Justia ERISA Opinion Summaries

Articles Posted in Arbitration & Mediation
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The Trustees of the New York State Nurses Association Pension Plan (the Trustees) and White Oak Global Advisors, LLC (White Oak) entered into an investment management agreement, which included an arbitration clause. The Trustees later brought several fiduciary duty claims against White Oak under the Employee Retirement Income Security Act (ERISA), which were resolved through arbitration. The arbitrator issued an award in favor of the Trustees, which the Trustees sought to confirm in the United States District Court for the Southern District of New York.White Oak appealed the confirmation, arguing that the district court lacked jurisdiction and that the court erroneously interpreted the award. The United States Court of Appeals for the Second Circuit affirmed the district court's jurisdiction, finding that the Trustees' petition to confirm the award was cognizable under ERISA § 502(a)(3). The court also affirmed the district court's interpretation of the award regarding the disgorgement of pre-award interest and the "Day One" fees. However, the court vacated and remanded the district court's confirmation of the disgorgement of White Oak's "profits," finding the award too ambiguous to enforce. The court also vacated and remanded the district court's order for White Oak to pay the Trustees' attorneys' fees and costs, finding the district court's findings insufficiently specific. View "Trustees of the NYSNAPP v. White Oak Glob. Adv." on Justia Law

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The case involves Ramon Dejesus Cedeno, an employee of Strategic Financial Solutions, LLC, and a participant in its Strategic Employee Stock Ownership Plan. Cedeno sued the company, its trustee Argent Trust Company, and other defendants under the Employee Retirement Income Security Act (ERISA), alleging that a transaction caused the Plan to incur substantial losses and that Argent breached fiduciary duties owed to Plan participants. The defendants moved to compel arbitration under the Federal Arbitration Act (FAA), pointing to a provision in the Plan’s governing document that required Plan participants to resolve any claims related to the Plan in arbitration.The United States District Court for the Southern District of New York denied the motion, reasoning that the agreement was unenforceable because it would prevent Cedeno from effectuating rights guaranteed by Congress through ERISA, namely, the plan-wide relief available under Section 502(a)(2) to enforce the rights established in ERISA Section 409(a).On appeal, the United States Court of Appeals for the Second Circuit affirmed the district court's decision. The court held that the arbitration provision is unenforceable because it would prevent Cedeno from pursuing the Plan-wide remedies Sections 409(a) and 502(a)(2) unequivocally provide. The court concluded that the entire arbitration provision is null and void due to a non-severability clause in the Plan. View "Cedeno v. Sasson" on Justia Law

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The case revolves around Dycom Industries, Inc. ("Dycom") and its predecessor, Midtown Express, LLC ("Midtown"), a cable contractor that installed, serviced, and disconnected telecommunications cables for Time Warner Cable Company customers in New York City and Bergen County, New Jersey. Midtown had collective bargaining agreements with Local Union No. 3 of the International Brotherhood of Electrical Workers, which required contributions to the Pension, Hospitalization & Benefit Plan of the Electrical Industry (the "Fund"), a multiemployer pension plan under ERISA. In 2016, Midtown ceased operations and contributions to the Fund, leading the Fund to assess withdrawal liability against Midtown and its successor, Dycom, under ERISA.Midtown demanded arbitration, arguing that its employees were performing work in the building and construction industry, and thus it was exempt from withdrawal liability under ERISA. The arbitrator determined that Midtown did not qualify for the exemption, concluding that Midtown's employees did not perform work in the building and construction industry. Dycom then filed a lawsuit to vacate the arbitrator's award, and the Fund filed a cross-motion to confirm the award. The district court adopted the magistrate judge's report and recommendation, denied Dycom's motion to vacate the award, and granted the Fund's cross-motion to confirm the award.The United States Court of Appeals for the Second Circuit affirmed the district court's judgment. The court concluded that the cable installation services at issue did not involve work in the "building and construction industry" under ERISA, and thus Dycom was not exempt from withdrawal liability. The court found that the arbitrator correctly determined that the work performed by Midtown was not work within the building and construction industry under ERISA, and thus the exemption did not apply. View "Dycom Indus., Inc. v. Pension, Hosp'n & Benefit Plan of the Elec. Indus." on Justia Law

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Berkelhammer and Ruiz participated in the ADP TotalSource Retirement Savings Plan, an investment portfolio managed by NFP. They filed suit under section 502(a)(2) of the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1132, for their own losses and derivatively on behalf of the Plan. The Plan’s contract with NFP contained an agreement to arbitrate disputes between the two entities. Berkelhammer and Ruiz argued that since they did not personally agree to arbitrate, the arbitration provision did not reach their claims. The district court disagreed, holding that Berkelhammer and Ruiz stand in the Plan’s contractual shoes and must accept the terms of the Plan’s contract.The Third Circuit affirmed. Civil actions under section 502(a)(2) “for breach of fiduciary duty [are] brought in a representative capacity on behalf of the plan as a whole” to “protect contractually defined benefits.” Because the plaintiffs’ claims belong to the Plan, the Plan’s consent to arbitrate controls. The presence or absence of the individual claimants’ consent to arbitration is irrelevant. View "Berkelhammer v. ADP TotalSource Group Inc." on Justia Law

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Henry participated in an employee stock ownership plan (ESOP) sponsored by his employer. After the ESOP purchased stock at what Henry believed was an inflated price, Henry filed a lawsuit against the plan’s trustee and executives of his employer, alleging that the defendants breached fiduciary duties to the ESOP imposed by the Employment Retirement Income Security Act (ERISA), 29 U.S.C. 1001, and engaged in transactions prohibited by ERISA. The defendants argued that an arbitration provision, added to the ESOP’s plan documents after Henry joined the ESOP, barred Henry from pursuing his claims in federal court. The district court denied their motion to dismiss, reasoning that all parties to an arbitration agreement must manifest assent to the agreement, and Henry did not manifest his assent to the addition of an arbitration provision to the ESOP plan document.The Third Circuit affirmed, first confirming its jurisdiction. The motion to dismiss was effectively a motion to compel arbitration, 9 U.S.C. 16(a) provides appellate jurisdiction to review the denial of that motion. The class action waiver (and, by extension, the arbitration provision as a whole) is not enforceable because it requires him to waive statutory rights and remedies guaranteed by ERISA. View "Henry v. Wilmington Trust NA" on Justia Law

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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

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The First Circuit reversed the judgment of the district court denying arbitration requested by two unions - the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union and the United Steelworkers Local 12203 (collectively, Union) - on behalf of former two employees of the Boston Gas Company (Company) as to their claims for pension benefits, holding that this matter called for arbitration.The Union represented the two members in filing grievances regarding their underpaid pensions. The Union submitted the grievances to the Joint Pension Committee, which was unable to resolve the dispute. The Union subsequently sought arbitration over the grievances, but the Company refused to arbitrate. The First Circuit reversed, holding that it was up to an arbitrator, not a court, to determine the matters at issue in this case. View "United Steelworkers v. National Grid" on Justia Law

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The Cintas “defined contribution” retirement plan has a “menu” of investment options in which each participant can invest. Each Plan participant maintains an individual account, the value of which is based on the amount contributed, market performance, and associated fees. Under the Employment Retirement Income Security Act (ERISA), 29 U.S.C. 1102(a)(1), the Plan’s fiduciaries have the duty of loyalty—managing the plan for the best interests of its participants and beneficiaries—and a duty of prudence— managing the plan with the care and skill of a prudent person acting under like circumstances. Plaintiffs, two Plan participants, brought a putative class action, contending that Cintas breached both duties. Plaintiffs had entered into multiple employment agreements with Cintas; all contained similar arbitration provisions and a provision preventing class actions.The district court declined to compel arbitration, reasoning that the action was brought on behalf of the Plan, so that it was irrelevant that the two Plaintiffs had consented to arbitration through their employment agreements–the Plan itself did not consent. The Sixth Circuit affirmed. The weight of authority and the nature of ERISA section 502(a)(2) claims suggest that these claims belong to the Plan, not to individual plaintiffs. The actions of Cintas and the other defendants do not support a conclusion that the plan has consented to arbitration. View "Hawkins v. Cintas Corp." on Justia Law

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Plaintiff filed a class action complaint under the Employee Retirement Income and Security Act (ERISA) against the fiduciaries of the retirement plan offered by his former employer, Triad, for alleged financial misconduct.The Seventh Circuit concluded that the ERISA provisions that plaintiff invokes have individual and plan-wide effect. However, the arbitration provision in Triad's defined contribution retirement plan precludes relief that "has the purpose or effect of providing additional benefits or monetary or other relief to any Eligible Employee, Participant or Beneficiary other than the Claimant." Therefore, this provision prohibits relief that ERISA expressly permits. Accordingly, the court affirmed the district court's denial of Triad's motion to compel arbitration or, in the alternative, to dismiss. View "Smith v. Board of Directors of Triad Manufacturing, Inc." on Justia Law

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The Labor Management Relations Act forbids employers from directly giving money to unions, 29 U.S.C. 186(a); an exception allows an employer and a union to operate a trust fund for the benefit of employees. Section 186(c)(5)(B) requires the trust agreement to provide that an arbitrator will resolve any “deadlock on the administration of such fund.” Several construction companies and one union established a trust fund to subsidize employee vacations. Six trustees oversaw the fund, which is a tax-exempt entity under ERISA 26 U.S.C. 501(c)(9). A disagreement arose over whether the trust needed to amend a tax return. Three trustees, those selected by the companies, filed suit, seeking authority to amend the tax return. The three union-appointed trustees intervened, arguing that the dispute belongs in arbitration.The court agreed and dismissed the complaint. The Sixth Circuit affirmed. While ERISA plan participants or beneficiaries may sue for a breach of statutory fiduciary duty in federal court without exhausting internal remedial procedures, this complaint did not allege a breach of fiduciary duties but rather alleges that the employer trustees’ own fiduciary duties compelled them to file the action to maintain the trust’s compliance with tax laws. These claims were “not directly adversarial to the [union trustees] or to the Fund.” View "Baker v. Iron Workers Local 25" on Justia Law