Justia ERISA Opinion Summaries

Articles Posted in US Court of Appeals for the Sixth Circuit
by
The Sixth Circuit reversed the judgment of the district court dismissing this ERISA action for lack of jurisdiction on the grounds that no contract bound the parties, holding that the presence of a live contract goes to the merits of this action, not the district court's jurisdiction to hear it.A group of employee benefits funds sued Defendant in a federal district court alleging breach of contract for late contributions under the Employee Retirement Income Security Act (ERISA). Defendant responded that no contract existed and that the presence of a live contract was a jurisdictional prerequisite to Plaintiffs' ERISA suit, meaning that the claim should have been brought under the National Labor Relations Act and that the National Labor Relations Board had exclusive jurisdiction to hear Plaintiffs' grievances. The district court dismissed the suit without prejudice, holding that it lacked jurisdiction to hear Plaintiffs' claim. The Sixth Circuit reversed, holding that the presence of a live contract is not an essential jurisdictional fact in an action brought under section 515 of ERISA. Rather, the presence of a live contract goes to the merits of Plaintiffs' ERISA claim. View "Operating Engineers' Local 324 Fringe Benefits Funds v. Rieth-Riley Construction Co." on Justia Law

by
In a suit under the Employee Retirement Income Security Act (ERISA) 29 U.S.C. 1104(a)(1)(B), concerning the duty of prudence as applied to the investment options that a company offers to its employees for their 401(k) and other defined-contribution plans, plaintiffs (employees) argued: (1) that the employer, TriHealth, should not have offered its employees the option of investing their retirement money in actively managed funds, (2) that the performance of several funds was deficient at certain points, (3) that the overall fees charged for the investment options were too high, and (4) that even if a prudent investor might make available a wide range of valid investment decisions in a given year, only an imprudent financier would offer a more expensive share when he could offer a functionally identical share for less.The Sixth Circuit reversed, in part, the dismissal of the suit, rejecting the first three claims as foreclosed by recent precedent. However, the plaintiffs’ claim that TriHealth offered them more expensive mutual fund shares when shares with the same investment strategy, the same management team, and the same investments were available to their retirement plan at lower costs stated a plausible claim that TriHealth acted imprudently. View "Forman v. TriHealth, Inc." on Justia Law

by
Smith worked for CommonSpirit and participated in CommonSpirit’s defined-contribution 401(k) plan. CommonSpirit's administrative committee administers the plan, which serves more than 105,000 people and manages more than $3 billion in assets. It offers 28 different funds in which employees may invest their contributions, including several index funds with management fees as low as 0.02% and several actively managed funds with management fees as high as 0.82%. The actively managed Fidelity Freedom Funds are the default investment if employees do not choose to place their contributions in a different fund instead; they are “target date” funds and managers change the allocation of the underlying investments over time. Other target-date funds have lower costs. Smith sued CommonSpirit and the administrative committee under the Employee Retirement Income Security Act (ERISA) for breach of fiduciary duty. 29 U.S.C. 1132(a)(2), seeking to represent a proposed class of similarly situated plan participants and claiming that the plan should have offered a different mix of fund options. The Seventh Circuit affirmed the dismissal of her suit. ERISA does not give courts a broad license to second-guess the investment decisions of retirement plans. It supplies a cause of action only when retirement plan administrators breach a fiduciary duty by, for example, offering imprudent investment options. Smith has not alleged facts from which a jury could plausibly infer that CommonSpirit breached any such duty. View "Smith v. CommonSpirit Health" on Justia Law

by
Tymoc died in a single-car accident. At the time of the accident, Tymoc was traveling between 80-100 miles per hour; the speed limit was 60 miles per hour speed. As Tymoc attempted to pass multiple cars, the gap between a car in the right lane and a box truck in the left lane closed. Tymoc veered to the right, causing his vehicle to drive off the road, roll down an embankment, striking multiple trees, and flip over several times.Through his employer, Tymoc was covered by Unum life insurance; the policy provided both basic life insurance coverage and an additional accidental death benefit. Unum approved a $100,000 payment of group life insurance benefits but withheld $100,000 in accidental death benefits, explaining that Tymoc’s conduct—speeding and reckless driving—caused his death, thereby triggering the policy’s crime exclusion. In a suit under the Employee Retirement Income Security Act, 29 U.S.C. 1001– 1191d, the district court entered in Fulkerson’s favor as to the accidental death benefits. The Sixth Circuit reversed. Reckless driving falls within the unambiguous plain meaning of crime. View "Fulkerson v. Unum Life Insurance Co. of America" on Justia Law

by
The Cintas “defined contribution” retirement plan has a “menu” of investment options in which each participant can invest. Each Plan participant maintains an individual account, the value of which is based on the amount contributed, market performance, and associated fees. Under the Employment Retirement Income Security Act (ERISA), 29 U.S.C. 1102(a)(1), the Plan’s fiduciaries have the duty of loyalty—managing the plan for the best interests of its participants and beneficiaries—and a duty of prudence— managing the plan with the care and skill of a prudent person acting under like circumstances. Plaintiffs, two Plan participants, brought a putative class action, contending that Cintas breached both duties. Plaintiffs had entered into multiple employment agreements with Cintas; all contained similar arbitration provisions and a provision preventing class actions.The district court declined to compel arbitration, reasoning that the action was brought on behalf of the Plan, so that it was irrelevant that the two Plaintiffs had consented to arbitration through their employment agreements–the Plan itself did not consent. The Sixth Circuit affirmed. The weight of authority and the nature of ERISA section 502(a)(2) claims suggest that these claims belong to the Plan, not to individual plaintiffs. The actions of Cintas and the other defendants do not support a conclusion that the plan has consented to arbitration. View "Hawkins v. Cintas Corp." on Justia Law

by
As a full-time Wal-Mart associate, Chelf purchased basic life insurance, an optional Prudential life insurance policy, and short-term and long-term disability insurance; premiums were deducted from his paycheck. Chelf obtained a leave of absence; his last workday was October 17, 2014. When his short-term benefits had maxed out, he obtained long-term disability benefits. Chelf was not required to pay premiums for his disability benefits while he was receiving those benefits. Nonetheless, Wal-Mart continued to charge him those premiums. Chelf paid life insurance premium payments during his leave. Chelf died in April 2016.After denial of her claims for benefits, Chelf’s widow filed suit under the Employee Retirement Income Security Act, 29 U.S.C. 1001–1461 (ERISA). She alleged Wal-Mart incorrectly treated the life insurance coverage as terminated before Chelf’s death and did not inform him that the policy had terminated; assessed certain premiums in error; failed to inform Chelf of that error; failed to remit premiums to Prudential; failed to inform Chelf that his accrued paid time off could cover his premiums; and failed to notify him of his right to convert his term life insurance policy.The district court dismissed, finding that Chelf’s allegations fell “outside the scope of ERISA’s fiduciary requirements or administrative functions.” The Sixth Circuit reversed with respect to allegations concerning the mishandling of premiums. The remaining allegations sought to impose liability for failure to disclose information that is not required to be disclosed under ERISA. View "Chelf v. Prudential Insurance Co." on Justia Law

by
After more than a decade of employment, a seizure disorder ended Dr. Autran’s career as a P&G research scientist. Autran received total-disability benefits under P&G’s Health and Long-Term Disability Plan in 2012-2018. The Committee terminated those benefits after concluding that Autran no longer qualified as totally disabled within the meaning of the Plan, and awarded him his remaining 19 weeks of partial disability benefits. Autran sued under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(a)(1)(B). He died while the suit was pending.The Sixth Circuit upheld summary judgment in favor of the Committee. Because the Plan delegates discretionary authority to the Committee to decide benefits claims, the court applied the deferential arbitrary-and-capricious test. The Committee had rational reasons to depart from the earlier total-disability finding. Among other new evidence, a doctor who performed many objective tests on Autran for over six hours found no basis to conclude that he suffered from a debilitating condition. Thorough medical opinions gave the Committee a firm foundation to conclude that Autran did not, in the Plan’s words, suffer from a “mental or physical condition” that the “medical profession” would consider “totally disabling.” View "Autran v. P&G Health & Long Term Disability Benefit Plan" on Justia Law

by
Simpson's insurer, the Fund, paid Simpson’s medical costs ($16,225) arising from a car accident. Simpson hired the Firm to represent her in a personal injury suit. The Fund maintained a right of subrogation and reimbursement. Simpson settled her suit for $30,000. After depositing the settlement funds in a trust account, the Firm paid $9,817.33 to Simpson, $1,000.82 to other lienholders, and $10,152.67 to its own operating account for fees and expenses, offering the Fund $9,029.18. The Fund sued under the Employee Retirement Income Security Act (ERISA) section 502(a)(3), claiming an equitable lien of $16,225. The Firm issued a $9,029.18 check to the Fund, exhausting the settlement funds.The district court issued a TRO requiring the Firm to maintain $7,497.99 in its operating account. The Firm argued that the Fund sought a legal remedy because the Firm no longer possessed the settlement funds; ERISA 502(a)(3) only authorizes equitable remedies. The Fund argued that it sought an equitable remedy because the settlement funds were in the Firm’s possession pursuant to the TRO and cited the lowest intermediate balance test: a defendant fully dissipates a plaintiff’s claimed funds (by spending money from the commingled account to purchase untraceable items) only if the balance in the commingled account dipped to $0 between the date the defendant commingled the funds and the date the plaintiff asserted its right to the funds. The district court granted the Firm summary judgment, reasoning that the Firm dissipated the settlement funds before the TRO issued; the Fund could not point to specific recoverable funds held by the Firm and sought a legal remedy. The Sixth Circuit affirmed, concluding that no issues had been preserved for review. View "Sheet Metal Workers' Health & Welfare Fund of North Carolina v. Law Office of Michael A. DeMayo, LLP" on Justia Law

by
Card was diagnosed with “chronic lymphocytic leukemia,” which can cause fatigue. Card alleges her worsening fatigue left her unable to perform her job as a night-shift nurse. She applied for disability benefits under an Employee Retirement Income Security Act (ERISA) plan administered by Principal, which denied her requests for short-term, long-term, and total disability benefits. Card sued. The district court granted Principal summary judgment. The Sixth Circuit reversed and remanded the case to Principal for further proceedings. Principal granted Card short-term disability benefits but requested additional information for her other claims. Card then filed motions in the district court, seeking attorney’s fees and asking the court to reopen the case because Principal had not reached a benefits decision for her other claims within the 45 days allegedly required by ERISA . The district court issued a “virtual order” on its docket, denying the motions for lack of jurisdiction.The Sixth Circuit first held that it had jurisdiction to review that order then vacated and remanded to the district court. A district court retains jurisdiction over a beneficiary’s ERISA suit during the remand. "As in every other ERISA case in this procedural posture," the prior decision remanded to the district for it to retain jurisdiction while Principal engaged in the new benefits determination. View "Card v. Principal Life Insurance Co." on Justia Law

by
Sofco terminated its collective bargaining agreement (CBA) with a local union. The Ohio Operating Engineers Pension Fund then assessed almost a million dollars in withdrawal liability against Sofco under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1002(41. Sofco challenged the assessment in ERISA-mandated arbitration. The arbitrator upheld the assessment. The district court affirmed in part and reversed in part.The Sixth Circuit affirmed in part. The Fund’s actuary used a 7.25% growth rate on assets for minimum funding purposes but for withdrawal-liability purposes, used the “Segal Blend,” which violated ERISA’s mandate that the interest rate for withdrawal liability calculations be based on the “anticipated experience under the plan.” The court vacated the district court’s decision upholding the Fund’s assessment of partial-withdrawal liability for 2011-2013 and remanded. A construction-industry employer is liable for a partial withdrawal when its contributions decline to an “insubstantial portion of its work in the craft and area jurisdiction of the collective bargaining agreement of the type for which contributions are required.” The CBA clearly establishes the union’s jurisdiction over forklift work and Sofco’s obligations to contribute to the fund for that work. The district court did not err by concluding that the Fund properly included forklift work in the withdrawal liability calculation. View "Sofco Erectors, Inc. v. Trustees of the Ohio Operating Engineers Pension Fund" on Justia Law