Delker v. MasterCard Int’l, Inc., No. 20-3600, __ F.4th __, 2022 WL 38468 (8th Cir. Jan. 5, 2022) (Before Circuit Judges Smith, Gruender, and Stras).

Of all the benefit plans employers offer their employees, life insurance plans are usually the simplest. However, even these plans can cause headaches if they are not properly designed and explained. This case provides a golden example of an overly confusing plan, compounded by the employer’s misrepresentations to both an employee and her beneficiary regarding what benefits were available and how premiums were supposed to be paid for them.

Julie Delker, an employee of MasterCard, was enrolled in the company’s ERISA-governed life insurance benefit plan. When enrolling in the plan, she electronically signed up for a “Core Employee Life” benefit of “1 X Salary,” and also signed up for the “Life Employer Credit” benefit of “2 X Salary.” Her enrollment form stated that MasterCard paid for both elections. The form also stated that Ms. Delker waived enrollment in MasterCard’s “Optional Life” benefit plan. As a result, Ms. Delker and her husband, Edward Delker, thought Ms. Delker had life insurance worth three times her salary through her participation in the plan.

In 2016, Ms. Delker passed away and Mr. Delker submitted a claim for benefits under the plan. MasterCard’s Director of Global Benefits informed Mr. Delker by letter that he was entitled to receive three times his wife’s salary as a benefit under the plan, and he was also told this several times over the phone by MasterCard employees.

However, The Prudential Insurance Company, the insurer of MasterCard’s plan, determined that Mr. Delker was only owed a benefit equal to one times Ms. Delker’s salary, not three, because MasterCard had only paid premiums for the lower benefit. Later, MasterCard told Mr. Delker that its previous representations were “an administrative error,” and that “the company’s records did not show that she had purchased any life insurance beyond the core benefit.”

Mr. Delker sued MasterCard in Missouri state court, and MasterCard removed the case to federal court on ERISA preemption grounds. After Mr. Delker filed an amended complaint asserting ERISA claims, MasterCard filed a motion to dismiss, which the district court granted with prejudice on the ground that “there was no plausible allegation that Mrs. Delker had used her employer credits to elect three times her salary in life insurance.” The district court further found that MasterCard was a fiduciary for ERISA purposes, but did not breach its duty by making a material misrepresentation.

Mr. Delker appealed to the Eighth Circuit, which reversed. The court agreed with the district court that Mr. Delker could not bring a claim against MasterCard for payment of plan benefits under 29 U.S.C. § 1132(a)(1)(B) because the employer was not the proper defendant. It thus addressed the remainder of Mr. Delker’s claims, which it construed as alleging breach of fiduciary duty under 29 U.S.C. § 1132(a)(3). The court agreed with the district court that MasterCard was a fiduciary under ERISA, and thus it had a duty not to make materially misleading statements to plan participants and fiduciaries.

The court thus turned to the central question in the case, which was whether Mr. Delker had properly alleged that MasterCard breached this duty. MasterCard argued that the enrollment guides and forms stated that employees needed to make an election in order to receive additional coverage, and that Ms. Delker had not made a proper election. Furthermore, MasterCard contended that the form language indicated that MasterCard would only provide credits, and not pay premiums, for additional insurance.

The Eighth Circuit rejected these arguments. It found that Mr. Delker plausibly alleged that Ms. Delker had elected the additional coverage given the “numerous explicit representations as well as the overall context in which the election took place.” Given the wording of the forms, as well as MasterCard’s overall benefit package scheme, “Mr. Delker’s assertion that his wife in fact elected life insurance in the amount of three times her annual salary is plausible; indeed, it is the most straightforward and natural reading of MasterCard’s own forms.” The court was also skeptical of MasterCard’s distinction between “credits” and payment of premiums: “MasterCard takes the position with respect to her life insurance coverage that its bestowal of credits did not amount to a promise to pay the premiums. This raises the obvious question of just what the credits are meant to do.”

In short, the Eighth Circuit found that “Mr. Delker has plausibly alleged that his wife elected a total amount of three times her salary in life insurance, for which MasterCard promised to pay premiums.…If that proves true, MasterCard’s failure to pay premiums would constitute a breach of the fiduciary duty it owed its employees participating in its ERISA-governed benefit plan.”

As a result, on remand the district court will take another look at Mr. Delker’s case on the merits. In the meantime, it appears MasterCard has some plan redesign work to do.

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

Attorneys’ Fees

Ninth Circuit

Wit v. United Behavioral Health, No. 14-cv-02346-JCS, 2022 WL 45057 (N.D. Cal. Jan. 5, 2022) (Magistrate Judge Joseph C. Spero). Signaling confidence in the court’s decision finding defendant United Behavioral Health liable for breaches of fiduciary duty and violation of class members’ health plans, the court awarded $19,628,071.88 in fees for plaintiffs’ attorneys and $1,230,729.86 in costs. Although the amount awarded was less than the requested $27,774,894.74, it was still a big win for the plaintiffs’ attorneys who have litigated the case since January 2014. First, the court held that all five Hummell factors supported awarding fees and costs. The court especially emphasized United Behavioral Health’s large degree of culpability in denying mental health and substance use treatment coverage to tens of thousands of class members by using guidelines “that were inconsistent with the terms of the class members’ health insurance plans…UBH engaged in its course of conduct deliberately, to protect its bottom line.” Plaintiffs requested that the court calculate the lodestar amount using 2020 hourly rates in order to compensate for the long delay in receiving compensation. The court found this request reasonable. The hourly rates went as high as $1,145 for attorneys with over 35 years of experience who live and work in the San Francisco Bay area. Based on included declarations and supporting materials, the court was satisfied that the attorney rates sought were reasonable for firms in the Bay Area “conducting complex litigation.” The court was also satisfied that the hours for which plaintiffs’ attorneys sought fees were recorded through contemporaneous records using a timekeeping system. The time requested was therefore deemed reasonable and in line with clients’ expectations. Additionally, the court found the 1,279 hours counsel spent preparing the fee petition, constituting 4.1% of the total requested hours, to be reasonable. As for the costs requested, the court was, by and large, satisfied that plaintiffs adequately substantiated their costs and provided invoices and charts supporting the amounts. Finally, plaintiffs asked the court to award a 1.5 multiplier on their attorneys’ fees as this was a long, complex, nationwide class action. Finding a 1.5 multiplier excessive, the court instead applied a 1.05 multiplier to the lodestar. The result was a large fee award to be sure, consistent with the judge’s stated desire to incentivize attorneys to take on meritorious ERISA cases. 

Breach of Fiduciary Duty

Ninth Circuit

Anderson v. Intel Corp. Inv. Policy Comm., No. 19-CV-04618-LHK, 2022 WL 74002 (N.D. Cal. Jan. 8, 2022) (Judge Lucy H. Koh). Former employees of the Intel Corporation who claimed imprudence based on the fees and performance of retirement plan investments won a significant victory in 2020 in the Supreme Court, which held that ERISA’s three-year actual knowledge statute of limitations did not bar their claims. However, they did not fare so well back in district court in this decision, which dismissed most of their claims based on their perceived failure to persuasively identify meaningful benchmarks. Plaintiffs brought this proposed class action consisting of participants in the Intel Retirement Contribution Plan and the Intel 401(k) Savings Plan, alleging defendants breached their fiduciary duties of loyalty and prudence, duty to diversify, and duty to monitor and evaluate asset allocation of its target date and global diversified funds. Plaintiffs alleged that the Investment Committee redesigned the defined contribution default funds to include not only stocks and bonds but also began to heavily invest in non-traditional investments including hedge funds, private equity, and commodities. By 2015, the 401(k) Savings Plan had up to 37.2% of the funds’ assets in these non-traditional investments, and the Intel Global Diversified Fund had 56.22% of its assets allocated to non-traditional investments. Plaintiffs alleged that through this investment strategy the funds performed poorly. Plaintiffs also claimed that the 401(k) plan’s disclosure documents were “silent as to any potential risks of Non-Traditional Investments.” According to plaintiffs’ complaint, the Investment Committee used the funds to invest in the hedge funds and private equity as a way of benefiting Intel and the Intel Capital Corporation. Defendants moved to dismiss six of plaintiffs’ counts pursuant to Federal Rule of Civil Procedure 12(b)(6). The court granted defendants’ motion. The court held plaintiffs failed to provide and identify meaningful benchmarks beyond conclusory labels such as “comparable” and “peer.” Without satisfactory benchmarks that shared similar rewards, risks, and aims with which to compare the performance or fees of the funds at issue, the court was not persuaded that plaintiffs’ complaint stated a valid claim. Further, as plaintiffs, “already had two chances to amend their pleadings,” the court granted the motion to dismiss counts I-VI with prejudice. Count VII of the complaint, which alleged that the Committee failed to provide required documents, remains.

Disability Benefit Claims

Seventh Circuit

Lane v. Structural Iron Workers Local No. 1 Pension Tr. Funds, No. 20-6769, 2021 WL 6197074 (N.D. Ill. Dec. 30, 2021) (Judge Jorge Alonso). Plaintiff Jeffery Lane brought this Section 502(a)(1)(B) suit against defendant Structural Iron Workers Local No. 1 Pension Trust Fund after the denial of his application for disability pension benefits. The fund is a multi-employer pension plan administered by a board of trustees. In order to qualify for a disability pension a participant has to have earned at least 15 pension credits by the time he or she becomes permanently disabled, or a participant has to have earned at least 5 pension credits and to have become permanently disabled “as the result of an accident sustained while on the job.” Mr. Lane fell into the latter category. In 2014, he tore his meniscus in his left knee and injured his left shoulder while working in his job as an iron worker. In 2017, following several surgeries and several attempts to resume working, Mr. Lane was forced to apply for Social Security Disability Insurance, which he was awarded in 2018. The following year, Mr. Lane applied for disability pension benefits. Despite treating doctor’s statements and documentation from the Social Security Administration attesting that Mr. Lane’s disability was caused by his work-related injury, the application for benefits was denied. During the internal appeals process, the assigned medical reviewer concluded that the documents Mr. Lane provided did not demonstrate that his disability for which he was receiving SSDI benefits was the direct result of his on the job injury from 2014. Rather, the reviewer concluded that the medical records revealed, “several other serious ongoing health conditions, in addition to the left shoulder and knee issues that might logically have begun with the May 28, 2014 accident.” The parties filed cross-motions for summary judgment. As the plan conferred discretionary decision making authority to interpret plan provisions and determine eligibility for benefits, the court reviewed the decision under the arbitrary and capricious standard. The court granted defendant’s motion for summary judgment and denied Mr. Lane’s motion. The court agreed with defendant that the trustees’ decision was based on substantial evidence, well-grounded in the record. As this was primarily a case of conflicting medical opinions, the court found defendant’s denial relying on the opinion of its own doctor rather than Mr. Lane’s to be reasonable. Mr. Lane’s argument that defendant should have sought additional information to resolve any uncertainty was not persuasive to the court. It was Mr. Lane’s and not defendant’s responsibility to include evidence necessary to support an award of benefits. The court concluded defendant sufficiently “engaged in the meaningful dialogue necessary to substantially comply with the full-and-fair review requirement.” For these reasons, the court concluded that the denial was not downright unreasonable and thus upheld the decision. 

Life Insurance & AD&D Benefit Claims

First Circuit

Alexandre v. Nat’l Union Fire Ins. Co. of Pittsburgh, No. 21-1140, __F.4th__, 2022 WL 18778 (1st Cir. Jan. 3, 2022) (Before Circuit Judges Thompson and Kayatta, and Judge Katzmann). Plaintiff Mary Alexandre appealed the district court’s decision upholding the accidental death insurance benefit denial by defendant National Union Fire Insurance Company of Pittsburg, PA. National Union denied the application on the ground that Ms. Alexandre’s husband had committed suicide. Although the plan did not define the term “accident,” the AD&D policy explicitly excluded death “caused by suicide or any attempt at suicide or intentionally self-inflicted injury.” Ms. Alexandre’s husband died after falling nine stories from a balcony. The death was ruled a suicide by the medical examiner. The district court granted National Union’s motion for summary judgment. The district court referred to precedent in the First Circuit to reach its conclusion that National Union had not abused its discretion in determining that Ms. Alexandre’s husband’s death was not an accident. On appeal, Ms. Alexandre asked the First Circuit to instead apply the Eleventh Circuit’s presumption against suicide and in favor of an accident. National Union argued that First Circuit precedent properly controls in the First Circuit and the district court had not erred in its conclusion. The First Circuit declined to overrule its own precedent to apply the Eleventh Circuit’s in this instance, despite the fact that the case was originally brought in the Eleventh Circuit and then transferred to the First, writing, “nothing compels one federal court to apply another’s interpretation of federal law after a case’s transfer.” Thus, adhering to its own precedent, the First Circuit held that the district court did not err in ruling that the decisional law of the First Circuit applies. Furthermore, as there was substantial evidence indicating that the death was intentional, and National Union’s decision was not found to be an abuse of discretion, the First Circuit affirmed the district court’s summary judgment decision. 

Eighth Circuit

Yates v. Symetra Life Ins. Co., No. 4:19-CV-154 RLW, 2022 WL 19211 (E.D. Mo. Jan. 3, 2022) (Judge Ronnie L. White). “Thou know’st ‘tis common; all that lives must die.” Yet, as this decision illuminates, death is usually unforeseeable, and it is therefore the purpose of life insurance and accidental death insurance to protect policy holders against their own negligence. Plaintiff Terri M. Yates moved to alter judgment under Federal Rule of Civil Procedure 59(e), asking the court to reconsider its initial decision concluding Ms. Yates’s claim was barred for failure to exhaust administrative remedies, after defendant Symetra Life Insurance Company denied her claim for AD&D benefits following her husband’s death. The claim was denied on the ground that Mr. Yates’s death, a heroin overdose, was a self-inflicted injury in which death was the foreseeable outcome. Under the policy language, an injury is defined as an “accidental bodily injury which is a sudden and unforeseen event.” Before considering the merits of Symetra’s denial, the court concluded that because the policy had no provision requiring exhaustion, Ms. Yates was not barred from bringing her claim for benefits. Thus, the court granted plaintiff’s motion to reconsider. The court then turned to the denial itself. As there was no explicit language in the plan giving Symetra discretionary authority, the court reviewed the decision under de novo review standard. The court was persuaded by Ms. Yates’s argument that Mr. Yates did not expect to die of an overdose. Symetra argued that death was a possible foreseeable outcome from heroin use. This argument was found to be inconsistent “with the goals of an accident insurance plan to deny coverage for all accidents other than those in which the victim was passive, or which did result from the victim’s own actions but were so bizarre as to be unforeseeable.” Therefore, the court found the denial an unreasonable reading of the plan’s language, and that Symetra failed to prove the exclusion for intentionally self-inflicted injuries barred Ms. Yates from receiving accidental death benefits. Having so found, the court granted summary judgment in favor of Ms. Yates and found her entitled to an award of benefits. 

Pleading Issues & Procedure

Third Circuit

Clark v. Alight Sols., No. 5:21-cv-01855, 2022 WL 43285 (E.D. Pa. Jan. 5, 2022) (Judge Joseph F. Leeson, Jr.). When plaintiff Bruce Clark divorced his wife a few years ago, the Court of Common Pleas of Lancaster County entered a qualified domestic relations order (“QDRO”) which diverted a portion of Mr. Clark’s pension to his ex-wife. Since the divorce, each month the ex-wife receives a payment of $782.20 from the pension. Mr. Clark asserts that the monthly payments, which continue to this day, were supposed to stop after thirty months. The QDRO “assigns to (the ex-wife) an amount equal to $782.20, commencing January 1, 2017…and continuing to [the ex-wife] until the earlier to occur of her death or [Mr. Clark’s] death.” Mr. Clark has brought several suits against his ex-wife including a private complaint with the Lancaster District Attorney, a civil action in state court, an appeal of the second case to the Pennsylvania Supreme Court, and a second civil action in state court against his ex-wife. None of these attempts to stop his ex-wife from receiving the payments were successful. Mr. Clark then commenced this suit in federal court against Alight Solutions, LLC, believing Alight was the plan administrator, and seeking Alight to stop the payments and reimburse him for the past payments. Exelon Corporation informed Mr. Clark that it was the true administrator of his pension plan. Exelon then filed a motion to dismiss the complaint. Mr. Clark filed motions, requesting the court ignore Exelon’s motion to dismiss because it is not a named party in the complaint, and requesting default judgment against Alight. The court determined it did not have subject matter jurisdiction in this case, and dismissed it without prejudice. The complaint did not satisfy diversity jurisdiction because Mr. Clark did not allege the amount in controversy was greater than $75,000. Further, the court concluded that the complaint did not raise a federal question as ERISA does not apply to the entry of a domestic relation order in state court. Finally, the court concluded that, because Mr. Clark has litigated the interpretation of the QDRO three times in state court, and lost each time, the Rooker-Feldman doctrine prohibited the court from hearing this claim as it would be “inextricably intertwined with the state adjudication.” For these reasons the motion to dismiss was granted. 

Tenth Circuit

Garrison v. The Admin. Comm. Of Delta Air Lines, Inc., No. 20-cv-01921-NYW, 2022 WL 60309 (D. Colo. Jan. 6, 2022) (Magistrate Judge Nina Y. Wang). Plaintiff Roberta Stepp Garrison received a Monthly Income Survivor Benefit from Delta Air Lines, Inc. following the death of her husband Richard Stepp, a Delta employee, in 2013, until the benefit was terminated in 2019. Under the plan, the survivor benefit is payable for up to ten years, but is subject to offset by other benefits. Relevant here, the plan dictates that the benefit is to be reduced by “100% of the available Family Social Security Benefit.” The Delta Employee Service Center told Ms. Garrison that upon her 60^th birthday she would be eligible to receive a widow’s benefit from the Social Security Administration. They also informed her that per the plan terms, her survivor benefit payment would be reduced by the amount of the widow’s benefit, “whether or not payment of the widow’s benefit is delayed, suspended, reduced, or forfeited.” When Ms. Garrison attempted to apply for the widow’s benefit, the Social Security Administration informed her that because she had remarried prior to the age of 60, she was not entitled to receive the widow’s benefit. Nevertheless, Delta’s administrative committee offset Ms. Garrison’s survivor benefit by the amount of the widow’s benefit she would have received had she been eligible. As the widow’s benefit was a greater amount than the survivor benefit, the survivor benefit was effectively terminated. The committee reasoned that Ms. Garrison would have been eligible for the widow’s benefit, but for her marriage prior to the age of 60. The marriage, the committee determined, was an act of forfeiture of the benefit, and thus according to the plan terms still appropriate for offset. Ms. Garrison then initiated this suit for wrongful denial of benefits and breach of fiduciary duties, and filed a motion requesting summary judgment only for the wrongful denial of benefits claim, seeking to have the court reinstate the survivor benefit. As the plan gives the committee discretionary authority to decide eligibility, the court applied abuse of discretion review. Although the plan language was ambiguous and the terms “available” and “forfeit” could be interpreted to be understood to mean Ms. Garrison was never eligible for the widow’s benefit and thus had forfeited nothing, as she understood the terms to mean, under the deferential review standard the court concluded the committee’s interpretation and denial were reasonable and supported by substantial evidence. Accordingly, Ms. Garrison’s motion for judgment on the wrongful denial of benefits claim was denied. Because the fiduciary duty claims were not briefed and addressed, the court ordered Ms. Garrison to show cause why they are not duplicative of the denial of benefit claim. 

Provider Claims

Third Circuit

Ass’n of N.J. Chiropractors v. Data ISight, Inc., No. 19-21973, 2022 WL 45141 (D.N.J. Jan. 5, 2022) (Judge John Michael Vazquez). Plaintiffs are chiropractic centers located throughout the northeast, which brought suit alleging defendants Aetna Health Inc, Aetna Health Insurance Co., Connecticut General Life Insurance Company, Cigna Health and Life Insurance Company, Data ISight, Inc., and Multiplan, Inc. have been improperly underpaying for chiropractic services plaintiffs provided to out-of-network patients. According to plaintiffs, Cigna and Aetna hired ISight, Inc. and Multiplan, Inc. to reprice insurance reimbursements, and through this repricing, they have been systematically unpaid for their services in breach of patients’ plan documents in violation of ERISA. Defendants moved to dismiss for failure to state a claim and for lack of standing. Defendants argued plaintiffs lack standing because “the allegations as to their Assignment of Benefits (‘AOB’) are conclusory,” and because some of the plaintiffs did not sufficiently allege that they had AOBs from at least one patient. Plaintiffs countered that they obtained written AOBs from Aetna and Cigna patients prior to providing care. The court was satisfied that this assertion was sufficient to convey plaintiffs with standing, and defendants’ motion to dismiss for lack of standing was denied. ISight, Inc. and Multiplan, Inc. argued they should be dismissed because plaintiffs failed to allege that they are fiduciaries. In their complaint, plaintiffs alleged that Aetna and Cigna gave ISight and Multiplan “discretionary authority to reduce, reprice, delay, deny, and otherwise issue benefit determinations.” However, these statements alone were not sufficient for the court to conclude that ISight and Multiplan were indeed fiduciaries. Rather, the court held that the specific allegations demonstrated it was Aetna and Cigna who had discretionary decision-making authority. Therefore, ISight and Multiplan’s motion to dismiss was granted. Next, the court examined plaintiffs’ Section 502(a)(1)(B) claim with regard to Aetna, and concluded that plaintiffs failed to identify plan language that would entitle them to the payment amounts they claimed they were due. As plaintiffs included only patient initials with no references to specific plan terms, the court found the allegations to be insufficient to state a Section 502(a)(1)(B) claim against Aetna. Plaintiffs’ Section 502(a)(3) claim was also dismissed against Aetna for the same reason. Accordingly, Aetna’s motion to dismiss was granted. As for Cigna, the court granted the motion to dismiss the claims against it asserted by three of the plaintiffs, whom the court stated failed to identify plan language sufficient to state their claims, but denied the motion to dismiss the claims against it asserted by the remaining plaintiffs. Accordingly, the motions to dismiss were granted in part and denied in part as described above. 

Statute of Limitations

Fourth Circuit

Hurley v. The Hartford, No. 21-2307, 2022 WL 36444 (D. Md. Jan. 4, 2022) (Judge Stephanie A. Gallagher). Plaintiff Christopher Hurley brought suit seeking to reinstate disability benefits. Mr. Hurley became disabled in 1991. In 1992, he returned to work on a part-time basis and has continued working part-time since then. Mr. Hurley applied for and received partial disability benefits until defendants terminated the benefits on January 11, 2018. Mr. Hurley appealed the denial on June 28, 2018. Defendants denied the appeal. Mr. Hurley brought suit arguing that defendants applied an improper definition of disability, and failed to consider all of the submitted medical evidence in the denial. Moreover, the denial letter defendants sent in September 2018 did not advise Mr. Hurley of the applicable statute of limitations. Defendants moved to dismiss, asserting Mr. Hurley’s case was time-barred, and the court agreed. The policy sets a statute of limitations requiring participants to provide proof of loss ninety days from the date of the termination letter, and lawsuits to be brought within three years from that date. Therefore, Mr. Hurley had three years from April 11, 2018 to commence his Section 502(a)(1)(B) suit. Mr. Hurley, however, did not bring suit until September 8, 2021. Mr. Hurley argued that defendants’ letter violated regulatory requirements by failing to advise him of the applicable time limits to filing suit. The court, however, found that this requirement was not applicable to this case because it came into effect ten years after Mr. Hurley began receiving benefits. In addition, Mr. Hurley argued that the three-year statute of limitations didn’t begin until he had exhausted his administrative remedies. The court disagreed, concluding that this exact argument was foreclosed by the Supreme Court decision in Heimeshoff v. Hartford Life & Accident Ins. Co., 571 U.S. 99, 106 (2013). As the limitations provision in Heimeshoff was the same as the provision in Mr. Hurley’s policy, the court concluded that the statute of limitations had run before the case was brought even though that was not the case in Heimeshoff. Therefore defendants’ 12(b)(6) motion was granted, and the case was dismissed without prejudice. 

Withdrawal Liability & Unpaid Contributions

Second Circuit

Mar-Can Transp. Co. v. Local 854 Pension Fund, No. 20 Civ. 8743 (CS) (PFD), 2022 WL 35588 (S.D.N.Y. Jan. 4, 2022) (Magistrate Judge Paul E. Davison). Plaintiff Mar-Can Transportation Company is a non-profit corporation that provides bus transpiration to special needs school children in New York. Employees of Mar-Can were unionized under the International Brotherhood of Teamsters Local 553 prior to March 2020. Plaintiff’s employees then changed union representation and joined the Amalgamated Transit Workers Local 854, and changed pension funds. Defendant Local 854 Pension Fund is the former multi-employer pension plan for plaintiff’s employees. Due to Mar-Can permanently ceasing covered operations and ending contributions to the plan, defendant sent Mar-Can a Notice and Demand of Payment of Withdrawal Liability. Local 854 Pension Fund assessed a withdrawal liability against Mar-Can for $1,798,978. After Mar-Can began contributing to the new pension fund, it requested that defendant reassess its withdrawal liability calculations. Defendant rejected plaintiff’s requested recalculation. Plaintiff also requested defendant transfer assets and liabilities to the new pension plan. Defendant has stated that it will transfer liabilities and assets to the new plan, “if and when it is determined that the ATW Local 854 Pension Plan is a multi-employer defined benefit plan.” This dispute over whether the new plan is a qualifying multi-employer plan has gone on so long that plaintiff asserts the deadline for the pension transfer has expired. Mar-Can then commenced this suit in which it seeks to compel defendant to transfer assets to the new plan, thus reducing Mar-Can’s withdrawal liability. Defendant moved to compel plaintiff to join the Amalgamated Transit Workers Local 854 Pension Fund as a party in the case pursuant to Federal Rules of Civil Procedure Rule 19, on the basis that the new fund has an interest in the outcome of the litigation. Defendant additionally argued that the new fund’s absence would subject it to substantial risk of “incurring inconsistent obligations.” The court denied the motion. The new fund did not claim an interest in the litigation, and the only risk defendant runs, according to the court, is the “risk of facing a subsequent civil action which may obligate it to readjust the pension transfer values.” Therefore, the court concluded that defendant failed to prove the new fund is a necessary party. 

Third Circuit

Shopman’s Local Union 502 Pension Fund v. Samuel Grossi & Sons, Inc., No. 20-cv-5776, 2022 WL 63038 (E.D. Pa. Jan. 6, 2022) (Magistrate Judge Lynne A. Sitarski). Plaintiff Shopman’s Local Union 502 Pension Fund brought suit against Samuel Grossi & Sons, Inc. (“SGS”) after the company ceased its steel fabrication operations, triggering a $3.8 million withdrawal liability, which was never paid. After plaintiffs moved for summary judgment against SGS, the judge entered a consent judgment in favor of plaintiffs in the amount of $4,030,781. Plaintiffs then moved for leave to file an amended complaint adding claims for withdrawal liability collection from E&R Erectors, Inc. and Bensalem Steel Erectors, Inc., entities under common control with SGS, as alter egos and through veil piercing. Defendants opposed the amendment as futile. First, the court held that, counter to defendant’s assertions, alter ego and veil piercing theories are available under ERISA and the MPPAA. The court next applied the federal labor law test to determine whether the entities were indeed part of a single enterprise. Plaintiffs pled that defendants share equipment, employees, and the same physical space for their operations, thus pleading defendants have interrelated operations. Plaintiffs also pled defendants have related supervisors and managers. Taken as true, defendants exercised centralized control of their workforces. Also, plaintiffs pled defendants are owned by the same and related individuals, and the enterprises have a lack of formal financial divisions. These facts established common ownership. Finally, plaintiffs were able to plead that the enterprises share common management, satisfying the fourth and final factor considered under the federal labor law test. The court therefore granted plaintiff’s motion to leave to amend, allowing plaintiff to pierce the veil.