Asner v. The SAG-AFTRA Health Fund, No. 2:20-cv-10914-CAS-JEMx, 2023 WL 6984582 (C.D. Cal. Oct. 19, 2023) (Judge Christina A. Snyder)

A judge in the Central District of California approved a settlement of this class action brought by participants and beneficiaries of the SAG-AFTRA Health Plan against the trustees and fiduciaries of the plan, after they amended and restructured the plan during the height of the COVID-19 pandemic to cut costs by changing benefit eligibility requirements. These changes resulted in many then out-of-work actors losing their healthcare coverage. Participants who did not lose coverage saw reduced benefits and higher premiums and out-of-pocket expenses. Plaintiffs brought this ERISA action alleging breaches of fiduciary duties in connection with these changes.

In April of this year, the parties reached agreement on the terms of a settlement and submitted a motion for preliminary approval of class action settlement. The court granted their motion for preliminary approval, approved plaintiffs’ plan for dissemination of settlement notice, and scheduled a fairness hearing. That hearing took place on September 11, 2023. In this decision the court granted the parties’ motion for final approval of the class action settlement, and set out the awards of attorneys’ fees, costs, and class representative service awards.

To begin, the court went through the somewhat complicated terms of the proposed settlement and its impact on the various sub-classes of participants and beneficiaries. Broadly, as proposed, the settlement consists of three main parts. First, it will create a $15 million cash fund to compensate participants and their spouses over the age of 65 who lost coverage because of the amendments. Second, the settlement will provide HRA allocations of up to $700,000 annually to accounts of members who became ineligible for coverage after the plan eliminated residual earnings eligibility as a means of qualifying for coverage. Third, the settlement will provide for certain non-monetary relief, including mandating certain disclosures and requiring fiduciaries to engage a cost consultant for future proposed changes to the plan, allotting additional time for seniors to use their sessional wages to qualify for coverage, and other related enhanced disclosures.

Upon evaluating the settlement and factoring in the two objections voiced during the fairness hearing, the court blessed the terms of the agreement. “Based on its familiarity with the nature of the case, the record, the procedural history, the parties, and the work of their counsel, the Court finds that the Settlement was not the product of collusion and lacks any indicia of unfairness. The Court finds the Settlement is fair, reasonable, and adequate to the Settlement Class considering the complexity, expense, and likely duration of the case, and the risks involved in establishing liability, damages, and in maintaining this case through trial and on appeal. The Court finds that the Settlement represents a fair and complete resolution of all claims.” Accordingly, the court granted final approval of the settlement.

The decision then turned to calculating the fee and cost awards. Regarding attorneys’ fees, plaintiffs argued that fees should be calculated based on the total estimated maximum recovery of the settlement of $20.6 million. They requested a fee award of $6,866,667, or 25% of this amount. Defendants objected to this request and sought a lowered amount. Taking in the portions of the benefit that are not a “sum certain,” the court estimated the total recovery to be worth approximately $15,450,000, considerably less than the plaintiffs’ estimate. Nevertheless, the court agreed that plaintiffs’ attorneys should be awarded “25% of the common fund” of $15,450,000, or $3,862,500, based on their success in securing “a substantial settlement for the class despite their uncertain odds at trial.” This amount was slightly above plaintiffs’ counsel’s collective lodestar of $3.8 million.

As for costs, the court granted plaintiffs’ request for reimbursement of litigation expenses in the amount of $50,954.13. Finally, the court awarded each of the class representatives service awards of $5,000 for their help and effort in actively participating in this litigation and their commitment to seeking a benefit on behalf of the class.

At a time when members of SAG-AFTRA are currently on strike seeking higher pay, more job security, and better benefits from the major studios and streaming platforms, it is nice to see this action come to a favorable resolution for those same individuals.

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

Arbitration

Sixth Circuit

Merrow v. Horizon Bank, No. 22-123-DLB-CJS, 2023 WL 7003231 (E.D. Ky. Oct. 24, 2023) (Judge David L. Bunning). Three participants of the P.L. Marketing, Inc. Employee Stock Ownership Plan (“ESOP”) sued a group of selling shareholders from whom their plan acquired stock and the bank which acted as the trustee overseeing the transaction for breaches of fiduciary duties and prohibited transactions under ERISA. Defendants moved to dismiss the amended complaint and argued that plaintiffs were required to arbitrate their dispute pursuant to the plan’s arbitration provision. The arbitration clause states that in exchange for participating in the plan participants are bound to mandatory arbitration of any dispute, and that a claimant “whether pursing a claim for benefits or other relief on behalf of the Plan as a whole, by participating in this Plan, is specifically waiving the right it otherwise would have had to sue the Company, Trustee, the Administrator or any party to whom administration or investment discretion is delegated hereunder in court and to have such claims decided by a judge or jury.” Importantly, the ESOP also includes a waiver of class arbitration, and requires claims be arbitrated individually. Plaintiffs maintained that the arbitration agreement in the ESOP is unenforceable. The court resolved the parties’ arbitration dispute in this order in favor of arbitration. It concluded that plaintiffs’ position that the provision was unenforceable because it waives statutory remedies was “based on a misinterpretation of the relevant case law.” It disagreed with plaintiffs’ reading of case law to mean that “a plan cannot agree to prospectively waive statutory rights and remedies.” Instead, the court determined that plaintiffs’ claims must be brought in arbitration pursuant to the broad terms of the ESOP’s arbitration clause. The court therefore compelled arbitration and stayed the case pending arbitration.

Attorneys’ Fees

Eighth Circuit

Yates v. Symetra Life Ins. Co., No. 4:19-CV-154 RLW, 2023 WL 7017736 (E.D. Mo. Oct. 25, 2023) (Judge Ronnie L. White). On January 3, 2022, this court granted summary judgment in favor of plaintiff Terri Yates and awarded her accidental death and dismemberment benefits. Reversing an earlier position that Ms. Yates had failed to exhaust administrative remedies, the court concluded that Ms. Yates was not required to exhaust administrative remedies because there was no exhaustion requirement in the terms of the plan. Further, the court ruled that Symetra Life Insurance Company’s decision to deny benefits was erroneous. Following that decision, the court then issued a second judgment awarding Ms. Yates attorneys’ fees totaling $54,058.50. Symetra appealed the district court’s rulings. On February 23 of this year, the Eighth Circuit Court of Appeals affirmed the lower court’s decisions in all respects. Your ERISA Watch covered the Eighth Circuit’s ruling and featured it as our case of the week in our March 1, 2023 newsletter. Ms. Yates now moves for an award of attorneys’ fees and costs on appeal for her counsel, Kantor & Kantor attorneys Glenn Kantor and Sally Mermelstein. In addition, Ms. Yates sought prejudgment interest on her award of accidental death benefits. As a preliminary matter, the court quickly decided that Ms. Yates was both eligible for and entitled to a reasonable award of attorneys’ fees for her counsel’s work on appeal. It incorporated by reference its earlier analysis in its district court litigation fee decision. Having established that Ms. Yates should be awarded fees, the court moved on to assessing the reasonableness of counsel’s hours and their hourly rates. Ms. Yates sought attorneys’ fees totaling $114,840 for work incurred on appeal. This amount was comprised of hourly rates of $700 per hour for Mr. Kantor and $600 per hour for Ms. Mermelstein, and a total of 180 hours of work between the two attorneys. Symetra did not take issue with Mr. Kantor’s hourly rate, as it was the same rate awarded to Mr. Kantor by this court in 2022. However, the district court awarded Ms. Mermelstein $450 an hour in its 2022 fee decision, and Symetra argued in favor of matching that hourly rate again for the appeal fees. Finding a compromise, the court awarded Ms. Mermelstein an hourly rate of $500. It concluded that Ms. Mermelstein was entitled to an increase in her hourly rate given the “high quality” of her work on appeal, her “additional seniority and appellate ERISA briefing experience since the prior fee award,” and the general fact that “appellate work normally commands a higher rate than trial-level litigation work.” With the hourly rates established, the court then analyzed the hours expended. Ultimately it reduced the 180 hours sought by twenty percent, a reduction of 22.32 hours for Ms. Mermelstein in preparing the brief and 13.68 hours for Mr. Kantor for his work arguing on appeal. The court agreed with Ms. Yates that on appeal “Symetra was arguably seeking to establish Circuit case law that would have been highly unfavorable to millions of employees,” and that this appeal therefore “required a high level of work due to the potential adverse impact on ERISA participants in this Circuit if this Court’s decision had been reversed.” Left with its hourly rates and number of hours, the court calculated the lodestar and awarded Ms. Yates’ attorneys’ fees totaling $82,944. However, her motion for costs was denied. The court stated that Ms. Yates’ bill of costs was deficient because it was not accompanied by a declaration under penalty of perjury that the claimed costs were correct and necessary as required under the local statute. Finally, relying on Eighth Circuit precedent, the court awarded annually compounding prejudgment interest of 0.41%, which was the weekly average 1-year constant maturity Treasury yield from the calendar week preceding the court’s January 3, 2022 order. This low rate was the result of the COVID-19 pandemic when interest rates were set artificially low in order to counteract the economic impact of the pandemic.

Ninth Circuit

Su v. Bowers, No. 22-15378, __ F. 4th __, 2023 WL 7009599 (9th Cir. Oct. 25, 2023) (Before Circuit Judges Bea, Collins, and Lee). The U.S. Department of Labor brought an ERISA action against two owners/selling stockholders of an architecture and build company, appellants Brian Bowers and Dexter Kubota, alleging the two individuals inflated the value of the company’s stock when selling shares to an employee stock ownership plan. The DOL’s arguments were dependent on the report of a single valuation expert, Steven Sherman, resulting in a case the court of appeals described as “shoddy.” The district court rejected Mr. Sherman’s opinion entirely because of a fairly consequential calculation error he made in which he included subconsultant fees in his projections when these fees could not have had any impact on the figures, a fact Mr. Sherman stated that he knew and admitted later was a mistake. It either was known, or should have been known, to the government before trial that this error existed because the defendants’ expert pointed it out during discovery. This mistake left the government without the testimony of their lone valuation expert. As a result, the government lost their action following a bench trial. “Without a reliable expert to show that B+K was sold for more than its fair market value, the government’s case crumbled.” Mr. Bowers and Mr. Kubota then moved for attorneys’ fees and nontaxable costs under the Equal Access to Justice Act (“EAJA”). The district court denied this request and held that the government’s litigation position was substantially justified and that the government had not acted in bad faith by bringing the case. Mr. Bowers and Mr. Kubota appealed that decision. In this order the Ninth Circuit affirmed the district court’s denial of fees and costs under EAJA and remanded the district court’s award of taxable costs. Specifically, the court of appeals concluded that the lower court had not abused its discretion in concluding that the government’s position was substantially justified, despite their case’s “many flaws,” as the government could not have known heading into trial that the district court would reject their expert’s opinion as entirely unreliable. “The government’s expert, despite his errors, arguably had a reasonable basis – at least at the time of trial – in questioning whether the company’s profits could surge by millions of dollars in just months.” Therefore, the court of appeals concluded that the district court had not clearly erred in finding the government did not act in bad faith. However, the Ninth Circuit found the district court did abuse its discretion in reducing the award of taxable costs. It held that the lower court had relied on findings of fact that were clearly erroneous about when depositions were taken. The district court mistakenly believed that these depositions occurred after the summary judgment motion. However, it is clear from evidence provided that the depositions were actually taken before then. The Ninth Circuit therefore held that because “the district court’s reduction of costs was mainly based on that clear error, it abused its discretion.” Therefore this portion of the district court’s decision was overturned and remanded to the district court with instructions to reconsider its decision on the corrected record. Circuit Judge Collins dissented from the majority’s view affirming the denial of the EAJA attorneys’ fees. He was dubious of the district court’s determination that the government’s position was in fact substantially justified and stated that he would remand to the district court with instructions to consider the government’s argument that Mr. Bowers and Mr. Kubota did not satisfy the net worth requirements under EAJA. Nevertheless, Judge Collins stated that he concurred with his colleagues’ decision to vacate the district court’s order reducing the award of taxable costs.

Class Actions

Third Circuit

Packer v. Glenn O. Hawbaker, Inc., No. 4:21-CV-01747, 2023 WL 7019187 (M.D. Pa. Oct. 25, 2023) (Judge Matthew W. Brann). In 2021, the Pennsylvania Attorney General brought a criminal complaint against defendant Glenn O. Hawbaker, Inc., alleging the company underfunded benefits of prevailing wage employees. Later that same year, Hawbaker pleaded no contest to the charges and agreed to pay over $20 million in restitution to over 1,000 employees. Two months after the plea, three former employees of Hawbaker initiated this ERISA suit on behalf of themselves and others similarly situated. On June 6, 2023, the court certified a class of all current and former hourly wage employees who worked on prevailing wage contracts with the company in Pennsylvania from 2012 to 2018. Hawbaker moved for reconsideration of the class certification decision. In response, plaintiffs moved to supplement the class certification record. The court resolved both motions in this order. To begin, the court granted defendant’s motion. It agreed with Hawbaker that it shouldn’t have considered the criminal complaint and affidavit of probable cause to establish commonality, typicality, or adequacy. Because these documents could not be considered to establish the company’s benefit practices, the court ruled that certification of the class was in error. However, its decision didn’t stop there. Looking at plaintiffs’ motion to supplement the certification record, the court ended up back where it started. Plaintiffs included deposition transcripts and accompanying exhibits from Hawbaker’s CFO and Corporate Comptroller to prove the prerequisites of certification under Rule 23(a). The court held that this updated information was an adequate substitute for the criminal case documents it was now excluding, and that this supplemental information could be used to establish Hawbaker’s benefit calculation methods and the legality of those methods. Therefore, pursuant to this new record, the court held that plaintiffs carried their burden to establish that each of Rule 23’s prerequisites remained satisfied, and therefore ended up reaffirming its June 6 order certifying the class. Thus, after only a little ado, this decision ended with no change in the status quo.

Eleventh Circuit

In re Blue Cross Blue Shield Antitrust Litig., No. 22-13051, __ F. 4th __, 2023 WL 7012247 (11th Cir. Oct. 25, 2023) (Before Circuit Judges Pryor and Abudu and District Judge Thomas P. Barber). The Eleventh Circuit affirmed a $2.67 billion settlement in this multi-district class action brought a decade ago by policyholders of Blue Cross Blue Shield Association plans who alleged the insurer and its affiliated member plans were conspiring to drive up the cost of health insurance by agreeing not to compete with each other in violation of antitrust laws. The healthcare plan subscribers alleged that Blue Cross engaged in a multi-part campaign to restrain competition by allocating geographic regions, limiting the competition of member plans through mandating business under the Blue Cross brand, by restricting the right of member plans to be sold outside the Blue Cross Association, and through other consolidating and anticompetitive behaviors and schemes. In addition to the billions of dollars in monetary recovery, the settlement also provides for several forms of injunctive relief, including new requirements that will force “Blue Cross to make structural reforms to increase competition between its members.” The terms of the settlement also call for attorneys’ fees and expenses of 25% of the settlement fund, totaling $667 million. Although not an ERISA action, an ERISA issue did come up both during the fairness hearing and again on appeal. Two employees of fully insured employer plans who objected to the settlement argued “that the district court erred in…approving a plan of distribution that fails to address the employers’ disbursement obligations under…ERISA.” During the fairness hearing of the proposed settlement, the Department of Labor, which is not a party to this action, filed a statement of interest expressing concerns regarding the terms of the agreement and its effect on employers and other plan fiduciaries regarding their obligations under ERISA. “Specifically, the Department was concerned that the settlement did not account for ERISA at all.” This concern by the DOL, along with all other objections, was overruled by the district court, which approved the settlement. On appeal, the Eleventh Circuit found that the district court had not abused its discretion in holding that ERISA was no impediment to approving the agreement. The appeals court wrote, “as the district court explained, nothing in the settlement agreement changes ERISA rights: the order approving the settlement states that ‘all ERISA duties still apply’ and that ‘all ERISA fiduciaries must comply with those duties.’ Plans and employees retain their rights to sue under ERISA. The fear of a speculative violation is no reason to reject the settlement.” Aside from ERISA, no other argument presented on appeal persuaded the Eleventh Circuit to overturn the district court’s approval of the settlement. It rejected all of the legal challenges and found that (1) the terms of the release were not in violation of public policy; (2) they do not perpetuate illegal conduct; (3) the release is appropriately limited in its scope; (4) the distribution methods are fair under civil procedure rules; (5) the district court did not err by approving a settlement with the same named plaintiffs representing both the injunctive and damage classes; and (6) the attorneys’ fees were within the range of reasonableness. Accordingly, the settlement objectors’ concerns were overruled and the judgement approving the settlement agreement itself was affirmed.

Disability Benefit Claims

Ninth Circuit

Haag v. Unum Life Ins. Co. of Am., No. 22-cv-03130-TSH, 2023 WL 6960369 (N.D. Cal. Oct. 20, 2023) (Magistrate Judge Thomas S. Hixson). Plaintiff Rebecca Haag commenced this disability action against Unum Life Insurance Company of America to recover terminated long-term disability benefits under an ERISA-governed policy. Ms. Haag, a clinical lab scientist, stopped working and started receiving disability benefits on January 1, 2020, after finding she could not sustain even part-time work with the symptoms she was experiencing from lumbar radiculopathy, spondylosis, sciatica, a labral tear, and a herniated disc. Ms. Haag’s musculoskeletal spine and hip conditions ultimately required her to undergo two surgeries, experiment with a series of pain medications, and engage in several rounds of physical therapy. In the end these treatments did help improve Ms. Haag’s conditions. In August of 2022, after recovering from her second surgery, Ms. Haag returned to work as a lab analysist. However, this date was nearly three years after she stopped full time employment and “just under two years after [Unum’s] initial determination that she would not receive ongoing benefits.” Thus, the question before the court was whether the medical records established that Ms. Haag remained unable to work from the date when Unum terminated benefits until the date when Ms. Haag returned to work. In this decision ruling on the parties’ cross-motions for judgment, the court found that Ms. Haag produced sufficient evidence to demonstrate that she was disabled within the meaning of the policy from the date when Unum denied benefits through December 7, 2021. Beyond that date, the court concluded that the records did not support continued evidence of disability, as Ms. Haag’s surgeon concluded that she was doing well with significantly decreased pain levels. Nevertheless, prior to December 7, 2021, the court stated that Ms. Haag was “credible in describing her pain and ongoing symptoms…[and] consistently sought medical treatment, visited multiple providers…, engaged in multiple rounds of MRIs and testing,…. tried multiple medications which themselves created side effects, engaged in months and months of physical therapy, all while reporting ongoing pain. These activities support that she was truthfully and actually in serious pain.” Furthermore, the court found that objective evidence, including the results of a functional capacity examination, supported Ms. Haag’s characterization of her pain and work limitations, and that her treating physician’s opinions should be afforded weight. Additionally, the court was not persuaded by Unum’s hypothesis that Ms. Haag’s “real motivation in not returning to work was not back pain, but rather related to her mental health.” If anything, the court viewed Ms. Haag’s mental health as taking a toll from not being able to continue working in her career path. The court reminded Unum that it had itself concluded that Ms. Haag’s cause of disability was her pain when it approved her claim for benefits. Based on the foregoing, the court concluded that the evidence in the administrative record demonstrated that Ms. Haag was disabled under the terms of her plan through December 7, 2021, and that Ms. Haag was entitled to judgment in her favor up until that date. For the period beyond December 7, 2021, judgment was granted in favor of Unum. Ms. Haag was represented by Your ERISA Watch co-editor Peter Sessions.

Discovery

Fifth Circuit

Edwards v. Guardian Life Ins. of Am., No. 1:22-CV-145-KHJ-MTP, 2023 WL 7092500 (N.D. Miss. Oct. 26, 2023) (Judge Kristi H. Johnson). This action involves a dispute over a life insurance policy. In a previous order the court concluded that the policy at issue is an ERISA-governed employee benefit plan. Following that order, the Magistrate Judge issued a case management order setting out the deadlines for the case. Plaintiff Jimmy Edwards appeals that case management order because it limits discovery to the administrative record absent a court order on a discovery motion filed by either party. Applying a clear error standard, the court denied Mr. Edwards’ motion and upheld the case management order. The court understood Mr. Edwards’ motion as an attempt to reconsider its prior holding that the policy is an ERISA plan. It declined to engage with this attempt. Instead, the court stressed that Mr. Edwards does not have grounds to challenge the order as clearly erroneous or contrary to law. It emphasized that he has not been denied a specific discovery request. Rather, the order reiterates the court’s holding that ERISA applies, and incorporates ERISA’s general principle of limiting discovery to the administrative record. Should he wish, Mr. Edwards can petition the court for discovery. As such, the court found no mistake in the order and therefore upheld it.

Life Insurance & AD&D Benefit Claims

Fourth Circuit

GSP Transp. Inc. 401(k), Plan Comm. v. Hall, No. 2:23-cv-814-RMG, 2023 WL 6969962 (D.S.C. Oct. 23, 2023) (Judge Richard Mark Gergel). Marriage. Marriage is what brings these parties together today, in this interpleader action. Specifically, they were brought together over a dispute about whether the marriage of decedent Jeffrey Schoepfel and defendant Summer Hall was legally invalid, as his surviving children, defendants Jessica and Nicholas Schoepfel, contend, or whether Ms. Hall was Mr. Schoepfel’s lawful wife and thus entitled to benefits under the plan, as Ms. Hall maintains. Ms. Hall moved for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). Noting that judgment on the pleadings is only appropriate if, after accepting all of the nonmoving parties’ allegations as true and viewing facts most favorably to them, the moving party is entitled to judgment as a matter of law, the court wrote it was “abundantly clear that this is not a case that should be disposed of on a motion for judgment on the pleadings.” To the contrary, the validity of the marriage between Ms. Hall and Mr. Schoepfel “is vigorously disputed” among the competing beneficiaries. Therefore, the court ruled that judgment on the pleadings would not be appropriate here, and consequently denied Ms. Hall’s Rule 12(c) motion.

Medical Benefit Claims

Fifth Circuit

Windmill Wellness Ranch LLC v. H.E.B., Inc., No. SA-23-CV-00034-DAE, 2023 WL 6981993 (W.D. Tex. Oct. 23, 2023) (Magistrate Judge Elizabeth S. Chestney). A rehabilitation facility, plaintiff Windmill Wellness Ranch LLC, and a patient who received treatment there, E.A., brought this ERISA action against the HEB PPO healthcare plan, and its sponsor and administrator, H.E.B., Inc., for underpaying for E.A.’s treatment at Windmill. HEB and the Plan filed a joint motion objecting to plaintiffs’ experts’ testimony “asking the Court to exclude all of Plaintiffs’ designated experts.” In this order the court granted defendants’ motion. Plaintiffs designated four experts. They were the CEO of Windmill, Windmill’s Medical Director, a medical doctor hired as a consultant retained to testify about the reasonableness of Windmill’s charges, and plaintiffs’ counsel to testify on the reasonable of their attorneys’ fees. Defendants argued that plaintiffs’ experts should not be allowed to provide testimony because plaintiffs’ violated a procedural requirement for submitting a written report of their retained expert witness, the testimony of the experts is beyond the scope permitted in ERISA benefit actions, the proposed testimony will not assist the trier of fact, and plaintiffs’ counsel’s testimony on fees is unnecessary as fee motions are submitted separately after resolution of the merits of the case. The court agreed with these points. “The question in this case centers on whether HEB violated the Plan terms in applying its methodology for reimbursing Windmill for E.A.’s treatment. Here, none of the experts identified by Plaintiffs have been designated to testify as to how HEB, as administrator of the Plan, has interpreted the relevant terms of the Plan in other instances. Nor have Plaintiffs designated any experts to testify to assist the Court in its understanding of medical terminology or practice related to E.A.’s benefits claim. Rather, Plaintiffs’ experts are employees of Windmill who intend to testify on the services Windmill provides, the reasonableness of Windmill’s charges, the necessity of E.A.’s treatment, and the appropriate reimbursement rate for the services provided.” This information, the court held was “beyond the scope of the administrative record,” and not useful for resolution of the claims at issue. Therefore, the court granted defendants’ motion to strike plaintiffs’ experts.

Pension Benefit Claims

Second Circuit

Board of Trs. of the Bakery Drivers Local 550 & Indus. Pension Fund v. Pension Benefit Guar. Corp., No. 23-CV-1595 (JMA) (JMW), 2023 WL 7091862 (E.D.N.Y. Oct. 26, 2023) (Judge Joan M. Azrack). Just in time for the Halloween season, this case involves a zombie multiemployer plan resurrected from the grave not to eat brains but to apply for funds from a government assistance program. On December 17, 2016, the Bakery Drivers Local 550 and Industry Pension Fund was terminated following a mass withdrawal of employers. It was restored six years later on September 1, 2022, when the employer Bimbo Bakeries USA, Inc. and the Union agreed to amend the collective bargaining agreement, springing the pension plan back to life. Just five days later, the Fund filed a certification of its critical and declining status with the IRS. Why would they do this? Likely because of a pandemic-era amendment to Title IV of ERISA, wherein Congress enacted a new special financial assistance program to give multiemployer plans money to pay all benefits due through 2051 from general taxpayer monies. The program applied to plans in critical funding status from 2020 through the end of 2022. The Fund applied for $132,250,472.00 in assistance under the program. As the court wrote, “[i]t appears that the purpose of the Fund’s attempted restoration in September 2022 was to allow it to apply for [the program’s] assistance.” Its application was denied by the Pension Benefit Guaranty Corporation (“PBGC”) based on the PBGC’s opinion that “ERISA contains no provision allowing a multiemployer plan that terminated by mass withdrawal under Section 1341a to be restored.” The trustees of the Fund and the PBGC have each moved for judgment on the denial of the application for the government-backed financial assistance under the program. In this order the court affirmed the PBGC’s denial and granted judgment in its favor. The court identified “two questions of statutory interpretation” that it needed to answer in order to resolve the dispute. The first question was whether plans terminated by mass withdrawal prior to January 1, 2020 and remained terminated are eligible for special financial assistance benefits. The second was whether a multiemployer plan that was previously terminated by mass withdrawal can be restored after such a termination. The court concluded first that plans which terminated prior to January 1, 2020 are not eligible for benefits under the program. Accordingly, in order to qualify for benefits, the Fund needed to have been restored following its termination, making the answer to the second question central to the dispute among the parties. To answer this question, the court needed to consider the Chevron doctrine, and decide whether the PBGC’s interpretation is entitled to Chevron deference. It concluded that Congress had sufficiently delegated interpretive authority of Title IV of ERISA to the PBGC “such that its interpretation of Tile IV, including Sections 1347 and related provisions, trigger the Chevron deference framework.” Moreover, the court found that the PBGC’s interpretation was not unreasonable, arbitrary, or capricious. Therefore, it upheld the PBGC’s reasonable interpretation that Title IV prohibits restoration of a multiemployer plan terminated by mass withdrawal, and therefore granted the PBGC’s motion for summary judgment and denied the Fund’s motion for summary judgment. Thus, the court did not allow the undead Fund to feast on the pandemic-era assistance.

Plan Status

Second Circuit

Lovo v. Investis Dig., No. 23 Civ. 1868 (LLS), 2023 WL 7004772 (S.D.N.Y. Oct. 24, 2023) (Judge Louis L. Stanton). The terms of decedent Charles D. Scales’ employment agreement with his employer, Investis Digital Inc., were amended in the spring of 2021. At the time Mr. Scales was the Global CEO of the company. The amendment extended the list of employee benefit plans in which Mr. Scales was eligible to participate to include life insurance, with a benefit valued at five times his base salary of $459,000. This was a big deal for Mr. Scales, who was in his mid-60s and had a series of health complications which made obtaining life insurance difficult. However, Investis was not able to provide Mr. Scales with these promised life insurance benefits. The third-party insurer it attempted to secure a policy from denied Mr. Scales’ application after it received his statement of health and medical evaluation. Mr. Scales died just one month later, and was therefore never able to appeal the denial of his application for benefits. Investis has never paid any form of life insurance to Mr. Scales’ estate. In this action, asserted under both ERISA and state law, Mr. Scales’ estate seeks the life insurance benefits Mr. Scales was allegedly promised. Plaintiff alleges that defendants “knew that Scales could have obtained life insurance for three times the amount of his salary without completing a statement of health, and that Investis gave that life insurance option to the other two executives who received life insurance following Scales’ death.” The complaint maintains that this failure to pay life insurance benefits to the estate violates ERISA because the employment agreement entitles Mr. Scales to five times his base salary in life insurance benefits. Defendants moved to dismiss the action. Their motion was granted in this order, as the court concluded that it lacked subject matter jurisdiction over the lawsuit. The court disagreed with the estate that the employment agreement was an ERISA-governed plan. It wrote, “not every agreement by an employer to provide benefits to an employee constitutes an ERISA plan.” Because the court concluded that the agreement at issue here did not create an ongoing administrative program, it found that no ERISA life insurance plan exists and that the claims therefore do not arise under ERISA. In sum, the court stated that “a promise to obtain life insurance on Scales’ behalf is not the same as providing life insurance.” As a result, the court determined that it lacked federal subject matter jurisdiction over the case and dismissed it without prejudice.

Mason v. District Council 1707, No. 21-CV-9382 (VSB), 2023 WL 7043226 (S.D.N.Y. Oct. 26, 2023) (Judge Vernon S. Broderick). Former employees of District Council 1707, American Federation of State, County and Municipal Employees have sued the organization and its parent union under ERISA and New York State labor law after they were not paid the full amount of severance and vacation benefits for terminated employees that they maintain they are entitled to. Defendants moved to dismiss. They argued that the severance and vacation policies do not constitute employee benefit plans under ERISA. At this early stage of litigation, the court held that defendants failed to establish that either the vacation plan or the severance plan were beyond the scope of ERISA as a matter of law. Taking the allegations in the complaint as true, the court concluded that they were plausible to allege plaintiffs’ ERISA causes of action and therefore denied the motion to dismiss the ERISA claims. The court also denied the motion to dismiss the state law claims, as defendants’ only argument in support of dismissing them was that plaintiffs failed to raise federal claims, and thus the court lacks supplemental jurisdiction over the state law causes of action. “Because Plaintiffs’ ERISA claims survive Defendants’ motion to dismiss, so do their New York state law claims.”

Pleading Issues & Procedure

Ninth Circuit

Tolentino v. Saito, No. 23-00280 SOM-KJM, 2023 WL 7090375 (D. Haw. Oct. 26, 2023) (Judge Susan Oki Mollway). This action, asserted under ERISA, the Labor Management Relations Act (“LMRA”), and the Federal Arbitration Act (“FAA”), is a dispute among union trustees and employer trustees in interpreting the language of a collective bargaining agreement and its effect on settling matters over which the trustees are deadlocked. There are an equal number of union trustees and employee trustees. All of the union trustees have voted in favor of expanding certain benefits under a training fund. All of the employer trustees have voted against these added benefits. The document governing the trustees has a provision regarding deadlock votes. It states, “If the number of votes on any matter is deadlocked, the matter may be submitted to an impartial umpire mutually agreed upon by the Union and the Association.” Here, the union trustees are seeking a court order compelling the employer trustees to participate in arbitration over the deadlock. Plaintiffs bring an ERISA claim under Section 502(a)(3) to enforce the terms of the plan, a claim under Section 301 of the LMRA for refusal to arbitrate pursuant to the terms of the plan, and a claim under the FAA seeking to compel arbitration. Defendants moved to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and (b)(6). They argued that the court lacks subject matter jurisdiction and that the complaint fails to state a claim because the use of the word “may” indicates that arbitration is only permitted, not required. The court denied the motion to dismiss. It held that plaintiffs stated nonfrivolous claims under ERISA and LMRA, which establish federal jurisdiction, even if those claims later fail on the merits. With respect to ERISA, the court stated that “there is at least a question as to whether the Training Fund qualifies as a ‘plan’ for the purposes of ERISA. While the existence of such a question does not on its own render the Training Fund an ERISA plan, Defendants’ uncertainty at the very least means that Plaintiffs’ claim that ERISA applies cannot be disregarded as frivolous.” As for the use of the word “may” in the arbitration/deadlock provision, the court held that context matters. While the word “may” is usually understood to be permissive, here there would be no procedure for resolving a deadlock if arbitration is voluntary or requires all parties to agree to arbitration. Thus, because there would be no way to break a deadlock, “a deadlock would instead represent the failure of a motion to carry by a majority vote.” Given that this reading of the word “may” would essentially nullify the very clause it is contained within, the court declined to dismiss for failure to state a claim. Accordingly, none of plaintiffs’ claims were dismissed.

Severance Benefit Claims

Tenth Circuit

Franke v. Fifth Amended & Restated Newfield Expl. Co. Change of Control Severance Plan, No. 21-cv-2234-WJM-SKC, 2023 WL 6962081 (D. Colo. Oct. 20, 2023) (Judge William J. Martínez). The company plaintiff Jarrid Franke worked at for 14 years, Newfield Exploration Company, was acquired in 2019. Prior to that acquisition, the company had created a change of control severance plan to provide severance benefits to covered employees if they were involuntarily terminated or voluntarily resigned for “Good Reason” following a change of control at the company. In this ERISA action, Mr. Franke has sued the plan, its benefits administrator, and its committee, for improperly denying him severance benefits after his position at the company and aggregate responsibilities were materially reduced in the wake of the acquisition. In this order the court agreed with Mr. Franke that defendants arbitrarily and capriciously denied him severance benefits, and remanded to the committee with instructions and guidance to reconsider their decision under the proper standards outlined by the terms of the plan. The court held that defendants did not meaningfully engage with the material reductions in the scope and nature of Mr. Franke’s work in his roles immediately prior to and after the change in control and instead inappropriately “focused a great deal on Plaintiff’s career development, which has nothing to do with whether his aggregate responsibilities were reduced or if any such reduction was material.” The court wrote, “[n]ot only is the opportunity for future growth highly subjective and difficult to define, neither the Plan’s language nor the Committee’s interpretation worksheet indicate that it is a proper consideration at all.” Regardless, defendants’ discussions focused almost exclusively on this immaterial point. Therefore, the court found that defendants’ denial was an abuse of discretion not supported by substantial evidence, and so ordered them to perform a proper analysis of whether Mr. Franke is entitled to benefits under the plan by engaging with Mr. Franke’s specific evidence submitted regarding the ways in which his work was reduced. It stressed, “the Committee must not consider opportunity for growth or any other concepts not related to Plaintiff’s comparative aggregate responsibilities.” Mr. Franke was not awarded an injunction or statutory penalties on his second claim for breach of fiduciary duty claim though. The court stated that defendants did not breach any fiduciary duty and were in compliance with the Department of Labor’s governing regulations because they produced all documents they were required to which were relevant to his claim. Finally, the court determined that Mr. Franke achieved success on the merits in this action, and as a consequence concluded that he is entitled to an award of reasonable attorneys’ fees and costs.

For the second week in a row, no case stood out as the case of the week. Nevertheless, there were still many interesting rulings, including two decisions concluding that ERISA did not preempt healthcare provider claims, and one decision (Rizzo) that includes a colorful example of the hazards of “Reply All.” (This is a family publication, so you’ll have to click through to find out for yourself what the email said.)

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

Attorneys’ Fees

Third Circuit

Rizzo v. First Reliance Standard Life Ins. Co., No. 3:17-cv-745-PGS-DEA, 2023 WL 6923494 (D.N.J. Oct. 18, 2023) (Judge Peter G. Sheridan). In this case the court found that defendant First Reliance Standard Life Insurance Company arbitrarily and capriciously denied life insurance benefits to plaintiff Jody Rizzo. Reliance Standard appealed to the Third Circuit, which affirmed the grant of summary judgment to Ms. Rizzo and awarded her $79,050 in attorney’s fees and $302.79 in costs in connection with the appeal. Ms. Rizzo and her counsel, attorney Gregory Heizler, then moved for attorney’s fees and costs for the work expended on the district court litigation. Mr. Heizler sought $125,800 in fees and $3,279.88 in costs. To begin, the court stated that the litigation had been “particularly adversarial” and noted behavior by plaintiff’s counsel, including a lurid email, that was “antithetical to the professional standards of our practice and common courtesy.” Nevertheless, the court concluded that fees were justified. It wrote, “the deterrent effects of this decision will serve to discourage Reliance Standard from arbitrarily and capriciously denying a Waiver of Premium application where medical information is available for its review prior to making a benefit determination,” and that “other members of the pension plan will benefit from Reliance Standard’s consideration of medical information prior to determination of its Waiver of Premium decisions, and this decision might deter other insurers from engaging in similar arbitrary and capricious conduct in the future.” The court also expressed that it was not inclined to “deprive a widow of such an award,” especially under these circumstances, where she achieved success on the merits both in the district court and again on appeal. Having established that a fee award is appropriate, the court then turned to assessing the reasonableness of the hourly rate and hours requested. Mr. Heizler sought an hourly rate of $500 per hour, the same rate he was awarded in the Third Circuit’s fee decision. The court found this requested rate eminently reasonable and in line with comparable legal services in the geographic area, “[g]iven the information supplied to the Court – along with a review of the previous cases.” Moreover, the court concluded that the 251.6 hours of work spent on litigation in the district court was reasonable, not inflated, and appropriately documented. Accordingly, the court awarded the full amount of attorney’s fees sought, totaling $125,800. The court then considered an appropriate award of costs. Counsel sought $3,279.88 in costs for reimbursement of travel expenses, filing fees, service of process, record search costs, photocopies, and postage. However, as the court noted, in the revised time sheet counsel submitted $855.13 worth of costs that were not accounted for. Therefore, the court deducted this amount and awarded plaintiff’s counsel $2,424.75 in costs. Finally, the court denied Mr. Heizler’s request for interest on his attorney’s fee award. It stated that it could find no case law supporting this concept, and was unsure how it would even go about calculating interest on such an award.

Breach of Fiduciary Duty

Sixth Circuit

Washington v. Lenzy Family Inst., No. 1:21-cv-1102, 2023 WL 6879788 (N.D. Ohio Oct. 18, 2023) (Judge Meehan Brennan). The core allegations in this action stem from an employer’s failure to remit employee premiums deducted from paychecks to the insurance provider of the company’s ERISA-governed healthcare plan. Plaintiff Leonard Washington sued his former employer, Lenzy Family Institute, Inc., along with its board of directors and its executive director, in connection with this failure, which resulted in the plan’s termination and the Washington family losing their health insurance coverage. Even after the plan was terminated, Lenzy Family Institute continued to deduct premium payments from their employees’ paychecks, and failed to inform them that they had lost their health insurance coverage. Mr. Washington also maintains that defendants never provided him with documentation required under ERISA, including plan documents, the summary plan description, and annual funding notices. Due to his loss of health insurance coverage, Mr. Washington and his family were unable to receive medical care and to procure their prescription medications. Based on defendants’ actions relating to the healthcare plan, Mr. Washington asserted causes of action under ERISA for breach of fiduciary duties, as well as a claim seeking statutory penalties for failure to comply with ERISA’s disclosure and notification requirements. Additionally, Mr. Washington brought two state law causes of action against defendants, one for violation of an Ohio state wage law and another for promissory estoppel. Defendants have not appeared in this litigation. The clerk of the court previously entered a default, and Mr. Washington subsequently moved for default judgment. In this decision his motion for default judgment was denied without prejudice thanks to issues regarding damages and ERISA preemption. First, the court held that Mr. Washington established by his allegations that he is entitled to penalties under ERISA Section 1132(c)(1)(A) for defendants’ failure to provide plan documents as required under Section 1021(f). However, the court was not only unclear about the appropriate start and end dates to apply for the purposes of statutory penalties, but also stated that it required additional information and briefing on reasons why it should use its discretionary power to award Mr. Washington damages at all, and assuming it should, in what amount. Mr. Washington encountered similar problems with his fiduciary breach claims. Again, the court found that Mr. Washington’s allegations entitle him to relief for his breach of fiduciary duty claims asserted under Section 502(a)(3). It held that defendants breached their fiduciary responsibilities by failing to remit the healthcare payments deducted from their employees to the plan and that they misrepresented to Mr. Washington that the money taken out of his paycheck would provide him with health insurance when this turned out not to be the case. Yet, once again, Mr. Washington ran “into hurdles with damages.” The court instructed him to refile his motion with information needed in order to establish what remedies he is seeking for these breaches and to cite supporting caselaw demonstrating that these remedies constitute “appropriate equitable relief” under Section 1132(a)(3)(B). Finally, as alluded to above, the court requested additional information about Mr. Washington’s state law causes of action, specifically addressing whether either of his claims are either completely or expressly preempted by ERISA. For the forgoing reasons, the court denied the motion for default judgment, and Mr. Washington was given time to refile his motion to address all the concerns raised by the court in this order.

Eleventh Circuit

Su v. CSX Transportation, Inc., No. 3:22-cv-849-MMH-JBT, 2023 WL 6940242 (M.D. Fla. Oct. 11, 2023) (Magistrate Judge Joel B. Toomey). Magistrate Judge Toomey issued this report and recommendation recommending the court deny the motion of defendants – CSX Transportation, Inc., CSX Pension Plan, Merged UTU Pension Plan, Greenbrier Frozen Union Pension Plan, the CSX Corporation Master Pension Trust, and the plans’ administrative and investment committees – to dismiss Acting Secretary of Labor Julie A. Su’s complaint alleging breaches of fiduciary duties and prohibited transactions under ERISA. Broadly, the Secretary has alleged that defendants used an opaque and unreasonable system to calculate plan fees which “was not appropriately designed to reflect the Company’s expenses or reasonable cost for services provided,” and seeks in this action “a complete reversal” of the $1,323,744.00 in fees the CSX defendants billed for the years 2016-2020. Defendants argued that the complaint fails to state a claim because they were not acting as fiduciaries with regard to the payment for administrative services and expenses, and because the Secretary “effectively concedes that the Plans paid no more than reasonable compensation for the services they received.” Magistrate Toomey was not persuaded by either argument. He pointed out that the complaint demonstrated the ways in which defendants exercised control over plan assets and fees and that this management, as alleged, plausibly demonstrates that defendants were acting as fiduciaries with respect to the allegations of wrongdoing. Furthermore, the Magistrate held that the complaint sets forth its claims in such a way that the court can reasonably infer that defendants are liable for the breaches and misconduct alleged. Contrary to defendants’ position, the Magistrate Judge concluded the complaint does not concede the fees were reasonable, rather the allegations make clear that plaintiff views the compensation paid as excessive and in violation of ERISA. “Moreover, Plaintiff has pleaded that Defendants did not comply with the Plan documents. Thus, even if the Plan documents said one thing, Plaintiff alleges that the reality was different.” Accordingly, the Magistrate found that the allegations in the complaint were nonfrivolous, plausible, and satisfied notice pleading. He therefore recommended the motion to dismiss be entirely denied.

ERISA Preemption

Third Circuit

Prime Healthcare Servs.-Lower Bucks, LLC v. Cigna Health & Life Ins. Co., No. 23-1313, 2023 WL 6927330 (E.D. Pa. Oct. 19, 2023) (Judge Anita B. Brody). Plaintiff Prime Healthcare Services is a group of hospitals in Pennsylvania. The hospitals allege that Cigna Health and Life Insurance Company and Cigna Healthcare of Pennsylvania, Inc. have failed to fully reimburse costs of emergency services provided to hundreds of patients insured under Cigna benefit plans. Plaintiff brought a lawsuit in state court asserting state law claims of breach of implied-in-law contract, breach of contract, promissory estoppel, quantum meruit, unjust enrichment, and conversion against the Cigna defendants. The complaint expressly states that Prime Healthcare will “remove any claims from the list once it is ‘able to confirm that the claims are governed by self-funded ERISA plans.” Plaintiff attests that it does not wish to state any cause of action under ERISA. Despite clearly attempting to avoid ERISA preemption issues and asserting only state law causes of action, Prime’s complaint was nevertheless removed by the Cigna defendants to federal court on the grounds that ERISA completely preempts at least some of the claims in the complaint. Prime Healthcare moved for remand. The court agreed with Prime that it is the “master of its complaint,” and that it may choose to plead its claims only on the basis of state law and avoid asserting ERISA claims. Upon analyzing the causes of action under the two-prong Davila preemption test, the court was satisfied that neither prong was met here. It concluded that the hospitals could not have brought claims under ERISA and that their state law causes of action implicate independent legal duties. The court agreed with plaintiff that Cigna’s obligations do not arise under the terms of any ERISA plan and that its duties instead are “owed to Prime under an implied-in-law contract to provide emergency services, under an express contract to pay for post-stabilization services, as well as under state law principles of promissory estoppel, quantum meruit and unjust enrichment, and conversion.” In sum, the court stated that Cigna’s duties “would exist whether or not an ERISA plan existed,” and thus are not dependent on any ERISA plan or its terms. Accordingly, the court granted the motion to remand. However, because it could not definitively conclude that Cigna’s decision to remove the case was objectively unreasonable, the court denied Prime’s request for an award of attorney’s fees and costs in connection with the removal to federal court.

Fifth Circuit

Baytown Med. Center, LP v. UnitedHealthcare Ins. Co., No. 1:23-CV-00142, __ F. Supp. 3d __, 2023 WL 6939177 (E.D. Tex. Oct. 18, 2023) (Judge Michael J. Truncale). An out-of-network hospital, plaintiff Baytown Medical Center, LP, sued UnitedHealthcare Insurance Company in state court under the Texas Insurance Code for failure to pay the usual and customary rate as reimbursement for emergency care it provided to an insured patient. Baytown Medical was paid only $1,764.49 of the $13,811.91 medical costs, and believes this rate of reimbursement is far lower than the usual and customary rate UnitedHealthcare is required to pay under Texas law. UnitedHealthcare removed the case to federal court, arguing that the hospital’s claim is preempted by ERISA. In response, Baytown Medical maintained that its state law claim is not subject to either complete or conflict preemption, and moved to remand the action back to state court. The motion to remand was granted in this order. Although the court found that the first prong of the two-prong Davila preemption test was satisfied because Baytown Medical was assigned benefits by the patient and therefore had derivative standing to assert a claim under ERISA, the court held that the second prong was not met. Specifically, the court concluded that the claim under the Texas Insurance Code implicates an independent legal duty as it does not require a benefit determination under plan terms and because the claim involves the rate of payment rather than the right to payment. Therefore, the court held that the claim against UnitedHealthcare is not completely preempted by ERISA and federal jurisdiction does not exist. As a result, the court remanded the case back to Texas state court.

Medical Benefit Claims

Second Circuit

Colin D. v. Morgan Stanley Med. Plan, No. 20-CV-9120-LTS-GWG, 2023 WL 6849130 (S.D.N.Y. Oct. 17, 2023) (Judge Laura Taylor Swain). A father and son, plaintiffs Joseph and Colin D., sued their ERISA-governed healthcare plan, the Morgan Stanley Medical Plan, and its administrators, Optum Group LLC and United Behavioral Health, Inc., after Colin’s stay at a residential treatment center for the treatment of mental health disorders was denied by defendants. Plaintiffs asserted causes of action under ERISA seeking payment of benefits under the plan, and also alleging violations of the Mental Health Parity and Addiction Equity Act. The parties both moved for summary judgment on plaintiffs’ claims. As an initial matter, the court needed to resolve the parties’ dispute over the appropriate standard of review. Although the two sides agreed that the plan grants discretionary authority to the United defendants, plaintiffs argued that defendants violated the Department of Labor’s claims handling regulations by violating minimum notice standards, and thus defendants are not entitled to deference. They claimed that defendants’ denial letters did not explain which specific plan provisions or Optum Level of Care Guidelines criteria were applied in making the benefit determinations and that the letters never specifically discussed medical necessity. The court agreed with plaintiffs that the letters failed to reference specific plan provisions upon which the denials were based, and that this “regulatory violation was [not] inadvertent or harmless.” Thus, the court determined that plaintiffs were entitled to de novo review of the denial of benefits. However, the court did not grant either party summary judgment on the Section 502(a)(1)(B) claim for denial of benefits. Instead, it identified conflicting evidence in the medical record that created genuine issues of material fact as to whether the treatment at the residential facility was medically necessary as defined by the plan. The court expressed that to make such a determination it would need to weigh various opinions of medical professionals, which “is outside the scope of the Court’s authority in a traditional summary judgment posture.” Given these material disputed factual issues, the court declined to award summary judgment to either party, and held off ruling on the claim for benefits until after it can hold a bench trial on the administrative record. The court then moved on to the Parity Act violation claims. Plaintiffs maintained that the plan violated the Parity Act in two ways, one by providing reimbursement for travel and lodging expenses for medical and surgical treatments, but not for mental health treatments, and two by using guidelines outside of the plan (the “Optum Guidelines”) only for mental health treatment and not for other kinds of analogous medical treatment at skilled nursing facilities. The court started with the travel expenses claim. It ultimately concluded that plaintiffs failed to identify an analogous medical/surgical treatment in the same classification as their residential mental healthcare treatment, because the plan only provides for travel and lodging reimbursement “when using an in-network facility.” The mental health benefits for which plaintiffs seek coverage were out-of-network, meaning the benefits could not be compared to in-network medical or surgical treatment. Accordingly, the court granted judgment in favor of defendants on this claim. It did so for plaintiffs’ other Parity Act claim as well. There, the court held that the use of the Optum Guidelines was not a violation because the plan uses another set of comparable guidelines, the MCG Guidelines, for skilled nursing facilities. Although not identical to one another, the court concluded that these two sets of guidelines “do not impose materially different limitations on treatment claims for residential mental health facilities as opposed to skilled nursing facilities.” Therefore, the court found that plaintiffs did not carry their burden of proving a Parity Act violation, and entered summary judgment in favor of defendants on both Parity Act claims.

Pension Benefit Claims

First Circuit

Tseng v. Welch Foods Inc., No. 1:20-cv-11486-GAO, 2023 WL 6847039 (D. Mass. Oct. 17, 2023) (Judge George A. O’Toole, Jr.). In 2019, defendant Welch Foods Inc. reduced its Pension Restoration “top-hat” Plan’s accrual interest rate from 9.5% to 4%, changing the rate for the first time since the plan’s inception in 1997. That decision consequently lowered the amount of annual benefits provided under the plan to its participants. A group of those participants challenged the interest rate change through the plan’s administrative appeals process, and then, after the decision was upheld on appeal, commenced this lawsuit. They claim that the reduction in accrual interest rate violated the plan terms, which offer “lifetime” benefits. In this action they sought a court order overturning the interest rate change. The parties filed cross-motions for summary judgment. Before resolving the parties’ dispute, the court settled on the appropriate review standard. As the plan grants its administrator discretionary authority, the court concluded that arbitrary and capricious review was the applicable standard for the summary judgment motions. Under deferential review, and upon consulting the terms of the plan, the court held that the Welch defendants were able to adjust the rate as they saw fit. “The fact that the rate was not adjusted for many years does not establish that the rate could not, under the Plan documents, ever be adjusted. The Plan plainly provides otherwise. Adjusting the annual accrual to a more conservative 4 percent, though disadvantageous to the participants, was a decision plainly authorized by the explicit language of the Plan.” Based on these findings, the court concluded that it was not an abuse of discretion to lower the accrual interest rate of the top-hat plan, and as a result, the court granted judgment in favor of the defendants.

Pleading Issues & Procedure

Fifth Circuit

Hall v. Fraternal Order of Police, No. 22-1823, 2023 WL 6847363 (E.D. La. Oct. 17, 2023) (Judge Jay C. Zainey). Plaintiff Sonya Hall, on behalf of herself and the estate of her late husband, officer Mark Hall, brought this lawsuit against the Fraternal Order of Police, Crescent City Lodge No. 2, Reliance Standard Insurance Company, and Federal Insurance Company alleging state law causes of action on the basis that she has not received life insurance benefits under a policy belonging to Mr. Hall. Defendant Federal Insurance Company moved to dismiss the single claim against it for breach of contract pursuant to Rule 12(b)(6). It argued that ERISA governs the plan at issue and that Ms. Hall’s breach of contract claim alleged in her complaint is completely preempted by ERISA. Moreover, Federal Insurance Co. claimed that Ms. Hall cannot allege a cause of action under ERISA and she failed to exhaust administrative remedies prior to commencing this action. Before reaching any decision on defendant’s grounds for dismissal, the court first settled the issue of whether the policy at issue is governed by ERISA, and, by extension, whether it has federal subject matter jurisdiction in this litigation. It answered both queries in the affirmative. The court was satisfied that the plan exists, that it does not fall under ERISA’s safe harbor provision because the employer contributes to the plan, and that the plan meets ERISA’s definition of an employee benefit plan, as it is an insurance plan offered by an employer to employees to provide benefits to those employees in the event of death or dismemberment. Accordingly, the court found the policy qualifies as an ERISA-governed plan, and therefore moved on to consider the issue of preemption. Here, the court held that ERISA undoubtedly preempts the bad faith breach of contract claim for failure to pay plan benefits. “Such a claim clearly falls within the parameters of Section 1132(a)(1)(B), and within the standards set forth in Davila and Ellis. Therefore, the state law claim set forth by Hall is completely preempted by ERISA.” Accordingly, the motion to dismiss was granted as to the preemption of the breach of contract claim. However, the court concluded that leave should be given to Ms. Hall to amend her complaint and replead her claim against Federal Insurance Company as a claim for benefits under ERISA. It also informed Ms. Hall that she should include facts about exhausting administrative remedies within her amended complaint, or advance arguments why she did not or could not have exhausted remedies prior to filing her lawsuit. Thus, the motion to dismiss was denied to the extent that Federal argued that Ms. Hall failed to state a claim under ERISA and failed to exhaust the administrative process. Consequently, Ms. Hall was given these instructions by the court and granted leave to amend her complaint in this manner.

Seventh Circuit

Taylor v. BW Wings Mgmt., No. 1:22-CV-0106-HAB-SLC, 2023 WL 6847030 (N.D. Ind. Oct. 17, 2023) (Judge Holly A. Brady). Plaintiff Nick Taylor is an employee of BW Wings Management, LLC. He, his wife, and their minor child, Z.T., were all covered under BW Wings Management LLC Employee Benefit Plan, an ERISA-governed welfare plan, when Ms. Taylor was diagnosed with an aggressive form of breast cancer. On July 29, 2020, Ms. Taylor was scheduled for surgery related to her cancer diagnosis. However, right before the surgery was scheduled to take place, the co-owner of BW Wings informed the family “that Ms. Taylor’s and Z.T.’s health insurance was improperly implemented under the Plan outside the open enrollment period and the health insurance for Mrs. Taylor and Z.T. under the Plan would end” immediately. So, Ms. Taylor and her son had their health insurance under the plan retroactively cancelled, and because she no longer had health insurance and could not afford to pay the cost of the surgery without insurance, Ms. Taylor was forced to cancel and postpone her medically necessary surgery. In this action the Taylors have sued the company for interference with their health benefits under ERISA Section 510, and levied state law claims for promissory estoppel, breach of fiduciary duty, fraud, constructive fraud, and intentional infliction of emotional distress. BW Wings moved to dismiss the complaint for failure to state an ERISA Section 510 claim, and moved to dismiss the state law claims as preempted by ERISA Section 514(a). Defendant’s motion was denied in this order. The court found the complaint plausibly alleges facts to sketch a viable Section 510 claim under ERISA and that it could infer defendants took away the beneficiaries’ coverage to avoid paying for costly surgery. “The complaint need not lay out all the facts that must eventually be proved to prevail at trial – that is what discovery is for.” The court was clear that the Taylor family need not prove their entitlement to benefits at this stage of the proceedings. “Rather, taking the allegations as true, the Taylors have pled they were entitled to dependent benefits under an ERISA plan…they were granted benefits under an ERISA plan, and those benefits were rescinded by the Defendant to prevent paying for Mrs. Taylor’s surgery.” The factual disputes are for a later stage of litigation, the court stressed, and stated that it was persuaded the family alleged sufficient facts to infer a plausible Section 510 claim. Turning to ERISA preemption, the court held that the conflict preemption argument “is not properly raised in a motion to dismiss,” as it is an affirmative defense. Thus, the court declined to dismiss the family’s complaint.

Ninth Circuit

Warren v. The Lincoln Nat’l Life Ins. Co., No. 2:23-cv-00601-GMN-EJY, 2023 WL 6850193 (D. Nev. Oct. 16, 2023) (Judge Gloria M. Navarro). In a brief decision, the court granted defendant The Lincoln National Life Insurance Company’s motion to dismiss plaintiff Allanna Warren’s lawsuit for failure to state a claim. Ms. Warren asserted state law causes of action against Lincoln in a single-paragraph complaint alleging a conspiracy between the Las Vegas Police and Lincoln for racial profiling, discrimination, and misuse of medical information. Although somewhat unclear, the lawsuit also stems from an improper denial of ERISA-governed disability benefits, and possibly seeks a court order granting disability benefits. Lincoln therefore argued the state law causes of action are preempted by ERISA. The court ultimately could not reach a definitive finding on the issue of ERISA preemption given the “limited allegations” in the complaint. Nevertheless, the court was sure that Ms. Warren’s complaint as currently pled was insufficient to infer the wrongdoing alleged, stating that “it currently consists of nothing more than the ‘unadorned, the-defendant-unlawfully-harmed-me accusation.’” Accordingly, the motion to dismiss was granted, and Ms. Warren was given 21 days to file an amended complaint to address and remedy its current deficiencies.

Standard of Review

Fifth Circuit

Stout v. Smith Int’l, No. 6:22-CV-06036, 2023 WL 6882790 (W.D. La. Oct. 18, 2023) (Judge Terry A. Doughty). Plaintiff Charles Robert Stout commenced this action against Metropolitan Life Insurance Company (“MetLife”) and Smith International, Inc. seeking a court order reinstating his terminated long-term disability benefits. In this order the court examined whether MetLife has discretionary authority under the plan, and by extension what the appropriate standard of review of the denial ought to be when it comes time to decide the ultimate merits issues of the disability benefits decision. As a preliminary matter, the court found that there was no genuine issue of material fact about whether MetLife is a fiduciary under the long-term disability plan. The terms of the plan unambiguously vest MetLife with the authority to deny or approve submitted claims, verify claimants’ continuing disabilities, and conduct appeals of any initial denials it may make. The court held that the authority to carry out these tasks clearly establish MetLife is a fiduciary under ERISA. The tricker issue was whether the plan language, which does not expressly invoke the phrase “discretionary authority,” nevertheless vests MetLife with such authority. In order to answer this question, the court wrote that it was required to “look to ‘the breadth of the administrators’ power.’” The plain language of the plan “holds that benefits terminate when a claimant is no longer disabled and MetLife has specific authority to verify whether claimants do, in fact, remain disabled.” This language was understood by the court as granting MetLife with discretionary authority to terminate a claimant’s benefits when he or she cannot prove their continuing disability. Accordingly, the court explained that the defendants are entitled to a deferential standard of review and therefore granted judgment to them on this issue.

Eleventh Circuit

Davis v. United of Omaha Life Ins. Co., No. 6:23-cv-57-ACA, 2023 WL 6849438 (N.D. Ala. Oct. 17, 2023) (Judge Annemarie Carney Axon). Plaintiff Laura Davis and defendant United of Omaha Life Insurance Company agreed to bifurcate this disability benefits action into two phases. In the first and present phase, the parties each moved for partial summary judgment as to the standard of review the court should use in evaluating the disability termination decision. Ms. Davis argued that United of Omaha did not provide her with an opportunity to respond to an amended report or that report’s new evidence for denial before issuing its final appeal determination, which she asserts is in violation of ERISA’s claims handling procedure regulations. As a result of this violation, Ms. Davis maintained that United of Omaha “forfeited as a matter of law entitlement to deferential review standard.” In response, United of Omaha argued that this violation was de minimis because the amended report at issue only corrected an identified typo in the original report, meaning that there was no new grounds or evidence that Ms. Davis was unable to respond to. United of Omaha thus contended that the arbitrary and capricious standard of review applies because the plan grants it discretionary authority to determine eligibility for benefits. The court agreed with defendant that “even if United of Omaha violated ERISA’s regulations, the violation was de minimus.” It stated that Ms. Davis did not suffer harm or prejudice by not receiving an opportunity to respond to the amended report, because she was able to respond to the original report, which was nearly identical. Therefore, the court felt that under the circumstances, United of Omaha demonstrated that the claims procedure violation “was for good cause and part of the ongoing, good faith exchange of information with Ms. Davis.” Accordingly, the court denied Ms. Davis’ motion. Instead, the court held that it would stick with the Eleventh Circuit’s unique six-step framework for evaluating ERISA plan benefit denials, evaluating first if the decision was de novo wrong and then, assuming that it was, progressing to an analysis of the denial under deferential review. The court also declined to depart from this framework by skipping the first de novo review step of the Eleventh Circuit’s framework and proceeding directly to the following five steps applicable to arbitrary and capricious review, which it understood defendant to be requesting in its motion. As a result, the court also denied United of Omaha’s partial summary judgment motion to establish an arbitrary and capricious review standard.

This was a slow week in the courts. Out of the handful of ERISA decisions, none stood out as the case of the week. But, as always, we have summarized each one for your reading pleasure.

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

Breach of Fiduciary Duty

Ninth Circuit

Hormel Foods Corp. Hourly Emps’ Pension Plan v. Perez, No. 1:22-cv-00879-JLT-EPG, 2023 WL 6626121 (E.D. Cal. Oct. 11, 2023) (Magistrate Judge Erica P. Grosjean). This action centers around rather unusual circumstances. Plaintiff Hormel Foods Corporation Hourly Employees’ Pension Plan, along with the Hormel Foods Corporation, commenced this lawsuit against a woman to whom they mistakenly paid plan benefits. That woman, defendant Marie E. Perez, shares the same name as a former Hormel employee. As the complaint outlines, Hormel sent a form to Ms. Perez, believing she was the plan participant of the same name, informing her that she was entitled to an approximately $20,000 lump-sum cash payment, and that to receive the payment she needed to sign the document, certify that she was the person named above, attest that “I am not currently employed by Hormel Foods or an affiliate of Hormel foods,” and provide the last four digits of her social security number. Ms. Perez signed the form, including the last four digits of her own social security number and her telephone number, and returned the form to Hormel. She was then paid the lump sum payment. Hormel later realized its mistake and asked Ms. Perez to return the money. When she refused to do so, the company and the plan commenced this action, bringing ERISA breach of fiduciary duty claims asserted under Section 502(a)(2) and (a)(3) against her. Hormel Foods has since moved for a default judgment under Rule 55(b)(2) on the Section 502(a)(2) claim. Its motion was denied by the court in this order. Although fiduciary status is often a tricky issue in the ERISA contest, the court here did not particularly struggle to conclude that Ms. Perez does not qualify as a fiduciary. “Defendant was not an employee of Hormel. She was never designated as a fiduciary of the Plan. She was not informed of any responsibilities, obligations, or duties imposed upon her by the Plan. She did not have control over any assets in the plan. The form sent to her did not indicate that she was a fiduciary, inform her of any duties related to the Plan, or ask her to undertake any responsibilities by returning the form.” The court was not persuaded by Hormel that by returning the form and keeping the payment, Ms. Perez became a fiduciary under the plan. Instead, it came to the opposite conclusion: “a defendant does not become a fiduciary under the statute by simply retaining funds mistakenly deposited in her account.” Thus, even assuming the allegations in the complaint are true, the court held that Hormel cannot state a claim against Ms. Perez for breach of fiduciary duty under Section 502(a)(2). Thus, the court denied Hormel’s motion for default judgment and dismissed the case in its entirety for failure to state a claim.

Class Actions

Second Circuit

Lutz v. Kaleida Health, No. 1:18-CV-01112 EAW, 2023 WL 6617737 (W.D.N.Y. Oct. 11, 2023) (Judge Elizabeth A. Wolford). In this putative ERISA class action, plaintiffs have appealed Magistrate Judge Jeremiah J. McCarthy’s order granting defendants’ motions to strike the report and rebuttal report of their expert witness, James M. Garber. Plaintiffs argued that the Magistrate’s determination that the entire report and rebuttal should be stricken in their entirety as unreliable is contrary to Second Circuit precedent which cautions against striking entire witness reports “when the unreliable portion of an opinion can easily be distinguished from testimony that could help the jury,” adding that “it may be an abuse of discretion to throw the good out with the bad.” Here, however, the court agreed with Magistrate McCarthy that the witness report was all bad. It seconded the Magistrate’s finding “that the errors in Garber’s analysis were so significant that they rendered the entirety of his reports unreliable and inadmissible.” Moreover, the court found the scale and “magnitude” of Mr. Garber’s flaws to be of such great degree, and so fundamental, that they rendered the entirety of his report unusable and defective. “In other words…the pervasive errors made by Garber were so significant – and cast such a pall on his overall reliability – that it was not appropriate to attempt to parse out any unproblematic aspects of his opinions.” The court thus found that the Magistrate’s order was fully consistent with the Second Circuit precedent plaintiffs cited as undermining the reasonableness of the Magistrate’s decision. Accordingly, the court found no abuse of discretion in the Magistrate’s decision and concurred that Mr. Garber’s analysis rendered his report inadmissible. Plaintiffs’ appeal was therefore denied.

Ninth Circuit

Mills v. Molina Healthcare, Inc., No. 2:22-cv-01813-SB-GJS, 2023 WL 6538381 (C.D. Cal. Sep. 27, 2023) (Judge Stanley Blumenfeld, Jr.). A certified class of participants of the Molina Salary Savings Plan claim in this action that their former employer, Molina Healthcare, Inc., the plan’s former investment advisor, flexPATH Strategies, LLC, the plan’s investment committee, and the Molina board of directors violated their fiduciary duties of prudence, loyalty, and monitoring, and engaged in prohibited transactions by selecting a suite of flexPATH target date funds as the plan’s default investment options despite these funds being untested and ultimately proving to be inferior and more expensive when compared to other target date funds available. Plaintiffs allege that the decision to include these funds in the plan was motivated by self-interest, that the individuals who advocated for their implementation in the plan were financially incentivized to do so, and that defendants were not acting in compliance with the plan’s investment policy statement either when they selected the funds or when they evaluated their performance over time. Eventually the plan replaced flexPATH as the investment advisor. The new company selected by the plan recommended the removal of the flexPATH funds given the costs of the revenue sharing to flexPATH and concerns that there was “a significant conflict of interest” present. According to plaintiffs’ experts, the flexPATH target date funds were nothing more than BlackRock’s target date funds, dressed up with an additional layer of fees. Their damages expert calculates that the plan’s assets would have increased by as much as $26.7 million during the relevant period if the plan had used other target date funds instead of the flexPATH funds. Defendants moved for summary judgment on all claims. Their motion was mostly denied by the court, with a couple of narrow exceptions as applied to three subparts of plaintiffs’ prohibited transaction claim asserted against flexPATH. For the most part, the court found that the record contained evidence from which a reasonable factfinder could find for plaintiffs. In particular, the court highlighted evidence that “raises questions about the adequacy of [defendants’] decision-making process.” This evidence included, among other things, a document purporting to be minutes of the meeting when flexPATH was selected to serve as the plans’ fiduciary and the flexPATH funds were implemented as the default investment options. The document’s metadata revealed that it was in fact created many years later, after defendants became concerned about the flexPATH funds and their potential liability under ERISA. On the voluminous record before it, the court listed many issues of genuine fact as to whether defendants breached their duties of loyalty, prudence, and monitoring, and therefore denied their motion for summary judgment entirely on the breach of fiduciary duty claims. However, the court granted, in part, defendant flexPATH’s motion for summary judgment on plaintiffs’ prohibited transaction claim. It granted the motion for the claims against flexPATH asserted under Sections 1106(a)(1)(A), (a)(1)(C), and (b)(3), holding that plaintiffs’ claims did not fit the criteria of these subsections. It did not, however, dismiss the prohibited transaction claims asserted against flexPATH under Sections 1106(a)(1)(D), (b)(2), or (b)(8), nor did the court dismiss any of the prohibited transaction claims brought against the Molina defendants. Thus, most of plaintiffs’ claims remain following the court’s decision here, and all of the genuine issues of fact identified by the court in this order remain for it to decide following a bench trial.

Disability Benefit Claims

Ninth Circuit

Reynolds v. Life Ins. Co. of N. Am., No. C21-1424 TSZ, 2023 WL 6541328 (W.D. Wash. Oct. 6, 2023) (Judge Thomas S. Zilly). Plaintiff Lucy Reynolds commenced this lawsuit against Life Insurance Company of North America (“LINA”) to challenge its denial of her claim for long-term disability benefits under an ERISA-governed policy. Ms. Reynolds has been diagnosed with multiple sclerosis, fibromyalgia, migraine headache, hypothyroidism, asthma, depression, anxiety, and post-traumatic stress disorder. Ms. Reynolds leaned heavily on the decision of the Social Security Administration approving her claim for Social Security disability benefits, in which the SSA determined that Ms. Reynolds’ conditions “significantly limit [her] ability to perform work activities on a regular and continuing basis,” and that she is “unable to perform any past relevant work.” The parties filed cross-motions for judgment under Federal Rule of Civil Procedure 52. They agreed on de novo review as the appropriate review standard. The court ruled in this decision that Ms. Reynolds was entitled to judgment in her favor and payment of benefits under both the 24-month “own occupation” and subsequent “any occupation” standards of the disability policy. It wrote, “LINA’s correspondence with Plaintiff…demonstrates that LINA approved Plaintiff’s claim for STD benefits because Plaintiff satisfied the terms of the Policy. Because the Policy required Plaintiff to meet the same definition of disabled to receive the first 24 months of LTD benefits, LINA’s approval of Plaintiff’s claim for STD benefits must be construed as a determination that Plaintiff was disabled as defined by the Policy for the purposes of the first 24 months of LTD benefits. Thus, LINA incorrectly denied Plaintiff’s claim for LTD benefits.” With regard to the long-term disability benefits after 24 months, the court was persuaded that Ms. Reynolds’ medical conditions have not improved, and she continues to suffer from ongoing disabling illnesses. It also found that although the SSA’s disability finding is “not dispositive,” it was nevertheless convincing evidence that Ms. Reynolds’ numerous impairments leave her unable to perform the duties of “any occupation.” For these reasons, Ms. Reynolds met her burden of establishing entitlement to benefits, and the court ordered LINA to pay her long-term disability benefits to date, and to continue paying them until the policy’s maximum benefit duration absent a showing that she is no longer disabled within the meaning of the policy should there be some improvement in her medical conditions.

ERISA Preemption

Eleventh Circuit

S. Broward Hosp. Dist. v. Elap Servs., No. 20-61007-CIV-SINGHAL/VALLE, 2023 WL 6547748 (S.D. Fla. Sep. 30, 2023) (Judge Raag Singhal). A nonprofit hospital system, plaintiff South Broward Hospital District d/b/a Memorial Healthcare System, brought this putative class action against defendants ELAP Services, LLC and Group and Pension Administrators, Inc. alleging defendants engaged in systematic practices designed to underpay hospital services. According to information gleaned through the discovery process, plaintiff estimates that it has incurred $2 million in damages as a result of defendants’ allegedly flawed reimbursement formulas. Plaintiff challenged these actions under Florida’s Deceptive and Unfair Trade Practices Act and under common law unjust enrichment. Defendants moved for summary judgment, arguing that the claims relating to underpayment and inaccurate appeals are preempted by ERISA, and that plaintiff’s other claims fail because their billing practices are fair, do not result in consumer harm, have not caused the hospital system any damages, and have not conferred any direct benefit onto them. The court granted the motion for summary judgment in this order. Although the court was skeptical of defendants’ arguments that their actions did not constitute deceptive or unfair practices and that the actions did not cause damages to plaintiff, it nevertheless agreed that plaintiff failed to demonstrate consumer harm. Thus, the court entered judgment in favor of defendants on the state law claim for deceptive trade practices. The court also faulted plaintiff’s unjust enrichment claim. It concluded that Memorial Healthcare failed to present evidence that there was any direct benefit conferred to defendants. However, defendants’ ERISA preemption arguments were unsuccessful. The court disagreed with defendants that plaintiff’s claims in any way related to or relied upon ERISA plans. Instead, it agreed with plaintiff, which is a non-ERISA entity, that its allegations were based on the challenged metrics and billing formulas which exist outside the ERISA plans and plan language. Nevertheless, although the claims were not found to be ERISA-preempted, as discussed above, the court identified other shortcomings in the state law claims and therefore granted defendants’ motion for summary judgment. 

Pension Benefit Claims

Ninth Circuit

Munger v. Intel Corp., No. 3:22-cv-00263-HZ, 2023 WL 6540052 (D. Or. Oct. 5, 2023) (Judge Marco A. Hernandez). Plaintiff Ruth Ann Munger, individually and in her capacity as the representative of the estate of Philip Cloud, filed this ERISA action seeking payment of Mr. Cloud’s life insurance benefits to the estate. Ms. Munger argued that the named beneficiary of the plans, Mr. Cloud’s widow, defendant Tracy Lampron Cloud, has been convicted of second degree murder, and is therefore not entitled to any plan benefits under both Oregon’s state slayer statute and federal common law. The court previously granted Ms. Munger’s partial motion for summary judgment in which she requested that the court estop Ms. Cloud from relitigating the question of whether she murdered her husband. Ms. Munger subsequently moved for summary judgment requesting distribution of the ERISA plan benefits to the estate. In response to Ms. Munger’s summary judgment motion, Ms. Cloud filed a cross-motion for summary judgment and additionally moved for leave to file a counterclaim alleging that Ms. Munger and the Intel defendants breached a global settlement agreement that she claims the parties entered into during state court proceedings. In this order the court granted Ms. Munger’s summary judgment motion and denied Ms. Cloud’s motions. It held that under either Oregon, California, or federal law, Ms. Munger has established that Ms. Cloud is a slayer and therefore not entitled to recover benefits. Under the unambiguous terms of the plans, the court determined that the estate is entitled to benefits of the 401(k) and the retirement contribution plan, and that no person or entity is entitled to benefits under the minimum pension plan, the retiree medical plan, and the retirement medical account plan. As for Ms. Cloud’s request for leave to assert her counterclaim, the court not only found that Ms. Cloud unduly delayed in asserting a counterclaim, but also concluded that it lacked jurisdiction to enforce the settlement agreement that the state court had rescinded.