Justia ERISA Opinion Summaries
Theresa Hursh v. DST Systems, Inc
Plaintiffs in these 177 consolidated appeals1 were participants in a 401(k) Profit Sharing Plan (the “Plan”) provided to employees by DST Systems, Inc. (“DST”), a financial and healthcare services company based in Kansas City, Missouri. At the time in question, DST was the Plan’s sponsor, administrator, and a designated fiduciary. Ruane Cunniff & Goldfarb Inc. (“Ruane”) was a Plan fiduciary involved in managing the Plan’s investments. Between October and December 2021, the district court issued seven largely identical orders confirming the arbitration awards to 177 claimants and granting their requests for substantial costs and attorneys’ fees. Defendants appealed, raising numerous issues. The Eighth Circuit vacated the district court’s judgment including the awards of attorney’s fees, and the consolidated cases are remanded to the district court for determination of transfer and subject matter jurisdiction issues, to the extent necessary. The court concluded that transfer under Section 1631 is an issue that can be addressed before the district court’s subject matter jurisdiction is resolved. The court declined to consider the issue because Badgerow has changed underlying circumstances that may affect whether transfer “is in the interest of justice.” View "Theresa Hursh v. DST Systems, Inc" on Justia Law
VICKI COLLIER V. LINCOLN LIFE ASSURANCE COMPANY
Plaintiff challenged Lincoln’s denial of her claim for long-term disability benefits. On de novo review, the district court affirmed Lincoln’s denial of Plaintiff's claim, but it adopted new rationales that the ERISA plan administrator did not rely on during the administrative process. Specifically, the district court found for the first time that Plaintiff was not credible and that she had failed to supply objective evidence to support her claim.The Ninth Circuit held that when a district court reviews de novo a plan administrator’s denial of benefits, it examines the administrative record without deference to the administrator’s conclusions to determine whether the administrator erred in denying benefits. The district court’s task is to determine whether the plan administrator’s decision is supported by the record, not to engage in a new determination of whether the claimant is disabled. Accordingly, the district court must examine only the rationales the plan administrator relied on in denying benefits and cannot adopt new rationales that the claimant had no opportunity to respond to during the administrative process.Here, the district court erred because it relied on new rationales to affirm the denial of benefits. View "VICKI COLLIER V. LINCOLN LIFE ASSURANCE COMPANY" on Justia Law
Knolmayer, et al. v. McCollum
This case presented the questions of whether and how Alaska Statute 09.55.548(b) applied when the claimant’s losses were compensated by an employer’s self-funded health benefit plan governed by the federal Employee Retirement Income Security Act (ERISA). The Alaska Supreme Court concluded that an ERISA plan did not fall within the statute’s “federal program” exception. Therefore AS 09.55.548(b) required a claimant’s damages award to be reduced by the amount of compensation received from an ERISA plan. But the Supreme Court also concluded that the distinction the statute draws between different types of medical malpractice claimants was not fairly and substantially related to the statute’s purpose of ensuring claimants do not receive a double recovery — an award of damages predicated on losses that were already compensated by a collateral source. "Because insurance contracts commonly require the insured to repay the insurer using the proceeds of any tort recovery, claimants with health insurance are scarcely more likely to receive a double recovery than other malpractice claimants. The statute therefore violates the equal protection guarantee of the Alaska Constitution." View "Knolmayer, et al. v. McCollum" on Justia Law
Shields v. United of Omaha Life Insurance Co.
The First Circuit affirmed in part and vacated in part the order of the district court granting summary judgment in favor of United of Omaha Life Insurance Company (United) and against Lorna Shields on her claims for recovery of plan benefits under 29 U.S.C. 1132(a)(1)(B) of the Employee Retirement and Investment Security Act (ERISA) and breach of fiduciary duty under 29 U.S.C. 1132(a)(3) of ERISA, holding that the district court erred in part.Shields was the beneficiary of a life insurance policy that the decedent, her late husband, acquired through his employer. Shields sued United, bringing claims for recovery of plan benefits and breach of fiduciary duty under ERISA. The district court granted summary judgment for United on both claims. The First Circuit vacated the judgment in part, holding (1) there was no error in the district court's summary judgment rulings with respect to the claim for recovery of benefits; but (2) the district court's grounds for granting summary judgment for United on the breach of fiduciary duty claim did not hold up. View "Shields v. United of Omaha Life Insurance Co." on Justia Law
Jay Richmond v. Life Insurance Company
Plaintiff sought accidental death benefits under an employee benefit plan governed by the Employee Retirement Income and Security Act of 1974 (ERISA) after his wife died from injecting herself with a cocktail of unprescribed narcotics. The district court upheld the Life Insurance Company of North America’s (LINA) decision to deny benefits based on a policy exclusion for the “voluntary ingestion of any narcotic, drug, poison, gas or fumes unless prescribed or taken under the direction of a Physician.” Plaintiff appealed, contending that the district court erred because LINA’s decision was unreasonable and not supported by substantial evidence. The Eighth Circuit affirmed. The court decided that LINA’s interpretation of “ingestion” was reasonable. The court then turned to whether LINA’s application of its interpretation to the facts is supported by substantial evidence. Here, the wife undisputedly died because she willingly injected herself with a combination of unprescribed narcotics. Therefore, there is sufficient evidence to support LINA’s application of the voluntary ingestion exclusion to the wife’s death. Thus, because the court agreed with the district court’s conclusion that LINA’s denial of benefits was justified in light of the voluntary ingestion exclusion, the court wrote it need not address LINA’s assertion that the wife’s death was not accidental. View "Jay Richmond v. Life Insurance Company" on Justia Law
Daniel Matousek v. MidAmerican Energy Company
Defendant, MidAmerican, selected a defined-contribution plan, which can rise in value over time but includes no fixed payments. Plaintiffs alleged their employer failed to properly manage and monitor the costs of the company's defined-contribution retirement plan. The district court granted MidAmerican’s motion to dismiss. Without mentioning the recordkeeping allegations, it concluded that Plaintiffs had failed to plead meaningful benchmarks for “assessing the performance of the challenged funds.” The Eighth Circuit affirmed. The court explained that Plaintiffs allege that no more than $100 per participant is reasonable for a plan with approximately $1 billion in total assets and 5,000 participants. Even if the fees here look high, the court explained it cannot infer imprudence unless similarly sized plans spend less on the same services. Rather than point to the fees paid by other specific, comparably sized plans, Plaintiffs rely on industry-wide averages. But the averages are not all-inclusive: they measure the cost of the typical “suite of administrative services,” not anything more. Finally, the court concluded that there was no abuse of discretion in the district court’s decision to dismiss the complaint with prejudice without giving Plaintiffs a chance to amend it. Here, Plaintiffs never requested leave to amend, much less “submitted an amended complaint.” View "Daniel Matousek v. MidAmerican Energy Company" on Justia Law
Guenther v. BP Retr Accumulation
BP Corporation North America Inc. (“BP America”) a Defendant-Appellee in this action, acquired Standard Oil of Ohio (“Sohio). BP America converted the Sohio Plan into a new plan called the BP America Retirement Plan (the “ARP”). The ARP was also a defined benefit plan that retained the formula used by the Sohio Plan to calculate its members’ pension distributions. BP America converted the ARP into the BP Retirement Accumulation Plan (the “RAP,” the conversion from the ARP to the RAP as the “Conversion,” and the date of the Conversion as the “Conversion Date”), the other Defendant-Appellee in this action. Plaintiffs-Appellees, two Sohio Legacy Employees, (the “Guenther Plaintiffs”) filed a class action complaint against the RAP and BP America. Four years after the Guenther Plaintiffs filed their original complaint, Movant-Appellant, along with 276 other individuals (the “Press Plaintiffs”) moved to intervene in the Guenther Action “for the purpose of objecting” to the magistrate judge’s recommendation. Press Plaintiffs contend that the certified class in the Guenther Action inadequately represents their interests, and therefore, they have a right to intervene in this case. The Fifth Circuit affirmed the district court’s ruling denying the intervention. The court held that the Press Plaintiffs cannot demonstrate that their interests diverge from those of the Guenther Plaintiffs in any meaningful way. Further, the Press Plaintiffs did not identify a unique interest of their own, they are unable to specify how a determination in the Guenther Action could have a future detrimental preclusive effect. The court wrote it is satisfied that the Press Plaintiffs will be adequately represented. View "Guenther v. BP Retr Accumulation" on Justia Law
Perrone v. Johnson & Johnson
Johnson & Johnson's Employee Stock Ownership Plan (ESOP) is an investment option within its retirement savings plans. The ESOP invests solely in J&J stock, which declined in price following news reports accusing J&J of concealing that its baby powder was contaminated with asbestos. J&J denied that its product was contaminated and that it had concealed anything about the product. J&J employees who participated in the ESOP alleged that the ESOP’s administrators, senior officers of J&J, violated their fiduciary duties of prudence under the Employee Retirement Income Security Act, 29 U.S.C. 1002-1003. The Supreme Court has held that a plaintiff bringing such a claim must plausibly allege “an alternative action that the defendant could have taken" consistent with the securities laws, and that a prudent fiduciary in the same circumstances would not have viewed the proposed alternative as more likely to harm the fund than to help it. The J&J plaintiffs proposed that the defendants could have used their corporate powers to make public disclosures to correct J&J’s artificially high stock price earlier or that the fiduciaries could have stopped investing in J&J stock and held all ESOP contributions as cash.The Third Circuit affirmed the dismissal of the suit. A reasonable fiduciary in these circumstances could readily view corrective disclosures or cash holdings as being likely to do the ESOP more harm than good, given the uncertainty about J&J’s future liabilities and the future movement of its stock price. View "Perrone v. Johnson & Johnson" on Justia Law
Frederick Rozo v. Principal Life Insurance Co.
Principal Life Insurance Company (Principal) offers a product called the Principal Fixed Income Option (PFIO), a stable value contract, to employer-sponsored 401(k) plans. Plaintiff on behalf of himself and a class of plan participants who deposited money into the PFIO, sued Principal under the Employee Retirement Income Security Act of 1974 (ERISA), claiming that it (1) breached its fiduciary duty of loyalty by setting a low-interest rate for participants and (2) engaged in a prohibited transaction by using the PFIO contract to make money for itself. The district court granted summary judgment to Principal after concluding that it was not a fiduciary. The Eighth Circuit reversed, holding that Principal was a fiduciary. On remand, the district court entered judgment in favor of Principal on both claims after a bench trial. Plaintiff challenges the court’s judgment. The Eighth Circuit affirmed. The court agreed with the district court that Principal and the participants share an interest because a guaranteed CCR that is too high threatens the long-term sustainability of the guarantees of the PFIO, which is detrimental to the interest of the participants. The question then becomes whether the court clearly erred by finding that Principal set the CCR in the participants’ interests. The court held that the district court did not clearly err by finding that the deducts were reasonable and set by Principal in the participants’ interest of paying a reasonable amount for the PFIO’s administration. Finally, the court affirmed the district court’s judgment in favor of Principal on the prohibited transaction claim because it is exempted from liability for receiving reasonable compensation. View "Frederick Rozo v. Principal Life Insurance Co." on Justia Law
Albert v. Oshkosh Corp.
Albert claimed that his former employer, a subsidiary of Oshkosh, violated the Employee Retirement Income Security Act, 29 U.S.C.1132(a)(2), by mismanaging its retirement plan. Albert alleged that the defendants breached their fiduciary duties by authorizing the Plan to pay unreasonably high fees for recordkeeping and administration, failing to adequately review the Plan’s investment portfolio to ensure that each investment option was prudent, and unreasonably maintaining investment advisors and consultants for the Plan despite the availability of similar service providers with lower costs or better performance histories.The district court dismissed the complaint. While Albert’s appeal was pending, the Supreme Court issued Hughes v. Northwestern University (2022), vacating Seventh Circuit precedent (Divane) and remanding. The district court had cited Divane repeatedly in its opinion, albeit not for the proposition that the Supreme Court rejected in Hughes. The Seventh Circuit affirmed the dismissal of all claims for failure to state a claim. The complaint is devoid of allegations as to the quality or type of services the comparator plans provided; the cheapest investment option is not necessarily the one a prudent fiduciary would select. Plaintiffs “must do more than recast allegations of purported breaches of fiduciary duty as disloyal acts.” View "Albert v. Oshkosh Corp." on Justia Law