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Your ERISA Watch – Supreme Court “Leaves Women Workers to Fend for Themselves” for Contraceptive Coverage

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This week’s notable decision, Little Sisters of the Poor Saints Peter & Paul Home v. Pennsylvania, No. 19-431, — S.Ct. —, 2020 WL 3808424 (U.S. July 8, 2020), impedes patient access to contraception through employer-provided health benefit plans. The decision affects approximately 70,000 to 126,000 people who will be unable to receive contraception through their employer’s health benefit plans. Justice Thomas wrote the majority opinion, joined by Justices Neil Gorsuch, Samuel Alito, Brett Kavanaugh, and Chief Justice Roberts. Justice Alito concurred, joined by Justice Gorsuch. Justice Kagan concurred, joined by Justice Breyer. Justice Ginsburg dissented, joined by Justice Sotomayor.

The Court considered whether the Patient Protection and Affordable Care Act (ACA) may permit exemptions or accommodations for employers’ religious or moral objections to providing no-cost contraceptive coverage.

As background, the ACA requires employers to provide women with “preventative care and screenings” at no cost and relies on the Health Resources and Services Administration (HRSA) to determine what constitutes “preventative care and screenings.”

In prior decisions by the Court, religious entities challenged the contraceptive mandates under the Religious Freedom Restoration Act of 1993 (RFRA). The Court previously held that contraceptive mandates substantially burdened the free exercise of corporations with sincerely held religious objections to providing their employees with contraception and the Court remanded without deciding the issue so that the parties could develop an approach to accommodate the employers’ concerns. As a result, the Departments of Health and Human Services, Labor, and Treasury (Departments) implemented interim final rules to the ACA which provide the exemptions at issue.

The present lawsuits involved challenges by religious nonprofits and the Commonwealth of Pennsylvania. Two religious nonprofits run by the Little Sisters of the Poor (Little Sisters) challenged the ACA’s accommodation requirement because they held the religious conviction that “deliberately avoiding reproduction through medical means is immoral.” Second, the Commonwealth of Pennsylvania and State of New Jersey challenged the final rules, alleging the Department lacked statutory authority under the ACA and RFRA to create the exemptions and therefore the rules were procedurally defective. The district court issued a nationwide preliminary injunction against implementation of the final rules and the Third Circuit affirmed.

For the majority, Justice Thomas wrote that the Departments had the authority under the ACA to promulgate religious and moral exemptions to contraceptive coverage. The Court relied on the “pivotal” phrase “as provided for” in the ACA which gave the HRSA “sweeping authority” to define preventative care. The Court held that the ACA gives broad discretion to the HRSA to define preventative care and create the religious and moral exemptions.

In concurrence, Justice Alito wrote that the Court should go further and hold that the RFRA compels an exemption for the Little Sisters and any other employer with a similar objection to an accommodation to the contraceptive mandate.

In concurrence, Justice Kagan wrote that she would uphold HRSA’s statutory authority not because there is clarity in the statute but rather because courts should resolve statutory ambiguity by ceding to the reasonable interpretation by the implementing agency.

In dissent, Justice Ginsburg wrote that “[t]oday, for the first time, the Court casts totally aside countervailing rights and interests in its zeal to secure religious rights to the nth degree.” She continued that “[d]estructive of the Women’s Health Amendment [to the ACA], this Court leaves women workers to fend for themselves” to find contraceptive coverage through other means.

This week’s notable decision was prepared by Kantor & Kantor, LLP Partner, Elizabeth Green. Elizabeth is passionate about helping patients obtain health benefits for a range of health conditions and particularly for mental health disorders such as eating disorders and bipolar disorder.

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Last week’s edition covered this week’s second notable decision, Cal. Spine & Neurosurgery Inst. v. Blue Cross of Cal., Case No. 19-15192, __F. App’x__, 2020 WL 3536496 (9th Cir. Jun. 30, 2020), and the positive impact that this decision has on medical providers. This week the focus is on its importance to participants. Based on an anti-assignment provision, the district court dismissed a medical provider’s claim against Blue Cross for benefits. Citing Spinedex Physical Therapy USA Inc. v. United Healthcare of Arizona, Inc., 770 F.3d 1282, 1296 (9th Cir. 2014), and Harlick v. Blue Shield of California, 686 F.3d 699, 720 (9th Cir. 2012), the Ninth Circuit held that waiver was applicable and that the medical provider’s complaint was adequate. As explained in an amicus brief filed by Kantor & Kantor on behalf of United Policyholders, if a claims administrator were permitted to wait until a lawsuit is filed to raise an anti-assignment provision, providers would require participants to pay for medical services in advance. Participants would then forgo costly medical treatment despite eligibility for covered benefits under their health plans. This decision demonstrates the ongoing vitality of Spinedex and Harlick. In Harlick, the Ninth Circuit emphasized the ERISA claims regulation and held that waiver is applicable to defenses not raised during the claims process. Spinedex makes clear that waiver applies to anti-assignment provisions. This case also appears to be the end of a trend among district courts of characterizing anti-assignment as an unwaivable “litigation defense.”  See, e.g., Korman v. ILWU-PMA Claims Office, 2019 WL 3033529 (C.D. Cal. July 3, 2019).

*The above summary was contributed by counsel for Appellant California Spine and Neurosurgery Institute, Joseph Garofolo of Garofolo & Ramsdell, LLP.

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

Attorneys’ Fees

Ninth Circuit

Richardson v. Ibew Pacific Coast Pension Fund, No. C19-0772JLR, 2020 WL 3639625 (W.D. Wash. July 6, 2020) (Judge James L. Robart). Plaintiff and Defendant seek attorney’s fees, having each achieved some success on the merits. Defendant did not make a request until its reply, thus depriving Plaintiff of an opportunity to respond. District courts must still consider several factors  (1) the degree of the opposing party’s culpability or bad faith; (2) the ability of the opposing party to satisfy an award of fees; (3) whether an award of fees against the opposing party would deter others from acting under similar circumstances; (4) whether the party requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; and (5) the relative merits of the parties’ positions. Here, the court held that the first factor weighed in Plaintiff’s favor because IBEW’s conduct here was more than merely negligent. IBEW’s failure to refer its initial calculation of Ms. Richardson’s pension benefits to an actuary for a calculation to remove the employer subsidy that inhered in the Plan’s early retirement factors amounted to a breach of its fiduciary duties. The second factor also weighs in Plaintiff’s favor, as she is disabled and has a fixed income. As to the third factor, an award of fees against IBEW may serve to deter it from failing to seek actuarial advice in similar circumstances in the future. Accordingly, the court concluded that this factor favors an award of fees to Ms. Richardson and disfavors an award to IBEW. Insofar as the fourth factor, IBEW tried to eliminate its overpayment for legitimate pension payments. Thus, the court concluded that this factor weighs in favor of an award of fees to IBEW but not to Ms. Richardson. The final factor is neutral. Based on the foregoing, the court granted Plaintiff’s motion for attorney’s fees and ordered her to submit a detailed motion concerning the amount.

Durham v. Aetna Life Insurance Co., 8:19-cv-01494-DOC-DFM (C.D. Cal. Mar. 30, 2020) (Judge David O. Carter). Plaintiff sought to recover $125,485.25 plus interest in attorney’s fees and costs. After analyzing the Hummel v. S.E. Rykoff & Co., 634 F.2d 446 (9th Cir. 1980) factors, which are: (1) the degree of the opposing party’s culpability or bad faith; (2) the ability of the opposing party to satisfy an award of fees; (3) whether an award of fees against the opposing party would deter others from acting under similar circumstances; (4) whether the party requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; and (5) the relative merits of the parties’ positions, the court found that an award of fees was warranted. However, the court reduced the fees to $88,772.75. The court found that hourly fee of $750 per hour for partner time (McKennon), $525  per hour for an associate with 12 years of experience (Soliz), and $375 per hour for a more junior associate were reasonable, but reduced the hours claimed. The reduction for Soliz were: 7.29 hours for review of the administrative record, 20 hours for drafting the complaint, 3.2 hours for work on the joint report, 1.2 hours for review of stipulation to vacate, 18 hours for work on the fees motion, and 0.6 hours for clerical work that was block billed, for a total of 50.29 hours.  For McKennon, the court deducted 0.5 hours for work on the joint report and 1.3 hours for work on the settlement demand, for a total of 1.8 hours.

Breach of Fiduciary Duty

Seventh Circuit

Senior Lifestyle Corp. v. Key Benefit Administrators, Inc., No. 117CV02457JMSMJD, 2020 WL 3642512 (S.D. Ind. July 6, 2020) (Judge Jane Magnus-Stinson). Senior Lifestyle Corporation (“SLC”) initiated this lawsuit for breach of fiduciary duty against KBA as the third-party administrator for SLC’s self-funded healthcare plan (the “Plan”) for failing to pay premiums on SLC’s stop-loss insurance, causing the policy to be canceled. The court granted KBA’s motion for summary judgment, and SLC brought this motion for reconsideration. SLC argued KBA had failed to prove that the Plan had not been harmed by loss of the stop-loss insurance. The court disagreed, finding that the evidence supported KBA’s assertion that SLC was the policyholder of the stop-loss insurance, not the Plan. Because the Plan was not the policyholder, it was not party injured by the termination of the stop-loss policy. SLC’s breach of fiduciary duty claim failed because there was not “a cognizable loss to the plan.”

Disability Benefit Claims

Fourth Circuit

Holmes v. Prudential Ins. Co. of Am., No. 2:20-CV-02060, 2020 WL 3820394 (W.D. Ark. July 8, 2020) (Judge P.K. Holmes III). Plaintiff filed suit over the denial of her claim for long term disability benefits. Defendant Employer moved for summary judgment on the basis that Plaintiff released her claims for ERISA benefits when she signed her employer’s severance agreement, while Defendant Prudential moved based on Plaintiff’s failure to exhaust administrative remedies. Plaintiff argues that the release should not be enforceable, as the amount she was given in consideration, $250, constituted a violation of the employer’s (and Prudential’s) fiduciary duties toward her. She also seemingly argued that she did exhaust administrative remedies, though offered no proof of that outside of conclusory allegations in the complaint. The court found for Defendant Employer, noting that despite the small sum received in consideration, Plaintiff still had plenty of time to request that an attorney review the release and/or the terms of her benefit plan. The court also found for Defendant Prudential, as it showed (without rebuttal) that Plaintiff did not exhaust administrative remedies prior to filing suit.

ERISA Preemption

Fifth Circuit

Barnes v. Provident Life & Accident Ins. Co., No. 6:17-CV-586-JDK-KNM, 2020 WL 3637803 (E.D. Tex. July 6, 2020) (Judge Jeremy D. Kernodle). Unum Group continues to ERISA-fy individual policies. Plaintiff was an executive at Discount Tire Co., which facilitated access to individually owned disability policies for its executives by managing the payments of premiums for individual policies the executives apply for and own. Plaintiff purchased three policies. While Discount Tire made the premium payments, the amount was reported as taxable income and thus the individual paid taxes on the premium amount. Discount Tire executives received a 35% to 40% discount on the premiums if they applied through the company. One could argue this is a rough estimate for the savings an ERISA benefit provides to an insurance company over one subject to bad faith laws because, after Plaintiff’s disability benefits were terminated under the individual policies, he sued for bad faith damages and Provident sought to ERISA-fy the policies. The court made three findings that resulted in ERISA preemption. First, a plan existed because Discount Tire created a risk group to provide insurance benefits to employees at a discounted rate and paid the premiums on the disability insurance at issue. Second, the safe harbor provision did not apply because Provident provided the discounted premiums because of the role Discount Tires played in securing the policies. Third, Discount Tires established or maintained a plan because it paid the premiums by sending in checks (something allowed under the safe harbor provision), enabled its employees to apply on a group basis (something allowed under the safe harbor provision), handled invoices and bookkeeping (something allowed under the safe harbor provision), and procured discounts on the premiums for its employees. In short, what otherwise looks like individual policies sold under the safe harbor provision will be subject to ERISA so long as the insurance company claims it offered a discount on the insurance if purchased through the employer’s group.

Life Insurance & AD&D Benefit Claims

Seventh Circuit

McComb, Jr. v. National Union Fire Ins. Co. of Pittsburgh, No. 19-CV-553-JDP, 2020 WL 3799164 (W.D. Wis. July 7, 2020) (Judge James D. Peterson). Plaintiff had $25,000 in accidental death and dismemberment coverage on his wife. She had terminal metastatic cancer, was in hospice, and had months left to live when she fell and broke her hip. Her family chose to pursue only palliative care—treating only her pain. She died two days after the fall. The death certificate listed the cause of death as “accident,” and her cause of death as broken hip. The lung cancer was listed under “other significant conditions contributing to death but not resulting in the underlying cause.” AIG, who administered the claim, hired a forensic pathologist, Dr. Andrew M. Baker, to review the records. Dr. Baker determined that, in the absence of cancer, the broken hip “would have almost certainly been treated surgically and the prognosis would have been very good.” No evidence was submitted to rebut Dr. Baker’s concussion. For a covered claim, the policy required (1) the death must be a result of an accidental injury and (2) the death must be “independent of sickness, disease, mental incapacity, bodily infirmity.” The court found the first condition met. The second was not. The death certificate and Dr. Baker both said the cancer contributed to the death. Plaintiff offered no evidence to rebut those conclusions, so the court granted summary judgment to the insurance company.

Medical Benefit Claims

Supreme Court

Little Sisters of the Poor Saints Peter & Paul Home v. Pennsylvania, No. 19-431, — S.Ct. —, 2020 WL 3808424 (U.S. July 8, 2020). See Notable Decision Summary above.

Ninth Circuit

California Surgery Center, Inc. v. Unitedhealthcare, Inc., No. CV1902309DDPAFMX, 2020 WL 3869715 (C.D. Cal. July 9, 2020) (Judge Dean D. Pregerson). Plaintiff filed suit after it refused to cover treatment its patient’s spinal surgery, despite repeatedly stating, in writing, that the surgery was authorized and covered. United Healthcare moved to dismiss all of Plaintiff’s claims. Specifically, Defendant attempted to dismiss Plaintiff’s claims under the Knox-Keene act and California Insurance Code §796.04, as well as claims for breach of implied contract, breach of oral contract, negligent misrepresentation, and estoppel. The court dismissed the claims under the Knox-Keene Act, Insurance Code §796.04, as well as the claims for breach of the implied covenant and negligent misrepresentation. The court held that the Knox-Keene act only applied to HMOs and Insurance Companies, not to employee benefit plans, and that Insurance Code §794.04 did not provide a private right of action. It dismissed the breach of implied contract case because there was an actual contract between the parties which was in dispute. It also dismissed the negligent misrepresentation claim because, while Plaintiff meets the elements to establish an intentional misrepresentation claim, it could not sustain a claim for negligent misrepresentation. The court allowed the estoppel claim to proceed because it was not preempted by ERISA, as argued by Defendants, and also that it did meet the requisite elements to establish estoppel. It also allowed the breach of oral contract claim to proceed as United’s specific promise to pay constitutes an alleged breach of an oral contract.

Pension Benefit Claims

Ninth Circuit

Villasenor v. Community Child Care Council of Santa Clara Cty., Inc., No. 18-CV-06628-BLF, 2020 WL 3639652 (N.D. Cal. July 6, 2020) (Judge Beth Labson Freeman). Plaintiff brought this suit against his employer and other related defendants for benefits under two ERISA-governed retirement plans, asserting that he properly submitted claims, but Defendants withheld payment without a written explanation. He filed a motion for summary judgment, which the court granted. The court found that although Defendants contended that Plaintiff did not submit his claims properly, there was no material dispute as to how claims under the plans should have been submitted, and that Plaintiff had properly followed those rules. The court further found that Plaintiff was eligible for the benefits for which he had applied, which Defendants did not seriously dispute. As for Defendants’ non-responsiveness, the court found that they failed to comply with ERISA claims regulations by not providing a rationale for withholding benefits. During briefing, Defendants asserted that Plaintiff had been accused of engaging in prohibited transactions related to his employment and had breached his fiduciary duty to the employer. However, Defendants did not cite any evidence to support these allegations, and in any event, they were not allowed to make this argument for the first time during litigation. Finally, the court denied Defendants’ request for additional briefing, finding that it had given them more than adequate time to prepare their opposition to Plaintiff’s motion.

Carol Foster, et al. v. Adams and Associates, Inc., et al., No. 18-CV-02723-JSC, 2020 WL 3639648 (N.D. Cal. July 6, 2020) (Magistrate Judge Jacqueline Scott Corley). In this ESOP case, Plaintiffs allege Defendants, officers and directors of the plan sponsor, and the ESOP’s independent fiduciary, breached their fiduciary duties and engaged in prohibited transactions by failing to provide or obtain material information necessary for the proper valuation of the company stock sold by the officer/director Defendants to the ESOP. Plaintiffs moved for summary judgment on their breach of fiduciary duty claim and ERISA § 406(a) prohibited transaction claim. Defendants moved for summary judgment on all counts, including ERISA § 406(b), the issue of available remedies, and invalidation of the indemnification language of the Plan.

Plaintiffs’ breach of fiduciary duty claim is premised on the duty to monitor the independent fiduciary. In analyzing the duty to monitor, the court stated the Ninth Circuit has not addressed the issue of whether a duty to monitor claim requires an underlying breach of fiduciary duty claim, but relied on opinions from other district courts in the Ninth circuit and district courts in the Second circuit to hold that the duty to monitor is a derivative claim, requiring an underlying breach of fiduciary duty. However, the court declined to rule on the duty to monitor claim because it found there are issues of fact with regard to whether the independent fiduciary breached his fiduciary duties.

Analyzing the 406(a) prohibited transaction (transaction between the Plan and a Party In Interest), the court found the officer/director Defendants were not fiduciaries when they sold their stock to the ESOP and their liability for the claim of prohibited transaction must be evaluated as non-fiduciaries. As non-fiduciaries to a prohibited transaction, the director/officer Defendants were required to have actual knowledge of the circumstances that render the transaction prohibited. The court dismissed two Defendants for lack of evidence but, found issues of fact as to actual knowledge with regard to the remaining two officer/director Defendants.

Regarding the available remedies, the court, having already found the officers/directors to be non-fiduciaries with regard to the sale of stock, ruled disgorgement and surcharge were not appropriate remedies because Plaintiffs had not identified funds within these Defendants’ control that could be traced to Plan assets. The Court, however, allowed Plaintiffs’ recission relief request to go forward.

Defendants were successful in moving for summary judgment on the 406(b) prohibited transaction (a transaction between the Plan and a Fiduciary) claim because it had already found Defendants were not fiduciaries with regard to the transaction. Finally, the court declined to rule on the issue of the indemnification provision finding Defendants’ promise not to use plan assets for attorneys’ fees unavailing.

Pleading Issues & Procedure

Third Circuit

Abira Med. Labs., LLC v. Johns Hopkins Healthcare LLC, Case No. 19cv05090-AB, 2020 WL 3791585 (E.D. Pa. Jul. 7, 2020) (Judge Anita B. Brody). Plaintiff Abira Medical Laboratories, LLC d/b/a Genesis Diagnostics (“Genesis”) brought this action against health insurer Defendant Johns Hopkins Healthcare LLC (“JHHC”) under ERISA for allegedly failing to appropriately pay Genesis for services rendered to members insured by JHHC (“JHHC Members”) and to implement reasonable claims procedures. JHHC moved to dismiss this suit for lack of personal jurisdiction and in the alternative for failure to state a claim on which relief can be granted. The court granted JHHC’s motion to dismiss for lack of personal jurisdiction. Genesis contended that the Court had specific jurisdiction over JHHC because (1) JHHC’s Members’ physicians were allowed to solicit Genesis’s out-of-network laboratory testing services in Pennsylvania, and (2) JHHC routinely paid a portion of Genesis’s claims. The court held that the fact that JHHC Members’ physicians solicited Genesis’s out-of-network laboratory testing services alone did not establish sufficient minimum contacts for specific jurisdiction. The court concluded that rather than deliberately targeting the forum state, JHHC merely allowed JHHC Members to choose physicians who, in turn, chose to send members’ specimens to Genesis for laboratory testing services in Pennsylvania. The deliberate contact with Pennsylvania was two degrees removed from JHHC itself.

Severance Benefit Claims

Tenth Circuit

Manna v. Phillips 66 Co., No. 19-5064, __F. App’x __, 2020 WL 3816813 (10th Cir. July 8, 2020) (Before Briscoe, McHugh, and Moritz, Circuit Judges). Plaintiff sued his employer and its severance pay plan for violating ERISA, the Americans with Disabilities Act, and Oklahoma’s drug-testing laws when he was terminated. The district court granted Defendants’ summary judgment motion, and the Tenth Circuit affirmed on all three claims. (1) ERISA claims: The Tenth Circuit found that the district court properly used the abuse of discretion standard of review, without reduced deference, because Plaintiff had not identified how any conflict of interest on Defendants’ part might have affected the benefits decision. The court also found that, even if the plan had mishandled Plaintiff’s claim in making its first decision, it corrected those errors with its second decision after a remand from the district court. In that second decision Defendants reasonably found that Plaintiff was not entitled to severance benefits because he was not laid off and was terminated for cause. The court further agreed with the district court that, even though Plaintiff had obtained a remand, he was not entitled to attorney’s fees under ERISA because he had not achieved “some success on the merits.” (2) ADA claim: The court found that plaintiff had not properly argued causation, specifically, that his “regarded-as-disabled” status was the reason he was terminated. The court further found that the employer had a legitimate non-discriminatory reason for terminating him (i.e., job performance issues), and that he had not demonstrated that this reason was pretextual. (3) Finally, the court ruled that the employer did not violate state drug-testing laws when it terminated Plaintiff because those laws governed situations where the employee had tested positive or had refused a test; it did not speak to Plaintiff’s situation, in which he had tested negative.

Statute of Limitations

Second Circuit

Tarquino v. Muse Enterprises, Inc., No. 19 CIV. 3434 (AT), 2020 WL 3871512 (S.D.N.Y. July 9, 2020) (Judge Analisa Torres). Plaintiffs in this case allege their employer misclassified them as independent contractors when they were employees. Among the causes of action, Plaintiffs brought a claim under 29 U.S.C. § 1132(a)(1)(b) for the employee benefits they would have been entitled to if they had been classified as employees. The court dismissed Plaintiffs ERISA claims as untimely. Claims for benefits due accrue upon a clear repudiation of rights by a plan. Plaintiffs had received 1099 IRS tax forms each year from their employer beginning in 2002. The court said they knew or should have known based on receipt of the 1099 that they were not considered employees. The court applied New York’s 6-year statute of limitations for contract claims and dismissed Plaintiffs’ ERISA claims as untimely.

Subrogation/Reimbursement Claims

Ninth Circuit

Richardson v. Ibew Pacific Coast Pension Fund, No. C19-0772JLR, 2020 WL 3639625 (W.D. Wash. July 6, 2020) (Judge James L. Robart). After the court concluded that Plaintiff’s pension was calculated correctly, the issue that remained was whether Plaintiff must repay IBEW for the $130,648.95 in overpayments that IBEW sent to her over the course of more than 11 years. In its briefing, IBEW admits that Ms. Richardson is correct that pursuit of an overpayment is not mandatory. There is no evidence in the administrative record to support any wrongdoing on Ms. Richardson’s part that induced IBEW’s overpayment. The overpayment was entirely IBEW’s error. Further, even if the plan unambiguously provides a plan fiduciary with the right to recoup an overpayment, equitable principles may limit an ERISA fiduciary’s legal right to so do. Courts have considered a variety of factors to determine if equitable principles bar recovery of mistaken overpayments to an ERISA plan beneficiary, including (1) the amount of time which has passed since the overpayment was made; (2) the effect that recoupment would have on that income; (3) the nature of the mistake by the administrator; (4) the amount of the overpayment; (5) the beneficiary’s total income; and (6) the beneficiary’s use of the money at issue. Here, the court found that the balance of equities did not favor Defendant because:  1) the overpayments occurred over period of more than 11 years; 2) the amount is very large due to Defendant’s failure to discover error and Plaintiff is disabled and lives on a limited, fixed income; 3) the overpayment was not due to any wrongdoing on Plaintiff’s part. Accordingly, the court denied Defendant’s motion for summary judgment concerning recoupment.

Withdrawal Liability & Unpaid Contributions

Second Circuit

Finkel v. Allstate Electric Corp., No. 19-CV-6260-ARR-RLM, 2020 WL 3867136 (E.D.N.Y. July 8, 2020) (Judge Allyne R. Ross). “[T]he petition to confirm the arbitration award is granted with two modifications. The total amount of the award as modified is $578,848.17.”

Fourth Circuit

Penske Logistics LLC v. Freight Drivers & Helpers Local Union No. 557 Pension Fund, Case No. 19-1304, __F.App’x__, 2020 WL 3790826 (4th Cir. Jul. 7, 2020) (Before Circuit Judge Albert Diaz and Henry F. Floyd, and District Judge Rossie D. Alston, Jr., sitting by designation). This was an appeal from a district court order affirming the arbitration awards that Plaintiff Appellees, Penske Logistics LLC and Penske Truck Leasing Co., L.P. (collectively, “Penske”) was not liable for Leaseway Motorcar Transport Co.’s (Leaseway) withdrawal from the Freight Drivers and Helpers Local Union No. 557 Pension Fund (the “Fund”). The district court had affirmed the arbitrator’s award which found that the Fund had to reimburse Penske millions of dollars in withdrawal liability payments the company made in connection with a 2004 sale. On appeal, the Fund and Trustees make two principal arguments: (1) that the district court erred in enforcing the Arbitrator’s Supplemental Award because the Arbitrator made a number of errors of both law and fact; and (2) that the district court erred in holding that the attorneys’ fees awarded by the Arbitrator were reasonable. The court held that (1) the Arbitrator’s finding that the avoidance of withdrawal liability was not a principal purpose of the Transaction was not clearly erroneous, therefore finding that Penske was entitled to summary judgment and finding that the district court did not err in affirming the Arbitrator’s Original Award as supplemented by the Supplemental Award, and (2) that the district court did not err in ruling that the Arbitrator’s grant of $44,302 in attorneys’ fees to Penske was unreasonable.

Ninth Circuit

Van Sant v. Nu-Way Printing & Envelope Co., No. 3:19-CV-2058, 2020 WL 3840419 (D. Or. July 8, 2020) (Judge Michael H. Simon). The court granted Defendant’s Motion to Compel Arbitration and to Dismiss in part. “The Court compels arbitration between Plaintiff and Nu-Way of the underlying disputes relating to Plaintiff’s First Amendment to the Pension Agreement and Plaintiff’s decision of default and accelerated withdrawal liability.”

Employee Painters’ Trust et al. v. Dahl Construction Services, Inc., et al., No. C19-1541-RSM, 2020 WL 3639591 (W.D. Wash. July 6, 2020) (Judge Ricardo S. Martinez). The court granted Plaintiffs’ Motion for Default Judgment and ordered Defendants to submit Dahl Construction’s payroll and related records Plaintiffs and their auditors for completion of a compliance audit within 21 days of entry of this judgment. The court also awarded attorney’s fees and costs in the current amount of $8,445.91, but Plaintiffs claim attorney’s fees and costs will continue to accrue.

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

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