Justia U.S. D.C. Circuit Court of Appeals Opinion SummariesArticles Posted in ERISA
Lewis v. Pension Benefit Guaranty Corp.
In 2005, Delta Airlines filed for bankruptcy and stopped contributing to its pilots' pension plan. Delta and the Pension Benefit Guaranty Corporation (PBGC) terminated that Plan, which had insufficient assets to support promised benefit payments, Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1301-1461. Under such circumstances, a trustee collects the remaining assets and makes promised payments according to statutory priorities. PBGC provides additional money from its own funds to make up the difference between those payments and guaranteed benefits. PBGC, the Plan's trustee, determined the Plan had a deficit of over $2.5 billion, almost $800 million of which PBGC guaranteed, and paid estimated benefits. It took six years to finalize benefit determinations. After administrative appeals by the pilots, nearly 1,700 beneficiaries sued to further challenge those determinations, citing the Administrative Procedure Act, 5 U.S.C. 706, and seeking disgorgement, arguing that the Corporation breached its fiduciary duty and controlled Plan assets for a longer period to collect “massive investment returns” rather than timely paying the pilots. The D.C. Circuit reversed the denial of the Corporation’s motion to dismiss the breach of fiduciary duty claim. Recovering the post-termination increase in the value of plan assets is not an available remedy; 29 U.S.C. 1344(c) prevents disgorgement, providing that “[a]ny increase or decrease in the value of the assets of a single-employer plan occurring after the date on which the plan is terminated shall be credited to, or suffered by, the [C]orporation.” View "Lewis v. Pension Benefit Guaranty Corp." on Justia Law
Marcin v. Reliance Standard Life Insurance Co.
Reliance challenged the district court's award of disability benefits to plaintiff under a plan pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., and the amount of benefits owed. The DC Circuit affirmed, holding that plaintiff proved partial disability. In this case, the conflict of interest factor in the standard of review, as well as plaintiff's medical record, lack of full time work, and release to return to work only "as tolerated" convinced the court that she established partial disability. The court explained that, according to the express terms of the Plan, partial disability was equivalent to total disability within the relevant period. View "Marcin v. Reliance Standard Life Insurance Co." on Justia Law
Coburn v. Evercore Trust Company, N.A.
Plaintiff, on behalf of herself and others similarly situated, filed suit against Evercore under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1109(a), 1132(a)(2)-(3). Plaintiff is a former J.C. Penney employee and investor in a J.C. Penney employee stock ownership plan (ESOP) managed by Evercore. Plaintiff claims that Evercore breached its fiduciary duties of prudence and loyalty when it failed to take preventative action as the value of J.C. Penney common stock tumbled between 2012 and 2013, thereby causing significant losses. Applying Fifth Third Bancorp v. Dudenhoeffer, the court concluded that plaintiff's complaint was properly dismissed because she failed to allege additional allegations of "special circumstances." In this case plaintiff failed to allege that the market on which J.C. Penney stock traded was inefficient. Accordingly, the court affirmed the judgment. View "Coburn v. Evercore Trust Company, N.A." on Justia Law
Foster v. Sedgwick Claims Management Services, Inc.
Kelly Foster filed suit against Appellees under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(a), to enforce her rights under short-term and long-term disability benefit plans that had been adopted by her employer, Sun Trust Bank. The district court granted summary judgment to Appellees and dismissed Foster's complaint. The district court then denied Foster's motion for reconsideration. The court affirmed the district court's finding that the short-term disability plan is an ERISA-exempt “payroll practice” under Department of Labor regulations; held that the district court appropriately applied a deferential standard of review to the administrator’s denial of benefits under the long-term disability plan because the terms of the plan unambiguously granted the administrator, and the administrator alone, the power to construe critical terms of the plan and to decide an employee’s eligibility for benefits; and held that the district court did not abuse its discretion in denying Foster's motion for reconsideration. View "Foster v. Sedgwick Claims Management Services, Inc." on Justia Law
Deppenbrook v. Pension Benefit Guaranty Corp.
Plaintiff filed suit against PBGC, alleging claims under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., and seeking to correct PBGC's benefit determinations. The court concluded that PBGC properly interpreted the provisions of ERISA and did not act arbitrarily or capriciously in declining to provide shutdown benefits to plaintiff; PBGC properly interpreted ERISA and did not act arbitrarily or capriciously in failing to insure plaintiff's individual account; and, assuming arguendo that PBGC in fact amended the pension plan, plaintiff cannot identify a statutory provision that bars PBGC from doing so. Accordingly, the court affirmed the district court's grant of summary judgment to PBGC. View "Deppenbrook v. Pension Benefit Guaranty Corp." on Justia Law
Vanderkam v. Vanderkam
John and Melissa married in 1984. John enrolled in his employer’s retirement plan and designated Melissa as the beneficiary of a qualified joint and survivor annuity. John retired in 1994. The survivor annuity irrevocably vested in Melissa; John began receiving benefits. In2002, they divorced, agreeing to a decree awarding John all “benefits existing by reason of [John’s] past, present, or future employment.” John remarried and sought to designate his new wife as the survivor annuity beneficiary. The plan advised John that this designation would be permissible if done by qualified domestic relations order (QDRO) that would not require the plan to increase benefits beyond actuarial estimates of John’s and Melissa’s life expectancies, 29 U.S.C. 1056(d)(3)(D). On John’s motion, a Texas court entered a purported QDRO divesting Melissa of all ownership interests in the survivor annuity. The employer terminated its pension plan. Pension Benefit Guaranty Corporation (PBGC) became the plan’s statutory trustee and determined that the supposed QDRO was invalid because it would require “a form of benefit, or [an] option, not otherwise provided under the plan” and because, unless waived in accordance with statutory procedures within 90 days, a spouse’s right to the survivor annuity irrevocably vests on the annuity start date. The district court upheld the determination and found John’s contract and unjust enrichment claims against Melissa preempted. The D.C. Circuit affirmed. View "Vanderkam v. Vanderkam" on Justia Law
Holland v. Bibeau Construction Co.
Bibeau appealed the district court's grant of summary judgment and order directing it, as a related person to a disabled miner's former employer, to pay health insurance premiums, interest, and liquidated damages to the United Mine Workers of America 1992 Benefit Plan. The court concluded that Bibeau's laches claim was precluded under Petrella v. Metro-Goldwyn-Mayer, Inc. because each premium installment gives rise to a separate cause of action for legal relief for which Congress has enacted a statute of limitations to govern timeliness. Further, under the Coal Industry Retiree Health Benefit Act of 1992, 26 U.S.C. 9701-9722, which incorporates the Employee Retirement Income Security Act's (ERISA), 29 U.S.C. 1451(a)(1), enforcement scheme, the district court did not err in awarding interest and liquidated damages. Accordingly, the court affirmed the judgment. View "Holland v. Bibeau Construction Co." on Justia Law
Russell v. Harman Int’l Indus.
Plaintiff filed a class action suit against his former employer, Harman, under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., alleging that Harman breached its fiduciary duties by making false and misleading statements to investment firms. On appeal, plaintiff challenged the district court's conversion of defendants' motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)(d) and grant of summary judgment to defendants without giving plaintiff a reasonable opportunity to present evidence. The court did not reach the merits of the appeal, concluding that if the district court violated Rule 12(d), the error would be harmless in this case where discovery would be futile. Accordingly, the court affirmed the judgment. View "Russell v. Harman Int'l Indus." on Justia Law
Stephens, et al. v. US Airways Group, Inc., et al.
Plaintiffs, a group of retired U.S. Airways pilots, filed a class action seeking interest for the period of delay in the payment of their retirement benefits. The district court refused to certify the class. The court reversed and remanded, holding that the class members were not required to exhaust internal remedies before bringing their claims in court because they sought enforcement of the Employee Retirement Income Security Act's (ERISA), 29 U.S.C. 1001 et seq., substantive guarantees rather than contractual rights. View "Stephens, et al. v. US Airways Group, Inc., et al." on Justia Law
Clark v. Feder Semo and Bard, P.C., et al.
Plaintiff filed suit against her former law firm alleging that decisions made by the firms' directors who administered the retirement plan breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. The court concluded that ERISA's adoption of the common law's standard of fiduciary care in section 1104(a)(1)(B) permitted prudent fiduciaries making important decisions to rely on the advice of counsel in appropriate circumstances. Therefore, the court affirmed the district court's conclusion that the directors rightfully relied upon the advice of the plan's lawyer. View "Clark v. Feder Semo and Bard, P.C., et al." on Justia Law