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Your ERISA Watch – Sixth Circuit Affirms Dismissal of Claims Challenging Severance Plan’s General Release Requirement

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This week’s notable decision is Castellon-Vogel v. International Paper Company, __F.App’x__, 2020 WL 5891679 (6th Cir. Oct. 5, 2020). Martha Castellon-Vogel (Vogel) worked as an engineer for International Paper Company (IPC). The company’s ERISA welfare benefit plan provided that Vogel could receive a severance package at the end of her employment if, among other conditions, she “sign[ed] a termination agreement acceptable to the Company.” After her job was eliminated, Vogel signed such a “Termination Agreement,” which included a broad General Release. That provision released IPC of liability for all employment-related claims arising during her tenure. She then received fifty-four weeks’ pay, in accordance with the Plan’s terms. Despite cashing the check, Vogel sued IPC. She argued on appeal that the Plan’s terms were illusory and that the General Release in the Termination Agreement was unenforceable for lack of consideration.

Before signing, Vogel consulted with a lawyer. Vogel informed IPC of her view that, under ERISA, the company could not condition her eligibility for severance on agreeing to the General Release. Yet, the following week, she signed the Agreement anyway. After signing, she had seven days to revoke her acceptance of the termination allowance. She did not do so. Instead, she received a check for fifty-four weeks’ severance pay and deposited it. Two weeks later, she sued IPC, seeking “a declaration that the General Release of Claims in the [Termination] Agreement is null and void.” The district court dismissed that suit on lack of standing, where the issue was only hypothetical, as well as noting that she could no longer state a cause of action under ERISA as she was no longer a participant in the welfare benefits plan. Vogel refiled, and included causes of action for employment discrimination and retaliation. The second district court held that Vogel was precluded from relitigating the first court’s determination that she “had no cause of action under ERISA” to challenge the validity of the release. It then concluded that Vogel’s discrimination and retaliation claims were waivable and covered by the release’s “clear and unmistakable” language. Vogel appealed.

Vogel did not challenge the district court’s determination that issue preclusion barred her claim for a declaratory judgment under ERISA, or the district court’s conclusion that the General Release plainly covers her discrimination and retaliation claims. Nor does she contest that these claims were waivable by the General Release. She argued a new theory on appeal, that general principles of contract formation rendered the General Release “unenforceable as an illusory obligation and for lack of consideration.” She argued that there was no consideration for the General Release, she now says, because she was already entitled to severance pay under the Plan; and the Plan’s conditions on receipt of benefits were so open-ended as to be illusory.

The Sixth Circuit held that Vogel had a duty to bring her arguments to the district court’s attention in her response to the motion to dismiss; it was not the district court’s job to find them for her. Vogel argued that new arguments in support of a preserved claim could be brought on appeal.  The Sixth Circuit expressed skepticism about this idea, but found it unnecessary to rule upon it.  The court held that the only claim Vogel brought was for declaration that the release was unenforceable under ERISA. The ERISA claim was dismissed on preclusion grounds and she did not appeal that finding. Therefore, any new theory must be unrelated to ERISA and a new claim entirely. She cannot bring new claims on appeal and has failed to preserve prior claims.

This week’s notable decision summary was prepared by Stacy Monahan Tucker. Stacy has practiced ERISA-related and insurance law for 20 years. She is admitted throughout the Ninth Circuit and has won appeals in the Ninth, Sixth, Fifth and DC Circuits.

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

Attorneys’ Fees

Second Circuit

Mason Tenders District Council Welfare Fund, et. al., v. Gibraltor Contracting Inc., et al., No. 18CV3668MKVJLC, 2020 WL 5904357 (S.D.N.Y. Oct. 6, 2020) (Magistrate Judge James L. Cott, to Judge May Kay Vyskocil). In this dispute over unpaid fringe benefits, Plaintiffs filed a motion for attorneys’ fees after the court granted summary judgment in their favor. Plaintiffs requested $174,671.50 in fees and $7,339.25 in costs. Plaintiffs requested $225-275 per hour for a partner with more than 25 years of experience, $200-$225 per hour for senior associates with under 14 years of experience, $125-135 per hour for junior associates with two years of experience, and $60-$75 for paralegals. The court recommended a 20% across-the-board reduction in the attorneys’ fees requested, and no reduction in costs requested. The court noted that all the hourly rates requested by Plaintiff were reasonable and rejected Defendants’ argument that Plaintiffs’ use of block billing and redacted billing entries warranted fee reductions. However, the court did find justification for the 20% reduction based on 1) a modest reduction for vague entries, 2) unnecessary delegation of document review to senior attorneys, and 3) an unusually high hours devoted to the taking of depositions.

Fisher v. Aetna Life Ins. Co., No. 16-CV-144 (RJS), 2020 WL 5898788 (S.D.N.Y. Oct. 5, 2020) (Judge Richard J. Sullivan). In this dispute involving a denied medical benefit claim, the court agreed with Plaintiff that the remand order granted here—which required Aetna to reassess its denial of benefits—constituted a sufficient degree of success on the merits to justify a fee award under Hardt. The court found that after applying the Chambless factors, Plaintiff was entitled to some fees and costs. The court found that Aetna acted culpably and its decision to resist paying demonstrated more than mere negligence. The court found that Plaintiff at least succeeded in forcing Aetna to provide a revised justification for its decision to deny her ERISA benefits. The fact that Aetna ultimately awarded Plaintiff the copay differential on remand suggests her claim had some substance to it. Due to Plaintiff’s limited success, the court determined a 75% reduction in fees is warranted.

Fifth Circuit

Ingerson v. Principal Life Insurance Company, No. 2:18-CV-227-Z-BR, 2020 WL 5938364 (N.D. Tex. Oct. 2, 2020) (Judge Matthew Kacsmaryk). After finding in favor of Defendant, the court granted Defendant’s motion for attorneys’ fees in the amount of $57,000 and costs of $528.41. The court exercised its discretion to not apply the five-prong Bowen test for calculating fees. The court found the $350/hour rate of the defense partner to be reasonable, and the 172 hours expended on the ERISA matter also reasonable. The court then considered the twelve Johnson factors and saw no reason to adjust the reasonable lodestar figure. The court did decline to award appellate fees in advance of the appellate filing.

Tenth Circuit

Smith v. Standard Life Insurance Company, No. CIV-15-1126-D, 2020 WL 5880971 (W.D. Okla. Oct. 2, 2020) (Chief Judge Timothy D. DeGiusti). Plaintiff sought attorneys’ fees after his case was dismissed under the mootness doctrine. The claim was moot because after Plaintiff filed suit, Defendants enacted a retroactive amendment of the group life insurance policy governing Plaintiff’s claim that caused Standard to pay the claim. The court held the “catalyst theory” applied such that a fee claimant can obtain a fee award without an adjudication on the merits by showing the lawsuit was the catalyst behind the change in the defendant’s conduct, that is, that the lawsuit was causally linked to securing the relief obtained. Judicial activity was not necessary. After determining the lawsuit was the catalyst for the payment, and thus Plaintiff had achieved some success on the merits, it declined to award attorneys’ fees after applying the non-dispositive five-factor evaluation.

Breach of Fiduciary Duty

Seventh Circuit 

Teamsters Local Union No. 786 v. Blevins, No. 19 C 6317, 2020 WL 5909069 (N.D. Ill. Oct. 6, 2020) (Judge Joan H. Lefkow). Teamsters Local 786 filed this action against the trustees of four multiemployer employee benefit plans, alleging breach of fiduciary duty under ERISA. The dispute centered around a change in the plans’ trust agreements which gave the union trustees the power to appoint and remove themselves. The union argued that its executive board, and not the trustees themselves, should have this power. (If this sounds confusing, it is because this action is part of a larger and more complicated dispute between Local 786 and the International Brotherhood of Teamsters, which placed Local 786 in receivership, over who controls Local 786.) Local 786 sought a preliminary injunction compelling removal of the trustees; the trustees moved to dismiss. The court denied the trustees’ motion and granted the preliminary injunction. First, the court found that Local 786 had standing to challenge the amendments. Next, the court ruled that ERISA fiduciaries “can violate their duties of loyalty and prudence by entrenching themselves in their positions” because in doing so they improperly insulate themselves from oversight. The court rejected the trustees’ argument that there could be no breach of fiduciary duty because they were acting in a “settlor capacity” and not a “fiduciary capacity,” ruling that the plan amendments themselves were fiduciary acts because the amendments affected the selection and retention of plan administrators. Because Local 786 had “a high likelihood of success on the merits,” the court granted Local 786’s request for a preliminary injunction to void the amendments and remove the trustees.

Bartnett v. Abbott Labs., No. 20-CV-02127, 2020 WL 5878015 (N.D. Ill. Oct. 2, 2020) (Judge Thomas Durkin). Plaintiff Barnett sued the fiduciaries of her employer-sponsored retirement plan for breach of fiduciary duty when her entire retirement account was stolen by an imposter who contacted the service center for the retirement plan and illegally transferred the funds. The plan refused to make Barnett whole again. On Defendants’ motion to dismiss, several defendants were dismissed including Barnett’s employer because the complaint did not adequately allege that it was a fiduciary, and the retirement plan because plans are not proper parties to lawsuits seeking recovery of plan losses under § 502(a)(2). Barnett’s breach of fiduciary duty claim against the service center could proceed. The court also found that ERISA did not preempt claims under the Illinois Consumer Fraud and Deceptive Business Practice Act (“ICFA”).

Ninth Circuit

Thondukolam v. Corteva, Inc., No. 19-CV-03857-YGR, 2020 WL 5944423 (N.D. Cal. Oct. 7, 2020) (Judge Yvonne Gonzalez Rogers). Plaintiffs filed a second amended complaint asserting a single claim for breach of fiduciary duty. Plaintiffs theory was that DuPont spun off its business into different entities to transfer liability for its pension obligation to a shell company. Defendants sought dismissal for the same reason asserted against prior complaints—because DuPont’s spinoff of companies was a corporate business decision, it could not implicate fiduciary duties. The court agreed, holding that “defendant’s actions in this case—specifically, placing the Plan with a Corteva subsidiary while placing core business operations and employees with New DuPont—were non-fiduciary in nature.” This holding held true even though the court recognized the business operations that supposedly were meant to support the Plan may have been ill-equipped to do so. “In reaching its decision, the Court is mindful of the importance of protecting employee pension benefit plans from employers using improper methods, including hiding behind corporate acts, to evade their obligations to these plans.” The court also rejected Plaintiff’s argument that DuPont had not complied with transfer requirements in Section 208 of ERISA. It found the section did not apply because the plain language of the statute required transfer to any other plan, but the Plan at issue had retained its assets and participants. Finally, the court rejected arguments that a breach of fiduciary duty occurred when DuPont failed to terminate the Plan as required under section 4041 of ERISA because the Plan had not attempted any of the regulatory steps required under ERISA to terminate a plan.

Class Actions

Eighth Circuit

Lechner, et al. v. Mutual of Omaha Insurance Company, et al., No. 8:18CV22, 2020 WL 5982022 (D. Neb. Oct. 8, 2020) (Judge Joseph F. Bataillon). In this case where Plaintiffs allege that Defendant Mutual of Omaha, the Plans’ sponsor and fiduciary, violated the duties of loyalty and prudence by selecting its affiliate, United, to provide administrative and investment services for the Plans, the court granted Plaintiffs’ motion for preliminary approval of proposed partial settlement agreement and for certification of a settlement class. The settlement provides for a $6.7 million cash payment. The court determined that the factors support class certification and preliminary approval of the settlement.

Ninth Circuit

Davis v., Inc., No. 20-CV-01753-MMC, 2020 WL 5893405 (N.D. Cal. Oct. 5, 2020) (Judge Maxine M. Chesney). Plaintiffs, former employees of Salesforce, brought this class action against the company and related Defendants, contending that Defendants breached their fiduciary duties under ERISA by selecting and retaining high-cost investments for Salesforce’s retirement benefit plan, and that Defendants breached their duties of loyalty and monitoring. Defendants filed a motion to dismiss the complaint, which the court granted. Plaintiffs argued that passively invested funds performed better than the plan’s higher-cost actively managed funds, but the court agreed with Defendants that such funds were not comparable. The court ruled that Plaintiffs had not identified a “meaningful benchmark” for comparison, and that the five-year window of time alleged by Plaintiffs was not sufficiently long-term. The court also found that Defendants were justified in investing in higher-cost share classes because the difference was appropriately used for “revenue sharing,” i.e., recordkeeping and administrative expenses. The court further found that Defendants were justified in offering mutual funds instead of collective trusts and separate accounts because these investments were not comparable, and ERISA does not mandate that plans invest in any “particular mix of investment vehicles.” Finally, the court ruled that Plaintiffs’ allegations regarding Defendants’ duty of loyalty and conflict of interest lacked factual support and were “wholly conclusory.”

D.C. Circuit

White, et al. v. Hilton Hotels Retirement Plan, et al., Case No. 16-856, 2020 WL 5946066, (D.D.C. Oct. 7, 2020) (Judge Colleen Kollar-Kotelly). Plaintiffs filed a “renewed” motion for class certification made up of three subclasses of individuals who were challenging certain vesting determinations made by Defendant. The court denied Plaintiffs’ motion without prejudice. The court determined that the subclasses was impermissibly “fail-safe” as it required a future decision on the merits to specify the scope of the class. The court noted that it is unsettled among the circuits as to whether there is a “fail safe” requirement. Nonetheless, the court believed that multiple factors weighed strongly in favor of an operative rule against “fail-safe” classes. The court denied Plaintiffs’ motion without prejudice as the court believed that the deficiencies could be remedied. The court went on and discussed two other deficiencies that should be corrected before a renewed motion is made – (1) lack of commonality within a subclass; and, (2) one of the representative Plaintiff’s claim is not typical of the subclass that he represents.

Disability Benefit Claims

Sixth Circuit

Lewis v. Unum Life Insurance Company of America, No. 1:18-CV-127, 2020 WL 5880959 (E.D. Tenn. Oct. 2, 2020) (Judge Travis R. McDonough). In this action, Plaintiff seeks judicial review of Defendant’s decision to deny his claim for long-term disability benefits. Lewis alleges that Unum acted arbitrarily and capriciously in determining that he was not eligible for benefits under the policy. The court granted Defendants’ motion for judgment, ruling that even though Unum had a conflict of interest, its existence did not render the decision arbitrary or capricious. The court also ruled that Unum’s argument before the SSA that Plaintiff was “totally disabled” fell short of requiring estoppel. The court went on to state that relying on peer review opinions did not render a decision arbitrary or capricious, because plan administrators were not obligated to accord special deference to the opinion of treating physicians. Unum’s failure to obtain an IME, while a factor in determining whether a decision was arbitrary and capricious, is not enough by itself to conclude that the decision was unreasonable. Finally, the “misclassification” of Plaintiff’s work was not relevant to the court’s review, as it was bound by the terms of the policy, which stated that Unum looks at an occupation as it is normally performed in the national economy, not as Plaintiff actually performed it.

ERISA Preemption

Second Circuit

The Trundle & Co. Pension Plan, et al. v. Emanuel, No. 18 Civ, 7290, 2020 WL 5913285 (S.D.N.Y. Oct. 6, 2020) (Judge Edgardo Ramos). Plaintiff filed a lawsuit in state court alleging state law claims against a long-term business partner over $150,000 which was purportedly improperly diverted to a tennis club of which Defendant had an ownership interest. The case was removed to federal court and a motion to dismiss was filed and granted on the grounds of ERISA preemption. Plaintiffs attempted to amend the complaint to state a claim for fraud. After three separate attempts and several procedural violations, the court denied Plaintiff’s third motion to amend and dismissed the case with prejudice. Plaintiffs again sought leave to amend the complaint and filed a motion for reconsideration. The court denied Plaintiffs motions and noted that even if the allegations were sufficiently plead, the fraud claim would still be preempted by ERISA.

Tenth Circuit

Ferrell Companies, Inc. v. GreatBanc Trust Company, et al., Case No. 20-2229-JTM, 2020 WL 5908956 (D. Kan. Oct. 6, 2020) (Judge J. Thomas Marten). Ferrell Companies, Inc. brought claims against the former Trustee of its Employee Stock Option Plan, GreatBanc Trust Company. Ferrell alleges that GreatBanc breached the Trust Agreement by attempting to install its own board of directors for Ferrell, and that it violated its fiduciary duties under ERISA § 409(a). Ferrell also brought claims against Houlihan Lokey, a financial adviser, for tortious interference and breach of contract. Houlihan Lokey moved to dismiss the claims against it. The Complaint alleged that in 2015 Ferrellgas employed GreatBanc as a discretionary trustee to independently evaluate a proposed acquisition of an oil shipping company. GreatBanc reported that the acquisition was in the best interest of Plan Participants and approved it. However, the acquisition failed and Ferrellgas accumulated debt. The Complaint alleged that GreatBanc, in collaboration with former Ferrellgas officers sought to purchase Ferrellgas on behalf of outside investors. In August of 2018, Ferrellgas considered employing Houlihan Lokey for advice on how to recover from the Bridger failure. The parties entered into a Confidentiality Agreement as the parties discussed the proposed employment. The Complaint alleged that, after Ferrellgas decided not to hire Houlihan Lokey, that company surreptitiously began working GreatBanc to recruit replacement Ferrellgas directors who would cooperate with the VanWinkle investors, using some confidential information it had previously obtained or through meetings with GreatBanc and former Ferrellgas officers. In its motion to dismiss, Houlihan Lokey argued that Count 3 of the Complaint for tortious interference was preempted by ERISA, and that Count 4 failed as a matter of law because Ferrell Companies, as Plan Administrator, was not a party to the Confidentiality Agreement. Specifically, as to the issue of preemption the Court agreed that the Plan’s tortious interference claim inherently required a determination of whether GreatBanc violated the Trust Agreement (not the Confidentiality Agreement), which is an ERISA Plan document. The court found that the allegations that GreatBanc violated the Trust Agreement by its “attempted hijacking” of the Ferrell Companies Board inevitably addressed the Trustee’s obligations under the Plan. The court held that the tortious interference claim was preempted because the plaintiff is seeking to enforce rights which arise under the terms of an ERISA plan, and does not rest on any legal duty outside the terms of the ERISA plan.

Medical Benefit Claims

Second Circuit

Fisher v. Aetna Life Ins. Co., No. 16-CV-144 (RJS), 2020 WL 5898788 (S.D.N.Y. Oct. 5, 2020) (Judge Richard J. Sullivan). Plaintiff moved for reconsideration of the court’s order granting summary judgment in favor of Aetna. Plaintiff argued the court failed to interpret the ACA properly and seeks attorney’s fees and costs. The court ruled that it already reconsidered and rejected Plaintiff’s arguments regarding the policy’s family out-of-pocket limit. The court ruled that neither the ACA or the applicable regulations or the HHS 2015 Rule concerning benefit and payment parameters for health plans supports Plaintiff’s arguments.

Eighth Circuit

Kellum, et al. v. Nationwide Ins. Co. of America, et al., No. 1:20-CV-23-SNLJ, 2020 WL 5960918 (E.D. Mo. Oct. 8, 2020) (Judge Stephen N. Limbaugh, Jr.). Plaintiff Kellum filed a motion for reconsideration following the court’s order granting summary judgment to Defendant. Plaintiff appeared pro se and did not explain which reasons under FRCP 60(b) apply to her motion. As to the merits, the court found that the third-party administrator properly acted for the plan in exercising discretionary control. The court found the Plan has standing to counterclaim against Plaintiff. The court noted the Plaintiff did nothing until summary judgment was granted and did not answer the Plan’s counterclaim or the motion for summary judgment. The court denied the motion for reconsideration.

Pension Benefit Claims

Second Circuit

Metzgar, et al., v. U.A. Plumbers and Steamfitters Local No. 22 Pension Fund, et al., No. 13-CV-85 (JLS) (LGF), 2020 WL 5939202 (W.D.N.Y. Oct. 7, 2020) (Judge John L. Sinatra, Jr.). The court adopted the R&R which previously made the following findings: Defendants’ suspension of Plaintiffs’ Early Retirement Pensions unless Plaintiffs terminate further employment with Plaintiffs’ employers does not violate ERISA’s anti-cutback rule because Defendants’ determination is not an amendment to the Plan subject to review under § 204(g). Defendants’ administrative action resulting in the suspension of Plaintiffs’ pensions and loss of employment income was not a de facto plan amendment actionable under § 204(g). Plaintiffs’ special early retirement pensions were not an accrued benefit under the Plan because they were improperly approved based on Defendants’ misunderstanding of § 401(a)’s requirement. “Defendants’ suspension of Plaintiffs’ pensions or requiring Plaintiffs forgo continued employment with Plaintiffs’ former employers was not arbitrary, capricious or illegal. To the contrary, it was on based on a reasonable interpretation of applicable Treasury regulations, I.R.S. rulings and the PLR required to preserve the Fund’s tax-exemption.” Defendants did not breach their fiduciary duty to Plaintiffs by acting in compliance with their obligation under the Trust and applicable tax law. The breach of fiduciary duty claim is also subject to dismissal due to redundancy. The court also denied Plaintiffs’ motion for leave to file a supplemental complaint and for preliminary injunction. See Metzgar v. U.A. Plumbers & Steamfitters Local No. 22 Pension Fund, No. 13-CV-85V(F), 2019 WL 1428083 (W.D.N.Y. Mar. 28, 2019).

Eighth Circuit

Ruessler v. Boilermakers-Blacksmiths National Pension Trust Board of Trustees, 2020 WL 5909772 (E.D. Mo. Oct. 6, 2020) (Senior Judge Stephen Limbaugh, Jr.). Plaintiff filed a claim for pension benefits. Defendant denied the claim initially because Plaintiff failed to submit a copy of his Social Security award with his initial application. Plaintiff appealed and included a copy of the award with his appeal. However, Defendant took the position that Plaintiff had to have submitted the award within the 180 days of filing the application for benefits. Plaintiff filed actions for unpaid benefits under 1132(a)(1)(B) as well as a breach of fiduciary duties under 1132(a)(3)(B). Defendant filed a motion to dismiss in response to Plaintiff’s lawsuit, claiming it was required to deny the claim under the terms of the Plan. The court found for Plaintiff, concluding that the procedures provided by this Plan “[do] not provide a claimant with a reasonable opportunity for a full and fair review of a claim and adverse benefit determination [because they do not provide] the claimant an opportunity to submit new documents and records relevant to his or her claim.”

Pleading Issues & Procedure

First Circuit

Lipshires v. Behan Bros. Ret. Plan, No. CV 20-252-JJM-PAS, 2020 WL 5894094 (D.R.I. Oct. 5, 2020) (Judge John McConnell). Plaintiff retirees sought to withdraw funds from their retirement accounts in 2019. They specifically asked for a valuation date of December 31, 2019. The plan administrator delayed the valuation, instead using the date April 30, 2020, after the pandemic had negatively impacted the market and caused loss of retirement funds for the retirees. The court denied Defendants’ motion to dismiss the retirees claims for benefits due and breach of fiduciary duty, finding that the complaint adequately pled facts for both counts.

Seventh Circuit

United Association of The Plumbing and Pipe Fitting Industry of United States and Canada, Local No. 360, et al. v. Ehret, Inc., No. 19-CV-43-RJD, 2020 WL 5893526 (S.D. Ill. Oct. 5, 2020) (Magistrate Judge Reona J. Daly). The court granted Defendant’s Motion to Set Aside Entry of Default where “Defendant represents to the Court that its Controller, Kim Hugger, accepted service of Plaintiffs’ Complaint in January 2019. Ms. Hugger mistook the service of process in this case for a case that had previously proceeded before the Court involving similar parties, Case No. 17-cv-511-RJD. On August 31, 2020, Ms. Hugger received the Entry of Default in this case. She forwarded the Entry of Default to legal counsel who entered one week later.” The court granted the motion because there is a lenient standard for vacating an Entry of Default and a trial on the merits is favored.

Provider Claims

Ninth Circuit

Martin Luther King, Jr. Community Hospital v. Community Insurance Company dba Anthem Blue Cross Blue Shield, et al., No. 19-55053, __F.App’x__, 2020 WL 5870513 (9th Cir. Oct. 2, 2020) (Before Circuit Judges Mary M. Schroeder and Daniel P. Collins and Judge Michael M. Baylson, by designation). The Ninth Circuit declined to enforce an ERISA plan’s anti-assignment provision against a healthcare provider because the language of the anti-assignment provision did not allow Anthem to ignore the assignments. And, alternatively, the district court correctly ignored the anti-assignment provision.


D.C. Circuit

Hall v. Washington Metropolitan Area Transit Authority, No. CV 19-1800 (BAH), 2020 WL 5878032 (D.D.C. Oct. 2, 2020) (Judge Beryl A. Howell). Plaintiff brought this lawsuit against her former employer alleging, inter alia, that it failed to ensure that she received notice of her options for continuation coverage under its group health plan upon termination. Plaintiff argued that no genuine dispute existed as to the fact that she received no such notice following her termination and that she is therefore entitled to summary judgment on this claim. Defendant argued that it enjoyed the 11th Amendment sovereign immunity which shielded it from this claim. Plaintiff argued that her claim is an “action in equity” and fell within an exception to sovereign immunity because it alleged an ongoing violation and sought prospective relief. The court ruled that Plaintiff’s effort to construe her claim as one for equitable relief failed because she has not named as a defendant any individual against whom an injunction might properly be entered. Equitable relief is available only against a state officer, not against a state entity. In addition, while a state may waive sovereign immunity, there was no such waiver in this case. Therefore, summary judgment was granted for Defendant on this claim.

Severance Benefit Claims

Sixth Circuit

Castellon-Vogel v. International Paper Company, __F.App’x__, 2020 WL 5891679 (6th Cir. Oct. 5, 2020) (Judges Silr, Sutton, Larsen). See Notable Decision summary above.

Standard of Review

Seventh Circuit

Hampton v. National Union Fire Insurance Company of Pittsburgh, PA, a subsidiary of American International Group, Inc., No. 1:18-CV-06725, 2020 WL 5946967 (N.D. Ill. Oct. 7, 2020) (Judge John J. Tharp, Jr.). In this dispute over accidental death benefits, Plaintiff argued that the de novo standard of review applies because National Union did not have discretionary authority to deny her claim. The court found that de novo review applies. First, it found that National Union acted as a fiduciary when it denied the claim for benefits. “An insurer who holds discretionary authority over a benefit plan therefore serves as a plan fiduciary whether or not the plan denominates the insurer as such.” National Union acted as a fiduciary regarding the claim at issue when it reviewed relevant documents, interpreted the Summary Plan Description, and ultimately exercised discretion in denying the claim. However, the Plan Administrator did not properly delegate fiduciary authority to National Union. The Plan provides a specific method for delegating fiduciary authority to a service representative and the Plan Administrator was bound to follow the Plan’s procedures by memorializing the delegation in writing and conducting a vote. There is no evidence that these procedures were followed. Therefore, de novo review applies. The court declined to reach the question of whether ERISA allows for an implicit delegation of a Plan Administrator’s authority to an insurer because the Plan here expressly rejects the possibility of an implied delegation.

Statute of Limitations

Third Circuit

Carpenters Health and Welfare Fund of Philadelphia and Vicinity, et al. v. P. Santos Co., Inc., No. 2:19-CV-00699-JDW, 2020 WL 5961044 (E.D. Pa. Oct. 8, 2020) (Judge Joshua D. Wolson). “The cross-motions for summary judgment before the Court focus primarily on the application of the statute of limitations. If it accrued when P. Santos Co. first stopped making contributions that it owed to various union funds under a collective bargaining agreement, then it bars Plaintiffs’ claims. But it didn’t accrue then. Instead, each time Santos failed to make a contribution, it gave rise to a separate claim, and the statute of limitations began to accrue for that claim. Because Plaintiffs only seek contributions from January 1, 2017, forward, the three-year statute of limitations does not bar their claims. Because Santos cannot point to any evidence to create a material factual dispute about Plaintiffs’ claims, the Court will grant Plaintiffs’ summary judgment motion and deny Santos’s motion.”

Withdrawal Liability & Unpaid Contributions

Second Circuit

Trustees of the Ne. Carpenters Health, Pension, Annuity, Apprenticeship, & Labor-Mgmt. Cooperation Funds v. 34 Grp., Inc., No. 20-CV-2612 (DRH), 2020 WL 5878256 (E.D.N.Y. Oct. 2, 2020) (Judge Denis R. Hurley). “The petition to confirm the arbitration award in the amount of $204,815.58 (consisting of delinquent contributions in the amount of $168,255.62, interest of $1,258.84, liquidated damages of $33,651.12, attorneys’ fees of $900 plus interest on the attorneys’ fees at the rate of 10% from the date of the Award, and the arbitrator’s fee of $750) is granted. Petitioners are further awarded attorneys’ fees in the amount of $643.00, costs in the amount of $470.00, and post judgment interest pursuant to 28 U.S.C. § 1961.”

Third Circuit

Supor & Son Trucking & Rigging Co., Inc. v. Trucking Employees of North Jersey Welfare Fund, et al., No. CV1713416ESMAH, 2020 WL 5988240 (D.N.J. Oct. 9, 2020) (Judge Kevin McNulty). The court granted Respondents’ motion for summary judgment. “Because Supor’s contribution obligation qualifies Supor as an ‘employer’ under the MPPAA, and because the issues in dispute fall within the purview of § 1381 through § 1399 of the MPPAA, the court finds that disputes between the parties in the instant case are subject to the MPPAA’s statutory arbitration mandate.”

Sixth Circuit

Kemp, et al. v. Carson Corporation, et al., No. 3:20-CV-00043, 2020 WL 5912815 (M.D. Tenn. Oct. 6, 2020) (Judge Waverly D. Crenshaw, Jr.). The court granted Plaintiffs’ Motion for Entry of Default Judgment by the Court, including granting a permanent injunction and an award of $7,605.00 in fees and expenses.

Seventh Circuit

McGriff v. Schenkel & Sons Inc., et al., No. 2:18-CV-364-JVB-JEM, 2020 WL 5912363 (N.D. Ind. Oct. 6, 2020) (Judge Joseph S. Van Bokkelen). Here, Defendants move to dismiss claims seeking interim liability payments on the basis that they are not “employers” as defined by ERISA and to stay the claims pending another arbitration. The court found that “the Fund has now pled a new basis for a ‘complete withdrawal,’ and the prior court’s orders do not compel a finding that the Fund’s instant claims for interim payments should be dismissed or stayed.” The court denied the motion.

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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