Justia ERISA Opinion Summaries

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

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

Clinton Mahoney, the sole member and manager of Mahoney & Associates, LLC, signed an agreement obligating the company to contribute to the Railroad Maintenance and Industrial Health and Welfare Fund, an employee benefit fund. When the Fund could not collect delinquent contributions from Mahoney & Associates, it sued Mahoney personally, citing a personal liability clause in the agreement. The district court granted summary judgment to the Fund, concluding that Mahoney was personally liable based on the clause.The United States District Court for the Central District of Illinois initially entered judgment on July 31, but it did not comply with Federal Rule of Civil Procedure 58. Mahoney filed a notice of appeal on September 26, and the district court later entered a corrected judgment on October 11. Mahoney filed a second notice of appeal the same day. The district court had awarded the Fund attorneys’ fees based on the trust agreement.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo. The court found that there was a genuine dispute of material fact regarding Mahoney’s intent to be personally bound by the trust agreement, as he signed the memorandum in a representative capacity, which conflicted with the personal liability clause. The court concluded that this issue could not be resolved at summary judgment. The court also addressed Mahoney’s laches defense but found it waived due to his failure to address relevant complications. Consequently, the Seventh Circuit reversed the district court’s grant of summary judgment and vacated the award of attorneys’ fees, remanding the case for further proceedings. View "Railroad Maintenance and Industrial Health & Welfare Fund v. Mahoney" on Justia Law

Barton Hankins was hired by Crain Automotive Holdings, LLC in 2019 as Chief Operating Officer and was offered a deferred compensation plan (DCP). After four years, Hankins resigned and sought compensation under the DCP, which Crain denied. Hankins then filed a lawsuit under the Employee Income Retirement Security Act of 1974 (ERISA) to claim his benefits. The DCP stipulated that Hankins could earn a percentage of Crain’s fair market value upon his exit, with full vesting at five years. Having served four years, Hankins was entitled to 80% of the benefits.The United States District Court for the Eastern District of Arkansas granted judgment in favor of Hankins, concluding that the DCP did not require the creation of an Employment Agreement or a Confidentiality, Noncompete, and Nonsolicitation Agreement for enforceability. The court found that Crain’s claims of misconduct by Hankins were unsubstantiated and awarded Hankins attorney’s fees, determining that Crain’s conduct was sufficiently culpable.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court affirmed the district court’s judgment, holding that Crain’s interpretation of the DCP was unreasonable. The court found that the DCP’s Article 4, which mentioned the Employment and Confidentiality Agreements, did not create a condition precedent but rather a condition subsequent. The court also upheld the award of attorney’s fees, noting that Crain’s actions lacked merit and were raised only after Hankins sought his vested compensation. The appellate court concluded that the district court did not abuse its discretion in its rulings. View "Hankins v. Crain Automotive Holdings, LLC" on Justia Law

The case involves Bristol SL Holdings, Inc., the successor-in-interest to Sure Haven, Inc., a defunct drug rehabilitation and mental health treatment center, and Cigna Health and Life Insurance Company and Cigna Behavioral Health, Inc. Bristol alleged that Sure Haven's calls to Cigna verifying out-of-network coverage and seeking authorization to provide health services created independent contractual obligations. Cigna, however, denied payment based on fee-forgiving, a practice prohibited by the health plans. Bristol brought state law claims for breach of contract and promissory estoppel against Cigna.The district court initially dismissed Bristol’s claims, but the Ninth Circuit Court of Appeals reversed the dismissal, holding that Bristol had derivative standing to sue for unpaid benefits as Sure Haven’s successor-in-interest. On remand, the district court granted Cigna’s motion for summary judgment, ruling that the Employee Retirement Income Security Act of 1974 (ERISA) preempted Bristol’s state law claims.On appeal, the Ninth Circuit Court of Appeals affirmed the district court's decision. The court held that Bristol’s state law claims were preempted by ERISA because they had both a “reference to” and an “impermissible connection with” the ERISA plans that Cigna administered. The court reasoned that Bristol’s claims were not independent of an ERISA plan because they concerned the denial of reimbursement to patients who were covered under such plans. The court also held that allowing liability on Bristol’s state law claims would interfere with nationally uniform plan administration, a central matter of plan administration. View "Bristol SL Holdings, Inc. v. Cigna Health and Life Insurance Co." on Justia Law

The United States Court of Appeals for the Seventh Circuit heard an appeal from Bulk Transport Corp. against Teamsters Union No. 142 Pension Fund and its Trustees. The dispute originated from two collective-bargaining agreements between Bulk Transport and Teamsters Local 142, active from 2003 to 2006. The Union insisted that Bulk Transport apply one such agreement, the Steel Mill Addendum, to non-steel mill work (LISCO work), which Bulk Transport initially did, subsequently making pension contributions on behalf of the LISCO workers. However, when Bulk Transport lost the LISCO contract, they ceased these contributions, leading to the Pension Fund assessing a withdrawal liability of about $2 million under the Multiemployer Pension Plan Amendments Act (MPPAA).After arbitration, Bulk Transport paid but demanded a review of the decision. The district court agreed with the arbitrator's ruling that Bulk Transport had adopted the Addendum by conduct, and thus the Pension Fund was entitled to the withdrawal liability. The district court also denied Bulk Transport's request for a refund.The Seventh Circuit, however, reversed the district court's decision. It held that the written agreement, not the practice or conduct, should dictate the terms of pension contributions to multi-employer plans. The written agreement in this case did not cover the LISCO work, and the court rejected the argument that Bulk Transport's conduct altered the substantive terms of the agreement. The court held that the writings were conclusive and that employers and unions could not opt-out of the requirements orally or through their course of conduct. The court affirmed the district court's denial of attorney's fees for the Pension Fund and remanded the case with instructions to order the Pension Fund to repay the withdrawal liability it collected from Bulk Transport. View "Bulk Transport, Corp. v. Teamsters Union Local 142" on Justia Law

A married couple who owned a small dental practice, D.L. Markham DDS, MSD, Inc., established an employee pension benefit plan for their business. They hired Variable Annuity Life Insurance Company (VALIC) to maintain the plan. Dissatisfied with VALIC's services, they decided to terminate their contract and were informed by VALIC that they would be charged a 5% surrender fee on all of the plan’s assets. The couple sued, alleging VALIC violated the Employee Retirement Income Security Act of 1974 (ERISA) by breaching its fiduciary duties and engaging in a prohibited transaction. The United States Court of Appeals for the Fifth Circuit affirmed the district court's dismissal of their claims. The court held that VALIC did not act as a fiduciary when it collected the surrender fee, as it simply adhered to the contract by collecting the previously agreed-upon compensation. The court also found that VALIC was not a "party in interest" when it entered the contract, as it had not yet begun providing services to the plan. Finally, the court held that VALIC's collection of the surrender fee did not constitute a separate transaction under ERISA, as it was a payment in accordance with an existing agreement. The court also affirmed the district court’s denial of the plaintiffs’ request to amend their complaint due to undue delay and insufficient detail of their new allegations. View "Markham v. Variable Annuity Life" on Justia Law

Plaintiff is a former federal employee and participant in a health-insurance plan (“Plan”) that is governed by the Federal Employees Health Benefits Act (“FEHBA”). The Plan stems from a contract between the federal Office of Personnel Management (“OPM”) and Blue Cross Blue Shield Association and certain of its affiliates (together, “Blue Cross”). Blue Cross administers the Plan under OPM’s supervision. Plaintiff suffered from cancer, and she asked Blue Cross whether the Plan would cover the proton therapy that her physicians recommended. Blue Cross told her the Plan did not cover that treatment. So Plaintiff chose to receive a different type of radiation treatment, one that the Plan did cover. The second-choice treatment eliminated cancer, but it also caused devastating side effects. Plaintiff then sued OPM and Blue Cross, claiming that the Plan actually does cover proton therapy. As against OPM, she seeks the “benefits” that she wanted but did not receive, as well as an injunction directing OPM to compel Blue Cross to reform its internal processes by, among other things, covering proton therapy in the Plan going forward. As against Blue Cross, she seeks monetary damages under Texas common law. The district court dismissed Plaintiff’s suit.   The Fifth Circuit affirmed. The court held that neither the advance process nor the proton-therapy guideline poses an immediate threat of injury, so injunctive relief is therefore unavailable. Further, the court found that FEHBA preempts Plaintiff’s common-law claims against Blue Cross. Accordingly, the court held that no relief is available under the relevant statutory and regulatory regime. View "Gonzalez v. Blue Cross Blue Shield" on Justia Law

Plaintiffs brought a class action under the Employee Retirement Income Security Act of 1974 ("ERISA"), arguing that Defendant Colgate-Palmolive Co. miscalculated residual annuities based on an erroneous interpretation of its retirement income plan and improperly used a pre-retirement mortality discount to calculate residual annuities, thereby working an impermissible forfeiture of benefits under ERISA. The district court granted summary judgment to Plaintiffs on these claims. Colgate appealed that order and the final judgment of the district court.   The Second Circuit affirmed. The court concluded that the text of the RAA is unambiguous and requires Colgate to calculate a member's residual annuity by subtracting the AE of LS from that member's winning annuity under Appendix C Section 2(b). Further, the court wrote that Colgate's "same-benefit" argument does not disturb our conclusion that the RAA's language is unambiguous. Because "unambiguous language in an ERISA plan must be interpreted and enforced in accordance with its plain meaning," the court affirmed the district court's grant of summary judgment to the class Plaintiffs as to Error 1. View "McCutcheon v. Colgate-Palmolive Co." on Justia Law

A collective bargaining agreement (“CBA”) required RoadSafe Traffic Systems, Inc. to contribute to four employee benefits Funds. The Funds sued for unpaid contributions, alleging that the CBA unambiguously requires contributions for all hours worked by covered employees, regardless of the type of work performed. RoadSafe countered that the CBA unambiguously requires contributions only for construction and highway work. The district court granted summary judgment to RoadSafe. The issue on appeal was whether the CBA obligates RoadSafe to make contributions to the Funds for all or only specified types of work   The Eighth Circuit affirmed. The court explained that by its plain language, Article V of the CBA limits RoadSafe’s contribution obligations to “Building Construction” and “Highway/Heavy” categories of work. Because work coded as NON or “shop hours” is not within the definitions of either “Building Construction” or “Highway/Heavy,” the CBA does not require RoadSafe to make contributions for the coded work. Therefore, the district court properly granted summary judgment to RoadSafe. View "Cons. Laborers Welfare Fund v. RoadSafe Traffic Systems, Inc." on Justia Law