Justia ERISA Opinion Summaries

Gradei’s withdrew from a multi-employer pension plan, asserting that it had ceased all operations covered by the governing multi-employer collective bargaining agreement and was no longer required to contribute to the Fund, which sought to collect $221,932.55 in withdrawal liability. Gradei’s did not respond to payment demands and filed for bankruptcy. The Fund sued the Pitellos (Gradei’s owners) and another corporation owned by the Pitellos (GX), on the theory that they were businesses under common control. The district court found that Gradei’s and GX were conducting business rent-free on property owned by the Pitellos, which was enough to establish common control.The Seventh Circuit affirmed. Under the Employee Retirement Income Security Act, 29 U.S.C. 1381(a), 1404(a) withdrawal liability applies to the withdrawing employer and to “all trades or businesses ... under common control” with that employer. The court rejected Pitello’s argument that the property was only a passive investment. It is possible to rebut the presumption that leasing property to a withdrawing employer is a business but the Pitellos failed to do that. The court noted the economic equivalence between a return on investment in the form of rent collection and return on investment in the form of dividends or salaries made possible by the absence of any rent obligation. The land is part of the business. View "Local 705 International Brotherhood of Teamsters Pension Fund v. Pitello" on Justia Law

Plaintiff appealed the district court's grant of summary judgment in favor of Aetna, as well as the denial of her motion for class certification. In this case, Mars operated a self-funded health care plan and hired Aetna as a claims administrator of the plan pursuant to a Master Services Agreement (MSA). Aetna subsequently executed subcontracts with Optum for Optum to provide chiropractic and physical therapy services to the plan participants for more cost-effective prices. From 2013 to 2015, in addition to obtaining other non-Optum medical services, plaintiff received treatment from chiropractors and physical therapists provided by Optum under its contract with Aetna.In 2015, plaintiff filed suit against appellees, alleging violations of the Employee Retirement Income Security Act (ERISA), claiming that appellees breached their fiduciary duties to her and the plan based on Aetna's arrangement to have the plan and its participants pay Optum's administrative fee via the bundled rate. Plaintiff also alleged that appellees engaged in comparable violations in their dealings with similarly situated plans and their participants, requesting to represent two classes of such similarly situated plans and their participants.The Fourth Circuit held that plaintiff experienced no direct financial injury as a result of appellees' use of the bundled rate in the claims process. Therefore, the court affirmed the district court's judgment on plaintiff's personal claim for restitution under section 502(a)(1) and (3). However, because the court is unable to conduct appellate review of plaintiff's restitution claim on behalf of the plan under section 502(a)(2), the court vacated and remanded that claim to the district court for development of the record as necessary and resolution in the first instance under Donovan v. Bierwirth, 754 F.2d 1049 (2d Cir. 1985).In regard to plaintiff's claims for surcharge, disgorgement, and declaratory and injunctive relief, which do not require a showing of direct financial injury, the court is persuaded that she has produced sufficient evidence for a reasonable factfinder to conclude that Aetna was operating as a functional fiduciary under ERISA and breached its fiduciary duties. The court also concluded that there is sufficient evidence in the record upon which a reasonable factfinder could find that Optum was acting as a party in interest engaged in prohibited transactions, but not as a fiduciary. Accordingly, the court reversed the district court's judgment as to plaintiff's claims for surcharge, disgorgement, and declaratory and injunctive relief under section 502(a)(1) and (3), and for her claims on behalf of the plan for surcharge, disgorgement, and declaratory and injunctive relief under section 502(a)(2) and remanded those claims for further proceedings. Finally, the court held that the district court abused its discretion in denying plaintiff's motion for class certification when it failed to properly ascertain the full measure of available remedies. Accordingly, the court vacated and remanded the district court's order denying class certification for a full reevaluation under Federal Rule of Civil Procedure 23. View "Peters v. Aetna Inc." on Justia Law

A class of employees who participated in Banner Health, Inc.’s 401(k) defined contribution savings plan accused Banner and other plan fiduciaries of breaching duties owed under the Employee Retirement Income Security Act (ERISA). A district court agreed in part, concluding that Banner had breached its fiduciary duty to plan participants by failing to monitor its recordkeeping service agreement with Fidelity Management Trust Company: this failure to monitor resulted in years of overpayment to Fidelity and corresponding losses to plan participants. During the bench trial, the employees’ expert witness testified the plan participants had incurred over $19 million in losses stemming from the breach. But having determined the expert evidence on losses was not reliable, the court fashioned its own measure of damages for the breach. Also, despite finding that Banner breached its fiduciary duty, the district court entered judgment for Banner on several of the class’s other claims: the court found that Banner’s breach of duty did not warrant injunctive relief and that Banner had not engaged in a “prohibited transaction” with Fidelity as defined by ERISA. The class appealed, arguing the district court adopted an improper method for calculating damages and prejudgment interest, abused its discretion by denying injunctive relief, and erred in entering judgment for Banner on the prohibited transaction claim. Finding no abuse of discretion or other reversible error, the Tenth Circuit affirmed the district court in each instance. View "Ramos v. Banner Health" on Justia Law

The Ninth Circuit reversed the district court's dismissal, based on the doctrine of equitable estoppel, of an Employee Retirement Income Security Act (ERISA) action in which the Trustee of the Anaplex Corporation Employee Stock Ownership Plan (ESOP) sought equitable and declaratory relief against the holder of a promissory note from Anaplex.The panel joined the Fourth Circuit in barring the defensive use of equitable estoppel when estopping the plaintiff would contradict an ERISA plan's express terms. The panel deferred to ERISA's focus on what a plan provides, consistent with US Airways, Inc. v. McCutchen, 569 U.S. 88, 100 (2013). The panel explained that equitable estoppel has no place at any stage in this litigation, and the district court erred in dismissing the case based on it.The panel held that, in addition to satisfying the traditional equitable estoppel requirements, a party bringing a federal equitable estoppel claim in the ERISA context must also allege: (1) extraordinary circumstances; (2) that the provisions of the plan at issue were ambiguous such that reasonable persons could disagree as to their meaning or effect; and (3) that the representations made about the plan were an interpretation of the plan, not an amendment or modification of the plan. Furthermore, a party cannot maintain a federal equitable estoppel claim against a trust fund where recovery on the claim would contradict written plan provisions. In this case, allowing the holder to assert her equitable estoppel claim against the trustee would contradict the clear terms of the ESOP. The panel remanded. View "Wong v. Flynn-Kerper" on Justia Law

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

The federal Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001, et seq., does not preempt a California law that creates a state-managed individual retirement account (IRA) program.The Ninth Circuit concluded that CalSavers is not an ERISA plan because it is established and maintained by the State, not employers; it does not require employers to operate their own ERISA plans; and it does not have an impermissible reference to or connection with ERISA. Furthermore, CalSavers does not interfere with ERISA's core purposes. Therefore, ERISA does not preclude California's endeavor to encourage personal retirement savings by requiring employers who do not offer retirement plans to participate in CalSavers. The panel affirmed the district court's judgment. View "Howard Jarvis Taxpayers Ass'n v. California Secure Choice Retirement Savings Program" on Justia Law

The DC Circuit affirmed the district court's grant of summary judgment to PBGC, concluding that 29 C.F.R. 4044.4(b) is valid and that the PBGC Appeals Board reasonably applied section 4044.4(b) to deny appellant's lumpsum request. The court also concluded that, because fiduciaries must act in accordance with the terms of plan documents only "insofar as such documents and instruments are consistent with the provisions of" the Employee Retirement Income Security Act of 1974 (ERISA), Penn Traffic fulfilled its fiduciary duties by denying appellant's request in compliance with section 4044.4(b). Therefore, the court need not address appellant's contentions that Penn Traffic's handling of his lumpsum request was inconsistent with the Plan's terms. View "Fisher v. Pension Benefit Guaranty Corp." on Justia Law

The Ninth Circuit affirmed the district court's dismissal of plaintiff's action against defendants, two Edison Executives, alleging breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA) in managing the plan's assets. Defendants are fiduciaries of Edison's 401(k) employee stock ownership plan (ESOP). Plaintiff claimed that Defendant Fiduciary Boada breached his duty of prudence by allowing employees to continue to invest in Edison stock after he learned that the Edison stock was artificially inflated.The panel concluded that the district court properly determined that plaintiff failed plausibly to plead that a prudent fiduciary in defendants' position could not have concluded that plaintiff's proposed alternative action of issuing a corrective disclosure would do more harm than good. In this case, the second amended complaint relies solely on general economic theories and is devoid of context-specific allegations explaining why an earlier disclosure was so clearly beneficial that a prudent fiduciary could not conclude that disclosure would be more likely to harm the fund than to help it. Accordingly, plaintiff failed to state a claim for breach of the duty of prudence consistent with the standard announced in Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409, 428 (2014). Consequently, the derivative monitoring claim alleged against Defendant Craver also fails. View "Wilson v. Craver" on Justia Law

Plaintiffs filed suit alleging that Hewitt, the Committee, and Northrop had breached their fiduciary duties and that the Committee failed to provide required Employee Retirement Income Security Act (ERISA) benefit information. In the alternative, plaintiffs asserted state-law professional negligence and negligent misrepresentation claims against Hewitt. Plaintiffs' claims stemmed from statements mailed by Hewitt that grossly overestimated the benefits to which each plaintiff would be entitled. The district court granted defendants' motion to dismiss.The Ninth Circuit affirmed the district court's dismissal of plaintiffs' fiduciary duty claims against Northrop and the Committee, concluding that Northrop and the Committee did not breach a fiduciary duty by failing to ensure that Hewitt correctly calculated plaintiffs' benefits. The panel agreed with the First Circuit and held that calculation of pension benefits is a ministerial function that does not have a fiduciary duty attached to it. Likewise, plaintiffs' claim that Hewitt breached its fiduciary duties failed. The panel also concluded that plaintiffs did not adequately plead that they submitted written requests for pension benefit statements as required to state a claim for violation of 29 U.S.C. 1025(a)(1)(B)(ii). However, because plaintiffs could plead facts adequate to allege they made written requests, the panel directed the district court to permit plaintiffs to file an amended complaint. Finally, the panel concluded that state-law professional negligence and negligent misrepresentation claims are not preempted by ERISA because they do not have a "reference to or connection with" an ERISA plan. Accordingly, the panel vacated the dismissal of the state-law claims and remanded for further proceedings. View "Bafford v. Northrop Grumman Corp." on Justia Law

The Eleventh Circuit held that the Employment Retirement Income Security Act's (ERISA) fee-shifting provision, 29 U.S.C. 1132(g)(1), cannot support a fee award against a party's counsel. The court explained that the function of this statute is not to sanction attorney misconduct. Rather, that role belongs to other provisions, such as 28 U.S.C. 1927 and Federal Rule of Civil Procedure 11(c).In this case, the district court relied exclusively on Section 1132(g)(1) when awarding fees. Therefore, the court reversed and vacated the district court's fee award. The court did not address Liberty Life's argument that the district court should have imposed fees against Theresa E. Peer's counsel, Paul Sullivan. On remand, the district court may consider whether a fee award is appropriate against Peer under ERISA or against Peer or Sullivan under another statute, rule, or the district court's inherent authority. View "Sullivan v. Liberty Life Assurance Company of Boston" on Justia Law