In Glazing Health & Welfare Fund v. Lamek, No. 16-16155 (9th Cir.), a panel of the Ninth Circuit Court of Appeals (the “Panel”) affirmed the district court’s dismissal of an ERISA action brought by employee benefit trust funds (the “Trust Funds”), seeking unpaid contributions owed under the contracts governing the benefit plans that the Trust Funds managed for Accuracy Glass & Mirror Company.

The Trust Funds argued that, pursuant to those contracts, the unpaid contributions were trust assets over which the owners and officers of Accuracy exercised control and that the Trust Funds therefore could sue these individuals as fiduciaries to collect the contributions.  The Panel held that the Trust Funds’ claim was foreclosed by Bos v. Bd. of Trustees (Bos I), 795 F.3d 1006 (9th Cir. 2015), which held that employers are not fiduciaries under ERISA as to unpaid contributions to ERISA benefit plans.

Dissenting, Judge Gleason wrote that she disagreed with the majority’s interpretation of Bos I and would find that outside of the bankruptcy context unpaid employer contributions to employee benefit plans may constitute plan assets when the ERISA plan document expressly defines them as such.



In Indiana Electrical Workers Pension Benefit Fund v. ManWeb Servs., No. 16-2840 (7th Cir. 2018), for a second time in this case, the Seventh Circuit Court of Appeals (the “Court”) considered whether defendant-appellee ManWeb Services, Inc. is a successor in interest to a defunct employer that owes withdrawal liability to a multiemployer pension plan.  The original employer was Tiernan & Hoover, but everyone refers to it as “Freije” after its key founder, William Freije, and his son Richard.  ManWeb entered into an asset purchase agreement with Freije in 2009.  Freije was a small contractor specializing in refrigeration and cold-storage engineering for commercial and industrial projects.  ManWeb was a larger company offering a wider range of contracting services, with the notable exception, before it acquired Freije’s assets, of refrigeration projects such as cold-storage warehouses.  Freije’s unionized electricians were covered by a multiemployer pension plan.

ERISA establishes withdrawal liability for employers leaving a multiemployer pension plan. See 29 U.S.C. § 1381.  In this case, Freije withdrew from the Indiana Electrical Workers Benefit Fund (“the Fund”).  The Fund assessed withdrawal liability of $661,978 against Freije.  When Freije failed to pay, the Fund brought this action against both Freije and ManWeb as a successor in interest to Freije.  Successor liability can apply under the MPPAA when the purchaser had notice of the liability and there is continuity of business operations. Upholsterers’ Int’l Union Pension Fund v. Artistic Furniture of Pontiac, 920 F.2d 1323, 1329 (7th Cir. 1990). At this point, the only issue in the case is the claim against ManWeb based on successor liability.

The district court granted summary judgment for Man-Web in 2013, finding it lacked notice of Freije’s withdrawal liability.  In the first appeal, the Court remanded, finding that “Man-Web had sufficient pre-acquisition notice of [Freije’s] contingent withdrawal liability to satisfy the federal successor liability notice requirement.” Tsareff v. ManWeb Services, Inc., 794 F.3d 841, 848 (7th Cir. 2015) (“ManWeb I“).  On remand, the district court again granted summary judgment for ManWeb, concluding that the Fund had not shown sufficient continuity of business operations to support successor liability.  The Fund has appealed again.  This time, the Court found itself in respectful disagreement with it’s colleague on the district court.  In the totality of relevant circumstances, ManWeb’s purchase of and use of Freije’s intangible assets—its name, goodwill, trademarks, supplier and customer data, trade secrets, telephone numbers and websites—and its retention of Freije’s principals to promote ManWeb to existing and potential customers as carrying on the Freije business under ManWeb’s larger umbrella, weigh more heavily in favor of successor liability than the district court recognized. Therefore, the Court vacated the district court’s decision and remanded the case for further consideration of this equitable determination.

Introduction/ Holding.  In Chamber of Commerce of the United States v. United States Dep’t of Labor, No. 17-10238 (Fifth Cir. 2018), the Fifth Circuit Court of Appeals (the “Court”) struck down the “Fiduciary Rule” promulgated by the U.S. Department of Labor (the “DOL”) in April 2016.

In this case, three business groups had filed suit challenging the Fiduciary Rule.  As used in this case, the term “Fiduciary Rule” refers to a package of seven different rules that broadly reinterpret the term “investment advice fiduciary” and promulgate and redefine prohibited transaction exemptions to add provisions concerning fiduciaries that appear in ERISA at 29 U.S.C. § 1001 et seq, and the Internal Revenue Code, at 26 U.S.C. § 4975.  The stated purpose of the Fiduciary Rule is to regulate, in an entirely new way, hundreds of thousands of financial service providers and insurance companies in the trillion dollar markets for ERISA plans and individual retirement accounts (“IRAs”).

The business groups’ challenge proceeds on multiple grounds, including: (a) the Fiduciary Rule’s inconsistency with the governing statutes, (b) the DOL’s overreaching to regulate services and providers beyond its authority, (c) the DOL’s imposition of legally unauthorized contract terms to enforce the new regulations, (d) First Amendment violations, and (e) the Fiduciary Rule’s arbitrary and capricious treatment of variable and fixed indexed annuities.  The district court rejected all of these challenges.   Finding merit in several of these objections, the Court vacated the Fiduciary Rule.

In Santomenno v. Transamerica Life Ins. Co., No. 16-56418 (9th Cir. Feb. 23, 2018), a panel of the Ninth Circuit Court of Appeals (the “Panel”): (1) reversed the district court’s order denying defendants’ motion to dismiss an ERISA case alleging breach of fiduciary duties in connection with a retirement plan, and (2) vacated the district court’s subsequent class certification orders.

In this case, the district court had held that a plan service provider breached its fiduciary duties to plan beneficiaries first when negotiating with an employer about providing services to the plan and later when withdrawing predetermined fees from plan funds.  An employer that forms an ERISA plan is a statutory fiduciary, and a plan service provider becomes a functional fiduciary under certain circumstances.

Joining other circuits, the Panel held that a plan administrator is not an ERISA fiduciary when negotiating its compensation with a prospective customer.  As to alleged breaches after the defendant became a plan service provider, the Panel held that the defendant was not a fiduciary with respect to its receipt of revenue sharing payments from investment managers because the payments were fully disclosed before the provider agreements were signed and did not come from plan assets. Agreeing with other circuits, the Panel held that defendant also was not a fiduciary with respect to its withdrawal of preset fees from plan funds.  The Panel concluded that when a service provider’s definitively calculable and nondiscretionary compensation is clearly set forth in a contract with the fiduciary-employer, collection of fees out of plan funds in strict adherence to that contractual term is not a breach of the provider’s fiduciary duty.

In Cooper v. Honeywell International, Inc., No., 17-1042 (6th Cir. 2018), the issue was whether retiree healthcare benefits in a collective bargaining agreement (“CBA”) should extend beyond the CBA’s expiration.  Rebecca Cooper and some 50 other retirees at Honeywell International’s Boyne City, Michigan plant allege that Honeywell must provide them healthcare benefits until they reach age 65.  Honeywell responds that its obligation to provide those benefits ended when its CBA with the Boyne City employees expired in March 2016.

While waiting for the district court to rule on the matter, the retirees sought a preliminary injunction barring Honeywell from terminating their healthcare.  The district court granted the injunction, concluding that the retirees had shown both a likelihood of success on the merits and that they would suffer irreparable harm without such relief.

Upon reviewing the case, the Sixth Circuit Court of Appeals (the “Court”) said that, because it finds that the retiree healthcare benefit provision in the CBA did not clearly provide an alternative end date to the CBA’s general durational clause, it concludes that Cooper has not shown a likelihood of success on the merits.  Thus, the Court reversed the decision of the district court, thereby not allowing the retirees to obtain the preliminary injunction.


In Singh v. RadioShack Corp., 16-11587 (5th Cir. 2018), the Plaintiffs, Manoj P. Singh, Jeffrey Snyder, and William A. Gerhart, represent a putative class of those who participated in RadioShack Corporation’s 401(k) Plan (the “Plan”) and who held RadioShack stock in their 401(k) accounts after November 30, 2011.  They appeal the dismissal by the district court of their claims that Defendants—members of the RadioShack board of directors and plan administrative committee—breached their fiduciary duties under ERISA by allowing plan participants to invest in RadioShack stock despite the company’s descent into bankruptcy.

The Fifth Circuit Court of Appeals (the “Court”) affirmed the district court’s dismissal.  The Court concluded that the Plaintiff’s complaint did not plausibly state any fiduciary claims with respect to the Plan.

In Dragus v. Reliance Standard Life Insurance Co., No. 17-1752 (7th Cir. 2018), Plaintiff-appellant, John Dragus, brought suit against defendant-appellee, Reliance Standard Life Insurance Company (“Reliance”), under ERISA for denial of long-term disability (“LTD”) benefits.  After the district court denied Dragus’ request for discovery outside the claim file record, both parties moved for summary judgment.  Before the court ruled, Dragus filed a motion to supplement the claim record with a fully favorable Social Security Disability Insurance (“SSDI”) decision.  The district court denied the motion to supplement and granted summary judgment in favor of Reliance.  Dragus then appealed.

Upon reviewing the case, the Seventh Circuit Court of Appeals (the “Court”) affirmed the district court’s decisions.  The Court found that the applicable insurance policy grants Reliance a discretionary review of claims, and with any conflict of interest appropriately eliminated by Reliance, no contention of bad faith or fraud, and a well-reasoned decision supported by the evidence, Reliance’s decision to deny the LTD benefits was not arbitrary or capricious.

In Miscevic v. Estate of M.M., No. 17-2022 (7th Cir. 2018), in January 2014, Anka Miscevic (“Anka”) killed her husband, Zeljko Miscevic (“Zeljko”).  At a state criminal proceeding, the court determined that Anka intended to kill Zeljko without legal justification.  However, the court also determined that Anka was insane at the time of the killing and found her not guilty of first degree murder by reason of insanity.

Following the criminal trial, the Laborers’ Pension Fund (the “Fund”) brought an interpleader action to determine the proper beneficiary of Zeljko’s pension benefits.  Anka claimed she was entitled to a Surviving Spouse Pension.  The Estate of M.M. (Anka and Zeljko’s child) argued that Anka was barred from recovering from the Fund by the Illinois slayer statute.  After both parties filed motions seeking a judgment on the pleadings, the district court ruled in favor of the Estate of M.M.  It determined that ERISA did not preempt the Illinois slayer statute, and that the statute barred even those found not guilty by reason of insanity from recovering from the deceased.

The Seventh Circuit Court of Appeals affirmed the district court’s ruling.

In Boyd v. ConAgra Foods, Inc., Nos. 16-1763 and 16-3443 (8th Cir. 2018), James Boyd, a former employee of ConAgra Foods, Inc., brought this action under ERISA.  Boyd seeks to recover severance benefits under an ERISA plan that guarantees these benefits when ConAgra, in certain circumstances, materially reduces an employee’s position, duties, or responsibilities.  Boyd alternatively claims that ConAgra breached its fiduciary duty by misleading him about his employment.  The district court granted ConAgra summary judgment on these claims and then granted Boyd his attorney’s fees, pursuant to the plan’s terms.

The Eighth Circuit Court of Appeals (the “Court”) affirmed the district court’s rulings.  As to the claim to recover benefits, the Court said that ConAgra’s decision to not pay the severance benefits is entitled to a deferential review.  The Court found that ConAgra’s decision was reasonable, and held that ConAgra did not abuse its discretion in denying Boyd’s claim for the benefits.  As to the claim of breach of fiduciary duty, the Court said that .Boyd did not show that he reasonably relied, to his detriment, on any material misrepresentation or omission.

In Ellis v. Fidelity Management Trust Company, No. 17-1693 (1st Cir. 2018), Plaintiffs James Ellis and William Perry brought a certified class action under ERISA, alleging that Fidelity Management Trust Company (“Fidelity”), the fiduciary for a fund (namely, the Barnes & Noble 401(k) plan) in which plaintiffs had invested, breached its duties of loyalty and prudence in managing the fund.  Fidelity was awarded summary judgment by the district court, and the plaintiffs appealed.

In reviewing the case, the First Circuit Court of Appeals (the “Court”) ruled that, because the district court correctly concluded that plaintiffs failed to adduce evidence necessary to proceed to trial, the district court’s award of summary judgment is affirmed.

In so ruling, the Court said that, though the record in this matter is voluminous, the essential issues are relatively straightforward.  Plaintiffs failed to adduce evidence after ample discovery that would have provided reasonable, non-speculative support for their claims of disloyalty or imprudence.  The record shows, instead, an alignment between the interests of Fidelity and the fund participants, and an investment strategy that lacked not prudence, but rather, a crystal ball.  The district court applied the correct legal test in its evaluation of the evidence.