Schuman v. Microchip Technology Inc., No. 24-2624, 24-2978, __ F. 4th __, 2025 WL 1584981 (9th Cir. Jun. 5, 2025) (Before Circuit Judges Thomas, Fletcher, and Smith, Jr.)

Waivers and releases of federal claims, including ERISA claims, are not favored, but are generally allowed so long as they are “knowing and voluntary.” Courts have enumerated various factors, which they usually describe as non-exhaustive, to be applied in making this determination. In this week’s notable decision, the Ninth Circuit reversed a district court ruling holding that releases signed by two former employees barred them from being named plaintiffs in an ERISA class action challenging the elimination of severance benefits by their employer. In so doing, the court announced a new Ninth Circuit test for evaluating ERISA releases. 

This case arose from the 2016 merger of Atmel Corp. and Microchip Technology. Following the merger, Microchip announced that it would no longer honor a severance plan that Atmel had adopted in anticipation of the merger for employees who were fired without cause. Two such former Atmel employees, Peter Schuman and William Coplin, filed an ERISA class action lawsuit challenging this decision and also asserting that that Microchip further violated its fiduciary duties by encouraging employees to sign a release of claims in exchange for significantly lower benefits than they had been promised under the severance plan.

The district court, however, agreed with Atmel and Microchip that Mr. Schuman and Mr. Coplin were precluded by the releases from suing and representing others who had signed releases. Strictly applying a six-factor test from the First and Second Circuits, the district court concluded that the release was “knowing and voluntary” and therefore enforceable. The court expressly declined to consider any evidence concerning whether Microchip had violated its fiduciary duties in obtaining the releases.

The court therefore granted summary judgment in favor of Microchip with respect to Mr. Schuman and Mr. Coplin, but not with respect to the unnamed class members because the court concluded that the factors were “too individualized to support a class-wide conclusion that all of the releases were signed knowingly and voluntarily.”

The district court “entered final judgment under Federal Rule of Civil Procedure 54(b) in favor of Microchip and against Schuman and Coplin, certifying for our review the question of “what legal test the Court should apply in determining the enforceability of the releases signed by Plaintiffs Peter Schuman and William Coplin and the majority of class members.” Specifically, the court wanted to know “whether it properly adopted and applied the First and Second Circuit’s six-part test or whether it should have considered Microchip’s alleged breach of fiduciary duties as part of its evaluation.” The Ninth Circuit answered the certified question in several steps.

First, the court considered whether, given the protective purposes and trust-law underpinnings of the statute, “ERISA requires heightened scrutiny of a waiver or release of ERISA claims,” particularly where there are allegations of fiduciary abuse. The court had little trouble answering this in the affirmative. “In accord with ERISA’s purposes and guided by other circuits’ approaches, we conclude that, when a breach of fiduciary duties is alleged, courts must evaluate releases and waivers of ERISA claims with ‘special scrutiny designed to prevent potential employer or fiduciary abuse.’” The court reasoned that “[r]equiring courts to consider evidence of a breach of fiduciary duty related to a release of claims under ERISA aligns with the statute’s purpose, structure, and underlying trust-law principles.”

The court then considered how best “to apply the required special scrutiny in practice.” Looking at the “ERISA-specific tests for the enforceability of releases” that other circuits have adopted, the Ninth Circuit concluded “that courts must consider alleged improper conduct by the fiduciary in obtaining a release as part of the totality of the circumstances concerning the knowledge or voluntariness of the release or waiver.”

The Ninth Circuit recognized that other circuits have adopted slightly different tests, contrasting “the First and Second Circuit’s non-exhaustive six-part test” with the Seventh and Eighth Circuits’ “more comprehensive but still non-exhaustive eight- and nine-part tests.” Because the Seventh and Eighth Circuit “explicitly require consideration of any improper conduct by the fiduciary,” the court concluded that their approach “provides the right balance between a strictly traditional voluntariness examination and an ERISA-based analysis.”

Thus, the Ninth Circuit combined “the two sets of factors, [to] hold that, in evaluating the totality of the circumstances to determine whether the individual entered into the release or waiver knowingly and voluntarily, courts should consider the following non-exhaustive factors: (1) the employee’s education and business experience; (2) the employee’s input in negotiating the terms of the settlement; (3) the clarity of the release language; (4) the amount of time the employee had for deliberation before signing the release; (5) whether the employee actually read the release and considered its terms before signing it; (6) whether the employee knew of his rights under the plan and the relevant facts when he signed the release; (7) whether the employee had an opportunity to consult with an attorney before signing the release; (8) whether the consideration given in exchange for the release exceeded the benefits to which the employee was already entitled by contract or law; and (9) whether the employee’s release was induced by improper conduct on the fiduciary’s part.”  

Because the district court “found a genuine issue of fact material to the issue of a breach of fiduciary duty in obtaining the release of claims,” the Ninth Circuit noted that “the final factor warrants serious consideration and may weigh particularly heavily against finding that the release was ‘knowing’ or ‘voluntary’ or both.” After concluding that the district court properly certified the release question for interlocutory review under Rule 54(b), but that it lacked jurisdiction over Microchip’s cross-appeal from the denial of summary judgment as to the non-named class members’ claims, the Ninth Circuit reversed the grant of summary judgment against Mr. Schuman and Mr. Coplin and remanded for consideration of the enumerated factors. 

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

Attorneys’ Fees

Eleventh Circuit

Asselta v. Nova Southeastern Univ., No. 0:22-cv-61147-WPD, 2025 WL 1560772 (S.D. Fla. May 28, 2025) (Magistrate Judge Patrick M. Hunt). This breach of fiduciary duty class action brought on behalf of the participants of the Nova University Defined Contribution 403(b) Plan ended with the parties reaching a settlement totaling $1,500,000. The court granted final approval to all aspects of the parties’ settlement other than attorneys’ fees and costs. This matter was referred to Magistrate Judge Patrick M. Hunt for appropriate disposition or report and recommendation. In this order Judge Hunt recommended the court approve plaintiffs’ requested attorney fee award of one-third of the settlement amount, or $500,000, as well as costs of $8,051.35. Judge Hunt held that class counsel should be awarded this amount given their expertise, the quality of their representation, counsel’s considerable time and effort, and the excellent result they achieved on behalf of the class. Judge Hunt wrote, “[t]he size and complexity of the issues before the Court, and the novelty of the litigated claims involving a 403(b) plan, support the one-third fee sought.” Moreover, the Magistrate concluded that one-third of the common fund is in line with fees awarded in similar complex ERISA class actions, and cited several instances where courts have awarded the same percentage of the common fund to the attorneys. “Not only that,” he added, “but the benefits of the Settlement must also be considered in the context of the risk that further protracted litigation might lead to no recovery, or to a smaller recovery for Plaintiffs and the proposed Settlement Class. The Defendant mounted a vigorous defense at all stages of the litigation and, but for the Settlement, would have continued to do so through all future stages of the litigation, including through possible appellate proceedings.” Given these factors and more, Judge Hunt opined that plaintiffs’ requested fee recovery was appropriate and well deserved. Thus, Judge Hunt fully approved plaintiffs’ unopposed motion for attorneys’ fees and costs.

Class Actions

Second Circuit

Andrew-Berry v. Weiss, No. 3:23-cv-978 (OAW), 2025 WL 1549102 (D. Conn. May 30, 2025) (Judge Omar A. Williams). Plaintiff Beth Andrew-Berry is a former employee of the now bankrupt Connecticut hedge fund GWA, LLC. Ms. Andrew-Berry brought this action against her former employer and its owner alleging they violated their fiduciary duties and misused assets of the company’s retirement plan in violation of ERISA. After the parties engaged in limited discovery, the case was stayed pending the resolution of the related bankruptcy action. The bankruptcy court eventually gave permission to continue litigating this action. At that time the parties engaged in mediation, which was successful. Thus, before the court here was plaintiff’s unopposed motion for preliminary approval of class action settlement and class certification. The court granted the motion in this decision. It began with certification of the settlement class. The court determined that all four elements of Rule 23(a) were satisfied because (1) the 200-plus individual class members made joinder impracticable and satisfied numerosity, (2) there are common questions of law and fact around defendants’ conduct that are capable of class-wide resolution, (3) the claims of Ms. Andrew-Berry are typical of those of the absent class members as they all revolve around the same course of conduct and events, and (4) Ms. Andrew-Berry and her counsel at Cohen Milstein Sellers & Toll PLLC are adequate representatives of the class. Having found that Rule 23(a) “presents no impediment to the relief requested,” the court looked to the requirements of Rule 23(b). It determined that certification under subsection (b)(1)(B) was appropriate “since success or failure on the claims presented as to the named plaintiff would be dispositive of the success or failure of the claims as to the entire class.” The court therefore preliminarily certified the proposed class of plan participants and beneficiaries and appointed Ms. Andrew-Berry as the class representative and Michelle C. Yau, Caroline Elizabeth Bressman, Daniel Sutter, and Jacob Timothy Schutz at Cohen Milstein Sellers & Toll PLLC as class counsel. The court then assessed the fairness of the settlement terms. The gross settlement amount is $7,900,000. Out of this amount litigation costs, attorneys’ fees, and a class representative award will be deducted. The remaining amount in the fund, the net settlement amount, will then be distributed automatically on a pro rata basis to each member of the class. Counsel agreed to cap their fee award at one-third of the settlement fund. Ms. Andrew-Berry will receive an award of up to $45,000. The court assessed the terms of the settlement and determined that they appear both procedurally and substantively fair. The court stated that it appears the settlement was the result of arm’s-length and informed negotiations, without collusion among the parties. Moreover, the court found the relief provided in the agreement, representing approximately 36% of the total losses to the class, to be reasonable, adequate, and substantively fair. Likewise, the court concluded that the proposed attorneys’ fee award and award to the class representative “are not extravagant.” Finally, the court found the proposed method of notice and the content of the proposed notice appropriate. For the reasons discussed, the court granted plaintiff’s motion and preliminarily approved of the class action settlement. The final approval fairness hearing is scheduled for August 26, 2025.

Disability Benefit Claims

Ninth Circuit

Dharmasena v. Metropolitan Life Ins. Co., No. EDCV 23-01510 JGB (DTBx), __ F. Supp. 3d __, 2025 WL 1563970 (C.D. Cal. May 29, 2025) (Judge Jesus G. Bernal). Plaintiff Hettihewage Dharmasena worked for many years as an electrical engineer. Mr. Dharmasena suffers from a type of muscular dystrophy and also has chronic kidney disease. Both illnesses are progressive. The kidney disease required him to undergo an organ transplant. But it was the genetic muscular dystrophy that affected him even more. The progressive muscle degeneration and weakness from the disease left Mr. Dharmasena in a wheelchair and unable to use his right hand for everyday activities such as eating, drinking, and brushing his teeth. His disease also impeded his ability to function on a computer keyboard, or to sit for any prolonged period. Ultimately, Mr. Dharmasena’s conditions caused him to get sicker, until he could no longer continue working in his sedentary occupation, despite his best efforts to continue doing so. On February 4, 2022, Mr. Dharmasena was terminated from his employment at Schneider Electric, Inc. He then submitted a claim for disability benefits, which was denied by defendant MetLife. First, MetLife informed Mr. Dharmasena that it was denying his claim for long-term disability benefits because it was no longer administering claims for Schneider Electric. However, on June 29, 2023, MetLife sent a denial letter correcting its previous rationale, distancing itself from its position that the claim was being denied due to the fact that it no longer administered Schneider’s disability benefits. In the new letter MetLife changed the reason for the denial to something else entirely. It determined that Mr. Dharmasena’s disability onset date was February 7, 2022. Because he was laid off a few days earlier, on February 4, 2022, MetLife determined that Mr. Dharmasena did not have active long-term disability insurance coverage as of February 7, 2022, and was therefore ineligible for benefits. Represented by attorneys Glenn Kantor and Sally Mermelstein of Kantor & Kantor LLP, Mr. Dharmasena brought this action under ERISA to challenge MetLife’s decision. Mr. Dharmasena moved for judgment on the administrative record under Rule 52. In this decision the court granted his motion. As a preliminary matter, the court noted that it would employ de novo review of the denial and that it would not give deference to the MetLife’s decision. Mr. Dharmasena next argued that under the Ninth Circuit’s decision in Harlick v. Blue Shield of California, MetLife could not raise new challenges to his claim in court that it did not offer during the administrative appeals process. The court was not convinced. It stated that it could not read Harlick “to disclaim Plaintiff of his burden of proof, as the claimant, to ‘show he was entitled to the benefits under the terms of his plan.’” Accordingly, the court agreed with MetLife that it was entitled to rebut Mr. Dharmasena’s attempt to meet his burden of showing by a preponderance of evidence that he was disabled under the terms of the plan during the claim period. Nevertheless, the court ultimately decided that the Harlick issue was a moot point because the court was confident that Mr. Dharmasena could meet that burden here. Contrary to MetLife’s assertions, the court found that Mr. Dharmasena was disabled on or before February 4, his last day of employment. The court stated that there is not a “brightline rule that an employee must claim disability before being terminated to receive long-term benefits.” Here it was clear to the court that Mr. Dharmasena was disabled when his employer terminated him. The court found that there was “adequate evidence in the record” to support that Mr. Dharmasena “was pushing himself beyond his limits” by the time Schneider laid him off. Moreover, while it is true that Mr. Dharmasena had a degenerative and progressive condition with symptoms that can rapidly worsen, the court stated there was “no evidence to suggest that Plaintiff’s condition could have deteriorated so rapidly that he was not disabled on the date of his termination.” For these reasons, the court found the record sufficient for it to determine that Mr. Dharmasena was disabled and eligible for benefits. The court thus reversed MetLife’s denial. It then concluded that remand was inappropriate under the circumstances, and opted instead to award benefits outright. Accordingly, the court granted Mr. Dharmasena’s motion and entered judgment in his favor.

Discovery

Ninth Circuit

THC – Orange County, LLC v. Regence BlueShield of Idaho, Inc., No. 1:24-cv-00154-BLW, 2025 WL 1556137 (D. Idaho Jun. 2, 2025) (Judge B. Lynn Winmill). Plaintiff Kindred Hospital is a long-term acute care hospital in California. Kindred provided care to a patient who was a participant in defendant Winco Holdings, Inc.’s employee benefit welfare plan. Winco sponsored and administered the plan. Defendant Regence Blue Shield of Idaho is the plan’s contracted administrator. Plaintiff also sued Cambia Health Solutions, Inc., the parent company of Regence, in this ERISA action seeking judicial review of the claims denial. Before the court was Kindred’s motion for limited discovery, as well as its motion to take judicial notice. Kindred requested discovery on six topics: (1) Regence’s relationship to the plan; (2) the existence of reinsurance and documentation concerning Regence’s compensation from the plan; (3) the identities and qualifications of the medical reviewers who handled the claim; (4) information regarding the Blue Card Program; (5) the appeal panel minutes and material; and (6) defendants’ assertions of privilege. The court addressed each topic in turn. First, the court agreed with Kindred that discovery into the relationship between Regence and Plan is necessary in order to determine the appropriate standard of review, as the plan’s delegation of authority appears to conflict with terms of the Administrative Services Agreement. Not only do the terms of the Administrative Services agreement call into question the discretionary grant, but the court also read them to suggest a structural conflict may exist, which also warrants limited discovery into this topic. Next, the court permitted Kindred to conduct discovery into the plan’s reinsurance as it was able to make a threshold showing of a plausible conflict of interest. As for the identities and qualifications of the medical reviewers, the court stated that the failure to provide this information to the hospital in the first instance “constitutes a failure to follow a procedural requirement of ERISA that prevented the full development of the administrative record.” Therefore, the court found that Kindred is entitled to discovery on this matter. The court also agreed with Kindred that it is entitled to discovery on the Blue Card Program, stating, “[a]s a matter of fairness, Regence and Cambia should not be able to argue that, based on the Blue Card Program, they had no role in the denying the claim without producing information about the Blue Card Program to support this claim. This information is also relevant to the presence, or absence, of a conflict of interest because if, as Regence and Cambia claim, it did not deny the claim then there should be no conflict of interest. If, however, the opposite is true then questions about a conflict of interest remain.” Regarding the appeal panel minutes, documents, notes, and communications, the court found that this material should be part of the administrative record and that it should be provided to Kindred. As for defendants’ assertions of privilege, the court ruled that, consistent with normal discovery procedures, should defendants withhold any documents on this basis they must produce a privilege log. For these reasons, the court granted Kindred’s discovery motion entirely. Finally, the court granted Kindred’s motion to take judicial notice of the plan’s Form 5500s, as they are public documents subject to judicial notice and the court relied on them in reaching its decision. Otherwise, the court denied as moot Kindred’s motion for judicial notice as to the remaining documents.

ERISA Preemption

Eighth Circuit

Luckett v. Guardian Life Ins. Co. of Am., No. 4:24-CV-1467-NCC, 2025 WL 1580390 (E.D. Mo. May 30, 2025) (Magistrate Judge Noelle C. Collins). Curtis Saahir was employed by Laminated and Fabricated Panels, LLC and a participant in the company’s employee life insurance plan, insured by Guardian Life Insurance Company of America. Mr. Saahir named plaintiff Lenard Luckett as the sole beneficiary under the policy. However, after Mr. Saahir died, Guardian paid only a portion of the life insurance proceeds to Mr. Luckett, paying the remaining amount to Mr. Saahir’s heirs. Mr. Luckett responded by filing a lawsuit in state court against Guardian asserting that its actions harmed him by depriving him of the full benefits of Mr. Saahir’s life insurance policy. Guardian removed the action to federal court, arguing that the state law claims are preempted by ERISA. Mr. Luckett moved to remand his action, arguing that ERISA does not apply to his claims. The court first addressed the threshold question regarding plan status. It agreed with Guardian that the group life insurance policy is governed by ERISA because it is offered and maintained by an employer, lays out its provided benefits, class of beneficiaries, source of financing, and procedures for receiving benefits, and does not meet the criteria for ERISA’s safe harbor exception. Specifically, the court concluded that “far from passive collection of premiums, LFP had an active role in the administration of benefits under the Group Plan.” Having found that ERISA governs the policy in question, the court addressed whether ERISA preempts Mr. Luckett’s state law claims. The court easily determined that ERISA does preempt the claims. “Here, the nexus is plain: Plaintiff’s cause of action is based on Defendant’s failure to pay benefits under an ERISA plan.” Quite simply, the court concluded that Mr. Luckett would not have a claim against Guardian but for the existence of the ERISA plan and there is no other independent legal duty that is implicated by Guardian’s challenged conduct. Therefore, the court found that Mr. Luckett’s claims asserted in his complaint seeking benefits under the policy are preempted by ERISA and that removal based on federal question jurisdiction was proper. As a result, the court denied Mr. Luckett’s motion to remand and granted Guardian’s motion to dismiss. Dismissal was without prejudice.

Eleventh Circuit

Foster v. Metropolitan Life Ins. Co., No. 8:24-cv-02617-WFJ-TGW, 2025 WL 1580813 (M.D. Fla. Jun. 4, 2025) (Judge William F. Jung). After a stroke in 2020, pro se plaintiff David A. Foster began receiving disability benefits under an ERISA-governed policy issued by defendant MetLife. In 2023, MetLife learned through Mr. Foster’s W-2 and pay stubs that he had earned income while receiving disability benefits. It calculated that it had overpaid him $530.40, and determined that it would offset his gross earnings by 50%, per the terms of the plan. Mr. Foster responded to this decision by filing a lawsuit in state court alleging MetLife had engaged in business malpractice. MetLife removed the case to federal court and moved to dismiss the complaint, arguing that ERISA completely preempts Mr. Foster’s claim. The court granted the motion to dismiss, agreeing that the claim was preempted by ERISA. It then encouraged Mr. Foster to contact a legal aid group for help and directed him to file an amended complaint asserting a claim under ERISA Section 502(a). Mr. Foster did file a motion to amend, which the court granted. However, rather than heed the court’s advice and plead a claim under ERISA, Mr. Foster stuck with his business malpractice claim and added a claim for discrimination under the Americans with Disabilities Act, as well as a claim of “overall mistreatment.” Defendants once again moved to dismiss. The court agreed with MetLife that Mr. Foster’s business malpractice claim is completely preempted under ERISA and that he failed to state a claim under ERISA. As before, the court determined that both prongs of the two-prong Davila preemption inquiry were satisfied here because Mr. Foster could bring a claim under Section 502(a) to challenge MetLife’s calculation decision, and because his state law claim does not implicate any legal duty. Indeed, the court stated that resolution of whether Mr. Foster is entitled to relief under his state law business malpractice claim necessarily requires interpreting the terms of the ERISA-governed policy to determine if the 50% reduction of monthly benefits based on the beneficiary’s gross income is allowed under the plan. Accordingly, the court once again determined that Mr. Foster’s complaint was completely preempted by ERISA. And, because his amended complaint did not even refer to ERISA, despite the court’s three reminders that he must assert a cause of action under the statute in any future complaint, the court went ahead and dismissed the action with prejudice.

Pleading Issues & Procedure

Ninth Circuit

Bozzini v. Ferguson Enterprises LLC, No. 22-cv-05667-AMO, 2025 WL 1547617 (N.D. Cal. May 29, 2025) (Judge Araceli Martínez-Olguín). Plaintiffs Tera Bozzini and Adrian Gonzales filed this putative class action against the fiduciaries of the Ferguson Enterprises, LLC 401(k) Retirement Savings Plan for alleged violations of ERISA. On August 30, 2024, the court issued a decision granting in part and denying in part defendants’ motions to dismiss. That order allowed plaintiffs the opportunity to file an amended pleading curing the deficiencies identified by the court. (Your ERISA Watch summarized the decision in our September 4, 2024 edition). Plaintiffs’ complaint at the time focused on allegations concerning plan fees, share classes, and underperforming funds. It did not challenge defendants’ alleged mishandling of forfeited employer contributions. Nevertheless, when plaintiffs amended their complaint following the court’s dismissal order, they asserted two causes of action alleging only that – i.e., that Ferguson improperly used the forfeitures to reduce its own contribution obligations instead of offsetting plan expenses. Plaintiffs alleged that the misuse of these plan assets was a breach of the fiduciary duty of loyalty and constituted a prohibited transaction within the meaning of Section 1106. Ferguson moved to dismiss these two causes of action. It argued that these new claims rest on factual allegations and new theories of liability not pleaded in plaintiffs’ prior complaint and that plaintiffs were thus required to obtain its consent or leave of the court before adding them. Additionally, Ferguson argued that the allegations concerning the forfeited employer contributions are insufficient to state either a disloyalty or prohibited transaction claim. The court agreed with both arguments. “In filing their second amended complaint, Plaintiffs have introduced a new legal theory in violation of the Court’s Order. The prior iteration of the complaint, which spanned 100 pages and asserted eight causes of actions, made no mention of forfeited contributions at all, much less that their mishandling gave rise to the duty of loyalty and prohibited transactions claims asserted in that pleading.” Given that plaintiffs failed to obtain either leave of the court or the defendant’s consent, the court agreed with Ferguson that dismissal of these two claims is appropriate. Putting aside this issue, the court further stated that the two claims as currently alleged would nonetheless fail. Regarding the fiduciary breach claim, plaintiffs alleged that Ferguson exercised discretion to direct forfeited funds in a manner that benefited itself rather than the plan participants, thereby violating its duty of loyalty. The court ruled that plaintiffs needed to allege more to state a viable claim. As for the prohibited transaction claim, the court ruled that plaintiffs cannot simply contend that “[b]y taking the funds in the [f]orfeiture account every year to be used for its own benefit, the Defendant was engaging in a prohibited practice… Without more, these allegations fail.” For these reasons, the court granted the motion to dismiss the two challenged causes of action. It then informed plaintiffs that should they wish to seek leave to amend they must file a motion to do so within seven days.

Nestler v. Sloy, Dahl & Holst, LLC, No. 3:24-cv-00842-MO, 2025 WL 1581058 (D. Or. Jun. 3, 2025) (Judge Michael W. Mosman). Plaintiffs Stephen Nestler and Deryck Jackson are participants in the Pacific Office Automation Capital Accumulation Plan. The two men allege in this action that the trust advisor, Sloy, Dahl & Holst, LLC, and the trustee, Alta Trust Company, are violating their fiduciary duties under ERISA by mismanaging the Sloy, Dahl & Host collective investment trusts (the “SDH Funds”). Plaintiffs contend that the SDH Funds have been disastrous for the participants, costing them millions of dollars in lost investment earnings, as these “exceedingly risky and highly volatile” investment vehicles have underperformed benchmarks and peers since their launch on December 31, 2015. In their complaint plaintiffs compared the performance of the SDH Funds to Morningstar Risk Scores, expense ratios, Sharpe Ratios, and Alpha, and presented charts with standard deviations of fund volatility to show that the SDH Funds rank in the bottom of their peers. Plaintiffs assert that the SDH Funds were so badly managed that defendants were in breach of their fiduciary duties under ERISA. Plaintiffs attest that they suffered a concrete loss because of the retention of the SDH Funds and that the values of their retirement accounts would have been significantly higher if they had been managed by a prudent fiduciary. Defendants disagreed and moved for dismissal for lack of subject matter jurisdiction. They argued that plaintiffs cannot demonstrate Article III standing. The court sided with defendants. First, the court held that plaintiffs’ theory of standing was “fundamentally too circular to satisfy an ‘actual or imminent, not conjectural or hypothetical’ injury in fact.” It explained that in its view plaintiffs’ complaint was based on “conclusory labels…without factual support.” The court added that the metrics provided by plaintiffs in their complaint do not provide a useful benchmark by which to measure the SDH Funds’ overall performance, and instead only provide a snapshot glimpse of their performance at a certain point in time. The court went on to state that “[e]ven if Plaintiffs had more factual support to show that the Funds did regularly rank in the bottom percentile of their peer funds, ranking in the bottom percentile of a group of funds does not necessarily amount to underperformance in violation of ERISA. Every time 100 funds are compared on some metric, one fund will be ranked #100. Without more information, one cannot conclude that investors in fund #100 were harmed by underperformance that constitutes a legal breach of fiduciary duty to prudently manage investments.” This was so, it concluded, because underperformance is relative. To be meaningful, the court stressed that the SDH Funds’ performance must be measured against a benchmark that defendants were required to meet. As currently pled, the court held that plaintiffs fail to provide such a benchmark and therefore cannot demonstrate a concrete injury in fact to satisfy Article III. The court therefore granted defendants’ motion to dismiss. However, its dismissal was without prejudice, so plaintiffs may be able to amend their complaint to address these identified shortcomings.

Provider Claims

Fifth Circuit

Lone Star 24 HR ER Facility, LLC v. Blue Cross Blue Shield of Tex., No. SA-22-CV-01090-JKP, __ F. Supp. 3d __, 2025 WL 1570183 (W.D. Tex. Jun. 3, 2025) (Judge Jason K. Pulliam). Plaintiff Lone Star 24 Hour ER Facility, LLC is a freestanding emergency care facility located in Texas. In this action the provider alleges that Blue Cross Blue Shield of Texas is violating ERISA and state law by failing to reimburse it for its emergency services at usual and customary rates. Lone Star alleges that Blue Cross has reimbursed it “in grossly inadequate amounts,” or not at all. Blue Cross moved for dismissal of plaintiff’s negligent misrepresentation and bad faith insurance practices causes of action. Lone Star agreed to voluntarily dismiss these two claims. As a result, the court dismissed the two claims with prejudice. Blue Cross further requested that the court dismiss Lone Star’s requests for declaratory judgment. Lone Star requested the court declare four things: (i) “The Texas Insurance Code and Texas Administrative Code require Defendants, either singularly, jointly or severally, to reimburse Lone Star at a usual, customary and reasonable rate;” (ii) “Defendants must base the usual, customary and reasonable rate at which it reimburses Lone Star based on ‘generally accepted industry standards and practices for determining the customary billed charge for a service and that fairly and accurately reflects market rates, including geographic differences in costs;’” (iii) “Defendants failed to pay Lone Star at usual, customary and reasonable rates;” and (iv) “Lone Star is entitled to recover damages from Defendants, either singularly, jointly or severally in an amount to be determined at a trial on the merits, and all other appropriate relief.” The court broke the requests into two parts. Taking on requests (i) and (ii) first, the court held that the Texas Insurance Code provisions and Texas Administrative Code regulation “state what they state. It is improper and unnecessary for this Court to make a declaration regarding what a statute or regulation states or requires. Any declaration by the Court would not serve a useful purpose in settling a legal issue or uncertainty. For this reason, this Court will exercise its discretion to decline consideration of this request and grant the Motion to Dismiss.” The court added that it could not impose “an obligation that had no basis in statute,” and that any request for it to do so would be inappropriate. Accordingly, the court dismissed the requests for declaratory judgment under (i) and (ii). It then also dismissed the third and fourth requests as well. The court agreed with Blue Cross that these requests are duplicative of both the ERISA and breach of contract causes of action as they seek resolution of issues that must be resolved in disposition of those claims and are therefore a redundant remedy. Thus, the court stated that it would exercise its discretion to decline consideration and that dismissal of these declaratory requests was also appropriate. For these reasons, the court granted Blue Cross’s motion to dismiss and dismissed the negligent misrepresentation claim, the bad faith insurance practices claim, and all of the requests for declaratory judgment.

Statute of Limitations

Seventh Circuit

Electrical Ins. Trustees Health & Welfare Trust Fund v. WCP Solar Services, LLC, No. 24 C 11389, 2025 WL 1567833 (N.D. Ill. Jun. 3, 2025) (Judge Robert W. Gettleman). Plaintiffs are a group of multiemployer plans. They brought this action under ERISA and the Labor Management Relations Act (“LMRA”) against WCP Solar Services, LLC seeking to recover delinquent contributions from the company. Defendant moved to dismiss the complaint, arguing that the funds’ claim is time-barred under ERISA’s statute of limitations. “According to defendant, plaintiffs seek unpaid contributions and related damages under sections 1132 and 1145 of ERISA for defendant’s breach of its contractual obligations. But, it says, ERISA imposes a three-year statute-of-limitations period under section 1113 for bringing any such claim, which began to run on the date plaintiffs obtained actual knowledge of defendant’s alleged breach. Defendant argues that section 1113 bars plaintiffs’ claim here because the exhibits attached to the first amended complaint ‘demonstrate on their face that the plaintiffs had actual knowledge of the alleged delinquencies no later than May 2021’ – more than three years before plaintiffs filed their initial complaint on November 5, 2024.” The court did not agree with this argument. It ruled that Section 1113 explicitly applies to actions concerning a fiduciary breach and is not applicable here to plaintiffs’ action to recover defendants’ unpaid contributions brought under ERISA Sections 1132 and 1145, as well as Section 285 of the LMRA. Rather, the court agreed with the funds that the 10-year period under analogous Illinois law to enforce a written agreement was the appropriate and applicable statute of limitation. The court therefore held that the complaint is not time-barred. Accordingly, the court denied WCP Solar’s motion to dismiss.

Venue

Eleventh Circuit

Williams v. Unum Life Ins. Co. of Am., No. 24-CV-24113-RAR, 2025 WL 1591213 (S.D. Fla. Jun. 5, 2025) (Judge Rodolfo A. Ruiz, II). Plaintiff Mikalley Williams filed this case on October 23, 2024 against Unum Life Insurance Company of America, asserting claims under ERISA. As the court explained, because ERISA benefit cases have limited discovery outside of the administrative record and are usually resolved on the papers without trial, it is the court’s standard practice to set such cases on an expedited case management track prescribed by the local rules of the Southern District of Florida. As a result, the court issued its scheduling order on December 9, 2024, and placed the case on an expedited track with discovery due to close on May 27, 2025 and pretrial motions due by June 10, 2025. Seven months after Ms. Williams initiated this case and served Unum – less than one week before the close of discovery and three weeks before the pretrial motions deadline – Unum moved to transfer venue to the District of Utah. “The apparent impetus for the transfer is that Plaintiff recently obtained discovery from Defendant of certain medical records outside the administrative record that favor Plaintiff’s case. These extra-record documents are admissible in the Eleventh Circuit, see Harris v. Lincoln Nat’l Life Ins. Co., 42 F.4th 1292, 1297 (11th Cir. 2022), but not in the Tenth Circuit, see Jewell v. Life Ins. Co. of N.A., 508 F.3d 1303, 1308 (10th Cir. 2007).” Because Tenth Circuit precedent favors its case, Unum moved to transfer to Utah, the state where Ms. Williams resides. In this order the court denied Unum’s motion. While no one disputed that this action might have been brought in the District of Utah because of Ms. Williams’ connection to the venue, the court did not take kindly to Unum’s obvious gamesmanship behind its motion to transfer so late in the proceedings after the parties had actively litigated and conducted discovery. The court thus ruled that “Defendant’s Motion is not timely, and the interests of justice would not be well served by allowing transfer at this late juncture.” The court added that Unum’s “conduct belies its contention that it would face any true inconvenience by litigating this case in the Southern District of Florida. Transferring this action to the District of Utah would only delay disposition of a case that is ready for adjudication. Under these circumstances, Defendant plainly did not act with reasonable promptness to request transfer.” The court therefore concluded that Unum failed to meet its burden of demonstrating that transfer is appropriate under the circumstances. Accordingly, it denied Unum’s motion.