure to give notice of plan amendments that restricted eligibility for retirement benefits, retroactive applications of the amendments to decrease accrued benefits, and failure to provide full and fair reviews of the denials by withholding material information. The court held these claims were sufficiently pled under Rule 8 standards.

As for the anti-cutback claim, the court granted judgment to the Pension Trust defendants on the aspects of the claim which were based on the overpayment amendments to the plan. The court held that the overpayment amendments could not violate Section 204(g) because “[b]efore and after the overpayment amendments, the value of Plaintiffs’ pension rights remained unchanged.” However, as noted above, the court found that plaintiffs stated plausible anti-cutback claims regarding the amendment to Section 8.08 of the plan and the application of the 90-Day Rule, as both changes may have led to reductions in accrued benefits.

Finally, much like the Health Fund defendants, the court granted the Pension Trust defendants judgment on the pleadings with respect to the alleged Section 206(d) violation. Once again the court concluded that no unlawful transfer, alienation, or assignment of pension benefits took place when the Health Fund Defendants refused to refund one of the plaintiffs his pension plan payments directly and instead transferred those payments back to the Pension Trust.

Thus, defendants’ motion for judgment on the pleadings ended with a mixed result. However, this decision is notable because the court chose not to follow the Second Circuit’s decision in Metzgar and specifically distinguished it. Thus, the decision demonstrates that it remains an open question as to what it means to “retire” for purposes of receiving a pension under multiemployer retirement plans, and it is still unclear whether and the extent to which the trustees of such plans may eliminate early retirement benefits for some retirees by redefining that term. Although this case is still far from reaching its conclusion, the plaintiffs have cleared their first hurdle and may be able to persuade the court at the end of the day that they had in fact “retired” when they first stopped working in covered employment and began receiving their pensions.

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

Breach of Fiduciary Duty

Second Circuit

Jacobs v. Verizon Commc’ns, No. 16 Civ. 1082 (PGG) (RWL), 2023 WL 3027311 (S.D.N.Y. Apr. 20, 2023) (Judge Paul G. Gardephe). Plaintiff Melina N. Jacobs initiated this class action against Verizon Communications, Inc., Verizon Investment Management Corporation, the Verizon Employee Benefits Committee, and individual committee members for breaches of fiduciary duty. Ms. Jacobs avers that the fiduciaries of the Verizon Savings Plan for Management Employees failed to monitor and remove the plan’s imprudent investment options. The class consists of the participants of the plan who had their retirement savings invested in the Global Opportunity Fund, the challenged investment option at the center of this class action, either directly or indirectly. Notably, one of Ms. Jacobs’ experts analyzed the annual returns for the Global Opportunity Fund and concluded that it underperformed benchmarks by 78.4% in the relevant ten-year timeframe from 2007 to 2017. The Benefits Committee did eventually eliminate the Global Opportunity Fund as a stand-alone investment option in the savings plan, but not until February 2017, one year after the complaint was filed. Defendants brought several motions before the court. First, defendants moved to exclude the opinions of two of Ms. Jacobs’ expert witnesses. This motion was denied. The court held that the expert testimony was admissible under the Federal Rule of Evidence 702 and that defendants’ challenges to the opinions offered by the experts should be addressed during the trial. Next, defendants moved for summary judgment. The court denied the summary judgment motion. It held that the question of whether defendants breached their duty of prudence regarding the Global Opportunity Fund is a genuine issue of material fact making summary judgment improper. The court wrote, “Defendants provide no explanation as to why they preserved the Global Opportunity Fund as an investment option, and there is no evidence that, during the time period between the Global Opportunity Fund’s inception on January 1, 2007, and April 1, 2010, the Benefits Committee or the Executive Committee discussed or considered what to do about the Fund’s poor performance.” Not only did the court state that it was unclear that defendants’ review process functioned properly with regard to the Global Opportunity Fund, but the court also stated that defendants were not entitled to judgment based on the Fund’s performance, as plaintiff and her experts provided substantial evidence that the Fund performed poorly during the time periods. Finally, defendants moved to strike plaintiff’s jury demand, which Ms. Jacobs did not oppose. Accordingly, the court granted the motion to strike the jury demand.

Third Circuit

Krutchen v. Ricoh U.S., Inc., No. 22-678, 2023 WL 3026705 (E.D. Pa. Apr. 20, 2023) (Judge Juan R. Sanchez). Participants of the Ricoh Retirement Savings Plan brought this putative class action against the plan’s administrative committee, its board of directors, and Ricoh USA, Inc. for breaches of fiduciary duties. Plaintiffs allege that the fiduciaries breached their duty of prudence by failing to control the plan’s costs and fees and that they breached their duty to monitor co-fiduciaries. In a previous motion, defendants moved to dismiss the complaint for failure to state a claim. That motion was granted on November 15, 2022, and the complaint was dismissed with leave to amend. “Plaintiffs have now had three chances to correctly plead their claims. Because the Second Amended Complaint fails to cure the defects identified in this Court’s previous Order, Defendants’ Motion to Dismiss will be granted with prejudice.” Once again, the court stated that it could not infer breaches of fiduciary duties based on the allegations in the complaint. It held that plaintiffs’ comparators were inapt and not meaningful because they did not provide equivalent quality and types of services provided for the amounts charged. The court was not persuaded by plaintiffs’ position that “all large plans require the same type of services, of which all recordkeepers are able to provide the same quality.” It further disagreed that plan recordkeeping and administrative services are “fungible” and that “they are only distinguished by price,” making higher fees per se unreasonable. “Within the ‘care, context-sensitive scrutiny’ the Supreme Court mandates in evaluating ERISA claims, vaguely alleging recordkeeping services are fungible does not plausibly allege a breach.” It therefore remained unclear to the court whether a prudent fiduciary would have necessarily taken different actions from the defendants. Thus, the court concluded that plaintiffs could not state a plausible claim of imprudence, and without an underlying fiduciary breach violation could also not state a derivative failure to monitor claim. 

Ninth Circuit

Davis v. United Health Grp., No. C21-01220RSM, 2023 WL 2955277 (W.D. Wash. Apr. 14, 2023) (Judge Ricardo S. Martinez). Three plan beneficiaries of ERISA-governed health and welfare benefit plans administered by UnitedHealth Group Inc. and its subsidiaries (together “United”) who received care from out-of-network healthcare providers initiated this putative class action lawsuit against United to challenge its alleged underpayment of out-of-network reimbursement rates determined through the use of methodology created by third-party vendors including Multiplan Inc. Plaintiffs allege United violated plan terms by reimbursing the out-of-network healthcare providers “at rates that were lower than the negotiated rates agreed upon by the…providers and third-party vendors.” According to the complaint, United’s behavior was motivated by self-serving economic interests and that was therefore a breach of fiduciary duties, including the duty of loyalty. Plaintiffs asserted claims for denial of benefits, breach of fiduciary duty, and equitable relief under Section 502(a)(3). United moved to dismiss plaintiffs’ first amended complaint. Their motion was denied in this order. The court held that plaintiffs had Article III standing to pursue their claims, including those for injunctive relief, as they alleged injuries in fact traceable to United’s alleged actions, and because they remain plan beneficiaries and therefore may face the same harm in the future. In addition, the court declined to dismiss the equitable relief claim as duplicative of the potential remedies under Section 502(a)(1)(B) at this stage of the proceedings. Finally, the court was satisfied that plaintiffs had stated their claims. It held that the complaint satisfied Rule 8 pleading requirements, and that it alleged facts from which the court could infer the alleged wrongdoing, including that United unreasonably interpreted the plan and underpaid claims for out-of-network providers. Regarding the benefit claim specifically, the court agreed with plaintiffs “that the discretionary phrase in the Plans does not allow United to dispose of a negotiated rate if the parties have agreed to a rate. Instead, the Court finds that United’s discretion applies to who the negotiating party is on behalf of United… As such, the phrase ‘at UnitedHealthcare’s discretion’ does not allow United to elect which methodology it will use to pay benefits, where, as here, rates have been negotiated.” Along these same lines, the court also found that plaintiffs plausibly alleged that United failed to comply with its fiduciary duties under ERISA when it decided to use rates other than those negotiated with the providers, and that this decision could plausibly have been “influenced by its own economic self-interest.” Accordingly, the court denied the motion to dismiss, and plaintiffs’ action will carry on.

Class Actions

Second Circuit

Browe v. CTC Corp., No. 2:15-cv-267, 2023 WL 2965983 (D. Vt. Apr. 17, 2023) (Judge Christina Reiss). On December 16, 2022, the court issued an order in this breach of fiduciary duty class action related to wrongdoing and mismanagement of the CTC Corporation deferred compensation top-hat plan. In that order, summarized in Your ERISA Watch’s December 21, 2022 edition, the court entered judgment in favor of the plan participants on their breach of fiduciary duty claim, drafted the restoration award, outlined how the award was to be paid to the participants, and ordered the plan’s termination following the issuance of those payments. Now plaintiffs and defendants have each moved for reconsideration of certain aspects of that decision, and each moved for attorneys’ fees and expenses. In this decision the court granted in part plaintiffs’ reconsideration motion, denied defendants’ reconsideration motion, and denied without prejudice both parties’ fee motions until it is determined whether there will be an appeal. The court first addressed plaintiff’s reconsideration motion. Plaintiffs requested two things in their motion. First, they requested that the court order defendants to pay the Plan as opposed to the plan participants and name either an interim administrator, escrow agent, special master, or receiver. The court responded that it wished for an immediate payment of the amounts due to plan participants. Such immediate distribution, it said, “is the best means of ensuring that Plan benefits are distributed to Plan participants, many of whom are elderly, as soon as possible.” However, the court acknowledged that this desire for quick disbursement may not in reality be possible, especially if there is an appeal. Accordingly, the court directed the parties to meet and confer to discuss a possible person or entity to serve as the funds’ interim fiduciary and to then advise the court of their proposed selection. Second, plaintiffs requested reconsideration regarding the calculation of the account balance of one of the plan participants over withdrawals she took from her account which affected the balance. The court expressed that to the extent this calculation error exists, it was, at least in part, the result of the parties’ actions. Nevertheless, the court did not want to prejudice the plan participant and therefore amended the order to address the error. The court ordered that the benefits be calculated in the same manner as those of another plan participant who similarly took withdrawals and altered the judgment to reflect this change. The court then moved on to addressing defendants’ reconsideration motion. Defendants sought reconsideration based on a statute of limitations defense as to two of the plan participants’ claims to recover benefits under the plan. The court held that defendants had “not satisfied the exacting standard for reconsideration,” and “[t]o the extent Defendants claim that the statute of limitations has no import if the court fails to reconsider its ruling, that argument is without merit.” Thus, defendants’ motion for reconsideration was denied. Regarding the fee motions, the court not only felt that deferring any fee award and denying the motion without prejudice pending a resolution of a Circuit Court appeal would serve judicial interests and conserve resources, but it also advised the parties that if they renew their attorneys’ fee motions they must include more information, currently lacking, regarding hours and costs spent.

ERISA Preemption

Fourth Circuit

Mallory v. Terminal Inv. Corp., No. 9:22-cv-04538-DCN, 2023 WL 3017963 (D.S.C. Apr. 20, 2023) (Judge David C. Norton). Plaintiff Douglas R. Mallory filed a state court complaint against his former employer, Terminal Investment Corporation, and his former supervisor, Greg Marcum, alleging that he was wrongfully discharged in retaliation for seeking workers’ compensation benefits. Mr. Mallory asserted two state law causes of action, a claim of retaliatory discharge brought against the employer, and a negligence claim against both defendants. Defendants removed the action to federal court because Mr. Mallory referenced COBRA as part of his negligence cause of action. Specifically, Mr. Mallory alleged that defendants “fail[ed] to offer [him] an opportunity to continue his health coverage; following his termination,” and “fail[ed] to provide [him] with notices required under COBRA.” Accordingly, defendants argued that the negligence claim was preempted by ERISA. In response, Mr. Mallory moved to amend his complaint to remove the portions of his complaint that referenced COBRA and therefore implicated ERISA preemption. In addition, Mr. Mallory moved to remand his amended complaint back to state court. The court granted both motions. First, it agreed with defendants that removal was proper, and that the original complaint was preempted by ERISA as the allegations of negligence premised on COBRA violations affect the administration of the plan and therefore fall under ERISA’s administrative civil enforcement scheme. However, because defendants provided written consent in response to Mr. Mallory’s request to amend his complaint, the court granted the motion to amend. With the ERISA issues removed from the amended complaint the court considered whether the amendment weighed in favor of remand. It found that it did, as diversity jurisdiction does not exist in this action, and because the court did not find the amendment or remand request to be “manipulative tactics.” Thus, the court stated that factors weighed strongly in favor of remand and against exercising supplemental jurisdiction. The court therefore granted the motion to send the lawsuit back to state court.

Ninth Circuit

Forman v. John Hancock Life Ins. Co., No. 2:22-cv-01944-KJM-AC, 2023 WL 3025226 (E.D. Cal. Apr. 19, 2023) (Judge Kimberly J. Mueller). Plaintiff Leslie Dean Forman commenced this action against John Hancock Life Insurance Company in state court alleging claims of negligence, fraudulent misrepresentation, and breach of fiduciary duty. Mr. Forman claims that John Hancock wrongfully transferred the funds in his ERISA-governed 401(k) plan into the stock market without his consent and then delayed transferring the funds into a different account servicer against his explicit directions, causing him losses of hundreds of thousands of dollars. John Hancock serves as the recordkeeper and administrator of the plan. Mr. Forman is both a trustee of the plan and a participant in it. Prior to opening his account, Mr. Forman signed a recordkeeping agreement with John Hancock in his role as trustee of the plan. In that agreement, John Hancock is a “limited fiduciary,” and the agreement outlines that John Hancock will only act “in accordance with directions from trustees [with the] authority and responsibilities for reviewing the Plan documents, ensuring compliance with ERISA… and instructing John Hancock accordingly.” Mr. Forman maintains that he is suing in his individual capacity, and not as a trustee of the plan. John Hancock removed the action to the Eastern District of California under federal question jurisdiction. After removing the lawsuit, John Hancock moved for dismissal under Federal Rule of Civil Procedure 12(b)(6). It argued that all three causes of action are preempted by ERISA. The court disagreed. First, the court held that complete preemption does not apply. “The court finds Forman’s claims are not within the scope of ERISA § 502(a)(2) because [John Hancock] is not an ERISA fiduciary. Defendant itself argues it did not act as an ERISA fiduciary. The relationship between Forman and [John Hancock] is defined by the recordkeeping agreement the parties entered into…. Moreover, any fiduciary duties [John Hancock] owed Forman arose out of its obligation under the Recordkeeping Agreement and not from the terms of the Plan.” Thus, the court concluded that the allegations in the complaint are not based on a violation of the terms of the plan. Next, the court held the state law claims were not preempted by conflict preemption, concluding “the connections between the Plan and the state law causes of action are too tenuous.” The court expressed that the claims do not relate to denials of benefits, administration of plan benefits, or breach of the ERISA plan. Thus, it stated that resolution of the claims will not interfere with ERISA’s goal of uniform administrative practices. However, despite finding that the state law claims were not preempted by ERISA, the court nevertheless dismissed the fraudulent misrepresentation claim without prejudice. It held that claim did not meet the heightened pleading standards for fraud-based claims. Mr. Forman’s breach of fiduciary duty and negligence claims meanwhile were not dismissed.

Exhaustion of Administrative Remedies

Eighth Circuit

Saucedo v. United Healthcare Ins. Co. of the River Valley, No. 5:23-CV-5008, 2023 WL 3034115 (W.D. Ark. Apr. 19, 2023) (Judge Timothy L. Brooks). Plaintiff Sergio Saucedo sued United Healthcare Insurance Company of the River Valley under ERISA seeking health care benefits under his plan. In addition to his claim for benefits, Mr. Saucedo brought a claim for penalties under § 1024(b)(4) for failure to provide plan documents upon request. Mr. Saucedo contends that United refused to provide him a copy of the plan or a summary plan description despite his written requests, and because of United’s refusal he was unable to pursue an internal administrative appeal prior to bringing suit. United moved to dismiss the complaint for failure to exhaust administrative remedies. The court granted the motion in this decision and dismissed the action without prejudice. The court agreed with United that the documents Mr. Saucedo relied upon were “plainly not written requests for plan documents or appeal information,” and were in fact “Authorizations for Release of Health Information,” the purpose of which is to allow United to release Mr. Saucedo’s health information to his counsel. Accordingly, the court disagreed with Mr. Saucedo that he was unable to pursue the internal appeal process, and because his plan requires exhaustion prior to bringing ERISA actions, the court granted the motion to dismiss the ERISA claims as premature.

Ninth Circuit

Jackson v. The Guardian Life Ins. Co. of Am., No. 22-cv-03142-JSC, 2023 WL 2960290 (N.D. Cal. Apr. 13, 2023) (Judge Jacqueline Scott Corley). Plaintiff Charles Jackson, Sr. filed a claim for long-term disability benefits under his ERISA plan from his employer Pacific States Petroleum. The administrator of the plan, The Guardian Life Insurance Company of America, stated that Mr. Jackson was not submitting a viable claim and was not insured at all because he never submitted an “evidence of insurability” form. Mr. Jackson responded that Pacific States Petroleum had accepted his coverage because they had sent him an evidence of insurability form and confirmed that coverage premiums were being deducted from his paycheck. Mr. Jackson’s attorneys, who were in communication with Guardian Life, requested that it waive the evidence of insurability form requirement. After Guardian Life declined to do so, Mr. Jackson commenced this civil lawsuit against the insurance company and his employer, asserting claims pled in the alternative for benefits and fiduciary breach. Defendants moved for summary judgment based on Plaintiff’s failure, in their view, to exhaust administrative remedies under Pacific States’ employee benefit plan prior to filing suit. In this decision, the court denied the summary judgment motion. Under binding precedent in the Ninth Circuit, exhaustion is “a question of contract.” Thus, the court stated that its role was to read the plain language of the plan and determine whether the plan language could be reasonably read as making exhaustion optional prior to bringing an ERISA suit. Here, the court found that it was, and that Mr. Jackson therefore had no obligation to do so. “[N]othing in (the plan) language would alert a reasonable claimant that waiving the claimant’s right to an administrative appeal will preclude the clamant from bringing a civil action under Section 502(a) of ERISA.” The plan did not do more, the court held, than inform claimants about the right to appeal. But that, the court concluded, is not the same as making it clear that failing to internally appeal would result in the inability to challenge an adverse decision in court. Although the court stated that precedent dictates that any ambiguity in the plan needs to be interpreted against the drafters of the plan, the court highlighted certain language in the plan which it did not find ambiguous and which it expressed would lead a reasonable reader to “understand an ERISA suit as an ‘in addition to’ or ‘alternative’ to the appeal process, rather than prerequisite.” Finally, the court found that the conflicting information within letters the defendants said they sent to Mr. Jackson did not modify the plan terms and was therefore irrelevant. Thus, defendants’ summary judgment motion failed “because pre-suit exhaustion was optional under the Pacific States plan.”

Pleading Issues & Procedure

Eighth Circuit

Dida v. Ascension Providence Hosp., No. 4:22-CV-00508-AGF, 2023 WL 3002403 (E.D. Mo. Apr. 19, 2023) (Judge Audrey G. Fleissig). On January 4, 2017, ex-employee Dawit Dida filed a charge of discrimination with the D.C. Office of Human Rights (“OHR”) against his former employer Ascension Providence Hospital. Although the parties participated in mediated settlement negotiations facilities by the OHR, the process was ultimately unsuccessful. Mr. Dida withdrew his OHR complaint on August 24, 2021. Shortly after the withdrawal request was granted, Mr. Dida filed this present civil action in D.C. Superior Court. Ascension Providence removed the action to federal court, and then filed a motion to transfer the case to the Eastern District of Missouri pursuant to a forum selection clause. The motion to transfer was granted, and Ascension Providence moved to dismiss the complaint for failure to state a claim. The court previously denied the motion to dismiss Mr. Dida’s Family Medical Leave Act (“FMLA”), Americans with Disabilities Act (“ADA”), and ERISA claims, but granted the motion and dismissed Mr. Dida’s state law breach of contract claim. Mr. Dida subsequently amended his complaint, and Ascension Providence renewed its motion to dismiss. This time, the court granted the motion to dismiss in its entirety and dismissed the complaint with prejudice. Specifically, the court dismissed the FMLA claim as untimely because it was filed two years after the statute of limitations had run and the complaint did not allege any facts to plausibly support equitable tolling or equitable estoppel. Regarding the ADA claim, the court agreed with Ascension Providence Hospital that Mr. Dida was bound by the allegations in his OHR charge. In that complaint, Mr. Dida alleged discrimination based on age, but did not check the box for discrimination based on disability. As a result, the court stated that Mr. Dida could not bring a lawsuit that included new allegations that were not made in the original charge and dismissed the ADA claim for failure to exhaust administrative remedies. Finally, with regard to the ERISA claim, the court stated that it was unclear what particular section or sections of ERISA Mr. Dida was basing his claim or claims under. The court therefore evaluated Mr. Dida’s claim under what it identified as the two potentially relevant ERISA sections, 510 and 502(a)(1)(B), and concluded that he could not state a claim under either. First, the court held that to “the extent that Plaintiff is alleging he was terminated because he requested benefits, the Court agrees that any Section 510 claim would fail because Dida has not alleged the required elements of a Section 510 claim… Indeed, it appears that Dida was terminated before any request for disability benefits.” Next, the court concluded that Mr. Dida could not bring a claim for benefits under Section 502(a)(1)(B) against his former employer, defendant Ascension Providence Hospital, because it was not the plan administrator. Rather, the plan identifies “Ascension Health Alliance d/b/a Ascension” as the plan administrator, which the court viewed as entirely separate from the defendant. Accordingly, Mr. Dida’s ERISA cause of action was also dismissed.

Retaliation Claims

Fifth Circuit

A.S.C.I.B., L.P. v. Carpenter, No. 1:20-CV-1125-RP, 2023 WL 2993397 (W.D. Tex. Apr. 18, 2023) (Judge Robert Pitman). An employer, Sheshunoff & Co. Investment Banking, and a former employee, Curtis Carpenter, dispute what took place during Mr. Carpenter’s last days and weeks working for the company as Head of Investment Banking. In one version of events, Mr. Carpenter announced his resignation, and then was denied benefits under a deferred compensation ERISA plan and a severance release agreement and was subsequently sued in state court by his former employer under false charges as a pretext not to pay him benefits owed. In another version of the story, Mr. Carpenter took trade secrets from Sheshunoff, failed to promptly return his phone and computer to the company, and because of these actions he did not retire but was terminated for cause prior to the date he was set to leave. To date, Mr. Curtis has not been paid either benefits under the ERISA deferred compensation plan, or severance payments under the non-ERISA release. After exhausting an internal appeals process for the denied ERISA benefit claim, Mr. Carpenter removed Sheshunoff’s state law action to the Western District of Texas and asserted counterclaims against Sheshunoff. The parties then reached an agreement on Sheshunoff’s affirmative claims, and as a result those claims were dismissed. Now, Sheshunoff moves for summary judgment on the counterclaims asserted against it. Its motion was mostly granted in this decision. Before doing anything else, the court analyzed what the proper standard of review would be for the ERISA benefits claim. It resolved the dispute in Sheshunoff’s favor, understanding the language of the plan which grants the Administrative Committee the authority to make final and conclusive determinations as granting discretionary authority adequate under Fifth Circuit precedent to confer deferential review. With the standard of review settled, the court concluded that the Committee did not abuse its discretion by denying benefits because it was “rational” to conclude that Mr. Carpenter was terminated for taking trade secrets and that decision to deny benefits therefore fell “somewhere on a continuum of reasonableness – even if on the low end.” Sheshunoff was thus granted summary judgment on the Section 502(a)(1)(B) claim. It was also granted judgment on the claim for violation of ERISA procedural requirements. Under the “lenient” substantial compliance standard applied to violations of ERISA procedural requirements, the court held that Mr. Carpenter “has not shown a genuine issue of material fact regarding any alleged irregularities and, to the extent Carpenter has, those technicalities are permissible as a matter of law.” Thus, Sheshunoff was granted judgment on the ERISA violations claim as well. And Mr. Carpenter’s final ERISA cause of action, an interference claim under Section 510, fared no better. The court stated that the complaint “failed to offer any evidence” that the lawsuit Sheshunoff filed was a pretext not to pay benefits. For these reasons, Sheshunoff was granted summary judgment on all the ERISA claims. However, its motion for summary judgment was denied with regard to Mr. Carpenter’s breach of contract claim seeking benefits under the release agreement he signed. There, the court identified a genuine issue of material fact precluding an award of judgment.