Happy Sunday, ERISA Watchers!  I’m glad to be able to report some good news in the post-Tackett world of retiree medical.  In this week’s notable decision, Kelly v. Honeywell Int’l, Inc., No. 17-2075, __F.3d__, 2019 WL 3673139 (2d Cir. Aug. 7, 2019), the Second Circuit affirmed the district court’s grant of summary judgment in favor of the retirees, and their surviving spouses, whose medical benefits it determined had vested before the expiration of the effects bargaining agreement (“EBA”).  The court also affirmed the district court’s order preliminarily enjoining Honeywell from terminating medical benefits vested after the EBA expired.

All of this started after the Supreme Court’s decision in M&G Polymers USA, LLC v. Tackett, ––– U.S. –––, 135 S. Ct. 926, 190 L.Ed.2d 809 (2015), which prompted Honeywell to review its collective bargaining agreements.  Believing it was justified to terminate the retiree medical coverage it had been providing Plaintiffs for over 15 years, Honeywell announced that it was doing so effective December 31, 2016.  As a result of the various lower court proceedings, however, Honeywell has continued to provide medical coverage to the retirees. Continue Reading Second Circuit Holds Employer to Promise of Lifetime Retiree Medical Benefits

What do you do if you’re a milling and animal feed manufacturer saddled in scandal because you produced horse and cattle feed containing a fatal amount of monensin?  Apparently, you sell your stock to an ESOP at an overly inflated price.  That’s at least what the plaintiff alleges in this week’s notable decision, Zavala v. Kruse-Western, Inc., et al., No. 119CV00239DADSKO, 2019 WL 3387102 (E.D. Cal. July 26, 2019).  

Following Kruse-Western’s expensive settlements related to monensin poisoning of horses and cattle, and allegedly with the knowledge of significant future liabilities, the Western Milling Employee Stock Ownership Plan (the “ESOP”) was created.  Zavala, a current ESOP participant, alleges various violations related to the sale of Kruse-Western stock to the ESOP.  The ESOP purchased the stock from Kruse-Western and the other defendant “selling shareholders,” which the ESOP financed by borrowing the entire purchase price of $244 million from Kruse-Western.  The value of Kruse-Western stock fell shortly thereafter, with only marginal recovery, such that within two years of the ESOP’s creation, the ESOP had purchased Kruse-Western’s outstanding stock for nearly ten times its actual value.  And like monensin, that’s a hard pill to swallow. Continue Reading Dudenhoeffer Does Not Defeat Breach of Fiduciary Duty Claims Related to ESOP Purchase of Inflated Company Stock

Good morning, ERISA Watchers!  Last week was quite a busy week.  I spent four days in Spokane, Washington attending the Ninth Circuit Judicial Conference (and met Associate Justice Elena Kagan to boot!).  Despite the flurry of activity, I continued to review all the recent ERISA decisions so that Your ERISA Watch wouldn’t miss a beat. The mid-week notable decision was from the Fourth Circuit.  (Read about it here if you missed it.).  Today’s notable decision is from the Fifth Circuit in Faciane v. Sun Life Assurance Co. of Canada, No. 18-30918, __F.3d__, 2019 WL 3334654 (5th Cir. July 25, 2019), where the court addresses the accrual of a limitations period applicable to a disability benefit miscalculation claim.   Continue Reading Fifth Circuit Finds Limitations Period for Miscalculation Claim Began to Accrue Upon Notice of Benefit Calculation