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Your ERISA Watch – The Difficult Dudenhoeffer Standard Saves Wells Fargo from Answering an ERISA Class Action Lawsuit

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This week’s notable decision is Allen v. Wells Fargo & Co., No. 18-2781, __ F.3d __, 2020 WL 4279751 (8th Cir. July 27, 2020). The three plaintiffs, employees of Wells Fargo, brought a class action lawsuit against the bank under ERISA based on the 2016 scandal in which the public learned that the bank had opened millions of unauthorized customer accounts. The plaintiffs, whose retirement plan accounts contained Wells Fargo stock which suffered significant losses from the scandal, contended that Wells Fargo breached their fiduciary duty of prudence and loyalty imposed by ERISA when they failed to protect plan participants from these losses. Specifically, Plaintiffs argued that Wells Fargo should have disclosed its unethical sales practices earlier in order to protect the plan assets. Wells Fargo filed a motion to dismiss, which the district court granted.

On appeal, the Eighth Circuit, following the Supreme Court’s test in Fifth Third Bancorp v. Dudenhoeffer, found that Plaintiffs had not plausibly alleged that a prudent fiduciary in the same position as Wells Fargo could not have concluded that the proposed alternative action (earlier disclosure) would have done more harm than good. The court found that Wells Fargo might easily have concluded that an earlier exposure would “spook the market” or cause an outsized stock drop.

The court further found that Wells Fargo had not breached its duty of loyalty because it was not required to disclose non-public information about the company that might affect plan participants. The court considered Plaintiffs’ breach of loyalty claim as an attempt to create an end-run around the “demanding” breach of fiduciary analysis required by Dudenhoeffer, which they were unable to satisfy. The court affirmed the decision of the district court.

The notable decision summary was prepared by Kantor & Kantor Attorney, Peter Sessions. Peter has been practicing in the insurance and ERISA-related fields of law for more than 20 years and has special expertise in appellate litigation.

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

Breach of Fiduciary Duty

Fourth Circuit

Scalia v. Marzett, et al., No. 1:19-CV-1164, 2020 WL 4365535 (E.D. Va. July 30, 2020) (Judge T.S. Ellis, III). The court granted the Secretary’s motion for default judgment against Defendants. They are jointly and severally liable to restore $21,880.90 to the Mahan Consulting Group 401(k) Plan and the Mahan Consulting Group Health and Welfare Plan as restitution, and shall further restore $2,320.00 to those Plans for the costs and expenses of employing AMI Benefit Plan Administrators, Inc., the Court-appointed independent fiduciary. The court awarded other relief include removal of Defendants as administrator and fiduciary of the Plans and permanent injunction from serving as an ERISA fiduciary.

Eighth Circuit

Allen v. Wells Fargo & Co., No. 18-2781, __ F.3d __, 2020 WL 4279751 (8th Cir. July 27, 2020) (Before Circuit Judges Shepherd, Grasz, and Kobes). See Notable Decision summary above.

Dormani v. Target Corp., No. 18-2543, __F.3d__, 2020 WL 4289987 (8th Cir. July 28, 2020) (Circuit Judges Bobby E. Shepard, L. Steven Grasz, Jonathan A. Kobes). Participants in Target’s employee stock ownership plan (“ESOP”) sued Target and several of its senior executives alleging that as ESOP fiduciaries, they breached their duties of prudence and loyalty and to monitor other fiduciaries in violation of ERISA. The losses suffered by the ESOP followed Target’s “ill-fated expansion into Canada.” The district court dismissed the complaint. The participants appealed. Regarding duty of prudence, the participants claimed the fiduciaries had inside information about Target’s problems in Canada and should have known continuing to invest in Canada was imprudent. The court found the participants’ assumptions were an uncertain “chain of reasoning” as held by this and other circuit courts. The participants raise four other alternative acts but they are not properly before the circuit court because they were not presented with specificity in the participants’ brief. Regarding duty of loyalty, the participants claim the fiduciaries were to be independent and not put themselves in a conflicted position by having the plan hold as much Target stock as possible. The court held that ERISA requires fiduciaries to “wear different hats” and “may also act in capacities that conflict with the individual’s fiduciary duties.” The court held the participants “point to nothing more than the tension inherent in the fiduciaries’ dual roles” and therefore fail to state a claim for breach of duty of loyalty. The court held that the duty to monitor claim cannot survive without an underlying breach and so it also fails. The judgment of the district court is affirmed.

Ninth Circuit

Engel v. Farmers Group, Inc. et al., No. CV 20-245-MWF (PJWx) (C.D. Cal. July 28, 2020) (Judge Michael W. Fitzgerald). Defendant Willis Towers Watson moved to dismiss the ERISA breach of fiduciary duty claims against it on the basis it is not a fiduciary. Plaintiff argued WTW was a named fiduciary and a functional fiduciary. Although the court stated it was a close call, it granted the motion to dismiss in favor of WTW. Taking judicial notice of the plan document, the court held the plan contradicted the Form 5500 as to who could be a named fiduciary. Plaintiff was granted leave to amend.

Disability Benefit Claims

Sixth Circuit

Smith v. Hartford Life & Accident Ins. Co., No. CV 5:19-061-DCR, 2020 WL 4355068 (E.D. Ky. July 29, 2020) (Chief Judge Danny C. Reeves). Plaintiff went out on disability in 2001 and getting her initial claim for disability benefits approved required a successful trip to the Sixth Circuit and a published decision. Yet things changed over the subsequent years. Hartford took over the claim and benefits continued to be paid for a decade. Her condition showed signs of improvement—with lessening medications and declining to pursue some treatment modalities. Surveillance showed her running multiple errands at a time and doing activities she claimed she was unable to perform during an interview. An in-person examination sponsored by Hartford found her to have persistent medical issues, but not to a disabling level. It also found her symptom reporting to be magnified, particularly in relation to the surveillance evidence. Thus, after Hartford terminated her benefits, the court was unwilling to deem the denial an abuse of discretion. While Hartford had failed to adequately distinguish the award of SSDI benefits, evidence of arbitrary and capricious conduct, the balance of the medical evidence, the in-person examination, and a lack of evidence showing a heightened conflict of interest all favored upholding the decision—and thus the court did so.

Ninth Circuit

Olis v. Unum Life Ins. Co. of America, No. 8:19-cv-01347-JVS-DFM, __ WL __ (C.D. Cal. July 27, 2020) (J. James V. Selna). See our California Insurance Lawyer Blog post.

Copenhaver v. Baxter Int’l, Inc., et al., No. 1:19-CV-00079-CWD, 2020 WL 4288399 (D. Idaho July 27, 2020) (Judge Candy W. Dale). Plaintiff brought suit under ERISA Section 502(a)(1)(B) seeking reinstatement of his self-funded short-term disability benefits under a plan administered by Defendant Liberty Life Assurance Company of Boston (“Liberty”). Liberty approved his STD benefits but terminated them before he received the full 28 weeks of maximum benefits. Baxter reviewed Plaintiff’s second appeal after Liberty terminated his claim and denied his first appeal. The court applied the abuse of discretion standard in this case, albeit with some skepticism due to structural conflict, because an Administrative Committee, which in turn is appointed by the Compensation Committee of Baxter’s Board of Directors, is designated as the Plan Administrator. The Plan gives the Administrator power to delegate discretion to the Claims Administrator, Liberty Life. The court denied Plaintiff’s request to consider evidence outside the record which consisted of discovery responses, holding that its review was limited to the AR. Nevertheless, the court found that Defendants abused their discretion in discontinuing Plaintiff’s STD. The court explained that Plaintiff had established care and an escalation in the level of care was not needed for Liberty to continue to pay benefits, in light of it having approved benefits initially and there being no improvement in Plaintiff’s condition. Similarly, Baxter does not explain why an escalation in treatment or symptoms is necessary to sustain a finding that Plaintiff continued to be disabled under the terms of the Plan, when his condition had not improved despite following his doctor’s treatment recommendations. Baxter also failed to consider the IME results which confirmed the lack of improvement in Plaintiff’s condition.

Cohen v. Aetna Life Ins. Co., No. SACV1901506DOCDFMX, 2020 WL 4283959 (C.D. Cal. July 27, 2020) (Judge David O. Carter). Plaintiff brought suit challenging the denial of his long-term disability benefits. Plaintiff suffered a traumatic brain injury and spinal cord compression following a collision into a wall while driving a Go-Kart during an employer-sponsored event. Defendant paid benefits for 24 months under the “own occupation” standard of disability and terminated benefits thereafter after performing surveillance and performing a paper review. Plaintiff appealed and following a vocational review, Defendant reinstated benefits because Plaintiff did not have reasonable wage employability due to his restriction of part-time work. Defendant continued to approve benefits after several IMEs and surveillance. However, after two additional paper reviews and the third surveillance, Defendant terminated benefits and upheld its determination on appeal, finding that additional evidence submitted by Plaintiff including medical records, a vocational report, and personal letters from family and friends did not support disability. The court reviewed Defendant’s decision de novo and concluded that Plaintiff adequately proved by a preponderance of the evidence that he was disabled as of the date of termination of his benefits. The court found that Plaintiff has met his burden of proof that he is unable to perform any reasonable occupation because he cannot earn more than 80% of his pre-disability earnings given the part-time work restrictions that both his and Aetna’s physicians have found medically necessary between 2008 and 2018. In addition, the video footage that Aetna provided also did not rebut the medical evidence in the record that compelled the court’s findings. The footage largely showed Cohen performing routine acts of life that did not contradict the findings of the medical professionals. The court ordered that Plaintiff be awarded past-due benefits and pre-judgment interest and that his benefits be reinstated. The court also granted leave to file a motion for attorneys’ fees and costs.

ERISA Preemption

Second Circuit

Mulcahy v. Bristol-Myers Squibb Company & Johnson Controls, Inc., No. 5:19-CV-1410, 2020 WL 4346895 (N.D.N.Y. July 29, 2020) (Judge David N. Hurd). Plaintiff brought a 38-count amended complaint alleging BMS had denied him compensation and other employment benefits by misclassifying him as an independent contractor in violation of state law. The court called the operative complaint “a jumbled mess.” Relevant to ERISA, Defendants sought to dismiss eight of the causes of action as preempted by ERISA because each claim alleged the deprivation of employee benefits that were governed by an employee benefit plan within the broad meaning of ERISA. Plaintiff claimed ERISA preemption did not apply because he had not named an ERISA plan or plan administrator. Noting all the claims involved alleged deprivations of employee benefits in the form of things like health insurance, pharmacy benefits, 401(k) contributions and profit sharing, the court dismissed the claims on the grounds of ERISA preemption under 29 U.S.C. § 1144(a).

Sixth Circuit

Orr v. J. Ranck Elec., Inc., No. 19-13065, 2020 WL 4334961 (E.D. Mich. July 28, 2020) (Judge Victoria Roberts). Plaintiff was injured while working in a position secured through an apprenticeship program, (Local 876) the administration of which was supervised a Committee. Plaintiff alleged three claims against Local 876 and the Committee: Negligent supervision, breach of fiduciary duty, and breach of contract. The court found that Plaintiff failed to sufficiently plead any of the three counts against Local 876, regardless of preemption. The court went on to find that the breach of contract claims against the Committee was preempted by ERISA, primarily because all allegations center around violations of the employee benefit plan documents provided by Local 876 and the Committee. The court also similarly found the breach of fiduciary duty claim preempted as “all fiduciary duty claims Plaintiff has stem from and rely upon the interpretation and application of written documents governing the . . .program.”

Exhaustion of Administrative Remedies

Sixth Circuit

Neal v. United of Omaha Life Ins. Co., No. 3:19-CV-00193, 2020 WL 4346647 (S.D. Ohio July 29, 2020) (Judge Thomas Rose). Plaintiff filed suit over the non-payment of life insurance benefits. Defendant moved to dismiss based on Plaintiff’s failure to exhaust administrative remedies through the plan before filing suit. Plaintiff’s counsel may have been unaware that this case was governed by ERISA, as an allegation of bad faith was brought in her initial complaint. The court held that Plaintiff’s failure to appeal could not be excused, as Plaintiff did not establish that it had in fact exhausted nor that exhausting would have been futile. The court granted Defendant’s motion in full.

Life Insurance & AD&D Benefit Claims

Third Circuit

Hotop v. The Prudential Insurance Company of America, No. CV 18-15312, 2020 WL 4364337 (D.N.J. July 30, 2020) (Judge Madeline Cox Arleo). “This action arises from a dispute over whether Plaintiff is entitled to $100,000 or $1,000,000 from Prudential due under a life insurance policy.” Prior to the insured’s death, Prudential committed an administrative error that caused Plaintiff’s Billing Notice to mistakenly reflect $1,000,000 in SDTLI coverage and the Plan’s terms limiting his SDTLI coverage. Plaintiff paid premiums based on the $1 million coverage amount. Prudential did not discover the mistake until after the insured’s death. The court determined that ERISA applies to Plaintiff’s claims, rejecting Plaintiff’s argument that “when the Group Contract terminated, his post-retirement, continued coverage under the Plan ‘transferred to the Prudential Standard Port Plan – which was new coverage, completely separate from the UPS Plan.’” The court agreed with Prudential that Plaintiff’s decision to port, rather than convert, his life insurance policy continued his coverage under the ERISA plan. The court found that the terms of the ERISA plan bars Plaintiff’s claim for more than $100,000 in death benefits. On the breach of fiduciary duty and equitable estoppel claims, the court found that Prudential did act in a fiduciary capacity in preparing and mailing the Billing Notice to Plaintiff but that it was entitled to summary judgment on these claims because Plaintiff has not established detrimental reliance. For instance, he only sought $100,000 in coverage, there was no evidence he decided not to pursue other coverage in reliance, and he also admitted that due to the insured’s medical condition, she would not be able to provide evidence of insurability. The court granted summary judgment to Prudential.

Medical Benefit Claims

Third Circuit

Re: Pamela Vicarisi v. Aetna Ins., No. CV202105SDWLDW, 2020 WL 4288165 (D.N.J. July 27, 2020) (Judge Susan D. Wigenton). In this lawsuit brought by a pro se plaintiff, she appears to allege that, under the Plan, Defendant should fully cover her son’s upcoming oral surgery with her preferred, out of network surgeon, which is currently partially covered”, the court found that the lawsuit was subject to dismissal because she fails to state a claim (“Plaintiff does not allege or argue that Defendant is required to provide such coverage under the Plan, that Defendant improperly denied coverage, or that Defendant failed to properly reimburse Plaintiff.”). And, Plaintiff failed to plead that she exhausted her administrative remedies under ERISA.

Advanced Orthopedics & Sports Med. Inst. v. Int’l Union of Operating Eng’rs Local 14-14B, et al., Case No. 19-cv-5076-BRM-ZNQ, 2020 WL 4345301 (D.N.J. Jul. 29, 2020) (Judge  Brian R. Martinotti). Advanced Orthopedics brought four claims against Defendants for not paying it 90% of “the reasonable and customary value for the highly skilled services provided by it,” but rather paying the less than 10% it received for the $340,552 billed to Defendants, including: 1) breach of an implied contract; 2) promissory estoppel; 3) account stated; and 4) unjust enrichment. Defendants removed the action to federal court. On April 10, 2019, Welfare Fund and Empire BCBS of New Jersey filed separate Motions to Dismiss. The court ruled preemption was not applicable at that time based on the facts alleged in the Amended Complaint, and then denied the Motions as to Counts One, Two and Three, but granted the Motion as to Count Four’s unjust enrichment claim. Before the court now was Defendants’ Motion for a Certification of Appealability pursuant to Federal Rule of Appellate Procedure 5(a)(3). This rule of appellate procedure pertains to parties that cannot petition for an appeal unless the district court enters an Amended Order, and it provides that in such cases “the district court may amend its order, either on its own or in response to a party’s motion.” After examining the factors to be considered under Federal Rules of Civil Procedure Rule 54 and 28 U.S.C. § 1292, the Court denied Defendants’ Motions for a Certification of Appealability.

Sixth Circuit

Select Specialty Hosp.-Memphis , Inc. v. Trs. of Langston  Cos., et al., Case No. 19-cv-2654-JPM-tmp, 2020 WL  4275264 (W.D. Tenn. Jul. 24, 2020) (Judge Jon P. McCalla). This case arises from the alleged nonpayment of medical expenses incurred by Select Specialty, a “long term acute care hospital” in Memphis, Tennessee, after it rendered treatment to a patient covered by an ERISA benefits plan. Select Specialty alleges that it billed $1,079,226.99 for this treatment and variously-named defendants, including the plan administrator and two other third party benefit manager-type entities (allegedly responsible for adjudicating the claims, HealthSmart and AMCS) paid only about $200,000 of these billed charges. On Defendants’ separately-filed motions to dismiss, the court held that (1) Select Specialty had adequately alleged that HealthSmart and AMCs were ERISA fiduciaries pursuant to Administrative Services Agreements between these entities and the Plan; (2) Select Specialty could not maintain a claim against the Langston Defendants (the patient’s employer and sponsor of the relevant Plan) and ACMS because success on its wrongful-denial-of-benefits claim would provide it with adequate relief; (3) Select Specialty’s claims would not be dismissed based on its alleged failure to adequately plead administrative exhaustion; and (4) Select Specialty’s state law claims relating to representations made by Plan Administrators prior to providing treatment to the patient about the scope of coverage under the Plan and the benefits that might be payable under the Plan were dismissed as preempted by ERISA.

Ninth Circuit

Andrew C. v. Oracle Am. Inc., No. 17-CV-2072-YGR, 2020 WL 4284839 (N.D. Cal. July 27, 2020) (Judge Yvonne Gonzalez Rogers). Plaintiff sought benefits for residential treatment of a teenager under an ERISA Plan administered by UnitedHealthcare. The court found that although several recent decisions have found the Optum Guidelines not consistent with any generally accepted standard of medical practice, the Plan specifically incorporates the Mental Health Administrator’s level of care guidelines as criteria for denying benefits. Regardless, the court found it need not reach the question of whether United used the Optum Guidelines improperly because the court finds Plaintiff entitled to benefits even under the Optum Guidelines. The court found the evidence establishes Andrew experienced mood disturbance resulting in behavior which could not be managed safely at home and that he required residential treatment to engage in therapeutic interventions to treat this disturbance. The court found that Andrew’s treating physicians recommended residential treatment and courts “generally give greater weight to doctors who have examined the claimant versus those who only review the file.” The court found United’s reviewers’ opinions are entitled to little weight because the reviewers’ decisions “only minimally acknowledge the contents of” the treatment records. The court found Dr. Uy’s opinion internally contradicts itself and cites nothing to the record to explain his opinion. The court found Dr. Sane’s conclusion that Andrew needed custodial care is inconsistent with the record. Dr. Sane also cited factors for denial which are prerequisites for residential treatment. The court found the external reviewers “quite obviously ignored or disregarded” parts of the treatment records. The court found that Defendants raised new reasons for denial—such as the professional qualifications of the staff or licensing as a residential treatment center—in its briefing. Under a de novo review, the court concluded Plaintiff was entitled to coverage for residential treatment and granted Plaintiff’s motion for judgment.

Tenth Circuit

Heather E. v. California Physicians’ Services d/b/a Blue Shield of California, No. 2:19-CV-415, 2020 WL 4365500 (D. Utah July 30, 2020) (Judge Clark Waddoups). In this dispute over payment of sub-acute inpatient treatment benefits for a minor child with severe mental health issues, Blue Shield seeks dismissal of Plaintiffs’ Parity Act Claim on the basis that it 1) fails to state a claim, 2) is duplicative of Plaintiffs’ first cause of action, and 3) is based on conclusory allegations that are insufficient to proceed past the pleading stage. The court denied the motion. It held that Plaintiffs’ Parity Act claim asserts sufficient facts, when accepted as true, show it is plausible that Blue Shield violated the Act. Specifically, Plaintiffs’ allegations meet the following test: “(1) identify a specific treatment limitation on mental health benefits, (2) identify medical/surgical care covered by the plan that is analogous to the mental health/substance abuse care for which the plaintiffs seek benefits, and (3) plausibly allege a disparity between the treatment limitation on mental health/substance abuse benefits as compared to the limitations that defendants would apply to the covered medical/surgical analog.” At this stage the court cannot determine that Plaintiffs are not entitled to pursue the equitable relief they seek. Under Varity Corp. or Lefler, the claim does not need to be dismissed because the requested relief is already available to Plaintiffs under their Section 502(a)(1)(B) claim. The court also cannot determine that Plaintiffs are not entitled to seek reformation but limited their request for accounting to just money wrongfully withheld from them.

Pension Benefit Claims

Third Circuit

Yahawi v. Boilermaker-Blacksmith Nat’l Pension Tr., No. CV 19-1952, 2020 WL 4365602 (E.D. Pa. July 30, 2020) (Judge Eduardo C. Robreno). Plaintiff filed suit under “29 U.S.C. § 1132(a)(1)(B), asserting three counts: (1) improper determination of his pension benefits starting date, (2) improper calculation of his pension benefits, and (3) improper termination of his health insurance benefits.” The court determined that Plaintiff failed to raise a genuine dispute of material fact as to count one, the benefits starting date claim.  The Plan terms are clear that he is not entitled to an earlier benefits starting date. The Trust properly amended the Plan in accordance with the Pension Protection Act of 2006. Plaintiff did not exhaust administrative remedies as to count two, the amount of the benefits claim. Lastly, Plaintiff did not contest that summary judgment is appropriate as to court three, the health insurance claim.

Pleading Issues & Procedure

Third Circuit

Emp’r. Trs. of W. Pa Teamsters v. Union Trs. of W. Pa. Teamsters, No. CV 19-388, 2020 WL 4339427 (W.D. Pa. July 28, 2020) (Judge Joy Conti). The Board of Trustees of the Western Pennsylvania Teamsters and Employers Welfare Fund (the “Fund”) is administered by five Employer Trustees and five Union Trustees. The Employer Trustees brought this lawsuit against the Union Trustees of the Fund and Michael Zobrak, who had been hired to arbitrate a disagreement between the parties. Zobrak moved to dismiss based on arbitral immunity. Zobrak was designated as an arbitrator under the Plan’s trust agreement, so he does receive arbitral immunity. Neither of the two exceptions to immunity apply: all claims against Zobrak were based on his actions as an arbitrator, and he did not act outside the scope of his authority as an arbitrator by interpreting the trust agreement because the agreement itself gave him discretion to do so. Zobrak’s motion to dismiss was granted.

Sixth Circuit

Enos v. Wenta & Metropolitan Life Insurance Company, No. 19-13797, 2020 WL 4364064 (E.D. Mich. July 30, 2020) (Judge Thomas L. Ludington). The court reviewed MetLife’s objections to the Magistrate Judge’s orders in this dispute challenging the validity of a life insurance beneficiary designation. The matter was filed by Plaintiff in probate court and MetLife removed the case to federal court based on federal question jurisdiction. The Magistrate Judge determined that MetLife could not be dismissed based on interpleader because it did not meet the diversity requirements of the interpleader statute. The court agreed. However, it asked for supplemental briefing explaining why MetLife should not be permitted to deposit the policy funds with the court pursuant to Federal Rule of Civil Procedure 67 and be dismissed. The court found no compelling reason to keep MetLife in the case and dismissed it as a defendant. The court permitted the deposition of one MetLife employee who allegedly spoke with Defendant Wenta prior to the change in the policy’s beneficiary designation. It denied deposition of two other employees who do not have personal knowledge of the facts at issue in this case.

Seventh Circuit

Appvion, Inc. Ret. Sav. & Employee Stock Ownership Plan by & through Lyon v. Buth, No. 18-C-1861, 2020 WL 4284150 (E.D. Wis. July 27, 2020) (Judge William Griesbach). Plaintiffs allege fiduciaries of the Appvion ESOP violated their fiduciary duties by fraudulently inducing Appvion’s employees to adopt the ESOP as part of their retirement plan, then over the next 15 years artificially inflating the value of stock owned by the ESOP, causing the ESOP’s stock to lose value. Defendants brought this motion to dismiss, which was granted in part and denied in part. The court dismissed as untimely all ERISA breach of fiduciary duty claims where the alleged breach took place more than six years before the complaint was filed. The court applied the heightened pleading standard for claims of fraud of Fed. R. Civ. Pro. 9(b) and dismissed the remaining ERISA claims because plaintiff had pled general allegations of wrongdoing without anything more specific. Plaintiffs failed to allege specific actions or inaction of the parties. The court granted leave to amend the complaint.

Ninth Circuit

Bakery & Confectionery Union & Indus. Int’l Pension Fund v. Dick’s Bakery, Inc., No. 5:20-CR-01446-EJD, 2020 WL 4284821 (N.D. Cal. July 27, 2020) (Judge Edward J. Davila). The court granted Plaintiffs’ request to serve Defendant the Summons and Complaint upon the Secretary of State. The court found that Plaintiffs exercised reasonable diligence in their prior unsuccessful attempts to serve Defendant so they should be permitted to effectuate service of process on Defendant by serving the California Secretary of State pursuant to Cal. Corp. Code § 1702(a).

Eleventh Circuit

Fogle v. IBM Corp., No. 8:19-cv-2896-T-33JSS, 2020 WL 4260988 (M.D. Fla. July 24, 2020) (J. Virginia M. Hernandez Covington). Plaintiff, an employee of IBM, made a claim under IBM’s short-term disability benefit plan, which was initially paid by the plan’s claim administrator, MetLife, but terminated after 24 months due to a plan limitation on disabilities resulting from mental illness. Plaintiff brought this action against IBM, the STD plan, and MetLife alleging several claims for relief under state and federal law. Defendants filed a motion to dismiss, which the court granted in part and denied in part. Defendants argued that plaintiff’s claim that IBM negligently administered its plan was barred by Florida’s impact rule (which generally bars a claim for emotional damages caused by negligence unless accompanied by physical harm), but the court found that under the rule Plaintiff was allowed to seek purely financial damages stemming from IBM’s administration of the plan. However, the court dismissed Plaintiff’s claim for negligent training against IBM, finding that Plaintiff did not plead a sufficient connection between the alleged mistreatment he received, and any training IBM might have provided. The court also dismissed Plaintiff’s claim for breach of fiduciary duty under ERISA, finding that IBM’s inclusion and retention of a 24-month benefit limitation was not a discretionary act of plan administration that could be challenged under ERISA.

Withdrawal Liability & Unpaid Contributions

Second Circuit

Trustees of New York City Dist. Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund, & Apprenticeship, Journeyman Retraining, Educ. & Indus. Fund v. Ocean Marine Dev. Corp., No. 19-CV-6164 (RA), 2020 WL 4274224 (S.D.N.Y. July 23, 2020) (Judge Ronnie Abrams). The court granted the petition to confirm the arbitration award. “The Clerk of Court is respectfully directed to enter judgment in the amount of $27,042.46, plus prejudgment interest calculated at a rate of 7.5% per annum from May 23, 2019 through the date of judgment in this action and post-judgment interest calculated at the statutory rate. In addition, Petitioner’s request for attorney’s fees is granted in the amount of $630, as are costs in the amount of $75.”

Eighth Circuit

Greater St. Louis Constr. Laborers Welfare Fund v. Simms Bldg. Grp., No. 4:19CV2105 HEA, 2020 WL 4260666 (E.D. Mo. July 24, 2020) (Judge Henry Edward Autrey). In this dispute over unpaid benefit plan contributions, the court granted summary judgment to the Benefit Funds and Union and found them entitled to judgment against Defendant in the total amount of $185,854.54.

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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