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Your ERISA Watch – No Remedy for Breach of Fiduciary Duty Related to Group Life Insurance Enrollment

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This week’s notable decision, Schwartz v. Keolis Commuter Servs., No. 16-CV-11506-LTS, 2018 WL 1411202 (D. Mass. Mar. 20, 2018), involves the mishandling of an employee’s group life insurance enrollment and evidence of insurability.  Though post-Cigna Corp. v. Amara we have seen courts find cognizable claims for breaches of fiduciary duty that used to have no remedy, this unfortunate case is an example of when a breach of fiduciary duty lacks a remedy because there is no recognizable harm.

In this case, the employee, Sofiya Schwartz, started working for Massachusetts Bay Commuter Railroad Company (“MBCR”) in February 2005.  A few years later, she attempted to enroll for Supplemental Life Benefits in the amount of two times her salary.  Because she was a late entrant, she also submitted to MBCR evidence of insurability, which MBCR forwarded to Unum.  Unum denied her request due to her history of myelopathy.  In 2014, the Massachusetts Bay Transportation Authority awarded the contract to manage the Commuter Rail system to Keolis.  Keolis was required to and did offer Schwartz a job.  MBCR assigned to Keolis all its rights, obligations, and liabilities as Policyholder under the life insurance plan.  Later that year, during Keolis’s open enrollment period, Schwartz applied for Supplemental Life Benefits coverage for four times her salary.  Keolis’s HR department acknowledged receipt of the application and confirmed her monthly deduction matched her selected level of coverage.  Keolis deducted the premiums for this coverage from Schwartz’s paycheck and did not request that she produce evidence of insurability.  Keolis forwarded the premium payments from its employees to Unum but did not identify Schwartz as one of the covered employees and Unum did not request evidence of insurability.  Schwartz died within eight months of her enrollment.  Unum agreed to pay the basic life insurance amount but not the supplemental life benefit.

The court granted Unum’s motion for summary judgment.  The court denied Plaintiffs leave to amend the complaint to add a prayer for equitable estoppel since it would be futile.  Even if Plaintiffs can establish a misrepresentation of fact and detrimental reliance, Plaintiffs’ request for equitable estoppel relates to statements that conflict with the plain terms of the Plan.

The court determined that Unum’s decision that no Supplemental Life Benefits coverage for Schwartz ever took effect in the absence of suitable evidence of insurability was neither arbitrary nor capricious nor a breach of fiduciary duty.  The individual responsible for enrolling participants in the Plan is a fiduciary and, in this case, that person failed to satisfy her fiduciary responsibilities with due care because she neglected to send Schwartz’s application to Unum or obtain evidence of insurability.  But, Plaintiffs do not advance sufficient evidence of actual harm because of the individual’s breach.  Schwartz underwent treatment for cancer around the time that she sought additional life insurance coverage from Keolis.  The court declined to strike an expert affidavit on the issue as to whether Schwartz would have found life insurance options available to her had she in fact been receiving treatment for cancer at the time of her hypothetical search for alternative life insurance coverage.  Keolis’s expert opined that Schwartz’s cancer treatment would have foreclosed alternative life insurance options.  In addition, there is no support for Plaintiffs’ claim that they have suffered a statutory, informational harm warranting surcharge.

If you have a denied life insurance claim, the attorneys of Kantor & Kantor, LLP have the expertise to get you the benefits you deserve.

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

Breach of Fiduciary Duty

First Circuit

Barchock v. CVS Health Corp., No. 17-1515, __F.3d__, 2018 WL 1444333 (1st Cir. Mar. 23, 2018) (Before Torruella, Kayatta, and Barron, Circuit Judges).  The court affirmed the district court’s dismissal of Plaintiffs’ allegations that the fiduciaries of an employer-sponsored retirement plan breached their fiduciary duties by investing too heavily in cash or cash-equivalents for the years at issue and thus that the plan was imprudently managed and monitored.  Imprudence cannot be inferred solely from the charge that Galliard’s cash-equivalent allocation “departed radically” from both industry averages and the underlying financial logic of stable value management.

Third Circuit

Secretary United States Department of Labor v. Koresko, et al., No. 16-3806, __F.App’x__, 2018 WL 1446397 (3d Cir. Mar. 23, 2018) (Before: HARDIMAN, VANASKIE and SHWARTZ, Circuit Judges).  The court affirmed the district court orders holding Koresko in civil contempt after finding that he failed to comply with Court orders compelling him to turn over assets he had misappropriated from employee welfare benefit plans protected by ERISA and denying his motion to quash a writ of garnishment issued in aid of collecting the sizeable judgment entered against him.

Harmon v. FMC Corporation, et al., No. CV 16-6073, 2018 WL 1366621 (E.D. Pa. Mar. 16, 2018) (Judge Berle M. Schiller).  In this lawsuit alleging that Defendants breached their fiduciary duties under ERISA by offering imprudent and undiversified investment options as part of an employer-sponsored retirement plan, the court granted Defendants’ motion to dismiss for failure to state a claim.  ERISA allows plans to contain undiversified investment options so the Complaint fails to state a plausible claim for failure to diversify.  “Plaintiffs’ allegations fall squarely within [Dudenhoeffer]: they rely on public information to claim that Defendants should have recognized that Valeant, a publicly traded stock, was overvalued and thus a risky investment. Plaintiffs do not allege any special circumstances in this case; thus, under Dudenhoeffer, the public records cited cannot plausibly support a claim that Defendants beached the duty of prudence.”

Fifth Circuit

Accordia Life and Annuity Company V. Shyvers, et al., No. CV H-17-1461, 2018 WL 1453277 (S.D. Tex. Mar. 23, 2018).  This case involves an interpleader action to resolve competing claims to an adjustable premium life insurance policy.  The Plan Defendants argued that the breach of fiduciary duty claim lacks plausibility because ERISA does not apply to multiple employer trust plans, including the Plan here, which is a “death benefits plan.”  The court denied dismissal of this claim because it has insufficient information to conclude that the fiduciary duty claim should be dismissed merely because the Plan is a multiple employer trust or plan.  Additionally, there is no substantiation for the assertion that ERISA does not apply to death benefits plans.

Seventh Circuit

Scott v. Aon Hewitt Financial, Advisors, LLC et al., No. 17 C 679, 2018 WL 1384300 (N.D. Ill. Mar. 19, 2018) (Judge Jeffrey T. Gilbert).  In this putative class action alleging various violations of ERISA relating to excessive service provider fees, the court granted Defendants’ motion to dismiss.  The court concluded that Scott fails to state a claim that Hewitt is a fiduciary or that Aon Hewitt Financial Advisors, LLC is a fiduciary for purposes of negotiating its compensation or hiring a subcontractor.  The court also concluded that Plaintiff fails to state a § 406(a)(1)(C) claim against Hewitt because she cannot allege the threshold requirement for a claim for a prohibited transaction under § 406(a) that a fiduciary caused the Plan to engage in an unlawful transaction.  Similarly, Plaintiff fails to state a § 406(b)(3) claim against AFA because she fails to allege that AFA as a fiduciary received consideration from another party dealing with the Plan.  Lastly, the court found that Plaintiff fails to state any claim for non-fiduciary liability pursuant to ERISA § 502(a)(3) based on those same predicate transactions.

Wisconsin Masons 401(k) Fund v. Froode, No. 16-CV-676-JDP, 2018 WL 1401205 (W.D. Wis. Mar. 19, 2018) (Judge James D. Peterson).  Where Masonry Specialist failed to remit certain 401(k) contributions on time, Plaintiffs asserted a breach-of-fiduciary-duty claim against Kathleen Froode (sole member and president of the company) individually.  The court determined that an employer does not owe a fiduciary duty to the contractually assessed interest on delinquent 401(k) contributions.  But, Plaintiffs have established that they are entitled to judgment as a matter of law on Froode’s liability under Wisconsin’s civil theft statute (section 943.20(1)(b)) and therefore entitled to recover $6,897.84 in unpaid dues and treble damages, as allowed under section 895.446(3)(c), for a total of $20,693.52.

Ninth Circuit

Johnson v. Providence Health & Services, et al., No. C17-1779-JCC, 2018 WL 1427421 (W.D. Wash. Mar. 22, 2018) (Judge John C. Coughenour).  In this putative class action alleging management of Providence’s employer-sponsored 403(b) Value Plan, the court granted in part and denied in part Defendants’ motion to dismiss.  It held that Plaintiff has standing to assert her Investment Management Claims regardless of whether she personally invested in the mutual funds held by unnamed class members.  Additionally, it held that Plaintiff has made plausible allegations, that when taken as true, allow the court to reasonably infer that Defendants were imprudent in their selection and monitoring of certain retail shares of mutual funds, but Plaintiff has failed to plausibly allege that Defendant breached the duty of prudence based on its recordkeeping agreement with Fidelity.

Glazing Health & Welfare Fund v. Lamek, No. 16-16155, __F.3d__, 2018 WL 1403579 (9th Cir. Mar. 21, 2018) (Before: Richard R. Clifton and Michelle T. Friedland, Circuit Judges, and Sharon L. Gleason, District Judge (dissented)).  In this case brought by trustees of employee benefit trust funds against the employer’s owners, who were also officers of the employer, alleging claims for breach of fiduciary duty and seeking unpaid contributions allegedly owed under contracts governing benefit plans, the court affirmed the district court’s dismissal of the lawsuit since the owners were not fiduciaries under ERISA with respect to unpaid contributions.

Class Actions

Second Circuit

Local 1522 of Council 4, American Federation of State County and Municipal Employees, et al. v. Bridgeport Health Care Center, Inc., et al., No. 15-CV-1019 (JCH), 2018 WL 1419792 (D. Conn. Mar. 21, 2018) (Judge Janet C. Hall).  On behalf of a putative class, Plaintiffs bring twenty-seven claims against one or both defendants, arising from the defendants’ alleged failure to fund employment benefits programs, including a health plan, a pension plan, disability insurance plans, life insurance plans, as well as the defendants’ failure to make payments to credit unions and other designated entities on behalf of BHCC employees.  The court denied Plaintiff’s motion for class certification without prejudice.  It concluded that certification of the proposed classes is improper pursuant to Rule 23(b)(1) because the harms alleged relate to the plan as a whole, and the proposed class is not representative of the plan.  Certification pursuant to 23(b)(2) is improper because the monetary damages requested do not appear to be “incidental” to the injunctive relief sought.  While it’s possible that common questions may predominate with respect to claims for monetary damages, Plaintiffs have failed to show this by a preponderance of the evidence.

Disability Benefit Claims

Third Circuit

Hocheiser v. Liberty Mutual Insurance Company, et al., No. CV176096FLWDEA, 2018 WL 1446409 (D.N.J. Mar. 23, 2018) (Judge Freda L. Wolfson).  The court determined that Plaintiff’s claims seeking long-term disability benefits are improperly pled under ERISA Sections 502(a)(2) and 502(a)(3) and these claims are dismissed.  The employees of the insurance company who handled the denial of Plaintiff’s claim are not proper defendants under ERISA Section 502(a)(1)(B) as they did not possess discretionary authority with respect to the denial of Plaintiff’s claims.  Plaintiff’s state law claims are preempted by ERISA and dismissed with prejudice.

Fifth Circuit

Hall v. Mutual of Omaha Insurance Company, No. 4:16-CV-160-DMB-JMV, 2018 WL 1440075 (N.D. Miss. Mar. 22, 2018) (Judge Debra M. Brown).  The court determined that Mutual of Omaha did not abuse its discretion in terminating Plaintiff’s long-term disability benefits.  Though the court agrees that Plaintiff’s surveillance activities (short walks, drives of various lengths, carrying a purse) would not, on their own, support a finding of no disability, they do establish inconsistencies with Plaintiff’s own statements, and inconsistencies with the restrictions imposed by providers.  Defendant did not abuse its discretion in crediting its doctors’ opinions over Plaintiff’s subjective complaints of pain.

Foster v. Principal Life Insurance Company, et al., No. CV 16-1270, 2018 WL 1377576 (E.D. La. Mar. 19, 2018) (Nannette Jolivette Brown).  The court determined that reconsideration of its decision in favor of Principal on Plaintiff’s long-term disability claim is not warranted for consideration of “newly” discovered evidence; specifically, updated medical records demonstrating that Plaintiff recently underwent a neurostimulator implant to help control her migraine headaches.  Plaintiff has also not identified any manifest error of law or fact that warrants reconsideration.

Sixth Circuit

O’Neill v. Unum Life Insurance Company of America, No. 1:16-CV-1061, 2018 WL 1374033 (W.D. Mich. Mar. 19, 2018) (Magistrate Judge Ellen S. Carmody).  On de novo review, the court found that Defendant’s decision to discontinue Plaintiff’s disability benefits after 24 months was consistent with the Policy and supported by the administrative record.  The court rejected Plaintiff’s argument that he was entitled to disability benefits due to an on-going physical disability since he refused to even attempt a reasonable treatment to lessen or alleviate his alleged vestibular symptoms.  “Simply put, in the aftermath of his April 2013 head injury, Plaintiff’s longstanding alcohol dependence and depression/anxiety increased to disabling levels, as evidenced by his subsequent suicidal conduct, increased alcohol consumption, and psychiatric hospitalizations and on-going mental health treatment. Plaintiff’s arguments to diminish, if not altogether ignore, his severe emotional impairments are unpersuasive.”

Eighth Circuit

Nicholson v. Standard Ins. Co., No. 2:17-CV-02098, 2018 WL 1384650 (W.D. Ark. Mar. 19, 2018) (Judge P.K. Holmes, III).  The court determined that Standard did not abuse its discretion in denying Plaintiff’s long-term disability claim.  Plaintiff’s treating doctor reported that Plaintiff complained of back pain, but the doctor offered no objective evidence that Plaintiff’s pain would render him unable to perform his job. Standard had his claim reviewed (on paper) by three physicians who all noted that there was no objective evidence of disability such as imaging or evaluation by a specialist. “The Eighth Circuit has held that when a doctor’s opinion provides no reliable objective evidence to support a finding, it is not unreasonable for a plan administrator to deny benefits based upon a lack of objective evidence.” (internal quotations and citations omitted).

Ninth Circuit

Bunger v. Unum Life Ins. Co. of Am., No. C15-1050-RAJ, 2018 WL 1427464 (W.D. Wash. Mar. 22, 2018) (Judge Richard A. Jones).  On de novo review, the court determined that though the “evidence of disability in this case is not overwhelming,” the evidence weighs in favor of showing that Plaintiff meets his burden establishing his entitlement to long-term disability benefits through July 5, 2015.  “Whether as a result of CFS, fibromyalgia, or another condition, a preponderance of the evidence shows Mr. Bunger had a sickness precluding his ability to perform the high level of mental functioning required for the performance of his job as a Web Content Specialist, to sustain the necessary employment-related activities, or to maintain attendance at that job on a consistent basis.”  The court declined to apply an exception to the requirement that Plaintiff exhaust his “any occupation” disability claim with Unum.  On remand, the court directed Unum to employ the services of different reviewing physicians and appoint a different benefits specialist to conduct the review.

Bowlin v. The Prudential Life Insurance Company of America, No. 816CV00937JLSPLA, 2018 WL 1441175 (C.D. Cal. Mar. 22, 2018) (Judge Josephine L. Staton).  This case involves a de novo review of Prudential’s denial of Plaintiff’s long-term disability benefits.  The court’s consideration of Prudential’s reasons for its denial of benefits is limited to the reasons communicated to Plaintiff by Prudential at the time it denied her claim and the decision was upheld on appeal.  In weighing the evidence, the court determined that the medical evidence establishes Plaintiff’s entitlement to benefits under the policy.  The court also concluded that Prudential is not entitled to offset Plaintiff’s estimated SSDI benefits because Prudential never communicated to Plaintiff she should pursue an appeal after her claim was denied.

Armani v. Nw. Mut. Life Ins. Co., No. CV 17-07814-RSWL-FFM, 2018 WL 1415166 (C.D. Cal. Mar. 21, 2018) (Judge Ronald S.W. Lew).  Where Defendant claimed to have overpaid Plaintiff long-term disability benefits due to his failure to report his return to work earnings, the court determined that Defendant has sufficiently pleaded intentional misrepresentation, fraud, negligent misrepresentation and concealment claims.  Defendant has properly alleged a claim for fraud that is sufficient to proceed under ERISA Section 502(a)(3).  The court denied Plaintiff’s motion to dismiss these claims.

ERISA Preemption

Ninth Circuit

Davis IV v. Con-Way Freight, Inc., et al., No. 15-35864, __F.App’x__, 2018 WL 1443623 (9th Cir. Mar. 23, 2018) (Before: N.R. SMITH, CHRISTEN, and HURWITZ, Circuit Judges).  “As pleaded, Davis’s wrongful discharge claim advances the theory that Con-Way fired him because it did not want to bear the expense of his healthcare. Such a claim is preempted by § 514(a) of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1144(a).”

Exhaustion of Administrative Remedies

Sixth Circuit

Cannon v. Crown Cork & Seal Co., Inc., No. 17-CV-0003, 2018 WL 1393290 (N.D. Ohio Mar. 19, 2018) (Judge Jeffrey J. Helmick).  In this lawsuit challenging a denial of disability retirement benefits, the court determined that Plaintiff failed to exhaust administrative remedies since he did not appeal the claim denial and his claim must be dismissed as a matter of law.  Plaintiff argued that an appeal would be futile since he is challenging the administrator’s interpretation of the plan.  The court determined that neither Fallick v. Nationwide Mutual Insurance Co., 162 F.3d 410 (6th Cir. 1998) nor Constantino v. TRW, Inc., 13 F.3d 969 (6th Cir. 1994) permit application of the futility exception to cases challenging the plan administrator’s interpretation of the plan.

Life Insurance & AD&D Benefit Claims

First Circuit

Schwartz v. Keolis Commuter Servs., No. 16-CV-11506-LTS, 2018 WL 1411202 (D. Mass. Mar. 20, 2018) (Judge Leo T. Sorokin).  See notable decision summary above.

Medical Benefit Claims

Fifth Circuit

Baudoin v. BlueCross BlueShield of Louisiana Inc., No. CV 6:12-00657, 2018 WL 1415677 (W.D. La. Mar. 21, 2018) (Judge James T. Trimble, Jr.).  The court determined that BCBS’s decision to deny coverage at the JayWalker Lodge was not an abuse of discretion.  There was no indication that upon his admission or thereafter, that Alex was a clear current risk of harm to himself or others if treatment was not provided at this level of care.  The risk assessment for suicide, self-harm or harm to others was low.  Thus, the court cannot say that there was no rational basis in the administrative record for the denial.

Humana, Inc.; United Healthcare Services, Inc.; & Aetna Inc. v. Shrader & Associates, LLP, No. CV G-16-0354, 2018 WL 1384529 (S.D. Tex. Mar. 16, 2018) (Judge Sim Lake).  In this lawsuit brought by entities that provide health benefits to treat injuries, including asbestos injuries, against the law firm representing certain participants in their asbestos claims, the court concluded that the claims asserted in this action are not subject to dismissal either because they implicate recoveries from asbestos trusts that are within the exclusive jurisdiction of the courts establishing the trusts or because § 524(g) of the Bankruptcy Code deprives the court of jurisdiction. The court also concluded that Plaintiffs’ ERISA claims for equitable restitution do not fail as a matter of law but Plaintiffs’ unjust enrichment/money had and received claims are subject to dismissal because they arise from express contracts.

Ninth Circuit

Kimberley D. v. United Healthcare Insurance Company, No. 16-56175, __F.App’x__, 2018 WL 1406643 (9th Cir. Mar. 21, 2018) (Before: REINHARDT, W. FLETCHER, and OWENS, Circuit Judges).  “The district court did not err when determining whether Appellant’s stay at Sierra Tucson was ‘medically necessary,’ as covered by the Plan. Appellant failed to show by a preponderance of the evidence that the treatment she received at Sierra Tucson was medically necessary or in compliance with United Healthcare’s applicable guidelines.”

Pension Benefit Claims

Fourth Circuit

Odle v. UMWA 1974 Pension Plan, et al., No. 1:17CV00018, 2018 WL 1419347 (W.D. Va. Mar. 22, 2018) (Judge James P. Jones).  The court rejected the Magistrate Judge’s recommendation to remand the case to the Trustees for further consideration and affirmed the Trustee’s decision on the amount of the survivor’s annuity awarded to Plaintiff under the Pension Plan.  “The uncontradicted evidence shows that Mr. Odle’s employers did not record any classified hours for the periods at issue, he did not pay union dues, and that his social security earnings records showed that he earned a salary after 1988. Collectively this evidence indicates that Mr. Odle was a salaried employee and exempt from benefits during the times in question.”

Pleading Issues & Procedure

Fifth Circuit

Kindred Hosps. Ltd. P’ship v. Cigna Health & Life Ins. Co., No. 4:17-CV-866-A, 2018 WL 1382404 (N.D. Tex. Mar. 16, 2018).  On the provider’s claim for benefits, which it brought as an assignee of its patient who is a beneficiary of the ERISA-governed welfare benefit plan, the court determined that the beneficiary is not bound by the arbitration clause between the provider and Cigna.  “Essentially, Kindred has stepped into the shoes of Insured in its pursuit of the ERISA claim, and therefore, without evidence that Insured intended to be bound by the arbitration clause, Kindred cannot be compelled to arbitrate such claim.”

Ninth Circuit

Miesen v. Hawley Troxell Ennis & Hawley LLP, No. 1:10-CV-00404-DCN, 2018 WL 1369909, (D. Idaho Mar. 16, 2018) (Judge David C. Nye).  In this shareholder’s derivative action, the court found that, under Rule 1.7 of the Idaho Rules of Profession Conduct, that attorney Bond cannot represent both Plaintiff Miesen (minority shareholder of the Defendant AIA Services Corp.) and Third-Party Defendant, Reed Taylor (who served as director for AIA for a period of time).  In this case, Taylor asserts class action claims against the AIA “Controlling Defendants” for breach of ERISA fiduciary duties and prohibited transactions.  The court found that Bond cannot represent both parties and maintain the confidences of his clients.  Applying the four-part Weaver test, the opposing party has standing to bring a motion to disqualify counsel.  But, the court denied the motion to disqualify.  Bond can continue in the case as Miesen’s counsel alone.

Provider Claims

Third Circuit

The Center for Orthopedics and Sports Medicine, et al., v. Anthem Blue Cross Life and Health Insurance Company & Google, Inc., No. 16CV08876PGSDEA, 2018 WL 1440325 (D.N.J. Mar. 22, 2018) (Judge Peter G. Sheridan).  The court found that the Plan has a valid and enforceable “Benefits Not Transferable” clause; as such, the patient’s Assignment of Benefits to Plaintiff Providers was invalid.  Thus, the out-of-network providers do not have standing to assert claims under ERISA and their claims are dismissed.

Atl. Plastic & Hand Surgery, PA v. Anthem Blue Cross Life & Health Ins. Co., No. CV174600FLWDEA, 2018 WL 1420496 (D.N.J. Mar. 22, 2018) (Judge Freda L. Wolfson).  The “Court concludes that: (1) the Providers lack standing to bring this action, and thus, all claims asserted by the Providers are dismissed; and (2) although Mr. Robinson has standing to assert the ERISA claims, Mr. Robinson has failed to state a claim upon which relief can be granted, and thus, the Complaint is dismissed without prejudice as to Mr. Robinson.”

University Spine Center v. Aetna Inc., No. CV 17-8160 (KM), 2018 WL 1409796 (D.N.J. Mar. 20, 2018) (Judge Kevin McNulty). The court denied Aetna’s motion to dismiss because the interpretation of the anti-assignment clause is not so clear and unambiguous as a matter of law as to permit resolution on a motion to dismiss.  In addition, the court determined that whether the anti-assignment Clause was indeed waived by a course of dealing is an issue that may be further explored in discovery.  The court denied dismissal of the breach of fiduciary duty claim under ERISA.  At this stage, it is too early to identify whether this count is proper.

Fifth Circuit

Weiner v. Blue Cross and Blue Shield of Louisiana, No. 3:17-CV-949-BN, 2018 WL 1407287 (N.D. Tex. Mar. 21, 2018) (Magistrate Judge David L. Horan).  The court determined that Dr. Weiner has not shown a right to sue BCBSLA for improper recoupment because the right to sue is limited to ERISA plan participants and beneficiaries, Dr. Weiner is not a “participant” under ERISA, and he is not a “beneficiary” under ERISA.  The Plan’s anti-assignment clause bars the purported assignment and recoupment claims are outside the scope of the purported assignments.  Dr. Weiner is also not entitled to summary judgment on the merits; the plan administrator did not abuse its discretion in denying the claim.

Severance Benefit Claims

Seventh Circuit

Luther v. Navistar International Corporation, Navistar, Inc., et al., No. 15 C 3120, 2018 WL 1397425 (N.D. Ill. Mar. 19, 2018) (Judge Rebecca R. Pallmeyer).  The court granted Defendant’s motion for partial reconsideration, finding that the evidence does not support Luther’s claim that a “409A change in control” occurred prior to his termination.  The court rejected Luther’s argument that the 409A regulations imply that the stock ownership percentage should be rounded to the nearest whole number.  The court found that in this case, a “miss is as good as a mile,” and 29.2% is not 30%; there was no 409A change in control.

Statutory Penalties

Fifth Circuit

Thorson v. Aviall Services, Inc., et al., No. 3:15-CV-0571-D, 2018 WL 1426971 (N.D. Tex. Mar. 22, 2018) (Judge Sidney A. Fitzwater).  Plaintiff claims that defendants violated ERISA by failing to give Don timely, proper notice of his right to extend health care coverage, and/or to act upon his election to secure such coverage.  The court found that “Aviall and Conexis have adduced undisputed evidence that two COBRA notices were mailed to Don’s residence address, which Don confirmed was correct when he spoke with Lesko on March 19, 2013. Accordingly, the court concludes that defendants are entitled to summary judgment as a matter of law on Rachel’s ERISA claim.”

Venue

Tenth Circuit

Michael v. Nexsen Pruet Grp. Med. & Dental Plan, No. 2:17-CV-1236 TS, 2018 WL 1406600 (D. Utah Mar. 19, 2018) (Judge Ted Stewart).  Defendants, corporations who routinely deal with out-of-state claims and have the resources to litigate this action in Utah, fail to show that their inconvenience rises to the level of constitutional concern.  The court found that it has personal jurisdiction over Defendants and venue is proper in Utah under the third prong of § 1132(e)(2).  But, the court concluded that the case should be transferred to South Carolina under § 1404(a) since, among other things, his action could have been brought in South Carolina. The Plan is administered in South Carolina, the alleged breaches occurred in South Carolina, and all of the parties reside in South Carolina.

Your ERISA Watch authored by Michelle L. Roberts, Esq., Partner

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