This week’s notable decision, Pruter v. Local 210’s Pension Trust Fund, Local 210, International Brotherhood of Teamsters, No. 16-733-CV, __F.3d__, 2017 WL 2431756 (2d Cir. June 6, 2017), is one of the rare instances where it pays to look like an ERISA claim. Plaintiffs are plan participants and former employees of World Airways who brought suit against their union and multiemployer pension plan for violation of ERISA as well as state law claims for fraud and breach of contract in connection with the cancellation of their past service credits. The district court dismissed Plaintiff’s claims, but the Second Circuit Court of Appeals affirmed in part, vacated in part, and remanded the case for further proceedings.
First, the Court held that the plan participants’ state law fraud and breach of contract claims were preempted by the Railway Labor Act even though Plaintiffs claimed that they do not seek to enforce, interpret, or otherwise challenge the ratification process or CBA.
Second, the court held that ERISA’s three-year statute of limitations, rather than the six–month limitations period in National Labor Relations Act (NLRA), applied to the Railway Labor Act claims. This is because Plaintiffs’ lawsuit seeking to hold Local 210 to a promise it made that the union members would not lose pension benefits because of the switch in plans most resembles a claim for pension benefits asserted under ERISA. Applying this limitations period makes Plaintiffs’ claims timely since they filed within three years of when they discovered that the past service credits were not funded.
Lastly, the court held that there was no evidence to support the participants’ claims that the Plan was arbitrary and capricious under ERISA in canceling their past service credits because the airline had fully funded them. As such, the district court properly dismissed the ERISA claim against the Fund.
Below is Roberts Disability Law, P.C.’s summary of this past week’s notable ERISA decisions.
Guest-Marcotte v. Metaldyne Powertrain Components, Inc., No. 15-CV-10738, 2017 WL 2403569 (E.D. Mich. June 2, 2017) (Judge Thomas L. Ludington). In this lawsuit involving short term disability benefits under ERISA and a wrongful termination claim in violation of Michigan’s Persons with Disabilities Civil Rights Act, the court previously entered judgment against Plaintiff. The court denied Defendants’ motion for attorneys’ fees because they have not demonstrated that Plaintiff acted in bad faith, or that other people should be deterred from bringing similar claims. Requiring Plaintiff to bear Defendants’ costs would result in an onerous financial burden.
Boysen v. Illinois Tool Works Inc., No. 1:15-CV-1900-TWT, 2017 WL 2374844 (N.D. Ga. May 31, 2017) (Judge Thomas W. Thrash, Jr.). Following an award of summary judgment to Defendant on Plaintiff’s claim for separation pay plan benefits, the court denied Defendant’s motion for attorneys’ fees. “Considering the totality of the circumstances, all five Iron Workers factors, and the interests of justice, the Court finds that attorney’s fees would be inappropriate in this case.”
Breach of Fiduciary Duty
Perez v. WPN Corp., No. CV 14-1494, 2017 WL 2461452 (W.D. Pa. June 7, 2017) (Judge Nora Barry Fischer). Here, the DOL alleges that fiduciaries and investment managers of two related pension plans violated ERISA and caused a loss of the pension plans’ value of approximately $7mil. Defendants moved to dismiss. The court determined that once Defendants appointed investment managers they are entitled to the protection of the safe harbor provision of ERISA section 405(d)(1), 29 U.S.C. § 1105(d)(1) but the DOL can amend its Amended Complaint to allege that Defendants are liable for failing to monitor the investment manages from November 3, 2008 to December 5, 2008. The court also concluded that ERISA intended named fiduciaries who have been granted control of plan assets and who have properly appointed an investment manager to manage the plan assets are protected by the safe harbor provision of Section 1105(d)(1), even though the named fiduciaries are not designated as “trustees.”
White v. Chevron Corp., No. 16-CV-0793-PJH, 2017 WL 2352137 (N.D. Cal. May 31, 2017) (Judge Phyllis J. Hamiton). In this lawsuit alleging breach of fiduciary duty with respect to the Chevron Employee Savings Investment Plan, the court found that Plaintiff’s allegations that Chevron had illicit motives to drive higher recordkeeping fees to Vanguard, and that the administration of the Plan was infected by “conflict of interests” resulting from Chevron’s relationship with Vanguard, are insufficient to state a claim. Plaintiffs allege no facts showing any benefit to Chevron resulting from the Plan’s arrangement with Vanguard that Chevron would not have received even absent any such relationship. The fifth cause of action fails to state a claim that the Plan fiduciaries were imprudent in failing to remove the ARTVX Fund from the Plan lineup sooner than they did since the basis of the claim is only on the fact that the Fund did not perform well. The dismissal is with prejudice.
The Pioneer Centres Holding Company Employee Stock Ownership Plan And Trust And Its Trustees, Matthew Brewer, Robert Jensen, & Susan Dukes v. Alerus Financial, N.A., No. 15-1227, __F.3d__, 2017 WL 2415949 (10th Cir. June 5, 2017) (Before BACHARACH, PHILLIPS, and McHUGH, Circuit Judges). In this matter alleging breach of fiduciary duty in connection with the failure of a proposed employee stock purchase, the court affirmed the district court’s grant of summary judgment to Alerus after determining that the evidence of causation did not rise above speculation. The Plan argued that the district court erred in placing the burden to prove causation on the Plan rather than shifting the burden to Alerus to disprove causation once the Plan made out its prima facie case. The court concluded that the plaintiff bears the burden on each element of its claim because Congress has given no indication that it intended to depart from that general rule. The court also rejected the Plan’s argument that a burden-shifting framework should be incorporated into ERISA from the common law of trusts.
Alerus Financial, N.A., v. Brewer, No. 15-1245, __F.App’x__, 2017 WL 2422852 (10th Cir. June 5, 2017) (Before BACHARACH, PHILLIPS, and McHUGH, Circuit Judges). The court dismissed as moot the cross appeal filed by Alerus of the district court’s holding that ERISA does not permit Alerus to seek contribution from cofiduciaries since the court affirmed the district court’s judgment to Alerus on the breach of fiduciary duty claim.
West v. Cont’l Auto., Inc., No. 3:16-CV-502-FDW-DSC, 2017 WL 2470633 (W.D.N.C. June 7, 2017) (Judge Frank D. Whitney). “Based on the findings as set forth above, the Court certifies the following as the Class under Federal Rule of Civil Procedure 23(b)(1):
Class 1: All individuals who are or were participants or beneficiaries under the Pension Plan for Hourly-Paid Employees of Continental Automotive, Inc. and Certain Affiliated Companies at the Charlotte, North Carolina Plant for a minimum of three years whose recall rights expired on or after January 1, 2008, and their eligible spouses, dependents, and survivors, who are now receiving, are entitled to receive, or will be entitled to receive retirement or pension benefits under the Plan, and whose benefit calculations by Defendants failed to include Vesting and Eligibility Service during periods of layoff with recall rights and for whom additional Vesting and Eligibility Service would impact their eligibility for benefits under the Plan.
Class 2: All individuals who are or were participants or beneficiaries under the Pension Plan for Hourly-Paid Employees of Continental Automotive, Inc. and Certain Affiliated Companies at the Charlotte, North Carolina Plant for a minimum of three years whose recall rights expired on or after January 1, 2008, and their eligible spouses, dependents, and survivors, who accepted lump sum distributions of their retirement or pension benefits from the Plan, and whose benefit calculations by Defendants failed to include Vesting and Eligibility Service during periods of layoff with recall rights and for whom additional Vesting and Eligibility Service would impact their eligibility for benefits under the Plan.
The Court finds that the Class is sufficiently well-defined and cohesive to warrant certification as a non-opt-out class under Fed. R. Civ. P. 23(a) and 23(b)(1).”
Disability Benefit Claims
Agnes Xiaohong Xie v. JPMorgan Chase Short-Term Disability Plan, No. 15CV04546LGSKHP, 2017 WL 2462675 (S.D.N.Y. June 7, 2017) (Magistrate Judge Katharine H. Parker). The court recommended denial of the pro se Plaintiff’s request to amend her complaint to add claims for breach of fiduciary duty under Section 502(a)(3) because Plaintiff can obtain a full remedy in connection with her claim for unpaid short term disability benefits under Section 502(a)(1)(B). Additionally, the proposed claims are improper because the amended complaint does not allege facts upon which it can be concluded that any of the allegedly fraudulent statements or omissions was made by plan fiduciaries. Plaintiff can have leave to amend the Complaint to add a claim against the short term disability plan administrator for failure to provide her with a copy of the short term disability plan document. The ERISA Section 510 claim cannot be added to the complaint because it is subject to mandatory arbitration.
Patrick v. Reliance Standard Life Insurance Company, No. 16-3980, __F.App’x__, 2017 WL 2459832 (3d Cir. June 7, 2017) (BEFORE: AMBRO, RESTREPO, and NYGAARD, Circuit Judges). The court affirmed the district court and determined that Reliance did not abuse its discretion in offsetting Plaintiff’s monthly benefit for the time she worked part-time. Plaintiff challenged the offset based on her argument that those funds were not “received” because they went to pay down a debt she owed to her medical group. “This argument misses the mark because she received the benefit of her earnings by having those funds applied against the deficit she owed her medical practice. That is to say, money may still be earned, even if the funds have never been possessed, so long as the recipient attains its benefit.”
Ballew v. Asbestos Workers Local #8, No. 1:15-CV-00731-TSB, 2017 WL 2443432 (S.D. Ohio June 6, 2017) (Judge Timothy S. Black). The court determined that Defendants’ decision regarding the onset date of Plaintiff’s disability was not arbitrary or capricious, especially where Plaintiff acknowledged that his last day of work was not related to injury. Further, Plaintiff’s admission that he continued to seek work in the industry following his alleged date of disability serves as an independent basis to deny benefits. Lastly, Plaintiff’s election to receive early retirement benefits made him ineligible to receive LTD benefits.
Mowery v. Metro. Life Ins. Co., No. 16-CV-516-JDP, 2017 WL 2415056 (W.D. Wis. June 2, 2017) (Judge James D. Peterson). MetLife abused its discretion in denying Plaintiff’s claim for disability benefits. Plaintiff worked as the lead registered nurse before a series of allergic reactions led to several emergency room visits. Tests confirmed that she is allergic to two chemicals found in a number of common products. Neither MetLife or its reviewing doctor, Dr. Robert Lin, analyzed how Plaintiff’s documented allergic reactions affect her ability to perform with reasonable continuity the important tasks, functions, and operations of a registered nurse.
Zaeske v. Liberty Life Assurance Co. of Boston, No. 5:15-CV-5305, 2017 WL 2438039 (W.D. Ark. June 5, 2017) (Judge Timothy L. Brooks). Considering the five Shelton factors recognized by the Eighth Circuit, Liberty Life abused its discretion in terminating Plaintiff’s long term disability benefits. Liberty Life’s reviewing physicians either ignored objective medical data in the file, failed to appreciate that his condition had not improved over time, or did not consider whether Plaintiff could perform the duties of his occupation given his limitations. Liberty Life’s doctors did not address how uncontrolled pain would affect Plaintiff’s ability to walk, sit, lift heavy things, or travel. The court reversed the claim decision and remanded to Liberty Life for the correct calculation of past-due benefits.
Roberts v. Anthem Life Ins. Co., No. CV1600571BROGJSX, 2017 WL 2469354 (C.D. Cal. June 7, 2017) (Judge Beverly Reid O’Connell). The court granted Plaintiff’s motion to remand to Anthem on the basis that Plaintiff did not have a meaningful opportunity to offer neurocognitive testing results prior to Anthem’s final denial of Plaintiff’s appeal. The court explained that the factual deficiencies in the underlying record may impede the court’s evaluation of the dispute and this weighs in favor of remand for further development of factual, objective evidence regarding Plaintiff’s medical condition.
McBurnie v. Life Ins. Co. of N. Am., No. EDCV161250JGBKKX, 2017 WL 2457447 (C.D. Cal. June 6, 2017) (Judge Jesus G. Bernal). The court found that LINA was justified in denying Plaintiff’s long term disability benefits during the “any occupation” period under the plan. The court found that Plaintiff does suffer from severe pain but her experience of pain does not suffice to establish an inability to work. Although in the de novo review context it is still relevant whether or not LINA engaged in a “meaningful dialogue” with Plaintiff about her claim, the court found that LINA complied with ERISA’s requirement to inform Plaintiff what information was needed to perfect her claim.
Gallegos v. Prudential Ins. Co. of Am., No. 16-CV-01268-BLF, 2017 WL 2418008 (N.D. Cal. June 5, 2017) (Judge Beth Labson Freeman). On de novo review of a long term disability denial for Plaintiff disabled by systemic lupus erythematosus, the court granted Plaintiff’s motion for judgment in part and denied Prudential’s motion. The court found that Prudential’s prior finding of disability for five months weighs in favor of finding disability. It also found that Plaintiff’s treating doctors and the functional capacity evaluations support that she was “more likely than not” disabled under the terms of the ERISA plan. Prudential’s doctors failed to take into account the side effects of Plaintiff’s medication and stress of her job, which contribute to her disability. The court also explained that the sporadic nature of lupus flares precludes consistent work capacity. Additionally, the SSA found Plaintiff disabled. The court remanded the claim to Prudential to make a determination about “any occupation” disability.
Prelutsky v. Greater Georgia Life Insurance Company, __F.App’x__, 2017 WL 2406730 (11th Cir. June 2, 2017) (Before MARTIN, JORDAN, and ROSENBAUM, Circuit Judges). The court reversed the grant of summary judgment in favor of Plaintiff on his claim for long term disability benefits. Although the district court found that Plaintiff was intoxicated at the time of his disabling fall down the stairs, it found that the evidence did not support a causal link between Plaintiff’s intoxication and his fall. The 11th Circuit noted that in order for the Intoxication Exclusion to apply, it is not enough merely to show that Plaintiff was intoxicated at the time of his injury. Defendant has to show that the injury was “caused by, resulting from, or related to” his intoxication. The court found that Defendant had a reasonable basis to conclude that Plaintiff’s injury was, at a minimum, “related to” his intoxication, and its denial of benefits was not an abuse of discretion.
Dawson v. Cigna Corp., No. 16-23502-CIV, 2017 WL 2389690 (S.D. Fla. June 1, 2017) (Judge Robert N. Scola, Jr.). “While it appears that Dawson had at least some physical symptoms after her accident and a great deal of subjectively reported pain, LINA’s determination that Dawson failed to provide sufficient objective medical evidence of functional losses or an inability to perform her job was supported by reasonable grounds.” Cigna is entitled to summary judgment on its counterclaim for $637.50, which is the amount Plaintiff received in Workers’ Compensation benefits during the time that Cigna paid her disability benefit claim and could offset that payment.
Scudder v. Colgate Palmolive Company, No. CV167433MASTJB, 2017 WL 2367054 (D.N.J. May 31, 2017) (Judge Michael A. Shipp). In this matter where the State seeks to: (1) examine the Plan’s records to determine if Defendant has complied with the New Jersey Uniform Unclaimed Property Act; (2) determine whether Defendant is in possession of any reportable property or deliverable under the NJUUPA; and (3) escheat uncashed checks and other unpaid debts of Colgate Palmolive’s health benefits plan, the court found that ERISA completely preempts these claims and denied the motion to remand to state court. The court found that the duty Plaintiff seeks to enforce under the NJUUPA is not independent from the existence of Colgate Palmolive’s ERISA-regulated plan.
Mitchell v. NFL Player Annuity Program, No. 16 C 146, 2017 WL 2424218 (N.D. Ill. June 5, 2017) (Judge Jorge L. Alonso). Plaintiff’s action seeking an entry of judgment against the Plans for violating the state court’s divorce orders by transferring to her former husband $124,379.15 ($64,379.15 by the Annuity Program and $60,000.00 by the Disability Plan) during the pendency of the state court citation proceedings is dismissed for being preempted by ERISA.
Life Insurance & AD&D Benefit Claims
Prudential Ins. Co. of Am. v. Govel, No. 116CV0297LEKDJS, 2017 WL 2455106 (N.D.N.Y. June 6, 2017) (Judge Lawrence E. Kahn). In this dispute over life insurance benefits, the court declined to hold that a conviction for second-degree vehicular manslaughter necessarily prohibits someone from receiving the life insurance proceeds of her victim. Although a reasonable jury could find that Govel recklessly caused the insured’s death, the court cannot conclude that a reasonable jury must find that Govel committed second-degree manslaughter. Since a reasonable jury would be entitled to go either way as to whether Govel recklessly caused the insured’s death, the court denied both parties’ motions for summary judgment.
Medical Benefit Claims
Mateus v. Liberty Union Life Assurance Company, No. 1:16-CV-623, 2017 WL 2464546 (W.D. Mich. June 7, 2017) (Judge Paul L. Maloney). In light of the medical plan terms and because there is no genuine dispute of material fact that Defendants did not receive payment for the December premium during the 31-day grace period, it was rational for the plan administrator to retroactively cancel the policy when payment was not received during the grace period. Summary judgment is granted to Defendants.
Mac v. Blue Cross Blue Shield of Michigan, No. 16-CV-13532, 2017 WL 2450290 (E.D. Mich. June 6, 2017) (Judge Paul D. Borman). The court denied Defendant’s motion to dismiss Plaintiff’s complaint alleging that BCBSM’s criteria for coverage for Plaintiff and for the putative class does not include Adult Idiopathic Growth Hormone Deficiency, notwithstanding that it is a well-recognized medical condition in many patients with GHD. At the motion to dismiss stage, the court cannot determine whether or not the coverage criteria are unreviewable matters of plan design.
Ritchie Capital Mgmt., L.L.C. v. Kermath, No. 15 C 8021, 2017 WL 2378076 (N.D. Ill. June 1, 2017) (Judge Sara L. Ellis). This case involves an allegation of misclassification as an independent contractor and an attendant loss of ERISA benefits. The court found that Plaintiff adequately alleged that the independent contractor provision in the 2008 professional services agreement (the “2008 PSA”) may offend public policy so he can proceed on his claim challenging the enforceability of the 2008 PSA. To the extent the classification portion of the 2008 PSA is invalid; the Court finds it severable, which means that the waiver of benefits provision remains enforceable. The court cannot determine at the motion to dismiss stage whether Plaintiff knowingly and voluntarily waived his right to benefits so he may proceed on his ERISA claim.
Pleading Issues & Procedure
Sadlowski v. Petersen-Dean, Inc., No. C 17-1601 CW, 2017 WL 2438656 (N.D. Cal. June 6, 2017) (Judge Claudia Wilken). The court granted Plaintiff’s motion to remand to state court. Here, Plaintiffs’ original complaint and first amended complaint contained a federal claim, however, Plaintiffs effectively dismissed their federal claims when they filed their second amended complaint which did not include the FMLA claim or the claim preempted by ERISA. Defendants complained that Plaintiffs dismissed their federal claims in order to secure remand to state court, but because Plaintiffs did not include federal claims in “bad faith or for the sole purpose of putting defendants through the removal-remand procedure” and “moved for remand with all due speed after removal,” this is a permissible tactical decision.
Heldt v. Guardian Life Ins. Co. of Am., No. 16-CV-00885-BAS-NLS, 2017 WL 2417173 (S.D. Cal. June 5, 2017) (Judge Cynthia Bashant). In this action arising out of Defendant Guardian Life Insurance Company of America allegedly disclosing Plaintiff’s confidential medical information without his consent, Plaintiff filed an amended complaint which does not plead a claim under ERISA nor include the breach of contract claim that provided a basis for federal question jurisdiction under ERISA’s complete preemption doctrine. The court concluded it lacks the ability to remand these claims since diversity jurisdiction is an independent basis for subject matter jurisdiction over the claims.
Cardiovascular Specialty Care Ctr. of Baton Rouge, LLC v. United Healthcare of Louisiana, Inc., No. CV 14-00235-BAJ-RLB, 2017 WL 2408125 (M.D. La. June 2, 2017) (Judge Brian A. Jackson). “Even accepting as true Plaintiff’s allegations that Defendant—through a representative—provided a medical-necessity determination for each procedure during a telephone conversation and that Defendant maintained an online portal that conveyed information regarding a patient’s deductible amounts and out-of-pocket maximums to Plaintiff, Plaintiff’s claim for detrimental reliance fails as a matter of law.” Also, Plaintiff does not have standing to sue for benefits under ERISA since the language in the assignment in this case is not a full assignment of benefits; rather it is an authorization for Defendant to pay Plaintiff directly for services.
Statute of Limitations
Pruter v. Local 210’s Pension Trust Fund, Local 210, International Brotherhood of Teamsters, No. 16-733-CV, __F.3d__, 2017 WL 2431756 (2d Cir. June 6, 2017) (Before: CABRANES, POOLER, and PARKER, Circuit Judges). Plaintiffs’ state law claims seeking damages for fraud, breach of contract and violation of an ERISA plan arise under the Railway Labor Act and are thus preempted. But since those claims bear a close resemblance to claims brought pursuant to ERISA, the court finds it appropriate to borrow and apply ERISA’s three–year statute of limitations rather than the six–month limitations period the district court borrowed from Section 10(b) of the National Labor Relations Act. The court vacated the district court’s dismissal of the RLA claims brought against Local 210 and remanded for further consideration of that claim consistent with this opinion.
Fiorentino v. Bricklayers & Allied Craftworkers Local 4 Pension Plan And The Board Of Trustees Of The Bricklayers & Allied Craft Workers Local 4 Pension Plan, No. 16-4003, __F.App’x__, 2017 WL 2438771 (3d Cir. June 6, 2017) (Before: AMBRO, RESTREPO, and NYGAARD, Circuit Judges). Plaintiff’s claim for benefits accrued when there was a clear repudiation of her eligibility for pension benefits. She was informed that she was not a participant at the latest on December 31, 2007 so her claim began to accrue no later than that date. She did not file her lawsuit until more than six years later so her claim for benefits is untimely. Similarly, regarding the breach of fiduciary duty claim, since she had actual knowledge of the breach by December 31, 2007 at the latest, she had three years from that date to file a lawsuit.
Wilson v. A&K Rock Drilling, Inc., No. 2:16-CV-739, 2017 WL 2422800 (S.D. Ohio June 5, 2017) (Judge Algenon L. Marbley). Ohio’s former fifteen-year statute of limitations that previously existed in Ohio Rev. Code § 2305.06, not the eight-year statute of limitations, applies to the Funds’ claims for delinquent contributions.
William G. v. United Healthcare, No. 1:16-CV-00144-DN, 2017 WL 2414607 (D. Utah June 2, 2017) (Judge David Nuffer). Because Defendants failed to disclose plan limitations periods in denial letters, the Plan’s limitations period is unenforceable. This lawsuit is timely filed within the applicable state six-year statute of limitations.
Mowery v. Metro. Life Ins. Co., No. 16-CV-516-JDP, 2017 WL 2415056 (W.D. Wis. June 2, 2017) (Judge James D. Peterson). The court expressed concern that venue is not proper in the Western District of Wisconsin since there is no connection to the district except for the location of Plaintiff’s attorney. But, since objections to venue and personal jurisdiction are waivable, and neither MetLife nor Dignity Health has objected to having this case decided in this district, the court found that “venue is technically proper here, even though it does not make much sense.”
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