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Your ERISA Watch – District Court Dismisses ERISA Fiduciary Breach Claim against Trader Joe’s Co.

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This week’s notable decision is  Kong v. Trader Joe’s Co., No. CV 20-05790 PA (JEMx), 2020 WL 5814102 (C.D. Cal. Sept. 24, 2020). Plaintiffs, employees of Trader Joe’s, brought this class action against the company and related defendants, alleging that they breached their fiduciary duties under ERISA by improperly managing the company’s retirement plan. Specifically, Plaintiffs alleged that Defendants selected and retained high-cost investments, failed to investigate lower-cost share classes in the plan’s funds, failed to monitor recordkeeping fees, and improperly placed plan revenue in a compensation recapture account. Defendants filed a motion to dismiss, arguing that Plaintiffs had failed to properly state a claim for relief. The court granted Defendants’ motion.

First, the court ruled that Defendants were not required to “scour the market” to find the cheapest possible funds for the plan. Defendants were entitled to consider funds for any number of reasons, of which cost was only one factor. Plaintiffs argued that they had identified specific funds that were in the wrong share class, but the court found that they had not alleged that the more expensive class did not offer benefits that might have offset the additional expense.

Second, the court found that Plaintiffs had not adequately alleged that Defendants failed their duty to monitor the funds in the plan. Plaintiffs admitted that the plan offered a diverse array of funds, and the pleadings showed that Defendants made numerous changes to the plan during the relevant time period, including adding and removing funds.

Third, the court ruled that Plaintiffs had not alleged any facts to show why they believed the recordkeeping fees at issue were unreasonable. Plaintiffs failed to present an adequate market comparison and did not explain how a lower cost recordkeeper would perform at the same level.

Fourth, the court found that Plaintiffs had not explained why the plan’s recapture account was a breach of fiduciary duty. The court noted that such accounts are common and acceptable, frequently benefited plan participants, and did not violate any statute or regulation.

Fifth, the court ruled that ERISA does not require periodic competitive bidding, and thus Defendants did not breach their fiduciary duty by not finding the cheapest possible recordkeeper. Plaintiffs did not even allege facts showing that the same services were available for less.

Because Plaintiffs had not adequately alleged facts to support a breach of fiduciary duty as to the above actions and inactions, the court also dismissed Plaintiffs’ claims regarding Defendants’ duty of loyalty and defendants’ failure to monitor fiduciaries, ruling that these were derivative claims. The court did, however, grant Plaintiffs leave to amend.

Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.

Attorneys’ Fees

Second Circuit

Surgicore of Jersey City v. Anthem Life & Disability Ins. Co., Case No. 19-cv-3482 (BMC), 2020 WL 5752227 (E.D.N.Y. Sep. 25, 2020) (Judge Brian Cogan). Surgicore brought a motion for reconsideration seeking costs, including attorneys’ fees, associated with its successful motion to remand the case back to state court. Anthem had contended that Surgicore’s claims were completely preempted by ERISA. The court held that ERISA did not preempt Surgicore’s claims. The order remanding the case, however, did not address whether Surgicore was entitled to reasonable attorneys’ fees. Here, the court denied the motion for reconsideration for two reasons: (1) Anthem had asserted a colorable basis for federal jurisdiction; and (2) Surgicore’s initial motion did not adequately brief the issue of costs and attorneys’ fees waiving that issue.

Sixth Circuit

Detroit Carpenters Fringe Benefit Funds v. Crawford Pile Driving, LLC, No. CV 18-10932, 2020 WL 5761035 (E.D. Mich. Sept. 28, 2020) (Judge Linda V. Parker). The court granted Plaintiff’s Motion for Attorney Fees and Costs. When determining what constitutes a reasonable fee award, the Sixth Circuit has held that district courts should begin by calculating the applicant’s lodestar figure. The work performed included conducting witness interviews, engaging in discovery conferences, reviewing and analyzing document productions, as well as drafting and/or responding to three sets of discovery requests, discovery motions, and a summary judgment motion. The billing entries coincide with the timeline of this matter and the court found that the total hours expended are reasonable. The court awarded $47,354.51 in attorneys’ fees and costs using hourly rates of $185/hour (2018-2019) $200/hour (2019-2020).

Cincinnati Children’s Hospital Ret. Plan v. Wall, No. 1:19-CV-831, 2020 WL 5797916 (S.D. Ohio Sept. 29, 2020) (Judge Timothy S. Black). In this dispute where Plaintiff successfully obtained default judgment against Defendant for repayment of inadvertently overpaid pension benefits, the court granted Plaintiff’s motion for attorneys’ fees in the amount of $3,642.20. The court found that all factors considered in determining whether an award of fees is appropriate weighed in favor of Plaintiff. The court also found that the hourly rates requested—$270 for an associate and $545 for a partner specializing in employee benefits—are reasonable.

Hornsby, et al., v. Extreme Service, LLC, No. 3:20-cv-00331, 2020 WL 5877129 (M.D. Tenn. Oct. 1, 2020) (Judge Waverly D. Crenshaw). The court granted Plaintiffs’ Motion for Entry of Default Judgment since Defendant never obtained counsel or defended against Plaintiffs’ allegations. In addition, the court granted Plaintiffs’ motion for attorneys’ fees in the amount of $2,950.00 and costs under 29 U.S.C. § 1132(g)(2)(D). The court determined that the hourly rates of $400 for a senior partner with over 45 years of experience and $100 for paralegals are reasonable. The court also found that the time expended, 2.6 attorney hours and 15.1 paralegal hours, is reasonable.

Class Actions

Second Circuit

Jacobs v. Verizon Communications, Inc., No. 16 Civ. 1082 (PGG), 2020 WL 5796165 (S.D.N.Y. Sept. 29, 2020) (J. Paul G. Gardephe). Plaintiff, a former employee of Verizon, brought this putative class action against Verizon and related defendants, contending that they breached their fiduciary duties under ERISA by failing to properly monitor and take action with respect to a poorly performing investment fund in one of Verizon’s retirement benefit plans. Plaintiff moved to certify the class, and a magistrate judge recommended that the motion be granted. Defendants objected, arguing that Plaintiff did not have constitutional standing because she had not suffered a cognizable “injury in fact.” Defendants contended that because the plan as a whole had performed well, Plaintiff had benefited overall and thus was not harmed by the underperformance of a certain fund within the plan. The court rejected this argument, ruling that diminished returns on a poorly administrated fund constituted a sufficient injury in fact to confer constitutional standing, regardless of the overall performance of the plan. The court further adopted the remainder of the magistrate’s recommendation, to which defendants had not objected, and certified Plaintiff’s proposed class.

Ninth Circuit

Kong v. Trader Joe’s Co., No. CV 20-05790 PA (JEMx), 2020 WL 5814102 (C.D. Cal. Sept. 24, 2020) (Judge Percy Anderson). See Notable Decision summary above.

Eleventh Circuit

Turner v. Allstate Insurance Company, No. 2:13-CV-685-ECM (WO), 2020 WL 5831791 (M.D. Ala. Sept. 30, 2020) (Chief Judge Emily C. Marks). This litigation comprised two consolidated class actions. The central dispute in both cases involved Allstate’s 2013 decision to terminate a life insurance benefit for individuals who retired from the company between 1990 and 2013. Plaintiffs sought continuation of the life insurance benefits at no cost to them under several theories. Allstate moved for summary judgment against the individually named plaintiffs. The court granted Allstate’s motion because the governing Plan documents unambiguously permitted Allstate to terminate the life insurance benefit and Plaintiffs’ interest in that benefit was not vested. The Plan documents stated Allstate “intends to continue the Plan indefinitely, but reserves the right to change, amend, or terminate the Plan…at any time.” It also stated, “Plan’s participants or beneficiaries do not have a vested right in any of the Plan’s benefits.”

Disability Benefit Claims

Eighth Circuit

Hestir v. USAble Life, No. 4:19-CV-00067-LPR, 2020 WL 5834251 (E.D. Ark. Sept. 30, 2020) (Judge Lee P. Rudofsky). Plaintiff brought this action for long term disability benefits. On cross-motions for judgment, the court found that the abuse of discretion standard of review applied. Plaintiff argued that the language in the plan giving Defendant discretionary authority was invalid because an Arkansas statute forbids such language. However, the statute only applied to policies issued or renewed after 2013, while the policy in this case was issued in 2011 and renewed in 2012. The court found there was no evidence that the policy renewed on its anniversary date any time after 2013, and thus the statute did not apply. Under the abuse of discretion standard, the court further ruled that Defendant’s denial decision was reasonable and plaintiff was not entitled to benefits. Plaintiff alleged that he dislocated his shoulder, limiting his range of motion in his shoulder and arm. However, the court found that he had a sedentary computer job, was very active even with his injury, and his own surgeon and Defendants’ independent consultants supported a return to work. The court further found Plaintiff’s supporting doctor’s conclusions to be “extreme” and “incredible,” as they were inconsistent with Plaintiff’s admitted activities. Thus, the court denied Plaintiff’s motion for judgment and granted Defendant’s motion.

Eleventh Circuit

Castleberry v. The Lincoln National Life Insurance Company, Case No. 2:19-CV-1025-WKW, 2020 WL 5831909 (M.D. Ala. Sept. 30, 2020) (Judge W. Keith Watkins). Plaintiff was injured on the job working as a truck driver for Virginia Transportation. He underwent a cervical fusion and tried and failed to return to work. He made a claim for disability benefits that was initially approved but terminated at the end of the 24-month own occupation period. Plaintiff appealed the termination. Plaintiff also disputed the amount that Lincoln National paid him for his benefits, claiming it was calculated erroneously. He did not address the issue in his appeal, however. The LTD Plan offered two administrative appeals. Plaintiff did not file a second-level appeal. Plaintiff filed suit and Lincoln National moved to dismiss, arguing that Plaintiff failed to exhaust his administrative remedies. Plaintiff argued that appealing a second time would have been futile and was now impossible as the appeal had to be filed within 180 days. The court found that both levels of appeal did need to be filed under the LTD Plan, and by failing to do so and being unable to file now, Plaintiff could not pursue that claim and it was dismissed with prejudice. Where the claim could not be pursued, the other causes of action were dismissed as moot.


Tenth Circuit

Phillips v. Boilermaker-Blacksmith Nat’l Pension Tr., No. 19-2402-DDC-KGG, 2020 WL 5819661 (D. Kan. Sept. 30, 2020) (Magistrate Judge Kenneth G. Gale). The court denied Plaintiffs’ motion for reconsideration of the Magistrate Judge’s denial of their motion to compel Defendants to search their electronically stored information for documents containing a list of 18 search terms. The court denied the motion because Plaintiffs did not identify the underlying Requests for Production for the court to determine relevancy. The court explained that, “[i]t is not the Court’s responsibility to search through the parties’ prior filings, past exhibits, and prior e-mail submissions in an attempt to piece together an understanding of the parties’ positions regarding the discovery requests at issue in a motion. Further, even if the Court were to attempt to do so, such an exercise would be futile.”

David S. v. United Healthcare Insurance Company, No. 2:18-cv-00803, 2020 WL 5821203, (D. Utah Sept. 30, 2020) (Magistrate Judge Daphne A. Oberg). In this dispute over Defendant’s failure to pay for two residential treatment programs, Plaintiffs moved to compel Defendant to respond to discovery requests related to their Parity Act claim.  Defendant asserted that discovery should be limited to the administrative record, because Plaintiffs’ principal claim is for recovery of benefits under ERISA, which offers them a complete remedy. The court disagreed and noted that Plaintiffs’ Parity Act claim is distinct from a claim for benefits under an ERISA plan and that discovery limitations applicable to ERISA claims do not apply.  The court granted plaintiffs’ motion to compel stating that extra-record discovery is necessary to evaluate whether the Plan treats mental health and substance abuse claims differently than medical/surgical claims as Plaintiffs’ allege.

ERISA Preemption

Sixth Circuit

Hilton v. Brownsville-Haywood Cnty Chamber Of Commerce & City Of Brownsville, No. 120CV01092STAJAY, 2020 WL 5800755 (W.D. Tenn. Sept. 28, 2020) (Judge S. Thomas Anderson). Plaintiff Hilton brought this lawsuit to recover pension benefits from the Chamber and the City of Brownsville. The court dismissed Hilton’s ERISA claims because ERISA does not apply to governmental employee benefit plans such as those of the City or the Chamber. The court then declined to exercise supplemental jurisdiction over Hilton’s breach of contract claim under state law and dismissed those claims as well.

Medical Benefit Claims

Fifth Circuit

Bennett, et al. v. Louisiana Health Service & Indemnity Co., No. CV 19-185, 2020 WL 5763604 (M.D. La. Sept. 28, 2020) (Judge Shelly D. Dick). Defendant moved the court to reconsider its prior interlocutory ruling on Defendant’s motion to dismiss. Plaintiffs plead counts against Defendant for overcharges for the cost of prescription drugs in violation of the ERISA Plan; receiving compensation or “clawbacks” for services provided; designing, implementing and benefiting from an “overcharge and clawback scheme”; and breaching fiduciary duties. The court found dismissal of counts two, three, and four to be premature and denied the motion to dismiss; Defendant moved to reconsider the motion to dismiss as to those counts. The court found Defendant made the same arguments that it made in its motion to dismiss. The court reiterated that the counts were not necessarily duplicative, and it would be “premature and unjust” to assume the claims were duplicative. Defendant did not meet the third criteria for interlocutory appeal (whether resolution of the question would “materially advance” the litigation). The court denied Defendant’s motions.

Sixth Circuit

Schmidt v. Overland Xpress, LLC, et al., No. 1:12-CV-397, 2020 WL 5760651 (S.D. Ohio Sept. 28, 2020) (Judge Michael Barrett). Plaintiff was an employee who went out on medical leave. Prior to going on leave, she discussed her health insurance and job status with Jason Brown, CEO of Overland Xpress. Mr. Brown informed her that her medical insurance coverage would continue and her job would be waiting for her. Terese Brown, the Chief Human Resources Officer, did not know this, and informed Humana that Plaintiff had been terminated and was no longer covered by the insurance plan. Ms. Brown later followed up and explained to Humana that Plaintiff was not terminated but on medical leave. She did not understand that an employee on medical leave would still have coverage even though she was not full time while on leave. Humana did not reinstate Plaintiff on the insurance plan, and Ms. Brown did not ask Humana to do so. When Plaintiff hired an attorney to try to reinstate her benefits, Overland Xpress terminated her and denied responsibility for her lack of coverage. Plaintiff filed suit, alleging claims under ERISA, and alleging disability discrimination and fraud against the Browns, and breach of fiduciary duty and bad faith against Humana. Plaintiff filed a motion for summary judgment. The court denied the motion for summary judgment as to the ERISA causes of action due to the factual questions about whether Humana was responsible for the termination of benefits, or Overland and the Browns. The court denied the summary judgment motion as to disability discrimination because the court believed it was preempted, although the Browns did not raise preemption in their opposition and Overland Xpress filed no opposition. The court denied the motion for summary judgment related to fraud based on its conclusions that any false statement made by Terese Brown was made to Humana, not to Plaintiff, as well as the likelihood of preemption. The motion for summary judgment was denied in its entirety and the case will go to trial.

Ninth Circuit

Doe v. Blue Cross Blue Shield of Illinois, No. CV-19-05044-PHX-SMB, __F.Supp.3d__, 2020 WL 5891723 (D. Ariz. Oct. 5, 2020) (Judge Susan M. Brnovich). See Kantor & Kantor’s blog for the summary.

Rahn v. Montana Rail Link Benefit Plan, et al., No. CV 19-141-M-JTJ, 2020 WL 5769471 (D. Mont. Sept. 28, 2020) (Judge John Johnston). Plaintiff sought Defendant Plan to pay benefits for physical therapy sessions for her back which the Plan denied as not medically necessary. The court considered cross motions for summary judgment. Under a strict abuse of discretion analysis, the court found that Defendants’ medical opinions were based on “clearly erroneous findings of fact.” The court found the Defendants’ physicians incorrectly opined that physical therapy sessions were for her shoulder and neck when the prescription for physical therapy was for Rahn’s lower back, not shoulders and neck. The court found Rahn is entitled to benefits, future benefits for physical therapy, and an award of reasonable attorney’s fees and costs, to be determined by further submissions by the parties.

Smith v. Cigna Health & Life Ins. Co., No. 3:20-CV-624-SI, 2020 WL 5834786 (D. Or. Sept. 30, 2020) (Judge Michael H. Simon). Plaintiff seeks health benefits for therapies associated with his son’s Autism Spectrum Disorder. Cigna moved to dismiss the complaint. The court approved Cigna’s request for judicial notice to consider two health plans. The court found Smith offered only conclusory allegations that Cigna denied benefits and therefore dismissed the 1132(a)(1) claim. Likewise, the court found the complaint makes only conclusory allegations in support of the 1132(a)(1)(B) and 1132(a)(3) claims and requests the same relief for both claims. The court also dismissed the 1132(a)(3) claim. The court provided Plaintiff leave to file an amended complaint.

Pension Benefit Claims

Second Circuit

Caban, v. NYC Dist. Council Of Carpenters Pension Plan, No. 19-CV-6205 (JGK), 2020 WL 5774901 (S.D.N.Y. Sept. 28, 2020) (Judge John Koeltl). Under the terms of the plan, Caban incurred a permanent break in service prior to achieving enough pension service credits to vest in the NYC Carpenter’s Pension Plan. The court dismissed his claim for benefits due because Caban was not entitled to any benefits under the terms of the plan. The court also dismissed Caban’s breach of fiduciary duty claim because the plan administrators had not breached the terms of the plan and the plan did not violate ERISA. The court also stated the claims were time-barred because Caban was informed in 2010 that he was losing his vesting credits and did not bring his lawsuit until July 1, 2019.

Plan Status

Fifth Circuit

Data Marketing Partnership, LP., et al., v. U.S. Dept. Of Labor et al., No. 4:19-CV-00800-O, 2020 WL 5759966 (N.D. Tex. Sept. 28, 2020) (Judge Reed O’Connor). Plaintiffs DMP and LPMS (general partners) filed this lawsuit to challenge a Department of Labor Opinion Advisory Opinion (“Opinion”) that 1) Plaintiffs’ proposed benefit plan (“Plan”) was not a single-employer welfare benefit plan governed by ERISA, 2) that DMP’s Limited Partners are not “participants” as defined by ERISA, and 3) that one common-law employee is not a sufficient basis for the Plan to cover any number of Limited Partners. The court overturned the Opinion entirely, finding the Department’s Opinion to be arbitrary and capricious and contrary to law under ERISA based largely on the Department’s incorrect application of the Darden factors where those factors should not be applied to equity owners. The court held that Limited Partners are working owners and bona-fide partners, and as such, the Limited Partners may participate in the Plan if at least one common-law employee is covered by the Plan.

Pleading Issues & Procedure

Second Circuit

Board Of Trustees Of The Local Union No. 373 United Association Of Journeymen And Apprentices Of The Plumbing And Pipefitting Industry Benefit Funds V. Mid Orange Mechanical Corp., A/K/A Mid-Orange Mechanical Corporation, & Mid-Orange Plumbing And Heating, Inc., No. 17-CV-2669 (NSR), 2020 WL 5836520 (S.D.N.Y. Oct. 1, 2020) (Judge Nelson S. Roman). In this dispute over unpaid contributions, Plaintiffs sought leave to file a Second Amended Complaint alleging that Mid-Orange Fire, 1191 Dolsontown, Mid-Orange, and MOPHI qualify as businesses under common control for ERISA purposes. The court granted Plaintiffs’ motion, finding that joinder of the defendants meets the requirements of FRCP 20(a)(2), the amendment is not futile, and Plaintiffs’ have met the good cause standard of FRCP 16.

First Reliance Standard Life Ins. Co. v. Giorgio Armani Corp., No. 19 CIV. 10494 (AKH), 2020 WL 5802292 (S.D.N.Y. Sept. 29, 2020) (Judge Alvin K. Hellerstein). In a prior suit brought in the Central District of California, a non-party Armani employee sued First Reliance for $500,000 in life insurance benefits. First Reliance had denied the claim because the employee had not completed necessary buy-up paperwork. First Reliance impleaded Armani in that suit, alleging Armani breached its obligations as Administrator of its employee’s life insurance plan by failing to collect paperwork from the employee. Armani moved to dismiss First Reliance’s third-party action and the complaint was dismissed with prejudice under Ninth Circuit law. First Reliance then brought essentially the same claim against Armani in the Southern District of New York. The Court recognized First Reliance “thought it would have a better chance with the same claims in this Circuit.” The court dismissed the suit under the doctrine of res judicata. First Reliance filed a motion for reconsideration. The court denied the motion citing no change in the facts or change in the law. It also refused to consider arguments not previously advanced.

Trustees of The Metal Polishers Local 8a-28a Funds v. Nu Look Inc. & Jason Tokarski, No. 18CV3816PKCRLM, 2020 WL 5793204 (E.D.N.Y. Sept. 29, 2020) (Judge Pamela K. Chen). This is a dispute over unpaid contributions to multi-employer labor management trust funds. The court vacated Plaintiff’s Notice of Voluntary Dismissal, seeking to dismiss this matter without prejudice, as impermissible under FRCP 41(a)(1)(A)(i) because the court found that FRCP 41(a) does not apply to a matter “where a plaintiff seeks to voluntarily dismiss an action after a Magistrate Judge has considered a default judgment motion and provided an R&R to the District Judge, particularly when there has already been a finding of liability.” The court explained that, “[a] change of circumstance does not warrant a full dismissal of an already-decided matter, permitting Plaintiff a second proverbial bite at the apple.”

Sixth Circuit

Bell, et al. v. Garcia-Brower, Case No: 2:19-cv-1550, 2020 WL 5877518 (S.D. Ohio Oct. 2, 2020) (Judge James L. Graham). Plaintiff Nationwide brought an action for declaratory judgment under ERISA against the Labor Commissioner of the State of California. Nationwide believed that the Labor Commissioner might attempt to apply California law to vacation wage benefit claims made by Nationwide employees. Nationwide sought a court order that ERISA preempts California’s vacation benefit laws. The California Labor Commissioner argued that the case should be dismissed as moot where Nationwide had already received a favorable order in a related case. The court agreed and dismissed the case for lack of case or controversy.

Ninth Circuit

Neville v. Griffin Maclean, Inc., No. C20-0299-JCC, 2020 WL 5815044 (W.D. Wash. Sept. 30, 2020) (Judge John C. Coughenour). Neville filed suit against his former employer Griffin Maclean (GMI) regarding, among other things, health benefits under ERISA which Neville alleges should have been continued following his separation from GMI. GMI filed suit against Neville in a prior state court lawsuit alleging that Neville improperly used proprietary information and GMI business contacts to establish a competing business. The state court issued judgement in that matter. GMI moved for judgement on the pleadings regarding Neville’s ERISA allegation, arguing that this was a compulsory counterclaim which must have been brought in the prior suit, and thus cannot be alleged in the current suit. Neville argued that this ERISA claim was strongly related to the other claims he brought against GMI in this suit. The court disagreed, finding the “clear relationship between the continuation of coverage claim and the subject matter of the prior litigation” sufficient justification to grant Defendant’s motion.

Provider Claims

Ninth Circuit

Cal. Spine & Neurosurgery Inst. v. Blue Cross of California, Case No. 18-cv-04777-PJH, 2020 WL 5748726 (N.D. Cal. Sep. 25, 2020) (Judge Phyllis J. Hamilton). The dispositive issue throughout the proceedings to date has been whether Cal Spine (provider-plaintiff), as patient H.R.’s healthcare provider, had standing under ERISA to bring a claim as an assignee of H.R.’s right to reimbursement under the Plan. For example, DB Healthcare, LLC v. Blue Cross Blue Shield of Ariz., Inc., 852 F.3d 868 (9th Cir. 2017) held that, “[A] health care provider in appropriate circumstances can assert the claims of an ERISA participant or beneficiary.” DB Healthcare, LLC, 852 F.3d at 876. Here, the applicable Plan contained an express anti-assignment provision that, if valid, would mean H.R.’s right to reimbursement under the plan could be assigned to Cal Spine. After the trial court found that Cal Spine had failed to establish that Blue Cross waived or was equitably estopped from asserting its anti-assignment provision, the matter went to the Ninth Circuit where the court held that the district court erred in determining that waiver was inapplicable. The court reasoned that Cal Spine had sufficiently plead that Blue Cross waived its ability to rely on the anti-assignment provision. Here, the trial court held that Cal Spine met the first, second, and fourth promissory estoppel factors but not the fifth. However, the court held that because the Ninth Circuit had already determined that waiver of the anti-assignment provision was sufficiently plead, it could then evaluate and hold that Cal Spine had sufficiently plead a claim for benefits under ERISA § 1132(a)(1)(B).

Statutory Penalties

Sixth Circuit

Reichert v. Whirlpool Corp., No. 3:18-cv-001, 2020 WL 5877132 (M.D. Tenn. Oct. 2, 2020) (Judge Richardson). For two reasons, the court held that Plaintiff cannot recover ERISA penalty fees against the Plan Sponsor, Whirlpool. First, Plaintiff’s general request for “plan documents,” without reference to specific documents, did not provide “clear notice” required by the Sixth Circuit for a valid request for plan documents supporting a claim for penalties. Second, the only defendant was Whirlpool, the Plan Sponsor, but not the Plan Administrator. The court rejected Plaintiff’s argument that he was not able to sue the Plan Administrator, a committee, because it was not a legal entity. It noted, “the statue does not require a plan administrator to be a separate legal entity, and courts have routinely held that a committee operating as plan administrator can be properly sued.”

Subrogation/Reimbursement Claims

Second Circuit

Trustees of the 1199SEIU National Benefit Fund for Health and Human Service Employees v. Cotto, et al., No. 18-cv-7123, 2020 WL 5763942, (E.D.N.Y. Sept. 28, 2020) (Judge Ann M. Donnelly). Alfredo Cotto, one of the defendants and a beneficiary of the Fund, was injured in an automobile accident for which Plaintiffs, trustees of a self-funded medical plan, paid $38,262.19 in medical expenses. Plaintiff filed an action under Section 1132(a)(3) for an equitable lien against settlement proceeds that Defendants expected to receive from a third party in his personal injury action. The court had previously granted Plaintiffs’ request for a preliminary injunction enjoining Defendants from disbursing any settlement proceeds and requesting that Defendants create a constructive trust of up to the amount of the medical expenses. Defendants had received an offer to settle the personal injury action for $25,000. Plaintiffs moved for a “pre-discovery summary judgment” to enforce its equitable lien and to recover up to $38,262.19. Defendants argued that Plaintiff should not have paid Cotto’s medical bills without first exhausting Cotto’s no-fault insurance and that Plaintiff may not recover any amounts paid towards attorneys’ fees under the common-fund doctrine. The court dismissed these arguments stating that the SPD placed responsibility for exhausting the no-fault coverage on the beneficiary and limited the common-fund doctrine by providing that the fund’s recovery takes priority over attorneys’ fees. The court entered judgment in favor of Plaintiff holding that the terms of the SPD must be enforced and directing Defendants to turn over the entire amount of any settlement up to $38,262.19.

Sixth Circuit

Cincinnati Children’s Hospital Ret. Plan v. Wall, No. 1:19-CV-831, 2020 WL 5797916 (S.D. Ohio Sept. 29, 2020) (Judge Timothy S. Black). Plaintiff inadvertently distributed two net lump sum pension payments to Defendant, resulting in an overpayment. Plaintiff unsuccessfully sought repayment and then filed suit. Plaintiff moved for default judgment and Defendant did not respond. Based on the allegations in the Complaint and the averments in affidavits submitted in support of default judgment, the court found that Defendant was inadvertently overpaid by the Plan and that the Plan is entitled to a refund of the overpaid funds pursuant to ERISA § 502(a)(3).

Withdrawal Liability & Unpaid Contributions

Second Circuit

Bricklayers Insurance and Welfare Fund, et al. v. Shelbourne Construction Corp. et al., No. 20-CV-998 (BMC), 2020 WL 5752118 (E.D.N.Y. Sept. 25, 2020) (Judge Brian M. Cogan). In this action seeking unpaid employee benefit fund contributions and unremitted dues checkoffs against a participating employer, the court granted Plaintiffs’ motion for a default judgment. “The Clerk is directed to enter judgment in favor of plaintiffs and against defendant Shelbourne in the amount of $189,402.19, and against defendant O’Brien in the amount of $88,053.90.”

Ninth Circuit

Nevada Resorts Ass’n – Int’l All. of Theatrical Stage Employees & Moving Picture Mach. Operators of the United States & Canada Local 720 Pension Tr. v. JB Viva Vegas, L.P., No. 219CV00499JADDJA, 2020 WL 5750851 (D. Nev. Sept. 25, 2020) (Judge Jennifer A. Dorsey). In this dispute over withdrawal liability, the arbitrator found that JB did not owe the Plan any money because of an exception to the MPPAA’s withdrawal-liability rules. The Plan filed suit to modify the award and JB counterclaimed, asking for the award to be affirmed. “Because the arbitrator applied a legally erroneous burden of proof, I cannot enforce the resulting award. I therefore grant the Plan’s motion for summary judgment, deny JB’s, and vacate the arbitration award.”

Your ERISA Watch is made possible by the collaboration of the following Kantor & Kantor attorneys:  Brent Dorian Brehm, Sarah DemersElizabeth GreenAndrew Kantor, Anna Martin, Michelle RobertsTim Rozelle, Peter Sessions, Stacy Tucker, and Zoya Yarnykh.


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