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Your ERISA Watch – Second Circuit Revives Excessive Fee Suit Against Investment Advisor

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This week’s notable decision is Sacerdote v. Cammack Larhette Advisors, LLC, No. 18-1558, __F.3d__, 2019 WL 4777824 (2d Cir. Oct. 1, 2019), which is one of a series of cases involving university retirement plans and allegations of excessive administrative fees and imprudent investments.  The Second Circuit revived the lawsuit against Defendant Cammack Larhette Advisors, LLC (“Cammack”), an independent investment management company that New York University (“NYU”) hired to provide investment advice on its retirement plans.  In so doing, the Court took us back to our law school days with a lesson in civil procedure.

The basic background is as follows:  Plaintiffs are six professors at NYU or the NYU School of Medicine who participated in two NYU retirement plans.  They filed suit against NYU in an action referred to as Sacerdote I, wherein they alleged breaches of fiduciary duty and other claims related to the management of the retirement plans.  They made a late attempt to amend the Complaint to add other NYU-related entities as defendants, which the district court did not let them do.  Plaintiffs filed a new action, Sacerdote II, alleging the same claims as in Sacerdote I, against the NYU-related entities it sought to add in Sacerdote I, plus other entities.  In response to a motion to dismiss, Plaintiffs amended the complaint to add and remove defendants, including adding Cammack as a defendant for the first time.  The district court dismissed the complaint against the defendants on the basis that, as against the NYU defendants, the lawsuit was duplicative, and as against Cammack, it was in privity with NYU.

The issue before the Second Circuit was whether the district court correctly applied the privity rule in the context of the rule against duplicative litigation.  Specifically, were the claims against Cammack in Sacerdote II—which are substantially similar to the claims against NYU in Sacerdote I—barred by the rule against duplicative litigation on the basis of Cammack’s alleged privity with NYU?

To answer that question, the Court analyzed the rule against duplicative litigation and the privity rule.  The rule against duplicative litigation, or the rule against claim-splitting, bars one of two suits that are both still pending because a plaintiff cannot maintain two actions on the same subject in the same court against the same defendant at the same time.  Usually, the rule against duplicative litigation does not apply when the defendants in two similar actions are different.  This is also known as the rule against nonparty preclusion.  As with any rule there are exceptions.  In the context of claim preclusion (which is distinct from the rule against duplicative litigation), if a nonparty is in privity with a party to a previous action, then the privy is bound with respect to all the issues that were raised or could have been raised in the prior lawsuit.  The Court found no reason why the underlying principles of the privity rule should not apply in the context of the rule against duplicative litigation.

So the question is whether Cammack was in privity with NYU such that Sacerdote II was barred by the rule against duplicative litigation.

The Second Circuit determined that the relationship between NYU and Cammack does not fit into any of the privity categories recognized by the Supreme Court in Taylor v. Sturgell, 553 U.S. 880 (2008) to justify an exception to the rule against nonparty preclusion.  It is not enough that NYU and Cammack “share a sufficiently close relationship and have aligned interests.”  The court explained that as ERISA co-fiduciaries, their interests are not aligned.  For example, they could be found liable for breaches of fiduciary duties but for different reasons.  And their interests could diverge:  “A reasonable trier of fact could find that Cammack provided flawed advice to NYU and was liable for plaintiffs’ losses, while also finding that NYU reasonably relied on Cammack’s advice, notwithstanding its flawed nature. Conversely, a reasonable trier of fact could find that Cammack provided reasonably prudent advice to NYU, but that NYU imprudently rejected Cammack’s advice or failed to properly implement Cammack’s investment recommendations.”

For these reasons, the Court found that the district court erred in accepting Cammack’s argument that its interests were identical to those of NYU over plaintiffs’ contrary allegations.  The Court vacated the district court’s order dismissing Cammack and remanded the matter to the district court.

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

Attorneys’ Fees

Second Circuit

Thigpen v. Board of Trustees of the Local 807 Labor-Management Pension Fund, No. 18-CV-162 (PKC) (LB), 2019 WL 4756029 (E.D.N.Y. Sept. 29, 2019) (Judge Pamela K. Chen).  After determining that the pro se plaintiff had no right to further benefits as a beneficiary of her deceased father’s retirement plan, the court granted Defendant’s request for attorneys’ fees but only for $100.  “The Court intends that the award of $100 in attorneys’ fees will serve to deter Plaintiff from ill-advisedly continuing or bringing future litigation of this nature, affirm Defendant’s entitlement to attorneys’ fees in situations such as this, and provide a measure of compensation for the fees expended by Defendant in this litigation.”

Breach of Fiduciary Duty

Second Circuit

Hudson v. National Football League Management Council, No. 1:18-CV-4483-GHW, 2019 WL 4784680 (S.D.N.Y. Sept. 30, 2019) (Judge Gregory H. Woods). Adopting the Magistrate Judge’s recommendations, the court held that: 1) the SPD did not violate § 102(a) because there is no requirement that plan fiduciaries disclose discretionary interpretation of plan terms, or that summary plan descriptions summarize every standard under which plan terms may be evaluated; 2) Plaintiff’s claim under § 404 for breach of fiduciary duty was not based on separate misrepresentations or knowing omissions, but on the same allegations as his § 102 (i.e. that the Board did not disclose its interpretation of “changed circumstances”), and therefore, this claim was also dismissed (with leave to amend); 3) the claim for breach of duty to monitor was dismissed, with leave to amend, because Plaintiff said nothing about the actions of Defendants Council or the Association with regards to their duty to monitor the members of the Retirement Board; Plaintiff also did not allege that either the Council or the Association was aware of any red flags that should have alerted them to potential breaches of fiduciary duties by members of the Retirement Board – the factual assumption that, simply because breaches occurred, is insufficient to support the claim that there was a failure to monitor; and 4) claim asserting violations of §§ 410 and 404(a)(1)(A) based on discrepancies between the description of the SOL for ERISA violations included in the plan and the SPD and the actual SOL set forth in the statute was dismissed as untimely because, in the absence of allegations of fraud or concealment, the SOL expired at the earlier of six years after the date of the breach or three years after plaintiff had actual knowledge of the breach, so, even if Plaintiff did not have actual knowledge of the breach until 2018, the SOL still expired in 2016 (emphasis in original).

Disability Benefit Claims

Ninth Circuit

Hinds v. Life Insurance Company of North America, No. EDCV180775FMOSHKX, 2019 WL 4871471 (C.D. Cal. Sept. 30, 2019) (Judge Fernando M. Olguin).  On de novo review, the court determined that Plaintiff was entitled to “any occupation” benefits because “there is significant objective and reliable medical evidence of underlying medical conditions which could reasonably be expected to cause the pain alleged by Hinds.”  Specifically, her treating doctor’s records document the scope and length of plaintiff’s disabling pain, electrodiagnostic tests showed nerve abnormalities, and the evidence showed that her condition worsened since an earlier IME which found her permanently disabled.  The court found that LINA erred in crediting paper-only reviews over the other more reliable evidence in the record.  Also, communications between LINA and its IME doctor, Dr. Frank Polanco, “suggests that Dr. Polanco was only interested in giving LINA the opinion it wanted rather than an opinion based on his unbiased review of the objective medical evidence.”  The court rejected LINA’s arguments that Plaintiff was not credible because she did not receive advice or treatment for her hip a year before benefits were terminated because the overall objective evidence shows that she has suffered from her conditions since her date of disability.  The court also rejected LINA’s contention that Plaintiff’s visits to her doctor after it terminated benefits “were calculated to perpetuate a disability claim.”  In sum, Plaintiff is entitled to long-term disability benefits because of her worsening debilitating pain and degenerative conditions.

Tenth Circuit

McNeal v. Metropolitan Life Insurance Company, No. 15-CV-289-JED-JFJ, 2019 WL 4751549 (N.D. Okla. Sept. 30, 2019) (Judge John E. Dowdell).  The court found that MetLife’s decision to deny Plaintiff long-term disability benefits was not an abuse of discretion where MetLife did not receive evidence tying Plaintiff’s knee issues to an inability to do her job as a clinician.  The evidence showed that Plaintiff could perform personal activities independently, and she could drive, go to church, and do household chores.  Her doctor’s general opinion that Plaintiff “should be considered for LTD benefits,” without referencing her actual abilities during the relevant timeframe was insufficient.  The court gave less weight to MetLife’s conflict of interest because it had Plaintiff’s file reviewed independently by two physicians who came to similar conclusions that the record lacked evidence of disability during the elimination period.

Hadd v. Aetna Life Insurance Company, No. 2:17-CV-02533-HLT, 2019 WL 4752041 (D. Kan. Sept. 30, 2019) (Judge Holly L. Teeter).  Aetna did not abuse its discretion in denying “any occupation” benefits to Plaintiff where Aetna relied on:  “(1) Plaintiff’s medical records, examination notes, and statements from Plaintiff and her medical providers; (2) Nurse Cesar’s review and interview of Plaintiff before the initial claim determination; (3) the review of two independent, board-certified occupational medicine physicians (Dr. Craven and Dr. Balogun); (4) a vocational review conducted by Ms. Hamilton and confirmed by Ms. Plummer; and (5) the findings associated with Plaintiff’s SSDI decision.”  The court did not consider an affidavit from one of Plaintiff’s doctors alleging that he was pressured to change his opinion since Plaintiff did not file the affidavit with the court, it is not part of the administrative record, constitutes inadmissible hearsay, and is after-the-fact evidence not considered during Aetna’s claim review process.  The court found that the jobs identified in the transferrable skills analysis may have required Plaintiff to get additional education or training but this was appropriate since the policy defines “reasonable occupation” as “any gainful activity” (1) “[f]or which [an employee is], or may reasonably become, fitted by education, training, or experience”; and (2) [w]hich results in, or can be expected to result in, an income of more than 60% of [their] adjusted predisability earnings.”

Discovery

Fourth Circuit

Chavis et al. v. Plumbers & Steamfitters Local 486 Pension Plan et al., No. 1:17-CV-02729-ELH, 2019 WL 4879015 (D. Md. Oct. 3, 2019) (Magistrate Judge J. Mark Coulson).  In this dispute challenging the suspension of retirement benefits under Sections 502(a)(1)(B) and (502)(a)(3), the court granted in part and denied in part Plaintiffs’ motion to compel and Defendants’ motion for protective order.  The court reminded all litigants that general “boilerplate” objections are highly disfavored and will cut in favor of waiver, not against it.  “Though not necessarily an issue in this case, there are instances where such objections can obscure what is and is not being produced, especially when coupled with the mischievous phrase ‘notwithstanding these objections,’ a practice specifically prohibited in response to requests for production. Fed. R. Civ. Proc. 34(b)(2)(c).”  The standard of review is contested in this case but the court found that neither standard of review acts as a strict bar to consideration of evidence outside of the administrative record.  The court ordered Defendants to produce contact information for other similarly situated plan participants which would allow Plaintiffs to determine whether Defendants also misrepresented the terms of the plan to others.

ERISA Preemption

Third Circuit

Snow Shoe Refractories LLC v. Jumper, No. 4:16-CV-02116, 2019 WL 4917923 (M.D. Pa. Oct. 4, 2019) (Judge Matthew W. Brann).  Plaintiff Snow Shoe, administrator of the Snow Shoe Pension Plan, sued defendant John Jumper, an investor, for entering into contracts with third-party defendant Merrill Lynch Bank & Trust Company, purportedly on Snow Shoe’s behalf but without Snow Shoe’s authority. “These contracts designated Merrill Lynch as a non-discretionary directed trustee of the Pension Plan. . . .Curry, another investor and one of Jumper’s business partners, brings a third-party complaint against Merrill Lynch” which alleges Merrill Lynch’s intentional or negligent misrepresentation and seeking contribution and/or indemnification should a judgment ultimately be rendered for Snow Shoe against Curry.  The court determined that Curry’s state law claims of misrepresentation, contribution and indemnity are not expressly preempted by ERISA.  “Though here, Curry is obviously making his claims at a point in time when an ERISA plan does exist, the character of Merrill Lynch’s alleged misrepresentations hews to the misrepresentations that the Third Circuit analyzed in [Nat’l Sec. Sys., Inc. v. Iola, 700 F.3d 65 (3d Cir. 2012)].”

Sixth Circuit

Lowe v. The Lincoln National Life Insurance Company, et al., No. CV 19-31-HRW, 2019 WL 4891041 (E.D. Ky. Oct. 3, 2019) (Judge Henry R. Wilhoit, Jr.).  Defendants initially paid LTD benefits to Plaintiff after she suffered a stroke and became unable to work. Then they terminated the benefits, which she appealed. While the appeal was pending, Plaintiff initiated this lawsuit, alleging negligence, negligent infliction of emotional distress, outrage, fraudulent misrepresentation, and violations of Kentucky Consumer Protection Act. After Defendants reviewed the appeal, they reinstated benefits and Plaintiff continued to receive monthly benefits. Defendants moved to dismiss the suit, arguing that Plaintiff’s claims were preempted by ERISA. The court held that all of Plaintiff’s claims were preempted because none of her claims alleged wrongdoing independent of Lincoln’s decision related to her benefits.

Exhaustion of Administrative Remedies

Fifth Circuit

Theriot v. Bldg. Trades United Pension Tr. Fund, No. CV 18-10250, 2019 WL 4752078 (E.D. La. Sept. 30, 2019) (Judge Lance M. Africk). Plaintiff filed a motion for reconsideration of the court’s dismissal of Count I (claim for benefits pursuant to 29 U.S.C. § 1132(a)(1)(B)) and Count IV (breach of fiduciary duty pursuant to § 1132(a)(3)) based on failure to exhaust administrative remedies. She also requested that the court reconsider the dismissal of Counts II and V for failure to state a claim (alleging that Defendant did not provide her with a full and fair review and that she failed to plausibly allege interference by the plan to be fully appraised of her rights, respectively) based on failure to state a claim. As to Count I, the court denied Plaintiff’s motion because, while the denial letter sent by Defendant on April 18, 2017 did not substantially comply with ERISA, the March 2, 2018 letter did, and triggered the 60-day time limit to appeal, which Plaintiff failed to do, thereby precluding judicial review. As to Count IV alleging breach of fiduciary duty, the court upheld its prior determination that it was a disguised claim for benefits, because, even if the SPD spelled out the interpretation of the provision that resulted in denial of benefits, the claim would still be for benefits, and Plaintiff failed to exhaust her administrative remedies.

Life Insurance & AD&D Benefit Claims

Fifth Circuit

Freeman v. Securian Life Ins. Co., No. 18-51078, __F.App’x__, 2019 WL 4855553 (5th Cir. Oct. 1, 2019) (Before Wiener, Haynes, and Costa, Circuit Judges).  The court affirmed the district court’s judgment in favor of Securian Life Insurance Company, finding that its denial of AD&D benefits due to the policy’s self-inflicted injury exclusion was not an abuse of discretion where the insured died from Russian Roulette.

Medical Benefit Claims

Second Circuit

Davis v. Flexible Benefits System, Inc., et al., No. 19-Cv-6504-FPG, 2019 WL 4871505 (W.D.N.Y. Oct. 3, 2019) (Chief Judge Frank P. Geraci, Jr.). The pro se plaintiff filed an amended complaint alleging that Defendants wrongfully refused to release money from her flexible spending account to cover medical expenses. The court found that she sufficiently set forth a cause of action under ERISA and allowed the case to proceed to service.

Halberg, et al., v. United Behavioral Health, d/b/a OptumHealth Behavioral Sols., No. 16-CV-6622 (MKB) (SJB), 2019 WL 4784571 (E.D.N.Y. Sept. 30, 2019) (Judge Margo K. Brodie). Plaintiffs alleged that Defendant improperly denied coverage for C.H.’s medical treatment, disregarding her records and misapplying its own “level of care criteria.” One of the main points of contention was whether Aetna’s SPD governed the benefits, or if the UBH SPD was in effect during the relevant time period. Defendant moved for summary judgment or alternatively, a motion to stay pending an outcome of a related class action which was before the United States District Court for the Northern District of California. Adopting the recommendation of the Magistrate Judge Bulsara, the court granted Defendant’s motion for summary judgment because: 1) Defendant did not commit a regulatory violation by failing to cite to and rely on the Aetna SPD because Defendant was not required to follow a different administrator’s SPD, and the regulation did not require an administrator to cite to specific plan provisions of a plan document the administrator has not relied on in making its coverage determinations; 2) Plaintiffs have not established that Defendant failed to take into account certain medical records. The administrative record showed that these documents were considered in the review process; the fact that Defendant did not specifically cite to them in their denials did “not mean this evidence was ignored.”; 3) Plaintiffs’ contention that Defendant improperly afforded deference to the initial benefit determination was not supported by the record, which showed only that Defendant restated the bases on which benefits had initially been denied, and not that Defendant was giving any special deference to those decisions; and 4) Plaintiffs have not established that Defendant violated 29 C.F.R. § 2560.503-1(h)(3)(iv), because that regulation merely required Defendant to have a procedure in place to provide Plaintiffs with the identifications of experts involved in denying coverage upon request, and Plaintiffs have not shown they requested this information.

Pension Benefit Claims

Second Circuit

Grosso, et al. v. AT&T Pension Benefits Plan, et al., No. 18 CIV. 6448 (LGS), 2019 WL 4805809 (S.D.N.Y. Sept. 30, 2019) (Judge Lorna G. Schofield).  This is a dispute over the payment of early retirement benefits based on a 1997 Amendment referred to as the Special Update.  First, the court determined that the doctrine of collateral estoppel does not apply based on the Fourth Circuit decision in Helton v. AT&T Inc., 709 F.3d 343 (4th Cir. 2013) because the Helton court did not address whether participants are entitled to retroactive benefits in the absence of administrative error.  Second, the court determined that BPC’s interpretation of the 2016 Plan as requiring written notice to receive pension benefits under the Special Update was not arbitrary or capricious, but the BPC’s conclusion that the 1998 Plan required written notice to receive these benefits was arbitrary and capricious.  The court remanded the matter to the Plan Administrator to determine whether the 1998 Plan requires a participant to make a written request to commence Special Update benefits.  If it does not require written notice, then under the anti-cutback rule, the 1998 Plan would apply and Plaintiffs would prevail.

Fourth Circuit

Knepper v. Volvo Group North America, et al., No. CV ELH-18-02879, 2019 WL 4750337 (D. Md. Sept. 27, 2019) (Judge Ellen L. Hollander).  Plaintiff alleges that Defendants underpaid his retirement benefits because they incorrectly used his earnings from a four-year period to calculate his benefits under a non-union contributory plan in which he participated before he transferred to a union position.  The court granted, in part, Defendants’ motion to dismiss the Amended Complaint.  The court did not dismiss the benefit claim only as it pertains to an alleged underpayment under the terms of a plan not before the court.  The court found that the relevant plan terms are not ambiguous and Plaintiff has not pleaded facts sufficient to plausibly allege that the plan administrator abused its discretion in determining Plaintiff’s non-contributory benefit amount.  For this reason, Plaintiff also does not plausibly allege a breach of fiduciary duty claim.  Further, Plaintiff failed show entitlement for equitable estoppel or plan reformation because he has not shown reliance, or fraud or mistake in contract formation.  Lastly, the court dismissed the document penalty claim under Section 502(c) because it was filed long after the one-year statute of limitations.

Plan Status

Fifth Circuit

Poe, et al. v. United Association of Journeyman and Apprentices of The Plumbing and Pipefitting Industry of The United States of America AFL-CIO Local 198 Health and Welfare Fund, et al., No. CV 18-0667-BAJ-EWD, 2019 WL 4855158 (M.D. La. Oct. 1, 2019) (Judge Brian A. Jackson). Local 106 maintained HRA accounts for its members. Local 106 and Local 198 merged. Local 198 did not have HRA account for its members. Pursuant to the terms of the merger, Local 106 HRA accounts were to be carried over to the Local 198 Plan. However, the contract contained language which empowered the Board of Trustees of Local 198 to terminate HRAs for all Local 198 members, and the Board voted to terminate the HRAs. Only previous Local 106 members had those accounts, so only they were affected. Both parties agreed that the plain language of the plan indicated that the Board had authority to terminate the HRAs, so Plaintiffs’ claim pursuant to 29 U.S.C. § 1132(a)(1)(B) was dismissed. Next, the court determined that Plaintiffs sufficiently alleged that Defendants’ actions adversely affected the plan when they transferred funds from some participants of the plan and gave them to other participants of the same plan. The court also held that Plaintiffs did not sufficiently allege the third prong of a claim under equitable estoppel (extraordinary circumstances) and dismissed that claim. The court then dismissed Plaintiffs’ claim for the creation of a constructive trust because such trusts were not recognized by Louisiana law. In addition, the court held that, although Plaintiffs adequately alleged a claim for equitable restitution, over the course of the litigation they suggested other potential damages, such as assessment of punitive damages. To secure an equitable lien, however, Plaintiffs must have established that there was no adequate remedy at law. Here, because other adequate remedies at law existed, the court dismissed this claim. The court also dismissed the claim for injunctive relief because Plaintiffs did not specifically allege any of the requisite factors to support the request. Finally, the court ruled that Plaintiffs’ state law claim of breach of contract was preempted by ERISA.

Pleading Issues & Procedure

Second Circuit

Sacerdote v. Cammack Larhette Advisors, LLC, No. 18-1558, __F.3d__, 2019 WL 4777824 (2d Cir. Oct. 1, 2019) (Before: Walker, Calabresi, and Livingston, Circuit Judges).  See Notable Decision summary above.

Fifth Circuit

Pensado v. Life Insurance Company of North America, et al., No. 1:19-CV-157-LY, 2019 WL 4889807 (W.D. Tex. Oct. 3, 2019) (Magistrate Judge Susan Hightower). Plaintiff brought suit against LINA for the termination of his long-term disability benefits. He also alleged a state law claim based on the referral LINA made to Advantage 2000 in connection with obtaining SSDI benefits. The Judge made the following recommendations: 1) Life Insurance Company of North America Group Policy was not a proper Defendant, because Plaintiff was not suing the plan, but the policy document itself; 2) Plaintiff’s state law tortious interference with business relationship claim did not relate to his right to receive benefits under the plan because it related to Plaintiff’s claim for Social Security benefits, and had only a “tenuous, remote or peripheral” connection to the plan, and as such, was not preempted by ERISA; and 3) Plaintiff alleged a plausible claim for tortious interference with a contractual relationship based on the arrangement between LINA and Advantage 2000.

Provider Claims

Third Circuit

University Spine Center v. Anthem Blue Cross Blue Shield, No. CV1711725 (KSH)(CLW), 2019 WL 4855439 (D.N.J. Oct. 2, 2019) (Judge Katharine S. Hayden). Plaintiff  alleged that Defendant failed to properly reimburse it for the medically necessary and reasonable services provided to Defendant’s insured Amy M. Plaintiff also maintains that it has derivative standing to pursue the ERISA claims pursuant to an assignment of benefits from Amy M. Defendant filed a motion to dismiss, arguing that Plaintiff lacked standing because the plan contained an anti-assignment clause. While the motion was pending, the Third Circuit issued a decision stating that anti-assignment clauses in ERISA-governed health insurance plans were enforceable. The Circuit Court noted, however, that the beneficiary may confer on his agent the authority to assert a claim on his behalf (e.g. via a power of attorney). Plaintiff sought leave to file an amended complaint that would substitute Dr. Emami as Plaintiff in this lawsuit as Amy M.’s attorney-in-fact. The court denied the request and held that the original assignment to University Spine was unenforceable as to the ERISA claims, and that the claim under a New Jersey statute was preempted by ERISA. The court summarized that it lacked subject matter jurisdiction over the action at the time it was filed because Plaintiff did not have standing to pursue a claim for benefits under ERISA by virtue of the anti-assignment clause in the plan, and Plaintiff could not attempt to cure jurisdictional deficiencies through an amended pleading.

Sixth Circuit

Air Trek, Inc., v. Capital Steel & Wire, Inc., et al., No. 1:17-CV-1145, 2019 WL 4873401 (W.D. Mich. Oct. 2, 2019) (Chief Judge Robert J. Jonker). “This could be a case study in the market disconnect between patients, health providers and the parties that actually pay for health care services.” Plaintiff provided air ambulance services to Dustin Preston, who ultimately died from his injuries. Neither he nor his heirs are parties. Plaintiff was paid $18,406, which was the quote it provided to the hospital, and which decedent’s plan paid in full. Thereafter, Plaintiff alleged that $18,406 was merely a deposit against the true cost of $241,905, and billed the plan for that amount. Interestingly, Plaintiff admitted that, were the decedent and his heirs the only target defendants, it would not seek this additional amount from them. Ultimately, Plaintiff seeks to recover $217,714.50 which it alleges the negotiating agent for the insurance carrier agreed to pay pursuant to a settlement agreement. Plaintiff alleged several claims under state law and an ERISA claim for plan benefits. The court granted Defendants’ motions to dismiss as to all claims because 1) Plaintiff failed to create a triable issue of fact on claims of breach of contract, promissory estoppel, and negligent or intentional misrepresentation; 2) Plaintiff lacked standing to bring an ERISA claim because it was not a plan beneficiary and the plan prohibited assignment; and 3) Plaintiff’s claim for quantum meruit was preempted by ERISA.

Statutory Penalties

Ninth Circuit

Michael v. La Jolla Learning Institute, Inc., No. 17-CV-934 JLS (MDD), 2019 WL 4747658 (S.D. Cal. Sept. 30, 2019) (Judge Janis L. Sammartino).  Plaintiff alleged violations of ERISA and COBRA based on Defendants’ failure to provide ERISA plan documents and provide a COBRA notice and election form within 30 days of his termination of employment.  The court rejected Defendants’ argument that under Spokeo Plaintiff only suffered an abstract injury and has not suffered an injury in fact.  Here, Plaintiff meets the injury in fact requirement because Plaintiff’s injuries stem from Defendants’ alleged failure to provide Plaintiff information required by statute and Defendants’ failure to provide COBRA information and an election form resulted in a concrete injury because it prevented Plaintiff from obtaining COBRA continuation coverage.  The court refused Defendants’ request to convert the motion to dismiss to a motion for summary judgment because discovery is required to show whether Defendants employed more than twenty-five employees as Plaintiff alleges.  The court dismissed the document penalty claim because it found that Plaintiff failed to provide clear notice to Defendants that he sought production of the summary plan document where he only requested the identity of the plan administrator.  The court denied dismissal of the COBRA penalty claim because it did not consider Defendants’ evidence on the number of its employees (less than 20) and found Plaintiff adequately pled the cause of action.

Withdrawal Liability & Unpaid Contributions

Second Circuit

Trustees of The New York City District Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund, & Apprenticeship, Journeyman Retraining, Educational And Industry Fund v. N.B.A Construction Inc., No. 18 CIV. 2221 (PAE), 2019 WL 4879332 (S.D.N.Y. Oct. 3, 2019) (Judge Paul A. Engelmayer).  The Court confirmed the arbitration award in favor of petitioners and issued judgment in the amount of $136,422.55, minus the $35,422.93 already paid, plus post-judgment interest pursuant to 28 U.S.C. § 1961(a).

Third Circuit

The Renco Group, Inc. v. Steelworkers Pension Trust, No. CV 18-1311, 2019 WL 4748057 (W.D. Pa. Sept. 30, 2019) (Judge Cathy Bissoon).  The court confirmed the Arbitrator’s opinion and award where the Arbitrator concluded that Renco’s selling of 24.5% of RG Steel to Cerberus Capital Management had a principal purpose of evading or avoiding Renco’s withdrawal liability, and, thus, should be disregarded pursuant to § 4212(c) of ERISA, 29 U.S.C. § 1392(c).

Sixth Circuit

Boards of Trustees of the Ohio Laborers Benefits v. Paschal, Bihn & Sons, LLC, No. 2:19-CV-3454, 2019 WL 4783861 (S.D. Ohio Oct. 1, 2019) (Magistrate Judge Elizabeth A. Preston Deavers).  The court recommended that Plaintiffs’ Motion for Default Judgment be granted and Plaintiffs recover the sum of $1,584.22, including unpaid fringe benefit contributions through December 2018, prejudgment interest, and liquidated damages, and a reasonable attorney’s fee in the amount of $2,550.00, plus interest from the date of judgment at the rate of one percent (1%) per month.

Eighth Circuit

Patt, et al. v. Tull Crane & Rigging, LLC, No. 19-CV-1548 (SRN/HB), 2019 WL 4894849 (D. Minn. Oct. 4, 2019) (Judge Susan Richard Nelson).  The court granted Plaintiffs default judgment against Defendant Tull Crane & Rigging, LLC, finding that is liable to the Funds in the amount of $20,941.43 for delinquent contributions and liquidated damages, and $1,462.15 for the Funds’ reasonable attorneys’ fees and costs.

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