Justia ERISA Opinion Summaries

Employees of Solvay Chemicals, Inc. brought an ERISA claim against the company for what they contended was improper notice with regard to changes in the company retirement program. At one time the company offered a defined benefit plan, but changed it to a "cash balance" plan that required a defined contribution from the company (rather than defined payments to employees). While the Tenth Circuit held that the company violated its notice obligations with regard to preexisting early retirement subsidies, the notice was sufficient in all other respects. As remedy for the defective notice, employees asked that the company revert back to the abandoned defined benefit plan. The district court found that the company's notice failure was not "egregious" to grant the employees' requested relief. The employees appealed the district court's denial of their request. Agreeing that the employees were not entitled to their requested relief, the Tenth Circuit affirmed. View "Jensen, et al v. Solvay Chemicals, Inc., et al" on Justia Law

Union members, working at Navistar’s Indianapolis engine-manufacturing plant, were represented by a union and were subject to a collective-bargaining agreement. They claim that on unidentified dates they were laid off, ostensibly for lack of work, but that Navistar actually subcontracted their work to nonunion plants in violation of the CBA and that Navistar failed to recall them as work became available. They claim to have filed hundreds of grievances that were diverted or stalled. In 2009, Navistar closed the Indianapolis plant. The union members sued. When union members sue their employer for breach of contract under the Labor Management Relations Act, 28 U.S.C. 185, they must also claim breach of their union’s duty of fair representation. The district court dismissed, finding that the plaintiffs had failed to adequately plead the prerequisite union breach of fair representation. A separate interference-with-benefits claim under the Employment Retirement Income Security Act, 29 U.S.C. 1001, was resolved by summary judgment in favor of Navistar. The 29 remaining plaintiffs appealed only the LMRA claim. The Seventh Circuit affirmed, stating that all of the allegations concerning the duty of fair representation were conclusory, so that the complaint lacked the required factual content. View "Yeftich v. Navistar, Inc." on Justia Law

In 1987, Kenseth underwent surgical gastric banding, covered by her insurer. About 18 years later Dr. Huepenbecker, advised another operation for severe acid reflux and other problems resulting from the first surgery. Her employer provided insurance through Dean, a physician-owned integrated healthcare system, specifically excluding coverage for “surgical treatment or hospitalization for the treatment of morbid obesity” and services related to a non-covered benefit or service. Plan literature refers coverage questions to the customer service department. Huepenbecker worked at a Dean-owned clinic, scheduled surgery at a Dean-affiliated hospital, and instructed Kenseth to call her insurer. Kenseth spoke with a customer service representative, who stated that Dean would cover the procedure. After the surgery, Dean declined coverage. Kenseth was readmitted for complications. Dean denied coverage for the second hospitalization. Kenseth pursued internal appeals to obtain payment of the $77,974 bill before filing suit under ERISA, 29 U.S.C. 1001, and Wisconsin law. The district court granted Dean summary judgment. The Seventh Circuit affirmed as to estoppel and pre-existing condition claims, but remanded concerning breach of fiduciary duty. After the district court again entered summary judgment for Dean, the Supreme Court decided Cigna v. Amara, clarifying relief available for a breach of fiduciary duty in an ERISA action. The Seventh Circuit remanded, stating that Kenseth has a viable claim for equitable relief. View "Kenseth v. Dean Health Plan, Inc." on Justia Law

Plaintiffs, current and former employees of Amgen and AML, participated in two employer-sponsored pension plans, the Amgen Plan and the AML Plan. The Plans were employee stock-ownership plans that qualified as "eligible individual account plans" (EIAPs) under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1107(d)(3)(A). Plaintiffs filed an ERISA class action against Amgen, AML, and others after the value of Amgen common stock fell, alleging that defendants breached their fiduciary duties under ERISA. The court concluded that defendants were not entitled to a presumption of prudence under Quan v. Computer Sciences Corp., that plaintiffs have stated claims under ERISA in Counts II through VI, and that Amgen was a properly named fiduciary under the Amgen Plan. Therefore, the court reversed the decision of the district court and remanded for further proceedings. View "Harris v. Amgen" on Justia Law

Hakim was an Accenture employee for nearly 10 years before being let go as part of a workforce reduction. During part of his tenure with the company, he participated in the company’s pension plan. In 1996, Accenture amended the plan to exclude a number of employees in various departments. In 1999, Hakim was promoted to a position in which he was no longer eligible to participate in the plan under the terms of the 1996 amendment. Upon his 2003 termination, at age 39, Hakim signed a release in exchange for separation benefits that waived all claims that arose prior to signing the release. In 2008, while employed elsewhere, Hakim sought additional pension benefits from Accenture, arguing that the notice of the 1996 amendment to the plan (which was emailed to employees) was insufficient and violated ERISA’s notice requirements, 29 U.S.C. 1054(h). His claim was denied by Accenture. The district court granted summary judgment in favor of Accenture, holding that Hakim knew or should have known about his claim when he signed the release, and thus waived his claim. The Seventh Circuit affirmed. View "Hakim v. Accenture U.S. Pension Plan" on Justia Law

Johnson, sole administrator of the Shirley T. Sherrod Benefit Pension Plan and Trust, sued the Plan’s custodian, Merrill Lynch, alleging that Merrill Lynch refused to abide by his instructions and has exercised control over Plan assets by refusing to make distribution to Sherrod. The Plan is a single-participant retirement account, exempt from garnishment under the anti-alienation provision of the Employment Retirement Income Security Act, 29 U.S.C. 1056(d). There is a freeze on the account, as a result of a Michigan state court order in a post-judgment collection proceeding. The district court dismissed for lack of subject-matter jurisdiction. The Seventh Circuit affirmed, holding that any harm is traceable to the state court order, not to Merrill Lynch. View "Johnson v. Merrill Lynch, Pierce, Fenner & Smith, Inc." on Justia Law

Heartland is an investment firm that formerly held an ownership interest in Metaldyne, an automotive supplier. Leuliette is a co-founder of Heartland and was the CEO and Chairman of the Board of Metaldyne. Tredwell is also a Heartland co-founder and a Metaldyne Board member. In 2006, Heartland agreed to sell its interest in Metaldyne to Ripplewood. Metaldyne submitted an SEC “Schedule 14A and 14C Information” report that detailed the terms of the acquisition, but failed to mention that Metaldyne would owe plaintiffs, former executives, approximately $13 million as a result of the sale, under a change-of-control provision in Metaldyne’s “Supplemental Executive Retirement Plan,” in which Plaintiffs participated. The SERP is subject to Employee Retirement Income Security Act of 1974. Ripplewood threatened to back out of the deal when it found out about the obligation. In response, Leuliette and Tredwell persuaded Metaldyne’s Board to declare the SERP invalid without notifying Plaintiffs. The Ripplewood deal closed less than a month later. Leuliette personally collected more than $10 million as a result. Plaintiffs claimed tortious interference with contractual relations. The district court dismissed. The Sixth Circuit reversed, holding that the state law claims were not “completely preempted” under section 1132(a)(1)(B) of ERISA. View "Gardner v. Heartland Indus. Partners, LP" on Justia Law

Central States is a multiemployer pension plan for members of the Teamsters union in the eastern half of the U.S. Ready Mix employed Teamsters labor and participated in the Central States plan. In 2007 Ready Mix ceased employing covered workers and incurred $3.6 million in withdrawal liability to fully fund its pension obligations. Two affiliated companies under common control by Nagy, the owner of Ready Mix, conceded liability for the shortfall under the Employee Retirement Income Security Act, as amended by the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. 1301(b)(1). The district court concluded that Nagy held and leased property to Ready Mix as a passive investment, not a trade or business, so the leasing activity did not trigger personal liability, but that Nagy’s work as a manager for a country club was as an independent contractor, not an employee, and this activity qualified as a trade or business under section 1301(b)(1), which was enough for personal liability. The Seventh Circuit affirmed, holding that Nagy’s leasing activity is categorically a trade or business for purposes of personal liability under 1301(b)(1). View "Cent. States SE & SW Areas Pension Fund v. Nagy" on Justia Law

Plaintiffs filed a putative class action, claiming that fiduciaries for their retirement plans violated the Employee Retirement Income Security Act, 29 U.S.C. 1001, by continuing to offer employer stock as an investment option while the stock price dropped. The individual retirement account plan at issue allowed employees to choose among more than 20 investment funds with different risk profiles that had been selected by plan fiduciaries. ERISA imposes on the fiduciaries a duty to select only prudent investment options. One of the investment options in the Plan was the M&I Stock Fund, consisting of M&I stock, under an Employee Stock Ownership Plan. In 2008- 2009, M&I’s stock price dropped by approximately 54 percent. The district court applied a presumption of prudence, found that plaintiffs’ allegations could not overcome it, and dismissed without addressing class certification. The Seventh Circuit affirmed, stating that plaintiffs’ theory would require the employer and plan fiduciaries to violate the plan’s governing documents and “seems to be based often on the untenable premise that employers and plan fiduciaries have a fiduciary duty either to outsmart the stock market, which is groundless, or to use insider information for the benefit of employees, which would violate federal securities laws.” View "White v. Marshall & Ilsley Corp." on Justia Law

The US Airways health benefits plan paid $66,866 in medical expenses for injuries suffered by McCutchen, its employee, in a car accident caused by a third party. The plan entitled US Airways to reimbursement if McCutchen recovered money from the third party. McCutchen’s attorneys secured $110,000 in payments, and McCutchen received $66,000 after deducting the contingency fee. US Air¬ways demanded reimbursement of the full $66,866 and filed suit under section 502(a)(3) of the Employee Retirement Income Security Act, which authorizes health-plan administrators to bring a civil action “to obtain ... appropriate equitable relief ... to enforce .. the plan.” The district court granted US Airways summary judgment. The Third Circuit vacated, reasoning that equitable doctrines and defenses overrode the reimbursement clause, which would leave McCutchen with less than full payment for his medical bills and give US Airways a windfall. The Supreme Court vacated and remanded, holding that the plan’s terms govern. An administrator can use section 502(a)(3) to obtain funds that its beneficiaries promised to turn over. ERISA focuses on what a plan provides; section 502(a)(3) does not authorize “appropriate equitable relief” at large,” but only relief necessary to enforce “the terms of the plan” or the statute. While equitable rules cannot trump a reimbursement provision, they may aid in construing it. The plan is silent on allocation of attorney’s fees, and the common¬fund doctrine provides the appropriate default rule. View "US Airways, Inc. v. McCutchen" on Justia Law