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Your ERISA Watch

No case of the week this week, but the courts were busy approving class action settlements and attorney's fee requests. Keep reading for more details.

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

Eighth Circuit
Sutton v. DST Systems Inc, No. 4:21-09052, 2021 WL 4896545 (W.D. Mo. Oct. 20, 2021) (Judge Nanette K. Laughrey). For the third week in a row, DST Systems, Inc. is ordered to pay the arbitration awards against it. Briefly stated, DST failed to monitor and ensure the rebalancing of overly concentrated investments in its defined contribution retirement plan. This mismanagement resulted in lawsuits from plan participants in Missouri in which DST argued successfully in favor of compulsory arbitrations. Hundreds of plan participants subsequently brought arbitration proceedings against DST. Then, a few years later in New York, other DST retirement plan beneficiaries brought another lawsuit. In New York, unlike in Missouri, DST’s arguments for compulsory arbitration failed and New York certified a class action. In an attempt to combine its Missouri and New York conflicts, DST argued in favor of mandatory class action participation for the plan participants in Missouri to join the class in New York. The court found judicial estoppel clearly applied based on DST’s contradictory stances. As there were no compelling arguments against confirming the arbitration awards, the court granted plaintiffs' motions to confirm the awards.

Attorneys’ Fees

Second Circuit
Cates v. The Trustees of Columbia Univ., No. 1:16-cv-06524-GBD, 2021 WL 4847890 (S.D.N.Y. Oct. 18, 2021) (Judge George B. Daniels). Class counsel for plaintiffs, Schlichter Bogard & Denton LLP, moved for an award of attorneys’ fees, reimbursement of litigation expenses, and awards for class representatives from a common fund created from the class action settlement. Plaintiffs, participants, and beneficiaries of the Columbia University Voluntary Retirement Savings Plan brought a class action against The Trustees of Columbia University, alleging breach of fiduciary duty and prohibited transactions. (Under the Class Actions heading below, you can read about the earlier October 13th decision, in this case, granting final settlement approval.) Class counsel requested an award of fees in the amount of one-third of the settlement fund totaling $4,333.333.33. Counsel spent 13,188 hours of attorney time and 2,288 hours of non-attorney time on the case and the court found reasonable the firm’s normal hourly rates, as follows: for attorneys with 25 years of experience or more, $1,060 per hour, for attorneys with 15-24 years of experience, $900 per hour, for attorneys with 5-14 years of experience, $650 per hour, for attorneys with 2-4 years of experience, $490 per hour, and for paralegals/law clerks, $330 per hour. The court found that the significant time and labor expended by counsel, the complexity of the litigation, the assumption of risk, the quality of representation, the reasonableness of the one-third requested fee in relation to the settlement amount, and public policy considerations all justified awarding the entire requested attorneys’ fees. The court found “the requested attorney fee award not only fair and reasonable but it is warranted for the exceptional work and significant resources devoted by (counsel) throughout this litigation.” Class counsel additionally requested $638,967.96 for reimbursement of expenses. Accounting for the complexity and magnitude of the case, the court found the costs incurred appropriate and the requested expenses legitimate. Accordingly, the request for reimbursement was approved in its entirety. Finally, as the named plaintiffs in the case were found to have provided invaluable assistance to class counsel and faced significant reputational and financial risks, the court granted the requested case contribution awards of $25,000 for each class representative. The decision here seems to prove that with great risk comes great reward.

Third Circuit
Fink v. Wilmington Trust, N.A., No. 19-1193-CFC, 2021 WL 4860683 (D. Del. Oct. 19, 2021) (Judge Colm F. Connolly). Plaintiff’s class counsel moved for final approval of settlement and for attorneys’ fees, litigation expenses, and class representative service award. The parties agreed to settle this class action for $5,500,000 into a common fund. Plaintiff argued that this payment will result in invested class members receiving $25,000 on average and non-vested members receiving $50. Plaintiff’s counsel requested a fee award of 30% of the recovery amount. As indicated at a hearing in September, the judge was willing to approve the proposed settlement agreement but had concerns regarding the requested attorneys’ fees. Specifically, the judge took issue with the 3.9 lodestar multiplier requested by counsel, finding it to be unreasonably high. The court reasoned that “the requested lodestar multiplier would be ‘double counting’ the skill and experience already presumably factored into the hourly rate.” The hourly rate requested for Gregory Porter, with 23 years of experience, was $850 per hour, and for Dan Feinberg, with 32 years of experience, was $975 per hour. The judge also factored in that the case was settled by the parties in the early stages of litigation before formal discovery had been conducted. Furthermore, the judge was skeptical that there was a serious risk of nonpayment as the attorneys had settled two other cases with Wilmington Trust involving similar circumstances of ESOPs overpaying for stock. Finally, to compare the requested fee in this case to other similar cases the court examined Swain v. Wilmington Trust. In Swain, the attorneys were awarded 33% of the recovery amount as the requested fees, but the lodestar multiplier, in that case, was only 1.7. As the lodestar multiplier here was over twice the multiplier used in Swain, the attorneys’ fees requested were deemed excessive. However, because the attorneys invested approximately 600 hours of work into the case the court found they should certainly be compensated for their time and effort. Applying the 1.7 multiplier used in Swain, the judge determined an appropriate award of fees to be $720,273. The unopposed motions for final approval of settlement and for attorneys’ fees, litigation expenses, and class representative service award were denied with leave to file amended motions consistent with the order.

Class Actions

Second Circuit
Cates v. The Trustees of Columbia Univ., No. 1:16-cv-06524-GBD, 2021 WL 4839619 (S.D.N.Y. Oct. 13, 2021) (Judge George B. Daniels). Class action plaintiffs moved for final settlement approval. Plaintiffs are participants and beneficiaries of the Columbia University Voluntary Retirement Savings Plan, who brought this ERISA suit for breach of fiduciary duty and prohibited transactions against the plan’s trustees. Following the court’s order granting preliminary approval, settlement notice was timely distributed to all class members. Additionally, pursuant to the Class Action Fairness Act, notice was provided to the Attorneys General for each of the states in which class members reside, the U.S. Attorney General, and the U.S. Secretary of Labor. The court concluded that all the requirements of Federal Rule of Civil Procedure 23(c)(2), due process, and the Class Action Fairness Act were met. Furthermore, class members had the opportunity to be heard on all issues regarding the resolution and release of their claims to the court. The court overruled every objection to the settlement with prejudice. Therefore, the motion for final approval of the settlement agreement was granted and settlement was approved as fair, reasonable, and adequate. The settlement administrator was directed to determine the share of the net settlement amount allocated to each participant and former participant, resolve all further questions, and notify class counsel and defense counsel within three calendar days following the issuance of all settlement payments with a list of each person who was issued a payment and the amount of the payment.

Ninth Circuit
Del Castillo v. Community Child Care Council of Santa Clara County Inc., No. 17-cv-07243-BLF, 2021 WL 4895084 (N.D. Cal. Oct. 20, 2021) (Judge Beth Labson Freeman). Class action plaintiffs, current and former participants of a defined contribution profit sharing plan and a non-qualified deferred compensation pension plan, moved for final approval of a class action settlement including attorneys’ fees, costs, and class representative enchantment payments. Plaintiffs brought this action alleging that defendants failed to keep required documentation of the plans and engaged in prohibited transactions. The court granted plaintiffs’ motion for preliminary approval in June of this year. The settlement provides for a settlement fund of $317,500, attorneys’ fees capped at $110,125, and attorneys’ costs of $9,645.55. The settlement administrator additionally requested $10,000 and the named plaintiffs sought an award of $20,000, or $5,000 for each of the four class representatives. No settlement class members opted out of the class, nor were any settlement objections filed. Evaluating the settlement for approval under Federal Rule of Civil Procedure 23, the judge found all requirements met and the proposed settlement to be adequate, fair, and reasonable. Additionally, the court found the $110,125 sought in attorneys’ fees, approximately one-third of the settlement fund and approximately one-third of the lodestar, to be reasonable. The court also found that the hourly rates charged by class counsel, which the decision did not specify, have been approved by courts throughout California, further supporting their reasonableness. The requested $9,645.55 in costs and $10,000 settlement administrator fee were also found to be reasonable by the court. However, the requested $20,000 service award for the named plaintiffs was deemed excessive. Given the settlement fund was only $317,500, the judge determined a reasonable service award to be $2,500 for each of the four class representatives totaling $10,000. Plaintiffs’ motions, as modified, were thus granted.

Foster v. Adams & Associates, No. 18-cv-02723-JSC, 2021 WL 4924849 (N.D. Cal. Oct. 21, 2021) (Magistrate Judge Jacqueline Scott Corley). Class action participants brought this ERISA suit alleging that defendants breached their fiduciary duty, participated in prohibited transactions, failed to make required disclosures, and improperly agreed to indemnification in the Adams & Associates Employee Stock Ownership Plan. The ESOP purchased 100% of the stock of Adams & Associates, Inc. for $33.5 million. Shortly before the trial was to commence, the parties reached a settlement agreement and moved for preliminary settlement approval. The class is comprised of all participants of the ESOP from October 25, 2012 to December 31, 2020 who vested under the terms of the plan and those participants’ beneficiaries. The class was estimated to have 2,800 individuals. Under the proposed settlement the non-Adams & Associates defendants agreed to pay $3,000,000 into a settlement fund to be divided among class members minus any court-approved expenses including attorneys’ fees, litigation costs, and representative enhancement payments. The non-Adams & Associates defendants will bear all costs of settlement administration. As the court has already certified the class under Rule 23(b)(1) and (b)(2), the only information needed for approval of the settlement class was whether the proposed settlement calls for any change in the class certified, or the claims, defenses, or issues of the dispute. Plaintiffs only requested one change to the certified class, which was the end date. This change was found not to alter the reasoning underlying the court’s prior order, and the court granted preliminary approval of the settlement class. In regard to the settlement agreement itself, the court found the parties engaged in extensive fact and expert discovery and that plaintiffs had sufficient information to broker a fair settlement. The settlement agreement was the product of serious, informed, and non-collusive negotiations. Further, no obvious deficiencies were found in the agreement. Nor was any preferential treatment given to any class member. The settlement agreement for $3,000,000 is approximately 28.5% of the maximum amount of the loss determined by plaintiffs’ expert. The court concluded that the risks and costs of continued litigation against the relief of the settlement agreement warranted granting preliminary approval. Noting that class counsel intended to file a motion for $1 million in attorneys’ fees, representing a third of the settlement amount and approximately 40% of class counsel’s lodestar, the court indicated that plaintiffs’ motion for attorneys’ fees should include declarations and billing records for the court to determine an appropriate lodestar figure and allow class members the opportunity to object. For the reasons stated above, the court granted plaintiffs’ unopposed motion for preliminary approval of the class action settlement.

Discovery

Eighth Circuit
Stallings v. The Procter & Gamble Disability Committee, No. 1:20-cv-270-MTS, 2021 WL 4902328 (E.D. Mo. Oct. 21, 2021) (Judge Matthew T. Schelp). Plaintiff Robert Stallings filed this ERISA suit for breach of fiduciary duty and wrongful denial of benefits against defendant the Procter & Gamble Disability Committee after he was denied disability benefits. Plaintiff argued that denial of his claim was biased, inconsistent with earlier determinations, and failed to give his medical evidence a full and fair review. Plaintiff moved for discovery, requesting limited written discovery, and two depositions of individuals with information on the denial and how the review was conducted. Mr. Stallings argued that he demonstrated good cause for discovery because a conflict of interest exists and procedural irregularities are present. Defendants conceded a conflict of interest exists as they were both the insurer and plan administrator but argued that they have “taken substantial steps to ensure any conflict of interest does not impact the benefit determination process.” Defendants further argued that none of plaintiff’s alleged procedural irregularities were substantiated by the administrative record. The court determined that plaintiff should be allowed to conduct the limited discovery requested to determine whether policies meant to safeguard against the conflict of interest existed and if they were used here. Additionally, the court concluded that the requested discovery was warranted to determine why evidence relating to plaintiff’s disability conditions were considered in previous evaluations but not during the evaluation at issue here. As the discovery requested was far from a “fishing expedition,” plaintiff’s motion was granted.

Life Insurance & AD&D Benefit Claims

Fifth Circuit
Talasek v. National Oilwell Varco, No. 21-20069, __ F.4th__, 2021 WL 4860133 (5th Cir. Oct. 19, 2021) (Before Circuit Judges Owen, Clement, and Duncan). Plaintiff Erica Talasek brought suit seeking supplemental life insurance benefits totaling $300,000 from a group policy sponsored by her late husband’s employer, National Oilwell Varco, and insured by Unum Life Insurance Company of America. In November of 2013, Mr. Talasek, who had signed up for the supplemental life insurance program, received a “benefits confirmation statement” from Unum, stating his benefits would begin in 2014 but that Mr. Talasek would first need to complete an “evidence of insurability” form before his coverage could begin. Mr. Talasek submitted that form on January 2, 2014. Later that same month, Mr. Talasek was diagnosed with pancreatic cancer. Because of abnormal blood and urine sample results, Unum informed Mr. Talasek in March that it was “not able to approve the insurance coverage listed.” On Christmas Eve 2017, Mr. Talasek died. Throughout the entire four-year period from when Mr. Talasek signed up for the supplemental benefits until his death, the Talaseks had received statements from National Oilwell Varco reflecting the supplemental life insurance elections made in 2013 and showing that NOV was deducting funds from Mr. Talasek’s paycheck for that upgraded coverage. The statements from NOV did not indicate the “suspended” coverage determination, as Unum’s correspondence had. When Ms. Talasek submitted a claim for the $300,000 supplemental life insurance benefits, Unum denied the payment and indicated it had rejected Mr. Talasek’s application for supplemental coverage in the March 2014 letter. After an unsuccessful appeal, Ms. Talasek brought suit against Unum and NOV asserting a benefit claim, as well as claims for fiduciary breach, negligence and estoppel. The district court dismissed the fiduciary breach and negligence claims and found in favor of defendants on summary judgment. In her appeal, Ms. Talasek challenged only the district court’s grant for summary judgment in favor of NOV on her estoppel claim. Although the circuit judges found that NOV clearly misrepresented the status of Mr. Talasek’s life insurance coverage by continuing to deduct premiums from his paychecks and sending out inaccurate annual benefits statements, the circuit judges agreed with the district court that the Talaseks’ reliance on NOV's documents was not reasonable. The “summary of benefits” provided by Unum was determined to be the governing document. The Talaseks could not reasonably rely on NOV's representations rather than the unambiguous group policy language. The opinion held, “our precedent clearly indicates that an employee cannot reasonably rely on informal documents in the face of unambiguous terms in insurance plans.” Thus, Ms. Talasek was found unable to establish the necessary elements of her estoppel claim. The Fifth Circuit affirmed the district court’s decision.

Ninth Circuit
Earle v. Unum Life Ins. Co., No. 20-55868, __ F. App’x__, 2021 WL 4871785 (9th Cir. Oct. 19, 2021) (Before Circuit Judges Graber, Christen, and Owens). Plaintiff Elaine Marie Walker Earle appealed the district court’s judgment concluding that Unum Life Insurance Company of America correctly denied Ms. Earle’s claim for AD&D benefits for the loss of sight in her right eye. The policy at issue contained a preexisting condition exclusion. In reviewing the denial of benefits, the district court applied the “substantial contribution” rather than the “proximate cause” standard because the exclusionary provision in Unum’s AD&D plan was conspicuous. On appeal, the Ninth Circuit agreed that “substantial contribution” was the correct legal standard. The district court concluded that Ms. Earle’s preexisting vitreomacular traction substantially contributed to the vision loss and that Ms. Earle was likely to have developed a macular hole even without her fall. The district court further found that Ms. Earle would not have developed a macular hole without her preexisting disorder. Concluding that this factual finding was not clearly erroneous, the Ninth Circuit affirmed the district court’s decision. The court added that its conclusion would be unaffected even under a stricter standard of review as urged by Ms. Earle.

Medical Benefit Claims

Seventh Circuit
McGinnis v. Costco Wholesale Corp. Employee Benefits Program, No. 20 C 50445, 2021 WL 4844094 (N.D. Ill. Oct. 18, 2021) (Judge Philip G. Reinhard). Plaintiff Sally McGinnis brought this lawsuit against Costco Wholesale Corporation Employee Benefits Program, Costco Benefits Committee, and Costco Wholesale Corporation for violation of the terms of the summary plan description, breach of fiduciary duty, and disclosure violations for failing to provide notice of plan benefit rights and failing to provide a summary plan description. When Ms. McGinnis was hired, she was advised that she would become entitled to employee benefits, including health insurance, after 90 days if she averaged at least 23 hours of work per week. Although Ms. McGinnis met these requirements, and other similarly situated employees were receiving benefits, Ms. McGinnis did not receive the promised benefits. Under the summary plan description, Ms. McGinnis became eligible for benefits on the first day of the second month of employment after working 450 hours. Even under these criteria Ms. McGinnis should have still become eligible for benefits almost half a year earlier than when she was finally enrolled in the programs. Ms. McGinnis alleged this delay violated fiduciary duties. Because of defendants’ delay in enrollment, Ms. McGinnis incurred health care premiums of at least $10,000 greater than the portion of the premiums she would have paid if enrolled in the defendants’ benefit plan. Defendants moved to dismiss for failure to state a claim upon which relief can be granted. Defendants argued that Ms. McGinnis was not eligible for benefits, that she failed to exhaust administrative remedies, and that her claims were time-barred. According to the clear language of the summary plan description, the employee benefit program was available to workers classified as full-time hourly or part-time hourly employees and not to temporary or limited part-time employees. It is undisputed that Ms. McGinnis was hired as a limited part-time employee. Under the SPD, the difference between part-time hourly employees and limited part-time employees is being guaranteed to be scheduled for no less than 24 hours per week. Ms. McGinnis made no allegation she was guaranteed to be scheduled no less than 24 hours per week and therefore failed to prove she had moved to “regular part-time schedule.” The court found plaintiff’s complaint therefore failed to state a claim based on a violation of the terms of the SPD and found Ms. McGinnis was not entitled to an earlier enrollment date. Additionally, the court found there was no breach of fiduciary duty for failing to make sure she was enrolled earlier. Defendants’ argument that plaintiff failed to exhaust her administrative remedies was also persuasive to the judge, as the SPD clearly required plaintiff to file an administrative claim, which plaintiff failed to do before bringing suit. The court also agreed that plaintiff’s claims were time-barred both by the two year deadline imposed by the SPD and by the three-year actual knowledge standard of ERISA. For these reasons, defendants’ motion to dismiss was granted and plaintiff was granted leave to amend.

Pension Benefit Claims

Third Circuit
Board of Trustees, Laborers’ District Council Construction Industry Pension Plan v. Bowman, No. 21-1965, 2021 WL 4860745 (E.D. Pa. Oct. 19, 2021) (Judge Mark A. Kearney). In this interpleader case, the Laborers’ District Council Construction Industry Pension Plan sought the court’s direction pertaining to monthly pension payments following a divorce decree including a detailed property settlement agreement confirming defendant’s ex-wife’s share in the monthly stream of pension benefits based upon a specified calculation. Mr. Bowman sought an order directing the plan to pay all benefits to him alone. The only legal issue was whether the Bowmans' property settlement agreement as incorporated into the divorce decree was sufficient to entitle Ms. Bowman to a portion of Mr. Bowman’s pension plan benefits. As the property settlement agreement clearly named the pension plan and laid out precisely the start and end dates to which the order applied, the amount and percentage of the participant’s benefits to be paid by the plan to the alternate payee, and the manner in which the amount was to be determined, the court was satisfied that the agreement constituted a qualified domestic relations order under ERISA. Therefore, the court denied the husband’s motion for summary judgment and entered judgment requiring the pension plan pay the former wife her defined share of the monthly stream of pension payments moving forward.

Eleventh Circuit
MetLife Insurance Co. v. Guy, No. 2:20-cv-01308-LSC, 2021 WL 4864278 (N.D. Ala. Oct. 19, 2021) (Judge Lawrence Scott Coogler). Metropolitan Life Insurance Company brought this interpleader case against defendants Robert J. Guy, Deborah H. Kornegay, and Karen L. Stanaland to determine the correct beneficiary or beneficiaries of decedent William Guy’s retirement benefits valued at $47,900. William Guy died in 2019 at the age of 93. In early 2020, MetLife received benefits claims from the defendants. The most recent beneficiary designation, dated less than a month before William Guy’s death, named Robert Guy, Deborah Kornegay, and Karen Stanaland as equal-share beneficiaries. The next prior beneficiary designation was from 2016 and named Deborah Kornegay as the primary beneficiary to receive 100% of the plan benefits and Robert Guy as a contingent beneficiary to receive 100% of the plan benefits. On April 1, 2020, MetLife paid $15,966.66 of the plan benefits to Deborah Kornegay, which represented the undisputed portion of her share of the plan benefits. Further settlement negotiations among the defendants failed, which prompted this complaint in interpleader to resolve the dispute regarding proper distribution of the remaining benefits. The heart of the dispute was whether defendant Stanaland has a rightful claim to plan benefits. Guy and Kornegay alleged that Stanaland fraudulently induced decedent to name her as a designated beneficiary. Guy and Kornegay requested the court order distribution of the remaining benefits of $23,950 to Guy and $7,983.94 to Kornegay, essentially splitting the $47,900 of benefits in half. In October 2020, before resolution in this case, Stanaland died. MetLife filed a suggestion of death of interpleader defendant Karen L. Stanaland on April 2, 2021. After 90 days had passed after the service of the statement, no substitutions for Stanaland had been offered. Therefore, as required by Federal Rule of Civil Procedure 25, Stanaland was dismissed. On June 16, 2021, plaintiff MetLife and defendants Guy and Kornegay jointly filed a motion for dismissal and order for relief. In their joint motion, the parties request that MetLife pay the remaining plan benefits as previously described to Guy and Kornegay. As the court found no reason to alter the agreement agreed upon between Guy and Kornegay, the joint motion for entry of consent order of disbursement was granted as requested.

Pleading Issues & Procedure

Eighth Circuit
Walsh v. Craftsman Independent Union, No. 1:11 CV 87 CDP, 2021 WL 4940923 (E.D. Mo. Oct. 22, 2021) (Judge Catherine D. Perry). The court-appointed fiduciary of defendant Craftsman Independent Union Local Health, Welfare and Hospitalization fund, Receivership Management, Inc., filed a motion to reform and terminate the trust holding the asserts of the health and welfare plan. In addition, Receivership moved for an order allowing it to destroy outdated business, enrollment, and medical records of the plan. All of plaintiff’s claims against defendants were fully settled by the court in a consent judgment on June 20, 2021. Receivership’s motions were all unopposed. As of January 2020, defendant had ceased all operations and Receivership had been winding down the business and affairs of the trust and the health and welfare plan. All benefit claims had also been adjudicated and paid, and all underlying insurance contracts had been terminated. All of the health and welfare plan’s remaining assets are held in the trust, with assets valued at just over $700,000. The trust agreement required the trust to be terminated once there were no plan participants, but neither the trust agreement nor the plan document contained provisions instructing how to distribute any remaining assets when terminating the plan. In determining how to do so, the court first ruled that ERISA preempts Missouri state law applicable in such situations, as the health and welfare plan and its trust were governed by ERISA. The court therefore determined that the plan document and trust agreement violated Title 1 of ERISA, because they failed to address this situation. The court determined, however that this drafting omission was a mistake. To rectify this, the court reformed the trust agreement to insert provisions regarding final distributions of the trust assets. This amendment allowed for the remaining assets of the trust to be paid to one or more charitable organizations for a public purpose. Given the trust’s original purposes have ceased to exist, the court granted the remaining assets after payment of expenses to be used to fund a scholarship at the Southeast Missouri State University. Receivership’s motion for destruction of certain outdated records was also granted as none of the records were likely to have any use and many of the records contained personal health information.

Withdrawal Liability & Unpaid Contributions

Seventh Circuit
Laborers’ Pension Fund v. Prop. Recycling Servs. Corp., No. 15-cv-09170, 2021 WL 4844096 (N.D. Ill. Oct. 18, 2021) (Judge Andrea R. Wood). Plaintiffs are multiemployer benefit plans that brought this ERISA suit to collect unpaid contributions owed to the funds by defendant Property Recycling Services Corporation and its the sole officer and shareholder, defendant Daniel Coyne. In addition to the ERISA claims, plaintiffs also brought this action under the Labor Management Relations Act. Both parties moved for summary judgment. The collective bargaining agreement between the plaintiffs and Property Recycling required Property Recycling to make contributions on behalf of employees for pension benefits, health and welfare benefits, retiree benefits, and a training fund. If it failed to do so, Property Recycling would have to pay liquidated damages and interest on unpaid contributions. Also under the agreement, Property Recycling was required to submit monthly reports about the required payments and submit its books to the funds for audits. Finally, when Property Recycling signed the agreement, it agreed to take on substantial debt that was owed to the funds totaling $1.3 million. Property Recycling failed to make many of the payments owed to the funds under the agreement from 2014-2016. The record also showed that Mr. Coyne made personal use of Property Recycling’s assets by utilizing a business vehicle for personal purposes and by paying for transactions made on credit cards held by Mr. Coyne through his companies funds totaling about $1,400. The funds asserted that Property Recycling violated ERISA Section 1145 and was “liable for delinquent contributions, liquidated damages, interest, audit costs, and attorney’s fees and costs.” The funds also asserted that Property Recycling is liable for unpaid union dues pursuant to Section 185(a) of the Labor Management Relations Act. The court found that the funds sufficiently established through documentation that Property Recycling failed to make required contributions under the agreement, and summary judgment was entered in favor of plaintiffs against Property Recycling on these two counts. However, the judge disagreed with plaintiffs that Mr. Coyne should personally have judgment obtained against him for the unpaid contributions at issue. The court disagreed that the corporate veil ought to be pierced and found that to the extent Mr. Coyne disregarded Property Recycling’s corporate form, such actions did not rise to a level sufficient to justify piercing the corporate veil. Mr. Coyne sufficiently maintained corporate records, rented space for business operations, issued stock, and entered into written contracts, and there was no indication that Property Recycling was a front for some kind of improper activity. Essentially, the funds “failed to come forward with enough evidence… to support the conclusion that ‘the separate personalities of (Property Recycling) and (Mr. Coyne) no longer exist.’” Therefore, Mr. Coyne’s motion for summary judgment was granted, and plaintiffs’ motion for summary judgment was granted only against Property Recycling.

Note from the Your ERISA Watch editors:

Your ERISA Watch is written and edited by Elizabeth Hopkins and Peter Sessions, with the assistance of Emily Hopkins. 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.

And don't forgot to check out the ERISA Watch podcast, which tells the true stories behind the cases. The newest episode is a moving interview with a 911 first responder who describes his resulting physical and psychological trauma and his struggles to get the World Trade Center Health Fund to pay for the costs of his healthcare treatment. You can listen to this podcast and other episodes here.

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