Articles Posted in ERISA

In GCIU Employer Retirement Fund v. Quad/Graphics, Inc., No. 17-55667 (9th Cir. 2018) (Unpublished Memorandum), the issue for decision was whether Quad/Graphics, Inc. (“Quad”) partially withdrew from the GCIU-Employer Retirement Fund (“the Fund”) in 2010, after employees at Quad’s Versailles, Kentucky, facility voted to decertify a collective bargaining agreement (“CBA”).  An arbitrator found that Quad had not withdrawn, but on review, the district court disagreed.  Quad appeals.

In reviewing this case, the Ninth Circuit Court of Appeals (the “Court”) said that, like the district court, we must presume the arbitrator’s factual findings are correct but review his conclusions of law de novo.  As such, the Court affirmed the district court’s decision that Quad had partially withdraww from the Fund.

In explaining its decision, the Court noted that an employer partially withdraws from a multiemployer pension plan, such as the Fund, when it permanently ceases to have an obligation to contribute under one or more but fewer than all collective bargaining agreements under which the employer has been obligated to contribute.  The district court correctly held that Quad partially withdrew from the Fund in 2010.  The Versailles CBA-one of the CBAs that Quad had with the Union- became void prospectively as of the decertification of the union as the employee’s bargaining representative in December 2010, extinguishing Quad’s ongoing obligations to contribute to the Fund on behalf of Versailles employees under the Versailles CBA.

In Leirer v. P&G Disability Ben. Plan, No. 17-3426 (8th Cir. 2018), Gary Leirer worked for the Proctor & Gamble Company (which maintained the Proctor & Gamble Disability Benefit Plan, collectively, the “Company”) for many years.  He became disabled as a result of a medical condition and began receiving total disability benefits.  Following a medical examination, the Company later determined that Leirer was partially disabled, and it terminated his benefits when his partial disability coverage ended.  After the Company upheld its determination, Leirer filed suit under section 502(a)(1)(B) of ERISA (a suit for benefits).  The district court granted summary judgment in favor the Company, and Mr. Leirer appeals.

After reviewing the case, the Eighth Circuit Court of Appeals (the “Court”) upheld the district court’s decision.  In doing so, the Court noted the following.  Mr. Leirer has not shown that a serious procedural irregularity existed, which caused a serious breach of the plan administrator’s fiduciary duty to him.  Further, the Company’s denial letter adequately stated the reasons supporting its decision.  The Company’s interpretation of the plan was reasonable and the Independent Medical Examination and Functional Capacity Evaluation constituted substantial evidence in support of its decision.  Also, there was no evidence that the Plan administrators’ conflict of interest—arising from their dual responsibilities of adjudicating Leirer’s claim and paying his benefits—affected the disposition of Leirer’s claim.


In Jander v. Retirement Plans Committee of IBM, Docket No. 17-3518 (2nd Cir. 2018), plaintiffs Larry Jander and Richard Waksman appeal from a judgment of the district court dismissing their suit against fiduciaries of IBM’s employee stock option plan (the “ESOP”).  The plaintiffs claim that the defendants violated their fiduciary duty under ERISA to manage the ESOP’s assets prudently, because they knew but failed to disclose that IBM’s microelectronics division (and thus IBM’s stock) was overvalued.  The district court determined that plaintiffs did not plausibly plead a violation of ERISA’s duty of prudence, because a prudent fiduciary could have concluded that earlier corrective disclosure would have done more harm than good.

On appeal, the plaintiffs assert that the foregoing standard for the duty of prudence is stricter than the one set out in Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459 (2014), and that the district court and others have applied this stricter standard in a manner that makes it functionally impossible to plead a duty-of-prudence violation.

In reviewing the case, the Second Circuit Court of Appeals (the “Court”) found it unnecessary to determine whether plaintiffs are correct, because they plausibly plead a duty-of-prudence claim even under the stricter standard used by the district court.  Here, the Court concluded that several allegations in the plaintiff’s complaint (considered in combination and drawing all reasonable inferences in plaintiffs’ favor) establish that a prudent fiduciary in the ESOP defendants’ position could not have concluded that corrective disclosure would do more harm than good.  Accordingly, the Court reversed the judgment of the district court and remanded the case back to the district court for further proceedings.


In Acosta v. Brain, Nos. 16-56529, 16-56532 (9th Cir. 2018), a panel of the Ninth Circuit Court of Appeals (the “Panel”) affirmed in part, reversed in part, and vacated in part the district court’s judgment in a civil enforcement action brought by the Secretary of the Department of Labor against Scott Brain, a former trustee of the Cement Masons Southern California Trust Funds (the “Trust Funds”), and Melissa Cook and Melissa W. Cook & Associates, PC (collectively, the Cook Defendants), former counsel to the Trust Funds, alleging violations of the ERISA.

The action alleged violations of two sections of ERISA — unlawful retaliation in violation of ERISA section 510, and breach of fiduciary duty in violation of ERISA section 404.

The Panel held that the district court did not err in concluding that Brain violated ERISA section 510 by retaliating against whistleblower Cheryle Robbins, the Director of the Trust Funds’ internal Audit and Collections Department.  The Panel held that Robbins’s participation in the Department of Labor (“DOL”) investigation of Brain was unmistakably protected activity under ERISA, and constituted an independently sufficient ground for the district court’s conclusion.  The Panel noted that there was a circuit split on the issue of whether “unsolicited internal complaints” constituted protected activity within the meaning of ERISA section 510, but concluded that the issue of Robbins’s letter-writing being protected activity was immaterial where Robbins’s cooperation with the DOL investigation provided an independent basis for the section 510 claim.

In Sulyma v. Intel Corporation Investment Policy Committee, No. 17-15864 (9th Cir. 2018), a panel of the Ninth Circuit Court of Appeals (the “Panel”) reversed the district court’s grant of summary judgment in favor of the defendants in an ERISA action on the ground that the limitations period had expired.

In this case, a former employee and participant in Intel’s retirement plans sued the company for allegedly investing retirement funds in violation of ERISA section 1104 (breach of fiduciary duty).  The district court concluded that the employee had the requisite “actual knowledge” to trigger ERISA’s three-year limitations period, 29 U.S.C. § 1113(2), so that the period of limitations for bringing the suit had expired.

The Panel held that a two-step process is followed in determining whether a claim is time- barred by section 1113(2).  First, the court isolates and defines the underlying violation on which the plaintiff’s claim is founded.  Second, the court inquires whether the plaintiff had “actual knowledge” of the alleged breach or violation.  The Panel held that actual knowledge does not mean that a plaintiff had knowledge that the underlying action violated ERISA, nor does it merely mean that a plaintiff had knowledge that the underlying action occurred.  Rather, the defendant must show that the plaintiff was actually aware of the nature of the alleged breach more than three years before the plaintiff’s action was filed. In an ERISA section 1104 case, the plaintiff must have been aware that the defendant had acted and that those acts were imprudent.  Disagreeing with the Sixth Circuit, the Panel held that the plaintiff must have actual knowledge, rather than constructive knowledge.

In W.A. Griffin, M.D. v. Teamcare, No. 18-2374 (7th Cir. 2018), W.A. Griffin, M.D., is the assignee of her patient’s health plan, TeamCare (the “Plan”).  The Board of Trustees of Central States, Southeast and Southwest Areas Health and Welfare Fund (collectively “Central States”) administers the Plan.  ERISA governs the Plan.  Dr. Griffin sued Central States for underpayment and for statutory penalties based on its failure to furnish plan documents upon request.  The district court dismissed her complaint.

Upon reviewing the case, the Seventh Circuit Court of Appeals (the “Court”) found that Dr. Griffin adequately alleged that she is eligible for additional payment for services and statutory damages.  Accordingly, the Court affirmed the district court’s judgment only as to Count 2 (Central States breached its fiduciary duty by not adhering to the Plan’s terms), vacated the district court’s judgment as to Count 1 (Central States did not pay Dr. Griffin the proper rate for her services under the Plan) and Count 3 (Central States failed to produce, within 30 days, the summary plan description she requested, and certain other information), and remanded Counts 1 and 3 back to the district court for further proceedings.

The case of McCann v. Unum Provident, No. 16-2014 (3rd Cir. 2018) involves two principal issues: first, whether a group insurance plan is governed by ERISA and, second, whether the physician—claimant was incorrectly denied his disability benefit payments.

In this case, plaintiff-appellant, Dr. Kevin McCann, is a radiologist certified in the specialty of interventional radiology.  The gravamen of this appeal concerns a supplemental long-term disability insurance policy Dr. McCann purchased from defendant, Provident Life and Accident Insurance Company.  After initially issuing payments under the policy, Provident terminated Dr. McCann’s disability benefits.  Central to its decision was a determination that Dr. McCann was primarily practicing as a diagnostic radiologist—rather than as an interventional radiologist—at the time he became disabled.  This suit followed.

In analyzing the case, the Third Circuit Court of Appeals (the “Court”) said that, as a preliminary matter, the parties dispute whether Dr. McCann’s claim arises under ERISA.  Thus, the Court first considers the outer bounds of an employer’s involvement in a group or group—type insurance plan before deciding whether the plan may be governed by ERISA.  The Department of Labor has promulgated a safe harbor regulation exempting certain plans from the definition of an “employee welfare benefit plan.”  But the Court concluded that Dr. McCann’s then—employer sufficiently endorsed the plan under which his policy was purchased to render the safe harbor inapplicable.  The plan is therefore governed by ERISA, which will supply the governing framework.

In Brotherston v. Putnam Investments, LLC, No. 17-1711 (1st Cir. 2018), plaintiffs John Brotherston and Joan Glancy are two former employees of Putnam Investments, LLC who participated in Putnam’s defined-contribution 401(k) retirement plan (the “Plan”).  They brought this lawsuit on behalf of a now-certified class of other participants in the Plan, and on behalf of the Plan itself pursuant to the civil enforcement provision of ERISA.  Section 502(a)(2) of ERISA.  They claim that Putnam (as well as other Plan fiduciaries) breached fiduciary duties owed to Plan participants by offering participants a range of mutual fund investments that included all of (and, for most of the class period, only) Putnam’s own mutual funds without regard to whether such funds were prudent investment options. They also claim that Putnam structured fees and rebates in a manner that was both unreasonable and treated Plan participants worse than other investors in those Putnam mutual funds.

In a series of rulings before and after plaintiffs presented their evidence at trial, the district court found that plaintiffs failed to prove that any lack of care in selecting the Plan’s investment options resulted in a loss to the Plan, and that the manner in which Putnam transacted with the Plan was neither unreasonable nor less advantageous than the manner in which Putnam dealt with other investors in its mutual funds.  Finding several errors of law in the district court’s rulings, the First Circuit Court of Appeals vacated the district court’s judgment in part and remanded the case back to the district court for further proceedings.

In Vest v. Resolute FP US Inc., No. 18-5046 (6th Cir. 2018), plaintiff Mead Vest contends defendant Resolute FP US Inc. breached its fiduciary-duty obligations set forth in ERISA when it failed to notify her late husband of his right to convert a group life insurance policy to an individual life insurance policy after he ceased employment and began drawing long-term disability benefits.  The district court ruled plaintiff did not adequately plead a breach-of-fiduciary-duty cause of action. The Sixth Circuit Court of Appeals (the “Court”) agreed with the district court and affirmed its decision.

In this case, Arthur Vest worked nearly forty years for Resolute.  During his employment, Resolute offered group life insurance benefits (“the Plan”) to its employees in the form of base and optional additional life insurance coverage; Resolute provided coverage equal to an employee’s annual salary and permitted employees to purchase optional additional coverage.  Arthur purchased an additional $300,000 of coverage.

Due to complications arising from diabetes, Arthur ceased working in September 2015, and began drawing short- and then long-term disability benefits.  Under the Plan, employees maintained base life insurance coverage when receiving long-term disability benefits, but lost the optional additional coverage.  However, employees had the right to port or convert the expiring additional group coverage to individual coverage within 31 days of ending active employment.  Accordingly, Resolute ended Arthur’s additional coverage on May 18, 2016.  Resolute did not, however, provide him with any information concerning his right to port or convert the coverage that ended, and Arthur never did port or convert.  He died in October 2016, and Resolute’s life insurance carrier paid Vest’s beneficiary, plaintiff here, only the base coverage amount.

In Manuel v. Turner Industrial Group, L.L.C., 2018 U.S. App. LEXIS 27810 (5th Cir. 2018), Michael N. Manuel (“Manuel”) is a former employee of Turner Industries Group LLC (“Turner”).  During his employment, Manuel participated in a group employee short term and long term disability plan (the “Plan”) sponsored by Turner and insured by Prudential Insurance Company of America (“Prudential”).

The Plan provides the following.  Benefits are payable when Prudential determines that a participant is unable to work.  The Plan also provides that participants must submit proof of disability satisfactory to Prudential.  The summary plan description (“SPD”) adds that Prudential has the sole discretion to interpret the Plan.  The Plan does not cover a disability which is due to a pre-existing condition.  As to short term disability (“STD”) benefits, Prudential has the right to recover any overpayments due to any error Prudential makes in processing a claim.

Manuel alleges he became unable to work and claimed STD benefits under the Plan.  His STD claim was approved and paid.  Once he exhausted these benefits, he applied for long term disability (“LTD”).  His LTD claim was denied at every level of internal adjudication because Prudential concluded that Manuel’s claim was subject to the pre-existing condition exclusion.  Related to the denial, but before any suit was filed, Prudential determined that it had paid STD benefits in error and demanded repayment.