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ERISA Watch – February 5, 2015

Your reliable source for summaries of recent ERISA decisions

Below is Roberts Disability Law, P.C.’s summary of this past week’s notable ERISA decisions.

D.C. Circuit

Ex-spouse not entitled to pension plan survivor benefits. In Musgrove v. Inst., No. CV 13-1794 (ABJ), __F.Supp.3d___, 2015 WL 393242 (D.D.C. Jan. 30, 2015), the court granted Defendants’ motion for judgment on the pleadings in this matter where Plaintiff brought suit challenging the denial of survivor benefits from her former husband’s pension plan. Plaintiff also claimed that TIAA-CREF and the Brookings Institution violated ERISA by failing to provide her with all of the documents and information she requested. In addition, she argued that even if she is not a beneficiary of the plan, Defendants should be estopped from denying her the survivor benefit because they previously informed her that she would receive it. The court found that Plaintiff is not a beneficiary of the Plan because the plain language of a 2009 amendment to the Plan excludes Plaintiff since she is an ex-spouse. With respect to her request for documents, Plaintiff did not contest Defendants’ assertion that she received all of the documentation and information that was relied on or “submitted, considered, or generated in the course of making the benefit determination.” Rather, she sought further documentation in order “to ascertain what, if any, notification was provided to the decedent that an amendment had been made to the Plan.” The court found that Plaintiff is not entitled to information relating to notice to the decedent unless it relates to the benefits determination, and she did not allege that it does. Lastly, the court found that Plaintiff did not establish a claim for equitable estoppel because she failed to allege that she relied to her detriment on the initial letters she received and that she has suffered prejudice a result.

PPA § 1107 does not provide relief from 29 C.F.R. § 4041.8. In Royal Oak Enterprises, LLC v. Pension Benefit Guar. Corp., No. CV 13-1040 (GK), __F.Supp.3d___, 2015 WL 364336 (D.D.C. Jan. 28, 2015), the court granted summary judgment to the Pension Benefit Guaranty Corporation (“PBGC”) in a matter where Plaintiff challenged the PBGC’s determination that it had improperly decreased the value of plan benefits after its pension plan’s termination and ordered Plaintiff to make additional payments to Plan participants. After the Plan’s termination date, Plaintiff changed the method it used to calculate certain payments to Plan participants which resulted in them receiving approximately $2.1 million less than they would have been paid under the terms of the Plan as previously written.

In its analysis, the court noted that 29 U.S.C. § 1341 provides the “[e]xclusive means” for terminating single-employer pension plans and requires plan administrators to distribute assets “in accordance with the provisions of the plan and any applicable regulations.” 29 U.S.C. § 1341(a)(1) & (b)(3)(A). Further, resolution of this matter rests primarily on the PBGC’s regulation codified at 29 C.F.R. § 4041.8, which provides that a “participant’s or beneficiary’s plan benefits are determined under the plan’s provisions in effect on the plan’s termination date.” 29 C.F.R. § 4041.8(a). Through PPA § 1107, Congress explicitly provided relief from any violations of ERISA’s anti-cutback provisions that occurred from a Plan’s compliance with required plan amendments. Under PPA § 1107, if a plan administrator amends a pension plan in order to comply with the PPA, the pension plan or contract shall be treated as being operated in accordance with the terms of the plan during the grace period and such pension plan shall not fail to meet the requirements of IRC and ERISA by reason of such amendment. Any amendment must be made on or before the last day of the first plan year beginning on or after January 1, 2009. Second, the amendment must apply retroactively to the grace period and the plan must have been operated as if such amendment were in effect during the grace period.

Plaintiff argued that PPA § 1107, accords with § 4041.8, and was in effect on the Plan termination date although it was not adopted until after the Plan’s termination. Second, Plaintiff argued that even if the PPA Amendment was not in effect on the termination date, it is permissible under § 4041.8’s exceptions for amendments that do not decrease benefits or are necessary to meet certain tax code requirements.

In rejecting Plaintiff’s arguments, the court found that the PPA Amendment was not “in Effect” on the Plan’s termination date because the PBGC’s interpretation of “in effect” is entitled to deference and § 1107 of the PPA does not provide relief from 29 C.F.R. § 4041.8. The court also found that the PPA Amendment is not a permissible post-termination amendment under Title IV of ERISA and 29 C.F.R. § 4041.8 because the PPA Amendment decreases the value of the participants’ or beneficiaries’ plan benefits under the plan’s provisions in effect on the termination date and the “decrease” in the value of plan benefits caused by the PPA Amendment was not necessary to meet a qualification requirement under section 401 of the IRS Code.

Unreported Decisions

Disability Benefit Claims

In Banks v. Aetna Life Ins. Co., No. 3:13-CV-4848-L, 2015 WL 413558 (N.D. Tex. Jan. 30, 2015), Plaintiff filed a motion seeking a remand to the plan administrator on his claim for short-term disability benefits. The court found that the case should not be remanded pursuant to general equitable principles to have any previously unavailable diagnosis or medical records considered. But, the court concluded that Plaintiff has properly invoked the court’s authority to remand based on Defendant Aetna’s failure to provide full and fair review pursuant to 29 U.S.C. § 1133 due to violations of ERISA’s procedural requirements. The court found that Aetna 1) failed to provide required disclosures pursuant to 29 C.F.R. §§ 2560.503-1(h) (2)(iii), 2560.503-1(i)(5), and 2560.503-1(j)(3); and 2) failed to identify the medical experts from whom it obtained advice on Plaintiff’s STD claim; and 3) consulted the same health care professionals at both the initial and appellate denial review stage in violation of 29 C.F.R. § 2560.503-1(h)(3)(v).


Glenn v. L. Ray Calhoun & Co., No. A-13-CA-701-SS, 2015 WL 363262 (W.D. Tex. Jan. 27, 2015), a matter involving a denial of benefits under an Occupational Accident insurance policy, the court granted summary judgment to Defendant OneBeacon for Plaintiff’s failure to exhaust administrative remedies. Plaintiff asserted that exhaustion is not mandated because the terms of the Policy do not explicitly require exhaustion. However, the court noted that the origins of the exhaustion requirement are based on judicial interpretations of the ERISA statutory scheme and Congressional intent. Plaintiff further argued that exhaustion is not required because the claim for coverage falls outside the exhaustion requirement, but the court found that the issue before the court is clearly an attack on a denial of benefits under an ERISA plan. Thus, Plaintiff was required to exhaust.

Pension Benefit Claims

In Hendrian v. AstraZeneca Pharm. LP, No. 3:13-CV-00775, 2015 WL 404533 (M.D. Pa. Jan. 29, 2015), Plaintiff retired and began receiving benefits under the AstraZeneca Defined Benefit Pension Plan. After more than three years he was notified that his benefits were miscalculated resulting in a $72.18 monthly overpayment. The Plan advised Plaintiff that he could either return the cumulative overpayment amount of $2,309.61 or allow his future payments to be further reduced. Plaintiff disputed his liability for any overpayments and objected to any reduction in his monthly benefits. The court found that for purposes of Section 502(a)(1)(B), Plaintiff cannot recover the $3,828 monthly amount stated in his Election Package because he was not entitled to that amount under the terms of the Plan. However, Defendants are not entitled to summary judgment because they have not sufficiently demonstrated the amount of benefits Plaintiff is entitled to under the Plan. Also, with respect to Defendants’ recoupment efforts, the court determined that whether Defendants’ decision to recoup Plaintiff’s overpayments was erroneous under the arbitrary and capricious standard is an issue for trial. With respect to Plaintiff’s breach of fiduciary duty claim, the court made the following findings: 1) AstraZeneca acted as a fiduciary with respect to the conduct at issue when its agent, with actual or apparent authority, communicated with Plaintiff about his benefits and options under the Plan; 2) reasonable minds could differ as to whether the miscalculation of Plaintiff’s benefits was immaterial as a matter of law; and 3) there is a genuine issue for trial as to whether Plaintiff detrimentally relied upon the miscalculated pension estimates. The court denied Defendants’ summary judgment motion on Plaintiff’s estoppel claim, finding that the multiple alleged miscommunications such as pension estimates, a benefit election package, and a benefit commencement verification letter, created an issue for trial as to whether Plaintiff can demonstrate the requisite extraordinary circumstances required to succeed on his estoppel claim. The court also denied Defendants’ motion for summary judgment on Plaintiff’s waiver and equitable restitution claims.

In Sanders v. Chrysler Grp., LLC UAW Pension Plan, No. 13-CV-11046, 2015 WL 349185 (E.D. Mich. Jan. 26, 2015), the court granted Defendant’s motion for judgment on Plaintiff’s claim seeking to recover surviving-spouse benefits allegedly due to her pursuant to her decedent husband’s employer-sponsored plan. The husband had retired under the terms of that plan on May 31, 2007, with payments effective June 1, 2007. He elected to enroll in a surviving-spouse option and had designated his former wife as beneficiary. His former wife died in August of 2008 and he submitted the death certificate to the plan but did not complete and submit the forms cancelling his surviving spouse coverage. Plaintiff and her decedent husband married on September 13, 2009 and he died a little over a year later. Plaintiff filed a claim for benefits as the surviving spouse but her claim was rejected because her husband never cancelled his surviving-spouse coverage in favor of his former wife after her death; and he never re-elected the surviving-spouse coverage, designating Plaintiff as the new beneficiary. The Board, who reviewed Plaintiff’s appeal, upheld the denial for the same reasons but later the parties agreed that the husband’s purported failure to cancel his existing surviving-spouse coverage upon his former wife’s death was not a proper basis for denying Plaintiff spousal benefits. The plan provides that any retiree who marries or remarries, subsequent to the earliest date surviving spouse coverage was in effect may elect, or re-elect, surviving spouse coverage. The plan states that “[s]uch coverage shall become effective on the first day of the third month following the month in which the Board of Administration receives a completed election form, but in no event before the first day of the month following the month in which the retired employee has been married one year.” However, “[n]o election provided [t]hereunder shall become effective under any circumstances for any retired employee whose completed election form is received by the Board of Administration after the first day of the month in which the retired employee has been married one year,” or 18 months if on or after October 1, 1999. The court observed that the plan language is not ambiguous. The terms of the plan spell out precisely what a retiree must do to elect coverage and, given those terms, the court found that the Board’s decision to deny Plaintiff benefits is reasonable, and therefore not arbitrary or capricious.

Plan Status

In McLaughlin v. Jones, No. CIV.A. 14-3430 JAP, 2015 WL 404913 (D.N.J. Jan. 29, 2015), Plaintiff sought access to the grievance procedure set forth in the collective bargaining agreement Dow Jones had negotiated with the Independent Association of Publishers’ Employees (“IAPE”), a labor union representing Dow Jones employees at its Monmouth Junction, New Jersey facility, among other locations. Plaintiff argued that a denial of access to this grievance procedure deprived him of benefits due to him under an employee benefit plan in violation of Section 502(a)(1)(B) of ERISA. The court found that Plaintiff failed to allege that he is seeking relief under an ERISA-covered employee welfare benefit plan, because the grievance procedure under the CBA, as well as the CBA itself, do not qualify as employee welfare benefit plans. The court granted Defendant’s motion to dismiss.

Retaliation Claims

In Bellegia v. Givaudan Flavors Corp., No. 1:13-CV-654, 2015 WL 421985 (S.D. Ohio Feb. 2, 2015), Plaintiff alleged that Defendant terminated his employment because he had used short-term disability benefits and FMLA leave. Interrogatory responses listed all of the customer care representatives who worked at the Cincinnati location during Plaintiff’s tenure, those who took FMLA or disability leave at any time, and those who have been terminated or left the company. Of the total of 69 employees, 18 took some period of FMLA or disability leave during that period; of those 18, 9 have left the company: one retired, two resigned for other jobs, one employee’s position was eliminated, four resigned for personal or private reasons; Plaintiff was terminated based on performance; and one was terminated two years before Plaintiff for violating company policy. The court found that this pattern for the customer care representatives does not reflect an atmosphere of hostility or retaliation against employees who exercised their right to FMLA leave or short-term disability. The court concluded that Plaintiff has not established a genuine factual dispute that the reasons cited by Defendant for his termination are a pretext for unlawful retaliation, or interference with his FMLA rights and his ERISA-protected disability benefits.

In Licona v. Nat’l Oilwell Varco, L.P., No. 4:13-CV-3599, 2015 WL 338867 (S.D. Tex. Jan. 26, 2015), the court granted summary judgment to Defendant on Plaintiff’s ERISA § 510 retaliation claim because Plaintiff cannot establish that Defendant discriminated against him with the specific intent to interfere with his ERISA rights. Here, Plaintiff appears to allege that he was retaliated against by Defendant after he complained to upper management about another employee who modified Plaintiff’s medical insurance plan without his authorization, causing calculations in his pension contributions to deviate from previous amounts and otherwise forcing him to forgo making 401(k) contributions. Plaintiff suggests that after informing Defendant of his intentions to file a lawsuit in order to stop such mismanagement, he was retaliated against under the guise of an unauthorized drug screen and alcohol breath test. The court agreed with Defendant that the record does not contain any evidence of its intention to interfere with the plaintiff’s ERISA rights or to retaliate against him to prevent him from attaining any benefits to which he would have become entitled to under an employee benefit plan. The situation regarding the modification of Plaintiff’s medical insurance benefits was eventually resolved, further dispelling any possible inference of intent. Even if Plaintiff could establish a prima facie case under § 510, his claim still fails because he cannot demonstrate that Defendant’s articulated, legitimate, non-retaliatory reason for his discharge was merely a pretext for retaliation under ERISA. Based on Plaintiff’s own admissions, he used marijuana six days prior to submitting to drug testing at Defendant’s request. Accordingly, Plaintiff failed to raise a fact issue on his ERISA retaliation claim and Defendant is entitled to judgment as a matter of law.

Retiree Medical

In Teamsters Local Union No. 340 v. Eaton, No. 2:13-CV-264-JDL, 2015 WL 413864 (D. Me. Jan. 30, 2015), the court considered whether Defendants’ interests in their health and welfare benefits as established by the 2001 plan were vested and thus could not be reduced or eliminated by the Local’s new executive board in 2013. The court found that Defendants’ interests were not vested and granted Plaintiff’s motion for judgment.

Statute of Limitations

In Trustees of the Plumbers & Pipefitters Nat. Pension Fund & Int’l Training Fund v. All Seasons Interior & Exterior Maint., Inc., No. 2:14-CV-00436-GMN-GW, 2015 WL 430708 (D. Nev. Feb. 3, 2015), Plaintiffs, who are express trusts created to represent certain organized labor unions, brought suit against Defendant All Seasons for failing to make employee benefit contributions to the trusts as required by a collective bargaining agreement entered into by All Seasons and a union represented by Plaintiffs. All Seasons failed to make the agreed upon contributions for a period between May 20, 2009 and January 20, 2010 relating to projects for which it was operating as a subcontractor for Defendant Gamma. Plaintiffs filed their Complaint on March 21, 2014. Defendants Gamma and Fidelity and Deposit Company of Maryland (“FDCM”) filed a Motion for Summary Judgment, on the basis that the statutes of limitations for Plaintiffs’ claims against them had both already run by the time Plaintiffs filed their Complaint. Under Nevada law, Plaintiffs’ claim for out-of-state general contractor liability against Gamma is limited to three years after the date contributions or premiums should have been made or paid by the subcontractor. Likewise, Plaintiffs’ claim on FDCM’s contractor license bond is limited to 2 years after the commission of the act on which the action is based. Plaintiffs did not dispute that their Complaint was filed after the running of the applicable statutes of limitations for their claims against Gamma and FDCM but asserted that their motion should be denied because of the doctrine of equitable tolling. The court declined to address the issue of equitable tolling because-despite Plaintiffs’ acquiescence on this point-it found that Gamma and FDCM have failed to present sufficient evidence showing that there is not a genuine issue of material fact concerning whether the statues of limitations have run on Plaintiffs’ claims. The court explained that under federal law, a plaintiff’s claim accrues and the statute of limitations begins to run, when the plaintiff knows or has reason to know of the injury that is the basis of the action. The court found that it is very likely that Plaintiffs knew or should have had reason to know of the deficiencies at the time All Seasons filed bankruptcy on May 25, 2012, which precipitated Plaintiffs decision to conduct the audit. Therefore, if the bankruptcy filing date begins the running of the limitations periods, then Plaintiff had until May 25, 2014 and May 25, 2015 to file its claims against FDCM and Gamma, respectively, and the Complaint would be timely for both claims. But, it is also possible that Plaintiffs knew or should have known of All Seasons’ deficient payments prior to the bankruptcy filing. The court found that it cannot make that determination as a matter of law and denied the motion.

Withdrawal Liability & Unpaid Benefit Contributions

In Upstate New York Engineers Health Fund v. FMC Demolition, Inc., No. 5:13-CV-1307 BKS/DEP, 2015 WL 401113 (N.D.N.Y. Jan. 28, 2015), a matter involving failure to remit fringe benefit contributions and deductions where the Defendant did not answer the complaint, the court granted Plaintiffs final judgment pursuant to Rule 54(b) on their first, third and fourth causes of action. The court awarded Plaintiff judgment against Defendants for the sum of $13,064.97, which includes $6,278.91in unpaid contributions and deductions,4 $1728.65 in interest, $2,024.89 in liquidated damages and $3,032.52 in attorneys’ fees and costs, plus interest thereon at the rate provided for by 28 U.S.C. § 1961(a). The court further awarded interest for the period from April 4, 2014 to date at the rates specified in its Memorandum-Decision and Order. The court also ordered Defendants to produce their books and records for Plaintiffs’ review and audit covering April 1, 2012 to date, to pay the cost and expense of the audit, to pay all auditing fees and to pay all attorneys’ and paralegal fees and costs incurred in obtaining that audit.

In Reed v. Greenworks, Inc., No. 12-72JJK, 2015 WL 364602 (D. Minn. Jan. 27, 2015), following a bench trial to determine whether Greenworks Landscaping Contracting, Inc. (“GLCI”) is liable for unpaid fringe benefit contributions pursuant to the terms of a 2007 collective bargaining agreement, the court found that GLCI did not breach the CBA by failing to make contributions to the Funds pursuant to the agreement in which Greenworks, Inc. (“GWI”) (the company from which GLCI had split into a separate entity) and Tom Grygelko (majority owner of GWI) are purported to have bound any company or entity owned or substantially under the control of GWI, or Tom Grygelko, as principals to the CBA. The court found that GLCI and its President, Karen Grygelko, were not signatories of the CBA and GLCI is an independent company, having separate ownership and management. The court also found that GLCI was not operated in a manner that indicated an effort by GLCI to take advantage of the benefits to be obtained under the CBA without incurring the obligation of an employer under the CBA. Finally, the court found that GLCI was not substantially controlled by Tom Grygelko or GWI.

In Richards v. Acme Heating & Air Conditioning, Inc., No. 2:13CV34 DAK, 2015 WL 339702 (D. Utah Jan. 26, 2015), the court granted Plaintiffs’ motion for summary judgment against Acme Heating for employee benefit plan contributions in the total amount of $45,831.76, plus interest, liquidated damages, audit fees, costs of suit and attorneys’ fees. The court also granted Plaintiffs’ motion for summary judgment against Fidelity as the payment bond surety on the construction project upon which the employee benefit plan contributions were earned by employees of Acme Heating, in the total amount of $45,831.76, plus interest, costs of suit and attorneys’ fees.

* Please note that these are only case summaries of decisions as they are reported and do not constitute legal advice. These summaries are not updated to note any subsequent change in status, including whether a decision is reconsidered or vacated. The cases reported above were handled by other law firms but if you have questions about how the developing law impacts your ERISA benefit claim, the attorneys at Roberts Disability Law, P.C. may be able to advise you so please contact us. Case summaries authored by Michelle L. Roberts, Partner, Roberts Disability Law, P.C., 1050 Marina Village Pkwy., Ste. 105, Alameda, CA 94501; Tel: 510-230-2090.


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*Please note that this blog is a summary of a reported legal decision and does not constitute legal advice. This blog has not been updated to note any subsequent change in status, including whether a decision is reconsidered or vacated. The case above was handled by other law firms, but if you have questions about how the developing law impacts your ERISA benefit claim, the attorneys at Roberts Disability Law, P.C. may be able to advise you so please contact us.

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