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ERISA Watch – May 28, 2015

It was a slow week for ERISA but our favorite case this week is Berger v. SSM Health Care of Oklahoma, Inc., No. CIV-14-872-D, 2015 WL 2455459 (W.D. Okla. May 22, 2015), where the court granted in part and denied in part the defendant’s motion to strike the jury demand on Plaintiff’s COBRA claim. Because the plaintiff’s Complaint asserts other claims for which a Seventh Amendment right to a jury trial exists, any essential factual issues which are central to both must be first tried to the jury, so that the litigants’ Seventh Amendment jury trial rights are not foreclosed on common factual issues. The court found that while Plaintiff is not entitled to a jury trial on her COBRA claim, the court’s determination of that claim must be consistent with a jury’s findings common to other claims. The court concluded that its resolution of Plaintiff’s COBRA claim must await a jury’s findings. Courts have determined resoundingly that there is no right to a jury trial in ERISA cases. Are they right? Send us your thoughts.

ERISA Watch – May 28, 2015

Your reliable source for summaries of recent ERISA decisions

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

First Circuit

Court awards attorneys’ fees and costs to successful long term disability claimant. In Gross v. Sun Life Assur. Co. of Canada, No. CIV.A. 09-11678-RWZ, __F.Supp.3d___, 2015 WL 2414471 (D. Mass. May 21, 2015), following Plaintiff’s success on her long term disability claim at the First Circuit, the district award fees at the rate of $500/hour for one of her attorneys first admitted to practice in 1985, is based in Boston (where hourly legal fees are among the highest in the country), and has decades of experience in ERISA litigation. For Plaintiff’s other attorney with 13 years of experience and based in Louisville, Kentucky, the court found that his standard billing practices and the expectations of his clients warrant a rate of $375/hour. The court also awarded $90/hour for work done by a paralegal based in Louisville. With respect to the number of hours, the court reduced the compensable time by approximately 10% of the requested hours due to the court’s determination of unnecessary and erroneous time entries. Lastly, the court downward adjusted the total lodestar to remove time spent pursuing unsuccessful claims and to reflect the quality of plaintiff’s victories.

Select Slip Copy & Not Reported Decisions

Breach of Fiduciary Duty

In Teets v. Great-W. Life & Annuity Ins. Co., No. 14-CV-2330-WJM-NYW, 2015 WL 2455464 (D. Colo. May 22, 2015) (Not Reported in F.Supp.3d), a putative class action involving a 401(k) Savings Plan’s interest rates and fees, Defendant moved to dismiss on the basis that (1) the Fund falls under the guaranteed benefit policy (“GBP”) exemption in ERISA, and thus Defendant was not an ERISA fiduciary that could have breached any fiduciary duties; and (2) Plaintiff’s Claim 3 fails because Defendant cannot be both a fiduciary and a party in interest under ERISA § 406(a). The court noted that the Contract here bears many of the indicia of a GBP as defined under Harris Trust: it allocates to the insurer the risk of loss of principal, and guarantees a benefit amount at the beginning of each quarter. But the court could not definitively conclude at this stage of the case that the rate of return was “reasonable,” that Defendant’s discretionary authority did not extend to management of Plan assets, or that the Contract’s discretionary rate model did not allocate risk to Plan participants invested in the Fund sufficient to foreclose applicability of fiduciary duties under ERISA. The court concluded that Plaintiff has stated a claim that Defendant was a fiduciary under ERISA when it took the challenged actions and denied Defendant’s motion to the extent that it contends otherwise. The court also concluded that as pled, Claim 3 alleges that Defendant has engaged in self-dealing, which is a violation of ERISA § 406(b), not (a), and is thus duplicative of Claim 2. The court dismissed Claim 3 without prejudice.

Disability Benefit Claims

In Zagon v. Am. Airlines, Inc. Long Term Disability Plan, No. 13-55866, __Fed.Appx.___, 2015 WL 2405450 (9th Cir. May 21, 2015), the Ninth Circuit affirmed the district court’s order granting summary judgment to Defendant, a self-funded long term disability plan. The court found that the district court properly declined to incorporate California’s notice-prejudice rule into ERISA federal common law.

ERISA Preemption

In Jones v. Citigroup Inc., No. CIV.A. 14-6547 ES, 2015 WL 3385938 (D.N.J. May 26, 2015), the court found Plaintiff’s claims arising out of Defendants’ administration of the 401(k) Plan to be preempted by ERISA. The gravamen of Plaintiff’s Complaint is that Defendants improperly administered his Plan Loan, foreclosed on the Plan Loan in error and refused to reimburse him for alleged tax penalties associated with the Plan Loan’s foreclosure.

In Rouse v. U.S. Steel & Carnegie Pension Fund, No. 2:15CV9 HEA, 2015 WL 2453032 (E.D. Mo. May 22, 2015), Plaintiff alleged three state law claims: breach of contract, unjust enrichment and fraud based on his allegations that he was promised health insurance coverage, complied with the requirements to receive continued coverage, was denied coverage and did not receive any notice prior to the cancellation of the coverage. The court found that these allegations fall squarely within ERISA preemption and Defendant has a right to remove Plaintiff’s claims to federal court. The court also found that Plaintiff failed to allege a claim for benefits under the terms of the plan or that he seeks recovery under the provisions of Section 1132(a)(1). As such, the court dismissed the petition and gave Plaintiff 14 days to file an amended complaint.

In Grossman v. United Parcel Serv., Inc., No. 13-CV-2824 PJH, 2015 WL 2438066 (N.D. Cal. May 21, 2015) (Not Reported in F.Supp.3d), UPS argued that the following exchange, at Plaintiff’s deposition, establishes that all of his claims arise out of UPS’ intent to deny him retirement benefits and are thus preempted by ERISA:

Q: There are three different claims that you’ve brought. I just want to be clear that all of the claims that you brought are based on the fact pattern that unfolded in February and March of 2013, that you believe was UPS moving you into a position to force you to retire such that they would avoid having to pay you a higher pension. Is that accurate?

The court found that while Plaintiff’s deposition response indicates that his claims are based solely on UPS’ intent to deny him retirement benefits; his complaint also alleges discrimination on the basis of age and those claims are not preempted.

Medical Benefit Claims

In Faison v. Donalsonville Hosp. Inc., No. 14-14939, __Fed.Appx.___, 2015 WL 3372192 (11th Cir. May 26, 2015), the 11th Circuit denied affirmed the district court’s denial of the Hospital’s Rule 60(b) motion. Defendant denied Plaintiff insurance benefits based on an Illegal Acts exclusion from coverage and the court previously affirmed the district court’s entry of judgment in favor of Plaintiff. Defendant sought relief from the judgment based on newly discovered evidence that showed that one hospital “wrote off” Plaintiff’s entire medical bill to charity. The court found that Defendant did not show that Plaintiff was not still liable to the hospital for his full medical bill. The hospital explained that the charitable credit would become null and void if Plaintiff became entitled to payment from “an employee benefit plan.”

Pension Benefit Claims

In Donati v. Ford Motor Co. Gen. Ret. Plan, No. 13-CV-14496, 2015 WL 2405613 (E.D. Mich. May 20, 2015), the Plan denied the participant’s request to pay a lump sum distribution of a retirement benefit the participant was receiving as an alternate payee of her ex-spouse. But, the Plan did approve a cash out that applied to the participant’s own retirement benefit. The court found that the cash out unambiguously applies only to the participant’s own retirement benefit. As such, the court found that discovery into the uniform application of plan provisions was not necessary. Lastly, because the language of the Plan is unambiguous, Plaintiff’s estoppel claim must fail.

Pleading Issues & Procedure

In Berger v. SSM Health Care of Oklahoma, Inc., No. CIV-14-872-D, 2015 WL 2455459 (W.D. Okla. May 22, 2015), Defendant moved to strike the jury demand on Plaintiff’s COBRA claim. The court found that an action under § 1132(a)(1)(A)-which encompasses a claim under § 1132(c) to enforce COBRA rights-does not require a jury trial. However, Plaintiff’s Complaint asserts other claims for which a Seventh Amendment right to a jury trial exists. In such a situation, when a case involves both a jury trial and a bench trial, any essential factual issues which are central to both must be first tried to the jury, so that the litigants’ Seventh Amendment jury trial rights are not foreclosed on common factual issues. The court is bound by the jury’s determination of factual issues common to both the legal and equitable claims. The court found that while Defendant is correct that Plaintiff is not entitled to a jury trial on her COBRA claim, the court’s determination of that claim must be consistent with a jury’s findings common to other claims. The court concluded that its resolution of Plaintiff’s COBRA claim must await a jury’s findings.

Retaliation Claims

In Pennington v. Engineered Packaging Servs. Co., No. 1:13-CV-826, 2015 WL 2383474 (S.D. Ohio May 19, 2015), the court granted Defendant summary judgment on Plaintiff’s ERISA § 510 claim, finding that the proximity between his termination and his surgery two years prior does not support an ERISA interference claim. Plaintiff conceded that while he was employed, he received all benefits that he was entitled to, including medical leave with full pay and continuation of health insurance. The employer’s stray comments about the rising costs of insurance are too general to raise a reasonable, plausible inference that the employer fired Plaintiff with intent to interfere with his medical benefits.

Statute of Limitations/Contractual Limitations

In Thomas v. Prudential Ins. Co. of Am., No. CIV.A. 14-00747-BAJ, 2015 WL 2406036 (M.D. La. May 19, 2015), the court found that Plaintiff’s lawsuit for long term disability benefits was contractually time-barred where the terms of the Plan require that legal action commence within three years from the time that proof of claim is required and her lawsuit was filed twenty months past the contractually required deadline. Proof of claim is required within 90 days after the end of the 180-day elimination period for that claim. Plaintiff’s disability commenced “on or about” June 26, 2009 so the elimination period would have ended on December 23, 2009. Proof of claim would have been required 90 days thereafter, by March 23, 2010. Commencement of legal action would have had to occur within three years from the time the proof of claim was required, or by March 23, 2013. Plaintiff did not file her lawsuit until December 1, 2014. The court declined to consider the Summary Plan Description which states that any defenses based on timeliness is tolled during the time that a second administrative appeal is pending. The court explained that the SPD does not constitute part of the Plan.

Withdrawal Liability & Unpaid Benefit Contributions

In Trustees of the Plumbers & Pipefitters Nat. Pension Fund v. Monarch Plumbing & Heating Co., No. 1:14-CV-1767 AJT/MSN, 2015 WL 2454273 (E.D. Va. May 22, 2015), the court ordered default judgment against Defendant Monarch Plumbing & Heating Co. in favor of Plaintiff Trustees of the Plumbers and Pipefitters National Pension Fund, in the total amount of $15,632.33 in delinquent contributions, plus interest continuing to accrue at twelve percent per annum from April 17, 2015, until full payment is made.

In Raines v. Integrity Acoustic Solutions, Inc., No. CIV. 14-2900 PAM/JJK, 2015 WL 2402523, at (D. Minn. May 20, 2015), the court found that the guaranty provision in the CBA is unambiguous and by signing the Agreement, an individual defendant agreed to be bound individually to the performance the corporation promised. Because the individual defendant agreed to be personally bound to the company’s obligations under the CBA, he therefore qualifies as an employer for the purposes of ERISA.

In Carpenters Health & Welfare Fund of Philadelphia & Vicinity v. Mgmt. Res. Sys., Inc., No. CIV.A. 14-07097, 2015 WL 2395152 (E.D. Pa. May 19, 2015), the court granted Defendants’ motion to dismiss, finding that Defendants are not bound by the 2012-2015 CBA, and rejecting Plaintiffs’ contention that the 1997 Assent Letter binds Defendants to all successive collective bargaining agreements negotiated between IFCA and the Union.

In Trustees of the Indiana State Council of Roofers Health & Welfare Fund v. Embry’s Roofing, Inc., No. 4:14-CV-00084-PPS, 2015 WL 2391136 (N.D. Ind. May 19, 2015), the court granted the Fund’s motion for default judgment against Embry’s Roofing, where the Fund claimed that Embry’s was a party to a CBA that required it to pay into the Fund and that Embry’s didn’t pay as agreed.

* 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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