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ERISA Watch – September 3, 2015

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This has been a busy week for ERISA on a number of fronts but particularly for matters involving withdrawal liability and unpaid contributions. The Sixth Circuit held that the alter-ego doctrine did not apply to a case where the pension plan trustees alleged that one of the defendant employers signed a labor agreement to allow the other defendant employer to evade its obligations under a different labor agreement. The Seventh Circuit held that an interim agreement following the expiration of a collective bargaining agreement relinquished the employer’s obligation to contribute to the pension fund. Now that you’re at the edge of your seat, read about more exciting developments in this week’s ERISA Watch!

Your reliable source for summaries of recent ERISA decisions

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

Fourth Circuit

Plan’s suit against participant for declaratory judgment is not authorized by ERISA. In Ret. Comm., Plan Adm’r of Executive Ret. Plan of Thermal Ceramics Latin Am. v. Magasrevy, No. 5:14-CV-408-FL, __F.Supp.3d___, 2015 WL 5042896 (E.D.N.C. Aug. 26, 2015), Plaintiffs brought suit seeking a declaratory judgment under ERISA concerning Defendant’s entitlement to retirement benefits under two different plans. The court concluded that since the plans at issue in this case are administered in Raleigh, North Carolina, and defendant has been served in the Southern District of Florida, this court would have personal jurisdiction over Defendant under § 1132(e)(2) if this is a proper ERISA enforcement action. However, the court found that it does not have subject matter jurisdiction over the action under § 1132(a)(3). Plaintiffs did not identify any particular provision of ERISA that they are enforcing through the instant action. The court noted that although the Fourth Circuit has not addressed directly the issue presented in this case, the Eleventh Circuit in Gulf Life Insurance Co. v. Arnold, 809 F.2d 1520 (11th Cir.1987) held that a fiduciary’s declaratory judgment action to determine the extent of its liability is not an action that enforces ERISA. All Plaintiffs need do to enforce the terms of the plan, assuming it contends the claim for benefits is invalid, is deny payment. Here, Plaintiffs did not bring suit to compel Defendant to do anything. Their claim seeking a declaration as to the status of the Top Hat Plan as an ERISA plan does not enforce or remedy a violation of ERISA or the plan. Therefore, the instant action does not constitute an action to “enforce” ERISA or the terms of the plan within the meaning of § 1132(a)(3)(B) or a suit to obtain “appropriate equitable relief.” The court found that Plaintiffs attempt to use the declaratory judgment action for “procedural fencing” since Defendant indicated that he was going to file suit in the Southern District of Florida where he resides. Plaintiffs filed this action in a district where Defendant would not otherwise be subject to personal judgment absent ERISA’s nationwide service of process provision. ERISA does not permit Plaintiffs to gain a procedural advantage over Defendant in this manner. Accordingly, the court dismissed the action.

Sixth Circuit

Alter-ego doctrine does not apply in circumstance where union association negotiated, signed, and received the benefit of the agreement with the employer. In Bd. of Trustees of the Local 17 Iron Workers Pension Fund v. Harris Davis Rebar LLC, No. 14-3997, __F.3d___, 2015 WL 5131853 (6th Cir. Sept. 2, 2015), the Sixth Circuit affirmed the district court’s dismissal of the Trustees’ claims, where they allege that one of the defendant employers, Harris Davis Rebar LLC, signed a labor agreement as a device to allow the other defendant employer, Davis JD Steel LLC, to evade its obligations under a different labor agreement. The court declined the Trustees’s invitation to treat the two companies as one under a judge-made doctrine known as the “alter-ego” doctrine. Essentially, the Trustees seek a determination that Davis Rebar is bound by the terms of JD Steel’s labor agreement, which requires JD Steel to make contributions to the Trustees’ pension fund rather than to union defined-contribution plans, which is what Davis Rebar is required to contribute to. In this case, the same association of iron-workers unions negotiated and signed both agreements with the two employers and the court declined to set aside the union association’s judgment regarding its members’ best interests in favor of the Trustees’ judgment or the court’s judgment. The court rejected the Trustees’ separate argument that Davis Rebar is required to make contributions to the fund under the Pension Protection Act, which imposes various obligations on plan sponsors. The court explained that Davis Rebar is not a sponsor of the fund under its contract with the Iron Workers.

Seventh Circuit

Interim agreement following expiration of CBA validly eliminated the employer’s obligation to contribution to the pension fund. In Michels Corp. v. Cent. States, Se., & Sw. Areas Pension Fund, No. 14-3726, __F.3d___, 2015 WL 5138576 (7th Cir. Sept. 2, 2015), the Seventh Circuit considered when the employer’s obligation to contribute to the pension funded ended, where the governing collective bargaining agreement (CBA) between the multiemployer group and the union terminated and there were a series of temporary “extensions” of the CBA. The court concluded that the parties to the CBA terminated it in accordance with its terms effective January 31, 2011. Thereafter, a series of short-term agreements that had the effect of extending the CBA’s terms for the designated periods while the parties negotiated but the interim agreement that took effect on November 15, 2011 eliminated the employers’ duty to contribute to the pension fund and extended all other terms of the CBA. The court reversed the district court’s grant of summary judgment for the pension fund, where it held that the interim agreement was not sufficient to end the employers’ duty to contribute. The Seventh Circuit determined that the CBA imposing the duty to contribute had long since expired by November of 2011, and there was nothing to prevent the parties from agreeing to the new arrangement.

Ninth Circuit

401(k) excessive fee class not certified but court noted that a fiduciary’s fees can be unreasonable under ERISA even if other fiduciaries are also charging unreasonable fees. In JACLYN SANTOMENNO; KAREN POLEY; BARBARA POLEY, Plaintiff, v. TRANSAMERICA LIFE INSURANCE COMPANY; TRANSAMERICA INVESTMENT MANAGEMENT, LLC; TRANSAMERICA ASSET MANAGEMENT INC., Defendants., No. CV1202782DDPMANX, __F.Supp.3d___, 2015 WL 5096388 (C.D. Cal. Aug. 28, 2015), a matter where Plaintiffs alleged that the fees they were charged for 401(k) plan products targeted at small and mid-size employers were excessive and in violation of ERISA, the court denied Plaintiffs’ Motion for Class Certification. The court found that each of the Rule 23(a) prerequisites were satisfied but that under Rule 23(b)(3) individual inquiries potentially loom large where Plaintiffs seek to certify a class of about 300,000 participants in about 7,400 plans. The fees charged to individual plans must be compared to the expense of providing services to those plans and these individualized inquiries would be significantly more complex than Plaintiff’s proposed inquiry into a single fee whose reasonableness (Plaintiffs argue) could be straightforwardly determined as to all plans equally. The court also found that whether there was actually a misrepresentation may not be susceptible to classwide proof because many class members appear to have received disclosures which explained the subsidization of plan-level costs and provided estimates of the amount spent on such subsidization. Although the court denied certification, it emphasized that its decision is limited to the particular facts of this motion and this proposed class. The court is appreciative of the problem that the majority (83%) of 401(k) participants do not know how much they pay in fees and expenses. The court made clear that “[t]his order is not intended to approve of ERISA plan service providers playing ‘hide the ball’ with their fees” or that “the reasonableness of fees is measured against what other providers are charging.”

Select Slip Copy & Not Reported Decisions

Attorneys’ Fees

In Chesemore v. Alliance Holdings, Inc., No. 09-CV-413-WMC, 2015 WL 5093283 (W.D. Wis. Aug. 28, 2015), the court awarded Plaintiffs attorneys’ fees for work related to post-judgment discovery, including preparing a motion to compel, reply in support of the motion and a fee petition. The court awarded Plaintiffs $17,599.81 in attorneys’ fees and awarded Alliance $31,740.54.

Breach of Fiduciary Duty

In Murray v. Invacare Corp., No. 1:13 CV 1882, __F.Supp.3d___, 2015 WL 5093438 (N.D. Ohio Aug. 28, 2015), a putative class action alleging breach of fiduciary duty for imprudent investment, failure to monitor co-fiduciaries, and knowing participation in co-fiduciaries’ breaches, the court denied Defendants’ Motion to Dismiss Plaintiff’s Second Amended Complaint. The court found that Plaintiff sufficiently alleged loss causation under Dura Pharmaceuticals, Inc. v. Broudo, 554 U.S. 336 (2005) to sustain the imprudent investment claim. Because the failure to monitor and knowing participation claims are derivative, the court also declined to dismiss these claims.

In Chesemore v. Alliance Holdings, Inc., No. 09-CV-413-WMC, 2015 WL 5093334 (W.D. Wis. Aug. 28, 2015), defendant Alliance Holdings, Inc., and nominal defendant Alliance Holdings, Inc. Employee Stock Option Plan sought a post-judgment, temporary restraining order against defendant David Fenkell. They requested: (1) an order requiring Fenkell to restore $2.044 million to Alliance ESOP within seven days or hold him in civil contempt; (2) an order freezing Fenkell’s assets and establishing a constructive trust to cover the $3.25 million indemnity requirement in the judgment, pending disposition of the Seventh Circuit appeal from this court’s final judgment; and (3) an order requiring Fenkell to pay all of their attorneys’ fees and costs attendant to obtaining enforcement of the judgment. The court ordered that on or before September 4, 2015, Fenkell is ordered to restore to the Alliance ESOP $2,044,014.42. The court denied the other aspects of the motion without prejudice.

In Perez v. California Pac. Bank, No. 13-CV-03792-JD, 2015 WL 5029452 (N.D. Cal. Aug. 25, 2015), an enforcement action brought by the Secretary of Labor against the bank for its handling of the Bank Employee Stock Ownership Plan, the court denied Defendants’ motion for summary judgment and granted in part and denied in part the Secretary of Labor’s motion. The court found that the bank failed to liquidate and distribute shares as cause upon termination and improperly diverted $132,506 of plan assets. Although the court found in favor of the bank on liability, it stated that it was unclear what losses, if any, were suffered by the Plan as a result of Defendants’ breach. As such, the determination of the specific amount of liability is reserved for trial. The court denied summary judgment on the Secretary’s claims that Defendants’ unlawfully transferred $69,745.93 in plan assets from the Plan to the Plan Sponsor and its claim that Defendants violated ERISA by holding Plan assets in noninterest bearing accounts at the bank.

Disability Benefit Claims

In PATTI OKUNO, Plaintiff, v. RELIANCE STANDARDLIFE INSURANCE COMPANY, Defendant., No. 2:14-CV-662, 2015 WL 5118077 (S.D. Ohio Sept. 1, 2015), applying abuse of discretion review, the court held that Reliance acted reasonably in declining to pay long-term disability benefits for Plaintiff’s Crohn’s disease, narcolepsy, and Sjogren’s syndrome. In this case, Plaintiff was also disabled by fibromyalgia and certain spinal conditions, which were deemed “pre-existing conditions.”

In Foster v. Sedgwick Claims Mgmt. Servs., Inc., No. 14-1241 (JEB), __F.Supp.3d___, 2015 WL 5118360 (D.D.C. Aug. 28, 2015), Plaintiff, allegedly disabled by fibromyalgia, fatigue, and anxiety disorder, brought suit claiming that Defendants Sedgwick Claims Management Services, Inc. and the Bank’s Short-Term and Long-Term Disability Plans improperly denied her disability benefits. The court granted summary judgment to Defendants, finding that the Short-Term Disability Plan is not governed by ERISA because it is a “payroll practice,” and that the denial of LTD benefits was appropriate in light of the aggregate medical evidence and the eligibility requirements of the Plans.

In Hardy v. Prudential Life Ins. Co. of Am., No. 3-14-0614, 2015 WL 5093249 (M.D. Tenn. Aug. 28, 2015), the court adopted the Magistrate Judge’s Report and Recommendation finding in favor of Prudential on Plaintiff’s claims for short-term and long-term disability benefits. The court reviewed Plaintiff’s claim under the arbitrary and capricious standard of review. The court disagreed with Plaintiff that Prudential ignored favorable, objective evidence from her treating physicians and relied on opinions of file reviewers who never examined Plaintiff. Plaintiff’s objections included that the file reviewers, the independent physicians who reviewed her medical records, were biased. The court found that Plaintiff failed to present credible evidence that the file reviewers in this case were biased or that any such bias affected their decision with regard to her benefits.

In Caldwell v. Standard Ins. Co., No. 2:14-CV-25242, 2015 WL 5031485 (S.D.W. Va. Aug. 25, 2015), on review of Standard’s termination of Plaintiff’s long-term disability benefits, the court found that it need not reduce the amount of deference afforded to Standard on the basis of the alleged conflict of interest since Standard paid benefits for a two-year period, and only terminated benefits after engaging in an independent review of Plaintiff’s medical records and vocational aptitude. Moreover, the court disagreed with Plaintiff that Standard withheld information from the consulting physicians who reviewed her medical records. Standard stopped paying Plaintiff based on the LTD policy’s 24-month limitation on disabilities related to disorders of the cervical, thoracic, or lumbosacral back, and depression. It also determined that for Plaintiff’s non-limited impairments, they did not cause her to be disabled from “any occupation.” The court granted summary judgment to Standard, finding that Standard engaged in a reasoned and principled decisionmaking process that took into account all of the evidence that Caldwell presented, relied on the judgment of independent consulting physicians, and reached a conclusion logically consistent with the language of the relevant provisions of the policy. Standard retained Dr. Mark Shih, Susan Martin (a certified rehabilitation counselor), Dr. Hans Carlson, and Karol Paquette (a second Certified Rehabilitation counselor) to review Plaintiff’s claim and appeal.

In Valentine v. Aetna Life Ins. Co., No. 14-CV-1752 JFB GRB, 2015 WL 5024569 (E.D.N.Y. Aug. 25, 2015), the court granted summary judgment in favor of Plaintiff on her claim for long-term disability benefits, finding that even under the deferential standard of review, Dr. Stuart Rubin’s (Independent Physician Consultant who is certified in Physical Medicine and Rehabilitation) report and Aetna’s corresponding denial of Plaintiff’s claim after June 30, 2012, failed to address substantial parts of the claim file, and are, therefore, “not reasonably consistent with the record as a whole.” Plaintiff is disabled by trigeminal nerve disorder. The court remanded the claim to Aetna for reconsideration.

ERISA Preemption

In Estate of Jennings v. Delta Air Lines, Inc., No. CIV.A. 15-962 JBS, 2015 WL 5089458 (D.N.J. Aug. 27, 2015), Plaintiff asserted claims for breach of contract and negligence against Defendants for their roles in the allegedly wrongful denial of the Estate’s life insurance claim on Ms. Jennings’ husband’s unexpected death. The life insurance policy was provided by the husband’s employer as part of a group employee benefits plan. The court found that Plaintiffs’ challenge of Defendants’ conduct under the terms of an ERISA plan require interpretation of the plan and is preempted by ERISA.

In Olmsted Med. Ctr. v. Carter, No. 14-CV-2916 PJS/BRT, 2015 WL 5039216 (D. Minn. Aug. 26, 2015), Plaintiff Olmsted Medical Center filed suit against Defendant for payment of services it rendered on his injured knee. Defendant filed a third-party complaint against his employer, Mayo Clinic, alleging that Mayo is liable for the debt under the doctrine of promissory estoppel. Mayo removed the case, arguing that Defendant’s claim is preempted by ERISA. On summary judgment, the court determined that Defendant’s promissory-estoppel claim is far removed from a real promissory-estoppel claim, in which the plaintiff alleges that the defendant made a promise and then harmed him by failing to keep that promise. Here, an employee of Mayo Clinic Health Solutions was contacted with an inquiry about the scope of coverage under the plan. The employee responded to the inquiry by accurately describing that coverage. Defendant was not harmed because the employee made an error, but because Defendant allegedly breached his obligations under the plan by failing to return the Accident Letters and then failed to file a timely appeal. The court found that this claim is an ERISA claim for benefits, not a promissory-estoppel claim. The court found that the ERISA claim must be dismissed because Defendant did not exhaust his administrative remedies. The court dismissed the third-party claim against Mayo, and remanded Plaintiff’s claim against Carter to state court.

In LeBlanc v. SunTrust Bank, No. 3:15-CV-00630, 2015 WL 5038032 (M.D. Tenn. Aug. 25, 2015), the court remanded Plaintiff’s case to state court, where Plaintiff brought suit against her former employer and its benefits administrator, Sedgwick Claims Management Services, Inc., asserting various state-law claims based on the denial of short-term disability plan benefits under a plan exempted from ERISA because it is a “payroll practice.” Defendants argued that although Plaintiff sued over denial of STD benefits, Plaintiff’s state law claims actually seek recovery of LTD benefits governed by an ERISA plan and are therefore preempted under ERISA. The court found that Plaintiff’s claims are not based on the terms of an ERISA-regulated plan and she could not bring her claims under ERISA because she was unable to quality for LTD benefits once her STD benefits were denied. Thus, Plaintiff did not ever apply for LTD benefits, she did not receive a denial of LTD benefits, there is not an administrative record to review, and she seeks damages from the individual Defendants, not from the LTD Plan’s assets.

In Schoen v. Health Mgmt. Associates, Inc., No. 2:14-CV-411-FTM-29CM, 2015 WL 5021623 (M.D. Fla. Aug. 25, 2015), the court found that Count I of Plaintiff’s Complaint related to the provisions of an Employment Agreement guaranteeing certain benefits separate and distinct from the benefits under a Supplemental Executive Retirement Plan (SERP) to be not preempted by ERISA.

Exhaustion of Administrative Remedies

In Schoen v. Health Mgmt. Associates, Inc., No. 2:14-CV-411-FTM-29CM, 2015 WL 5021623 (M.D. Fla. Aug. 25, 2015), the court denied Defendants’ motion to dismiss Plaintiff’s SERP claim for failing to exhaust administrative remedies. Although the SERP does require the filing of a claim and appeal, the court found that Plaintiff adequately pled exhaustion, or in the alternative, exhaustion would have been futile. Here, Plaintiff alleged that as a result of the acquisition of HMA by CHS on January 27, 2014, there was no known named plan administrator, and Plaintiff’s demand was sent directly to HMA’s counsel. HMA’s response did not state that any future notice or communication under the SERP should be directed to any other address, nor did it identify any other individual to make such demand upon. Subsequently, HMA made a partial payment that did not satisfy Plaintiff’s demand. Plaintiff also alleged that any further demand or administrative procedure would be futile because: (a) HMA failed to provide written notice within ninety (90) days in compliance with the terms of the SERP; and (b) HMA did not detail the manner in which the cash benefit was calculated, precluding Plaintiff from any meaningful review on appeal.

Life Insurance & AD&D Benefit Claims

In Stockman v. GE Life, Disability & Med. Plan, No. 13-4450, __Fed.Appx.___, 2015 WL 5061425 (6th Cir. Aug. 28, 2015), the court affirmed the district court’s decision in favor of Plaintiff on his claim for dismemberment benefits due to the permanent and total loss of his left foot for one year. A series of surgeries partially restored Plaintiff’s use of the foot, but it remains permanently damaged. The district court concluded that Plaintiff’s injury fell within the Plan’s promise that “the permanent and total loss of function of the hand or foot as a result of an accident after the loss has continued for at least 12 consecutive months” would be covered. The Sixth Circuit determined that the meaning of the term “permanent” is ambiguous because it is subject to two reasonable interpretations. Using Webster’s definition of “permanent” which means something that is “continuing or enduring without fundamental or marked change,” the court found that although Plaintiff was able to walk without an assistive device after 12 months, this does not mean that the loss of the use of his foot was not “continuing or enduring without fundamental or marked change.” Applying MetLife’s interpretation would create an insurmountable requirement to claim benefits. Judge Boggs penned a dissenting opinion.

Pension Benefit Claims

In Repass v. AT & T Pension Benefit Plan, No. 3:14-CV-2686-L, 2015 WL 5021405 (N.D. Tex. Aug. 25, 2015), Plaintiff seeks pension credit for time spent working at AT&T affiliates. Her complaint alleged ERISA violations, breach of fiduciary duty, and promissory estoppel, the latter two on which Defendants’ moved to dismiss. The court found that Plaintiff has alleged sufficient facts, at this stage, to assert a claim for promissory estoppel. Specifically, Plaintiff alleged misrepresentations for which Defendants would be liable irrespective of the existence of her benefits under her pension plan. The court did dismiss the breach of fiduciary duty claim upon determining that Plaintiff’s claim for wrongful denial of benefits under 29 U.S.C. § 1132(a)(1)(B) precludes her from asserting a claim for breach of the fiduciary duty under section 29 U.S.C. § 1132(a)(3).

Pleading Issues & Procedure

In PEACOCK MEDICAL LAB, LLC,PBL MEDICAL, LLC, & LAKEDRIVE MEDICAL, LLC, Plaintiffs, v. UNITEDHEALTH GROUP, INC.,UNITED HEALTH CARE SERVICES,INC., OPTUMINSIGHT, INC., and OPTUMHEALTH, INC., Defendants., No. 1481271CVHURLEYHOPKI, 2015 WL 5118122 (S.D. Fla. Sept. 1, 2015), Plaintiffs, affiliates of a substance abuse treatment center, brought suit against Defendant for payment of unpaid claims based on the patients’ assignment of benefits to the treatment center. The court ordered for a more definite statement and to show cause for why the patients are not “required” parties under Fed.R.Civ.P. 19 and should be joined to the lawsuit or order the treatment center to be joined as a required party.

In Heartland Health & Wellness Fund, an Employee Welfare Benefit Plan, by Henry B. Taylor and Joseph M. Chorpenning, as Trustees, Plaintiff, v. Salem Twp. Hosp. Plan & Mutual Medical Plans, Inc., Defendants., No. 3:14-CV-411, 2015 WL 5095424 (S.D. Ohio Aug. 31, 2015), a suit by a Taft-Hartley employee benefit fund against the administrator of one of its participant’s health plans, the court granted Defendants’ motions for abstention pending resolution of a state court proceeding involving the same matter. The court found that because these are the same claims that are currently being litigated in Illinois state court, hearing Plaintiffs’ case while the state proceeding is ongoing would be effectively the same as seeking a “removal determination in a forum other than the district court of the United States for the district and division within which the state court action is pending which is in contravention of the federal removal statute. The court explained that the defendant STH Plan cannot avoid ERISA preemption simply by attempting to characterize a coordination of benefits dispute as an eligibility issue. The state court is capable of determining whether or not ERISA has preempted the state law claims.

Provider Claims

In St. Alexius Med. Ctr. v. Roofers’ Unions Welfare Trust, No. 14 C 8890, 2015 WL 5123602 (N.D. Ill. Aug. 28, 2015), Plaintiff filed an amended complaint seeking to recover $153,424.00 for unpaid hospital services and $228,000.00 in statutory penalties due to Defendant’s failure to timely provide Plaintiff with the Plan. Defendant moved to dismiss, which the court granted in part. The court applied the two-year contractual limitations period in the plan and found the Plaintiff’s claim for benefits to be time-barred since it was filed almost five years after the expiration of the limitations period. As such, the court found that it need not reach Defendant’s exhaustion argument. Applying a two-year statute of limitations to the August 2008 statutory penalty claim, the court also found this claim to be time-barred. But, the court declined to dismiss the January 2014 and March 2014 statutory penalty claims, rejecting Defendant’s argument that the assignment of benefits does not confer standing to sue for statutory penalties.

Release of Claims

Anderson v. Xerox Corp., No. 14-2849-CV, __Fed.Appx.___, 2015 WL 5023929 (2d Cir. Aug. 26, 2015), a matter involving a claim against a retirement plan, the Second Circuit affirmed the district court’s judgment in favor of Defendants on the ground that when Plaintiff was terminated from employment by Xerox in 2002, he executed an agreement relinquishing “any and all claims of any kind, known or unknown”-including ERISA claims-arising out of “facts which [had] occurred prior to the date of [the] Release.” Plaintiff received a severance payment totaling approximately $47,000 for his release of claims. Relying on Frommert v. Conkright, 535 F.3d 111, 120-23 (2d Cir.2008), rev’d and remanded on other grounds, 559 U.S. 506 (2010), the court found such release enforceable.

Severance Benefits

In Blanch v. Chubb & Sons, Inc., No. CIV. CCB-12-1965, __F.Supp.3d___, 2015 WL 5090477 (D. Md. Aug. 28, 2015), a lawsuit involving a host of allegedly unpaid benefits following Plaintiff’s termination from employment, the court granted Plaintiff’s motion to reconsider its previous decision. The court considered two ERISA issues. The first relates to Plaintiff’s claim for the denial of severance benefits. The Committee deciding Plaintiff’s claim denied it because he was discharged for cause, including “fraud against the Company,” as well as “violation of the Company’s internal policies.” This was based on evidence indicating that Plaintiff had accepted meals from contractors from whom he approved (and in one case solicited) inflated estimates of claims. The court rejected Plaintiff’s argument that the Committee’s initial denial of benefits was impermissibly conclusory, insofar as it stated that he had been terminated for cause without reviewing the evidence underlying that determination. The court found that it was sufficient that the Committee initially explained that Blanch had been denied benefits because he had been terminated for cause, rather than some other ground of decision. The Committee did not need to extensively outline the facts supporting the termination. The court granted summary judgment in favor of Defendant on this claim. The second ERISA claim involves a statutory penalty claim under 29 U.S.C. § 1132(c)(1) for Defendant’s alleged failure to provide Plaintiff with access to the severance plan documents for more than two years. The court found that Plaintiff’s demand letter did not include a request for plan documents and that Defendant did respond to his request, which was not made until 30 days prior to the production of documents.

Statute of Limitations

In Shapiro v. Fid. Investments Institutional Operations Co., Inc., No. CV 14-143-DLB-CJS, 2015 WL 5076984 (E.D. Ky. Aug. 27, 2015), Plaintiff alleged in November 2006 he sent Fidelity a letter requesting reimbursement of his 401(k) funds and after eight years with no response, he sent another letter requesting confirmation that his account had been refunded. Fidelity responded within two weeks informing Plaintiff that his 401(k) plan had been terminated effective November 6, 2006 but did not indicate whether his 401(k) had been reimbursed. Plaintiff filed his lawsuit a few months following receipt of Fidelity’s letter. The court rejected Plaintiff’s argument that the concealment exception to the statute of limitations applies here where Fidelity simply did not act. Fidelity’s motives in not informing Plaintiff that it failed to reimburse his account are irrelevant. Because Plaintiff did not allege that Fidelity took action designed to cover up the 2006 disbursement, Plaintiff cannot avail himself of the concealment exception. The court further held that Fidelity’s failure to reimburse Plaintiff’s account did not amount to a continuing violation, and/or a separate breach of fiduciary duty because Plaintiff failed to allege the necessary elements of a continuing violation; to wit, that Fidelity committed a wrongful act after 2006. The court denied Plaintiff’s motion for leave to file a § 502(a)(1)(B) claim because he failed to identify any specific right or benefit he would seek to enforce, but also that the claim is time-barred applying the most analogous state law statute of limitions (here, five years under KRS § 413.120(2).

In Ramnaraine v. Merrill Lynch & Co, Inc., No. 14-3562-CV, __Fed.Appx.___, 2015 WL 5010304 (2d Cir. Aug. 25, 2015), the Second Circuit affirmed the district court’s dismissal of Plaintiff’s breach of fiduciary duty claim, which alleged that Defendants failed to comply with his instructions to sell all shares of Merrill Lynch stock held in his three ERISA plans, because Plaintiff had actual knowledge of the purported breach in September 2007 but did not file his complaint until June 2011.

Subrogation/Reimbursement Claims

In Pharmacia Corp. Supplemental Pension Plan, ex rel. Pfizer Inc. v. Weldon, No. 4:14CV1498 CDP, 2015 WL 5021889 (E.D. Mo. Aug. 24, 2015), Plaintiff brought suit against Defendant seeking reimbursement for more than $1.3 million in pension distributions that they mistakenly paid to her. When Defendant retired she elected to receive her pension benefits in set monthly payments over a period of three years, but the payments continued beyond three years. Defendant and her financial advisor brought the payments to the attention of the Plan’s third-party administrator, who assured Defendant that the payments were correct. The Plan ultimately stopped making the mistaken payments in 2009 and brought suit almost five years later asserting a variety of claims under ERISA and state law. Defendant filed a motion to dismiss, asserting that Plaintiffs’ ERISA claims fail because they seek legal, not equitable, relief, and that the state-law claims are preempted by ERISA. Defendant also filed a motion for summary judgment, asserting that Plaintiffs failed to file their lawsuit within the applicable statutes of limitation and that the affirmative defense of laches should apply to bar their claims. The court concluded that the Plan’s ERISA claims for restitution and unjust enrichment survive to the extent they seek to recover specifically identifiable funds (or the traceable proceeds of such funds) in Defendant’s possession and control. The court dismissed the claim seeking enforcement of the terms of the Plan because Defendants’ did not identify any plan provision requiring repayment of any benefit overpayments. The court dismissed the count for “recoupment/money had and received,” various state-law claims, and unjust enrichment as a federal common law claim because they seek relief not allowed by ERISA or they assert state-law claims that are preempted by ERISA. The court denied Defendant’s summary judgment motion because genuine disputes of material fact remain as to when the cause of action accrued, and whether Plaintiffs’ delay in bringing their claims was unreasonable.

Withdrawal Liability & Unpaid Benefit Contributions

In Bd. of Trustees of the Heat & Frost Insulators Local No. 33 Pension Fund v. D & N Insulation Co., No. 3:11-CV-01998 (JAM), 2015 WL 5121458 (D. Conn. Aug. 31, 2015), three construction companies in West Haven, Connecticut closed their business operations and did not pay “withdrawal liability” to the union’s pension fund for vested but unfunded pension benefits. The individual who led these companies started a new company-defendant E.R.P. Group, Inc. (“ERP”)-that used nonunion employees to perform much of the same work that had been done by the now-shuttered businesses. The court granted summary judgment to Plaintiff, finding that the three closed companies are subject to withdrawal liability and that ERP is indeed the alter ego of the earlier companies and is therefore responsible for the withdrawal liability owed by the earlier companies.

In Trustees of Teamsters Union No. 142 Pension Fund v. Underground Inc., No. 2:14-CV-449-PRC, 2015 WL 5098483 (N.D. Ind. Aug. 31, 2015), the court granted Plaintiffs’ summary judgment in their favor in the amount of $10,667.08 for unpaid contributions, interest, and attorneys’ fees.

In BOARDS OF TRUSTEES OF OHIOLABORERS’ FRINGE BENEFIT PROGRAMS, Plaintiffs, v. CAVER BROTHERS DEVELOPMENT, INC., Defendant., No. 2:15-CV-2461, 2015 WL 5047521 (S.D. Ohio Aug. 27, 2015), the court granted default judgment to Plaintiffs and awarded $7,154.73 in unpaid fringe benefit contributions, liquidated damages, and prejudgment interest, and an award of attorney’s fees in the amount of $1,912.50.

In Bd. of Trustees v. All Around Spiral, Inc., No. 1:14-CV-782 JCC/IDD, 2015 WL 5040168 (E.D. Va. Aug. 26, 2015), the court denied Plaintiffs’ motion for summary judgment in part because there are genuine issues of material fact as to the CBA that binds Defendant, for what period of time Defendant was bound, and as to the accuracy of the claimed contributions.

In Bricklayers Ins. & Welfare Fund v. LaSala, No. 12-CV-2314 JG RLM, 2015 WL 5022585 (E.D.N.Y. Aug. 24, 2015), Plaintiffs alleged that principals of two subcontracting firms breached their fiduciary duty under ERISA by failing to remit employee union dues. After a bench trial in connection with Plaintiffs’ third claim for relief against the “LaSala Defendants” for allegedly breaching fiduciary duties involving an amended payment agreement, the court found that though Mark and Ken Jr. are shareholders and officers of Town and New Town, there was no evidence that they had any trustee relationship with the employee-benefit funds, or any discretionary authority or control respecting the management of these various plans. Unpaid contributions are not assets of the plan. Therefore, the court concluded that they are not fiduciaries under 29 U.S.C. § 1002(21)(A). With respect to Ken Sr., his promise to pay was contingent upon an event that never happened, and the court found that he did not violate any fiduciary duty, to the extent he had one, by failing to pay $1.5 million out of his personal assets to satisfy Town and New Town’s debts to the Funds. Even if the promise were unconditional, Ken Sr. would still not be personally liable under ERISA for a breach of fiduciary duty since the owed amounts were not plan assets.

* 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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