Justia ERISA Opinion Summaries

Aramark, a company that self-funds employee health benefit plans governed by ERISA, contracted with Aetna to serve as third-party administrator for these plans. Under the agreement, Aetna was responsible for processing claims, managing provider networks, and handling various administrative tasks. Aramark alleged that Aetna breached its fiduciary duties by paying improper or fraudulent claims, retaining undisclosed fees, providing inadequate subrogation services, making post-adjudication adjustments detrimental to Aramark, and commingling plan assets.Aramark filed suit in the United States District Court for the Eastern District of Texas, asserting ERISA claims for breach of fiduciary duty and prohibited transactions. Aetna responded by seeking to compel arbitration in a Connecticut federal district court, relying on the arbitration clause in the parties’ Master Services Agreement (MSA), and moved to stay the Texas proceedings pending arbitration. The district court denied the stay, holding that the parties had not “clearly and unmistakably” delegated the threshold question of arbitrability to an arbitrator. The court found that the MSA's arbitration clause carved out disputes seeking equitable relief—such as Aramark’s ERISA claims—from arbitration and that these claims were equitable in nature.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s denial of a motion to stay litigation pending arbitration de novo. It held that the threshold issue of arbitrability was not clearly and unmistakably delegated to an arbitrator under the terms of the MSA, especially given the placement of the carve-out for equitable relief. The Fifth Circuit further held that Aramark’s ERISA claims constituted equitable, not legal, relief under Supreme Court and Fifth Circuit precedent. The Fifth Circuit affirmed the district court’s orders, finding no error or abuse of discretion. View "Aramark Services v. Aetna Life Insurance" on Justia Law

A former professional football player sought disability benefits from a retirement plan administered under the Employee Retirement Income Security Act (ERISA), arguing that he qualified for the highest tier of benefits due to multiple concussions suffered during his career. The plan granted him some benefits but denied the top category. He filed suit, claiming improper denial of benefits and lack of a full and fair review.The United States District Court for the Northern District of Texas ruled in favor of the plaintiff, ordering the plan to award the higher benefits and granting approximately $1.2 million in attorney’s fees, plus $600,000 in conditional fees. On appeal, however, a panel of the United States Court of Appeals for the Fifth Circuit reversed the district court’s judgment, holding that the plaintiff was not entitled to reclassification to the highest benefits tier due to his failure to immediately appeal the denial, making any further review futile. The panel remanded for entry of judgment for the plan.On remand, the district court nonetheless reaffirmed its prior fee award, reasoning that the plaintiff’s success in exposing flaws in the plan’s review process, as reflected in favorable factual findings, constituted sufficient success to support attorney’s fees.The United States Court of Appeals for the Fifth Circuit, reviewing the fee award for abuse of discretion, reversed the district court’s decision. The Fifth Circuit held that under 29 U.S.C. § 1132(g)(1), attorney’s fees may only be awarded if a party achieves “some degree of success on the merits,” which requires more than favorable factual findings or moral victories. Because the plaintiff received no relief—monetary, injunctive, or declaratory—the award of attorney’s fees was improper. The court reversed the fee award. View "Cloud v. NFL Player Retirement Plan" on Justia Law

Pamela Edwards, owner of Allure Salon in Starkville, Mississippi, was diagnosed with cancer in 2019 and passed away in 2022. After her death, her husband, Jimmy Edwards, sought payment from her life insurance policy with Guardian Life Insurance. Guardian denied the claim, stating the policy had been canceled because the number of insured employees at Allure dropped to one, triggering their right to cancel the policy. Jimmy Edwards was unaware of the policy until informed by the insurance agent, Debbie Jaudon, who also did not receive a cancellation notice from Guardian.Jimmy Edwards sued Guardian in the Northern District of Mississippi, bringing claims under Mississippi common law and arguing that ERISA entitled him to recover benefits. Guardian moved for partial summary judgment, asserting that ERISA governed the plan and preempted the common-law claims. The district court granted Guardian’s motion, and Jimmy Edwards appealed.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court determined that ERISA applied to the Allure policy, as the salon technicians were considered employees under federal common law. The court found that Guardian had waived its right to cancel the policy by continuing to accept premium payments for 26 months after the right to cancel vested. The court held that Guardian could not avoid its obligation to pay the claim after accepting premiums for such an extended period. Consequently, the Fifth Circuit reversed the district court's judgment and rendered judgment in favor of James Edwards. View "Edwards v. Guardian Life Insurance" on Justia Law

After plaintiff settled a medical malpractice claim, the employee benefit plan organized under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq., sought reimbursement. The Fifth Circuit held that when the plan paid for plaintiff's medical expenses, its summary plan description (SPD) can function as both an SPD and a written instrument; the SPD sufficiently complied with section 1102(b) by giving sufficient information regarding how the plan is funded or how it can be amended; when an SPD is a plan's only plausible written instrument, courts assume that the SPD is the written instrument; an SPD that defers to a non-existent plan document can be enforced as the plan's governing text; and the equities favor defendants in this case. The court also concluded that there was no abuse of discretion in issuing the award of attorneys' fees and costs. Accordingly, the court affirmed the district court's grant of summary judgment and fees and costs to defendants. View "Rhea v. Alan Ritchey, Inc. Welfare Benefit Plan" on Justia Law

After the BP Stock Fund lost significant value, the affected investors filed suit alleging that the plan fiduciaries breached their duties of prudence and loyalty by allowing the Plans to acquire and hold overvalued BP stock; breached their duty to provide adequate investment information to plan participants; and breached their duty to monitor those responsible for managing the BP Stock Fund. The district court held that the stockholders had failed to overcome the Moench v. Robertson presumption and dismissed their claims. The stockholders appealed, and while their appeal was pending in this court, the Supreme Court issued Fifth Third Bancorp v. Dudenhoeffer, holding that there was no such “presumption of prudence” under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. On remand, the district court held that the stockholders had plausibly alleged that defendants had inside information; and the stockholders had plausibly alleged two alternative actions that defendants could have taken that met the Fifth Third standard: freezing, limiting, or restricting company stock purchases; and disclosing unfavorable information to the public. The district court granted the motion to amend with respect to pleading these alternative actions. It then certified defendants’ motion for interlocutory appeal. The court concluded, however, that the district court here erred when it altered the language of Fifth Third to reach its holding. Under the Supreme Court’s formulation, the plaintiff bears the significant burden of proposing an alternative course of action so clearly beneficial that a prudent fiduciary could not conclude that it would be more likely to harm the fund than to help it. In this case, the stockholders have failed to do so. Because the stockholders' amended complaint is insufficient and the district court erred in granting their motion to amend, the court reversed and remanded. View "Whitley v. BP, P.L.C." on Justia Law

Plaintiffs, on behalf of themselves and others similarly situated, sought declaratory relief under section 502(a)(3) of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(a)(3), injunctive relief, damages, attorney’s fees, and costs, against Berkshire and Acme. The district court granted defendants' motion to dismiss all claims. The court concluded that Acme did not violate the plans and did not breach its fiduciary duties when it adopted the amendment consistent with the plans’ terms and the law. Therefore, dismissal of plaintiffs' claims against Acme was appropriate. The court held that plaintiffs have pleaded sufficient facts to assert a plausible claim to relief against Berkshire. All of plaintiffs’ claims against Berkshire may proceed, except for its breach-of-contract claim that was not appealed and its participation in Acme’s breach-of-fiduciary-duty claim. Because the court found that plaintiffs did not plead sufficient facts to assert a plausible breach-of-fiduciary-duty claim against Acme, the court also found that the derivative participation claim fails against Berkshire. Accordingly, the court affirmed in part, reversed in part, and remanded. View "Hunter v. Berkshire Hathaway" on Justia Law

Plaintiff filed suit against his former employer, Ericsson, asserting a claim under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. Despite filing that federal claim in a federal forum, plaintiff alternatively sought declaratory relief that ERISA did not govern this dispute over the Severance Plans. The district court ruled that ERISA governed the case and later granted summary judgment for Ericsson. The court concluded that Ericsson’s Plans check off most of the factors indicative of ERISA plans, and thus plaintiff's suit seeking to obtain benefits available under them, are governed by the federal statute. On the merits, the court concluded that the district court did not err in ruling as a matter of law that the Plan allowed Ericsson to deny benefits on the ground that plaintiff failed to meet the return of property condition. Given the absence of language entitling plaintiff to severance pay based solely on the release of legal claims, it is not inconsistent with the Plan to impose other conditions reasonably related to the termination of the employment relationship. In this case, a provision requiring the return of property is in line with the overall terms of the Plans, which are aimed at providing severance to those who depart the company on good terms through no fault of their own. Accordingly, the court affirmed the judgment. View "Gomez v. Ericsson, Inc." on Justia Law

After Prudential denied coverage of a life insurance policy, plaintiff filed suit claiming that she had no notice of the exclusion for active-duty servicemen and that the exclusion is otherwise unenforceable. The district court granted summary judgment for Prudential and UPS. Plaintiff worked for UPS and participated in a plan which provides group insurance coverage to UPS employees. Plaintiff sought coverage after plaintiff's husband was killed in a weekend motorcycle accident while off base and not on duty. The court concluded that Prudential correctly interpreted the exclusion as barring the claim where the plan indicates that a spouse is not a qualified dependent when the spouse is on active-duty in the armed forces of any country. Moreover, it was not an abuse of discretion for Prudential to interpret the exclusion to apply regardless of whether a spouse was on military duty at the time of an occurrence. The court rejected plaintiff's claim that she was not on notice of the exclusion, concluding that the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., only requires the court to simply interpret the plan. The court rejected plaintiff's claims and affirmed the judgment. View "Singletary v. Prudential Ins. Co." on Justia Law

Plaintiffs, former employees of NOPSI, filed claims against RTA and others under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq., and later 42 U.S.C. 1983 and various state laws. The district court granted summary judgment on the federal claims and declined to exercise supplemental jurisdiction on the state law claims. The court held that the plan at issue was a governmental plan and thus exempt from ERISA. Accordingly, the district court did not err in granting summary judgment as to the successor liability claims against the RTA. The court expressed no opinion as to whether successor liability applies to ERISA violations by predecessor entities. The court also concluded that plaintiffs' section 1983 claims are barred by the statute of limitations. Finally, plaintiffs failed to demonstrate that the district court abused its discretion in denying their FRCP 56(d) motion. Accordingly, the court affirmed the judgment. View "Smith v. Regional Transit Auth." on Justia Law

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