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ERISA Watch – September 28, 2015

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As of this morning, Westlaw did not pick up any notable published appellate court decisions. There were several decisions in the class action context, the most notable of which is Bush v. Liberty Life Assurance Co. of Boston, No. 14-CV-01507-YGR, __F.Supp.3d__, 2015 WL 5475082 (N.D. Cal. Sept. 16, 2015) (which coincidentally is one of our firm’s cases). Bush involves a putative class action challenging Veteran Benefit offsets in group long-term disability policies provided by Liberty Life. On the defendants’ motion to dismiss the first amended complaint, the court denied defendants’ motion as to most of the 12-count complaint, but did grant the motion with respect to a few challenges, including the claims that recoupment of alleged overpayments constitute a prohibited transaction and a violation of 38 U.S.C. § 5301(a)(1) (which prohibits attachment, levy or seizure of VA benefits).  Read about this and more in this week’s ERISA Watch.

Below is Kantor & Kantor LLP summary of this past week’s notable ERISA decisions.

Select Slip Copy & Not Reported Decisions

Class Action

In an action challenging an amendment to a pension plan, on an unopposed motion for class certification, the court certified a class defined as follows:

All participants in the Bakery and Confectionery Union and Industry International Pension Fund or, if deceased, their beneficiaries or Estates, who (i) accrued (a) years of Covered Employment credits and (b) age credits towards eligibility for pension benefits under Plan C (also known as the “Golden 90”) or Plan G (also known as “Golden 80”), and (ii) who would be eligible for Plan C or Plan G benefits except that their age and years of service first totaled 80 (with respect to Plan G eligibility) or 90 (with respect to Plan C eligibility) on or after May 1, 2012, at a time when they were not working in covered employment.

The court appointment Class Representatives: Plaintiffs Juan M. Reyes, Salvatore Tagliareni, Angel De La Cruz, Antonio Merolla, Smail Musovic, Tesfaye Ghebremedhin, Philip Rogers, Almond Reid, Carmelo Calabro, Russell Neubert, and John Williams. Class counsel includes the Law Office of Geoffrey V. White, Sinclair Williams LLC, Frumkin & Hunter LLP, and Abbey Spanier LLP. JUAN M. REYES, et al., Plaintiffs, v. BAKERY AND CONFECTIONERY UNION AND INDUSTRY INTERNATIONAL PENSION FUND, et al., Defendants., No. 14-CV-05596-JST, 2015 WL 5569462 (N.D. Cal. Sept. 22, 2015).

Over six objectors from a class of approximately 2.8 million, the Third Circuit affirmed the district court’s grant of final approval of a class action settlement in an ERISA lawsuit involving allegations that Horizon Blue Cross Blue Shield of New Jersey’s use of two flawed databases-Ingenix and Top of Range-caused it to systematically underpay both subscribers and providers for out-of-network healthcare services. McDonough v. Horizon Blue Cross Blue Shield of New Jersey, No. 14-3558, __Fed.Appx.___, 2015 WL 5573821 (3d Cir. Sept. 23, 2015).

In a certified class action challenging Defendants’ decision to terminate retiree medical benefits, the court entered judgment for Plaintiffs on their LMRA and ERISA claims, and ordered that: (1) Defendants must comply with ERISA and their 1998 and 2001 CBA retiree healthcare obligations; (2) Defendants must promptly restore the status quo ante ; (3) Defendants must provide the promised health insurance at no premium cost to class members, for the lifetime of each class member (4) Defendant must promptly take such action as necessary to identify, account for, and make whole class members for the expenses incurred by class members due to Defendants’ unilateral changes; and (5) that the court retains jurisdiction over the remaining issues in this case, as well as any post-judgment matters. Int’l Union v. Kelsey-Hayes Co., No. 11-CV-14434 VS., __F.Supp.3d___, 2015 WL 5460631 (E.D. Mich. Sept. 17, 2015).

In a putative class action challenging Defendants’ alleged payment of excessive fees stemming from imprudent investments in unnecessarily expensive funds and overpayment to two service providers, the court denied Defendants’ motion to dismiss. It found that Plaintiffs have stated enough of a claim for breach of fiduciary duty to survive Defendants’ motion to dismiss based on the imprudent retention of the retail class funds when institutional class shares were available. Although Plaintiffs did not allege facts regarding why the amount of the recordkeeping fees are excessive, the services provided, or how the fees charged to the Plan were excessive in light of those services, the court found that those are the types of facts warranting discovery, and, therefore, dismissal at this stage is not appropriate. The court also found that at this stage it is impossible to deduce whether or not Davis’ compensation was reasonable without further discovery. Kruger v. Novant Health, Inc., No. 1:14CV208, __F.Supp.3d___, 2015 WL 5511052 (M.D.N.C. Sept. 17, 2015).

In a putative class action challenging veteran benefit offsets in Liberty Life’s group disability policies; the court granted in part and denied in part Defendants’ motion to dismiss several claims in Plaintiffs’ First Amended Complaint (“FAC”). The FAC asserted twelve claims for: (1) disability benefits under section 502(a)(1)(B), against Liberty Life; (2) equitable relief pursuant to sections 102 and 502(a)(3), against Hyundai and the Administrator Class; (3) equitable relief and disgorgement pursuant to section 502(a)(3), against Liberty Life; (4) breach of fiduciary duty under section 404, against Liberty Life; (5) breach of fiduciary duty under section 404, against Hyundai and the Administrator Class; (6) co-fiduciary liability under section 405(a), against Liberty Life; (7) prohibited transactions under section 406(a) and (b), against Liberty Life based on its recoupment of alleged benefit overpayments; (8) violations of sections 104 and 402 and monetary penalties under sections 502(a)(1)(A) and 502(c), against Hyundai; (9) violation of section 503, against Liberty Life and Hyundai; (10) declaratory and injunctive relief under section 502(a)(3), against Liberty Life; (11) declaratory and injunctive relief and restitution under sections 2201-02, against Liberty Life for making an “attachment, levy or seizure” in violation of the anti-attachment provision in 38 U.S.C. § 5301(a)(1); and (12) knowing participation in a fiduciary breach by a non-fiduciary under section 502(a)(3), against Liberty Life. The court dismissed only Count IV for breach of fiduciary duty under section 404 to the extent it seeks to hold Liberty Life responsible for deficiencies with the Summary Plan Description; Count VII (prohibited transaction); and Count XI (purported violation of 38 U.S.C. § 5301(a). Bush v. Liberty Life Assurance Co. of Boston, No. 14-CV-01507-YGR, __F.Supp.3d__, 2015 WL 5475082 (N.D. Cal. Sept. 16, 2015).

Disability Benefit Claims

The court granted Defendant’s motion for judgment on the administrative record on Plaintiff’s claim for disability retirement benefits based on his diagnoses of major depression and post-traumatic stress disorder (PTSD). The court rejected Plaintiff’s argument that a contemporaneous Workers’ Compensation lawsuit is evidence of an actual conflict of interest. Burris v. Bridgestone Americas Tire, Operations, LLC, No. 3:14-CV-01546, 2015 WL 5577456 (M.D. Tenn. Sept. 22, 2015).

On abuse of discretion review, the court ruled in favor of Hartford on Plaintiff’s claim for long-term disability benefits, where Plaintiff suffered from panhypopituitarism and diabetes insipidus. Hartford had obtained four “independent” reviewing physicians: Dr. A. Wayne Meikle (endocrinology), Dr. James Lambur (orthopedic surgery), Dr. Charles Bliss (gastroenterology), Dr. Robert Cooper (endocrinology and internal medicine). DONA SNYDER, Plaintiff, v. HARTFORD LIFE INSURANCE COMPANY Defendant., No. 13-461-SLR-SRF, 2015 WL 5545055 (D. Del. Sept. 18, 2015).

ERISA Preemption

The court granted Plaintiff’s motion to remand where Plaintiff’s Complaint asserts state-law claims for professional negligence, implied contractual indemnity, and equitable indemnity. The court found that while such claims may “relate to” the ERISA plan, they did not derive from it and cannot be said to create ERISA liability. CATLIN SPECIALTY INSURANCE COMPANY, as Subrogee of GreatBanc Trust Co., Plaintiff, vs. FMV OPINIONS, INC., Defendant., No. CV 15-1062-R, 2015 WL 5601836 (C.D. Cal. Sept. 22, 2015).

Life Insurance & AD&D Benefit Claims

The court granted summary judgment in favor of the insurer on Plaintiff’s claim for accidental death benefits, where the insurer determined that the insured suffered a heart attack prior to falling out of a boat and landing face down in the water. The report on the autopsy concluded that the insured “died of Atherosclerotic Cardiovascular Disease complicated by Drowning.” The policy does not pay benefits for deaths resulting from heart attacks. Ervin v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., No. CIV.A. WMN-15-201, 2015 WL 5567318 (D. Md. Sept. 21, 2015).

Pension Benefit Claims

Although the Sixth Circuit acknowledged that ERISA’s anti-alienation provision should prohibit Michigan from obtaining state-court orders forcing prisoners to receive pension benefits at their prison addresses, because the state court issued such an order, the court must leave it undisturbed. Since the district court lacked authority to alter or amend the state court’s judgment, the Sixth Circuit reversed and remanded. Robbennolt v. Washington, No. 14-2433, __Fed.Appx.___, 2015 WL 5637563 (6th Cir. Sept. 25, 2015).

The court granted Defendant’s motion to dismiss based on its arguments that (1) statutory penalties under ERISA Section 104 do not apply to top hat plans, and (2) a tax impact is not part of an accrued benefit under ERISA. Taylor v. NCR Corp., No. 1:14-CV-2217-WSD, 2015 WL 5603040 (N.D. Ga. Sept. 23, 2015).

The court denied Defendant’s motion for judgment on the pleadings on Plaintiff’s claim for retirement benefits under a salary continuation agreement stemming from the sale of the company. The court found that a time period of three years from the date of change of ownership to termination does not so clearly indicate a lack of vesting as to render Plaintiff’s claim implausible. JAMES RUSSELL SMITH PLAINTIFF v. INTEGRAL STRUCTURES, INC. DEFENDANT, No. 3:14-CV-419-GNS, 2015 WL 5570042 (W.D. Ky. Sept. 22, 2015).

In this action seeking to recover pension benefits from the Boilermaker-Blacksmith National Pension Trust, Plaintiff claims that the Trust improperly denied his claim for pension benefits and breached its fiduciary duties. The court denied both motions for summary judgment without prejudice and remanded the claim to the Trust for a full and fair review of Plaintiff’s claim for pension benefits. Surface v. Boilermaker Black Smith Nat. Pension Trust, No. 7:14CV00528, 2015 WL 5553739 (W.D. Va. Sept. 18, 2015).

Statute of Limitations

The court found that Plaintiffs’ breach of fiduciary duty claim against the Trustees for terminating the Fund’s accrual of future benefits is barred by ERISA’s three year statute of limitations. Here, Plaintiffs had actual knowledge of the events which they claim constituted a breach -termination of the benefits because of mismanagement-and knew that those events supported a claim of breach of fiduciary duty as early as 2009. The court also found that Plaintiffs knew about the benefit suspension when the Fund Trustees notified all active participants, including the Individual Plaintiffs, on September 14, 2009. Teamsters Local Union No. 469 v. Teamsters Joint Council No. 73 Pension Fund, No. CIV.A. 14-7466 MCA, 2015 WL 5603656 (D.N.J. Sept. 22, 2015).

Statutory Penalties/Notice Violations

The court overruled Defendant Board of Trustees’ objections to the Magistrate Judge’s calculation of statutory penalties under 29 U .S.C. § 1132(c) for failure to provide Plaintiff a copy of the Policy in the amount of $12,760.00, calculated at $110.00 per day for the 116 days between January 5, 2013 and May 1, 2013. The court also assessed an additional penalty of $61,380.00 for Defendant’s failure to furnish a copy of the Plan Document, calculated at $110.00 per day for the 558 days between May 31, 2013 and December 10, 2014. Harris-Frye v. United of Omaha Life Ins. Co., No. 1:14-CV-72, 2015 WL 5562196 (E.D. Tenn. Sept. 21, 2015).

Venue

In a matter seeking fringe benefit contributions to several trust funds, the court denied Defendant’s motion to transfer venue from the Northern District of California to the Southern District of California. Because three of the plans involved in this case are administered in Santa Clara County and because some of the operative facts in the lawsuit occurred in the Northern District of California, the court concluded that the lawsuit is sufficiently related to the Northern District of California to afford substantial deference to Plaintiffs’ choice of forum under ERISA’s liberal venue rules and the balance of convenience is not strongly in favor of Defendant. ORANGE COUNTY IBEW-NECA LABOR MANAGEMENT COOPERATION COMMITTEE, et al., Plaintiffs, v. PRO TECH ENGINEERING CORPORATION, Defendant. Additional Party Names: Douglas Chappell, Elec. Indus. Admin. Maint. Fund, Nat’l Elec. Benefit Fund, NECA-IBEW Family Med. Care Plan, Orange Cnty. Elec. Joint Apprenticeship & Training Trust Fund, Orange Cnty. IBEW-NECA Elec. Workers Defined Contribution Plan, No. 14-CV-04225-LHK, 2015 WL 5591113 (N.D. Cal. Sept. 23, 2015).

Withdrawal Liability & Unpaid Benefit Contributions

The court granted Plaintiff’s motion for default judgment against Defendant Highway Safety Systems, Inc. in the amount of $576,808.79. Einhorn v. Highway Saftey Sys., Inc., No. CIV. 13-2021 RBK, 2015 WL 5567303 (D.N.J. Sept. 22, 2015).

The court granted Plaintiffs’ motion for default judgment against Defendant for unpaid benefit contributions and related relief in the amount of $329,928.78. Gesualdi v. E. Bay Contracting Corp., No. 14-CV-4429 JS SIL, 2015 WL 5562688 (E.D.N.Y. Sept. 21, 2015).

The court denied motion to dismiss where the Pension Fund alleged that Duluth effected a complete withdrawal from the Pension Fund and thus incurred withdrawal liability. It also alleged that it sent a notice and demand of payment to Duluth, and that while Duluth paid the Pension Fund some of the liability, $393,431.75 of the principal balance still remains outstanding. The court found that the Pension Funds’ allegations adequately state a cause of action against Duluth for withdrawal liability. Cent. States, Se. & Sw. Areas Pension Fund v. Duluth Paper & Specialties Co., No. 15-CV-00796, 2015 WL 5559748 (N.D. Ill. Sept. 18, 2015).

The court awarded unpaid contributions in the amount of $7,458.54 jointly and severally against both MAC and Syed; Interest on the unpaid contributions in the amount of $3,431.04 through April 15, 2015, plus $2.03 per day thereafter to the date of judgment jointly and severally against both MAC and Syed; Liquidated damages on the unpaid contributions in the amount of $3,431.04 through April 15, 2015, plus $2.03 per day thereafter to the date of judgment jointly and severally against both MAC and Syed; Unpaid dues and assessment in the amount of $671.88 jointly and severally against both MAC and Syed; Interest on the unpaid dues and assessment in the amount of $275.42 through April 15, 2015, plus $2.03 per day thereafter to the date of judgment jointly and severally against both MAC and Syed; Audit costs in the amount of $2,240.00 jointly and severally against both MAC and Syed; Attorneys’ fees and costs in the amount of $10,916.00 jointly and severally against both MAC and Syed. Sullivan v. M.A.C. Design Corp., No. 14-CV-1846 NGG VVP, 2015 WL 5518456 (E.D.N.Y. Sept. 17, 2015).

The court granted summary judgment to the Board on its withdrawal liability claim and found that it is entitled to (1) the withdrawal assessment of $1,660,266; (2) prejudgment interest of $545.84 per day beginning from January 28, 2011 and ending on the date of final judgment; (3) liquidated damages in an amount equal to the amount payable as prejudgment interest; and (4) reasonable attorneys’ fees and costs. Bd. of Trustees of the Ken Lusby Clerks & Lumber Handlers Pension Fund v. Lumber, No. 13-CV-03898-HSG, 2015 WL 5461561 (N.D. Cal. Sept. 16, 2015).

* Please note that these are only case summaries of decisions as they are reported and do not constitute legal advice. These summaries are not updated to note any subsequent change in status, including whether a decision is reconsidered or vacated. The cases reported above were handled by other law firms but if you have questions about how the developing law impacts your ERISA benefit claim, the attorneys at Kantor & Kantor LLP may be able to advise you so please contact us. Case summaries authored by Michelle L. Roberts, Partner, Kantor & Kantor LLP, 1050 Marina Village Pkwy., Ste. 105, Alameda, CA 94501; Tel: 510-992-6130.

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