Justia ERISA Opinion Summaries

Retirees, dependents of retirees, and the union filed a class action suit against the retirees’ former employer, M&G, after M&G announced that they would be required to make health care contributions. The district court found M&G liable for violating a labor agreement and an employee welfare benefit plan and ordered reinstatement of the plaintiffs to the current versions of the benefits plans they were enrolled in until 2007, to receive health care for life without contributions. The Sixth Circuit affirmed. The district court properly concluded that the retirees’ right to lifetime healthcare vested upon retirement after concluding that documents, indicating agreement between the union and the employers to “cap” health benefits and several “side” letters were not a part of the applicable labor agreements. View "Tackett v. M&G Polymers USA, LLC," on Justia Law

Participants in a cash balance defined benefit pension plan filed a purported class action, alleging that the plan violated ERISA, 29 U.S.C. 1132(a)(1)(B), and seeking recovery of benefits denied the participants as a consequence of the violation. The district judge granted summary judgment in favor of sub‐class A, which challenged the projection rate used by the defendant, and subclass B, which challenged the defendant’s handling of the pre‐mortality retirement discount. A cash balance plan is a “notional” retirement account because individual accounts are not funded; every year the employer adds a specified percentage of the employee’s salary plus interest at a specified rate on the amount in each individual’s notional account. The challenged projection rate and discount rate relate to the entitlement of employees who leave before reaching retirement age. The Seventh Circuit reversed and remanded with respect to the statute of limitations for class members who took lump sum benefits more than six years before the suit was filed and also with respect to the adequacy of the class representatives, but otherwise affirmed. View "Ruppert v. Alliant Energy Cash Balance Pension Plan" on Justia Law

Like many Michigan municipalities, Pontiac has experienced significant economic difficulties, especially since 2008. Michigan’s Governor appointed Schimmel as Pontiac’s emergency manager. Acting under Michigan’s then-existing emergency manager law (Public Act 4), in 2011, Schimmel modified the collective bargaining agreements of Pontiac’s retired employees and modified severance benefits, including pension benefits, that Pontiac had given retirees not covered by collective bargaining agreements. The retired employees claim that Schimmel and Pontiac violated their rights under the Contracts Clause, the Due Process Clause, and the Bankruptcy Clause. The district court denied the retirees an injunction. The Sixth Circuit vacated and remanded for expedited consideration of state law issues. Michigan voters have since rejected Public Act 4 by referendum, which may have rendered Schimmel’s actions void.The court also questioned whether two-thirds of both houses of the Michigan Legislature voted to make Public Act 4 immediately effective. The court noted that similar issues face many Michigan municipalities. View "City of Pontiac Retired Emps. Ass'n v. Schimmel" on Justia Law

Findlay sought relief from a withdrawal liability payment it allegedly owed the pension fund under the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. 1381-1461. Findlay had ceased making contributions to a pension plan administered by the fund as the result of a labor dispute. About three months after the strike began, the fund demanded Findlay pay withdrawal liability of more than $10 million. Findlay contended that withdrawal liability was improper because withdrawal occurred as the result of a labor dispute; that despite the Act’s arbitration requirement, it should not be forced to arbitrate the dispute because the withdrawal was “union-mandated;” and that despite the Act’s interim payment requirement, it should not be forced to make interim payments because doing so would cause it to suffer irreparable harm. The district court dismissed, holding that the Act required the dispute be arbitrated, and enjoined the fund from collecting withdrawal liability payments pending arbitration. The Sixth Circuit affirmed the dismissal, but reversed the injunction, stating that creating an exception to interim payments for employers that would suffer irreparable harm would contradict the congressional purpose of protecting funds from undercapitalized or financially precarious employers. View "Findlay Truck Line, Inc. v. Cen. States SE & SW Areas Pension Fund" on Justia Law

Plaintiffs filed suit under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001-1461, alleging that defendants violated ERISA when defendants, realizing that they had paid plaintiffs excess retirement benefits, reduced plaintiffs' monthly benefit payments and recouped overpayments through withholding. The court concluded that Count One of the complaint was time-barred; the court rejected plaintiffs' argument that defendants had no authority to either correct or recoup the benefit overpayments where the 2002 plan booklet contained broad language granting defendants such action; because the PPNPF was a defined-benefit plan, plaintiffs could not recover individualized relief in a section 1132(a)(2) claim; and plaintiffs' claim for equitable estoppel under section 1132(a)(3)(B) failed where this claim mirrored Count One's section 1132(a)(1)(B) claim. Accordingly, the court affirmed the district court's grant of summary judgment for defendants. View "Pilger, et al. v. Sweeney, et al." on Justia Law

Plaintiffs claim that Lockheed breached its fiduciary duty to its retirement savings plan, under the Employee Retirement Income Security Act, 29 U.S.C. 1132(a)(2). The Plan is a defined-contribution plan, (401(k)); employees direct part of their earnings to a tax-deferred savings account. Participants may allocate funds as they choose. Among the investment options Lockheed offered was a “stable-value fund” (SVF). SVFs typically invest in a mix of short- and intermediate-term securities, such as Treasury securities, corporate bonds, and mortgage-backed securities. Holding longer-term instruments, SVFs generally outperform money market funds. For stability, SVFs are provided through “wrap” contracts with banks or insurance companies that guarantee the fund’s principal and shield it from interest-rate volatility. Plaintiffs allege that the Lockheed SVF was heavily invested in short-term money market investments, with a low rate of return that did “not beat inflation by a sufficient margin to provide a meaningful retirement asset.” The district court granted Lockheed summary judgment with respect to some claims. The SVF claim survived. The district court initially certified two classes under FRCP 23(b)(1)(A). On remand, the court declined to certify further narrowed classes. The Seventh Circuit reversed, reasoning that the plaintiffs carefully limited the class to plan participants who invested in the SVF during the class period and employed reasonable means to exclude from the class persons who did not experience injury. View "Abbott v. Lockheed Martin Corp." on Justia Law

Edmonson’s husband was insured under a Lincoln group life insurance policy, established under an Employee Retirement Income Security Act employee benefit plan. When her husband died, Edmonson was entitled to a $10,000 benefit. The policy states that benefits, “will be paid immediately after the Company receives complete proof of claim.” It does not state that Lincoln will pay benefits using a retained asset account. Edmonson submitted a Lincoln claim form that stated that Lincoln’s usual method of payment is to open a SecureLine Account in the beneficiary’s name. Lincoln set up an interest-bearing SecureLine Account in Edmonson’s name in the amount of $10,000, and sent her a checkbook. In using retained asset accounts, an insurance company does not deposit funds, but merely credits the account; when a beneficiary writes a check on the account, the insurer transfers funds to cover the check. Three months after Lincoln set up the account, Edmonson withdrew the full amount. Lincoln paid $52.33 in interest. Edmonson contends that the profit Lincoln earned from investing the retained assets was greater than that amount and that Lincoln made $5 million in profit in 2009 by investing retained assets. Edmonson brought an ERISA claim claiming violation of fiduciary duties, 29 U.S.C. 1002(21)(A). The district court granted Lincoln summary judgment, concluding Lincoln was not acting in a fiduciary capacity when it took the challenged actions. The Third Circuit affirmed. View "Edmonson v. Lincoln Nat'l Life Ins. Co." on Justia Law

Frazier, a sorter for Publishers Printing, was covered by Publishers’ employee benefit plan, which provided disability insurance. In 2009, at age 42, she left her job due to back pain that radiated down her legs, which she thought was caused by arthritis and a bulging disc, though she could not remember any fall or injury that initiated the pain. An MRI revealed mild disc dislocation. Her family physician diagnosed her with lower back pain and radiculopathy and in 2010 opined that Frazier was unable to return to work at regular capacity. Frazier participated in limited physical therapy. Another physician prescribed lumbar epidural injections and eventually permitted her to return to work. The plan denied Frazier’s claim for long-term disability benefits after reviewing medical evidence and job descriptions from Publishers and the U.S. Department of Labor. A Functional Capacity Evaluation indicated that Frazier “is currently functionally capable of meeting the lower demands for the Medium Physical Demand level on a 8 hour per day.” Frazier sued under the Employee Retirement Income Security Act, 29 U.S.C. 1001. The district court granted judgment for the plan, reasoning that the administrator had discretion to deny Frazier’s claim, and that denial of benefits was not arbitrary. The Sixth Circuit affirmed. View "Frazier v. Life Ins. Co. of N. Am." on Justia Law

Reynolds acquired Pactiv in 2010 under an agreement that calls for severance pay to any non‐union employee terminated without cause, within a year, as a result of the acquisition. Pactiv established a severance‐pay plan with implementing terms, including a requirement that the departing worker execute a separation agreement in a form acceptable to the company, releasing all other claims against Pactiv. Within a year, Pactiv directed Rupert to relocate. He declined. Pactiv acknowledged entitlement to severance pay and sent him an agreement, which required that Rupert promise, for the next year, not to work for competitors in research and development, solicit sales of competing goods and services, or try to hire Pactiv employees. He had not previously been subject to a restrictive covenant and declined to sign. Pactiv withheld severance benefits. The district court held that Rupert was entitled to benefits because the formal plan, governed by ERISA, lacks any language conditioning benefits on signing a restrictive covenant; material terms must be in writing, 29 U.S.C.1102(a)(1). The Seventh Circuit vacated, noting that Rupert did not ask for benefits under Pactiv’s plan, but asked for benefits under the acquisition agreement, repeatedly asserting that the plan is irrelevant to his claim. The court remanded for consideration under that agreement. View "Pactiv Corp. v. Rupert" on Justia Law

Plaintiffs, insured under employer health plans, filed a proposed class action alleging that health-insurance companies violated Wisconsin law by requiring copayments for chiropractic care. The insurance code prohibits insurers from excluding coverage for chiropractic services if their policies cover the diagnosis and treatment of the same condition by a physician or osteopath. The policies at issue provide chiropractic coverage, although, like other services, it is subject to copayment requirements. The complaint cited provisions of the Employee Retirement Income Security Act for recovery of benefits due, 29 U.S.C. 1132(a)(1)(B) & 502(a)(3), and for breach of fiduciary duty, sections 1132(a)(3), 1104. The district court dismissed. The Seventh Circuit affirmed. Nothing in ERISA categorically precludes a benefits claim against an insurance company. The complaint alleges that the insurers decide all claims questions and owe the benefits; on these allegations the insurers are proper defendants on the 1132(a)(1)(B) claim. The complaint nonetheless fails to state a claim for breach of fiduciary duty; setting policy terms, including copayments, determines the content of the policy, and decisions about the content of a plan are not themselves fiduciary acts. View "Larson v. United Healthcare Ins. Co." on Justia Law