This week’s notable decision comes out of the Ninth Circuit Court of Appeals in a matter involving employer contributions to a union pension plan, Lehman, et al. v. Nelson, et al., No.18-35321, __F.3d__, 2019 WL 6484254 (9th Cir. Dec. 3, 2019). The Court affirmed the district court’s holding that trustees of the IBEW Pacific Coast Pension Fund (“Pacific Coast Fund”) abused their discretion by interpreting Plan Amendment 24 (an attempted Rehabilitation Plan to right the ship of its underfunded, ‘critical status’ pension plan pursuant to the terms outlined in the Pension Protection Act of 2006 (“PPA”)) to apply to “pass-through” payments to be transferred to out-of-state plans. As part of the Pacific Coast Fund’s rehabilitation plan, the Fund’s trustees used Amendment 24 to the Plan to specifically create “non-benefit contributions” and excluded those from the definition of “contributions” for which contributions would need to be made to a traveler’s home fund.
Continue Reading Trustees Abuse Discretion by Interpreting Plan Amendment to Apply to “Pass-through” Payments Transferred to Out-of-State Plans
Seventh Circuit Holds Employer to Promise of Lifetime Health-care Benefits for Retirees
Retired steelworkers and their families have something to be thankful for this week. And no, it’s not turkey. This week’s notable decision is Stone v. Signode Industrial Group LLC, No. 19-1601, __ F.3d __, 2019 WL 6139680 (7th Cir. Nov. 20, 2019), where the Seventh Circuit held that Signode Industrial Group LLC’s successors were obligated to continue to provide benefits to retirees even after the employer’s termination of the underlying collective bargaining agreement.
Defendant Signode was the sponsor of a health care benefit plan for retired steelworkers, the terms of which it had negotiated with a union. Defendant terminated the underlying benefits agreement and ceased paying benefits to the retirees and their families. Plaintiffs initiated a class action under both ERISA and the Labor-Management Relations Act contending that benefits under the plan were vested and thus could not be terminated. On cross-motions for summary judgment, the district court (Judge Thomas M. Durkin, N.D. Ill.) granted Plaintiffs’ motion and denied Defendants’ motion, holding that Defendant did not have the right to terminate benefits. The district court entered a permanent injunction against Defendants, who appealed.
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Murder of Plan Participant Disqualifies 401(k) Beneficiary
This week’s notable decision is a district court decision in Estate of Colleen J. Brownell v. Lyczak, et al., 2019 WL 5485392 (D.N.J. Oct. 25, 2019), which is another cautionary tale for the notion that murder doesn’t pay, well at least a murder conviction.
In this case, Defendant Lyczak pleaded guilty to murdering his girlfriend, Colleen Brownell, who was a plan participant in a 401(k) Employee Savings Plan (“the Plan”) administered by her former employer, Defendant PHH Corporation. Lyczak was Brownell’s named primary beneficiary. In other words, in the event of her passing, Lyczak was to receive all the money in her Plan account. The plaintiff is the Estate of Colleen J. Brownell.
The Estate moved for summary judgment on the basis that Lyczak’s guilty plea to the murder disqualifies him from being a beneficiary of Brownell’s 401(k) account. Lyczak did not respond and PHH did not oppose the motion.
Continue Reading Murder of Plan Participant Disqualifies 401(k) Beneficiary