
The federal courts took a breather this week after the Civil Justice Reform Act reporting period expired on September 30, with a sharp drop in the number of ERISA-related cases reported. None of the decisions that were reported were particularly striking, so we at Your ERISA Watch will take a breather as well and forgo a case of the week. Nevertheless, please read on, as the cases that were decided involve the family of a Nobel Prize winner battling over his $4 million retirement account, an unhappy retiree who took a $100,000 hit on her account in just one month at the start of the COVID-19 epidemic, and a dispute raising the question of whether ERISA governs claims relating to a pension fund employee’s overpaid wages (spoiler: it does not).
Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
Attorneys’ Fees
Fourth Circuit
Western Va. Reg’l Emergency Physicians v. Anthem Health Plans of Va., No. 3:23-cv-781, 2024 WL 4425686 (E.D. Va. Oct. 4, 2024) (Judge M. Hannah Lauck). On August 19, 2021, five emergency room staffing agencies sued Anthem in Virginia state court alleging the insurance company has failed to establish a sufficient network of contracted emergency services providers for its insureds which has resulted in its members seeking out-of-network emergency care through providers like them. In their complaint the providers argue that this was an intentional emergency network structure designed to give Anthem the ability to unilaterally establish its rates of compensation. According to plaintiffs, the compensation they received from Anthem has been far below fair market value. They assert entitlement to restitution under a quantum meruit theory. Despite the staffing agencies fashioning their action as a “right of payment” state law dispute, Anthem removed their case to federal court asserting ERISA preemption. The providers moved for remand in response. Ultimately, the court agreed with the ER groups that their action was not preempted as they did not have standing to sue under ERISA Section 502(a) and accordingly granted their motion to remand. Plaintiffs subsequently filed a motion for attorneys’ fees and costs under Section 1447(c) to recover the expenses they incurred in handling the removal and obtaining a remand. The court began its discussion by disagreeing with Anthem that the providers had waived their right to seek attorney’s fees. It stated that the providers were not required to request attorneys’ fees concurrently with their motion to remand, and they had not waived any rights to fees by failing to respond to the section of Anthem’s opposition brief devoted to arguing that plaintiffs would not be entitled to fees even if the court decided to remand the case. Nevertheless, the court declined to award plaintiffs attorneys’ fees. At the end of the day, the court could not say that Anthem’s removal was objectively unreasonable, frivolous, or lacking in a sound basis. After all, ERISA preemption is notoriously tricky, and courts often arrive at different decisions when it comes to analyzing preemption issues in provider cases. Therefore, it was unsurprising the court declined to penalize Anthem for its decision to remove this action. The court thus rejected plaintiffs’ arguments that fees should be awarded and denied their motion.
Breach of Fiduciary Duty
Sixth Circuit
Harris v. American Elec. Power Serv. Corp., No. 2:23-cv-769, 2024 WL 4434831 (S.D. Ohio Oct. 7, 2024) (Judge James L. Graham). Thomas Mann once wrote, “everything is a matter of ripeness and dear time.” For plaintiff Lorraine R. Harris the timing between the date when she requested the distribution of her 401(k) account savings and the date when that money actually arrived in the mail cost her 30 days and $98,870.22. This large dip occurred as a result of the volatile markets at the very beginning of the COVID-19 pandemic. In reality, Ms. Harris’s funds had decreased even further during this one-month period, but recognizing its failures in the handling of her account, defendant Empower Retirement LLC provided Ms. Harris with a check for $51,796.89 in addition to its distribution of the remaining balance in her account of over $1.5 million. Ms. Harris brings this breach of fiduciary duty action under ERISA against her former employer, American Electric Power, and the other fiduciaries of its retirement plan, Empower, JP Morgan Chase Bank NA, and GreatWest Trust Co LLC, alleging that they mismanaged her distribution by failing to inform her of the plan’s 30-day waiting period and by failing to place her distribution funds in a safe harbor cash account pending the issuance of her account balance given the visible upheaval of the coronavirus outbreak. Ms. Harris requests make-whole relief of the $98,870.22 plus interest, as well as attorneys’ fees and costs. Defendants moved to dismiss the complaint in its entirety, arguing that Ms. Harris failed to state claims upon which relief can be granted. In this decision the court agreed, and granted the motion to dismiss. To the court, the central grievance centered around claims processing, which it stressed is a ministerial rather than a fiduciary task. Moreover, the court agreed with defendants that the plan documents contained no language which would have permitted Empower to waive or shorten the unambiguous 30-day distribution waiting period and it therefore had no “discretionary authority to control with respect to the waiting period.” In addition, the court jumped on the fact that the misstatements made to Ms. Harris by Empower’s representative promising a next-day distribution were quickly corrected. To the court, one could only read Ms. Harris’s complaint at best to “argue that the letter shows Empower had some discretion to try to make things right when its employees made mistakes,” but “Plaintiff’s conversations with Empower do not indicate a level of discretionary authority or responsibility in the administration of the Plan.” Finally, the court rejected Ms. Harris’s theory that the fiduciaries should have placed her funds into a safe harbor cash account, as the plan itself does not contemplate such an option. Thus, the court was unconvinced on the face of the complaint that Empower functioned as a fiduciary during the relevant activities, or that the other defendants had fiduciary authority themselves to act or to monitor, and therefore ruled that Ms. Harris could not sustain her fiduciary breach claims against them. The court did not specify whether its dismissal was with prejudice. If it was, Ms. Harris will have found herself without judicial recourse for the nearly $100,000 she lost waiting for her distribution. If money is time, those 30 days proved costly.
Disability Benefit Claims
Sixth Circuit
Copeland v. The Lincoln Nat’l Life Ins. Co., No. 1:19-cv-1033, 2024 WL 4471155 (W.D. Mich. Oct. 11, 2024) (Judge Jane M. Beckering). Plaintiff Angela Copeland brought this action to challenge defendant Lincoln National Life Insurance Company’s denial of her claim for long-term disability benefits. Ms. Copeland was previously employed as a computer program and software analyst. She ceased working in 2016 as a result of epilepsy, fibromyalgia, chronic depression, degenerative back disease, and side effects from medications. Even getting short-term disability benefits proved an uphill battle for Ms. Copeland, and it too required legal action. In 2018, the parties settled the short-term disability lawsuit, and Ms. Copeland subsequently submitted a claim for long-term disability benefits, which was denied from the outset. In this decision the court issued its de novo review of the administrative record. “While the Court is sympathetic to Copeland’s many health challenges, the Court agrees with and affirms the decision of the plan administrator with respect to whether Copeland qualified for benefits under the ERISA plan during the relevant time period.” The court reached this decision thanks in large part to the results of in-person cognitive and neurological testing conducted by a doctor hired by Lincoln. The court concluded that the neurological testing did not “show such a drastic decline to prevent [Ms. Copeland] from performing any of the main duties of her occupation.” Moreover, the results of this testing remained largely uncontested as there were “no other objective medical evidence to dispute these findings.” And although an Administrative Law Judge from the Social Security Administration reached a different conclusion regarding whether Ms. Copeland was disabled, the court nevertheless found the criteria the SSA used distinguishable and therefore not determinative. The court was further unmoved by the opinions of Ms. Copeland’s treating providers, and found them unpersuasive for various reasons. Thus, after weighing and considering all of the evidence in the record, the court reached the same conclusion as Lincoln that Ms. Copeland’s symptoms, though real, were not significant enough to render her unable to perform the material duties of her occupation and she was therefore ineligible for long-term disability benefits under her policy. The court accordingly affirmed Lincoln’s denial.
Discovery
First Circuit
Basch v. Reliance Standard Life Ins. Co., No. 23-cv-30121-MGM, 2024 WL 4459339 (D. Mass. Oct. 10, 2024) (Magistrate Judge Katherine A. Robertson). Plaintiff Adam Basch moved to clarify and complete the claim administrative record in his ERISA long-term disability benefits action against Reliance Standard Life Insurance Company. In his motion, Mr. Basch argued that supplemental records and discovery are warranted because he had no part in creating the claims record, Reliance operates under a conflict of interest, and he cannot be sure that Reliance produced the complete record. Mr. Basch also requested the court order Reliance to produce an affidavit attesting that the record is complete. The assigned magistrate judge was not receptive to Mr. Basch’s arguments. The magistrate broadly emphasized that it is an ERISA claimant’s burden to supply information proving his or her disability to the insurer during the claims handling and appeals processes. Applying this principle, the magistrate stressed an unwillingness to deviate from the administrative record Reliance provided absent unusual circumstances, and in the instant matter, the magistrate concluded there were not circumstances justifying deviating from the norm. As an initial matter, the magistrate stated that Reliance sufficiently attested that the claims record it provided is the complete record, and thus declined to order it to produce an affidavit to this effect. Furthermore, the magistrate noted that disputes over the applicable definition of “regular occupation,” and whether Reliance reasonably relied on the opinion of a physician who did not examine Mr. Basch, are both merits issues rather than arguments that justify any additions to the claims record. And as for the claims record itself, the magistrate stated that the time for supplementing it with additional medical records has passed. Importantly, Mr. Basch could not indicate or identify any medical evidence or other document he provided on appeal that was omitted from the claim record, so it appeared to the magistrate that there was no compelling reason to depart from the administrative record Reliance provided. With respect to any conduct Reliance engaged in that was not in compliance with ERISA or the Department of Labor’s claims handling regulations, the magistrate stated that the proper remedy for these procedural missteps would be a remand, again not to supplement the record. Finally, the magistrate held that Reliance’s structural conflict of interest alone did not justify expanding the administrative record. For these reasons, the magistrate ruled that the record shall stay as is, and therefore denied Mr. Basch’s motion to in any way alter, clarify, or complete it.
Third Circuit
Taylor v. Sheet Metal Workers’ Nat’l Pension Fund, No. 24-4321 (CPO/EAP), 2024 WL 4471683 (D.N.J. Oct. 11, 2024) (Magistrate Judge Elizabeth A. Pascal). Plaintiff Stultz G. Taylor, a former sheet metal worker, sued the Sheet Metal Workers’ National Pension Fund and its fiduciaries for wrongful denial of benefits, breach of fiduciary duty, denial of full and fair review, and estoppel after his claim for early retirement pension benefits was denied on the basis that his office work in the same industry constituted “Covered Employment” under his pension plan. Mr. Taylor requested discovery outside the administrative record in his action. He argued that defendants’ conflicts of interest affected the way they exercised their discretionary authority and ultimately their decision-making, which he maintains entitles him to supplemental discovery. The court, however, did not agree. Contrary to Mr. Taylor’s assertions, the court stated that it could not see “any structural or procedural conflicts that would permit consideration of facts beyond the administrative record.” The court instead stated that Mr. Taylor’s allegations of fiduciary wrongdoing are truly an inquiry into the merits of the actual claim denial, “precisely the type of inquiry that ERISA shields from expansive discovery.” The court further explained that it would not allow Mr. Taylor the opportunity to perfect or develop his claim record through the discovery process as this would perversely incentivize claimants to withhold evidence relevant to claims from internal administrative review. Nor was the court receptive to Mr. Taylor’s contention that defendants’ denial was somehow influenced by its withdrawal liability lawsuit against his former employer. “Plaintiff…fails to explain how these facts – even taken as true – reflect any bias or other procedural irregularity. In considering procedural factors, the focus is whether in the particular case at issue, ‘the administrator has given the court reason to doubt its fiduciary neutrality’… Nothing in Plaintiff’s argument gives the Court any reasonable basis to doubt Defendants’ fiduciary neutrality or to believe that Defendants engaged in some misconduct when rendering Plaintiff’s benefits decision.” Additionally, the court said that it could not read the complaint to suggest that the Fund ever made a final decision that Mr. Taylor was eligible for the early retirement benefits he applied for, or reversed such a decision, and thus it could not conclude on this basis that there was a reasonable suspicion of misconduct sufficient to warrant discovery. Lastly, the court held that re-labeling ERISA benefit claims as state law claims does not permit ERISA plaintiffs the opportunity to seek discovery, as such claims are likely preempted by ERISA. For these reasons, the court denied Mr. Taylor’s request for discovery.
ERISA Preemption
Second Circuit
Mundell v. Natsios-Mundell, No. 24-cv-2800 (JSR), __ F. Supp. 3d __, 2024 WL 4441904 (S.D.N.Y. Oct. 8, 2024) (Judge Jed S. Rakoff). The children and grandchildren of the late Nobel Prize-winning economist Dr. Robert Mundell sued his widow, defendant Valerie Natsios-Mundell, in state court alleging she fraudulently used her husband’s credentials to login to his online portal to change his designated beneficiary from his four children and name herself the sole beneficiary of the $4 million retirement account. Plaintiffs aver that the change in beneficiary form was electronically completed during a period when Dr. Mundell could not operate a computer, or indeed communicate, as a result of a major stroke. Ms. Natsios-Mundell removed this state law “family dispute” to the federal court system, maintaining that the plaintiffs’ action seeking the retirement benefits is completely preempted by ERISA. The children and grandchildren disagreed. They argued that they are not challenging the plan administrator’s distribution of benefits, and that they are not beneficiaries with a colorable claim to benefits under ERISA. Plaintiffs moved to remand their action back to state court. Plaintiffs’ motion was granted by the court in this decision. It agreed with them that their claims failed both prongs of the Supreme Court’s two-part Davila test. First, the court held that “plaintiffs’ technical eligibility for benefits under Dr. Mundell’s ERISA plan is a matter separate from defendant’s alleged impropriety in securing sole claim to the benefits at issue.” And to the extent that plaintiffs could have sued under Section 502(a), the court emphasized that plaintiffs’ lawsuit seeks to hold Ms. Natsios-Mundell liable for her harm “rather than challenge the plan administrators’ distributions of benefits.” Thus, the court found that plaintiffs’ claims could not be construed as causes of action under ERISA. Finally, the court stated that “even assuming defendant has some legal duty under the plan, her obligation not to take another’s property as her own, or not to obtain property through fraud, is ‘independent and distinct’ from any obligation imposed by the plan.” For these reasons, the court was satisfied that ERISA does not completely preempt the family’s state law claims against the widow and therefore determined that it lacks subject matter jurisdiction over this matter and removal was improper. The court ended its analysis with a reminder that any arguments of ordinary conflict preemption will be up to the state court to consider and decide. “In other words, the instant decision ends the discussion of ERISA preemption only in this Court.” Of course, where the federal court’s discussion of ERISA preemption ends, Your ERISA Watch’s does too.
Ninth Circuit
Healthcare Justice Coal. CA Corp. v. Aetna, Inc., No. 2:24-cv-04681-CBM-RAOx, 2024 WL 4458543 (C.D. Cal. Oct. 10, 2024) (Judge Consuelo B. Marshall). A third-party healthcare organization in California dedicated to obtaining payments from insurance companies for emergency medical services, plaintiff Healthcare Justice Coalition CA Corp., sued a collective group of Aetna insurance companies in state court to recover alleged underpayments and lack of payments for emergency medical services provided to subscribers and insureds of Aetna’s healthcare plans. Plaintiff carefully pled claims under state law and explicitly decided not to pursue any rights or causes of action under ERISA. Nevertheless, Aetna removed the action to federal court and argued that ERISA completely preempts the state law claims giving the federal court subject matter jurisdiction over this dispute. It maintains that plaintiff is a “double assignee” and that its claims arising out of state law implicate and are dependent on Aetna’s duties and obligations to its members under their ERISA-governed welfare plans. Plaintiff filed a motion to remand the action, which the court granted in this order. It concluded that defendants did not meet their burden to show either prong of the Davila test was satisfied. With regard to prong one, the court stated Aetna failed to submit evidence establishing that plaintiff is indeed a double assignee with standing to sue under ERISA. Not only did the court hold that plaintiff could not have brought claims pursuant to ERISA Section 502(a), but it also further emphasized that “the Complaint does not allege that Plaintiff seeks to enforce rights created by ERISA plans at all.” Although prong one of Davila was not satisfied, which alone justifies remand, the court briefly discussed prong two as well. There the court concluded that plaintiff’s theory of liability is based solely on state law rights and obligations of insurers to provide healthcare reimbursement, independent of ERISA. For these reasons, the court determined that ERISA does not preempt or transform the state law causes of action. As a result, the court granted plaintiff’s motion to remand.
Eleventh Circuit
Worldwide Aircraft Servs. v. Worldwide Ins. Servs., No. 8:24-cv-01991-WFJ-NHA, 2024 WL 4416825 (M.D. Fla. Oct. 4, 2024) (Judge William F. Jung). An emergency aircraft transportation provider sued Blue Cross and Blue Shield of Louisiana in state court alleging four state law causes of action in connection to alleged underpayments. Blue Cross removed the action and argued that the federal court has jurisdiction over the matter because it is completely preempted by ERISA. Two motions were before the court here. Blue Cross moved to dismiss the complaint for failure to state a claim. In this brief decision, the court denied Blue Cross’s motion as moot and remanded the case back to state court for lack of subject matter jurisdiction. The court held that the provider’s claims are outside the scope of ERISA and instead found “that Plaintiff’s claims are more akin to the rate of payment claims.” The court elaborated that the provider’s lawsuit alleges that Blue Cross paid too little for the transportation services it provided which “is a classic ‘rate of payment’ claim that does not fall under ERISA.” Instead, the court held that the relief plaintiff seeks is solely available under Florida statutory and common law. As a result, the court determined that it does not have jurisdiction over the matter, and remanded it back to state court.
Exhaustion of Administrative Remedies
Fifth Circuit
Nyola Lynette Broussard Succession v. CVS Health Sols., No. 2:23-CV-01138, 2024 WL 4466733 (W.D. La. Oct. 10, 2024) (Judge James D. Cain, Jr.). The independent administrator of the succession of decedent Nyola Lynette Broussard sued CVS Pharmacy Inc. and the CVS Health Solutions Welfare Benefit Plan alleging CVS failed to honor its contract for optional life insurance benefits. CVS moved for summary judgment and dismissal of the lawsuit. It argued that plaintiff never filed a claim for optional life insurance benefits and therefore failed to exhaust administrative remedies prior to suing. In addition, CVS presented evidence that Ms. Broussard never elected optional life benefit coverage and did not pay the requisite premiums for such coverage. Plaintiff failed to respond or oppose CVS’s motion for summary judgment. The court issued this no-frills decision granting CVS’s motion and dismissing plaintiff’s claims with prejudice. The court was persuaded by both of CVS’s arguments, and stated that either one represented grounds to dismiss the action. To the court it was plainly clear that the succession administrator failed to exhaust, and, more fundamentally, Ms. Broussard never elected coverage for the benefits at issue. For both reasons, the court ruled that plaintiff’s claims must be dismissed, and thus it granted defendant’s motion, ending the case.
Pension Benefit Claims
Second Circuit
Guzman v. Bldg. Serv. 32BJ Pension Fund, No. 23-8032, __ F. App’x __, 2024 WL 4431100 (2d Cir. Oct. 7, 2024) (Before Circuit Judges Sullivan, Nardini, and Nathan). On November 20, 2023, the district court dismissed pro se plaintiff Carlos Guzman’s complaint against the Building Service 32BJ Pension Fund and others in this ERISA action in which he alleged he was entitled to an actuarial increase in his pension benefits. The district court dismissed the complaint after concluding that Mr. Guzman’s claims were foreclosed by the unambiguous language of the pension plan. (Your ERISA Watch covered this decision in our November 29, 2023 edition.) Mr. Guzman appealed the district court’s dismissal to the Second Circuit Court of Appeals. In this brief unpublished decision the Second Circuit affirmed. It stated that it agreed with the lower court that the plain language of the operative plan document “makes clear that an employee is entitled to an actuarial increase only ‘[i]f after terminating Covered Employment, [he] wait[s] to begin [his] pension until after Normal Retirement Age.” The Second Circuit added that Guzman acknowledged he never terminated his covered employment and instead remained employed in the building service industry after he reached normal retirement age. “This alone establishes that Guzman is not entitled to an actuarial increase under the SPD.” In addition, the appeals court rejected additional arguments Guzman raised for the first time in his administrative appeal, including arguments that his pension benefits were miscalculated, and that he is entitled to be returned money he paid into the pension fund after surpassing the maximum number of service credits needed to receive full monthly benefits. Finally, the Second Circuit found Mr. Guzman’s remaining arguments without merit. Accordingly, the district court’s judgment was affirmed.
Pleading Issues & Procedure
Second Circuit
Board of Trs. of the AGMA Health Fund v. Aetna Life Ins. Co., No. 24-CV-5168 (RA), 2024 WL 4432586 (S.D.N.Y. Oct. 7, 2024) (Judge Ronnie Abrams). This ERISA action was filed a few months ago by the Board of Trustees of the AGMA Health Fund against Aetna Life Insurance Company. As part of its complaint, The Board of Trustees attached the Master Services Agreement (“MSA”) executed between itself and Aetna as an exhibit. The MSA contains a confidentiality agreement. Interested in abiding by these confidentiality terms, Aetna moved to seal the MSA and file a redacted version in its place. Plaintiff did not oppose the motion. But the court in this decision stated that it was inclined to deny Aetna’s motion. The Second Circuit has articulated a strong presumption in favor of public access to judicial documents. In order to promote this principle, the Second Circuit created the three-part Lugosch test under which courts must (1) consider whether the document at issue is a “judicial document,” (2) assess the weight of the common law presumption of access to the document, and finally, (3) balance the competing considerations against the presumption of access. The court concluded that prongs one and two of the test counseled against sealing the document. It found that the MSA was central to the legal claims at issue “as it sets forth the terms of an agreement that is a subject of this dispute,” and therefore concluded that it is a judicial document. In addition, the court stressed that “the presumption of public access carries strong weight here.” This was so, the court went on, because the agreement serves a crucial role in defining the relative rights and duties of the parties with respect to the issues in this lawsuit. On the other side of the scale, the court expressed that it viewed Aetna’s arguments in favor of sealing the document as “lacking in particularity,” and insufficient as currently stated to overcome the interest of public disclosure and transparency. However, rather than definitively deny Aetna’s motion, the court allowed it the opportunity to file a supplemental letter expanding on the reasons why it views its own privacy interests as outweighing the public right of access. Once presented with this additional information, the court said it will rule on the third prong of the Lugosch test and only then conclusively rule on Aetna’s motion to seal.
Fourth Circuit
Trustees of the Plumbers & Steamfitters Union Local No. 10 Apprenticeship Fund v. Napky, No. 3:24-CV-180-HEH, 2024 WL 4453771 (E.D. Va. Oct. 8, 2024) (Judge Henry E. Hudson). Defendant Victoria Napky was hired by the Plumbers and Steamfitters Union Local No. 10 Apprenticeship Fund to assist the Fund’s training director in the office and work as an instructor. As an instructor, Ms. Napky was paid an hourly wage, with no fringe benefits of any kind. After Ms. Napky left this position in August of 2022, the Fund erroneously continued to pay her weekly payments which were directly deposited into her account. This continued for six months and allegedly resulted in a total of $58,590 in erroneous payments. This matter was brought by the Trustees of the Fund against Ms. Napky to recover the overpaid amount under ERISA and under state common law. Ms. Napky moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). She argued that this action cannot be sustained under ERISA. In this decision, the court agreed with her. “Here, Plaintiff does not seek to enforce any provision of the plan but to reverse erroneous payment of wages.” In fact, the court added, the complaint does not identify how the relationship between the parties implicates ERISA at all “other than the fact that Plaintiff generally operates as a ‘named fiduciary’ and Defendant was allegedly paid with Fund assets.” And although the court was willing to accept that the accidental payments made to Ms. Napky were contrary to the terms of the Trust Agreement, and that the Trustees are subject to that agreement and must comply with all governing documents, the court was unwilling to expand these facts to mean “that the Trust Agreement can affect [the Trustees’] relationship with Defendant, when Defendant is not a party to the Trust Agreement. Likewise, if the Court were to accept Plaintiff’s position that use of Fund assets, regardless of how they are used, entitled a named fiduciary to litigate state law claims through ERISA, the implications would be very consequential. The Court cannot entertain Plaintiff’s theory that risks turning countless disputes into federal claims simply because they involve an ERISA fund.” Thus, the court concluded that the claims at issue do not implicate ERISA. It therefore dismissed the ERISA cause of action. The court then declined to exercise supplemental jurisdiction over the state law unjust enrichment claim. Consequently, the court granted Ms. Napky’s motion to dismiss the Trustees’ suit against her.
Sixth Circuit
Mercer v. Unum Life Ins. Co. of Am., No. 3:22-cv-00337, 2024 WL 4437117 (M.D. Tenn. Oct. 7, 2024) (Judge Eli Richardson). Taking every precaution, plaintiff Nicole Mercer, in this action for benefits against Unum Life Insurance Company of America, filed documents designated by Unum under an applicable protective order under seal. She asked the court to seal five documents. Her motion was “unsurprisingly” unopposed, as the motion to seal was prompted by Unum’s designation of these documents as confidential. Unum represented that four of the five documents contain either private information of third parties or trade secrets. It therefore supported sealing these four documents. In this decision the court sealed the four documents identified by Unum, and denied the motion to seal the fifth document, which the parties agreed did not include trade secrets and thus did not need to be sealed. It agreed with defendant that the public’s interest in accessing the information in the documents was outweighed by Unum’s interest in keeping its trade secrets private, especially as the request to seal these documents was viewed by the court as narrowly tailored. As the court noted in its decision, other courts in the Sixth Circuit and the in the Eastern District of Tennessee “have found that similar information as that which Defendant seeks to keep under seal here, were trade secrets, and that similar requests were narrowly tailored.” Therefore, the court sealed each of the exhibits that Unum sought to keep under seal, and granted the motion in part to reflect this decision. Ms. Mercer was directed to file an amended redacted trial brief removing any redactions relating to the fifth unsealed document.
Seventh Circuit
Walther v. Wood, No. 1:23-cv-00294-GSL-SLC, 2024 WL 4471419 (N.D. Ind. Oct. 11, 2024) (Magistrate Judge Susan Collins). This is a breach of fiduciary duty case involving an Employee Stock Ownership Plan (“ESOP”). On September 27, 2024, defendant John Wood filed a motion to amend his answer to plaintiffs’ second amended complaint, stating that discovery has revealed a recusal letter pertinent to the ESOP board membership and trustees. In his amended answer, Mr. Wood seeks to add an affirmative defense based on the recusal letter and incorporate it and additional exhibits. Plaintiffs opposed Mr. Wood’s motion. They argued that it is untimely, as the recusal letter was produced during discovery two months before Mr. Wood’s deadline to seek amendments to the pleadings. In addition, plaintiffs averred that the amendment itself is futile because “courts have consistently rejected ‘recusal’ as a defense to ERISA fiduciary monitoring and co-fiduciary claims.” The court erred on the side of generosity given the Seventh Circuit’s stance generally favoring granting parties the opportunity to amend their pleadings. It stated that it would not deny the motion to amend solely due to its five-month untimeliness, and articulated that plaintiffs’ futility arguments are more appropriately raised in a dispositive motion, “[c]onsidering the futility argument at this juncture would be premature.” The court therefore granted Mr. Wood’s motion to amend his answer and instructed him to file his amended answer and exhibits.