Justia ERISA Opinion Summaries

Hakim was an Accenture employee for nearly 10 years before being let go as part of a workforce reduction. During part of his tenure with the company, he participated in the company’s pension plan. In 1996, Accenture amended the plan to exclude a number of employees in various departments. In 1999, Hakim was promoted to a position in which he was no longer eligible to participate in the plan under the terms of the 1996 amendment. Upon his 2003 termination, at age 39, Hakim signed a release in exchange for separation benefits that waived all claims that arose prior to signing the release. In 2008, while employed elsewhere, Hakim sought additional pension benefits from Accenture, arguing that the notice of the 1996 amendment to the plan (which was emailed to employees) was insufficient and violated ERISA’s notice requirements, 29 U.S.C. 1054(h). His claim was denied by Accenture. The district court granted summary judgment in favor of Accenture, holding that Hakim knew or should have known about his claim when he signed the release, and thus waived his claim. The Seventh Circuit affirmed. View "Hakim v. Accenture U.S. Pension Plan" on Justia Law

Johnson, sole administrator of the Shirley T. Sherrod Benefit Pension Plan and Trust, sued the Plan’s custodian, Merrill Lynch, alleging that Merrill Lynch refused to abide by his instructions and has exercised control over Plan assets by refusing to make distribution to Sherrod. The Plan is a single-participant retirement account, exempt from garnishment under the anti-alienation provision of the Employment Retirement Income Security Act, 29 U.S.C. 1056(d). There is a freeze on the account, as a result of a Michigan state court order in a post-judgment collection proceeding. The district court dismissed for lack of subject-matter jurisdiction. The Seventh Circuit affirmed, holding that any harm is traceable to the state court order, not to Merrill Lynch. View "Johnson v. Merrill Lynch, Pierce, Fenner & Smith, Inc." on Justia Law

Central States is a multiemployer pension plan for members of the Teamsters union in the eastern half of the U.S. Ready Mix employed Teamsters labor and participated in the Central States plan. In 2007 Ready Mix ceased employing covered workers and incurred $3.6 million in withdrawal liability to fully fund its pension obligations. Two affiliated companies under common control by Nagy, the owner of Ready Mix, conceded liability for the shortfall under the Employee Retirement Income Security Act, as amended by the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. 1301(b)(1). The district court concluded that Nagy held and leased property to Ready Mix as a passive investment, not a trade or business, so the leasing activity did not trigger personal liability, but that Nagy’s work as a manager for a country club was as an independent contractor, not an employee, and this activity qualified as a trade or business under section 1301(b)(1), which was enough for personal liability. The Seventh Circuit affirmed, holding that Nagy’s leasing activity is categorically a trade or business for purposes of personal liability under 1301(b)(1). View "Cent. States SE & SW Areas Pension Fund v. Nagy" on Justia Law

Plaintiffs filed a putative class action, claiming that fiduciaries for their retirement plans violated the Employee Retirement Income Security Act, 29 U.S.C. 1001, by continuing to offer employer stock as an investment option while the stock price dropped. The individual retirement account plan at issue allowed employees to choose among more than 20 investment funds with different risk profiles that had been selected by plan fiduciaries. ERISA imposes on the fiduciaries a duty to select only prudent investment options. One of the investment options in the Plan was the M&I Stock Fund, consisting of M&I stock, under an Employee Stock Ownership Plan. In 2008- 2009, M&I’s stock price dropped by approximately 54 percent. The district court applied a presumption of prudence, found that plaintiffs’ allegations could not overcome it, and dismissed without addressing class certification. The Seventh Circuit affirmed, stating that plaintiffs’ theory would require the employer and plan fiduciaries to violate the plan’s governing documents and “seems to be based often on the untenable premise that employers and plan fiduciaries have a fiduciary duty either to outsmart the stock market, which is groundless, or to use insider information for the benefit of employees, which would violate federal securities laws.” View "White v. Marshall & Ilsley Corp." on Justia Law

The 401(k) services industry engages in “revenue sharing,” an arrangement allowing mutual funds to share a portion of the fees that they collect from investors with entities that provide services to the mutual funds, the investors, or both. Until recently the practice was opaque to individual investors and many 401(k) plan sponsors. As the existence and extent of revenue sharing has become more widely known, lawsuits were filed, alleging that the practice violates the Employee Retirement Income Security Act of 1974 (ERISA). The district court awarded summary judgment to AUL, an Indiana-based insurance company that offers investment, record-keeping, and other administrative services to 401(k) plans. The court ruled that AUL was not a fiduciary of the Leimkuehler Profit Sharing Plan with respect to AUL’s revenue-sharing practices. The Seventh Circuit affirmed. Although “very little about the mutual fund industry or the management of 401(k) plans can plausibly be described as transparent,” AUL is not acting as a fiduciary for purposes of 29 U.S.C. 1002(21)(A) when it makes decisions about, or engages in, revenue sharing. View "Leimkuehler v. Am. United Life Ins. Co." on Justia Law

Tompkins began working in 1978 and was a participant in the Fund, a multi-employer pension fund established and administered under the Employee Retirement Income Security Act, 29 U.S.C. 1001. In 1999, Tompkins was granted a disability pension based on chronic asthmatic bronchitis, which he attributed to working with cement dust for 22 years. Tompkins’s application included agreement to be bound by all the Fund’s rules and regulations, although he did not inquire about those rules or make any effort to find out what they were. Upon receiving his first monthly payment of $2,115.43, he was required to sign a Retirement Declaration that provided notice of disqualifying employment for plan participants receiving retirement pensions but did not include the rules and regulations specific to disability pensioners. In 2007, the Fund suspended his disability pension, claiming that his full-time employment in 2005 and 2006 indicated that he no longer met the definition of “total and permanent disability.” The district court granted summary judgment in favor of the Fund. The Seventh Circuit affirmed. Although the Fund acknowledged ambiguity, it based its decision on a reasonable interpretation. View "Tompkins v. Cent. Laborers' Pension Fund" on Justia Law

Plaintiff left his senior position in 1996, having participated in the Retirement Income Security Plan for Employees (RISPE), a tax-qualified defined benefits plan that guarantees specified retirement benefits, and in the Excess Benefit Plan, a defined unfunded benefits pension plan under which benefits are paid directly by the employer rather than by a trust funded by the employer. Both plans allowed him to choose between an annuity and an actuarial equivalent lump sum distribution. In 2009 he received his RISPE lump sum, $325,054.28 and his Excess Plan lump sum, $218,726.38. The discount rate used to calculate lump sum RISPE benefits was a “segment rate,” 26 U.S.C. 417(e)(3)(C), of 5.24 percent. The discount rate applied to the Excess Plan lump sum was 7.5 percent. The district court rejected his ERISA claim that the discount rate required by both plans was a rate computed by the Pension Benefit Guaranty Corporation on the basis of annuity premiums charged by insurance companies. The Seventh Circuit affirmed. With respect to the RISPE, the accrued benefit, which cannot be reduced retroactively, is the annuity; the lump sum is not the accrued benefit and can be reduced retroactively. The court rejected a conflict-of-interest argument concerning calculation of the Excess Benefit Plan discount rate. View "Dennison v. MONY Life Ret. Income Sec. Plan for Emps." on Justia Law

A new owner informed paper mill employees that it was closing the mill with a likely shut-down date in late April. In March, plaintiffs received letters stating that their employment was being terminated effective May 2 and that, in exchange for a release, they would receive a severance package. Before plaintiffs submitted their executed release forms, the company indicated that it was no longer accepting release agreements and that it had decided to keep the plant open until October. Plaintiffs nonetheless signed and submitted the release and separation agreements they had received two weeks earlier. The company later stated that it would be extending a new severance offer and a bonus as an incentive to stay with the mill until October. Plaintiffs both stopped working at the mill on May 2 and started new jobs. The mill continued to operate. After leaving the mill and not receiving severance, plaintiffs requested it from the company’s severance plan. The plan administrator concluded that the two had voluntarily terminated their employment and denied their requests. Plaintiffs sued under the Employee Retirement Income Security Act, 29 U.S.C. 1132(a)(1)(B).. The district court granted the plan summary judgment. The Seventh Circuit affirmed. View "Reddinger v. SENA Severance Pay Plan" on Justia Law

When an employer participating in a multi-employer pension plan withdraws from the plan with unpaid liabilities, federal law can pierce corporate veils and impose liability on owners and related businesses. The Fund is a multi-employer pension plan under the Employee Retirement Income Security Act/Multiemployer Pension Plan Amendments Act, 29 U.S.C. 1381-1461. Messina Trucking was subject to a collective bargaining agreement that required it to contribute to the Fund for retirement benefits. Messina Trucking permanently ceased to have an obligation to contribute to the Fund, triggering a “complete withdrawal” and incurring nearly $3.1 million in potential withdrawal liability. The Fund sought a declaratory judgment that defendants were jointly and severally liable for the withdrawal liability as “trades or businesses” under “common control” with Messina Trucking. The district court held that Mr. and Mrs. Messina, who owned and leased several residential properties as well as the property from which Messina Trucking operated, were not engaged in a “trade or business” and could not be held liable for the withdrawal liability, but that Messina Products, as a formal business organization could be held liable for Messina. The Seventh Circuit ruled in favor of the Fund, holding that both can be held liable. View "Cent. States Se & Sw Areas Pension Fund v. Messina" on Justia Law

The district court certified a class consisting of more than 4000 participants in the Meriter pension plan who allegedly were not credited with all benefits to which the plan entitled them. Some members received benefits 23 years ago. Some are current, the rest former, participants. The plan has been amended several times, so claims were divided into 10 groups, each of which was certified as a separate subclass having a different representative under Fed. R. Civ. P. 23(b)(2), which authorizes class action treatment if the defendant “has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” Each subclass in the ERISA action seeks a declaration of the rights of its members under the plan and an injunction directing that the plan’s records be reformed to reflect those rights. Admonishing the attorneys for failing to adequately describe the plan, the Seventh Circuit affirmed. The court rejected arguments concerning conflicts of interest among class members and that class members who are no longer participants in the plan are not entitled to declaratory or injunctive relief because such relief is forward looking. View "Boyd v. Meriter Health Servs. Emp. Ret. Plan" on Justia Law