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ERISA Litigation - Home


2019.09.12  Single Document Can Serve as ERISA Plan Document and SPD. This excellent Wagner Law alert begins . . . The Eighth Circuit Court of Appeals, in MBI Energy Services v. Hoch, has held that a self-insured medical plan is entitled to reimbursement because its summary plan description ("SPD") was also the plan document. With this ruling, the Eighth Circuit has joined the Fifth, Sixth, Ninth, and Tenth Circuit Courts in concluding that the Supreme Court's ruling in Cigna v. Amara does not prevent an SPD from functioning as the plan document in the absence of a "formal" plan document. A combined plan and SPD often works well for an ERISA-fied severance plan - more info here. 


2019.08.26  Disclaimers of Coverage - Another Object Lesson.  Playing loose with insurance companies has an awful back-end risk, because premiums may be paid for years, and then coverage may be disclaimed if there were prior inaccuracies. The 8th Circuit just made such a ruling in this MetLife decision, finding that "There is substantial evidence in the record to support MetLife's reliance upon the plan administrator's representations that Jose would not have been automatically enrolled in the OLI program if he had truthfully answered the high blood pressure question in the screening questionnaire. Thus, we reverse the district court's order awarding OLI benefits." Employer's should also take heed, because it may be tempting on occasion to shoehorn an ineligible person into an insured health, life, or other plan. For instance, non-employee directors are sometimes added to an insured health plan that covers employees. Before ever extending coverage to a questionable person or class of employees, employers should receive written approval from the insurer's representative. Otherwise, they risk a perfect storm from offering coverage, collecting and paying premiums, and then being sure to provide the benefits if an insurer disclaims coverage. 


2017.09.29  Diligence Checklist for ESOP Fiduciaries. Whether you are an ESOP fiduciary or doing diligence focused on a company that sponsors an ESOP, it is worth considering the itemized list of fiduciary standards and processes that the Department of Labor has imposed in settling recent ESOP litigation. For further information, see this ESOP Fiduciary Checklist.  

 

2017.09.21 "Piggly Wiggly Execs Can't Nix Suit Alleging Stock Plan Missteps" -- This Law360 article begins as follows:

  • The executives of Piggly Wiggly Carolina Co. and Greenbax Enterprises Inc. must defend a lawsuit accusing them of breaching their fiduciary duties by enriching themselves at the expense of participants in the company's retirement plan (Spires v. Schools, 2017 BL 330520, D.S.C., No. 2:16-cv-00616-RMG, 9/19/17).
  • The participants sufficiently alleged that the grocery store chain executives breached their duties by not taking action to protect the assets of the company's employee stock ownership plan and by instead engaging in managerial acts that depleted the assets of most of their value, a federal judge in South Carolina held Sept. 19. The participants can also proceed with some of their claims that the executives engaged in prohibited transactions under the Employee Retirement Income Security Act, Judge Richard Mark Gergel ruled.

2017.01.10  Top Hat Forfeiture Enforced for Executive's Refusal to Sign Non-Compete (WD Penn).  As a general matter, employers win when they seek to enforce the unambiguous terms -- and forfeiture provisions - of their top hat and other executive-only ERISA plans.  Good faith administration by the employer is ordinarily sufficient.  Case in point: a Penn. district court upheld forfeiture of top hat benefits where an executive refused to sign a non-competition agreement that the underlying plan required as a condition for benefits.  The court's decisions are worth review because they dig into . . . continued at Vesting and Forfeiture. 


2016.08.25  ESOP Participants Avoid Dismissal of Claims vs Independent Trustee. In Misty v. GreatBanc, the 7th Circuit found viable ERISA claims by ESOP participants, with this paragraph giving a good sense of the litigation:

  • The ink was hardly dry on the acquisition papers when the value of Personal‐Touch’s stock began to tank. Twenty‐ two days later, the complaint asserts and GreatBanc accepts for present purposes, the Plan’s stock was estimated to be worth some $13 million (almost 22%) less than what the Plan paid for it. By late 2011, the estimated value of the stock had declined by almost 50%, and by December 31, 2013, the Plan’s shares were worth only around $26.6 million. The selling shareholders, however, were relatively untouched by these developments. Rather than holding a rapidly depreciating asset in the form of the stock, they had become creditors of the Plan (and thus indirectly the employees) and the recipients of a secure flow of principal and interest payments on the original $60 million loan. The plaintiffs felt that they had drawn the short straw: they sued GreatBanc, alleging that it violated its fiduciary responsibilities under ERISA by approving a purchase of stock at too high a price and by facilitating two prohibited transactions: (1) the Plan’s purchase of stock from the company, and (2) the loan to the Plan that funded the purchase. See 29 U.S.C. § 1106(a) and (b).

2016.07.21  ESOP Investor Held Liable as Functional Fiduciary.  In Chesemore c. Fenkell, the Seventh Circuit described the fiduciary breach as involving "a complicated leveraged buyout to off-load the company onto Tranche's employees" [at the desired price for which the investor's sale efforts had come up "empty-handed"].  As an equitable ERISA remedy, the court ordered the investor, who was owner and president of the parent company, to indemnify the ESOP trustees because they were mere musicians, and "Fenkell was the unquestioned conductor."

2016.06.16  Pension Plan Participant Held a Fiduciary re Mistaken Payment. In Alcatel-Lucent v. Borlabi, a New Jersey District Court entered a default judgement in favor of a pension plan, reasoning that "Defendant became a plan fiduciary because she retained control over plan assets that she was not entitled to.  The [pension plan] mistakenly transferred $233,691.92 of its assets to Defendant's personal money market account, and she refused to return the assets after the [pension plan' informed her of the erroneous transfer and requested repayment of the funds." 

2016.06.16 Document Retention Duty of Employers under ERISA. See Estate of Barton (9th Cir.).​