Header graphic for print
Employee Benefits Law Report Reporting on recent trends and developments affecting employee benefits

Category Archives: ERISA Litigation

Subscribe to ERISA Litigation RSS Feed

The illusion of an available job for the disabled: The Sixth Circuit’s decision in Kennard v. Means Industries, Inc. addresses long-term disability determinations

Posted in ERISA Litigation, Fringe Benefits

Many thanks to our summer clerk, Ryan Graham, for his significant contribution to this blog.

A farmer was having a tough time understanding why his chickens were producing less eggs than in previous years. He wrote a letter to the local university, asking for guidance on increasing his chickens’ egg production. The university handed the project off to its top theoretical physicist. The physicist quickly returned to the farmer and said “I have a solution to increase the production of your eggs, but it only works for spherical chickens in a vacuum.”

Some solutions are illusory, or at least that …


Continue Reading →

Sixth Circuit finds all anti-retaliation provisions are not created equal, but they are legal landmines. Watch your step

Posted in ERISA Litigation, Other Articles

Sexton v. Panel Processing, Inc. is a recent Sixth Circuit case that highlights that all anti-retaliation provisions are not created equal. And while not equal, there certainly are a lot of them. In fact, there are at least 40 federal anti-retaliation laws, and this does not even include all the various state statutory and common laws that prohibit an employer from taking adverse action against an employee for complaining about all sorts of various conduct. While the result in Sexton was a win for the employer, it should not give employers confidence against retaliation claims; rather, it should serve …


Continue Reading →

ERISA preemption of state law regarding multiemployer health, welfare and retirement benefits

Posted in ERISA Fiduciary Compliance, ERISA Litigation

The Pennsylvania General Assembly has given us another opportunity to expand our employee benefit plan boundaries discussion. This time, the discussion applies to multiemployer plans in the construction industry. It has been reported that Rep. William Keller, D-Philadelphia, introduced a bill in the General Assembly to amend the state’s Mechanics’ Lien Law to classify union benefit fund trustees as subcontractors allowed to pursue claims for nonpayment against employers and property owners. This action followed a Pennsylvania Supreme Court ruling that unions and benefit fund trustees do not qualify as subcontractors as a result of collective bargaining agreements with employers.

There …


Continue Reading →

New wrinkle for the Delinquent Filer Voluntary Compliance Program—trap for the unwary

Posted in ERISA Fiduciary Compliance, ERISA Litigation, Retirement Plans, Tax Issues

Plan administrators who fail to timely file Form 5500 annual returns/reports are subject to penalties under both Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Internal Revenue Code (the “Code”). The Department of Labor (the “DOL”) has the authority to assess civil penalties of up to $1,100 per day against plan administrators that fail to file complete and timely returns/reports. In addition, the Internal Revenue Service (the “IRS”) may impose further penalties of $25 per day up to a maximum of $15,000 per return against administrators that fail to file complete and timely returns/reports.…


Continue Reading →

ERISA Section 510: wanting to be a participant, versus being a participant

Posted in ERISA Litigation, Retirement Plans

My assistant informed me that my patience is shot and I need to do something about that, so I am channeling my energy into one issue. Since health care reform was enacted, I have been hearing about how we should anticipate a flood of ERISA Section 510 (29 U.S.C. Section 1140) discrimination cases from people who are not participants under the plan terms, but want to be participants. I don’t get it.

ERISA Section 510 provides, “[i]t shall be unlawful for any person to…discriminate against a participant or beneficiary…for the purpose of interfering with the attainment of any right to …


Continue Reading →

Participant document requests under ERISA: throw the crystal balls away! Sixth Circuit adopts “clear notice standard”

Posted in ERISA Litigation

“Can I have all documents related to my retirement plan benefit?” If you are involved with administering an ERISA-governed plan, you have probably received this type of vague request. After reading your crystal ball, you might assume the participant wants a summary plan description and perhaps a copy of the plan document. While that seems reasonable, the problem with these types of vague requests is that if your crystal ball happens to be foggy on a particular day, you could face penalties of up to $110 per day for not providing the requested materials. Thankfully, the Sixth Circuit Court of …


Continue Reading →

Facebook brag underscores the enforceability of confidentiality clauses in settlement agreements

Posted in ERISA Fiduciary Compliance, ERISA Litigation

Settlement agreements are fairly common in the ERISA / employee benefits area. We typically do not need “unique” provisions for these agreements, beyond making sure all the proper parties are named and that ERISA is referenced. But two issues typically require extra attention: confidentiality provisions, and payment method (including tax withholding and reporting). As discussed in our sister blog, a party might quietly violate a confidentiality provision, and get away with it without causing any real harm. But when a party shares settlement information with a child who has both a Facebook page and poor judgment, the ramifications can …


Continue Reading →

ERISA preemption is complicated – except when it isn’t

Posted in ERISA Fiduciary Compliance, ERISA Litigation, Other Articles

In light of health care reform, we anticipate ERISA preemption cases to start popping up more frequently. Two recent decisions demonstrate that ERISA preemption is complicated, except when it isn’t. In Liberty Mutual Ins. Co.v Donegan, Second Circuit Judge Dennis Jacobs explains the complicated nature of ERISA preemption. This opinion may be helpful for anyone to develop a better understanding of the topic and its history. (Shameless plug alert: you also may want to see the preemption chapter that I edit in ERISA: A Comprehensive Guide.)

Then there is the decision that demonstrates when preemption isn’t complicated.  Seventh


Continue Reading →

Frommert v. Conkright “Actuarial Heresy” is Back Again

Posted in ERISA Fiduciary Compliance, ERISA Litigation, Retirement Plans

Frommert v. Conkright, the Xerox “actuarial heresy” floor-offset plan case is back. This time, the Second Circuit has ruled that the new interpretation of the plan is unreasonable, and that ERISA’s “notice provisions” were violated.

Stating, “SPDs are central to ERISA,” the Court concluded that the SPD (summary plan description) did not satisfy 29 C.F.R. § 2520.102-3(l) because the SPD did not describe the offset provision in question in more detail. The Court held, “the Plan and its related SPDs violate ERISA’s notice provisions” and “Plaintiffs’ notice claims fall under Section 502(a)(3).” Frommert has been remanded to the district …


Continue Reading →

Supreme Court Takes on Fifth Third Bancorp v. Dudenhoeffer ESOP Dispute

Posted in ERISA Litigation, ESOPs, Other Articles

As I mentioned in my Heimeshoff v. Hartford blog, the U.S. Supreme Court has agreed to review Dudenhoeffer v. Fifth Third Bancorp, now captioned Fifth Third Bancorp v. Dudenhoeffer. The Court granted certiorari on the question as originally framed:

Whether the Sixth Circuit erred by holding that Respondents were not required to plausibly allege in their complaint that the fiduciaries of an employee stock ownership plan (“ESOP”) abused their discretion by remaining invested in employer stock, in order to overcome the presumption that their decision to invest in employer stock was reasonable, as required by [ERISA], …


Continue Reading →

Heimeshoff v. Hartford: Supreme Court Upholds ERISA Plan Document’s Three-Year Statute of Limitations for Benefit Claims

Posted in ERISA Litigation, Retirement Plans

I have been blogging about ERISA basic principles and respect for boundaries, and just got a little help from the U.S. Supreme Court. In Heimeshoff v. Hartford Life & Accident Insurance Company, a unanimous decision, the Court upheld the three-year statute of limitations set forth in the terms of the ERISA benefit plan document. The Court held that while a cause of action does not commence until the plan issues a final denial in the claims appeal process, the plan and its participants can agree to commence the limitation period before that time (here, at the proof of …


Continue Reading →

Sixth Circuit 502(a)(3) Windfall in Rochow v. Life Insurance Company of North America — ERISA’s Delicate Balance Goes So Far Off Kilter That I Am Queasy

Posted in ERISA Fiduciary Compliance, ERISA Litigation

When you think about it, balance is really important. It is hard to imagine how we all stand steady on a planet that is rotating on its access and rotating around the sun. The last earthquake I experienced left me queasy afterward, and that is how I feel after reading a new decision. Curses (or thank you?) to Brian Hall, editor of our sister blog, employerlawreport.com, for forwarding.

Within days of writing the Dudenhoeffer v. Fifth Third Bank blog about a threat to ERISA’s delicate balance and importance of boundaries, we have yet another Sixth Circuit decision that blazes …


Continue Reading →

Dudenhoeffer v. Fifth Third Bank at the U.S. Supreme Court: DOL Brief and the ESOP Sponsor / Fiduciary Boundary Dispute

Posted in ERISA Litigation, ESOPs

The DOL has filed a brief with the U.S. Supreme Court in the Dudenhoeffer v. Fifth Third Bank employee stock ownership plan (“ESOP”) dispute that made me think about Boundaries, a book about the importance of establishing boundaries, and compelling respect for those boundaries. In designing ERISA, Congress forged a delicate balance between protecting benefit plans and encouraging employers to provide those benefit plans. The U.S. Supreme Court reminded us in CIGNA v. Amara that this delicate balance includes carefully distinguishing the roles of plan sponsors and fiduciaries, even when one entity (e.g., the employer) wears both hats. The …


Continue Reading →

First Circuit to Potential Business Acquirers: Buyer Beware…of Underfunded Pension Liabilities

Posted in Benefits Issues Related to Mergers and Acquisitions, ERISA Litigation

We frequently encounter employers who are excited to purchase an underperforming company with the belief that it can make that company profitable.  While we as ERISA counsel never want to rain on anyone’s parade, we always encourage these employers to do their due diligence with respect to the company’s employee benefits plans.  The last thing an acquirer wants is to learn that it is responsible for a previously unknown pension liability of the acquired entity.  Careful planning can help minimize the risk of such liability.

A recent First Circuit decision involving a private equity fund’s investment in a portfolio company …


Continue Reading →

U.S. Supreme Court decision: U.S. Airways, Inc. v. McCutchen

Posted in ERISA Litigation

The United States Supreme Court issued an opinion today in an ERISA case regarding the breadth of Section 502(a)(3) relief, and the common-fund doctrine. While the decision was unanimous on the primary issues, the Court surprised us with a 5-to-4 split on a secondary issue. Overall, the decision in U.S. Airways, Inc. v. McCutchen is favorable for employers sponsoring health care plans. The decision is also favorable for health care plan participants in the aggregate because it allows for control of plan costs, and premiums, at a critical time when plans are gearing up for 2014 health care reform cost …


Continue Reading →

Circuit Decision Reminds Employers: Get Your Ducks in a Row at the EEOC Charge Stage and, for Goodness Sake, Know Your Own Policies

Posted in ERISA Litigation, Health and Welfare Plans

On our sister blog — Employer Law Report Sara Jodka analyzes a recent case — Gaglioti v. Levin Group, Inc. (6th Cir. Dec. 13, 2012), which serves as a good reminder to employers to pin down their reasoning for terminating an employee at the start, and stick to it.

In addition to his other claims, Gaglioti claimed that he was fired in response to the company’s fear of higher health costs for his wife, and that this was discriminatory under ERISA Section 510. Such a claim requires the plaintiff to establish “(1) prohibited employer conduct (2) taken for the …


Continue Reading →

How Do You Jack a 401(k) Plan? Santomenno v. John Hancock Life Insurance Company

Posted in ERISA Litigation, Retirement Plans

If you are the fiduciary of an ERISA plan that invested in John Hancock group variable annuity contracts, we hope you have heard that three individuals have filed a lawsuit, claiming to be representing your plan and its participants and beneficiaries. You will not be receiving service of process.

Santomenno v. John Hancock Life Insurance Company is an “excessive fee” case. The Third Circuit held that a participant may bring ERISA Sections 502(a)(2) and (3) claims without first making demand upon the plan trustee who entered into the contract with the defendant, and without joining the plan trustee. The U.S. …


Continue Reading →

Fiduciary Litigation Update — Tussey v. ABB, Inc.

Posted in ERISA Fiduciary Compliance, ERISA Litigation

A recent case, Tussey v. ABB, Inc., has received much warranted and unwarranted attention in the Section 401(k) plan arena. In Part 1 of this legal update, we will explain the basics of what happened in this case. In Part 2, we will provide practical aspects of Tussey and deliver specific recommendations on how plan sponsors and fiduciaries can help minimize their potential fiduciary liability.

Part 1: Case Summary

By way of background, this case was one of 15 different cases filed in 2006 by a single law firm. These lawsuits were aimed at large employers alleging …


Continue Reading →

United States Supreme Court Declines to Review Sixth Circuit’s Rejection of Class Certification in ERISA Fee Case

Posted in ERISA Litigation, Health and Welfare Plans

The Supreme Court last week denied a writ of certiorari to review the Sixth Circuit’s rejection of class certification for a group of self-insured health plans alleging that their plan administrator charged them improper fees.

In Pipefitters Local 636 Insurance Fund v. Blue Cross Blue Shield of Michigan, No. 09-2607 (Aug. 12, 2011), the Sixth Circuit Court of Appeals reversed the district court’s decision to certify the class, which would have consisted of between 550 to 875 self-insured plans that entered into Administrative Services Contracts (“ASC’s”) with Blue Cross Blue Shield of Michigan (“BCBSM”). These services included payment of …


Continue Reading →

Road to ERISA Class Action Certification Gets Bumpier With Second Circuit Decision in Nationwide Life Ins. Co. v. Haddock

Posted in ERISA Litigation

In Nationwide Life Ins. Co. v. Haddock, No. 10-4237-cv (Feb. 6, 2012), the Second Circuit vacated a district court’s order certifying an ERISA class action in light of the United States Supreme Court’s decision in Wal-Mart v. Dukes, 131 S. Ct. 2541 (2011). This decision may be a game-changer in the ERISA class action litigation arena, and may ease the pressure on service providers and employers to settle even frivolous claims to avoid the expense of litigation.

The Haddock litigation is substantial in terms of the number of plans involved. This is not the typical ERISA litigation involving …


Continue Reading →

Establishing that a pension plan creep benefit claim is preempted by ERISA took 19 years in state court – don’t let this happen to you

Posted in ERISA Litigation

ERISA preemption of state law is complicated, and it gets even murkier in state court. We advise our clients and our litigation partners to immediately refer anything that smells like an ERISA action to our ERISA team, so that the matter can be timely removed to federal court. State courts do not routinely handle ERISA matters, and this litigation tends to not go very well there. Barnett v. SKF USA, Inc. demonstrates what can happen.

In this case, non-union plaintiffs claim that back in 1991, they were promised a pension plan “creep benefit.” The pension plan allowed early retirement at …


Continue Reading →

Allowing Employee Investment in an ESOP or 401(k) Employer Stock Fund Becomes a Bigger Gamble – Sixth Circuit Decision in Pfeil v. State Street Bank & Trust Co.

Posted in ERISA Fiduciary Compliance, ERISA Litigation, Retirement Plans

The Sixth Circuit has reversed the district court’s dismissal of the GM ERISA stock-drop suit, Pfeil v. State Street Bank & Trust Co., and is allowing the case to proceed.  You may recall that we cautioned fiduciaries of ESOPs and 401(k) plans allowing investment in employer stock to keep an eye on this case because it could be a game-changer. And now it is.

The GM plan offered a number of investment options, one of which was the GM stock fund. The GM stock fund was not a default fund, and participants could change investments on any business day. …


Continue Reading →

Estoppel in ERISA: Simple Mistakes Can Lead to Costly Litigation

Posted in ERISA Litigation, Retirement Plans

Plan administrators need to take steps to ensure that the information they provide to plan participants is accurate. Otherwise, plan participants may use this misinformation to bring an estoppel claim.

In civil litigation, defendants have long relied on equitable estoppel as an affirmative defense. The basic elements of an equitable estoppel defense are:

  • a definite misrepresentation of fact made to another person with the expectation that they will rely on it; and
  • reasonable and detrimental reliance on the misrepresentation

See, e.g., Heckler v. Community Health Servs. of Crawford County. The rationale behind this defense is that a party who …


Continue Reading →

The Top-Hat Plan Test for Your ERISA Executive Deferred Compensation Plan – Daft v. Advest, Inc.

Posted in ERISA Fiduciary Compliance, ERISA Litigation, Executive Compensation

A recent Sixth Circuit decision provides a tutorial on designing and administering an ERISA executive compensation top-hat plan. In Daft v. Advest, Inc., a U.S. Court of Appeals for the Sixth Circuit reversed the District Court’s decision that the executive compensation plan was an ERISA plan but was not a top-hat plan, on the grounds that the District Court should have remanded the matter to the plan administrator for expansion of the administrative record and its own determination on this issue. This is good news for the employer, and presumably good news for the other plan participants, because an …


Continue Reading →