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ERISA Watch – November 26, 2014

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.

First Circuit


In Forristall v. Fed. Exp. Corp., No. CIV.A. 13-11454, __F.Supp.3d___, 2014 WL 6629256 (D. Mass. Nov. 21, 2014), the court granted summary judgment to Fedex where Fedex argued that Plaintiffs’ claims for wrongful discharge, negligent misrepresentation, intentional misrepresentation, and promissory estoppel are preempted by ERISA. The Plaintiff was a longtime and successful employee of Fedex. In January of 2003, Plaintiff and his then-wife divorced and Plaintiff was required to maintain his present group medical insurance policy, (Cigna), or its equivalent for his then-wife for so long as she is able to be covered at no additional cost to Plaintiff. Plaintiff notified his then-manager of his divorce and the obligations imposed by the Divorce Judgment (including payment of child support and alimony). The then-wife continued her coverage under Fedex’s group health insurance plan until March of 2010, when Plaintiff approached his current manager with a request to be given two days off work to propose to his girlfriend. Plaintiff also asked about removing his ex-wife from his health insurance plan and substituting his soon-to-be bride in her place, at which time Plaintiff was informed that she should never have been kept on the plan after the divorce. Plaintiff was first suspended with pay, then later without, and ultimately terminated, allegedly because the ex-wife had been wrongfully extended coverage under Plaintiff’s insurance plan.

The court determined that the crux of Plaintiff’s claims is that he reasonably relied to his detriment on his former manager’s implicit representation that he could permissibly keep his ex-wife on his Fedex group health plan as his designated spouse (and thus satisfy the Divorce Judgment). In arguing against ERISA preemption, the Plaintiff contested that he is not attempting to claim plan benefits and the disposition of his claims does not require analyzing the plan because he does not dispute his ex-wife’s ineligibility for plan coverage after their divorce. The court reasoned that the 1st Circuit’s more recent decision in Zipperer v. Raytheon Co., 493 F.3d 50 (1st Cir. 2007) makes clear that these distinctions do not alter the outcome. In Zipperer, the 1st Circuit found preempted an employee’s claim that his employer’s negligent recordkeeping led to his reliance on an erroneous estimate of his retirement benefits in electing early retirement. The court rejected Zipperer’s contention that his claims related only to the negligent recordkeeping and not the retirement plan, and that he was seeking only negligence damages and not a reinstatement of benefits. The court determined that Zipperer’s claims are preempted because the claims can only be evaluated with respect to the employer’s recordkeeping responsibilities for the plan under ERISA.

In this case, Plaintiff argued that Fedex’s liability stems from the former manager’s mistaken impression that the ex-wife remained eligible for coverage under the insurance plan after the divorce and his failure to correct the relevant data entries in Fedex’s computer system. The court found that this argument directly touches on Fedex’s recordkeeping and disclosure duties as an ERISA plan administrator, which include providing participants with an accurate written description of the plan. To permit plan participants to bring state law claims premised on oral explanations that deviate from the statutorily required written plan description would undo Congress’s intent of insuring the integrity and consistency of ERISA plan administration. Further, allowing a claim to proceed under Massachusetts law would impermissibly lead to inconsistent state regulations, as state courts develop different substantive standards applicable to the same employer conduct, requiring the tailoring of plans and employer conduct to the peculiarities of the law of each jurisdiction. Because the court found that Plaintiff’s claims are “inseparably connected” to Fedex’s administration of its group health plan, they are preempted by ERISA.

Unreported Decisions

Attorneys’ Fees

James v. Grp. Life & Health Benefits Plan for Employees of Participating AMR Corp. Subsidiaries, No. 3:11-CV-00051-ST, 2014 WL 6474929 (D. Or. Nov. 19, 2014) (in matter where Court reversed the Plan’s decision to deny Plaintiffs’ medical benefits of $21,874.15 pursuant to a group insurance policy, awarding Plaintiffs’ requested attorneys’ fees in the sum of $40,755.00 and costs in the sum of $350.00, finding that no special circumstances exists for denying the prevailing Plaintiffs fees and all time requested was reasonably expended).


Tracia v. Liberty Life Assur. Co. of Boston, No. CIV.A. 13-13248-JGD, 2014 WL 6485873 (D. Mass. Nov. 19, 2014) (denying Plaintiff’s Motion to Take Limited Discovery concerning the number and outcome of medical reviews undertaken by James Lee Lewis, M.D., Harold E. Gottlieb, M.D. and Ephraim K. Brenman, D.O., all of whom had participated in the review of his file which resulted in the denial of his long term disability claim, and information and documents about the relationship between Liberty and MCMC LLC, the entity which procured the services of the doctors for Liberty, because Plaintiff did not meet his burden of making a showing of colorable bias).

ERISA Preemption

Malbrough v. Kanawha Ins. Co., No. 2:11-CV-1842, 2014 WL 6455775 (W.D. La. Nov. 17, 2014) (suit brought by beneficiaries of life insurance and AD&D benefit policy against broker hired by employer to gather information about available group insurance policies, where the broker failed to disclose a limitation on the amount of available benefits and decedent signed up for more benefits than for which he was eligible, finding that the claim against the broker was not preempted by ERISA because the broker was not the decedent’s employer or a fiduciary of the Plan).

Pension Benefit Claims

Caban v. Employees Sec. Fund of Elec. Products Indus. Pension Plan, No. 10-CV-00389 SMG, 2014 WL 6473495 (E.D.N.Y. Nov. 18, 2014) (granting summary judgment to the Pension Plan on Plaintiff’s claim for a larger disability retirement pension benefit, finding that: 1) it was not arbitrary or capricious for Defendants to apply the version of the Plan in effect when Plaintiff applied for his pension, and not an amendment adopted later, when determining the amount of Plaintiff’s pension benefit; and 2) whether or not the amendment should have been applied is immaterial because Plaintiff would not have been entitled to a larger pension benefit than the one he was awarded even if his pension amount had been calculated pursuant to the terms of the amendment).

Myers v. Bricklayers & Masons Local 22 Pension Plan, No. 3:13-CV-75, 2014 WL 6469104 (S.D. Ohio Nov. 17, 2014) (overruling Plaintiffs’ motion to vacate court’s previous order dismissing their claims based on the finding that disability retirement benefits are non-accrued employee welfare benefits and ERISA’s non-forfeiture and anti-cutback provisions do not apply; rejecting Plaintiffs’ new argument that the Fund commingles its pension funds and disability retirement funds in violation of § 186(c)(5) (C), such that the Defendants should be precluded from arguing that the disability retirement benefits at issue are non-accrued employee welfare benefits that are exempt from ERISA’s non-forfeiture and anti-cutback provisions).

Pleading Issues & Procedure

Levy v. Young Adult Inst., Inc., No. 13-CV-02861 JPO SN, 2014 WL 6611454 (S.D.N.Y. Nov. 21, 2014) (in matter seeking to recover benefits due or obtain other appropriate equitable relief under the terms of a Supplemental Pension Plan and a Life Insurance Plan and Trust, where Plaintiffs sought to add three claims for equitable relief under § 502(a)(3)(B) of ERISA: 1) an order of restitution, disgorgement of profits, and the imposition of a constructive trust or equitable lien; 2) a derivative claim for restitution, disgorgement of profits, and the imposition of a constructive trust or equitable lien; and 3) specific performance to prevent alleged misuse of trust assets, denying motion for leave to amend the Third Amended Complaint because: 1) existence of adequate relief under § 502(a)(1)(B) precludes Plaintiffs’ claims for equitable relief under § 502(a) (3); 2) Plaintiffs’ claims under § 502(a)(3) are not available in equity; 3) derivative actions are unavailable under ERISA § 502(a) (3); and 4) Plaintiff’s claim for specific performance fails the requirements of ERISA § 502(a)(3)).

Wit v. United Behavioral Health, No. 14-CV-02346-JCS, 2014 WL 6626894 (N.D. Cal. Nov. 20, 2014) (denying Defendant’s motion to dismiss Plaintiffs’ claims against UBH for breach of fiduciary duty, including: 1) Violation of Fiduciary Obligations pursuant to ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), based on allegation that UBH developed guidelines that are far more restrictive than those that are generally accepted, and seeking declaratory, injunctive, and equitable relief in the form of a “surcharge”; 2) Equitable Relief pursuant to ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3)(A), seeking equitable relief only to the extent that the Court finds that the injunctive relief sought by the other claim are unavailable; and 3) Other Appropriate Equitable Relief pursuant to ERISA § 502(a)(3)(B), 29 U.S.C. § 1132(a)(3)(B), seeking equitable relief only to the extent that the Court finds that the injunctive relief sought to remedy other alleged violations are unavailable pursuant to 29 U.S.C. § 1132(a)(1)(B), and seeking a surcharge for Defendant’s alleged unjust enrichment).

Perez v. PBI Bank, Inc., No. 3:13CV1400 PPS, 2014 WL 6606088 (N.D. Ind. Nov. 20, 2014) (in suit brought by U.S. Department of Labor against PBI Bank and the ESOP Plan, alleging that the Bank violated ERISA by its actions as the trustee of the Plan by overpaying for company stock at a price of $40 million based on an inflated valuation far above the stock’s fair market value, and approved financing for the purchase at an excessive interest rate, where Bank filed a third-party complaint for indemnification and contribution against the company and six individuals each of whom was either a seller of stock to the ESOP or a recipient of other compensation or consideration in the transactions complained of in the DOL’s complaint, denying Bank’s motion to dismiss for lack of jurisdiction under Rule 12(b)(1) and rejecting Bank’s argument that ERISA’s statute of repose robs the court of subject matter jurisdiction; granting in part motion to dismiss third-party complaint to the extent that it seeks an equitable reformation claim to avoid enforcing erroneous plan terms and correct drafting mistakes in ERISA plans because the relief requested is not of the sort available by such a claim).

Comer v. Gerdau Ameristeel US, Inc., No. 814-CV-607-T-23EAJ, 2014 WL 6473786 (M.D. Fla. Nov. 18, 2014) (in suit where Plaintiffs argue that Defendants’ unilateral change to the Plan breaches the parties’ corresponding collective bargaining agreements, finding that Plaintiffs did not present a “clear and positive” showing of futility to excuse their failure to exhaust administrative remedies, and staying consideration of claims pending Plaintiffs’ exhaustion of administrative remedies).

Howse v. Owens-Illinois, Inc., No. 3:14CV00544, 2014 WL 6469121 (N.D. Ohio Nov. 17, 2014) (dismissing Plaintiff’s ERISA § 502(a)(3) and § 510 claims, finding that Plaintiff although a former employee has standing as a “participant” where, but for a fiduciary’s alleged misrepresentations or breaches, the employee would have been in a class eligible to become a member of the plan, Plaintiff was never in a class eligible to become a member of the O-I Plan, nor could have become eligible, regardless of Defendants’ actions).

Severance Benefit Claims

Feeko v. Pfizer, Inc., No. CIV.A. 11-4296, 2014 WL 6473265 (E.D. Pa. Nov. 18, 2014) (upholding Defendants’ decision to deny severance benefits to employees who they determined had been “transferred” to a “successor company of the Company or (any of its affiliates),” and not terminated, despite that the decision-making Committee had a “troubling” structural conflict of interest, including a majority of Committee members who operated under a personal conflict of interest in denying Plaintiffs’ claims for benefits).

Withdrawal Liability & Unpaid Benefit Contributions

Int’l Union of Painters & Allied Trades Dist. Council 711 Health & Welfare v. Cobra Const., No. CIV.A. 13-CV-07495, 2014 WL 6611160 (D.N.J. Nov. 21, 2014) (denying Plaintiffs’ motion for default judgment where the court determined that Plaintiffs failed to submit the CBAs covering the full period for which they seek damages, or sufficient evidence demonstrating that Defendant agreed to abide by the terms of the CBAs, such that the court cannot adequately evaluate the amount of damages that may be owed).

Trustees of the U.A. Local 393Pension Fund v. Pierce, No. C-14-00738-RMW (HRL), 2014 WL 6481873, at *1 (N.D. Cal. Nov. 18, 2014) (in suit to recover unpaid contributions owed by defendant employer Richard Alan Pierce (doing business as Pierce Plumbing), awarding default judgment in the amount of $77,354.74, which includes the amount of principal contributions owed, plus liquidated damages, attorney’s fees, and costs).

W. Virginia Carpenters Benefit Trust v. First Const. Corp., No. 2:14-CV-15425, 2014 WL 6390311 (S.D.W. Va. Nov. 17, 2014) (where the Plaintiffs alleged that First Construction failed to remit required contributions and fringe benefit contributions and failed to answer the Complaint or the Motion for Default Judgment despite proper service, directing the Clerk to enter default judgment in favor of the Plaintiffs in the amount of $80,280.35, plus post judgment interest).

Mackey v. Edde Const., LLC, No. 14-CV-922 SRN/SER, 2014 WL 6454003 (D. Minn. Nov. 17, 2014) (where Defendant failed to comply with Court’s order to produce records sufficient to permit Plaintiffs to complete the requested audit, awarding sanctions against Defendant in the form of a $50,000 lump sum compliance fine, payable to Plaintiffs within 30 days unless the contempt is purged by Defendant’s compliance with the July 21, 2014 Order, and attorneys’ fees and costs incurred by Plaintiffs for bringing the instant motion).

* 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 Parkway, 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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