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Your ERISA Watch – Heads I Win, Tails You Lose

Your ERISA Watch – Heads I Win, Tails You Lose: Fifth Circuit Concludes That District Court Acted Properly in Determining that Plaintiffs Who Lacked Standing to Challenge a Plan Investment Were Likely to Win

Ortiz v. American Airlines, Inc., No. 20-10817, __ F.4th __, 2021 WL 3030550 (5th Cir. July 19, 2021) (Before Circuit Judges Smith, Stewart and Ho).

This is a case of procedural luck for defendants. If plaintiffs had the benefit of relitigating this case with 20/20 hindsight, the case would likely have played out much differently.

Participants in a 401(k) pension plan filed this putative class action against American Airlines, its Pension Assets Administration Committee and the American Airlines Federal Credit Union (FCU), alleging the capital preservation investment option offered by FCU, a demand-deposit fund that acts like an interest-bearing checking account, was an imprudent investment choice, and that defendants therefore acted imprudently in failing to remove the option from the plan. They also alleged the defendants were holding the FCU fund as an investment option for their own benefit, mainly because FCU was using plan assets to increase interest rates for accounts of other customers and not for the benefit of the plan and therefore also acted disloyally with respect to this investment option. Plaintiffs contended the plan should have had a stable value fund as the capital preservation investment option.

District Court Proceedings

Shortly after the case began, the parties reached a settlement of $8.8 million. Plaintiffs filed a motion for preliminary approval of the settlement, but the court denied the motion because plaintiffs could not show how an $8.8 million settlement of an alleged loss between $55 and $88 million was reasonable. The Fifth Circuit opinion jumps to the court then denying plaintiffs’ motion for class certification. This left me scratching my head. Looking back at the district court’s original order on motion for summary judgment, Ortiz v. Am. Airlines, Inc., one can see how procedurally drawn out this case has been.

In any event, in late 2017, after denying defendants’ motion to dismiss, the court ordered plaintiffs to file a motion for class certification by April 23, 2018. To support their motion, plaintiffs engaged three experts, none of whom the court found helpful in deciding the motion for class certification. The Judge then held a telephonic hearing to address what the court found were inadequacies in plaintiffs’ motion. Following the hearing, the court ordered additional briefing on several questions mainly related to whether the case should proceed as a class action or simply a representative action on behalf of the plan. More than two years later, in July 2020, after the parties engaged experts to provide opinions on class certification, the court denied the motion for class certification, finding a representative action on behalf of the plan to be sufficient.

Fifth Circuit Finds No Standing under Thole

In the midst of the class certification briefing, the Supreme Court issued Thole v. U.S. Bank, N.A., bringing into question whether the plaintiffs had standing to continue to pursue their claims. The district court found plaintiffs had no standing under Thole for their breach of duty of prudence and loyalty claims against American Airlines and the Pension Committee because plaintiffs needed to establish that they would have chosen the stable value fund and plaintiffs presented no evidence supporting this argument. The court held plaintiffs had no standing because their injuries were speculative and not concrete.

The Fifth Circuit agreed but for different reasons. The Court explained there is a calculable difference between the investment returns under a stable value fund and under the FCU, which is concrete and redressable. However, plaintiffs were required to provide evidence that they would have, in fact, invested in the stable value fund. Plaintiffs did not move their funds to the stable value fund when it was added to the plan in 2015 and without any other evidence that they would have invested in the stable value fund absent the FCU fund the Court agreed plaintiffs have no standing.

No Standing Because No Causation

The Circuit then analyzed whether plaintiffs had standing to pursue their claims for disloyalty against FCU. Plaintiffs alleged they earned less in the FCU investment because FCU was using plan assets to provide loans and make other investments which benefited other customers but did not provide higher interest rates to the participants. The Court found this was sufficient to show concrete injury. However, the Court did not see a connection between the losses to the plan and FCU using plan assets for its own benefit because plaintiff did not present any evidence that other investors were receiving higher interest rates generated by the use of plan assets. The Circuit found plaintiffs lack standing because they could not show the element of causation against FCU.

Fifth Circuit Review of the Settlement

Plaintiffs had also appealed the district court’s rejection of the earlier motion for preliminary approval of the $8.8 million settlement arguing the court, at that time, denied the motion in part because it found plaintiffs were likely to succeed. Plaintiffs argued this was inconsistent with the ultimate dismissal of the entire case on summary judgment. The Circuit found the district court did not abuse its discretion in denying the motion for approval of the settlement because at that time it did not receive evidence assuring the court that $8.8 million was reasonable in comparison to the claimed losses. It further explained the district court had much less information at the time of the settlement motion than it did on summary judgment and a change of opinion was not an abuse of discretion.

Heads I win, tails you lose may be the ultimate take-away of this case for pension plan participants in the Fifth Circuit. Or maybe this case is an illustration that timing is everything.

The above notable decision summary was written by Susan L. Meter. Susan worked for BlackRock as an institutional mutual funds analyst before attending law school. Her background as a mutual funds analyst brings an invaluable perspective to the pension litigation section of Kantor & Kantor. She has a keen eye for details and fine print and enjoys getting into the weeds of evidence and putting all the puzzle pieces together.

Below is a summary of this past week’s notable ERISA decisions by subject matter and jurisdiction.

Attorneys’ Fees

Second Circuit
Jander v. Retirement Plans Committee of IBM, Case No. 15cv3781, 2021 WL 3115709 (S.D.N.Y. July 22, 2021) (Judge Colleen McMahon). Plaintiffs moved for final approval settling all claims in the action, and for an award of attorneys’ fees in the amount of 30% of the gross settlement fund, or $1,425,000, reimbursement for plaintiffs’ counsel's litigation expenses in the amount of $90,861.89, and case contribution awards of $10,000 each to plaintiffs Jander and Waksman. The court approved the settlement and award of attorneys’ fees and costs. The court found the complexity, expense, and likely duration of litigation, reaction of the class to settlement, stage of proceedings and amount of discovery completed, risks of establishing liability, damages, and maintaining the class through trial all weighed in favor of approving the settlement. The court further found that defendants had numerous arguments that could prevent plaintiff from achieving recovery, and therefore the settlement fund was reasonable. Therefore, the aggregate of factors weighed in favor of approval of the settlement. With respect to attorneys’ fees, the court found that class counsel’s request for 30% of the gross settlement fund was reasonable within the circuit and that counsel expended significant time and labor over the past six years litigating the case. The court also approved class counsel’s request for reimbursement of expenses, which were incidental and necessary to the representation of their clients and the type normally reimbursed. The court also granted each of the named plaintiffs $10,000 as a case contribution award. The court found this request was similar to other awards granted in the district. For the foregoing reasons, plaintiff’s motion for final approval of the settlement was granted and the motion for an award of attorneys’ fees and expenses and case contribution award was granted.

Breach of Fiduciary Duty

Second Circuit
Robertson v. Pfizer Retirement Committee, No. 20 CIV. 672 (GBD), 2021 WL 3077553 (S.D.N.Y. July 20, 2021) (Judge George B. Daniels). Robertson, an employee of Pfizer and a participant in its pension plan, sued the plan’s retirement committee and its third-party administrator, Fidelity Executive Services, alleging that they owed him a fiduciary duty under ERISA to inform him about the tax consequences of his retirement elections. Fidelity filed a motion to dismiss, arguing that “the provision of benefit estimates is a ‘purely ministerial function’ that cannot ‘confer fiduciary status.’” The court agreed, finding that none of Robertson’s allegations indicated that Fidelity exercised or had any authority or control, discretionary or otherwise, over plan management or administration. Thus, Fidelity had no duty to provide tax advice to Robertson, and the court granted its motion to dismiss.

Fourth Circuit
Sauls v. Liberty Mut. Pers. Ins. Co., No. CV 2:21-0288-MBS, 2021 WL 3053282 (D.S.C. July 20, 2021) (Judge Margaret B. Seymour). Price was an employee of defendant Kettler, who offered its employees long-term disability insurance and life insurance benefits insured by defendant Liberty. Price’s claim for long-term disability benefits was denied by Liberty due to a pre-existing illness exclusion. Kettler was informed by Kettler he had no option to continue or convert his life insurance coverage when he was no longer capable of working and his employment was terminated. Price’s life insurance coverage lapsed before his death because of this alleged misrepresentation by Kettler. Plaintiff, the personal representative of Prices’s estate, sued Kettler for breach of fiduciary duty in connection with the life insurance benefits and for benefits due under the disability policy. Kettler moved to dismiss the breach of fiduciary duty cause of action for failure to exhaust administrative remedies. The court denied the motion because Price was not covered under the plan at the time of his death and therefore plaintiff had no administrative remedies available to them to exhaust. The court also found that the plaintiff’s claim for benefits and breach of fiduciary duty were not duplicative of one another and denied Kettler’s motion to dismiss under that theory as well.

Ninth Circuit
In re: Prime Healthcare ERISA Litigation, No. 8:20-cv-01529-JLS-JDE, 2021 WL 3076649 (C.D. Cal. July 16, 2021) (Judge Josephine L. Staton). Plaintiffs alleged that defendants breached their fiduciary duties to manage and monitor a 401(k) retirement plan governed by ERISA. Defendants filed a motion to dismiss. On the claim for breach of fiduciary duties, the court denied defendants’ motion to dismiss, finding that plaintiffs plausibly alleged breach of fiduciary duty under ERISA based on allegations regarding defendants’ decision to include riskier and more costly funds rather than less costly and less risky funds in its plan lineup. On plaintiffs’ claim that defendant failed to monitor performance and processes of co-fiduciaries, the court rejected defendants’ argument that the claim was derivative of plaintiffs’ first claim and denied the motion to dismiss. Lastly, plaintiffs alleged, in the alternative, that if defendants were not deemed a fiduciary under ERISA, they were liable for participating in a “knowing breach of trust” under ERISA Section 502(a)(3). The court granted the motion to dismiss this claim without prejudice, explaining that 502(a)(3) authorizes only equitable relief, and plaintiffs did not sufficiently allege that their damages could be traced to particular funds or property in defendants’ possession for restitution to lie in equity.

Disability Benefit Claims

Third Circuit
Frost v. Provident Life and Accident Insurance Co., Civ. No. 19-6115, 2021 WL 3051906 (E.D. Pa. Jul. 19, 2021) (Judge Jan E. DuBois). Plaintiff was a volunteer firefighter and emergency responder. In 2007 a burning building collapsed on him, creating fourth degree burns over 60% of his body and resulting in amputation of his left arm and right leg. His insurance policy, through Provident Life, provided five years of benefits if he was unable to perform his own occupation. After five years Plaintiff needed to be disabled from any occupation. Provident Life terminated benefits in 2017, claiming that Plaintiff could find employment in some occupation after his doctor stated that Plaintiff no longer had any restrictions or limitations on his activities. Plaintiff had also filed a separate lawsuit in the same court for discrimination against him by the City of Philadelphia, alleging that he could work as a paramedic with accommodations and that he had attempted to obtain employment with the City in 2016 but had been immediately terminated when the extent of his disabilities became known. The court found that Plaintiff could perform the work of a paramedic, but determined that the reason for his termination was his failure of a retest at the Fire Academy. The court held that where Plaintiff had successfully argued that he could work as a paramedic, he could not now claim to be disabled from any occupation and was collaterally estopped from bringing his complaint.

Fifth Circuit
Messer v. The Lincoln Nat’l Life Ins. Co., Case No. 1:20-CV-00125-LY, 2021 WL 3038890 (W.D. Tex. July 16, 2021) (Mag. J. Susan Hightower). Messer filed this ERISA action regarding the amount of her benefit payments under her employer-provided long-term disability insurance policy administered by Lincoln. Lincoln approved Messer’s claim, but Messer contended her bonus should have been included in the calculation of her pre-disability income and thus she was entitled to additional benefits. Lincoln brought a motion for summary judgment, arguing that its calculation of monthly benefits was reasonable and supported by substantial evidence. The magistrate judge found that under Fifth Circuit case law, it was reasonable for an insurer to interpret the policy to include only those commissions actually paid to the insured in the basic monthly earnings calculation. Under the policy, basic monthly earnings are calculated on the insured’s W-2 form from the calendar year prior to the last day the insured worked. Messer’s basic monthly earnings were calculated based on her income from 2013, the calendar year prior to the last day she worked. However, her bonus was not issued until 2014. The magistrate found that Lincoln’s calculation of Messer’s basic monthly earnings was reasonable and did not include her 2014 bonus. Accordingly, the magistrate recommended that the district court grant Lincoln’s motion for summary judgment and enter judgment for Lincoln.

Sixth Circuit
Fitzgerald v. General Motors, LLC, No. 2:19-CV-10450, 2021 WL 3079866 (E.D. Mich. July 21, 2021) (Judge Stephen J. Murphy, III). Plaintiff sued defendants under Section 502(a)(1)(B) of ERISA to overturn a denial of disability benefits. Plaintiff also claimed that defendants violated her right to a full and fair review under ERISA Section 503, 29 U.S.C. § 1133, and that she is entitled to an order compelling production of relevant documents, per diem penalties against Defendants, interest, costs, and attorney's fees. The court concluded that defendants did not provide plaintiff with a “full and fair review.” Under the claims regulation, full and fair review under the regulation requires "that, before the plan can issue an adverse benefit determination on review on a disability benefit claim based on a new or additional rationale, the plan administrator shall provide the claimant, free of charge, with the rationale." 29 C.F.R. § 2560.503-1(h)(4)(ii). "[T]he rationale must be provided as soon as possible and sufficiently in advance of the day on which the notice of adverse benefit determination on review is required to be provided." Defendants' determination on review relied on a record review by Dr. Flippen, which was not provided to plaintiff prior to denying her benefits, thereby violating 29 C.F.R. § 2560.503-1(h)(4)(ii). The court held that the record was unclear as to whether plaintiff cannot work in any capacity (including part-time work) or cannot work at her former job (while other jobs may be possible). As a result, the court remanded the matter to the Plan Administrator for further fact-finding about whether plaintiff is disabled under the Plan, or whether she can work part time.

ERISA Preemption

Eighth Circuit
Garner v. Metropolitan Life Ins. Co., No. 4:20-CV-04182-KES, 2021 WL 3089251 (D.S.D. July 22, 2021) (Judge Karen E. Schreier). After removing this life insurance case to federal court, MetLife filed a Rule 12(b)(6) motion to dismiss on ERISA preemption grounds. Plaintiff claimed the insurance fell under the “safe harbor” provision and was therefore not an ERISA plan. Both sides looked to exhibits outside the pleadings to support their arguments. However, these exhibits referenced Lincoln Financial Group, not MetLife. Thus, the court held the exhibits did not relate to the complaint and did not consider the exhibits. Turning to the face of the complaint, there were no allegations preventing plaintiff from establishing all four elements of the safe harbor exception, and thus the court denied MetLife’s motion to dismiss.

Life Insurance & AD&D Benefit Claims

Eleventh Circuit
Mullins v. Securian Life Ins. Co., 2:21-cv-247-SPC-NPM 2021 WL 3055043 (M.D. Fla. July 20, 2021) (Judge Sheri Pollster Chappell). Defendants moved to dismiss a disputed claim for life insurance benefits by a putative beneficiary. The court found that: (1) the plan participant was terminated in 2000; and (2) neither the plan participant nor the plan designated plaintiff as beneficiary. The court further found that because none of plaintiff’s allegations supported that she qualified as a beneficiary under ERISA, she lacked standing to sue under ERISA. Accordingly, the court dismissed plaintiff’s complaint without prejudice.

Pension Benefit Claims

First Circuit
In re Biogen, Inc. ERISA Litigation, 20-cv-11325-DJC 2021 WL 3116331 (D. Mass. July 22, 2021) (Judge Denise J. Casper). Participants in a 401(k) pension plan filed a putative class action against plan fiduciaries alleging breaches of duty with respect to fees associated with certain plan investments. Defendant first argued that plaintiffs lacked standing as not all class members invested in all the mutual funds listed in the complaint. The court disagreed, finding that the named plaintiffs asserted an injury in fact, as they alleged that they personally paid excessive fees in connection with their own investments, thereby establishing injury, and asserted a sufficient claim for class standing given their joint stakes in the litigation. Next, the court analyzed defendants’ motion to dismiss plaintiff’s breach of fiduciary duty claims. The court denied the motion to dismiss with respect to the claims for breach of the duty of prudence (Count I) and duty to monitor (Count II), but granted the motion to dismiss, without prejudice, with respect to the breach of the duty of loyalty (Count I). The court also denied defendants' motion to dismiss as to plaintiffs' alternative claim for liability for knowing participation in breach of trust claim (Count III).

Plan Status

Ninth Circuit
Nathans v Unum Life Ins. Co. of America, CV 20-4977-RSWL-MRWx, __ F. Supp.3d __, 2021 WL 3053390 (C.D. Cal. July 20, 2021). In this case, litigated by Kantor & Kantor, the court dismissed Unum's ERISA defense based on the “list bill” character for a disability policy during an eight-month period in 1994. Eight months after the policy issued, Nathans relocated and his firm asked Unum to remove his premium billing from the firm’s “plan.” Unum terminated Nathans' benefits in May of 2020. In litigation, Unum asserted that ERISA barred Nathans' state law claims. In particular, Unum asserted the “Once ERISA, Always ERISA” defense. The court rejected the defense as being contrary to the Ninth Circuit's decision in Waks v Empire Blue Cross/Blue Shield, 263 F.3d 872 (9th Cir. 2001). The court acknowledged that the Waks decision was not squarely on point; however, its rationale was “instructive.” In Waks, the Ninth Circuit held that a policy converted from a group policy was not subject to ERISA. Unlike the Waks policy, the Nathans policy was never a part of a group policy, and therefore it was not technically a “converted” policy. Rather, it was always an individual policy. However, as in Waks, the ultimate policy was between the insured and the insurer and did not place any burdens on the plan administrator. The court distinguished Unum's cited authority because even if there was an original ERISA plan, the removed coverage constituted independent coverage not sufficiently related to the original plan. The Court reinforced its decision by citing the objectives of ERISA: protection of employee interests and administrative ease for employers. Neither of those objectives was implicated in this case where Nathans' employer had no connection to the removed Policy.

Pleading Issues & Procedure

District of Columbia Circuit
Trustees of the IAM Nat’l Pension Fund v. Ohio Magnetics, Inc., No. 21-928 (RDM), 2021 WL 3036854 (D.D.C. July 16, 2021) (Judge Randolph D. Moss). Plaintiff, a multiemployer pension plan, filed suit under ERISA seeking to modify or vacate an arbitrator’s award against it in favor of defendant on the ground that the arbitrator misinterpreted relevant provisions of ERISA. Plaintiff filed a separate suit on the same day against a different defendant seeking relief from another arbitrator’s award arguing that the arbitrator made the same interpretive mistake in applying the same ERISA provisions. The court granted plaintiff’s motion to consolidate the two matters, explaining that factual differences between the cases were unlikely to predominate and the two actions presented an “identical question of law.” The court concluded that the “convenience and economy” of consolidation outweighed any “confusion and prejudice.”

Third Circuit
Atlantic Neurosurgical Specialists P.A. v. United Healthcare Grp., Civ. 20-13834 (KM)(JBC), 2021 WL 3124313 (D.N.J. Jul. 22, 2021) (Judge Kevin McNulty). Plaintiffs are medical providers who sued for themselves and their patients, alleging that United intentionally fails to accept or process forms that United requires to appeal a claims decision. Defendant United Healthcare moved to dismiss the complaint against it, alleging that the plaintiffs lack standing under Article III and under ERISA, and that the plaintiffs failed to state a complaint for which relief could be granted. The court agreed that the plaintiffs lacked standing under Article III and ERISA because they were not insureds and therefore had no contract with United and suffered no harm. While plaintiffs challenged United procedures that failed to permit authorized representatives to appeal an adverse decision on behalf of the insured, the court concluded that they had no standing under either the constitution or ERISA to do so. For these reasons the court dismissed the complaint with prejudice.

Seventh Circuit
Lange v. Infinity Healthcare Physicians, S.C., No. 20-cv-737-JDP, 2021 WL 3022117 (W.D. Wis. July 16, 2021) (Judge James D. Peterson). Defendants moved to dismiss this proposed collective and class action case alleging breach of fiduciary duty for offering imprudent investment options and for paying excessive recordkeeping and administrative fees. Defendants argued first that the named plaintiff lacked standing to pursue the imprudent investment options claim because she wasn’t invested in the funds at issue nor could she prove harm in any other way. Second, defendants argued plaintiff lacked standing to pursue her claims based on alleged overpayments of recordkeeping and administrative fees because the fund she invested in did not pay any revenue sharing fees. The court agreed with both arguments finding plaintiff had no standing because she did not show injury in fact.

Malloy v. Walgreen Co., No. 20-cv-5686, 2021 WL 3054819 (N.D. Ill. July 20, 2021) (Judge Robert M. Dow, Jr.). Plaintiff sued defendants for various state and federal claims arising out of defendants’ refusal to pay retirement benefits pursuant to the terms of the Plan. Defendants filed a motion to dismiss for failure to state a claim and sought to dismiss plaintiff’s 29 U.S.C. § 1132(a)(1)(B) claim on the grounds that the plan grants Walgreens discretion, Walgreen’s interpretation of the Plan was correct and plaintiff has been paid more than what he was due under the Plan. The court denied defendants’ motion to dismiss as to the ERISA claim, explaining that critical issues remained unclear: (1) whether discretionary authority had been properly delegated to the committee that decided the claim; (2) the extent that a conflict of interest must be considered; (3) if Walgreen’s decision to deny benefits should be upheld; and (4) the contractual language was not so clear and unambiguous such that the claim could be resolved as a matter of law. As to plaintiff’s state law claims, the court declined to grant defendants motion to dismiss, concluding that it was unclear whether the plan at issue offers an employee benefit that is subject to ERISA. Defendants asserted that the plan is a “top hat” plan, which is subject to ERISA. Plaintiff asserted that the plan is an “unfunded excess benefit plan,” which is exempt from ERISA. Finally, defendants, in the reply brief, claimed for the first time that one of the defendants, Newport, should be dismissed because it was merely the plan recordkeeper. Newport, rather than file its own motion, joined in Walgreen’s motion to dismiss. The court found this to be unfair to plaintiff and declined to hear the parties’ arguments related to Newport and accordingly granted the motion to dismiss it as a defendant.

Rula A.-S. and M.Q. v. Aurora Health Care, No. 20-cv-1816, 2021 WL 3116143, (E.D. Wis. July 22, 2021) (Judge J.P. Stadtmueller). Plaintiffs sought treatment at Alpine Academy, a licensed residential treatment facility that provides sub-acute inpatient mental health treatment to adolescents. Defendant denied the claim on the grounds that Alpine provided treatment in a school setting and, therefore, was excluded from coverage. Plaintiffs sought $159,000 in benefits along with various equitable remedies. Plaintiffs also alleged that defendants violated the Mental Health Parity and Addiction Equity Act of 2008 (the “MHPAEA”). Defendants moved to dismiss the MHPAEA claim for both failing to state a claim and being duplicative of the plaintiffs’ claims for benefits. The court remarked that when it comes to pleading a case under the MHPAEA there is no clear law on how to state a violation and provided a nice discussion of the various pleading standards. As to a “facial challenge,” the court found that many of plaintiffs’ allegations constituted legal conclusions, but also concluded that plaintiffs pled that the plan imposed a quantitative treatment limitation that violated the MHPAEA when it covered out-of-network residential treatment. Defendants asserted that citing a single analog falls well short of the “substantially all” standard, but the court disagreed. Plaintiffs provided a concrete analog to compare the benefits given to mental health care versus medical care. As to an “as applied challenge,” the court found it sufficient that plaintiffs alleged that defendants do not ignore licensure of medical facilities as they do with residential treatment facilities. Finally, as to duplicative claims, the court held that at this early stage, plaintiffs are entitled to allege in the alternative as it is unclear whether dismissal is justified or the claims seek duplicative relief. Defendants motion to dismiss was denied in part and granted in part as to the relief that plaintiffs conceded was not available.

Retaliation Claims

Sixth Circuit
Rowe v. ZF N. Am., Inc., No. 3:20-CV-1296, 2021 WL 3036787 (N.D. Ohio July 19, 2021) (Judge Jeffrey J. Helmick). Plaintiff sued his former employer asserting employment discrimination, interference, and retaliation claims under the ADA, ERISA, and Ohio law. Defendant filed a motion to compel arbitration. The court compelled arbitration because “Congress intended ADA and ERISA claims to be arbitrable.” It recognized there was ambiguity regarding whether the arbitration agreement covered the ERISA claim. However, the law compelled it to resolve issues of ambiguity in favor of arbitration. The court held that plaintiff’s ERISA claims were inextricably linked to his employment relationship with ZF. The viability of these claims was dependent upon the underlying motivations for the termination of his employment relationship, such that it was reasonably foreseeable these claims would fall within the scope of his arbitration agreement with his employer.

Statutory Penalties

Seventh Circuit
Griffin v. Seven Corners, Inc., No. 4:18-CV-7-PPS, 2021 WL 3053220 (N.D. Ind. July 19, 2021) (Judge Philip P. Simon). The odd impetus for this case is an international au pair who purchased medical insurance for her adventure in the United States (patient N.V.). Dr. Griffin alleged that she performed medical services for N.V. and never got paid. According to Dr. Griffin, the au pair subsequently assigned Dr. Griffin certain rights and benefits. Pursuant to that assignment, and in the process of attempting to collect payment for the treatment she rendered to N.V., Dr. Griffin claims she asked Seven Corners to produce documents relating to the Policy, and their failure to produce all of the requested documents resulted in her sole claim that Dr. Griffin is entitled to recover statutory penalties under Section 502(c)(1) of the ERISA. However, the policy provided that it “is not assignable, whether by operation of law or otherwise, but benefits may be assigned.” The policy provided that it “shall not be assigned either in whole or in part without the written consent of the Correspondent endorsed hereon,” and Seven Corners was the Correspondent. Defendant contended that first that Dr. Griffin lacked standing to pursue the claim for statutory damages because Seven Corners did not consent to the assignment, thus there was no valid assignment of rights between Dr. Griffin and N.V. Second, defendant argued that Dr. Griffin has failed to prove the policy is covered by ERISA. The court did not reach the plan status question because it concluded that the first issue was dispositive. The court noted that “this is not Dr. Griffin's first rodeo. Indeed, she is a rather prolific ERISA litigant. Dr. Griffin has brought this same claim in multiple other lawsuits, and courts have addressed this exact same issue, holding Dr. Griffin lacked standing to sue for civil remedies under ERISA where she did not obtain a valid assignment.” Because the policy plainly and unambiguously stated that it “shall not be assigned in whole or in part without the written consent of the Correspondent endorsed hereon,” and Dr, Griffin did not obtain that consent, the court concluded that Dr. Griffin did not have the right to assert her civil penalty claims against Seven Corners.

Withdrawal Liability & Unpaid Contributions

Sixth Circuit
Trs. Of Tile, Marble, & Terrazzo Indus. Ins. Fund v. Hard Rock Stone Works, Inc., No. 19-CV-11093, 2021 WL 3089352 (E.D. Mich. July 22, 2021)(Judge Bernard A. Friedman). Individual defendants Amodeo and Franz founded and owned three companies also named as defendants. Plaintiffs alleged that the companies were alter egos of one another used to avoid rightfully owed contributions. They alleged defendants breached their fiduciary duties to plaintiffs when they failed to make required employee fringe benefit contributions to ERISA benefit plans pursuant to a collective bargaining agreement. The court determined that the defendant companies were indeed alter egos created to avoid using union labor and fulfilling union obligations. The court granted plaintiffs’ motion for summary judgment on the grounds that defendants had failed to make required contributions and also had breached their fiduciary duties to plaintiffs.

Your ERISA Watch is made possible by the collaboration of the following Kantor & Kantor attorneys: Brent Dorian Brehm, Jaclyn Conover, Beth Davis, Sarah Demers, Elizabeth Green, Elizabeth Hopkins, Andrew Kantor, Monica Lienke, Anna Martin, Susan Meter, Tim Rozelle, Peter Sessions, Stacy Tucker, and Zoya Yarnykh.

Note from the Your ERISA Watch editors:

Your ERISA Watch is edited by Elizabeth Hopkins and Peter Sessions. Each week our goal is to provide you with the benefit of the expertise of knowledgeable ERISA litigators who are on the frontline of benefit claim and fiduciary breach litigation. Although our firm represents plaintiffs, we strive to provide objective and balanced summaries so they are informative for the widest possible audience.

We include recent cases that have been picked up by Westlaw or sent to us by one of our readers. If you have a decision you'd like to see included in Your ERISA Watch, please send it to Elizabeth Hopkins at ehopkins@kantorlaw.net.

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