Justia ERISA Opinion Summaries

The Secretary filed suit alleging that defendants breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., when acting as trustees for an Employee Stock Ownership Plan (ESOP). In a three year period, BAI's owner Herbert C. Bruister sold 100% of his BAI shares to BAI's employees through a series of transactions. Two plan participants, Rader and Sealy, filed suit raising generally the same claims as the Secretary and seeking relief on behalf of the ESOP as a whole. The court concluded that Sealy has standing to sue on behalf of the ESOP; the district court applied the law correctly and did not clearly err in finding that Bruister was a fiduciary of the ESOP; defendants breached the duties of loyalty and prudence in their conduct with respect to the stock sales and engaged in prohibited transactions; the district court did not abuse its discretion by denying rescission of the BAI stock sales but granting equitable restitution in the amount the ESOP overpaid; the district court did not clearly err in holding BFLLC jointly and severally liable with the other defendants; the district court’s award and calculation of prejudgment interest were not an abuse of discretion; under the totality of circumstances, the district court did not abuse its discretion in barring defendants from serving as ERISA fiduciaries in the future; and, to alleviate any misconception and avert double recovery, the court modified the concurrent judgments in each consolidated case into a single judgment that disposes of them together. Accordingly, the court affirmed the judgment, but modified its concurrent judgments. View "Perez v. Bruister" on Justia Law

Central States is multiemployer pension fund. Bulk Transport is a Fund member and made contributions to the pension account of its employee, Loniewski. Bulk had certified that Loniewski was entitled by a collective bargaining agreement to participate in the Fund although the agreement was limited to Bulk’s drivers. Loniewski was a Bulk mechanic for 40 years. Bulk now denies that he was covered and has demanded that Central States refund $49,000 that Bulk had contributed to Loniewski’s pension account between 2002 and 2012. The Fund denied the request and sought a declaratory judgment. The district judge rejected Bulk’s claim. The Multiemployer Pension Plan Amendments Act of 1980 amends ERISA by imposing liabilty on employers who withdraw, partially or completely, from participation in an underfunded multiemployer pension fund, 29 U.S.C. 1381. Central States also assessed Bulk with withdrawal liability of $740,000 for the years 2010 through 2012, which Bulk challenged as excessive. At Bulk’s request, the court barred the Fund from enforcing its rules, which require arbitration of such a dispute by and conforming to the procedures of the American Arbitration Association. The Seventh Circuit affirmed with respect to the refund, but reversed with respect to the arbitration rules. View "Cent. States, SE & SW Areas Pension Funds v. Bulk Transp. Corp." on Justia Law

Bruce Barton filed suit against ADT under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1132, seeking claims related to his request for pension benefits. On appeal, Barton challenges the district court's conclusion that the Plan Administrator did not abuse its discretion in denying Barton’s request for pension benefits. The court concluded that the district court incorrectly placed the burden of proof on Barton for matters within defendants’ control. The court held that where a claimant has made a prima facie case that he is entitled to a pension benefit but lacks access to the key information about corporate structure or hours worked needed to substantiate his claim and the defendant controls such information, the burden shifts to the defendant to produce this information. The district court correctly held that to recover statutory penalties based on a plan administrator’s refusal to comply with ERISA’s disclosure obligations, a plaintiff must qualify as a plan participant. The court reversed and remanded for the district court to apply the now-clarified burden of proof in this case. View "Estate of Barton v. ADT" on Justia Law

Congress empowered the Department of Labor to issue rules and regulations governing claims procedures for employee benefit plans under Sections 503 and 505 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1133, 1135. The United States District Court for the District of Connecticut held that, when exercising discretionary authority to deny a claim for benefits, a plan’s failure to establish or follow reasonable claims procedures in accordance with the regulation entitles the claimant to de novo review of the claim in federal court, unless the plan “substantially complied” with the regulation, in which case an arbitrary and capricious standard applies to the federal court’s review of the claim. The district court further held that a plan’s failure to follow the Department’s regulation results in unspecified civil penalties. The court disagreed, holding that, when denying a claim for benefits, a plan’s failure to comply with the Department of Labor’s claims‐procedure regulation, 29 C.F.R. 2560.503‐1, will result in that claim being reviewed de novo in federal court, unless the plan has otherwise established procedures in full conformity with the regulation and can show that its failure to comply with the regulation in the processing of a particular claim was inadvertent and harmless; civil penalties are not available to a participant or beneficiary for a plan’s failure to comply with the claims‐procedure regulation; and a plan’s failure to comply with the claims‐procedure regulation may, in the district court’s discretion, constitute good cause warranting the introduction of additional evidence outside the administrative record. Accordingly, the court vacated and remanded. View "Halo v. Yale Health Plan" on Justia Law

After Prudential denied plaintiff's claim for long-term disability benefits, plaintiff subsequently filed suit against Prudential under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. The district court granted summary judgment for Prudential. Because the Plan expressly grants Prudential discretionary authority, the court held that the district court correctly reviewed Prudential’s denial for an abuse of discretion. As such, the court's de novo review of the district court's summary judgment ruling will also apply the abuse of discretion standard. The court concluded that, in light of this record, plaintiff has failed to raise a genuine dispute of material fact that Prudential abused its discretion in denying his claim for long-term disability benefits. Prudential acknowledged that while plaintiff does have depression and anxiety, typically depression and anxiety do not cause large changes in cognitive function, and in plaintiff's case, there is no evidence of valid cognitive impairment from any source. Accordingly, the court affirmed the judgment. View "Burell v. Prudential Ins. Co." on Justia Law

Appellant Linda Kesting obtained a judgment against Respondent James Kesting for breach of an alimony/spousal support agreement entered into during their divorce. When that judgment was returned without recovery, the magistrate judge issued a Judgment of Qualified Domestic Relations Order (“QDRO”). The subsequent judgment was intended to allow recovery of the unpaid spousal support and associated attorney fees from James’ pension plan. James appealed to the district court, which reversed. The district court concluded that the QDRO was not valid because the spousal support agreement was not merged into the divorce decree and, therefore, the QDRO was not issued pursuant to the State’s domestic relations law as required under the Employee Retirement Income Security Act (“ERISA”). Linda appealed. The Supreme Court reversed, "disagree[ing] with the district court’s narrow view of domestic relations law. [...] The policies underlying ERISA’s anti-assignment provisions would not be furthered by allowing a person to avoid his or her support obligation because that obligation was agreed to between the parties. [...] Regardless of whether a support obligation was created by court order or provided for by agreement, it was not Congress’s intent that ERISA be used as a tool for a person to evade his or her familial support obligations." View "Kesting v. Kesting" on Justia Law

ERISA Plaintiffs, administrators of Employee Benefit Plans governed by the Employees Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., who entered into securities lending agreements with Wells Fargo, seek to reverse the district court's judgment that it was bound by collateral estoppel and thus required to find against ERISA Plaintiffs and in favor of Wells Fargo on their ERISA claims. Other plaintiffs brought state common law claims. ERISA Plaintiffs and common-law plaintiffs were represented by the same law firm. Following the trial, the parties simultaneously submitted Proposed Findings of Fact and Conclusions of Law with respect to the ERISA claims. In its submission, Wells Fargo asserted that collateral estoppel should apply and that based on the jury verdict, the court was bound to find that there was no breach of fiduciary duty. The district court determined that it was constrained by collateral estoppel to render judgment on ERISA Plaintiffs’ claims consistent with the jury’s determination and issued judgment, dismissing the ERISA Plaintiffs’ ERISA claims with prejudice. ERISA Plaintiffs appeal, arguing that the district court erred in failing to find that Wells Fargo waived any right to assert that the district court was bound by the jury’s findings. The court vacated because the district court failed to consider whether the parties waived the application of collateral estoppel. The court remanded for the district court determine whether waiver occurred. View "Blue Cross Blue Shield of MN v. Wells Fargo Bank, N.A." on Justia Law

Plaintiffs filed suit on behalf of a putative class of former participants in an employee stock ownership plan (ESOP) invested exclusively in Lehman’s common stock, alleging that the Plan Committee Defendants, who were fiduciaries of the ESOP, breached their duty of prudence under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. Specifically, plaintiffs alleged that the Plan Committee Defendants breached ERISA by continuing to permit investment in Lehman stock in the face of circumstances arguably foreshadowing its eventual bankruptcy. Plaintiffs also filed claims against Lehman's former directors, including Richard S. Fuld. The district court dismissed plaintiff's consolidated amended complaint (CAC) and second consolidated amended complaint (SAC) for failure to state a claim. The court affirmed. The Supreme Court subsequently held in Fifth Third Bancorp v. Dudenhoeffer that ESOP fiduciaries are not entitled to any special presumption of prudence. After remand, the district court dismissed plaintiffs' third amended complaint (TAC). The court agreed with the district court that, even without the presumption of prudence rejected in Fifth Third, plaintiffs have failed to plead plausibly that the Plan Committee Defendants breached their fiduciary duties under ERISA by failing to recognize the imminence of Lehman’s collapse. The court concluded as it had before, that plaintiffs have not adequately shown that the Plan Committee Defendants should be held liable for their actions in attempting to meet their fiduciary duties under ERISA while simultaneously offering an undiversified investment option for employees’ retirement savings. Accordingly, the court affirmed the judgment. View "Rinehart v. Lehman Brothers Holdings" on Justia Law

The Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, sets minimum funding and vesting requirements, insures benefits through the Pension Benefit Guarantee Corporation and includes reporting, disclosures, and fiduciary responsibilities, but exempts church plans from its requirements. The plaintiffs, former and current employees, have vested claims to benefits under the Advocate retirement plan. Advocate operates Illinois healthcare locations, employing 33,000 people. Advocate maintains a non-contributory, defined-benefit pension plan that covers substantially all of its employees. Advocate is not a church. Its predecessor formed as a 501(c)(3) non-profit corporation from a merger between two health systems—Lutheran General and Evangelical. Advocate is affiliated with the Evangelical Lutheran Church and the United Church of Christ, but it is not owned or financially supported by either church. In contracts, the parties “affirm their ministry in health care and the covenantal relationship they share.” There is no requirement that Advocate employees or patients belong to any particular religious denomination, or uphold any particular beliefs. The Seventh Circuit affirmed that the plan “is not entitled to ERISA’s church plan exemption as a matter of law” because the statutory definition requires a church plan to be established by a church. The court rejected Advocate’s First Amendment arguments. View "Stapleton v. Advocate Health Care Network" on Justia Law

Plaintiff took early retirement from Union Pacific in 2006 and began receiving his monthly benefit (1,022.94) in 2009. In 2010 he retired from Terminal Railroad. Terminal’s retirement plan, governed by ERISA, provides that “the retirement income benefit payable under this Plan shall be offset by the amount of retirement income payable under any other defined benefit plan … to the extent that the benefit under such other plan or plans is based on Benefit Service taken into account in determining benefits under this Plan.” The Terminal Plan administrator calculated the monthly benefit owed plaintiff for his combined years of service to Terminal and Union Pacific to be $3,725.02, from which it would deduct the monthly benefits payable under the Union Pacific Plan, which it calculated as $2,311.73. The Seventh Circuit reversed the district court’s ruling (under 29 U.S.C. § 1132(a)(1)(B)) in favor of plaintiff. The maximum amount payable under the Union Pacific plan was $2,311.73; plaintiff lost nothing by choosing to receive only $1,022.94, because the expected value of a stream of the monthly receipts was equal to the expected value of a stream of monthly receipts of $2,311.73 received for many fewer months. View "Cocker v. Terminal R.R. Ass'n of St. Louis Pension Plan" on Justia Law