Aldridge v. Regions Bank, No. 24-5603, __ F. 4th __, 2025 WL 1983483 (6th Cir. Jul. 17, 2025) (Before Circuit Judges Gibbons, Larsen, and Murphy)

The bankruptcy of restaurant chain Ruby Tuesday and the loss of pension benefits under two “top hat” pension plans for Ruby Tuesday managers is the genesis of this week’s case of the week. The Sixth Circuit was called upon to answer two questions: (1) whether ERISA preempts the managers’ state law contract-based claims; and (2) whether ERISA Section 502(a)(3), 29 U.S.C. § 1132(a)(3), allows them to seek the value of their lost claims in the form of equitable surcharge. It answered yes to the former question and no to the latter.

Before we get to the court’s reasoning, a little background on “top hat” plans and the facts of the case is in order. As the court pointed out, to qualify for “top hat” status, a plan must cover only a “select group” of managers or highly compensated employees, and it must be “unfunded.” 29 U.S.C. § 1051(2). If the plan meets these requirements, ERISA exempts the plan from a number of its statutory requirements, including its fiduciary duty, funding, and vesting rules.

If a plan uses a device called a “rabbi trust” to put aside money for the plan, it is still considered to be unfunded for purposes of the top hat requirement. Under a rabbi trust, the funds must be used to pay benefits and not for general corporate purposes, but the assets are not the beneficial property of the plan participants, and they may still be used to pay creditors in the event of a bankruptcy. That is the structure that the Ruby Tuesday plans used, and the court held that this structure sufficed to make the plans top hat plans under ERISA. 

Regions Bank was appointed the trustee of the rabbi trusts and tasked with administering the plans under a written agreement with Ruby Tuesday dating back to 1992. The complaint alleges that Regions breached this agreement in several ways prior to the bankruptcy. First, plaintiffs allege that there was a change of control at the company in 2017, which triggered a requirement, which was not met, that the plans be funded up to the present actuarial value of all benefits. Second, plaintiffs allege that the plan was terminated in 2019, which triggered a right for participants to take a lump sum payout of benefits, but Regions failed to inform the participants of this right. Third, plaintiffs allege that Regions breached the trust agreement by acting pursuant to an oral instruction to cease all payments starting in August of 2020, when it was permitted to do so only pursuant to written instructions, which Regions did not receive until September 2020.

Because Regions itself recognized this latter problem, it filed an interpleader action asking a district court to decide who had the right to the funds from August and September. However, after Ruby Tuesday filed a bankruptcy petition in October 2020, and the bankruptcy court ordered that the money in the trust fund be transferred to the bankruptcy estate for the benefit of Ruby Tuesday’s creditors, Regions dismissed its interpleader action. The participants then settled with the bankruptcy estate, receiving some fees and fund assets in exchange for a waiver of their right to appeal the transfer of the funds’ assets to the bankruptcy estate.

Shortly thereafter, some of the participants sued Regions, alleging an ERISA claim for equitable relief in the form of “surcharge” pursuant to Section 502(a)(3), and also asserting state-law claims for breach of fiduciary duty, breach of trust, breach of contract and negligence. The district court “dismissed the state-law claims at the pleading stage on the ground that ERISA preempted them.” It later granted summary judgment to Regions on the ERISA claim, reasoning that plaintiffs’ “request for lost benefits did not qualify as the type of ‘equitable relief’ that the Participants may seek under 29 U.S.C. § 1132(a)(3).”

The Sixth Circuit first addressed Regions’ argument that ERISA’s “complete preemption” doctrine applies to the managers’ state-law claims. The court, however, declined to resolve the issue for three reasons. First, the court pointed out that the doctrine is primarily concerned with federal court jurisdiction, and because the district court had supplemental jurisdiction over the state-law claims, the case raises no jurisdictional issues. Second, the court reasoned that a finding that ERISA expressly preempts the claim would lead to the same result as a finding that ERISA completely preempts the claim because the plaintiffs forfeited any argument that they could restate their state-law claims as ERISA claims. Third, the court reasoned that because “express preemption” under ERISA applies more broadly than “complete preemption,” “judicial-economy concerns thus favor jumping to the broader express-preemption doctrine without first considering the narrow complete preemption issue.”

And so the court did, after taking brief detours to set out the history of Supreme Court decisions addressing ERISA’s express preemption and to explain that ERISA applies to the top hat plans at issue even though many of ERISA’s provisions do not. Looking to the state-law causes of actions asserted by plaintiffs, the court concluded that all four had a “connection with” the plans for purposes of ERISA preemption analysis.

The court found this “true for both procedural and substantive reasons.” As a procedural matter, the court found that plaintiffs’ state-law “claims all seek the same thing: the benefits allegedly due them under their ERISA-covered Plans.” Because ERISA itself contains a provision for seeking benefits, allowing “alternative enforcement methods” under state law would undermine the congressional policy choices embodied in ERISA.

As a substantive matter, the court saw plaintiffs’ state-law claims as an attempt to “impose additional duties on Regions on top of the duties that ERISA imposes.” Doing so “would undercut ERISA’s uniformity goals” by subjecting “plan administrators not just to ERISA’s fiduciary duties but also to the potentially conflicting standards of conduct of all 50 States.” This was true, in the court’s view, even though “ERISA exempts administrators of top-hat plans from its federal fiduciary duties,” because this decision was a deliberate congressional choice to impose a less-intrusive regime on plan sponsors with respect to top hat plans. Thus, as the court saw it, ERISA preempts not just the state-law remedies, but the substantive “right to state-law rules of fiduciary conduct.”

With respect to the plaintiffs’ assertions of contractual rights, the court held that plaintiffs must seek to enforce any such rights through “the vehicle that ERISA provides: a suit to enforce the terms of a plan under § 1132(a)(1)(B).” This was true even though plaintiffs asserted that they sought to enforce not the terms of the plans themselves, but the terms of the rabbi trust. The court reasoned that it “must look through the ‘label’ of the Participants’ state-law claim and consider its substance: a claim against a plan administrator for plan benefits based on its alleged misconduct.” Because “Regions would have had fiduciary duties under ERISA if it had managed ordinary plans rather than top-hat plans,” it “qualifies as ‘a traditional ERISA plan entity,’” meaning that plaintiffs “may bring their claims against the bank only under ERISA’s regime.”           

So, with that, the court turned at last to plaintiffs’ ERISA claim for equitable relief under Section 502(a)(3). Noting that the term “equitable” in ERISA “recalls the time in our history when governments divided their benches into distinct courts of equity and courts of law,” the court stated that “compensatory damages” are the “classic form of legal relief” that courts of law would grant and injunctions are the “classic form of equitable relief” that “equity courts would grant.”

Then, more directly addressing the issue at hand, the court noted that the phrase “equitable relief” in Section 502(a)(3) could convey either a “broad idea or a narrow one” with respect to remedies. “Thankfully,” the court concluded, it did not need to “independently choose between these broad and narrow readings” because “[f]or decades, the Supreme Court has held that Congress chose the narrower view of ‘equitable relief.’” The Sixth Circuit read these decisions as holding that “a request for ‘compensatory damages’ – that is, a request for ‘monetary relief’ measured by the plaintiff’s ‘losses’ – falls on the nonactionable legal side of the divide.” The Sixth Circuit also pointed out that courts apply more “nuanced rules when a party requests money” as a matter of “restitution,” requiring the tracing of “specific” plan funds.

“Before addressing that remedies question” at issue in this case, the court started “with a liability disclaimer: it is ‘far from clear’ that the Participants’ allegations suffice to hold Regions liable under § 1132(a)(3).” This was because plaintiffs “have identified no plan terms that Regions violated” and in fact argued that Regions violated not the plan, but only the trust agreement. But because neither party addressed the predicate question of liability, the court moved on to the remedies issue.

The court “immediately rule[d] out” that plaintiffs were seeking “equitable restitution” because “Regions turned over the Plans’ assets to the bankruptcy court and no longer possesses them.” The court then turned to the actual remedial issue in the case, whether the plaintiffs’ request for “equitable surcharge” is a request for available equitable relief under Section 502(a)(3). The plaintiffs, of course, rested their argument that it does on the Supreme Court decision in Cigna Corp. v. Amara, which the Sixth Circuit read as “suggest[ing] that equity courts could grant a beneficiary “monetary ‘compensation’ for a loss resulting from a trustee’s breach of duty.”

The Sixth Circuit noted that “several courts relied on that decision to conclude that ERISA plan participants may seek this type of monetary award against ERISA fiduciaries under § 1132(a)(3).” “Yet,” the court noted, “the Fourth Circuit has since disagreed” in Rose v. PSA Airlines, Inc. The Sixth Circuit read the Rose decision as holding that “an ‘equitable surcharge’ for a beneficiary’s losses qualifies as a damages remedy that Mertens does not permit ERISA plaintiffs to recover under § 1132(a)(3).”

“For four reasons,” the court “side[d] with the Fourth Circuit.” First, the Sixth Circuit held that the Supreme Court’s discussion of surcharge in Amara was unessential to its holding and thus dicta.

Second, the Sixth Circuit held that the Amara court’s dicta about surcharge conflicted with the holding of the Supreme Court in Mertens v. Hewitt Associates. The Sixth Circuit rejected the Supreme Court’s attempt in Amara to distinguish Mertens on the grounds that the Mertens’ rejection of damages was not directed at a recovery from a breaching fiduciary, holding that this distinction did not make a difference. 

Third, the Sixth Circuit pointed out that its own (pre-Amara) precedent rejected a surcharge remedy against a breaching fiduciary as constituting impermissible legal damages under Mertens. Although the court noted that “some of our unpublished cases have mentioned surcharge in passing as a potential remedy after Amara,” the court nevertheless noted that it should “refuse to follow the Supreme Court’s dicta if we have a ‘substantial reason’ for the refusal – such as ‘subsequent statements’ by the Court ‘undermining’ the ‘rationale’ of its earlier dicta.”

Fourth, the Sixth Circuit found such statements in the Supreme Court’s decision in Montanile v. Bd. of Tr. of Nat’l Elevator Indus. Health Plan, which the court read as “distanc[ing] itself from Amara’s dicta.”

Finally, the court refused to fashion a new cause of action as plaintiffs requested, noting that its general federal common law authority did not give it license to do so.  The court thus affirmed the district court’s decision with respect to both preemption and remedies.

Your ERISA Watch editors see a remedies showdown looming.  As always, we will be there for you when it happens.

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

Breach of Fiduciary Duty

Seventh Circuit

Bangalore v. Froedtert Health, Inc., No. 20-cv-893-pp, 2025 WL 1927534 (E.D. Wis. Jul. 14, 2025) (Judge Pamela Pepper). Plaintiff Nitish Bangalore participated in defendant Froedtert Health, Inc.’s 403(b) retirement plan. In this putative class action Mr. Bangalore alleges that the fiduciaries of the plan have violated their duties of prudence and monitoring by incurring excessive recordkeeping and administrative fees and by offering funds in the plan that were “needlessly expensive.” The pleading standard for these types of ERISA fee cases was in flux in the Seventh Circuit after the Supreme Court weighed in in Hughes v. Northwestern University, 595 U.S. 170 (2022). However, in subsequent decisions, including in its own decision in the Hughes case, the Seventh Circuit fleshed out what types of allegations in these cases are sufficient for a district court to infer fiduciary misconduct. Now that the contours of what a plaintiff must plead have been more concretely defined in the circuit, this district court was ready to weigh in on defendants’ motion to dismiss plaintiff’s second amended complaint. First, the court declined to dismiss the claims of imprudence and monitoring related to allegations of excessive recordkeeping fees. The court found that at this stage of the litigation the plans plaintiff chose as comparators were sufficiently similar to the “mega” plan at issue. “The comparator plans listed in the second amended complaint are sufficiently comparable in terms of both participant size and assets under management, especially given the plaintiff’s allegations in the second amended complaint that in 2021, the defendants’ plan was larger than 99.91% of all defined contribution plans in the United States. Taking that allegation as true (as the court must at the pleadings stage), it would be relatively difficult to find plans even closer in size and assets under management to the defendants’ plan. The complaint sufficiently identifies comparable plans with lower recordkeeping fees than the defendants’ plan.” Moreover, the court was unwilling to pull apart plaintiff’s calculation of the recordkeeping fees, stating that it would not be appropriate to do so at the motion to dismiss stage as it “would equate to the court considering the truth of the allegations in the second amended complaint.” Instead, accepting the allegations and calculations as true and accurate, the court concluded that it could infer imprudence based on recordkeeping fees that were between 2.3 and 4.4 times higher than every comparator fund. This was especially true, the court noted, because plaintiff alleges that recordkeeping services are fungible and all recordkeepers offer services of a materially identical level and quality. Thus, the court was satisfied that plaintiff sufficiently pled his claim that defendants paid higher fees for the same services. The court therefore denied the motion to dismiss the imprudence claim, and the derivative failure to monitor claim related to the excessive recordkeeping fees. The claims related to the excessive investment management fees was a different story, however. With regard to the fund-related claims, the court agreed with defendants that plaintiff failed to identify more than one lower-cost fund to demonstrate that the fiduciaries chose excessively expensive investment funds. Likewise, the court held that the complaint failed to plead facts that the comparator funds had similar investment strategies, management styles, or risk profiles as the challenged funds to allow it to determine that they truly were comparable. Without this level of detail, the court found that the complaint did not have enough to state a violation of the duty of prudence based on excessive investment management fees, and therefore granted the motion to dismiss both the underlying fiduciary breach claim and the derivative failure to monitor claims related to the challenged funds. Finally, defendants moved to dismiss plaintiff’s request for injunctive relief, arguing that he faces no risk of ongoing harm as a former employee. Mr. Bangalore stated at oral argument that he was not pursuing injunctive relief because he is a past participant. As a result, the court granted the motion to dismiss the request for injunctive relief from the second amended complaint. For these reasons, the court granted in part and denied in part defendants’ motion to dismiss. To the extent claims were dismissed, the court stated that its dismissal was with prejudice.

Eighth Circuit

Owens v. Life Ins. Co. of N. Am., No. 4:24-CV-792 HEA, 2025 WL 1952487 (E.D. Mo. Jul. 16, 2025) (Judge Henry Edward Autrey). Plaintiff Audrey Owens became an employee of the defense contractor Leidos, Inc. in May of 2018 when Leidos took over operations of another defense contractor that employed her. Prior to the Leidos takeover, Ms. Owens was enrolled in a welfare plan that provided long-term disability benefits. Ms. Owens alleges that as an employee of Leidos, she was a vested participant in a group insurance policy issued by Cigna that provided long-term disability benefits. About a month after Ms. Owens became an employee of Leidos she became disabled due to gastrointestinal issues, degenerative neck and spine conditions, and issues with her gallbladder. On June 27, 2018, she underwent surgery to remove her gallbladder. Despite the surgical intervention her symptoms never abated, and she was unable to continue working. Accordingly, Ms. Owens made a claim for benefits under the long-term disability benefit plan. On February 1, 2019, Cigna denied the claim. The basis for the denial was that Ms. Owens was not covered under the plan at the time she became disabled. In this ERISA action Ms. Owens is suing the Employee Benefit Committee of Leidos alleging that it breached its fiduciary duties to her and failed to provide plan documents upon written request. Ms. Owens seeks unpaid past benefits, reinstatement under the long-term disability plan, an order requiring Cigna to begin future long-term disability benefits, statutory penalties under § 1332(c), and attorneys’ fees and costs. Defendant Benefits Committee moved to dismiss the claims asserted against it. It argued that the fiduciary breach claim is untimely, and that all factual allegations in the amended complaint fail as a matter of law. The court denied the motion to dismiss in this decision. As an initial matter, the court found that it was not clear from the record when the last day the Benefits Committee could have cured its alleged breach and enrolled Ms. Owens in the Plan. The court stated, “Benefits Committee is raising the defense of timeliness, and it has not shown, based on the allegations in Amended Complaint, that the latest date on which it could have cured the alleged breach or violation was prior to June 6, 2018. Therefore, the Court finds Benefits Committee has not established that Plaintiff’s claim for breach of fiduciary duty is untimely, and the motion to dismiss is denied as to this issue.” The court then turned to whether the complaint states a claim for breach of fiduciary duty against the Benefits Committee. Ms. Owens alleges that the Committee violated its duties under ERISA by failing to give her proper and adequate information about enrolling in the plan. Alternatively, she alleges that the plan was a continuation of the prior plan in which she was enrolled, and that the long-term disability plan grandfathered in claims under the prior benefit plan. The Benefits Committee argued that, contrary to Ms. Owens’ allegations, it provided her with all of the required information regarding the plan in accordance with the governing regulations. In support of this assertion, it attached email correspondence it allegedly sent to Ms. Owens to its motion to dismiss. The court held that these emails were not embraced by the pleadings, and instead were provided “in opposition to the pleadings.” Because the emails were offered as a way to discredit and refute Ms. Owens’ allegations, the court concluded that they could not be considered on a Rule 12(b)(6) motion to dismiss. Moreover, the court was unwilling to convert the motion to dismiss as one for summary judgment under Rule 56, as there are open questions about whether the emails were sent to Ms. Owens’ personal email address or only to her work address and work computer, which she did not have access to while on medical leave. Moreover, the emails contained links to the relevant information, and the court could not say whether these links worked, and even assuming they did, whether they could only be accessed by employees at work through Leidos’ secure network. Thus, the court “demur[ed] considering the email exhibits without a more fully developed record following discovery” and instead decided the motion to dismiss based on the allegations in the complaint itself. Accepting Ms. Owens’ allegations, the court found that she sufficiently stated a fiduciary breach claim against the Committee, and therefore denied the motion to dismiss the claim. The court further denied the motion to dismiss the claim for penalties for failure to provide plan documents, as defendant’s arguments rested on the court finding that Ms. Owens was not a plan participant with a colorable claim for benefits, which the court would not do at this stage of the litigation. The Benefits Committee’s motion to dismiss was therefore denied in whole.

Ninth Circuit

Smith v. Recreational Equipment Inc., No. 3:24-cv-06032-TMC, 2025 WL 1953042 (W.D. Wash. Jul. 16, 2025) (Judge Tiffany M. Cartwright). In its defined contribution retirement plan defendant Recreational Equipment Inc. (“REI”) has a policy of charging recordkeeping and administrative fees only to participant accounts with balances of at least $5,000. Plaintiffs Macy Smith and Sally Johnson are two such participants of the plan who are challenging this policy in this putative class action ERISA lawsuit. They contend that REI, its Board of Directors, and the Retirement Plan Committee are breaching their duties of loyalty, prudence, and monitoring under ERISA by imposing fees in this way. Defendants moved to dismiss. They argued that the settlor doctrine bars plaintiffs’ claims because the $5,000 threshold is written into the terms of the retirement plan. Additionally, defendants contend that even if the claims are not barred by the settlor doctrine, the complaint nevertheless fails to plausibly allege a breach of fiduciary duty. The court took up the issue of the settlor doctrine first. The court agreed with defendants that one section of the plan, “read in isolation,” does impose an unambiguous and mandatory requirement that participant accounts with at least $5,000 must be charged recordkeeping and administrative fees. However, a different section of the plan allows the Plan Committee to not only exempt certain accounts from per capita charges based on a threshold set by the Committee that is greater or less than $5,000, but also to set separate thresholds for different types of per capita charges. If this second section didn’t exist, the court expressed that it would likely conclude that the plan’s allocation of expenses is a plan design decision encompassed by the settlor doctrine. But because it does, the court held that the plan does not forbid the Committee from setting the balance threshold for fees to whatever amount it choses, which amounts to discretionary authority, triggering fiduciary obligations. Accordingly, the court determined that the settlor doctrine does not preclude plaintiffs’ claims. In any case, the court’s analysis did not stop with this holding. Rather, the court assessed the legal theory undergirding plaintiffs’ allegations and found it wanting. In essence, plaintiffs take issue with the fact that participants with less plan assets are being subsidized by participants with more money in their accounts. But the court concluded there is nothing inherently wrong with this practice. To the contrary, the Department of Labor has blessed the pro rata method of allocating expenses, and essentially what REI is doing here is no different. The court agreed with defendants that there is no fiduciary duty “to ensure participants pay a proportionately equal share of plan expenses.” Plaintiffs are not alleging that the recordkeeping and administrative fees are overall unreasonable, instead they claim that they are unreasonably distributed. The court determined that “this legal theory ignores the obvious fact that every method of allocating RKA fees could be described as resulting in some plan participants subsidizing the costs of administration for others. In the pro rata method, participants with higher balances could be said to subsidize administration fees for those with lower balances. In the universal per capita method – which Plaintiffs seem to advocate in their complaint – participants with lower balances could be said to subsidize those with higher balances, since a participant with only $500 in their account would pay the same fee (but a far greater portion of their assets) as a participant with $500,000. There is nothing unique or even avoidable about the result of Defendants’ hybrid method, where RKA fees are assessed per capita, but only for accounts with a balance above a certain threshold.” The court added that assessing fees to participants with larger balances is within the range of reasonable judgments a fiduciary can make, and the decision to do so was not self-serving or disloyal. Accordingly, the court granted the motion to dismiss the claims of imprudence and disloyalty, as well as the derivative failure to monitor claim. As a final note, the court agreed with defendants that plaintiffs cannot sue under Section 502(a)(2) of ERISA because they are seeking to recover individual losses, rather than losses to the plan. It stated, “the relief sought is one based not on a loss to the whole Plan or any Plan assets, but to individual participants of the Plan. This is particularly evident because if the Court granted the relief Plaintiffs seek, other Plan participants with account balances less than $5,000 be required to pay higher annual fees. Since Plaintiffs seek only ‘a remedy for individual injuries distinct from plan injuries,’ their claims under Section 1132(a)(2) must also be dismissed on this basis.” Finally, the court stipulated that its dismissal was with prejudice, as it found that plaintiffs could not cure these shortcomings in the complaint through any amendment.

Disability Benefit Claims

Ninth Circuit

O’Connor v. Life Ins. Co. of N. Am., No. 24-3928, __ F. App’x __, 2025 WL 1937085 (9th Cir. Jul. 15, 2025) (Before Circuit Judges Thomas and De Alba and District Judge Rakoff). Plaintiff-appellant Francesca O’Connor filed this action to challenge a denial of benefits under a long-term disability policy administered by Life Insurance Company of North America (“LINA”). At issue was whether the operative policy’s pre-existing conditions limitation was valid and enforceable under Delaware law (the policy was issued in Delaware and subject to Delaware law). In a technical and short decision, the Ninth Circuit concluded that it was, and thus Ms. O’Connor cannot prevail on her claim. The Ninth Circuit wrote, “Section 3517(b) of the Delaware Insurance Code requires pre-existing condition limitations to ‘only apply to a disease or physical condition for which medical advice or treatment was received by the person during the 12 months prior to the effective date’ of coverage. O’Connor’s argument that the [pre-existing conditions limitation] is ‘wholly unenforceable’ under the doctrine of reasonable expectations is without merit because the [limitation] is ‘clear, plain, and conspicuous.’” Though the Ninth Circuit recognized that the pre-existing conditions limitation does conflict with Delaware law insofar as it purports to exclude conditions “for which a reasonable person would have consulted a Physician,” it nevertheless noted that this unenforceable clause within the limitation was not the basis on which LINA rejected Ms. O’Connor’s claim for benefits. Therefore, the Ninth Circuit held that the district court properly concluded that the pre-existing conditions limitation, as applied to Ms. O’Connor’s claim for benefits, was enforceable, and that this dispositive ruling foreclosed her claim for benefits. On this basis, the Ninth Circuit affirmed.

Discovery

Eighth Circuit

Jones v. Zander Grp. Holdings, Inc., No. 8:24CV428, 2025 WL 1918834 (D. Neb. Jul. 11, 2025) (Judge Joseph F. Bataillon). Plaintiff William “Chip” Jones, II filed this putative class action in the Middle District of Tennessee alleging that his former employer and some related entities have violated ERISA in connection with their actions rolling over funds in his employee stock ownership plan account into a 401(k) account after his employment with defendants ended. During discovery defendants issued document and deposition subpoenas to attorneys Mr. Jones consulted with at a law firm in Omaha, Nebraska prior to, and during, the rollover of the funds. Though the case is taking place in Tennessee, Mr. Jones filed a motion to quash the subpoenas directed at the lawyers and at their law firm in the District of Nebraska. On May 27, 2025, magistrate judge Michael D. Nelson granted Mr. Jones’ motion. (Your ERISA Watch reported on the decision in our June 4, 2025 newsletter). Defendants responded to the decision by filing objections to the magistrate judge’s order. The court overruled the objections in this brief decision. As an initial matter, the court noted that magistrate judges are afforded broad discretion in the resolution of non-dispositive discovery disputes, such that a district court may set aside a part of the magistrate judge’s order only if it finds it “clearly erroneous or contrary to law.” Having reviewed the matter, the court could not find anything in Judge Nelson’s order clearly erroneous or contrary to law. To the contrary, the court determined that he had correctly determined that the information defendants were seeking was both irrelevant to the underlying lawsuit, and protected by attorney-client and work-product privileges. Accordingly, the court declined to overturn any aspect of the magistrate’s order and affirmed its decision to grant Mr. Jones’ motion to quash the subpoenas.

Life Insurance & AD&D Benefit Claims

Fifth Circuit

The Prudential Ins. Co. of Am. v. Richardson, No. 4:24-CV-04979, 2025 WL 1918745 (S.D. Tex. Jul. 10, 2025) (Judge Kenneth M. Hoyt). Prudential Insurance Company of America filed this lawsuit in interpleader against defendants Tatjana Richardson and Kinberly Richardson-Whitfield seeking court involvement in the dispute over the proper beneficiary of decedent Russell W. Richardson. Since filing this action, Prudential has deposited the proceeds of Mr. Richardson’s life insurance benefits with the registry of the court and has been dismissed from this action. Plaintiff Kimberly Richardson-Whitfield moved for judgment under Rule 12(c) on Tatjana Richardson’s claim for the insurance proceeds. Ms. Richardson-Whitfield is Mr. Richardson’s ex-wife. Ms. Richardson is Mr. Richardson’s surviving spouse. The court granted Ms. Richardson-Whitfield’s motion for judgment on the pleadings in this order. The court held that the undisputed evidence shows that Kimberly Richardson-Whitfield remained the named beneficiary of the life insurance policy even after the couple’s divorce, and that under federal law “control of beneficiary designations remains in the hands of the insured who has the sole authority to change the beneficiary designation.” Thus, despite the terms of the former couple’s divorce decree stating that the husband would retain entitlement to all of his own employment benefits, the court concluded that the beneficiary designation nevertheless controls. Accordingly, the court agreed with Ms. Richardson-Whitfield that there is no dispute she is entitled to the funds as the designated beneficiary of her ex-husband’s policy, and is thus entitled to judgment in her favor.

Medical Benefit Claims

Sixth Circuit

Gipson v. Med. Mutual of Ohio, No. 1:24-cv-00103, 2025 WL 1921431 (M.D. Tenn. Jul. 11, 2025) (Judge William L. Campbell, Jr.). Plaintiffs in this action were participants in insurance plans issued by defendant Reserve National. During the time period at issue, Reserve National went from being a subsidiary of defendant United Insurance Company of America (which in turn was a subsidiary of defendant Kemper Corporation), to being acquired by defendant Medical Mutual. The healthcare plans plaintiffs were enrolled in included a portability provision that allowed the insureds to port their coverage so they could continue receiving benefits despite a change in employment or cancellation of the underlying group policy. The plans also included supplemental coverage for cancer treatment. “Plaintiffs had each secured continuing coverage through the portability provision and were receiving benefits for cancer treatment when, in December 2022, they were notified that their ‘Cancer coverage has terminated effective 2.28.2023.’” The cancellation letters were sent from Kemper Corporation. In their complaint plaintiffs allege that as part of the Medical Mutual acquisition defendants Kemper, United Insurance, and Medical Mutual collectively executed a plan to terminate substantially all of the ported group supplemental coverage Reserve National had on its books in order to reduce the liabilities acquired by Medical Mutual and to make the sale of Reserve National more attractive. After their insurance was cancelled, plaintiffs filed this ERISA lawsuit challenging defendants’ actions, including Medical Mutual’s refusal to pay for their continuing cancer treatments. Plaintiffs bring claims for declaratory and injunctive relief and for breach of fiduciary duty. Kemper and United Insurance moved to dismiss all of the claims against them. They argued that the policy termination took place after United sold Reserve National to Medical Mutual meaning that at the time of the allegedly improper conduct neither of them had a relationship to plaintiffs and that they cannot be held liable for the actions of Reserve National or Medical Mutual that took place following the sale. The court denied the motion to dismiss in this decision holding that at this stage of the litigation, “Plaintiffs have adequately alleged that Kemper and United Insurance were involved in the decision to terminate the policies at issue and were involved in the administration of claims before and after the termination such that dismissal of claims against them is not appropriate at this juncture.”

Ninth Circuit

Solis v. T-Mobile US, Inc., No. 24-2412, __ F. App’x __, 2025 WL 1937089 (9th Cir. Jul. 15, 2025) (Before Circuit Judges Murguia, Nelson, and Sung). Two participants in the T-Mobile healthcare plan, Jannet Solis and Michael Ortega, challenged denials of their benefit claims by United Healthcare, the claims administrator, for out-of-network hiatal hernia repair and gastric sleeve surgery. On March 14, 2024, the district court entered an order finding United’s explanations for the denials deficient under ERISA, but nevertheless determined that United did not abuse its discretion in denying the claims and so entered judgment in their favor. Plaintiffs appealed that order. In this decision the Ninth Circuit overturned the district court’s decision and remanded to it to either retry the case after proper augmentation of the administrative record, or alternatively to remand the case back to United to reevaluate the merits of the healthcare claims. Although the Ninth Circuit concluded that the district court correctly identified the standard of review, it found that the lower court “committed legal error by not allowing for augmentation of the administrative record despite finding United’s initial claims denial explanations deficient under ERISA.” The court of appeals agreed with the district court that United’s unilluminating denials were insufficient under ERISA as they did not cite any specific plan provision, provide any specific explanation, or permit plaintiffs to adequately respond during the administrative claims process in an effort to perfect their claims. In fact, the Ninth Circuit pointed out that the district court itself needed post-trial briefing from United to understand the basis for the denials. Accordingly, the court of appeals agreed with appellants that they did not receive adequate notice of United’s denial explanations. The court of appeals determined that the district court had “erroneously concluded that United’s procedural violations amounted to harmless error that did not affect the administrative review.” As a result, the Ninth Circuit found that the district court improperly denied plaintiffs’ request to submit supplemental evidence after bench trial and that the declarations they sought to add “contained direct responses to United’s claims denial explanations advanced during litigation.” These declarations, it went on, are the type of extra-record material that the Ninth Circuit requires district courts consider in order to remedy procedural irregularities and to essentially recreate what the administrative record would have been if United had not violated ERISA. Accordingly, the Ninth Circuit vacated the district court’s judgment in favor of defendants and remanded to it for further factfinding and review.

Pleading Issues & Procedure

Third Circuit

Cockerill v. Corteva, Inc., No. 21-3966, 2025 WL 1921645 (E.D. Pa. Jul. 11, 2025) (Judge Michael M. Baylson). This class action litigation was filed by DuPont employees and retirees in 2021. Plaintiffs alleged that when their employer split into three companies – DuPont de Nemours & Company, Dow Inc., and Corteva, Inc. – they were misled about early retirement benefits and improperly denied optional retirement benefits. Although plaintiffs were employees of the old DuPont and continued to work at the new company with the DuPont name, they lost their ability to obtain these retirement benefits because the pension plan had been moved into the new Corteva entity. In 2024, the court held a six-day bench trial, and on December 18, 2024 issued a ruling finding against defendants on Counts II, IV, and VI, the majority of plaintiffs’ claims. (Your ERISA Watch reported on this decision in our first newsletter of the year.) The court held that defendants’ interpretation of the plan regarding optional retirement benefits for the over-50 class members was arbitrary and capricious, that they breached their fiduciary duties based on affirmatively misleading statements about how the spin-off would affect the pension benefits, and that defendants violated ERISA’s anti-cutback provisions because their arbitrary and capricious interpretation had the effect of amending the plan to cut back optional retirement class members’ benefits. Then, in this year, the court conducted a further bench trial on the issue of remedies and in May awarded exclusively equitable relief and entered final judgment in favor of plaintiffs. On June 25, 2025, defendants filed a notice of appeal and a motion to stay enforcement of the court’s judgment pending resolution of the appeal. Plaintiffs opposed, arguing that defendants could not demonstrate likelihood of success on the merits or irreparable harm such that the “rarely granted” and “extraordinary remedy” was warranted here. The court agreed with plaintiffs, “particularly since the judgment is equitable in nature.” The court took the majority of its time discussing defendants’ likelihood of success on the merits. It rejected defendants’ arguments about standing, detrimental reliance, alleged errors in its fiduciary breach analysis, an argument that knowledge is necessary for liability on the fiduciary breach claim, that the court applied the wrong standard of review, and that plaintiffs failed to prove the challenged conduct caused them to forgo applying for benefits. In sum, the court concluded that “Defendants have not demonstrated a sufficient likelihood of success on appeal as to any of the issues raised.” It then held that defendants could not demonstrate they would suffer irreparable harm if the judgment is enforced during the appeal. Rather, it found defendants will only suffer “a purely economic injury,” which in the Third Circuit is insufficient to satisfy the irreparable injury requirement unless it is so great that it threatens the existence of their business. Such was not the case here, and defendants did not argue it was. “Defendants make no attempt to argue that paying these benefits threatens the solvency of the Plan or the viability of their multi-billion-dollar entities.” Accordingly, the court agreed with plaintiffs that defendants could not meet the Third Circuit’s heavy threshold to award a stay. However, instead of denying the motion outright, the court granted a stay for ten days in order to provide defendants with an opportunity to seek immediate relief in the court of appeal. Defendants chose to do so. The court of appeals speedily denied defendants’ motion on July 17, 2025. Accordingly, defendants will not be able to halt the judgment against them while they challenge the court’s verdict on appeal. (Disclosure: Kantor & Kantor attorneys represent the plaintiffs in this action.)

Provider Claims

Second Circuit

Rowe Plastic Surgery of N.J., LLC v. Aetna Life Ins. Co., No. 23-CV-3632-SJB-LKE, 2025 WL 1940325 (E.D.N.Y. Jul. 15, 2025) (Judge Sanket J. Bulsara). Plaintiffs Rowe Plastic Surgery of New Jersey, LLC and East Coast Plastic Surgery, P.C. filed this action against Aetna Life Insurance Company challenging the reimbursement rate the insurer paid for surgery the plaintiffs performed on a patient. If this case sounds like déjà vu all over again to any readers, that’s because it is one of more than 30 similar cases filed by the same plaintiffs against health insurance companies. In fact, last week Your ERISA Watch reported on a nearly identical lawsuit, and indeed a nearly identical decision from the court. The two lawsuits, both brought by Rowe and East Coast Plastic Surgery against Aetna, were stayed pending resolution of plaintiffs’ appeals of dismissals of two of their actions before the Second Circuit. In both cases, the Second Circuit affirmed the dismissals and agreed with the district courts that plaintiffs failed to state their claims because the state law causes of action were either preempted by ERISA, insufficient under state law, or both. Now that those appeals have been decided, plaintiffs moved for leave to amend their complaint. Like the decision from last week, the court denied the motion to amend and ordered the parties to proceed to summary judgment. The court wrote that, “[t]his case, and the approximately 30 other similar lawsuits, are based on the same theory: phone calls confirmed that the insurance company would pay at least 80% (in some instances 90%) of a reasonable and customary fee, and the conversations created enforceable contracts that were breached.” That assumption, the court said, is flawed and misunderstands preemption under ERISA, as well as state contract law. As in plaintiffs’ other cases, the court concluded that the state law claims in both the original complaint and in the proposed amended complaint are both preempted by ERISA and fail as a matter of state law. Regardless of how plaintiffs frame their allegations or what language they use, the court was clear that the only reason the providers called Aetna in the first place was to ascertain that payments would be made to them under the plan. At its core, the court determined that this lawsuit “[n]o matter how much this is dressed up in state law garb and additional facts, the claims grow out of what was (not) paid under an ERISA plan.” Thus, the court concluded that the proposed amended complaint still presupposes the existence of the relationship between the insurer and the insured through an ERISA healthcare plan, and accordingly, the state law claims are preempted by the federal statute. Putting aside the issue of preemption, however, the court also found flaws with each of the state law claims because the oral conversations at issue are insufficient to be considered a promise to pay on which the providers reasonably relied for their contract or contract-related claims. For these reasons, the court would not allow the providers to amend their complaint and instead ordered the case to proceed to summary judgment.