Pension Benefit Claims

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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.
Continue Reading Seventh Circuit Holds Employer to Promise of Lifetime Health-care Benefits for Retirees

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

This week’s notable decision is an unpublished ERISA preemption decision in Abernethy v. EmblemHealth, Inc., No. 19-422, __F.App’x__, 2019 WL 5302825 (2d Cir. Oct. 21, 2019), where the Second Circuit revived the state law claims retired officers brought against EmblemHealth after they cancelled the officers’ retiree medical coverage.

The retirees claimed that they were entitled to continued medical coverage based on their employment and separation agreements.  The employment agreements provide that the employee “shall be entitled to participate in, and receive benefits under” any retiree health benefit plan provided by EmblemHealth, “subject to the terms of such plans, program or policies.” But, the agreement also disclaims that the employee has any vested interest in any employee benefit plan, which the company may, in its discretion, change or revoke.  The separation agreements state that the employee will be able to “commence Retiree Health Benefits at the same level as that provided an active officer.”
Continue Reading Second Circuit Holds Breach of Contract Claims for Retiree Medical Coverage Not Preempted by ERISA