Justia ERISA Opinion Summaries

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

Appellant participated in Shell Chemical Yabucoa, Inc.’s employee welfare benefit plan, which Shell provided through a group insurance policy issued by Metropolitan Life Insurance Company (MetLife). On November 23, 2008, Appellant received his first long-term disability benefit payment. On April 5, 2010, Metlife sent Appellant a letter informing him that his benefits would expire on November 22, 2010. On November 24, 2010, in another letter, MetLife denied Appellant’s claim for an extension of benefits. On August 19, 2011, MetLife issued a final denial letter. Neither the November 24, 2010 letter nor the August 19, 2011 letter included a time period for filing suit. On August 18, 2013, Appellant filed suit, alleging improper denial of benefits. The district court dismissed the complaint as time-barred. The First Circuit reversed, holding (1) if a plan administrator fails to include the time limit for filing suit in its denial of benefits letter, the plan administrator is not in substantial compliance with Employee Retirement Income Security Act regulations, and the violation is per se prejudicial to the claimant; and (2) as a consequence of MetLife’s failure to include the time limit for filing suit in its final denial letter, the limitations period was rendered inapplicable, and therefore, Appellant’s suit was timely filed. Remanded. View "Santana-Diaz v. Metropolitan Life Ins. Co." on Justia Law

Vermont law requires certain entities, including health insurers, to report payments and other information relating to health care claims and services for compilation in a state health care database. Liberty Mutual’s health plan, which provides benefits in all 50 states, is an “employee welfare benefit plan” under the Employee Retirement Income Security Act (ERISA); its third-party administrator, Blue Cross, is subject to the statute. Concerned that the disclosure of confidential information might violate its fiduciary duties, the Plan instructed Blue Cross not to comply and sought a declaration that ERISA preempts application of Vermont’s statute. The Second Circuit reversed summary judgment in favor of the state. The Supreme Court affirmed. ERISA expressly preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan,” 29 U.S.C. 1144(a) and, therefore, preempts a state law that has an impermissible “connection with” ERISA plans. ERISA mandates certain oversight systems and other standard procedures; Vermont’s law also governs plan reporting, disclosure, and recordkeeping. Preemption is necessary to prevent multiple jurisdictions from imposing differing, or even parallel, regulations, creating wasteful administrative costs and threatening to subject plans to wide-ranging liability. ERISA’s uniform rule design makes clear that the Secretary of Labor, not the states, decides whether to exempt plans from ERISA reporting requirements or to require ERISA plans to report data such as sought by Vermont. View "Gobeille v. Liberty Mut. Ins. Co." on Justia Law

Trent Lebahn sued Eloise Owens, a consultant for Lebahn’s employee pension plan, for negligently misrepresenting the amount of his monthly retirement benefits. The district court dismissed Lebahn’s negligent-misrepresentation claim, concluding it was preempted by the Employee Retirement Income Security Act. Lebahn then filed an untimely Rule 59 motion, arguing preemption did not apply because Owens was not a fiduciary of the pension plan. The district court construed the untimely motion as one under Rule 60(b) and denied relief, reasoning that Lebahn’s argument regarding Owens’s fiduciary status had been raised too late. Lebahn appealed. The Tenth Circuit concluded it lacked jurisdiction to consider Lebahn’s challenge to the district court’s underlying judgment, so its review was limited to the district court’s denial of relief under Rule 60(b). Upon review, the Court found Lebahn did not demonstrate the district court abused its discretion in denying relief under Rule 60(b), and therefore the district court’s judgment was affirmed. View "Lebahn v. Owens" on Justia Law

During negotiations, Rubber Associates proposed to the Union that it decrease its contribution rate to the United Food and Commercial Workers Union Employer Pension Fund (governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001) from 62 cents per hour to 30 cents per hour. The Fund’s actuary opined that collecting withdrawal liability would result in a better funding status for the Fund than accepting reduced contributions. Rubber Associates agreed to maintain its previous contribution rate. Negotiations resumed without success. The Union authorized a strike, which lasted for 17 months. After the Union unilaterally disclaimed interest in representing its employees, Rubber Associates was deemed to have withdrawn from the Fund, pursuant to the Multiemployer Pension Protection Amendments Act (MPPAA). The Fund calculated Rubber Associates’ withdrawal liability obligation at $1,713,169, which the arbitrator awarded in full. The Fund sued to enforce the award. Rubber Associates counterclaimed that, because withdrawal from the Fund was union-mandated, its liability should be calculated by an alternate method, making its liability only $312,000. The Sixth Circuit affirmed dismissal of the counterclaim, declining to recognize a claim under the federal common law of ERISA for equitable relief in the case of union-mandated withdrawals. View "United Food & Commercial Workers v. Rubber Assocs., Inc." on Justia Law

Plaintiff filed suit under section 502(a)(1)(B) of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(a)(1)(B), alleging that the Plan erroneously determined his pension benefits. The district court granted summary judgment to the Plan. The court concluded that none of the conflicts of interest and procedural irregularities alleged by plaintiff “caused a serious breach of the plan administrator’s fiduciary duty” which warranted departure from the abuse-of-discretion standard of review. In this case, the district court correctly reviewed the decision of the Plan administrator for an abuse of discretion; substantial evidence supports the Plan administrator’s decision to exclude a 2006 sign-on bonus from pension-qualifying earnings and there was no abuse of discretion; and the Plan administrator’s interpretation of offsets for retirement benefits was reasonable because it was not inconsistent with Plan language, was consistent with Plan goals and ERISA, and rationally construed the offset so that the Normal Retirement Benefit under the Plan does not vary because of the form of payment chosen under another plan. Accordingly, the court affirmed the judgment. View "Ingram v. Terminal Railroad Ass'n" on Justia Law

The stockholders, former employees, who participated in employee stock option plans qualified under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1107(d)(3)(A), sued fiduciaries for breach of the duty of prudence. The plan held the employer’s stock, which dropped in value. On remand from the Supreme Court in 2014, the Ninth Circuit held that the complaint stated a claim. The Supreme Court again reversed and remanded. The Court has previously held that such ERISA fiduciaries are not entitled to a presumption of prudence but are “subject to the same duty of prudence that applies to ERISA fiduciaries in general, except that they need not diversify the fund’s assets,” and that Congress sought to encourage the creation of employee stock-ownership plans. Such fiduciaries confront unique challenges given “the potential for conflict.” To state a claim for breach of the duty of prudence on the basis of inside information, a plaintiff must plausibly allege an alternative action that the defendant could have taken that would have been consistent with the securities laws and that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund. Courts must consider whether the fiduciary might have concluded that stopping purchases or publicly disclosing negative information would do more harm than good by causing a drop in the stock price and a concomitant drop in the value of the stock held by the fund. The Ninth Circuit failed to assess whether the complaint plausibly alleged that a prudent fiduciary in the same position “could not have concluded” that the alternative action “would do more harm than good.” View "Amgen Inc. v. Harris" on Justia Law

Employee benefits plans regulated by the Employee Retirement Income Security Act (ERISA) often contain subrogation clauses requiring participants to reimburse the plan for medical expenses if they later recover money from a third party. Montanile was seriously injured by a drunk driver. His ERISA plan paid more than $120,000 for his medical expenses. Montanile sued the drunk driver, obtaining a $500,000 settlement. The plan administrator sought reimbursement from the settlement. Montanile’s attorney refused and indicated that the funds would be transferred from a trust account to Montanile unless the administrator objected. The administrator did not respond. Montanile received the settlement. Six months later, the administrator sued under ERISA 502(a)(3), which authorizes plan fiduciaries to file suit “to obtain . . . appropriate equitable relief . . . to enforce . . . the plan.” 29 U.S.C. 1132(a)(3). The district court rejected Montanile’s arguments, The Eleventh Circuit affirmed, holding that even if Montanile had completely dissipated the fund, the plan was entitled to reimbursement from Montanile’s general assets. The Supreme Court reversed and remanded for determination of whether Montanile had dissipated the settlement. When an ERISA-plan participant wholly dissipates a third-party settlement on nontraceable items, the plan fiduciary may not bring suit under section 502(a)(3) to attach the participant’s separate assets. Historical equity practice does not support enforcement of an equitable lien against general assets. View "Montanile v. Bd. of Trs. of Nat'l Elevator Indus. Health Benefit Plan" on Justia Law