Articles Posted in US Court of Appeals for the Second Circuit

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Plaintiff filed suit against the plan administrator for Xerox under the Employee Retirement Income Security Act (ERISA) for denial of benefits and breach of fiduciary duty. The Second Circuit held that plaintiff's denial of benefits claim was untimely and that the administrator, not plaintiff, was entitled to summary judgment on the fiduciary duty claim. The court held that a litigant may not bring a denial‐of‐benefits claim under ERISA when the limitations period is six years and his claim accrued twelve years before he sued. The court also held that Frommert v. Conkright, 433 F.3d 254 (2d Cir. 2006), did not order the plan administrator not to apply the so‐called "phantom account offset" to plan participants who did not bring timely denial of benefits claims. Accordingly, the court affirmed in part, reversed in part, and remanded for directions to enter judgment for the administrator and the Xerox Plan. View "Testa v. Becker" on Justia Law

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Plaintiffs appealed the district court's dismissal of their action against fiduciaries of IBM's employee stock option plan (ESOP), claiming that defendants violated their duty under the Employee Retirement Income Security Act (ERISA) to manage the ESOP's assets prudently. The Second Circuit reversed the district court's judgment against plaintiffs, holding that plaintiffs plausibly pleaded a duty‐of‐prudence claim even under the stricter "could not have concluded" test used by the district court. In this case, a prudent fiduciary in the Plan defendants' position could not have concluded that corrective disclosure would do more harm than good. View "Jander v. International" on Justia Law

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Plaintiff appealed the district court's summary judgment in favor of the trustees of two union-affiliated employee benefit plans on her claims for relief pursuant to the Employee Retirement Income Security Act (ERISA). The Second Circuit affirmed the district court's decision denying plaintiff's claim under section 502(a)(1)(B) of ERISA against the Pension Fund for benefits due, and held that the Pension Fund trustees correctly denied plaintiff's request for an augmented survivor benefit following her husband's death. In regard to plaintiff's section 502(a)(3) claim for breach of fiduciary duty, the court rejected the district court's reasoning that a plan administrator cannot be held liable for unintentional misrepresentations made about the plan's operation by its non‐fiduciary, "ministerial" agent. The court nonetheless affirmed the district court's denial of relief under section 502(a)(3) because the Pension Plan's summary plan description (SPD) adequately described the eligibility requirements for the benefits in question and thereby satisfied the trustees' fiduciary duty to provide complete and accurate information to plan participants and beneficiaries. Therefore, the court affirmed as to Case No. 16‐3549‐cv. The court reversed and remanded as to Case No. 16‐977‐cv, holding that there was an open question of material fact concerning whether the Welfare Fund trustees breached their fiduciary duty to provide plan participants with complete and accurate information about their benefits. View "In re: DeRogatis" on Justia Law

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The Second Circuit affirmed the district court's dismissal of plaintiff's Employee Retirement Income Security Act (ERISA) complaint for failure to state claims for which relief can be granted. Plaintiffs challenged the conduct of twelve banks and their affiliates in the FX market from January 2003 through 2014. On de novo review, the court held that plaintiffs failed to state plausible ERISA claims because the facts alleged do not show that defendants exercised the control over Plan assets necessary to establish ERISA functional fiduciary status. Furthermore, the court found no abuse of discretion in the district court's denial of adjournment or leave to file a fourth amended complaint. View "Allen v. Credit Suisse Securities (USA) LLC" on Justia Law

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Plaintiff filed suit under Section 502(c)(1) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1132(c)(1)(B), alleging that defendants failed to timely comply with her request for documents relating to her healthcare benefit plan. The Second Circuit affirmed the district court's dismissal of plaintiff's claim as time-barred. Because ERISA does not specify a statute of limitations for Section 502(c)(1) claims, the courts apply the state statute of limitations that is the nearest analogue. The court held that the most analogous statute of limitations in Connecticut was the one-year statute of limitations for actions to recover civil forfeitures. Applying the one-year limitation, the court held that plaintiff's claim was time-barred. View "Brown v. Rawlings Financial Services, LLC" on Justia Law

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Morrone participates in a ʺdefined benefit planʺ offered by the Pension Fund. From 1970-1996, Morrone earned benefits under the Plan; in 1997, he stopped working union jobs. Under the Plan, a participant is entitled to the accrual rates ʺin effect at the time [he] ultimately separates from Covered Employment.ʺ In 1994, the Plan was amended to allow a worker who took a hiatus to bridge the gap by working five years. In 1999, the Plan removed the Five Year Rule and reinstated the Parity Rule, under which a worker with a break in Covered Employment of two or more years could bridge that gap and reactivate pension credits earned pre-hiatus by working for at least as many years after the break as the length of the break. Morrone returned to Covered Employment in 2012 and requested an estimate of the benefits he would receive should he retire in 2017. The estimate applied the Parity Rule: Pension credits that he earned pre-hiatus were assigned the 1996 rate; those earned since 2012 were valued at the current rate. Because Morrone had taken a 15‐year hiatus and would have returned to Covered Employment for only six years as of 2017, he was not entitled to the current accrual rate for his pre-hiatus pension credits. Applying the Five Year Rule would give Morrone an extra $705 per month. The Second Circuit affirmed summary judgment, in favor of the Fund, finding that the 1999 Amendment did not decrease Morroneʹs accrued benefits in violation of ERISAʹs anti‐cutback rule, 29 U.S.C. 1054(g). The higher benefit accrual rates that Morrone demands are not a ʺretirement‐type subsidyʺ but would constitute his normal retirement benefit if he satisfied the conditions to receiving them: the Parity Rule. View "Morrone v. Pension Fund of Local Number One, I.A.T.S.E." on Justia Law

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Plaintiffs, retired officers of Booz Allen, filed suit alleging that they were improperly denied compensation when, after their retirement, Booz Allen sold one of its divisions in the Carlyle Transaction. The Second Circuit affirmed the district court's dismissal of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., claims on the ground that Booz Allen's stock-distribution program was not a pension plan within the meaning of ERISA, and denial as futile leave to amend to "augment" the ERISA claims with new allegations; affirmed the dismissal of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961 et seq., claims on the ground that they were barred by the Private Securities Litigation Reform Act of 1995 (PSLRA), 18 U.S.C. 1964(c); but vacated the district court's judgment to the extent it denied Plaintiff Kocourek leave to amend to add securities-fraud causes of action. The court remanded for the district court to consider his claims. View "Pasternack v. Shrader" on Justia Law

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The Second Circuit affirmed the district court's award of equitable relief in this Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., action. The court rejected defendants' challenges to the district court's award of equitable relief under section 502(a)(3). The court held that the district court did not err in rejecting defendants' challenge to the timeliness of participants' claims; ordering class-wide relief on participants' section 404(a) claims without requiring individualized proof of detrimental reliance; and concluding that mistake, a prerequisite to the equitable remedy of reformation, had been shown by clear and convincing evidence as to all class members. Finally, the district court did not abuse its discretion by awarding equitable relief. View "Osberg v. Foot Locker, Inc." on Justia Law

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Former employees of World Airways challenged the dismissal of their complaint seeking damages for fraud, breach of contract and violation of an employee benefit plan. The Second Circuit agreed with the district court that plaintiffs' state law claims arose under the Railway Labor Act (RLA), 45 U.S.C. 151 et seq., and were thus preempted. Because those claims bear a close resemblance to claims brought pursuant to the Employee Retirement Income Securities Act (ERISA), 29 U.S.C. 1001 et seq., the court found it appropriate to borrow and apply the three‐year statute of limitations set forth in Section 1113 of ERISA rather than the six‐month limitations period the district court borrowed from Section 10(b) of the National Labor Relations Act (NLRA), 29 U.S.C.160(b). Accordingly, the court vacated the dismissal of the RLA claims and remanded for further consideration. The court affirmed in all other respects. View "Pruter v. Local 210’s Pension Trust Fund" on Justia Law