Morris v. Aetna Life Ins. Co., No. 21-56169, __ F. App’x __, 2023 WL 3773656 (9th Cir. Jun. 2, 2023) (Before Circuit Judges Wardlaw and W. Fletcher, and District Judge Edward R. Korman)

Because ERISA allows benefit plan participants and beneficiaries (among others) to sue for breach of fiduciary duty, one of the thorniest questions in ERISA litigation is “who is a fiduciary?” This week’s notable decision from the Ninth Circuit tackles that issue, but first we must set the stage.

As Your ERISA Watch explained in its April 21, 2021 issue, the Ninth Circuit addressed this topic two years ago in Bafford v. Northrop Grumman Corp., 994 F.3d 1020 (9th Cir. 2021). In Bafford, the court considered Northrop Grumman’s pension plan, whose benefit statements were prepared by third party Hewitt (now Alight Solutions).

The plaintiffs brought a suit for breach of fiduciary duty against Northrop and Hewitt, alleging that Northrop and Hewitt had provided them with inaccurate pension benefit statements, on which they relied to their detriment when they retired. The defendants filed a motion to dismiss, arguing that calculation of pension benefits pursuant to a formula is not a fiduciary function, and thus Hewitt’s mistakes could not be a breach of fiduciary duty.

The district court agreed, and the Ninth Circuit affirmed, holding, “Northrop and the Committee did not breach a fiduciary duty by failing to ensure that Hewitt correctly calculated Plaintiffs’ benefits.” (However, the court did allow the plaintiffs to proceed with their state law claims, holding that they were not preempted by ERISA, and with a federal claim against the Committee, the plan administrator, for failure to provide accurate pension benefit statements.)

The defendant in this week’s notable decision, Aetna Life Insurance Company, seized on Bafford and attempted to expand its reach in the disability insurance context. The plaintiff was Irina Morris, a software consultant who had long-term disability insurance coverage with Aetna as an employee benefit. Unfortunately, she was stricken by cancer and became disabled in 2009. Aetna approved her claim for benefits and paid her a monthly benefit of $4,113.17. Over the years, Ms. Morris relied on this calculation in negotiating her divorce, paying her taxes, and refinancing her home. Aetna reassured her on numerous occasions that her benefit was accurate and would continue.

However, in 2018, almost a decade later, Aetna discovered that it had miscalculated Ms. Morris’ benefit and had been overpaying her for the duration of her claim. Aetna began reducing her benefit to recoup the overpayment. Ms. Morris appealed this decision, but Aetna upheld it, so Ms. Morris filed suit against Aetna, alleging that it had breached its fiduciary duty to her under ERISA § 502(a)(3).

Aetna filed a motion to dismiss, which the district court granted. The district court ruled that the alleged breach was “inextricably entwined with the ‘calculation of…benefits,’ which is ‘a ministerial function that does not have a fiduciary duty attached to it.’” As a result, “Bafford defeats Morris’ § 502(a)(3) claim.”

Ms. Morris appealed to the Ninth Circuit, arguing that the district court had misinterpreted Bafford. The Ninth Circuit agreed and reversed. The court ruled that Aetna’s actions “lie well within the category of ‘well-established fiduciary functions.’” The court noted that Aetna provided Ms. Morris with “individualized consultations with benefits counselors,” “consulted with Ms. Morris by phone about her benefit amount numerous times,” “sent letters Aetna knew Morris would share with lenders as proof of her benefits,” and “communicated with Morris’s financial institutions to verify her benefit amount.”

The court further noted that Aetna “exercised discretion when it gathered her earnings information, and interpreted the Plan’s terms to determine which benefits and deductions applied.” Furthermore, it exercised discretion when it decided to “immediately and aggressively collect the overpayment amount after nine years had passed, going as far as to entirely suspend Morris’s benefits.” The court clearly was not pleased with Aetna’s conduct, finding that “Aetna was not required to recoup the overpayment at all, much less in the manner it did that put Morris in dire financial straits.”

Aetna argued that the only “action subject to complaint” was its miscalculation of benefits, and thus Bafford applied. The court rejected this argument, noting that the behavior Ms. Morris complained about was not the miscalculation of benefits, but Aetna’s conduct over the years that “could have avoided any overpayment, much less the catastrophic amount that resulted.”

In conclusion, the court held that Aetna was not simply “a clerical employee typ[ing] an erroneous code onto a computer screen.” Instead, “the extent of Aetna’s involvement in Morris’s financial life distinguishes her case” from the supposedly “ministerial calculation error addressed in Bafford.” As a result, the court held that Bafford was inapposite, ruled that Aetna was indeed a fiduciary, and remanded to the district court to determine whether Aetna breached its duty to Ms. Morris.

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

Breach of Fiduciary Duty

Second Circuit

Powell v. Ocwen Fin. Corp., No. 18-CV-1951 (VSB), 2023 WL 3756847 (S.D.N.Y. June 1, 2023) (Judge Vernon S. Broderick). The six named plaintiffs in this putative class action lawsuit are trustees of The United Food & Commercial Workers Union & Employers Midwest Pension Fund. They sued nineteen defendants, including the moving defendants, Ocwen Financial Corporation, Ocwen Loan Servicing LLC, Ocwen Mortgage Servicing, Inc., and Wells Fargo Bank, N.A., for breaches of fiduciary duties and prohibited transactions in connection with the management of residential mortgages in six trusts in which the Fund invested. The moving defendants sought summary judgment on the grounds that the mortgages were not plan assets within the meaning of ERISA. Plaintiffs, for their part, sought summary judgment to establish that the securities they purchased were in fact plan assets within the meaning of ERISA. Under a governing regulation issued by the Department of Labor, the court concluded that the mortgage-backed securities are not plan assets within the meaning of ERISA. Accordingly, the court denied plaintiffs’ partial summary judgment motion, and granted the moving defendants’ summary judgment motion. Specifically, the court concluded that the securities at issue are “treated as indebtedness under applicable local law(s),” not plan assets, because they had fixed interest rates and final maturity dates. The court also found that the securities “have no substantial equity features,” under the relevant guidance of the Second Circuit’s “reasonable expectations of repayment” test. Thus, the court found that the at-issue securities cannot constitute equity interests under the relevant criteria. Because of this, the court held that “the Funds’ owning the At-Issue Securities (do) not cause the mortgages underlying the Trusts to be ‘plan assets’ within the meaning of ERISA § 2510.3-101(a)(2), and all of plaintiffs’ claims…fail.” Having so decided, the court not only granted the moving defendants’ motion for summary judgment, but it also directed the clerk of the court to terminate all open motions, enter judgment in favor of all nineteen defendants, and to close the case.

Disability Benefit Claims

Seventh Circuit

Artz v. Hartford Life & Accident Ins. Co., No. 21-cv-0391-bhl, 2023 WL 3752006 (E.D. Wis. Jun. 1, 2023) (Judge Brett H. Ludwig). Plaintiff Donald Artz stopped working in 2019 due to symptoms he was experiencing from multiple sclerosis (“MS”), after a career of more than 20 years working as a senior electric distribution controller for an energy company. After leaving his position, Mr. Artz applied for long-term disability benefits. The plan administrator, Hartford Life & Accident Insurance Company, denied his claim, concluding that Mr. Artz could work in the same position at other companies and that he therefore did not meet the plan’s eligibility requirements for benefits. Following an unsuccessful administrative appeal, Mr. Artz sued Hartford in this action. Under deferential review, however, the court concluded in this decision that Hartford’s decision was not arbitrary and capricious and therefore entered judgment in its favor. The court was particularly struck by the fact that Mr. Artz requested his employer change his 12-hour work shifts to 8-hour work shifts, and that this request was denied. The court agreed with Hartford’s conclusion that Mr. Artz would have been capable of performing the essential duties of his own occupation despite his MS symptoms because other employers would have allowed Mr. Artz to work a standard 8-hour day, and the position is mostly a sedentary occupation. Mr. Artz disagreed and emphasized that no employer in the industry only requires 8-hour workdays and that “any electric distribution controller ‘would be expected to work at any hour and however long is required’ to fix a [utility] issue.” In response, the court wrote, “Artz’s many iterations of this argument fail to address the terms of Hartford’s plan or the factual basis for Hartford’s decision. Hartford’s plan defines Artz’s Occupation by reference to the national economy, not his actual position at WEC.” Additionally, the court was satisfied that the medical evidence in the record could be read to support Hartford’s position, and that Hartford sufficiently explained its assessment of Mr. Artz’s medical situation. Finally, the court held that Mr. Artz’s award of disability benefits from the Social Security Administration, and Hartford’s conflict of interest, did not shift the weight of things in Mr. Artz’s favor or mean that the benefits determination was wrong. For these reasons, the court was persuaded that the evidence supported Hartford’s conclusion that Mr. Artz was not disabled within the meaning of the plan. 


Eighth Circuit

Hanley v. Unum Life Ins. Co. of Am., No. 4:22-cv-01094-SRC, 2023 WL 3736478 (E.D. Mo. May. 31, 2023) (Judge Stephen R. Clark). Decedent Suzanna Hanley died from a subdural hemorrhage while in a hospital a few days after she accidentally fell in a parking lot in October of 2021. Her widower, plaintiff Riley Hanley, filed a claim for accidental death and dismemberment benefits with Unum Life Insurance Company of America. Unum denied the claim. It held that Ms. Hanley’s death was contributed to by other non-accidental causes and therefore was excluded from the policy. Specifically, it found that Ms. Hanley’s “death was contributed to by a medical condition for which she was treating with aspirin and Plavix for peripheral vascular disease,” and that it therefore did not consider the death to be solely the result of an accident. Mr. Hanley appealed. He averred that the death certificate and medical records from the hospital did not list any underlying medical condition or prescription medication as contributing causes of death, and that her death was the result of an accident entitling him to benefits under the plan. After Unum affirmed its denial on appeal, Mr. Hanley commenced this lawsuit for benefits. Now, Mr. Hanley has moved for discovery beyond the administrative record. In his motion he seeks documents relating to Unum’s claims handling practices and seeks to depose an Unum representative. Mr. Hanley argued that discovery outside the administrative record is warranted in this case because of procedural irregularities. In particular, Mr. Hanley argued that Unum did not conduct an investigation of his claim after he filed his appeal, and that Unum did not employ a physician to review the claim or make a determination as to whether Ms. Hanley’s death was an accident under the terms of the policy. Unum opposed the discovery motion. It stressed that the 2,300 page administrative record contradicts Mr. Hanley’s assertion that it failed to investigate the claim. Furthermore, Unum argued that it employed a nurse to review and summarize the claims file, and that her summary is compliant with ERISA’s requirements. The court wrote that “Unum has the better argument,” and denied the discovery motion. The court did not agree with Mr. Hanley that serious procedural irregularities existed to the point where the record requires supplementation of further evidence.

ERISA Preemption

Third Circuit

Premier Orthopaedic Assocs. of S. N.J. v. Anthem Blue Cross Blue Shield, No. 22-02407 (RMB/EAP), 2023 WL 3727889 (D.N.J. May. 30, 2023) (Judge Renee Marie Bumb). An out-of-network healthcare provider, Premier Orthopaedic Associates of Southern NJ, LLC, sued Anthem Blue Cross Blue Shield in state court seeking payment for costs of medically necessary emergency spinal surgery it performed on an insured patient which it alleges Anthem approved but failed to pay for. Anthem removed the complaint to federal court and moved to dismiss the lawsuit. Anthem’s arguments for dismissal were twofold. First, it argued that the claims were preempted by ERISA. Second, Anthem maintained that the complaint failed to state plausible claims to survive dismissal under Federal Rule of Civil Procedure 12(b)(6). The court disagreed with the former argument, at least at this stage, but agreed with the latter. As a result, the court dismissed the complaint, but did so without prejudice. Regarding preemption, the court found that it could not address Anthem’s preemption argument without relying on a document outside of the complaint, a preauthorization letter,  the validity of which was challenged by Premier. The court also noted that Premier itself maintained that its state law claims were not based on this letter but instead were based on a “prior course of conduct” between it and Anthem. Thus, because the document was not necessarily relied upon in the complaint and not undisputedly authentic, the court declined to look at the letter. The court therefore stated that it would not conclude as a matter of law that the state law claims were preempted, especially because plaintiff maintains that there was an independent obligation to pay the claims for the surgery apart from the ERISA healthcare plan. However, the court wrote that “even when viewed in the light most favorably to Premier, the Complaint lacks enough facts to support Premier’s breach of contract, promissory estoppel, and account stated claims.” Nevertheless, the court allowed Premier the opportunity to replead its claims to address the deficiencies it identified in order to meet the elements necessary to plausibly state each of these claims.

Fourth Circuit

Zhang v. Cigna Healthcare Inc., No. 1:22-cv-1221 (MSN/IDD), 2023 WL 3727936 (E.D. Va. May. 30, 2023) (Judge Michael S. Nachmanoff). Dr. Jianyi Zhang sued Cigna Healthcare, Inc. in state court in Virginia asserting several state law claims in connection with what Dr. Zhang believed were unfair claim settling practices by Cigna with regard to the prices it paid him for reimbursement of claims for urine tests he submitted. Cigna removed the action to federal court. It argued that Dr. Zhang’s claims were preempted by ERISA. Cigna then moved to dismiss the complaint, and Dr. Zhang moved to remand his complaint back to state court. The court granted Dr. Zhang’s motion to remand, agreeing with him that ERISA did not preempt his causes of action and that it therefore lacked jurisdiction over the matter. Specifically, the court found that Dr. Zhang did not possess either direct or derivative standing to assert claims under Section 502 of ERISA, and that as a result complete preemption does not exist. Because the court found that Dr. Zhang did not meet the standing element for complete preemption, it did not even address the other prongs of the complete preemption test. Therefore, the court concluded that it lacked subject matter jurisdiction and remanded the action to the Circuit Court of Arlington County, Virginia. Cigna’s motion to dismiss was thus denied as moot.

Eighth Circuit

Bey v. Bd. of Trs. of the Carpenters & Joiners Defined Contribution Plan, No. 23-335 (JRT/ECW), 2023 WL 3752190 (D. Minn. Jun. 1, 2023) (Judge John R. Tunheim). Plaintiff Zar El Thomas Bey, as an authorized agent for a plan participant, Javon Martize Thomas, initiated this suit when he served the administrator of the Carpenters and Joinders Defined Contribution Plan with a notice of bill in equity to be reviewed by the U.S. Federal Supreme Court of Chancery. The Board of Trustees removed the action and has subsequently moved to dismiss it. The Board argued that Mr. Bey’s state law claims of fraud, theft, breach of contract, and for benefits are all preempted by ERISA, and that Mr. Bey also failed to state a claim upon which relief could be granted. The court agreed. To begin, it became clear that Mr. Bey’s allegations were likely premised on a misreading of the Plan’s Summary Annual Report from 2022. His filings appeared to suggest that he misunderstood the Summary Annual Report as describing the assets in Mr. Thomas’s individual retirement account, rather than explaining the total plan assets and the amount paid in plan expenses for the prior calendar year. Upon review of the Summary Annual Report, the court confirmed that the amounts Mr. Bey attributed to Mr. Thomas’s “private account” exactly corresponded with the amounts relating to the entire plan. Nonetheless, the court stated that the claims are all preempted by ERISA as they pertain to the administration of plan benefits, relate to the plan and its assets, and because Mr. Thomas could bring a claim for benefits only under Section 502 of ERISA. Moreover, the court agreed with the Board that the claims are unripe, as Mr. Thomas has not brought a claim or exhausted his administrative remedies. Finally, the court interpreted Mr. Bey’s failure to respond to the motion to dismiss as a waiver and voluntary dismissal of his claims. For these reasons, the court granted the motion to dismiss under Rule 12(b)(6) and dismissed the claims with prejudice. 

Eleventh Circuit

Am. Prods Prod. Co. of Pinellas Cnty. v. Armstrong, No. 8:23-cv-747-KKM-SPF, 2023 WL 3728407 (M.D. Fla. May. 30, 2023) (Judge Kathryn Kimball Mizelle). Plaintiffs are a group of Florida corporations owned by two individuals, Joseph Muraco and Kevin Mullan. They brought suit in state court in Florida against a former employee, the International Painters & Allied Trades Industry Pension Fund, and several other parties associated with an ERISA plan alleging defamation and abuse of process after the pension fund brought a withdrawal liability action against the companies in the federal District Court of Maryland under ERISA and the Multiemployer Pension Plan Amendments Act. Defendants removed the Florida state law case to federal court. They argued that the complaint is preempted by ERISA and moved for dismissal. The companies, meanwhile, moved to remand their action back to state court. The court resolved the motions in this decision, concluding that defendants had not met their burden of establishing complete preemption under ERISA. Defendants argued that the abuse of process claim premised on the withdrawal liability action between the parties necessarily “relates to the substantive merits of the withdrawal liability claim” and the actions that defendants took in that lawsuit. Additionally, Defendants expressed that plaintiffs’ lawsuit here significantly overlaps with counterclaims plaintiffs asserted in the Maryland action. The court, however, did not agree. “Even if the state court must address some aspects of the ERISA dispute, the state court’s decision ‘will not stand as binding precedent’ for any current or future withdrawal liability claim because resolution of Defendants’ pending ERISA suit is not an essential element of Plaintiffs’ abuse of process claim.” To the court, the distinction between the two actions is that resolution of the Maryland suit will determine whether plaintiffs improperly withdrew from the fund, while the analysis for the state law abuse of process claim will instead “evaluate the Defendants’ motive for bringing the Maryland suit, not the merits of the Defendants’ claim. Thus, no state court will adjudicate the merits of any ERISA claim, so this dispute is not significant enough to warrant federal jurisdiction.” Accordingly, the court granted plaintiffs’ motion to remand, and denied as moot defendants’ motion to dismiss.

Life Insurance & AD&D Benefit Claims

Seventh Circuit

McCombs v. Reliance Standard Life Ins. Co., No. 20CV3746, 2023 WL 3763526 (N.D. Ill. Jun. 1, 2023) (Judge Lindsay C. Jenkins). Father of two, Jeffrey McCombs, died on July 29, 2016. At the time of his death, his two children were both minors, and Mr. McCombs was insured under an ERISA-governed group life insurance policy which named his children as co-equal beneficiaries of the policy. Shortly after Mr. McCombs’ death, a benefits analyst for his employer, Transunion, reached out to Reliance on behalf of the minor children and their mother. Reliance Standard, through two employees, a client manager and a manager of life insurance claims, responded to the Transunion employee’s emails, and informed her that “the proceeds for the minor will be held with Reliance Standard until the minor attains the legal age of majority and requests the proceeds.” Mindful of this information provided by Reliance, the children waited until the older one reached adulthood, and then submitted a claim for benefits. Reliance Standard denied the children’s claim as untimely, and for failure to provide written notice of claim and information about the death within the time period outlined in the plan. The family appealed the denial. They argued that Transunion’s emails constituted written notice of claim, and that they could not have submitted a claim for benefits any earlier because the children were both minors and therefore legally incapable of submitting a claim any earlier. After Reliance Standard upheld its denial, the family commenced this lawsuit, arguing that Reliance’s decision was an abuse of discretion. In their action, the family seeks benefits, attorney’s fees, and prejudgment interest. The parties filed cross-motions for summary judgment. In this decision, the court entered judgment in favor of the children and ordered Reliance to pay them the life insurance benefits, plus attorney’s fees, costs, and interest. Regarding the notice of claim, the court held that “nothing in the record [suggests] that Reliance ever informed Plaintiffs (who were minors at the time) that the notice of loss had to come directly from them or their right to benefits would be forfeited.” The court also stated that the notice of claim met all of the plan’s requirements, as it was timely, and because it informed Reliance of Mr. McCombs’ death, his policy number, and included information about his beneficiaries. Thus, the court found that Reliance’s reasoning to deny the claim for failure to comply with the policy’s notice of loss provision was arbitrary and capricious, especially when factoring in its structural conflict of interest. Next, the court found that plaintiffs’ claim for benefits was timely, not only because the children relied on Reliance’s direction in the email correspondence, but also because they were minors legally incapable of claiming benefits any sooner. Finally, the court ruled that even if the children could have brought a claim earlier, which it doubted, Illinois insurance law provides no time limit for filing death claims, meaning the plan’s statute of limitations provision is unenforceable. Accordingly, the court agreed with plaintiffs that Reliance Standard’s denial was an abuse of discretion.

Medical Benefit Claims

Ninth Circuit

S.L. v. Premera Blue Cross, No. C18-1308RSL, 2023 WL 3738991 (W.D. Wash. May. 31, 2023) (Judge Robert S. Lasnik). Plaintiff S.L. and his parents sued Premera Blue Cross, Amazon Corporate LLC, and the Amazon Corporate LLC Group Health and Welfare Program under ERISA Section 502(a)(1)(B) after Blue Cross denied coverage for S.L.’s stay at a residential treatment facility in Utah. Plaintiffs argued that defendants violated the plan’s terms for coverage of medically necessary mental healthcare and substance use treatment by denying their claims. The parties filed cross-motions for summary judgment. The court granted judgment in favor of defendants under the abuse of discretion review standard. Upon review of the record, the court held that even weighing the procedural irregularities of the review of the claims, including the reviewer’s focus on S.L.’s preadmission symptoms, the denials were supported by substantial evidence. Moreover, the court stated that the procedural irregularities did not prevent the development of a full administrative record, and therefore stated that it would not consider evidence, including discovery testimony, outside of the administrative record in its review of Blue Cross’s decision. Regarding the decision, the court found that defendants’ position that S.L.’s stay at the treatment facility was not medically necessary under the plan because the InterQual Criteria “were not met for severe functional impairment” was not arbitrary or capricious. Specifically, the court disagreed with plaintiffs that defendants’ reliance on the InterQual Criteria was itself an abuse of discretion, writing that “courts across the country have recognized the widespread adoption of InterQual Criteria and ‘district courts routinely find that InterQual’s criteria comport with generally accepted standards of care.’” Thus, although the court expressed sympathy for the family, and stated that it admired their efforts to get S.L. the care he needed, it concluded that the denial of benefits was not an abuse of discretion and therefore denied plaintiffs’ motion for judgment and granted defendants’ summary judgment motion.

Tenth Circuit

D.B. v. United Healthcare Ins. Co., No. 1:21-cv-00098-BSJ, 2023 WL 3766102 (D. Utah Jun. 1, 2023) (Judge Bruce S. Jenkins). Plaintiff D.B., on behalf of his minor son, A.B., sued two insurance companies, Blue Cross Blue Shield of Illinois and United Healthcare Insurance Company/United Behavioral Health, in connection with denied coverage for A.B.’s stay at a sub-acute residential treatment center. Plaintiff asserted claims for benefits and claims for violation of the Mental Health Parity and Addiction Equity Act against insurers of both plans that A.B. was a beneficiary of. In this order the court issued its rulings on those motions. It began by addressing Blue Cross’s denial. Blue Cross denied the claim under a plan term requiring residential treatment centers to offer 24-hour onsite nursing services. Because the facility A.B. stayed at did not offer such services, Blue Cross denied the claim. Under abuse of discretion review, the court found that the facility did not satisfy the plan’s unambiguous requirement and that the denial was therefore reasonable. Accordingly, the court granted summary judgment in favor of Blue Cross on the denial claim. Regarding the Parity Act claim asserted against Blue Cross, the court found that there was no discrepancy between the 24-hour onsite nursing services requirement for mental healthcare facilities and any skilled nursing facility because federal Medicare law and state licensing authorities impose the exact same 24-hour onsite nursing services requirement on all inpatient facilities. Thus, the court stated that D.B. did not establish that the requirement for coverage of residential treatment centers for mental healthcare was more restrictive than comparable nursing treatment centers under the terms of the plan, and without any proof of a disparity in treatment, the Parity Act claim failed. Despite plaintiff’s lack of success against Blue Cross, the court’s calculus was quite different with regard to United Behavioral Health. In the case of United, the denial was based on a lack of medical necessity under a plan that included discretionary language which triggered arbitrary and capricious review. In its analysis, the court relied on recent Tenth Circuit precedent in D.K. v. United Behavioral Health, No. 21-4088, 2023 WL 3443353 (10th Cir. May 15, 2023), which Your ERISA Watch featured as our case of the week in our May 24, 2023 newsletter. Under the guidance of D.K., the court found that United’s denial was an abuse of discretion as United failed to engage in a dialogue with A.B.’s treatment provider or address that doctor’s opinions and recommendations. “Nowhere in any of its denials did UBH address the recommendations of Dr. McCormick that A.B. continue to receive (residential treatment center) care.” Thus, applying D.K., the court concluded that United arbitrarily and capriciously refused to engage with the medical opinions of A.B.’s treating healthcare providers, and therefore entered summary judgment against United. Unfortunately for plaintiff, though, the court did differ from D.K. in one respect. Rather than awarding benefits outright, it concluded the proper course of action in this case would be to remand to United for a renewed evaluation of the claim consistent with this decision. Finally, having directed remand, the court denied as moot United and D.B.’s cross-motions for judgment on the Parity Act claim.

Pleading Issues & Procedure

Second Circuit

Vellali v. Yale Univ., No. 3:16-cv-1345(AWT), 2023 WL 3727426 (D. Conn. May. 26, 2023) (Judge Alvin W. Thompson), Vellali v. Yale Univ., No. 3:16-cv-1345(AWT), 2023 WL 3727432 (D. Conn. May. 26, 2023) (Judge Alvin W. Thompson), Vellali v. Yale Univ., No. 3:16-cv-1345(AWT), 2023 WL 3727415 (D. Conn. May. 30, 2023) (Judge Alvin W. Thompson), Vellali v. Yale Univ., No. 3:16-cv-1345(AWT), 2023 WL 3727452 (D. Conn. May. 26, 2023) (Judge Alvin W. Thompson), Vellali v. Yale Univ., No. 3:16-cv-1345 (AWT), 2023 WL 3727438 (D. Conn. May. 26, 2023) (Judge Alvin W. Thompson). A series of motions in limine were before the court this week in a class action brought by participants in the Yale University 403(b) Retirement Account Plan, where a jury trial is already underway, a first of its kind in an ERISA breach of fiduciary duty case. In the first two decisions, the court ruled on the sufficiency of plaintiffs’ claim that the Yale fiduciaries had the authority to transfer participant assets from TIAA annuities to other investments, a practice referred to as “mapping.” The participants argued that “ERISA requires plan documents and service provider contracts to be interpreted to allow Defendants to close investments and map them to other options if the investments are imprudent or charge unreasonable fees.” The court did not agree with this characterization of ERISA’s requirements. Instead, it held that the plan does not unambiguously give defendants the authority to remove any investment option or to transfer funds into a different option, and that doing so would actually have interfered with the terms of the contracts between the participants and TIAA itself. “Thus, the plaintiffs have failed to show that they have a basis for arguing or attempting to introduce evidence in support of an argument, that the defendants were imprudent by not unilaterally transferring assets invested in the legacy version of the TIAA traditional annuities to different investment options.” Accordingly, the court denied plaintiffs’ motion regarding defendants’ authority to map the TIAA annuities and granted defendants’ motion precluding plaintiffs from arguing that they were imprudent by not unilaterally doing so. The third decision of the bunch granted in part and denied in part plaintiffs’ motion to exclude evidence or argument “suggesting that Defendants’ duty of prudence under ERISA is defined solely by comparison to the conduct of other educational institutions.” Plaintiffs argued that there is no such thing as a “university specific standard” for ERISA fiduciaries. The court granted the motion to the extent that it seeks to preclude defendants from arguing that the applicable legal standard is defined solely through the context of conduct by other universities. Nevertheless, the court found plaintiffs’ motion to be overly broad, and denied it to the extent that they sought to preclude defendants from arguing that the most appropriate comparator plans to the Yale plan are those belonging to other educational institutions. In the fourth decision, the court denied plaintiffs’ motion to exclude testimony of Conrad Ciccotello, an individual that defendants intend to call as an expert witness to offer testimony about Yale’s oversight process for monitoring and reviewing third party vendors and plan investments. The court concluded that Mr. Ciccotello is qualified to testify as an expert given his academic work, his past service as an expert witness in similar cases, and his experience with two private foundations, including as a research fellow in the TIAA Institute. In addition, the court was satisfied that Mr. Ciccotello’s opinions were likely to be reliable and helpful to the triers of fact. In the final decision this week, the court almost entirely denied defendants’ omnibus motion in limine addressing nine separate issues. First, the court ruled that defendants’ remedial measures, including their decision to consolidate recordkeepers in 2015 and move to a consolidated investment lineup, are admissible before the jury. The court agreed with plaintiffs that whether Yale could have taken these actions earlier is a contested and relevant fact that the jury will have to decide. Second, the court ruled that it would not preclude plaintiffs from introducing evidence relating to their previously dismissed claims so long as that evidence is probative to the claims still pending. Third, the court stated that the statute of limitations which shaped the class period, “does not operate to bar the introduction of evidence that predates the commencement of the limitations period but that is relevant to the events during the period.” Thus, the court allowed plaintiffs to include information about pre-class period conduct for the jury to be able to consider how the fiduciaries managed the plan over an extended period of time. Fourth, the court denied defendants’ motion to exclude evidence regarding Yale’s procurement process, holding that such evidence is relevant. Fifth, the court granted, with the consent of plaintiffs, defendants’ motion for an order forbidding plaintiffs’ experts from referring to settlements in other ERISA cases. Sixth, the court restated an earlier opinion that Yale’s process for monitoring investments in its endowments was relevant, and therefore denied defendants’ motion to exclude evidence on this topic. Seventh, defendants moved to preclude plaintiffs from introducing evidence about comparative plans that did not have TIAA annuities. The court denied this motion. It stated that whether recordkeeping or investment monitoring practices undertaken by fiduciaries of ERISA plans that did not offer TIAA annuity products are comparable to the Yale plan is a determination that should be made by the finder of fact. Eighth, the court allowed plaintiffs to offer evidence about potential conflicts of interest defendants had involving TIAA. Finally, the court reiterated that the “jury trial standard” applies to Daubert motions to exclude, and that its analysis on defendants’ arguments to exclude plaintiffs’ experts’ opinions remains unchanged from its earlier decision.

Retaliation Claims

Second Circuit

Neufville v. Metro Cmty. Health Ctrs., No. 22-cv-06002 (ALC), 2023 WL 3687727 (S.D.N.Y. May. 26, 2023) (Judge Andrew L. Carter). Plaintiff Sherie Neufville was employed by a health clinic, defendant Metro Community Health Centers, Inc., as a podiatrist from December 2016 until February 2022. She was fired in February 2022 while taking paid maternity leave under an employer sponsored benefit plan. In her complaint, Ms. Neufville alleges that in the fall of 2021 she formally applied for and was approved paid family leave to give birth and take care of her newborn from late November 2021 to the end of February 2022. She maintains that her employer discharged her for retaliatory reasons to interfere with her attempt to exercise her rights under her ERISA plan. Accordingly, in this lawsuit Ms. Neufville asserted one cause of action, a violation of Section 510 of ERISA. To date, Metro Community Health has not appeared in the action. On March 28, 2023, the court issued an order to show cause why it should not issue an order pursuant to Federal Rule of Civil Procedure 55 entering default judgment. Ms. Neufville served a copy of the order to show cause on Metro Community Health. Once again, it failed to respond. As a result, Ms. Neufville moved for default judgment. The court granted her motion in this order. It was satisfied that Ms. Neufville made a prima facie case that her employer’s action to terminate her was at least partially motivated by the intent to engage in retaliatory conduct. The short time period between Ms. Neufville’s protected activity and the termination also convinced the court that “a causal connection could exit between the protected activity…and the adverse action.” Finally, because defendant defaulted, the court stated that it failed to articulate a legitimate or non-discriminatory reason for its decision to fire Ms. Neufville while she was on her paid leave. “Therefore, the presumption of retaliation is not rebutted, and Defendant is liable for violating Section 510 of ERISA.” However, the court did not award damages in this order. Instead, it ordered Ms. Neufville to file supplemental materials clarifying the amount in damages she was seeking and the basis for the requested award amount.

Statutory Penalties

Third Circuit

Goode v. Capital One Fin. Corp., No. 22-325-CFC, 2023 WL 3750679 (D. Del. Jun. 1, 2023) (Judge Colm F. Connolly). Pro se plaintiff Alexander Goode sued his former employer, Capital One Financial Corporation, for a violation of a provision in the American Rescue Plan Act of 2021 which requires employers to notify laid off workers that they were entitled to have their former employer pay for their healthcare premiums for continuing coverage under COBRA. In his complaint, Mr. Goode asserted a claim under ERISA § 1132(c) for statutory penalties of up to $110 per day for the alleged violation of the American Rescue Plan Act’s notice provisions. Capital One moved to dismiss. It argued that the complaint failed as a matter of law because Section 502(c) does not authorize statutory penalties of violations of the American Rescue Plan Act. The court disagreed and denied the motion to dismiss. It held that failure to comply with the availability of premium assistance notification requirements of the act constitutes a failure to comply with ERISA’s COBRA requirements, and that under Section 502(c), a court may exercise its discretion and award penalties per day from the date of such a failure. Thus, the court concluded that Mr. Goode’s claim for statutory penalties for Capital One’s alleged failure to comply with these provisions did not fail as a matter of law.