Justia ERISA Opinion Summaries

Two former employees of the University of California, after leaving their positions, delayed applying for retirement benefits under the University of California Retirement Plan (the Plan) until several years after reaching the normal retirement age of 60. When they eventually applied, both requested retroactive monthly retirement payments dating back to when they first became eligible. The Regents of the University of California denied these requests, interpreting the Plan to provide benefits only from the date of application forward. The plaintiffs, representing a class of similarly situated former employees, argued that the Plan entitled them to retroactive benefits or, alternatively, that The Regents breached a fiduciary duty by failing to inform them that retroactive benefits were unavailable.The Superior Court of Alameda County granted summary adjudication to The Regents on the breach of contract claim, finding that the Plan did not provide for retroactive monthly benefits prior to a member’s application. The court later held a bench trial on the breach of fiduciary duty claim, ultimately concluding that The Regents had not breached its duty to inform members about their retirement options, as the Plan documents and related communications were sufficient to fully and fairly inform a reasonable plan beneficiary.The California Court of Appeal, First Appellate District, Division Four, reviewed the case. It held that the Plan’s language unambiguously requires a member to apply for retirement benefits before those benefits become payable, and that retroactive monthly benefits are not available for periods before an application is filed. The court also affirmed that The Regents met its fiduciary duty of disclosure by providing adequate information about the Plan and its options. The judgment in favor of The Regents was affirmed. View "Mass v. Regents of the University of California" on Justia Law

In this case, several former employees of a seafood company participated in an employee stock ownership plan (ESOP) that was funded by a $92 million loan used to purchase all outstanding company stock from four directors and officers. The plaintiffs alleged that these directors and officers manipulated sales projections and inventory figures to inflate the stock’s valuation, causing the ESOP to overpay by tens of millions of dollars. They further claimed that the plan’s trustee failed to conduct proper due diligence before agreeing to the purchase price. The plaintiffs sought restoration of plan losses, disgorgement of profits, and other equitable relief under ERISA, asserting breaches of fiduciary duty.The plaintiffs filed suit in the United States District Court for the Northern District of Georgia without first exhausting the plan’s internal administrative remedies, despite acknowledging that the plan provided such procedures. They argued that exhaustion was not required for their claims and, alternatively, that they were excused from exhausting due to futility and inadequacy of the remedy. The defendants moved to dismiss on exhaustion grounds. The district court granted the motions, finding that Eleventh Circuit precedent required exhaustion for ERISA claims, and rejected the plaintiffs’ arguments for excusal. The court also denied the plaintiffs’ request for a stay to allow exhaustion, but did not specify whether the dismissal was with or without prejudice.On appeal, the United States Court of Appeals for the Eleventh Circuit affirmed the district court’s dismissal. The appellate court held that ERISA plaintiffs must exhaust available administrative remedies before seeking judicial review, including for breach of fiduciary duty claims, and that no valid excuse relieved the plaintiffs of this obligation. The court also remanded the case for the district court to clarify whether the dismissal was with or without prejudice. View "Bolton v. Inland Fresh Seafood Corporation of America, Inc." on Justia Law

SuperValu, Inc. participated in a multiemployer pension plan, contributing on behalf of its employees for over a decade. In September 2018, SuperValu sold several stores to Schnuck’s Markets, Inc., with five of those stores employing workers covered by the pension plan. This sale qualified for a statutory “safe harbor,” meaning SuperValu did not incur withdrawal liability for the sold stores, as Schnuck’s agreed to continue contributions. Later, SuperValu closed its remaining stores and fully withdrew from the plan, triggering withdrawal liability. The pension fund calculated SuperValu’s total liability and the annual installment payments required, using statutory formulas. In calculating the payment schedule, the fund deducted the sold stores’ contribution base units for only the most recent five years, not the entire ten-year lookback period, which resulted in higher annual payments for SuperValu.SuperValu challenged the fund’s calculation, arguing that the contribution base units for the sold stores should have been excluded for all ten years, not just five. The dispute was submitted to arbitration under federal law, where the arbitrator ruled in favor of the fund. SuperValu then sought review in the United States District Court for the Northern District of Illinois, Eastern Division. The district court granted summary judgment to the fund, holding that the relevant statutory text did not require the deduction of the sold stores’ units for the entire ten-year period, and that SuperValu’s arguments based on legislative history and statutory purpose could not override the plain language.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s decision de novo. The Seventh Circuit held that the statute governing the payment schedule for withdrawal liability does not require a pension fund to deduct contribution base units for stores sold under the safe harbor provision for the entire ten-year lookback period. The court affirmed the district court’s judgment. View "SuperValu, Inc. v. UFCW Unions and Employers Midwest Pension Fund" on Justia Law

Yellow Corporation, a major trucking company, ceased operations and filed for bankruptcy in 2023. As a result, it withdrew from several multiemployer pension plans, triggering withdrawal liability—an amount owed to the pension plans to cover unfunded vested benefits for employees. The pension plans, which had received substantial federal funds under the American Rescue Plan Act of 2021 (ARPA) to stabilize their finances, filed claims against Yellow’s bankruptcy estate for withdrawal liability. The dispute centered on how much of the ARPA funds should be counted as plan assets when calculating Yellow’s liability, as well as whether certain contractual terms could require Yellow to pay a higher withdrawal liability than statutory minimums.The United States Bankruptcy Court for the District of Delaware reviewed the claims. It upheld two regulations issued by the Pension Benefit Guaranty Corporation (PBGC): the Phase-In Regulation, which requires ARPA funds to be counted as plan assets gradually over time, and the No-Receivables Regulation, which bars plans from counting ARPA funds as assets before they are actually received. The Bankruptcy Court found these regulations to be valid exercises of PBGC’s authority and not arbitrary or capricious. It also ruled that two pension plans could enforce a contractual provision requiring Yellow to pay withdrawal liability at a higher, agreed-upon rate, rather than the rate based solely on its actual contributions.On direct appeal, the United States Court of Appeals for the Third Circuit affirmed the Bankruptcy Court’s order. The Third Circuit held that the PBGC’s regulations were valid under ARPA and ERISA, as Congress had expressly delegated authority to the PBGC to set reasonable conditions on the allocation of plan assets and withdrawal liability. The court also held that pension plans could enforce contractual terms requiring higher withdrawal liability, as the statutory scheme sets a floor, not a ceiling, for such liability. View "In re: Yellow Corporation" on Justia Law

A professional musician employed by the Indianapolis Symphony Orchestra was placed on furlough in March 2020 due to the COVID-19 pandemic. In December 2020, she developed severe symptoms, including dizziness and tinnitus, after contracting COVID-19, which rendered her unable to perform. She was rehired by the orchestra in September 2021 but soon went on sick leave because her symptoms persisted. In February 2022, she applied for long-term disability benefits under her employer’s group policy, stating that her last day of work was in March 2020 and that her disability began in December 2020.The insurance company denied her claim, reasoning that she was not an “active, full-time employee” at the time her disability began, as required by the policy. The claimant appealed internally, submitting new information that she had returned to work in September 2021 but was again unable to perform due to her illness. The insurer treated this as a fundamentally different claim, maintaining its denial and advising her to file a new application based on the later date.She then filed suit under the Employee Retirement Income Security Act (ERISA) in the United States District Court for the Southern District of Indiana. Both parties moved for summary judgment, and the district court granted summary judgment in favor of the insurer, finding that she was not eligible for benefits based on her initial application and that her new information constituted a separate claim for a different loss.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the case de novo and affirmed the district court’s judgment. The court held that the claimant was not eligible for benefits for a disability beginning in December 2020, and that her subsequent information regarding a September 2021 onset constituted a new claim, requiring exhaustion of administrative remedies before judicial review. View "Moratz v. Reliance Standard Life Insurance Co." on Justia Law

The appellant, a former Senior Vice President of Corporate Development at a pharmaceutical company, had a longstanding history of back and hip problems, leading him to stop working in 2014. He received long-term disability benefits under an insurance plan administered by USAble Life for several years. In 2019, USAble terminated his benefits, citing evidence of significant improvements in his physical condition, including weight loss, increased exercise, travel, and other activities inconsistent with total disability. The termination was based on updated medical records, surveillance, and reviews by independent physicians, despite continued support for disability from some of the appellant’s treating doctors.After the termination, the appellant pursued multiple rounds of internal appeals with USAble, submitting additional medical and vocational evidence. USAble obtained further independent medical reviews, which consistently concluded that the appellant was no longer disabled under the plan’s definition. The appellant then filed suit in the United States District Court for the District of Massachusetts, which granted summary judgment in favor of USAble, finding that the insurer’s decision was reasonable and supported by substantial evidence.On appeal, the United States Court of Appeals for the First Circuit reviewed the district court’s summary judgment ruling de novo but applied a deferential “arbitrary and capricious” standard to USAble’s benefits determination, as required under ERISA. The First Circuit held that USAble’s decision to terminate benefits was reasoned and supported by substantial evidence, that USAble properly applied the plan’s definition of disability, and that it adequately explained its disagreement with the appellant’s treating physicians. The court also found that any structural conflict of interest was sufficiently mitigated. Accordingly, the First Circuit affirmed the district court’s judgment in favor of USAble. View "Bernitz v. USAble Life" on Justia Law

NCR Corporation established five “top hat” retirement plans to provide supplemental life annuity benefits to senior executives. Each plan promised participants a fixed monthly payment for life, with language allowing NCR to terminate the plans so long as no action “adversely affected” any participant’s accrued benefits. In 2013, NCR terminated the plans and paid participants lump sums it claimed were actuarially equivalent to the promised annuities, using mortality tables, actuarial calculations, and a 5% discount rate. NCR knew that, statistically, about half of the participants would outlive the lump sums if they continued to withdraw the same monthly benefit, resulting in some participants receiving less than they would have under the original annuity.Participants filed a class-action lawsuit in the United States District Court for the Northern District of Georgia, alleging breach of contract and seeking either replacement annuities or sufficient cash to purchase equivalent annuities. The district court certified the class and granted summary judgment for the participants, finding that NCR’s lump-sum payments adversely affected the accrued benefits of at least some participants, in violation of the plan language. The court ordered NCR to pay the difference between the lump sums and the cost of replacement annuities, plus prejudgment and postjudgment interest.On appeal, the United States Court of Appeals for the Eleventh Circuit reviewed the district court’s summary judgment order de novo. The Eleventh Circuit held that the plan language was unambiguous and did not permit NCR to unilaterally replace life annuities with lump sums that reduced the value of accrued benefits for any participant. The court affirmed the district court’s judgment, including the remedy of requiring NCR to pay the cost of replacement annuities and awarding prejudgment interest. View "Hoak v. NCR Corp." on Justia Law

In this case, a group of pensioners from a multiemployer retirement fund governed by ERISA challenged the reduction of their pension benefits following the enactment of the Multiemployer Pension Reform Act of 2014 (MPRA). The MPRA allowed plan administrators to reduce benefits for current and future beneficiaries in order to prevent plan insolvency, subject to certain procedural safeguards and approval by the U.S. Department of the Treasury. The plaintiffs, who had vested rights to their pension benefits, argued that these reductions constituted an uncompensated taking under the Fifth Amendment.The United States Court of Federal Claims granted summary judgment in favor of the government. The Claims Court found that while the plaintiffs had a cognizable property interest in their vested pension benefits, the reduction of those benefits did not amount to a physical taking. Instead, the court analyzed the claim as a regulatory taking under the Penn Central framework and concluded that the economic impact, interference with investment-backed expectations, and the character of the government action did not support a finding of a taking.On appeal, the United States Court of Appeals for the Federal Circuit affirmed the Claims Court’s decision. The Federal Circuit held that the MPRA’s reduction of pension benefits was not a physical taking because the plaintiffs had only a contractual right to payment, not a property interest in the plan’s assets, and the government did not appropriate any specific property for itself or a third party. The court further held that, under the Penn Central test, the reduction did not constitute a regulatory taking, as the economic impact was not severe, the plaintiffs’ expectations were not unduly interfered with given the heavily regulated nature of pension plans, and the government action served a substantial public purpose. The judgment for the government was affirmed. View "KING v. US " on Justia Law

Four former employees of grocery store chains, who participated in a defined contribution 401(k) retirement plan, brought a putative class action under the Employee Retirement Income Security Act of 1974 (ERISA). They alleged that the plan’s fiduciaries mismanaged the plan by failing to prudently select and monitor investment options, failing to act solely in the interest of plan participants, and allowing excessive fees and improper compensation arrangements. The plaintiffs sought monetary and injunctive relief on behalf of themselves, the plan, and a proposed class of similarly situated participants.The United States District Court for the Northern District of New York dismissed several of the plaintiffs’ claims for lack of Article III standing, finding that the plaintiffs had not alleged any concrete injury to their individual accounts from the alleged mismanagement of certain investment options or from the plan’s compensation arrangements. The district court concluded that because the plaintiffs had not invested in the specific funds they challenged, or had not shown that the alleged breaches affected their own accounts, they lacked standing to pursue those claims. The court did find standing for some claims related to funds in which the plaintiffs had invested, but ultimately dismissed those claims for failure to state a claim and denied leave to amend.The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court’s dismissal of the claims for lack of standing. The Second Circuit held that participants in a defined contribution plan must plausibly allege a concrete, individualized financial injury to establish Article III standing for monetary relief under ERISA. Because the plaintiffs did not allege that they suffered losses in their own accounts from the challenged conduct, they lacked both individual and class standing for those claims. The court affirmed in part and vacated in part the district court’s judgment, remanding for further proceedings consistent with its opinion. View "Collins v. Ne. Grocery, LLC" on Justia Law

The plaintiff, a former employee of a dental supply company, suffered a traumatic brain injury and later filed a claim for long-term disability (LTD) benefits under her employer’s LTD plan, which was insured and administered by an independent insurance company. After her claim was denied, she left her job and entered into a separation agreement with her employer. This agreement included a broad release of claims against the employer and its “parents, subsidiaries, related or affiliated entities,” as well as their agents, including claims under the Employee Retirement Income Security Act of 1974 (ERISA). Before signing, the plaintiff sought clarification from her employer about whether the release would affect her ability to pursue her LTD claim against the insurer. The employer’s representatives assured her that the insurer was a separate, independent entity and that the agreement would not impact her ability to appeal the denial of her LTD claim.After the insurer denied her appeal, the plaintiff sued the insurer in the United States District Court for the Southern District of New York, alleging violations of ERISA. The insurer moved for summary judgment, arguing that the release in the separation agreement barred her claims. The district court agreed, holding that the insurer was covered by the release and that the plaintiff knowingly and voluntarily waived her ERISA claims against it. The court granted summary judgment in favor of the insurer, and the plaintiff appealed.The United States Court of Appeals for the Second Circuit reviewed the case de novo. The court held that, based on the totality of the circumstances, the plaintiff did not knowingly and voluntarily release her ERISA claims against the insurer. The court emphasized the employer’s express assurances to the plaintiff that the release would not affect her LTD claim and found no evidence to create a genuine dispute on this point. The Second Circuit vacated the district court’s judgment and remanded the case for further proceedings. View "Schuyler v. Sun Life Assurance Company of Canada" on Justia Law