Justia ERISA Opinion Summaries

A company operating a nationwide truck leasing business contributed to a multiemployer pension plan on behalf of employees in several bargaining units, including a group in Dallas, Texas (Local 745). After the company and Local 745 negotiated a one-year extension to their collective-bargaining agreement, the pension plan’s trustees rejected the extension, citing concerns that the company was aligning expiration dates to minimize future withdrawal liability. The plan subsequently notified the company that unless it agreed to treat any 2022 withdrawal of Local 745 as a 2021 withdrawal, the participation of Local 745 would be terminated. The company did not accept, and the trustees voted to terminate Local 745’s participation effective December 25, 2021.The company filed suit in the United States District Court for the Northern District of Illinois, seeking to enjoin the expulsion of Local 745 and arguing that the trustees lacked authority under the plan’s Trust Agreement. The district court initially granted a temporary restraining order but later vacated it and denied a preliminary injunction. After discovery, the district court granted summary judgment to the pension plan, finding the plan’s trustees had the authority to expel Local 745 and had not acted arbitrarily or capriciously. The district court also dismissed the plan’s counterclaim seeking a judicial declaration of Local 745’s withdrawal date, holding that this issue must first be resolved through mandatory arbitration under federal law.On appeal, the United States Court of Appeals for the Seventh Circuit affirmed the district court’s rulings. The appellate court held that the Trust Agreement granted the trustees discretionary authority to interpret plan provisions, and their decision to expel Local 745 was reasonable and not arbitrary or capricious. The court also affirmed the dismissal of the counterclaim, holding that disputes over withdrawal liability and related determinations must proceed to arbitration before judicial review. The case was remanded for further proceedings on attorney fees. View "Penske Truck Leasing, LP v. Central States Southeast and Southwest Areas Pensi" on Justia Law

After the death of Dana Kleinsteuber, her husband, Charles Kleinsteuber, sought accidental death and dismemberment (AD&D) benefits under an ERISA-governed insurance plan administered and insured by Metropolitan Life Insurance Company (MetLife). Dana Kleinsteuber, who suffered from end-stage renal disease (ESRD) due to a long history of an eating disorder, was using home dialysis as treatment. On the day of her death, she apparently failed to properly close her chest port after a dialysis session, resulting in severe blood loss and subsequent cardiac arrest. Emergency responders stopped the bleeding, but she died shortly after.MetLife initially denied the claim on the basis that Dana’s death resulted from natural causes related to her ESRD, and that an exclusion in the plan applied for losses caused or contributed to by illness or its treatment. Following an extensive administrative appeal submitted by Mr. Kleinsteuber, which included evidence from Dana’s doctor and other records, MetLife reconsidered and acknowledged the death was accidental. However, it maintained the exclusion applied because the death was caused or contributed to by the treatment for her ESRD. After Mr. Kleinsteuber exhausted his administrative remedies, he filed suit in the United States District Court for the District of Minnesota. The district court granted summary judgment for MetLife, finding the exclusion applicable.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court held that MetLife provided a full and fair review and that its conflict of interest deserved little weight. The court interpreted the plan exclusion de novo, finding that the ordinary meaning of “caused or contributed to” included Dana’s death under these circumstances. Applying an abuse-of-discretion standard to MetLife’s ultimate decision, the court found substantial evidence supported the denial. As a result, the Eighth Circuit affirmed the district court’s judgment, upholding MetLife’s denial of benefits. View "Kleinsteuber v. Metropolitan Life Ins. Co." on Justia Law

A group of former employees of a company that operated a manufacturing facility in Virginia sued the company after it announced it would close and began terminating employees. They alleged violations of the Worker Adjustment and Retraining Notification Act (WARN Act) due to insufficient notice of the plant closure, and violations of the Employee Retirement Income Security Act (ERISA) relating to the improper termination of a severance plan. The employees initially named an investment group and several related parties as defendants, claiming they were alter egos or successors of the company and should be jointly liable. However, before trial, the employees voluntarily dismissed the investment group and related parties without prejudice, focusing instead on the liability of the company itself.The United States District Court for the Western District of Virginia granted summary judgment in part, including dismissing claims by employees who signed releases, and ultimately entered a money judgment against the company after a bench trial. The employees were unable to collect on this judgment due to the company's insolvency. They then filed a new lawsuit against the investment group and various related parties, seeking to enforce the prior judgment on alter ego and veil piercing theories and claiming federal jurisdiction under the WARN Act and ERISA.The United States Court of Appeals for the Fourth Circuit reviewed the district court's dismissal of the new lawsuit for lack of subject matter jurisdiction. The Fourth Circuit held that federal courts lack subject matter jurisdiction to enforce a prior federal judgment against parties not found liable in the original action, absent independent allegations of new federal statutory violations. The court affirmed the district court's dismissal, concluding that neither federal question jurisdiction nor ancillary jurisdiction applied because the plaintiffs did not allege new violations of the WARN Act or ERISA. View "Messer v. Garrison Investment Group, LP" on Justia Law

Two former employees of a large utility holding company, participants in the company’s defined-benefit pension plan, challenged the way their monthly retirement benefits were calculated. Both men, after vesting in the plan, selected joint-and-survivor annuities that would provide payments to their spouses if they died first. The plaintiffs argued that the plan used outdated and unreasonable actuarial assumptions—some based on mortality tables from 1951 or earlier—to determine both the conversion of their accrued single-life annuity benefit to a joint-and-survivor annuity and to calculate charges for mandatory preretirement survivor annuity coverage. They alleged these practices resulted in significantly lower monthly benefits than they would have received if reasonable, current actuarial assumptions had been used.The plaintiffs filed suit in the United States District Court for the Northern District of Georgia, asserting violations of the Employee Retirement Income Security Act of 1974 (ERISA). They claimed the plan failed to provide “actuarial equivalence” between single-life and joint-and-survivor annuities as required by ERISA, and that excessive reductions for preretirement survivor benefits amounted to unlawful forfeiture of accrued benefits. The district court dismissed the complaint for failure to state a claim.On appeal, the United States Court of Appeals for the Eleventh Circuit held that ERISA’s “actuarial equivalence” provision requires plans to use actuarial assumptions that a reasonable actuary would use at the time of benefit determination—not arbitrary or outdated assumptions. The court further held that employers cannot impose preretirement survivor benefit charges that exceed the actual, reasonably calculated cost of providing those benefits. Because the plaintiffs plausibly alleged violations of these standards, the Eleventh Circuit reversed the district court’s dismissal and remanded the case for further proceedings. View "Drummond v. Southern Company Services, Inc." on Justia Law

General Electric Company (GE) was assessed withdrawal liability by the Boilermaker-Blacksmith National Pension Trust (the Fund) under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), which amended the Employee Retirement Income Security Act (ERISA). The Fund claimed that GE partially withdrew from the plan based on a 70% decline in contribution base units (CBUs) and the closure of a manufacturing facility in Chattanooga, resulting in liability assessments totaling over $227 million. GE disputed these assessments, arguing that it qualified for the “building and construction industry” (BCI) exception, which exempts certain employers from withdrawal liability if substantially all their covered employees perform work in the building and construction industry.An arbitrator considered the dispute and found in favor of GE, concluding that it met the requirements for the BCI exception. Both parties sought review in the United States District Court for the Western District of Missouri, which affirmed the arbitrator’s decision. The district court determined that the statutory language was ambiguous regarding how to count employees for the purpose of the BCI exemption and adopted GE’s cumulative headcount method rather than the Fund’s preferred monthly headcount method.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the district court’s legal conclusions de novo and examined the ambiguity in the statutory language. The Court held that, of the two methods presented, the cumulative headcount approach advanced by GE was more consistent with the purpose and legislative intent of the statute, which was designed to accommodate the fluctuating nature of employment in the building and construction industry. The Court affirmed the district court’s judgment, holding that GE qualified for the building and construction industry exemption and was not liable for withdrawal assessments. View "General Electric Company v. Boilermaker-Blacksmith National Pension Trust" on Justia Law

Four employers participating in an underfunded multiemployer pension plan withdrew from the plan in 2018. The plan’s trustees, using a newly adopted discount rate of 6.50% (previously 7.50%), calculated each employer’s withdrawal liability based on the plan’s unfunded vested benefits as of December 31, 2017. The change in the discount rate, adopted after the measurement date but before the calculation, significantly increased the amounts the employers owed. The employers challenged these assessments in arbitration, arguing that only actuarial assumptions in effect as of the measurement date could be used.Each arbitrator agreed with the employers, concluding that the plan should have used the discount rate in effect on the measurement date and requiring reassessment with the prior, higher rate. The fund’s trustees then sought review in the United States District Court for the District of Columbia, which disagreed with the arbitrators and held that it was permissible for the plan’s actuary to select assumptions after the measurement date. The United States Court of Appeals for the District of Columbia Circuit affirmed, reasoning that the statutory text did not require actuarial assumptions to be fixed as of the measurement date, and that assumptions could be adopted later as long as they reflected the best estimate as of that date. This decision created a conflict with a prior ruling by the United States Court of Appeals for the Second Circuit.The Supreme Court of the United States held that the relevant provisions of ERISA do not require the actuarial assumptions used to calculate withdrawal liability to be selected on or before the statutory measurement date. The Court affirmed the D.C. Circuit, concluding that, while the measurement date fixes the relevant factual data, the timing of selecting actuarial assumptions is not limited by statute. The Court also noted that the statute requires only that the assumptions be reasonable and reflect the actuary’s best estimate. View "M & K Employee Solutions, Inc. v. Trustees of IAM Nat. Pension" on Justia Law

Edward Beard, a participant in an employer-sponsored ERISA plan administered by Lincoln National Life Insurance Company, died after suffering a fall and subsequent subdural hematoma. Mr. Beard had stage IV pancreatic cancer and was taking a blood thinner due to an increased risk of blood clots. The fall occurred while he was rushing to the bathroom, and although an initial hospital visit revealed no issues, he was found unresponsive the following day and died after a second hospital visit revealed a large subdural hematoma. His wife, Tina Beard, filed a claim for accidental death and dismemberment (AD&D) benefits, asserting that his death resulted from an accidental injury.The United States District Court for the Southern District of Iowa reviewed the administrative record after Lincoln Life denied the claim. Lincoln Life concluded that Mr. Beard’s death was not solely the result of an accidental injury and invoked a plan exclusion since his blood thinner, used to treat his cancer-related clotting risk, contributed to his death. The district court granted judgment in favor of Lincoln Life, finding its interpretation of the plan reasonable and supported by substantial evidence, including medical reports indicating the blood thinner contributed to the fatal outcome.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the plan administrator’s decision for abuse of discretion, as the plan granted Lincoln Life discretionary authority to interpret its terms. The appellate court found that Lincoln Life’s interpretation of the plan terms and application of the exclusion were reasonable and supported by substantial evidence. The court held that Mrs. Beard failed to prove the loss resulted solely from an accident, and that Lincoln Life established the plan exclusion applied because the blood thinner contributed to Mr. Beard’s death. Accordingly, the Eighth Circuit affirmed the district court’s judgment. View "Beard v. Lincoln Nat'l Life Ins. Co." on Justia Law

The plaintiff worked as a Project Director and participated in her employer’s long-term disability (LTD) plan, which was administered by Matrix Absence Management on behalf of the Federal Reserve Bank of Cleveland. After taking leave due to ongoing symptoms from long-haul COVID-19, the plaintiff applied for LTD benefits under the plan, which required proof of total disability. Matrix reviewed the medical evidence—including opinions from both treating and independent physicians—and denied her claim, concluding that as of her leave date, she was not totally disabled under the plan’s terms. The plaintiff appealed this denial, but Matrix upheld its decision after additional review.The United States District Court for the Northern District of Ohio heard the plaintiff’s subsequent lawsuit against the Bank, Matrix, and the plan, asserting breach of contract and breach of fiduciary duty. The district court denied the plaintiff’s requests for discovery beyond the administrative record and granted judgment on the administrative record in favor of the defendants. The court found that New York contract law, not ERISA, applied, and review was limited to whether Matrix’s decision was arbitrary, made in bad faith, or the result of fraud, given the plan’s broad delegation of discretionary authority to Matrix.On appeal, the United States Court of Appeals for the Sixth Circuit affirmed the district court’s judgment. The Sixth Circuit held that the district court correctly applied New York contract law and the arbitrary-and-capricious standard of review. The appellate court found no abuse of discretion in denying discovery beyond the administrative record, as the plaintiff did not establish a colorable claim of conflict of interest or procedural defect. The Sixth Circuit concluded that Matrix’s denial had a reasonable basis in the administrative record and thus was not arbitrary or capricious. The judgment for the defendants was affirmed. View "Martin v. Fed. Rsrv. Bank of Cleveland" on Justia Law

A group of trustees managing an ERISA-regulated pension plan invested in six classes of residential mortgage-backed securities (RMBSs), some issued as notes under indenture agreements and others as trust certificates. The trustees alleged that companies servicing the underlying mortgages mismanaged the loans, acted in self-interest, and failed to protect investors’ interests, in violation of their fiduciary duties under ERISA. The investments included three classes of notes and three classes of trust certificates, each backed by pools of residential mortgages.The United States District Court for the Southern District of New York considered cross-motions for summary judgment on whether the underlying mortgages constituted plan assets under ERISA. The district court ruled that only the RMBSs themselves, not the mortgages behind them, were plan assets as defined by the Department of Labor’s regulation. Consequently, it granted summary judgment to all defendants, holding that the servicers did not owe ERISA fiduciary duties regarding the mortgages, and denied the trustees’ cross-motion.On appeal, the United States Court of Appeals for the Second Circuit reviewed the district court’s summary judgment ruling de novo. The Second Circuit agreed that the notes issued under indenture agreements were not equity interests and did not confer plan asset status on the underlying mortgages. However, it found that the trust certificates were beneficial interests in the trusts and thus qualified as equity interests under the Department of Labor’s regulation. As a result, the court affirmed the district court’s judgment in part (regarding the notes), vacated in part (regarding the trust certificates), and remanded for further proceedings, including determination of whether the servicers acted as fiduciaries with respect to the trust certificates. View "Powell v. Ocwen Fin. Corp." on Justia Law

A financial advisory employee of a large securities firm participated in a compensation program called the WealthChoice Awards, which provided annual contingent cash awards to select high-performing advisors. To earn these awards, an advisor had to meet certain revenue thresholds and remain employed at the company for eight years after the award was granted. A notional, unfunded account tracked a benchmark investment, but no funds were set aside for the advisor during the vesting period. If the advisor left the company before vesting, the award was typically forfeited. After vesting, payment was mandatory and made promptly, usually while the advisor was still employed. The stated purpose of the program was to incentivize retention and productivity, not to provide retirement income.After voluntarily resigning and forfeiting unvested awards, the employee filed a putative class action in the United States District Court for the Western District of North Carolina. He alleged that the WealthChoice Awards program was an “employee pension benefit plan” under the Employee Retirement Income Security Act of 1974 (ERISA), and that it violated ERISA’s vesting and anti-forfeiture rules. The district court granted summary judgment to the employer, finding that the program was a bonus plan exempt from ERISA.On appeal, the United States Court of Appeals for the Fourth Circuit reviewed the district court’s grant of summary judgment de novo. The Fourth Circuit held that the WealthChoice Awards program is a bonus payment plan and not an ERISA-covered pension benefit plan. The court reasoned that the program’s primary purpose was to enhance retention and productivity, eligibility was limited, the awards were not funded with deferred employee income, and payment was not systematically deferred until employment termination or retirement. The judgment of the district court was affirmed. View "Milligan v. Merrill Lynch, Pierce, Fenner & Smith, Inc." on Justia Law