Home > Blog > Blog > Defined Contribution Plans > ERISA Watch – July 19, 2016

ERISA Watch – July 19, 2016

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.

Good morning, ERISA Watchers!  This week’s notable decision is In re Fidelity ERISA Float Litig., No. 15-1445, __F.3d__, 2016 WL 3748685 (1st Cir. July 13, 2016).  In this case, Plaintiffs allege that Fidelity breached its fiduciary duties under Section 404(a) (duty of loyalty) and Section 406(b) (prohibition on self-dealing) in its treatment of “float” while administering 401(k) defined-contribution retirement plans.  Float, interest earned on the cash paid out by the mutual funds, could be earned by Fidelity at two points after a plan participant requested withdrawal of funds:  (1) when the cash was in FICASH (an interest-bearing account owned and controlled by Fidelity) overnight, and, (2) for participants who opted to receive a paper check rather than an electronic transfer, when it sat in the disbursement account until the participant cashed her check.  Plaintiffs allege that Prudential breached its fiduciary duties by using float, a plan asset, for purposes other than for the benefit of the 401(k) plans.  The district court dismissed the action under Rule 12(b)(6), finding that float is not a plan asset.

The First Circuit Court of Appeals affirmed the district court’s decision.  It rejected Plaintiffs’ argument that cash received in redemption of the mutual-fund shares are plan assets just because the mutual-fund shares are plan assets prior to redemption.  The court noted that the redemption does not go, nor is intended to go, to the plan itself.  Although Fidelity is in receipt of the funds via the withdrawal process by virtue of its fiduciary relationship with the plan, this relationship is not sufficient to confer plan-asset status on everything that comes within Fidelity’s position.  The court’s decision reaches the same conclusion as the Eighth Circuit in Tussey v. ABB, Inc., 746 F.3d 327 (8th Cir. 2014).  The court acceded to the Secretary of Labor’s request to reserve decision on the issue as to whether Fidelity, in the absence of an express agreement about float, has engaged in prohibited transactions and acted disloyally.

On a housekeeping matter, where case decisions are publicly available online (i.e. Google Scholar, Justia, court websites), I will provide links to those decisions in lieu of the Westlaw link.  For all cases, I will continue to provide the Westlaw citation for future reference.  Have a great week!

Select Slip Copy & Not Reported Decisions

Attorneys’ Fees

Ninth Circuit

Breach of Fiduciary Duty

First Circuit

  • In putative class action matter where Plaintiffs alleged that Fidelity breached two fiduciary duties by using certain plan assets other than for the benefit of the plans, affirming dismissal of case and holding that “float” (interest earned on the cash paid out by the mutual funds) is not a plan asset; reserving decision on the issue as to whether Fidelity, in the absence of an express agreement about float, has engaged in prohibited transactions and acted disloyally. In re Fid. ERISA Float Litig., No. 15-1445, __F.3d__, 2016 WL 3748685 (1st Cir. July 13, 2016) (Before Thompson, Circuit Judge, Souter, Associate Justice, and Kayatta, Circuit Judge).

Fifth Circuit

  • In matter challenging an amendment to a 401(k) plan, holding that employer (Acme) and parent (Berkshire) did not violate retirement plans and did not breach their fiduciary duties, and employees stated a claim that amendment to ERISA plans was unreasonable. Specifically, the court affirmed dismissal of breach of fiduciary duty claims against Acme, where the court found that Acme acted akin to a settlor of a trust, rather than in a fiduciary capacity, when it implemented the amendment.  The court also affirmed dismissal of derivative breach of fiduciary duty claim against Berkshire, but reversed district court’s dismissal of claim against Berkshire seeking to enforce a contractual commitment rather than a vested benefit under ERISAHunter v. Berkshire Hathaway, Inc., No. 15-10854, __F.3d__, 2016 WL 3710253 (5th Cir. July 11, 2016) (Before CLEMENT and OWEN, Circuit Judges, and JORDAN, District Judge).

Tenth Circuit

Disability Benefit Claims

Fourth Circuit

Eleventh Circuit


Sixth Circuit

  • In a long term disability matter, ordering that the deposition of Hartford’s Rule 30(b)(6) designee be taken in the corporation’s principal place of business and deposition of its two employees be taken in their respective places of residence. Regarding permissible topics of discovery, the court permitted limited inquiry into:  Hartford’s training of claims personnel to comply with the ERISA claim regulations; and any incentive, bonus, or reward programs or systems that Hartford has for its disability claims personnel (but not compensation paid to specific employees).  Court denied discovery into:  further inquiry into Hartford’s claims unit organizational structure; Hartford’s reduction of monthly benefits by “Other Income Benefits” as well as its collection practices related to these benefits; and Hartford’s earnings and profits for its disability claims unit, including its use of claim closure targets and tracking of reservesDavis v. Hartford Life & Accident Insurance Company, No. 3:14-CV-00507-TBR, 2016 WL 3843478 (W.D. Ky. July 13, 2016) (Judge W. Keith Watkins).

Seventh Circuit

  • In a long term disability matter where Plaintiff argued that Aetna’s vocational consultants failed to provide a labor market survey and that a vocational report’s underlying data did not show available jobs within a reasonable geographical area, the court disagreed with Plaintiff’s assertions and found that Plaintiff failed to show the existence of a specific conflict of interest or instance of misconduct to warrant discovery related to Aetna’s alleged structural conflict of interest. Schrock v. Aetna Life Insurance Company, No. 15 C 10582, 2016 WL 3693428 (N.D. Ill. July 12, 2016) (Magistrate Judge Mary M. Rowland).

Eighth Circuit

  • In matter challenging validity of a QDRO, granting surviving spouse’s motion to limit discovery related to the separation agreement since the court will not look beyond the Franklin County Circuit Court’s March 2015 order to determine whether it is a QDRO. But, if the court later determines that the order is a QDRO, there may be circumstances where the intent of the parties is relevant and the former spouse can seek such discovery at that pointAnheuser-Busch Companies Pension Plan v. Laenen, et al., 2016 WL 3753702 (E.D. Mo. July 14, 2016) (Judge Catherine D. Perry).

Life Insurance & AD&D Benefit Claims

Sixth Circuit

Eleventh Circuit

Medical Benefit Claims

Ninth Circuit

Pleading Issues & Procedure

Second Circuit

Ninth Circuit

  • In matter involving judgment against Debtor for self-dealing, prohibited transactions and breaches of fiduciary duty under ERISA related to the Harris Realty Pension Plan, denying Debtor’s claim of exemption under Code of Civil Procedure Section 708.550 and ordering that 100% of any distributions made to Michael F. Harris from the Rita Harris Trust, the Gilbert Harris Bypass Trust and/or the Michael Harris Discretionary Trust shall be assigned to Plaintiffs in partial satisfaction of Debtor’s outstanding judgment. Cavellini v. Harris, No. 93-CV-00057-SBA(KAW), 2016 WL 3648927 (N.D. Cal. July 8, 2016) (Magistrate Kandis A. Westmore).

Retaliation Claims

Third Circuit

Statute of Limitations

Third Circuit

Severance Benefit Claims

Fifth Circuit

  • In lawsuit for severance benefits, affirming the district court’s grant of summary judgment in favor of the employer and holding that: (1) severance agreement was an “employee benefit plan” subject to ERISA; (2) employee failed to exhaust administrative remedies on claim that employer’s property did not include electronic property; and (3) severance agreement permitted employer to require employees to return company property prior to receiving benefitsGomez v. Ericsson, Inc., No. 15-41479, __F.3d__, 2016 WL 3669965 (5th Cir. July 8, 2016) (Before SMITH, BARKSDALE, and COSTA, Circuit Judges).

Withdrawal Liability & Unpaid Contributions

Sixth Circuit

Ninth Circuit

* 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.  If you have questions about how the developing law impacts your ERISA benefit claim, contact an experienced ERISA attorney.  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. 


facebook twitter shop

*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.

Get The Help You Need Today

Inner form image


Contact Us

We know how to get your insurance claim paid. Call today at:
(510) 230-2090

Close Popup