Board of Trustees of Bakery Drivers Loc. 550 & Indus. Pension Fund v. Pension Benefit Guar. Corp., No. 23-7868, __ F.4th __, 2025 WL 1226844 (2d Cir. Apr. 29, 2025) (Before Circuit Judges Robinson, Pérez, and Nathan)
On March 11, 2021, President Biden signed into law The American Rescue Plan Act (ARPA). This mammoth stimulus bill authorized $1.9 trillion in spending to help Americans recover from the hardships of the COVID-19 pandemic.
Many individuals and businesses were able to stay afloat because of ARPA funds, and the same was true for employee benefit plans, which were allowed under ARPA to file applications for “Special Financial Assistance” (SFA) with the federal Pension Benefit Guaranty Corporation (PBGC). By January of 2025, the PBGC had approved $70 billion in SFA for 108 pension funds, covering more than 1.2 million beneficiaries.
The plaintiff in this week’s notable decision, the Board of Trustees of Bakery Drivers Local 550 and Industry Pension Fund, wanted to join these plans. The Fund was created in 1955 and is a multiemployer plan benefiting unionized bakery drivers in New York City.
Unfortunately, the Fund has been in financial hot water ever since its largest contributing employer, Hostess Brands Inc., declared bankruptcy in 2012. In 2016, the Fund “reached an agreement with its four remaining employers to transfer some of their members to a newly created pension plan. Those employers were then relieved of their obligations to continue contributing to the Fund, triggering the Fund’s termination by mass withdrawal under ERISA.”
At this point you may be wondering how a plan that terminated in 2016 has any relevance to legislation passed in 2021. However, ERISA aficionados know that it can be very difficult to truly kill a benefit plan. Indeed, the Fund continued well past 2016. More than 1,100 beneficiaries remained on the books, and the Fund “continued to perform audits, conduct valuations, file annual reports, and make payments.”
In September of 2022, Bimbo Bakeries USA agreed to rejoin the Fund and resume contributions on behalf of its employees. The idea was that Bimbo’s participation would assist the Fund in applying for relief under the SFA program. Indeed, shortly after Bimbo jumped aboard, the Fund submitted its SFA application to the PBGC, contending that it was eligible for assistance because it was in “critical and declining status.”
However, the PBGC rejected the Fund’s application, ruling that the Fund could not be in “critical and declining status” because it “has had no zone status since plan year 2016, when the Plan terminated by mass withdrawal.” The PBGC was unimpressed by the fact that Bimbo had rejoined the Fund, stating, “ERISA contains no provision allowing a multiemployer plan that terminated by mass withdrawal under section 4041A to be restored.”
The Fund filed suit against the PBGC in the Eastern District of New York, and the parties filed cross-motions for summary judgment. The district court addressed two issues: (1) is a multiemployer plan which was previously terminated by mass withdrawal eligible for SFA funding; and (2) does ERISA allow such a plan to be “restored.” The court answered both questions “no” and thus granted the PBGC summary judgment. (Your ERISA Watch reported on this decision in our November 1, 2023 edition.)
The Fund appealed. To resolve the dispute, the Second Circuit examined the SFA statute, which provides that the PBGC must grant assistance to a multiemployer plan that “is in critical and declining status (within the meaning of section 1085(b)(6) of this title) in any plan year beginning in 2020 through 2022.”
In support of its position, the PBGC pointed to 29 U.S.C. § 1081(c), which provides that “Part 3 of Subchapter I of ERISA,” which includes the “critical and declining status” definition in Section 1085, “‘applies, with respect to a terminated multiemployer plan,’ only ‘until the last day of the plan year in which the plan terminates.’” As a result, “because the Fund terminated in 2016…it could not have a ‘status’ under § 1085 in the 2020, 2021, or 2022 plan years, making it ineligible” for SFA funding.
The Second Circuit disagreed, ruling that Section 1081 did not control. “Section 1081(c) does not apply to the SFA statute, which is located in a different part of a different subchapter. Nor does it apply by virtue of its application to § 1085.” The court ruled that while the SFA statute may have incorporated by reference Section 1085’s definition of “critical and declining status,” “[i]t does not incorporate external limitations on § 1085’s operation, such as the limitation contained in § 1081(c).”
In essence, the court ruled that the PBGC was simply borrowing too much from ERISA in its reading of the SFA statute. Quoting a practice guide on statutory construction, the court stated, “[W]here a statute refers specifically to another statute by title or section number, there is no reason to think its drafters meant to incorporate more than the provision specifically referred to.”
Furthermore, the court explained that if Congress had wanted to import all of ERISA’s other limitations on Section 1085 into the SFA statute, it could have, but it did not. Indeed, the court noted that in other parts of the SFA statute Congress had used different phrasing when referring to Section 1085, thus indicating that Congress wanted Section 1085 to apply in different ways to different situations. Moreover, “Congress also knew how to exclude terminated plans expressly – which it did in one of the other SFA eligibility provisions… The fact that Congress chose not to include a similar limitation in subparagraph (A), the provision at issue here, is telling.”
The PBGC attempted to buttress its interpretation with a public policy argument, contending that “permitting terminated plans to apply for SFA funding ‘would severely challenge PBGC’s ability to process the applications of all eligible plans within the tight statutory deadlines.’” The court stated it was “sympathetic” to this concern, but its hands were tied by the statutory language, which “do[es] not support a per se exclusion of terminated plans[.]”
As a result, the Second Circuit reversed and remanded to the district court with instructions to enter summary judgment for the Fund, vacate the PBGC’s denial of the Fund’s application for SFA relief, and remand to the PBGC for further action. The court noted that because it agreed that the SFA statute did not categorically exclude terminated plans, it did not need to reach the second issue decided by the district court, i.e., whether ERISA allows a terminated multiemployer plan to be “restored.”
Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.
Attorneys’ Fees
Sixth Circuit
House-Forshee v. Benefits Comm. of W. & S. Fin. Grp. Co. Flex. Benefits Plan, No. 1:24-cv-110, 2025 WL 1235076 (S.D. Ohio Apr. 29, 2025) (Magistrate Judge Stephanie K. Bowman). Plaintiff Roberta House-Forshee filed this action against the Benefits Committee of Western & Southern Financial Group Co. Flexible Benefits Plan and Western & Southern Financial Group, Inc., alleging they wrongfully denied her claim for short-term disability benefits under the company’s ERISA-governed welfare plan. Seven months after the suit was filed, defendants reversed the adverse benefits decision and determined that Ms. House-Forshee was unable to perform the normal duties of her regular occupation for any employer for the whole length of the claim period, from July 8, 2023 through October 30, 2023. Defendants then moved to dismiss Ms. House-Forshee’s action based on their post-litigation reversal. All pretrial motions in the case were referred to Magistrate Judge Stephanie Bowman for initial review. In this decision Judge Bowman recommended that the court grant defendants’ motion to dismiss, but without prejudice to Ms. House-Forshee’s ability to move for a post-judgment award of attorneys’ fees and costs under ERISA Section 502(g)(1). Judge Bowman agreed with defendants that their reversal of their prior decision and their award of full short-term disability benefits to Ms. House-Forshee rendered her substantive claim for those benefits moot. Nevertheless, Judge Bowman agreed with Ms. House-Forshee that the dismissal of an underlying substantive ERISA claim that has become moot does not defeat the court’s ability to exercise continuing jurisdiction over an ancillary claim such as her claim for attorneys’ fees and costs. Where, as here, a plan participant sues to recover benefits under ERISA and the plan pays the benefit claim in full after the lawsuit was filed, courts have consistently held that they retain equitable jurisdiction to adjudicate any fee claims under Section 502(g). Should they lack such jurisdiction “opportunistic plans could routinely delay deciding whether to pay benefit claims until participants and beneficiaries file suit, effectively requiring them to incur legal costs unrecoverable under ERISA § 502(g) in order to receive benefits to which they are legally entitled. In this case, if plans routinely pay benefit claims in full shortly after participants and beneficiaries file suit, seeking, perhaps, to avoid having to pay the plaintiff’s costs for bringing the ERISA suit, plans could significantly blunt ERISA § 502(g).” Moreover, Judge Bowman was confident that Ms. Bowman demonstrated some degree of success on the merits as she persuasively argued that the filing of her lawsuit was the catalyst for defendants’ change of heart. That being said, Ms. House-Forshee has yet to file a formal motion for attorneys’ fees or argue why she believes she is entitled to fees under the five-factor test set out in Secretary of Dep’t of Labor v. King, 775 F.2d 666 (6th Cir. 1985). Thus, Judge Bowman instructed Ms. House-Forshee to file a post-judgment motion for an award of fees and costs under ERISA.
Breach of Fiduciary Duty
Fifth Circuit
LeBoeuf v. Entergy Corp., No. 24-30583, __ F. App’x __, 2025 WL 1262414 (5th Cir. May 1, 2025) (Before Circuit Judges Dennis, Oldham, and Douglas). Alvin Martinez was an employee for Entergy Corporation until he retired in 2003. While employed at Entergy Mr. Martinez participated in its defined contribution savings plan. Entergy Corporation is the plan’s sponsor, the Entergy Corporation Employee Benefits Committee is the plan administrator and named fiduciary, and T. Rowe Price Trust Company is the plan’s trustee. In 2010, Mr. Martinez named his four children as his designated beneficiaries under the savings plan. Per ERISA, the beneficiary form informed Mr. Martinez that were he to remarry after submitting it, his beneficiary designation would be revoked unless he updated the designation form after remarriage and his new spouse signed a spousal waiver form relinquishing her beneficiary status under the plan. In 2014, Mr. Martinez did remarry. Both before and after his second marriage Mr. Martinez received quarterly plan statements from T. Rowe Price which listed the four children as the beneficiaries. These statements did not reference the changed status of the beneficiary designation following his marriage with his new wife. In 2021, Mr. Martinez died from a car accident. He was survived by his wife, Kathleen Mire, and his four adult children, the plaintiff-appellants in this litigation. The committee subsequently directed T. Rowe Price to distribute Mr. Martinez’s three-million-dollar account balance to Ms. Mire, his surviving spouse. The four children sued the corporation, the committee, and T. Rowe Price. They alleged that all three entities functioned as fiduciaries and that they breached their fiduciary duties by misrepresenting plan provisions by sending quarterly statements that wrongly informed Mr. Martinez that his four children were his designated beneficiaries without informing him that his second marriage invalidated that designation. Defendants responded by filing a motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). The district court granted defendants’ motions to dismiss. It concluded that Entergy and T. Rowe Price could not be liable for breach of fiduciary duty because neither party exercised discretionary authority over the management of the savings plan, and were therefore not fiduciaries. Additionally, the court reasoned that the committee had not breached its fiduciary duty as a matter of law because it accurately relayed the plan’s provisions regarding beneficiary elections and spousal waivers in the plan document, the beneficiary designation form, and the summary plan descriptions, and as such, complied with its fiduciary duties under ERISA. The four children appealed the district court’s dismissal of their claims. In this unpublished per curiam decision the Fifth Circuit affirmed the district court’s dismissal. The court of appeals first discussed the threshold issue of the district court’s conclusion that Entergy and T. Rowe Price were not fiduciaries under ERISA. As neither entity is a named fiduciary in the savings plan, the appellate court considered appellants’ arguments that Entergy and T. Rowe Price functioned as fiduciaries by exercising some form of discretionary control over the plan. Far from concrete and specific factual allegations detailing how these two entities performed discretionary authority over the plan, the Fifth Circuit found the allegations in the complaint to be “conclusory and factually unsupported.” Moreover, the court of appeals agreed with the district court that T. Rowe Price was performing a purely ministerial function when it prepared and issued the quarterly reports sent to Mr. Martinez at the center of this litigation. Accordingly, the court of appeals determined that the district court did not err by dismissing Entergy and T. Rowe Price from the suit based on its finding that neither party was a fiduciary under ERISA. That left only the issue of whether the district court erred by rejecting appellants’ claim that the committee breached its fiduciary duty. In short, the Fifth Circuit agreed with the lower court that Mr. Martinez could not reasonably rely on the information contained in the quarterly statements in the face of unambiguous terms outlined in the official instruments of the plan. The court added that the committee had no affirmative duty to inform Mr. Martinez that his remarriage nullified his beneficiary designation until he made an inquiry about the matter. Because appellants did not allege that their father ever did so, the court of appeals held that the complaint failed to sufficiently allege the committee conveyed a material misrepresentation or failed to provide adequate plan information. Thus, the Fifth Circuit concluded the district court did not err in dismissing the breach of fiduciary duty claim against the committee. For these reasons, the appeals court affirmed the district court’s dismissal in its entirety.
Ninth Circuit
Sievert v. Knight-Swift Trans. Holdings, Inc., No. CV-24-02443-PHX-SPL, 2025 WL 1248922 (D. Ariz. Apr. 30, 2025) (Judge Steven P. Logan). In the past couple of years there has been a deluge of litigation over the use of forfeited employer contributions in defined contribution retirement plans. Plaintiffs in this action are current and former participants of Knight-Swift Transportation Holdings, Inc.’s retirement plan. They allege that the fiduciaries of the plan are breaching their duties of prudence, loyalty, and monitoring, engaging in prohibited transactions with plan assets, and violating ERISA’s anti-inurement provision by using forfeited nonvested employer contributions to offset their obligations towards future matching contributions rather than spending the forfeited plan assets to pay the plan’s administrative expenses. In annual Form 5500 disclosures for the plan, defendants have stated that forfeitures of nonvested contributions and earnings on those contributions would be used to pay plan expenses and to the extent any remain, to reduce the company’s matching contributions. Contrary to this statement, defendants have not first used forfeitures to pay plan administrative expenses, but used those forfeited assets solely to reduce the company’s own future employer contributions. Because of this decision, plaintiffs allege that defendants acted in their own self-interest and harmed the plan and its participants by forcing them to cover plan expenses that would otherwise have been paid for by utilizing forfeited funds as the company represented to the Department of Labor. Defendants moved to dismiss plaintiffs’ lawsuit. In this decision the court granted the motion to dismiss, and dismissed the action with prejudice. The court agreed with Knight-Swift that its only fiduciary duty was to ensure that the participants received their promised benefits as outlined by the terms of the plan. Notwithstanding the statement on the Form 5500s, the court held that defendants were complying with the terms of the plan as written when they elected to use the forfeited assets to offset future employer contribution costs. “Ultimately, Plaintiffs simply have not shown that the Form 5500s created any binding legal obligation for Knight-Swift to use forfeitures to pay administrative expenses.” Without more, the court ruled that defendants’ decision to allocate forfeitures toward reducing the Knight-Swift contributions was insufficient to state a claim for breach of fiduciary duty of loyalty or prudence under ERISA. Moreover, absent an underlying fiduciary breach, the court dismissed plaintiffs’ claim for failure to monitor. Additionally, the court found that the anti-inurement claim failed for the same reason as the fiduciary duty claims: “as the law currently stands, ERISA does not create any duty for a plan sponsor to maximize pecuniary benefits, only to ensure that participants have received the benefits promised to them – and as this Court has determined, the Form 5500 reports simply do not establish that Defendant ever promised, in a legally binding manner, that it would allocate forfeitures toward the Plan’s administrative costs.” Further, the court agreed with defendants that the reallocation of plan assets to provide employees matching contributions is not a prohibited transaction under § 1106. For these reasons the court dismissed the entirety of plaintiffs’ complaint. Finally, the court denied plaintiffs leave to amend their complaint, determining that amendment would be futile as it could not possibly cure the deficiencies identified. The case was accordingly dismissed with prejudice.
Disability Benefit Claims
Third Circuit
Hall v. Reliance Standard Ins. Co., No. 23-20761 (ZNQ) (RLS), 2025 WL 1233203 (D.N.J. Apr. 29, 2025) (Judge Zahid N. Quraishi). Plaintiff Lisa Hall brought this action against defendant Reliance Standard Insurance Company seeking to recover terminated long-term disability benefits under ERISA Section 502(a)(1)(B). The parties filed competing motions for summary judgment under an arbitrary and capricious standard of review. The central question was whether Reliance had arbitrarily decided that Ms. Hall’s disabling cognitive symptoms were caused or contributed to by mental disorders – somatic symptom disorder and post-traumatic stress disorder – as opposed to post-concussive syndrome, as her treating providers attested. The court determined that it had not. The court held it was not an abuse of discretion for Reliance to conclude that Ms. Hall did not suffer from a non-psychiatric related condition. “Here, the Court finds that Defendant has fully articulated its reasoning in making its determination that Plaintiff did not have restrictions or limitations from a non-psychiatric condition that rendered her totally disabled from any occupation.” The court pointed out that Reliance relied on the opinions of three of its own medical consultants, including a neuropsychologist, a neurologist, and an orthopedic surgeon. It stressed that Reliance was not required to give any special weight to Ms. Hall’s treating providers, and was only obligated to consider their views and explain the points of disagreement between any conflicting medical opinions. Given the positions of the three reviewing doctors, one of whom examined Ms. Hall in person, the court was confident that Reliance’s decision to terminate her disability coverage was not unreasonable, unsupported by the evidence, or erroneous as a matter of law. Accordingly, the court held that Reliance had not abused its discretion in terminating Ms. Hall’s benefits pursuant to the plan’s 24-month “Mental or Nervous Disorders” limitation, and entered summary judgment in its favor.
ERISA Preemption
Second Circuit
Finkel v. Structure Tone, LLC, No. 23-CV-1269 (VSB), 2025 WL 1237411 (S.D.N.Y. Apr. 29, 2025) (Judge Vernon S. Broderick). Plaintiff Dr. Gerald R. Finkel is the chairman of the Joint Industry Board of the Electrical Industry. The Board administers several multiemployer benefit plans pursuant to collective bargaining agreements with employers and employer organizations. On behalf of these benefit funds, Dr. Finkel filed a lawsuit in state court against Structure Tone, LLC, the general contractor on three skyscraper construction projects in Manhattan, alleging that is liable for a subcontractor’s unpaid contributions, after that subcontractor failed to remit over $1.4 million in contributions to the employee benefit funds. Defendant removed the action to federal court based on federal question jurisdiction, arguing that ERISA and the Labor Management Relations Act (“LMRA”) preempt the state law causes of action. Dr. Finkel moved to remand the case to state court, while Structure Tone, LLC moved for judgment on the pleadings. In response to defendants’ motion, Dr. Finkel conditionally moved to amend his original complaint in the event the court agreed with the contractor that the state law claims are preempted by federal law. The court did agree. “As a matter of first impression, I conclude that when a collective bargaining agreement establishes an employer’s obligation to contribute to a benefit fund, ERISA and the LMRA each preempt an action asserted under Section 198-e of New York’s Labor Law to collect a subcontractor’s delinquent fund contributions from a general contractor.” The court agreed with defendant that Dr. Finkel, as a fiduciary of the plans, was the type of party that can bring a claim under ERISA to enforce the plans’ contribution requirements, and that his claims seeking to recover delinquent contributions pursuant to the terms of the collective bargaining agreement could be asserted under the statute. Dr. Finkel argued that he could not in fact bring a colorable claim under ERISA Section 502(a) because the statute only allows fiduciaries to bring delinquent contribution claims against the employer and here Structure Tone was not a party to the collective bargaining agreement. The court did not find this argument convincing, stating that it ignored the animating purposes of ERISA’s expansive preemption provision. The court stated, “the fact that Section 502 permits plan fiduciaries to sue employers and cofiduciaries for delinquent contributions – and does not provide for contribution enforcement lawsuits against other parties – weighs in favor, rather than against, a finding that Plaintiff’s claim falls within the scope of Section 502.” In sum, the court held the claim under New York law depends on ERISA to create the contribution obligation, and that it was not independent of ERISA, but rather preempted by it. Because of this holding and the court’s concurrent conclusion that LMRA also preempts the state law claims, the court denied Dr. Finkel’s motion to remand. As for his motion to amend, the court permitted Dr. Finkel to assert ERISA and LMRA claims against the subcontractor, as a party to the collective bargaining agreement, but denied his motion for leave to amend the complaint as to the proposed ERISA and LMRA claims against defendant Structure Tone, as it is not a contributing employer pursuant to the collective bargaining agreement. Finally, the court denied Structure Tone’s motion for judgment on the pleadings as moot.
Life Insurance & AD&D Benefit Claims
Fifth Circuit
Sewell v. The Lincoln Nat. Life Ins. Co., No. 2:23-CV-00317, 2025 WL 1276005 (S.D. Tex. May 2, 2025) (Judge Nelva Gonzales Ramos). Plaintiff Timothy Sewell brought this action against The Lincoln National Life Insurance Company to challenge its denial of his claim for accidental death and dismemberment insurance benefits under an alcohol intoxication exclusion. On March 4, 2025, Magistrate Judge Jason B. Libby issued a report and recommendation on the parties’ cross-motions for summary judgment, recommending the court grant summary judgment in favor of Mr. Sewell. Broadly, Judge Libby held that Lincoln abused its discretion by relying entirely on an isolated blood alcohol test, the results of which were in direct conflict with accounts of eyewitnesses and corroborating facts. Because Lincoln offered no other support for its application of the intoxication exclusion, and because it disregarded the direct evidence out-of-hand, the Magistrate held that Lincoln’s conflict of interest led the claims process to become adversarial. As a result, his report recommended the court deny Lincoln’s motion for summary judgment and grant Mr. Sewell’s cross-motion. Lincoln timely objected to Magistrate Libby’s report. In this order the court addressed Lincoln’s objections and overruled them, finding no error in the Magistrate’s analysis. Like the Magistrate Judge, the court agreed that Lincoln completely disregarded the evidence provided by Mr. Sewell, and instead treated the blood alcohol test result as dispositive. The court added that the shallow dive that Mr. Sewell performed which caused the injury to his cervical spine could not have injured him in the manner it did absent for his unexpected contact with a sand bar from which the water had dropped off. “Even if Sewell still had some alcohol in his system, credible evidence demonstrated that his injury was caused by an unanticipated geographical under-water drop-off that was not visible prior to his dive. According to all of the surrounding evidence, the mechanism of his injury was not caused by any impairment.” Not only did the blood alcohol test come with a disclaimer on its results, but it showed intoxication levels so extreme that if it were true Mr. Sewell would have been so impaired as to be inconsistent with all of the competing evidence in the record. Given this fact, the court agreed with the Magistrate Judge that Lincoln did not fairly or impartially read the test results with skepticism, but relied on them wholesale in order to apply the intoxication exclusion to deny the claim for benefits. Lincoln’s arguments to the contrary were wholly unconvincing to the court. The court therefore overruled Lincoln’s objections and adopted the findings and conclusions of the Magistrate. It ordered Lincoln to pay Mr. Sewell the $764,000 in accidental death and dismemberment benefits, plus interests and court costs, and directed Mr. Sewell to file a motion addressing his request for attorneys’ fees.
Pension Benefit Claims
Seventh Circuit
Hoffman v. United Airlines, Inc., No. 21-cv-06395, 2025 WL 1262504 (N.D. Ill. May 1, 2025) (Judge John J. Tharp, Jr.). In The Mirror & The Light Hilary Mantel writes about the point of a promise. Mantel’s protagonist, Thomas Cromwell, thinks a promise “wouldn’t have any value, if you could see what it would cost you when you made it.” This lawsuit brought by retirees of United Airlines alleges that United made them a promise in 2017, which it would later break in 2021 at the height of the COVID-19 pandemic, once they knew the true cost of that promise. The 2017 promise at issue came from the CEO of United, Oscar Munoz. Mr. Munoz announced to all United employees that he knew that many of them were hesitant to retire for fear that the airline would offer a generous “early out” program in the near future with benefits they would miss out on. To allay those fears, and presumably incentivize a steady flow of voluntary retirement, Mr. Munoz promised the workers that beginning on August 17, 2017, if United offered an early out program within 36 months from the date of an employee’s retirement that employee would be eligible for the financial benefits of the program even after retiring. Then came COVID, which upended global travel, grounding all aircraft. In the summer of 2020, United introduced its Voluntary Separation Program 2, a program which offered various severance benefits to incentivize workers to leave. United said that it did not consider the Voluntary Separation Program 2 to be an early out program and expressly specified that it was not covered by the 2017 policy. In October 2020, United announced it was sunsetting the 2017 policy as of January 1, 2021. In the announcement United told its employees that in 2017 it had not anticipated the situation it now found itself in, and thus “the August 2017 early out policy no longer makes sense.” It added that this change did not signal that it was planning on offering an early out program in early 2021. Yet in early 2021, that was exactly what plaintiffs alleged happened. On January 21, 2021, United announced the Voluntary Separation Leave Program. Like the Voluntary Separation Program 2, the Voluntary Separation Leave Program was a company-wide separation program offering retirees benefits. But these benefits were far better and more generous. Once again, the airline stated that it did not consider the program to be an early out program and that these benefits offered were excluded from the 2017 program, which was updated in 2020. The plaintiffs in this action are United retirees who believe that despite United’s assertions to the contrary, the voluntary separation programs at issue were indeed early out programs, covered by the 2017 promise and policy. They allege that by retiring within three years of the programs they were entitled to those generation benefits under it, and they seek those benefits in this action. Plaintiffs bring this action individually and on behalf of a putative class of similarly situated former United employees who were likewise harmed by United reneging on its promise. Plaintiffs assert claims for those benefits, as well as injunctive and equitable relief, under ERISA, and, in the alternative, claim entitlement to relief under a state law theory of breach of contract. The United defendants moved to dismiss the complaint for failure to state a claim. In this decision the court granted their motion to dismiss, without prejudice. The court began with plaintiffs’ claim for wrongful denial of benefits under Section 502(a)(1)(B). Plaintiffs assert that both the Voluntary Separation Program 2 and the Voluntary Separation Leave Program are ERISA-governed plans in which the retirees are participants by virtue of the 2017 policy, which is itself an ERISA-governed plan in which they are participants. The court did not agree. Relying on the Supreme Court’s ruling in Fort Halifax, the court found that the 2017 policy “lacks the ongoing administrative oversight and discretion which would signify an ‘employee welfare benefit plan’ under ERISA.” Though the court acknowledged the contingent payment of benefits under the 2017 policy, it stressed that the payments being made under it were a one-time, lump-sum payment which imposed only the obligation that United issue a check. It added that even if it accepted plaintiffs’ argument that the Voluntary Separation Program 2 and the Voluntary Separation Leave Program “were early out programs that merely paid financial benefits over the course of a pre-separation period rather than in a single lump payment, that arrangement would not transform the 2017 Policy into an ERISA plan because it would still not impose ‘periodic demands on [United’s] assets that create a need for financial coordination and control.’” The court further rejected plaintiffs’ argument that the 2017 policy required an ongoing administrative scheme by requiring United to administer any benefits the company might later offer and to keep track of the eligible retirees. Again, the court said, “those tasks amount to no more than cutting checks to eligible employees – burdens which are certainly no greater than those imposed on the employers in Fort Halifax.” Ultimately, the court’s conclusion that the 2017 policy does not constitute an ERISA-governed employee welfare benefit plan doomed all of the plaintiffs’ claims under ERISA – not only their claim for benefits under Section 502(a)(1)(B), but also their claims for equitable relief for United’s alleged fiduciary breaches in violation of Section 404(a) and for interference with benefits under Section 510. In addition to dismissing plaintiffs’ claims under ERISA, the court also dismissed their alternative state law breach of contract claim. The court disagreed with plaintiffs that the 2017 promise made by Mr. Munoz and the written 2017 policy United issued formalizing it were enforceable contracts which United breached by failing to pay benefits under the separation programs. The court held that, “although the plaintiffs maintain that the differences between an early out program and a pre-separation program like [Voluntary Separation Program 2] or [Voluntary Separation Leave Program] were semantic, in fact they were materially different. Early out programs, which paid cash upon separation, did not alter an employee’s relationship with the company – they ended it. As evidenced by [Voluntary Separation Program 2] and [Voluntary Separation Leave Program], however, pre-separation program participants maintained their status as employees of the company for the duration of the program.” Accordingly, the court found that plaintiffs failed to state an alternative claim for breach of contract. For these reasons, the court dismissed plaintiffs’ complaint, although it did so without prejudice, granting plaintiffs leave to amend their complaint to attempt to cure the problems it identified. (Plaintiffs in this action are represented by Your ERISA Watch co-editor Elizabeth Hopkins, as well as Susan L. Meter and Samantha Brener of Kantor & Kantor, among other law firms.)
Packaging Corp. of Am. Thrift Plan for Hourly Employees v. Langdon, No. 23-cv-663-jdp, 2025 WL 1258241 (W.D. Wis. Apr. 30, 2025) (Judge James D. Peterson). This interpleader action was brought by plaintiff Packaging Corporation of America Thrift Plan for Hourly Employees seeking judicial intervention to resolve the dispute over the proper beneficiary of a 401(k) account belonging to decedent Carl Kleinfeldt. Defendants are the three potential beneficiaries: (1) Kleinfeldt’s estate; (2) his former spouse, Dena Langdon; and (3) the estate of Terry Scholz, Mr. Kleinfeldt’s sister. In this order the court denied Langdon’s and Kleinfeldt’s estate’s motions for summary judgment, and granted summary judgment to Scholz’s estate, determining that the undisputed facts show the estate of Terry Scholz is the proper beneficiary. The court stated, “[a]t the time of Kleinfeldt’s death, plan documents listed Langdon as the primary beneficiary of the 401k and Scholz as the contingent beneficiary. But before he died, Kleinfeldt sent a fax to Packaging Corporation asking it to remove Langdon as the primary beneficiary. Kleinfeldt did not comply with the plan requirements when he tried to change his beneficiary by fax, but the court concludes that the fax was a valid change of beneficiary under the federal common law rule of substantial compliance. Scholz was still alive when Kleinfeldt died, so as the contingent beneficiary, she was the proper recipient of the 401k after Langdon’s removal.”
Pleading Issues & Procedure
Seventh Circuit
Frick v. Empower Retirement, LLC, No. 25-cv-284-wmc, 2025 WL 1235627 (W.D. Wis. Apr. 29, 2025) (Judge William M. Conley). This action stems from withdrawals pro se plaintiff Tyler Frick made from his 401(k) account at a time when he was suffering from mental illness. Mr. Frick alleges that his friend, Coty Mayfield, coerced him to withdraw this money even though he was unable to consent to the withdrawals at the time. Mr. Mayfield then allegedly took the money that Mr. Frick withdrew. Traumatized by this theft and betrayal, Mr. Frick sued his friend and the company that manages his 401(k) plan, Empower Retirement, LLC, under state law, the Americans with Disabilities Act (“ADA”), and ERISA. Because Mr. Frick seeks to proceed without prepaying the filing fee, the court screened his complaint to assess the sufficiency of his stated claims. In this decision the court concluded that the complaint fails to state its federal claims under the ADA or ERISA, and declined to exercise supplemental jurisdiction over the state law claims. First, the court dismissed the claims under Title III of the ADA against Empower Retirement. “The problem with plaintiff’s ADA claim is that neither an employee benefit plan, nor its administrator, qualify as a ‘public accommodation’ because such plans are not ‘offered to the public.’” Because Empower Retirement does not provide a public accommodation, the court held that Mr. Frick could not proceed with a Title III ADA claim against it. This claim was dismissed with prejudice, as any amendment would be futile. Next, the court scrutinized the ERISA claim against Empower Retirement. Although the court acknowledged that Mr. Frick is correct that some courts have recognized potential ERISA claims against plan administrators for permitting a fraudulent withdrawal or paying benefits to the wrong person, and then refusing to reimburse the beneficiary’s account after the mistake is uncovered, the court noted that those cases involve allegations that the plan administrator failed to follow plan policies and procedures in approving the withdrawal request. There were no allegations like that in the complaint here. As currently alleged, there are no facts in the complaint which show that Empower Retirement knew or could have known about Mr. Frick’s mental illness or about Mr. Mayfield’s involvement coercing him to withdraw the money. The court therefore held that the allegations currently in the complaint do not permit an inference that the administrator abused its discretion or acted arbitrarily or capriciously. Accordingly, the court concluded that Mr. Frick failed to state an ERISA claim, including any claim for reimbursement after Empower Retirement learned that the withdrawals had been coerced due to Mr. Frick’s mental state. Nevertheless, the court noted that these shortcomings could potentially be addressed through amendment. Thus, the court gave Mr. Frick an opportunity to file an amended complaint to include additional factual allegations about why he believes the plan administrator abused its discretion in authorizing the withdrawals from his retirement account. Finally, the court dismissed the state law causes of action alleged against Mr. Mayfield. Although these claims share some common facts with the federal ERISA claim against Empower Retirement, as they stem from the same allegations that Mr. Mayfield manipulated Mr. Frick into requesting the withdrawals, the court concluded it did not make sense to keep them together in the same lawsuit as they “are conceptually and practically distinct.” The court thus dismissed the state law claims without prejudice to Mr. Frick refiling them in state court.
Retaliation Claims
Ninth Circuit
Berland v. X Corp., No. 24-cv-07589-JSC, 2025 WL 1223547 (N.D. Cal. Apr. 28, 2025) (Judge Jacqueline Scott Corley). From February 2016 through November 1, 2022, plaintiff Leslie Berland was the Chief Marketing Officer of Twitter. Her employment ended when Elon Musk took over the company and swiftly enacted mass changes. Ms. Berland seeks to recover employee benefits she alleges that Musk and Twitter (now the X Corporation) withheld under the company’s Change of Control Severance and Involuntary Termination Protection Policy. Ms. Berland alleges four causes of action: (1) a claim for plan benefits under ERISA Section 502(a)(1)(B); (2) a claim for unlawful discharge to interfere with her right to plan benefits under Section 510; (3) a claim for breach of contract; and (4) a claim for breach of the implied covenant of good faith and fair dealing. Defendants moved to dismiss Ms. Berland’s Section 510 claim, arguing primarily that the complaint fails to plausibly plead Ms. Berland is entitled to any equitable relief because the severance plan at issue is a top hat plan. Before the court tackled this issue, it addressed the parties’ requests that it take judicial notice of five documents outside of the complaint. These documents were the plan, two filings with the Securities and Exchange Commission, the Department of Labor’s online material on top hat plans, and a letter from Twitter which forms part of the basis of Ms. Berland’s claims because it is the original denial of her claim under the plan. The court agreed to consider all five documents because no party offered any opposition and because they were either incorporated by reference in the complaint, otherwise integral to it, or publicly available materials. With that preliminary matter settled the court discussed whether equitable relief was recoverable as a matter of law. The court concluded that at least one form of equitable relief, surcharge, is plausibly available to Ms. Berland. The court agreed with her that defendants failed to persuasively argue that the change of control severance plan is a top hat plan as a matter of law because they failed to establish that the plan was maintained primarily for the purpose of providing deferred compensation. Indeed, the plan provides for a lump sum payment of cash and immediate vesting of certain shares on the 61st day following an employee’s termination. Additionally, the court noted that the plan itself states that the administrator is the “named fiduciary” of the policy for the purposes of ERISA and that the administrator is subject to the fiduciary standards of ERISA when acting in that capacity. The court stated that this fact cuts against a finding that the plan is a top hat plan. Drawing all reasonable inferences in Ms. Berland’s favor, the court found the plan is not a top hat plan, and because defendants did not challenge her Section 510 claim on any other grounds, the court concluded that the complaint pleads the availability of a surcharge remedy. As a result, the court denied defendants’ motion seeking to dismiss Ms. Berland’s interference claim.
Statute of Limitations
Second Circuit
Cooper v. International Business Machines Corp., No. 3:24-cv-656 (VAB), 2025 WL 1275880 (D. Conn. May 2, 2025) (Judge Victor A. Bolden). Pro se plaintiff Simon J. Cooper sued his former employer, International Business Machines Corporation (“IBM”), challenging its pension crediting decisions under its cash balance plan. Mr. Cooper asserted claims under ERISA, as well as a claim under the European Union’s privacy laws. Notably, Mr. Cooper filed his lawsuit nearly four years after he submitted his claim for pension benefits to IBM. Because of the timing of his lawsuit, as well as the fact that he did not exhaust administrative claims processes prior to filing it, the court granted IBM’s motion to dismiss Mr. Cooper’s lawsuit on December 6, 2024. (The court also dismissed the EU general data protection claim as neither party is a EU citizen.) In response to the court’s dismissal Mr. Cooper moved for reconsideration. The court denied that motion in this decision. As before, the court determined that Mr. Cooper’s ERISA claims for benefits, statutory penalties, and fiduciary breaches were all untimely under the applicable and analogous statutes of limitations. Mr. Cooper argued that the court’s order dismissing his complaint failed to toll the statutes of limitations on bringing his ERISA claims during the pendency of the administrative proceedings. He maintained that the complaint should be reconsidered because the court failed to consider that IBM committed fraud by failing to provide his benefit calculation when they stated they would do so. The court disagreed. It held that Mr. Cooper was made aware of the potential claim arising from no production of the calculation in October of 2020, meaning that by filing this lawsuit on March 14, 2024, the three-year statute of limitations period had already lapsed. Moreover, because he knew of the alleged violation of not providing the calculation since that time, the concealment exception extending the statute of limitations for a breach of fiduciary duty claim to six years is inapplicable, because the alleged breach was not concealed in any way. In addition, Mr. Cooper argued that the court erred in its earlier decision because it did not include the timeline to complete administrative remedies per the plan documents and that he was still trying to complete the administrative remedy but could not do so because IBM did not complete its pension valuation. The court did not agree. It noted that Mr. Cooper failed to plead exhaustion of administrative remedies in his original complaint, and there was no basis for equitable tolling because Mr. Cooper was aware of the alleged violations for years before he commenced his legal action. “Accordingly, because Mr. Cooper’s argument about tolling and seeking administrative remedies was already considered in this Court’s original decision, reconsideration on these grounds would be inappropriate.” Thus, the court reached the same conclusion as in its earlier decision – that Mr. Cooper’s claims under ERISA are time-barred. Finally, Mr. Cooper argued that the court erred in dismissing his data privacy protection claim because the relevant EU provisions were codified in United Kingdom Law, meaning as a citizen of Great Britain his claim should stand. The court stated that while Mr. Cooper was correct that EU data protection laws have been incorporated into the UK’s laws, court enforcement of the UK’s data privacy law is restricted to enforcement in courts within England, Wales, Scotland, and Northern Ireland. Therefore, as a court in Connecticut, this court determined that it had no power to enforce Mr. Cooper’s rights under the UK Data Protection Act, and was therefore correct to dismiss this cause of action. Accordingly, the court denied Mr. Cooper’s motion for reconsideration of its order dismissing his complaint.