Justia ERISA Opinion Summaries

Two fiduciaries, who managed retirement and welfare funds for a New York City law enforcement union, were found to have improperly withdrawn over $500,000 from the union’s annuity fund. The withdrawals, which occurred over several years, were facilitated by one defendant preparing false authorization forms and the other signing and submitting them to the fund’s custodian. The funds were then transferred to the union’s operating account and used for unauthorized purposes, including personal enrichment and unrelated union expenses. The defendants misrepresented the nature of these withdrawals to both the fund’s custodian and union members, and they continued the scheme even after being warned by auditors that their actions were improper.The United States District Court for the Southern District of New York presided over a joint jury trial, where both defendants were convicted of wire fraud and conspiracy to commit wire fraud. One defendant was also convicted of conspiracy to defraud the United States and multiple counts of tax evasion. The district court denied motions to sever the trials, found the evidence sufficient to support the convictions, and imposed restitution and forfeiture orders. The court also addressed government discovery errors by granting a continuance and requiring early disclosure of materials, but declined to impose harsher sanctions.On appeal, the United States Court of Appeals for the Second Circuit reviewed claims of improper joinder, insufficient evidence, prosecutorial misconduct, ineffective assistance of counsel, and errors in restitution calculation. The court held that joinder was proper because the indictment sufficiently linked the fraud and tax offenses, the evidence was sufficient to support the convictions, and the attorney’s illness did not constitute per se ineffective assistance. The court also found no abuse of discretion in the district court’s handling of discovery issues or restitution calculation, and no reversible prosecutorial misconduct. The Second Circuit affirmed the district court’s judgment. View "United States v. Wynder" on Justia Law

A multiemployer pension fund managed by the Operating Engineers Local 324 Pension Fund assessed withdrawal liability against Ace-Saginaw Paving Company after Ace partially withdrew from the fund in December 2018. The dispute centered on the interest rate assumption used to calculate the withdrawal liability. Ace argued that the rate should match the fund’s minimum funding interest rate of 7.75%, resulting in a lower liability, while the fund’s actuary used a much lower rate of 2.27% (the PBGC rate), resulting in a significantly higher liability. The actuary’s choice of rate was based on policy considerations and a desire to protect the fund’s remaining employers, rather than his best estimate of the fund’s anticipated investment experience.The parties proceeded to arbitration, as required by ERISA. The arbitrator found that the actuary’s use of the 2.27% rate violated 29 U.S.C. § 1393(a)(1) because it was not the actuary’s best estimate of anticipated experience under the plan. The arbitrator ordered the fund to recalculate Ace’s withdrawal liability using a rate that complied with the statutory requirements. The United States District Court for the Eastern District of Michigan affirmed the arbitrator’s findings and granted summary judgment to Ace on the statutory violation, but declined Ace’s request to require use of the minimum funding rate as the remedy, instead allowing the fund’s actuary another opportunity to select a compliant rate.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court’s judgment. The court held that the actuary’s use of the PBGC rate was not his best estimate and thus violated ERISA. The court also held that, on remand, the actuary may use a different rate from the minimum funding rate only if it is justified by factors that improve the accuracy of the withdrawal liability calculation, not by policy considerations. The court denied both parties’ requests for attorney’s fees. View "Ace-Saginaw Paving Co. v. Operating Engineers Local 324" on Justia Law

Robert Platt, an employee of Sodexo, Inc., sued his employer, claiming that a monthly tobacco surcharge on his employee health insurance premiums violated the Employee Retirement Income Security Act (ERISA). Platt brought claims on behalf of himself and other plan participants to recover losses under ERISA § 502(a)(1)(B) and § 502(a)(3), and a breach of fiduciary duty claim on behalf of the employer-sponsored health insurance plan (the Plan) for losses under ERISA § 502(a)(2). Sodexo sought to compel arbitration based on an arbitration provision it unilaterally added to the Plan after Platt joined.The United States District Court for the Central District of California denied Sodexo’s motion to compel arbitration, holding that there was no enforceable arbitration agreement because Sodexo unilaterally modified the Plan to add the arbitration provision without Platt’s consent. The court found that Platt did not agree to arbitrate his claims.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court agreed that an employer cannot create a valid arbitration agreement by unilaterally modifying an ERISA-governed plan to add an arbitration provision without obtaining consent from the relevant party. The court held that Platt is the relevant consenting party for claims under ERISA § 502(a)(1)(B) and § 502(a)(3) and that he did not consent to arbitration because he did not receive sufficient notice of the arbitration provision. However, the court held that the Plan is the relevant consenting party for the breach of fiduciary duty claim under ERISA § 502(a)(2) and that the Plan consented to arbitration.The Ninth Circuit affirmed the district court’s denial of Sodexo’s motion to compel arbitration for Platt’s claims under ERISA § 502(a)(1)(B) and § 502(a)(3). It reversed in part the district court’s denial of the motion to compel arbitration for the breach of fiduciary duty claim under ERISA § 502(a)(2) and remanded for the district court to consider Platt’s unconscionability defenses and the severability of the representative action waiver and any other arbitration clauses found unconscionable. View "PLATT V. SODEXO, S.A." on Justia Law

Perfection Bakeries Inc. paid into the Retail, Wholesale and Department Store International Union’s Industry Pension Fund for its employees in Michigan and Indiana. The company later ceased contributions, first in Michigan and then in Indiana, incurring "withdrawal liability" under the Multiemployer Pension Plan Amendments Act of 1980. The Fund calculated this liability using a four-step formula outlined in 29 U.S.C. § 1381. Perfection Bakeries challenged the Fund's calculation, arguing that a specific calculation was performed at the wrong step.The United States District Court for the Northern District of Alabama reviewed the case. The district court granted summary judgment in favor of the Fund, holding that the statutory text unambiguously required the credit to be applied as part of the second adjustment step.The United States Court of Appeals for the Eleventh Circuit reviewed the case. The court affirmed the district court's judgment, agreeing that the Fund correctly applied the partial-withdrawal credit at step two of the four-step formula. The court concluded that the statute's language and structure supported the Fund's interpretation, which incorporated all of section 1386, including the credit for previous partial withdrawals, at step two. The court found that this interpretation was consistent with the statutory context and the repeated cross-references to section 1386 throughout the four-step formula. The court rejected Perfection Bakeries' arguments, including the contention that the partial-withdrawal credit should be applied after all four steps, and upheld the Fund's calculation method. View "Perfection Bakeries Inc v. Retail Wholesale & Dept Store International Union" on Justia Law

The case involves a dispute over the management of an ERISA fund, specifically the Southern Ohio Painters Health and Welfare Plan and Trust. Plaintiffs, including union-appointed trustees and the International Union of Painters and Allied Trades District Council No. 6, allege that two union-appointed trustees, Smith and Clark, have engaged in actions that violate their fiduciary duties. These actions include procedural changes that benefit themselves and undermine the union's authority, such as amendments to the Trust Agreement that make it difficult to remove trustees and provide benefits to retired trustees.The United States District Court for the Southern District of Ohio dismissed the plaintiffs' claims against the employer-appointed trustees and denied the plaintiffs' request for a preliminary injunction. The plaintiffs sought to remove Smith and Clark as trustees, terminate their employment with the Fund, and prevent the Fund from paying their legal expenses, among other relief. The district court found that the plaintiffs failed to demonstrate irreparable harm, a necessary requirement for a preliminary injunction.The United States Court of Appeals for the Sixth Circuit reviewed the district court's denial of the preliminary injunction. The appellate court affirmed the district court's decision, agreeing that the plaintiffs did not show they would suffer irreparable harm without the injunction. The court noted that the plaintiffs' concerns about self-dealing and the inability to exercise fiduciary duties were speculative and could be addressed through monetary damages. The court also declined to exercise pendent jurisdiction over the district court's dismissal of the claims against the employer-appointed trustees, as the issues were not inextricably intertwined with the appeal of the preliminary injunction denial. View "Int'l Union of Painters & Allied Trades v. Smith" on Justia Law

The Grand Traverse Band of Ottawa and Chippewa Indians and its employee welfare plan (the Plan) alleged that Blue Cross Blue Shield of Michigan (Blue Cross) breached fiduciary duties under ERISA and related duties under Michigan state law. The Tribe claimed that Blue Cross submitted false claims, causing the Tribe to overpay for hospital services. The Tribe also alleged violations of the Michigan Health Care False Claims Act (HCFCA) and sought to amend its complaint to include additional facts.The United States District Court for the Eastern District of Michigan dismissed the Tribe’s ERISA and common-law fiduciary duty claims as time-barred, granted summary judgment to Blue Cross on the HCFCA claim, and denied the Tribe’s motion for leave to amend its complaint a second time. The court found that the Tribe had actual knowledge in 2009 that it was not receiving Medicare-Like Rates (MLR) and thus the claims were time-barred. The court also concluded that Blue Cross was not directly governed by the MLR regulations, and therefore, the Tribe could not prove a violation of the HCFCA based on Blue Cross’s failure to apply MLR.The United States Court of Appeals for the Sixth Circuit affirmed the district court’s decisions. The appellate court agreed that the Tribe’s fiduciary duty claims were time-barred because the Tribe knew in 2009 that it was not receiving MLR. The court also upheld the summary judgment on the HCFCA claim, finding that the MLR regulations did not apply to Blue Cross. Additionally, the court found no error in the district court’s denial of the Tribe’s motion for leave to amend its complaint, as the proposed amendments would not have cured the deficiencies in the ERISA claim. View "Grand Traverse Band of Ottawa & Chippewa Indians v. Blue Cross Blue Shield of Michigan" on Justia Law

A group of former managers of Ruby Tuesday, Inc. participated in two top-hat retirement plans administered by Regions Bank. These plans were unfunded and designed for high-level employees, meaning they were exempt from certain ERISA fiduciary duties. When Ruby Tuesday filed for bankruptcy, the managers lost their benefits and sued Regions Bank, alleging breaches of state-law fiduciary, trust, contract, and tort duties. They also sought equitable relief under ERISA to recover their lost benefits.The United States District Court for the Eastern District of Tennessee dismissed the state-law claims, ruling that ERISA preempted them. The court also granted summary judgment to Regions Bank on the ERISA claim, concluding that the requested monetary relief did not qualify as equitable relief under ERISA.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed the district court's decision, holding that ERISA preempted the state-law claims because they related to an ERISA-covered plan. The court emphasized that allowing state-law claims would undermine ERISA's uniform regulatory scheme. Additionally, the court held that the monetary relief sought by the plaintiffs did not qualify as equitable relief under ERISA. The court reasoned that the plaintiffs' request for an "equitable surcharge" was essentially a request for legal damages, which ERISA does not permit under its equitable relief provision.Thus, the Sixth Circuit affirmed the district court's judgment in favor of Regions Bank, concluding that the plaintiffs could not pursue their state-law claims or obtain the requested monetary relief under ERISA. View "Aldridge v. Regions Bank" on Justia Law

Clinton Mahoney, the sole member and manager of Mahoney & Associates, LLC, signed an agreement obligating the company to contribute to the Railroad Maintenance and Industrial Health and Welfare Fund, an employee benefit fund. When the Fund could not collect delinquent contributions from Mahoney & Associates, it sued Mahoney personally, citing a personal liability clause in the agreement. The district court granted summary judgment to the Fund, concluding that Mahoney was personally liable based on the clause.The United States District Court for the Central District of Illinois initially entered judgment on July 31, but it did not comply with Federal Rule of Civil Procedure 58. Mahoney filed a notice of appeal on September 26, and the district court later entered a corrected judgment on October 11. Mahoney filed a second notice of appeal the same day. The district court had awarded the Fund attorneys’ fees based on the trust agreement.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo. The court found that there was a genuine dispute of material fact regarding Mahoney’s intent to be personally bound by the trust agreement, as he signed the memorandum in a representative capacity, which conflicted with the personal liability clause. The court concluded that this issue could not be resolved at summary judgment. The court also addressed Mahoney’s laches defense but found it waived due to his failure to address relevant complications. Consequently, the Seventh Circuit reversed the district court’s grant of summary judgment and vacated the award of attorneys’ fees, remanding the case for further proceedings. View "Railroad Maintenance and Industrial Health & Welfare Fund v. Mahoney" on Justia Law

Laurence Bonday, a former employee of Nalco Company LLC, filed an arbitration demand against Nalco, alleging that the company violated its severance plan by demoting him without offering severance pay. Nalco argued that a court needed to determine the scope of the arbitration agreement before proceeding. However, the arbitrator concluded that Bonday’s severance claim fell outside the scope of the arbitration agreement and awarded him nothing on that claim. Instead, the arbitrator awarded Bonday $129,465.50 on an ERISA discrimination claim that he never raised.Nalco moved to vacate the arbitration award, arguing that the arbitrator exceeded her powers by deciding the scope of the arbitration agreement and awarding relief on a claim Bonday never made. The United States District Court for the Middle District of Florida granted Nalco's motion, concluding that the arbitrator exceeded her powers by interpreting the scope of the arbitration agreement and awarding relief on an unraised ERISA discrimination claim.The United States Court of Appeals for the Eleventh Circuit reviewed the case and affirmed the district court's decision. The appellate court agreed that the arbitrator exceeded her powers by granting relief on an ERISA discrimination claim that Bonday did not submit for arbitration. The court emphasized that an arbitrator can only bind the parties on issues they have agreed to submit and that the arbitrator's decision to award relief on an unsubmitted claim was beyond her authority. The court did not address the district court's first reason for vacating the award, as the second reason was sufficient to affirm the decision. View "Nalco Company LLC v. Bonday" on Justia Law

Nancy Stark, as the legal guardian and mother of Jill Finley, an incapacitated person, filed a lawsuit against Reliance Standard Life Insurance Company. Finley, who suffered a hypoxic brain injury in 2007, was initially approved for long-term disability benefits by Reliance. However, in 2022, Reliance terminated her benefits, claiming recent testing did not support her total disability. Stark appealed, and Reliance reinstated the benefits in 2023. Stark then sued, seeking a surcharge for financial harm caused by the wrongful termination, claiming breach of fiduciary duty for not providing internal records, and contesting the deduction of social security payments from Finley's disability payments.The United States District Court for the Western District of Oklahoma granted Reliance's motion to dismiss under Rule 12(b)(6) for failure to state a claim. The court found that Stark did not plausibly allege a claim for equitable relief under ERISA, nor did she demonstrate that Reliance's actions violated the terms of the insurance policy or breached fiduciary duties.The United States Court of Appeals for the Tenth Circuit reviewed the case. The court affirmed the district court's dismissal, holding that Stark was not entitled to attorney’s fees incurred during the administrative appeal under ERISA’s § 1132(a)(3) or § 1132(g). The court also found that Stark's claims regarding the SSD offset were time-barred and waived due to failure to exhaust administrative remedies. Additionally, the court concluded that Stark did not allege any concrete harm resulting from Reliance's alleged failure to provide requested records during the administrative appeal. Consequently, the Tenth Circuit affirmed the district court's decision to dismiss all of Stark's claims. View "Stark v. Reliance Standard Life Insurance Company" on Justia Law