Employee Benefits & Executive Compensation Blog

The View from Proskauer on Developments in the World of Employee Benefits, Executive Compensation & ERISA Litigation

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U.S. Supreme Court Agrees to Hear IBM’s Challenge to Second Circuit Ruling in ERISA Stock-Drop Suit

In December 2018, we reported here that the Second Circuit became the first court at any level to allow an ERISA stock-drop claim to survive a motion to dismiss since the Supreme Court revamped the pleading standard for such claims several years ago.  The Second Circuit reinstated a claim for breach of fiduciary duty under … Continue Reading

Nortel Reaches Settlement with Retirees

In In re: Nortel Networks Inc., No. 1:09-bk-10138 (Bankr. D. Del. 2013), Nortel Networks Inc. reached a settlement with over 3,000 of its retired employees for nearly $67 million. Nortel, a former telecom equipment maker, filed for bankruptcy in 2009. In the subsequent four years, Nortel sold off nearly all of its assets, but had … Continue Reading

Eleventh Circuit Refuses to Excuse Exhaustion

In McCay v. Drummond, 2013 WL 616923 (11th Cir. Feb. 20, 2013), the Eleventh Circuit held that deficiencies in a notice of denial of benefits did not excuse a participant’s failure to appeal within a designated 180-day time period. In so ruling, the Court reasoned that plaintiff’s allegations of defendant’s noncompliance with ERISA’s technical requirements … Continue Reading

Arbitrator Determined to Have Erroneously Denied Enforcement of Indemnification Agreement

In Schafer v. Multiband Corp., 2013 WL 607910 (E.D. Mich. Feb. 19, 2013), a district court vacated the decision of an arbitrator who concluded that indemnification agreements executed in connection with the establishment of an employer stock ownership plan and an employee stock ownership trust violated ERISA § 410(a), 29 U.S.C. § 1110(a). The agreements indemnified … Continue Reading

Employers’ Discretion Over Whether to Pay Contributions Does Not Confer Fiduciary Status

In Int’l Painters and Allied Trades Indus. Pension Fund v. Clayton B. Obersheimer, Inc., 2013 WL 594691 (D. Md. Feb. 13, 2013), a district court rejected plaintiffs’ contention that company officers were acting as ERISA fiduciaries in connection with the company’s delinquent contributions to a pension plan because they exercised discretionary control over the unpaid … Continue Reading

Second Circuit Issues Additional Ruling on Scope of Moench Presumption

In Taveras v. UBS AG, 2013 WL 692535 (2d Cir. Feb. 27, 2013), the Second Circuit held the Moench presumption of prudence did not apply to fiduciaries of an eligible individual account plan where the plan document neither required nor “strongly” encouraged investment in the defendant’s stock fund. The Court accordingly reversed and remanded a … Continue Reading

Seventh Circuit Enjoins Enforcement of ACA Based on Religious Beliefs

In Grote v. Sebelius, 2013 WL 362725 (7th Cir. Jan. 30, 2013), the Seventh Circuit held that members of the Grote family, and their company, Grote Industries, were entitled to an order enjoining enforcement of the Affordable Care Act’s requirements that non-grandfathered health plans cover certain preventative health services, including contraceptives, without cost-sharing. Plaintiffs sued … Continue Reading

Fourth Circuit Allows Post-Distribution Suits to Enforce State Law Waivers

The U.S. Supreme Court previously held that an ERISA plan administrator must distribute benefits to the beneficiary named in the plan, regardless of any state law waiver purporting to divest that beneficiary of his right to the benefits. That case explicitly left open the question of whether, once the benefits are distributed by the administrator, … Continue Reading

Third Circuit Rules Statute of Limitations Accrues Upon Receipt of Notice of Distribution From IRS

In Raymond v. Callebaut, 2013 WL 150232 (3d Cir. Jan. 15, 2013) (summary order), the Third Circuit affirmed the district court’s ruling that dismissed plaintiff’s claim seeking benefits due under the terms of a 401(k) plan because plaintiff’s claim was filed more than fourteen years after it had accrued. Plaintiff’s claim was based on an … Continue Reading

Fourth Circuit Concludes Participants Have No Constitutional Standing to Assert Prohibited Transaction Claims

In David v. Alphin, 2013 WL 142072 (4th Cir. 2013), plaintiffs alleged that defendants engaged in prohibited transactions and breached their fiduciary duties by selecting and maintaining Bank-affiliated mutual funds in the investment menu for the Bank’s 401(k) Plan and the Bank’s separate defined benefit pension plan. The Fourth Circuit affirmed dismissal of plaintiffs’ claims. … Continue Reading

Sixth Circuit Rules Claim for Reimbursement is Appropriate Equitable Relief

In Wooden v. Alcoa, 2013 WL 141777 (6th Cir. Jan. 11, 2013), the Sixth Circuit ruled that defendant’s claim for reimbursement of benefits overpayments was appropriate equitable relief because defendant’s claim was properly limited to a specified fund within plaintiff’s general assets — the proportion of income that would have been reduced if she had … Continue Reading

Venue Selection Clause Unenforceable as Contrary to Public Policy

In Coleman v. Supervalu Inc. Short Term Disability Program, 2013 WL 365263 (N.D. Ill. Jan. 31, 2013), the court denied an ERISA plan’s motion to dismiss for improper venue, holding that the venue selection clause was unenforceable. In so ruling, the court concluded that such clauses are contrary to public policy and inconsistent with congressional … Continue Reading

Fifth Circuit Rules that Changed Basis for Denying Claim Violated ERISA § 503

In Rossi v. Precision Drilling Oilfield Services Corp. Employee Benefit Plan, 2013 WL 85910 (5th Cir. Jan. 8, 2013), the Fifth Circuit held that defendant violated ERISA § 503 by changing its basis for denying plaintiff medical coverage, because doing so prevented plaintiff from having a meaningful review of the denial of benefits. The court thus … Continue Reading

Fifth Circuit Determines TPA is Proper Defendant

In Lifecare Management Services LLC v. Insurance Management Administrators Inc., 2013 U.S. App. LEXIS 239 (5th Cir. Jan. 4, 2013), the Fifth Circuit affirmed the district court’s ruling that a third party administrator of an ERISA welfare plan was a proper defendant in a claim for benefits under ERISA § 502(a)(1)(B) if the TPA “exercise[d] ‘actual … Continue Reading

Sixth Circuit Rules Plaintiff Failed to Prove Specific Intent Required Under ERISA Section 510

In Gaglioti v. Levin Group, Inc., No. 11–3744, 2012 WL 6217365 (6th Cir. Dec. 13, 2012), the Sixth Circuit affirmed summary judgment dismissing ERISA Section 510 and disability discrimination claims, but reversed as to age discrimination claims. Upon hiring, Plaintiff was immediately given health benefits. A few months later, shortly after disclosing health problems regarding his … Continue Reading

Seventh Circuit Affirms Certification of Rule 23(b)(2) Class Action

In Johnson v. Meriter Health Services Employee Retirement Plan, No. 12-2216, 2012 WL 6013457 (7th Cir. Dec. 4, 2012) (J. Posner), the Seventh Circuit affirmed the lower court’s grant of class certification of ERISA claims for declaratory relief under Fed. R. Civ. P. 23(b)(2), while acknowledging that individualized issues may preclude certification of claims for … Continue Reading

D.C. Circuit Concludes that Plan Violated ERISA’s Anti-Backloading Rules

In Kifafi v. Hilton Hotels Retirement Plan, — F.3d —, No. 11-7113, 2012 WL 6216631 (D.C. Cir. Dec. 14, 2012), the D.C. Circuit affirmed a judgment holding that Hilton violated ERISA’s anti-backloading provisions, despite a subsequent amendment purporting to cure the violation in response to plaintiffs’ claims. Under the terms of the pre-1999 plan, the … Continue Reading

Second Circuit Dismisses Stock-Drop Claim Based on Moench Presumption of Prudence

In Slaymon v. SLM Corp., 2012 WL 6684564 (2d Cir. Dec. 26, 2012), the Second Circuit Court of Appeals affirmed dismissal of an employer-stock class action in a summary order. Plaintiffs were employees of SLM Corp. (also known as Sallie Mae) who alleged that the fiduciaries of two Sallie Mae retirement plans breached fiduciary duties … Continue Reading

Eighth Circuit Affirms Denial of Severance Benefits Where Plaintiff Terminated for Misconduct

In Carr v. Anheuser Busch Co., No. 12–1224, 2012 WL 6685323 (8th Cir. Dec. 21, 2012), the Eighth Circuit affirmed summary judgment dismissing an ERISA Section 502(a)(1)(B) claim for severance benefits, finding that the plaintiff was terminated for misconduct, thereby disqualifying him from receiving benefits under the terms of the plan.  Plaintiff was terminated for attempting … Continue Reading
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