Employee Benefits Law Report

Archives: ERISA Litigation

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Sixth Circuit nonqualified deferred compensation plan decision highlights importance of Code Section 409A compliance and ERISA claims procedures

We often receive questions about whether different types of bonus plans and nonqualified deferred compensation plans (NQDC plans) are subject to ERISA. We explain that being subject to ERISA may be a good thing for an NQDC plan, particularly with respect to resolving disputes and claims for benefits. Even if it is questionable whether an … Continue Reading

Protection of ERISA’s statute of limitations is narrowed by the Supreme Court

The United States Supreme Court yesterday issued a unanimous opinion in Tibble et al. v. Edison International et al. vacating a Ninth Circuit Court of Appeals ruling that claims by employees of Edison International against the company over allegedly imprudent 401(k) plan investments were time-barred under applicable ERISA statute of limitation rules. The issue before the … Continue Reading

ERISA contractual time limitations for filing civil actions: why you may want to add these provisions to your benefit claim denial letters

ERISA plan sponsors were given what was described in our earlier post as a “holiday gift” last December with respect to plan-based statutes of limitation when the Supreme Court decided Heimeshoff v. Hartford Life & Accident Insurance Co. There, the Court declared a three-year plan-based (or contractual) time limitation for the filing of an ERISA civil … Continue Reading

Could’ve, would’ve. What should a fiduciary do? Fourth Circuit decision could spell more uncertainty for retirement plan fiduciaries.

Coming on the heels of the U.S. Supreme Court’s Dudenhoeffer decision, which eliminated a pro-fiduciary presumption with respect to company stock holdings in qualified retirement plans, the 4th Circuit issued a decision last week that could cause even more unrest for plan fiduciaries. The case, Tatum v. RJR Pension Investment Committee, et al., represents a potential elevation of … Continue Reading

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

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 … Continue Reading

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

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 … Continue Reading

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

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 … Continue Reading

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

“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 … Continue Reading

Facebook brag underscores the enforceability of confidentiality clauses in settlement agreements

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.… Continue Reading

ERISA preemption is complicated – except when it isn’t

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. Donegal, 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. … Continue Reading

Frommert v. Conkright “Actuarial Heresy” is Back Again

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).” … Continue Reading

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

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], and every other circuit to address the issue.… Continue Reading

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

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 Comany, 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 loss due date).… 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

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 past boundaries and throws that delicate balance into a tailspin. The Sixth Circuit has, in the words of dissenting Judge McKeague, “taken an unprecedented and extraordinary step to expand the scope of ERISA coverage.”… Continue Reading

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

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 Court ruled that CIGNA, while acting as plan fiduciary, did not have authority to change the terms of the plan as written by CIGNA, acting as plan sponsor.… Continue Reading

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

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 shows just how serious this risk is. … Continue Reading

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

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 … Continue Reading
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