• In Miller v. American Airlines, Inc., No. 10-1784, 2011 WL 208291 (3rd Cir. Jan. 25, 2011), the Third Circuit concluded that it was unreasonable for American Airlines to terminate a participant’s disability benefits for anxiety disorder and brief reactive psychosis, considering that no new evidence was relied upon to terminate the benefits; American apparently relied on the participant’s failure to obtain an FAA medical certification, which was not a requirement under the plan; the notice of denial to the participant did not give specific reasons for the denial or address each diagnosis; and American operated under a conflict of interest.
  • In DuPerry v. Life Insurance Co. of North America, No. 10-1089, 2011 WL 199087 (4th Cir. Jan. 24, 2011), the Fourth Circuit determined there was no reasonable basis for LINA to deny disability benefits to a participant with fibromyalgia and arthritis. In reaching this conclusion, the court applied an eight-factor test to consider the reasonableness of the plan administrator’s decision, which included LINA’s “structural conflict of interest” based upon the fact that LINA insures and administers the plan. The court’s decision that the plan administrator’s denial was unreasonable was based on evidence establishing that the plaintiff suffered from chronic diseases that are potentially debilitating, and that the plaintiff presented substantial evidence from her physicians that these diseases do, in fact, prevent her from working, as well as her own declaration and declarations from her family and even her former employer confirming the severity of her symptoms. The court found the evidence submitted by LINA contained no significant basis to support a conclusion that the plaintiff’s symptoms, either by themselves or combined with the symptoms from her other conditions, were not sufficiently severe as to prevent her from enduring the rigors of her workweek.
  • In Einhorn v. M.L. Ruberton Construction Co., No. 09-4204-cv (3rd Cir. Jan. 21, 2011), the Third Circuit vacated a district court’s grant of summary judgment in favor of the defendant M.L. Ruberton Construction Co., dismissing the plan administrator’s claims that the defendant should be liable for the unpaid contributions owed to the multi-employer pension and welfare funds by a company whose assets were purchased by the defendant. The district court reasoned that the defendant was not a continuation of the company that owed the contributions to the funds, and under the law of successorship, was not liable to the funds. The Third Circuit disagreed, reasoning that because the defendant had notice of the company’s liability to the funds at the time of the asset sale and continued similar operations, the defendant could be found liable for delinquent contributions under ERISA. The Court stated: “In sum, we hold that a purchaser of assets may be liable for a seller’s delinquent ERISA fund contributions to vindicate important federal statutory policy where the buyer had notice of the liability prior to the sale and there exists sufficient evidence of continuity of operations between the buyer and seller.” The case was remanded to the district court for further proceedings consistent with the court’s opinion.
  • In Feinberg v. RM Acquisition LLC, 10-1890-cv (7th Cir. Jan 16, 2011), the Seventh Circuit affirmed the district court’s dismissal of the claims of several former executives of Rand McNally & Co., who sought benefits under Rand McNally’s top-hat plan after RM Acquisition LLC purchased all of Rand McNally’s assets. The executives sued RM Acquisition LLC claiming that, as a successor to Rand McNally, it was liable for payment of benefits owed to them under the top-hat plan. The Seventh Circuit ruled otherwise, holding that RM Acquisition LLC’s acquisition of Rand McNally’s assets did not mean that RM Acquisition LLC took on its liabilities. The court reasoned that “RM did not assume the top hat plan’s liabilities; nor, so far as appears, did it connive with Rand McNally to deprive participants of their top hat benefits; nor was it a mere continuation of Rand McNally under another name.” The court also noted that in this case there was no valid ERISA § 510 claim for interference with benefits because “RM wasn’t trying to interfere with any rights that the plaintiffs may have had under the top hat plan.”
  • In Alday v. Raytheon Co., Nos. 08-16984 & 08-16985 (9th Cir. Jan. 14, 2011), the Ninth Circuit granted rehearing in a dispute over whether Raytheon could charge retirees for their health insurance premiums, which Raytheon paid entirely until 2004. In September, the Ninth Circuit affirmed summary judgment for the retirees in Alday v. Raytheon Co., 620 F.3d 1219 (9th Cir. 2010) (see above), concluding that Raytheon expressly agreed to continue to pay premiums for medical insurance for the plaintiffs until retirees and their spouses reached age 65. The Ninth Circuit’s decision relied in part on a promise in the collective bargaining agreement of “Plan coverages” with “no weekly premium/charge” despite a subordination provision in the CBA that provided benefits are subject to the plan documents. The plan documents contained a reservation of rights clause that provided benefits could be terminated. Defendants requested rehearing, contending the September ruling was contrary to other circuit court decisions where the plans’ reservation of rights clauses controlled. The Ninth Circuit order granting rehearing suggested that the parties focus their arguments on the subordination provision and the significance of the terms “coverage” and “benefits.”
  • In Price v. Board of Trustees of the Indiana Laborer’s Pension Fund, Nos. 09-3897/09-420409-4204, 2011 WL 93043 (6th Cir. Jan. 12, 2011), the Sixth Circuit held that the application of the “Yard-Man” inference (pursuant to which a court presumes that the parties intended benefits to continue for life, notwithstanding the expiration of a CBA) is limited to retiree health benefits, and thus did not apply to occupational benefits, because (1) retiree health benefits are a form of delayed compensation or reward for past compensation, and (2) retiree health benefits are unique in that unions do not owe retired persons any obligation to bargain for their continued benefits, and therefore, it is more likely that the parties would intend the retiree benefits to vest to avoid the benefits being left to future negotiations. According to the court, unlike retiree health benefits, occupational disability benefits cannot be considered a form of delayed compensation, are more appropriately characterized as an uncertain potentially realized benefit, and are not necessarily left open to unrepresented future negotiations because an occupationally disabled person might expect to recover at some point and return to a position of union representation. The Sixth Circuit therefore vacated the district court’s summary judgment decision applying the “Yard-Man” inference to find that the plaintiff’s occupational disability benefit vested, and remanded the case for further proceedings consistent with this opinion.
  • In Wilson v. Venture Financial Group, Inc., 2011 WL 219692 (W.D. Wash. Jan. 24, 2011), a district court preliminarily approved a $750,000 settlement of a stock-drop class action, in which it was alleged that it was imprudent for the plan to continue to invest in Venture Bank stock where the bank was heavily invested in risky real-estate-related investments. The bank was eventually closed by state banking regulators in September 2009 in the wake of the mortgage crisis.
  • In Moore v. Comcast Corp., No. 08-773 (E.D. Pa. Jan. 24, 2011), the district court approved a $5,000,000 settlement of an action brought by participants in Comcast’s 401(k) plan who invested in Comcast Corporation Stock. The plaintiffs alleged that the defendants breached their fiduciary duties under ERISA by continuing to offer Comcast Corporation Stock in the 401(k) plan when they knew that the stock was artificially inflated. The settlement requires Comcast to provide investment advisory services to the class members for three years, provide an annual diversification notice to participants holding more than 10% of their 401(k) assets in Comcast Corporation Stock, offer annual fiduciary training for members of the plan’s investment committee, and permit participants to sell Comcast Corporation Stock with no limitations for three years.
  • In Teamsters Joint Council No. 83 of Virginia Pension Fund v. Empire Beef Co., No. 08-CV-340 (E.D. Va., Jan. 20, 2011), a district court held that, in connection with assessing withdrawal liability, a multi-employer pension fund could not disregard a composition agreement entered into by Empire Beef Co. (“Empire”), which restructured the assets of Empire by transferring ownership of Empire from the owner to his father. The fund contended that Empire’s motivation to enter into the agreement was to avoid paying the remaining withdrawal liability due to the fund. Accordingly, the fund sought to hold the owner’s father liable for the remainder of the withdrawal liability. The court held that “evading withdrawal liability” was not “a principal purpose of the Agreement” and that the fund “must honor the Compensation Agreement when assessing and collecting withdrawal liability.”
  • In In re IndyMac ERISA Litigation, No. 08-04579 (C.D. Cal. Jan. 19, 2011), the district court approved a $7,000,000 settlement for “stock-drop” claims brought against IndyMac by participants in its 401(k) plan. The participants alleged that IndyMac acted imprudently by offering company common stock in its 401(k) plan when fiduciaries were aware of IndyMac’s involvement with high-risk mortgages that fueled the subprime mortgage crisis. According to the complaint, IndyMac stock declined 99.7 percent in value before the bank was closed in July of 2008.
  • In United States v. Sims, No. 8:10-cr-379-T-33TGW (M.D. Fla. Jan. 18, 2011), a pastor for the Crossroads Church of Dade City, Florida was sentenced to 30 months imprisonment after he pleaded guilty to embezzling approximately $813,000 from the International Brotherhood of Electrical Workers Local 915’s health and welfare, pension, and vacation funds. The pastor, who was in charge of managing the funds, diverted the money to the church’s financial accounts and then disbursed the embezzled money for his own personal benefit and for the use of his parishioners and associates. In addition to his 30-month prison sentence, the court also entered an order for reimbursement of the stolen funds.
  • In Groussman v. Motorola, Inc., No. 10 C 911, 2011 WL 147710 (N.D. Ill. Jan. 18, 2011), the district court denied the defendants’ motion to dismiss stock drop claims upon finding that it was premature at the pleadings stage to decide issues such as whether: defendants were fiduciaries, defendants were responsible for imprudent investment offering decisions and the extent of any imprudence, defendants possessed negative information about the company, and fiduciaries had a duty to communicate certain business information to plan participants. The plaintiffs alleged that the defendants breached their fiduciary duties by continuing to offer Motorola stock as an investment option in the company’s 401(k) plan at a time when the defendants allegedly possessed negative information about Motorola’s business yet failed either to act based on such information in administering the plan or communicate such information to the plan participants.
  • In Winnett v. Caterpillar Inc., No 3:06-cv-0235, 2011 WL 98586 (M.D. Tenn. Jan. 12, 2011), the district court issued a combined decision on two related, but not consolidated, cases, Winnett and Kerns, alleging breaches of an agreement to provide “lifetime cost-free retiree health care.” In both cases, Caterpillar moved for reconsideration of the district court’s opinion denying in part its motion for summary judgment after the Sixth Circuit ruled that the claims of a certain subclass of plaintiffs were time-barred. The difference between the two subclasses of plaintiffs was that the subclass in Winnett asserted their claims under a 1988 collective bargaining agreement, whereas the class in Kerns sought relief under a 1998 collective bargaining agreement. The district court granted Caterpillar’s motion for reconsideration in Winnett, but denied Caterpillar’s motion for reconsideration in Kerns. The district court held that the Winnett plaintiffs’ claims under the 1988 collective bargaining agreement were time-barred based on the Sixth Circuit’s decision, which held that Caterpillar had given this class notice of “major changes” to health care benefits more than six years prior to filing their claims. According to the court, “the assorted changes … announced in the 1998 CBA and further explained in the 1999 SPD as ‘major changes’ to the plan benefits …should have alerted the … subclass that the promise of ‘free lifetime health care’ under the 1988 CBA was repudiated.” In addition, the 1999 SPD contained a reservation-of-rights clause that gave Caterpillar an “unfettered” right to terminate the plan.” The court found that the subclass’ claims in Kerns, however, were not time-barred because notice of the 1998 collective bargaining agreement occurred within the limitations period.

In Wright v. Medtronic, Inc., 09-CV-0443, 2011 WL 31501 (D. Minn. Jan. 5, 2011), the district court dismissed the plaintiffs’ ERISA stock drop claims. The plaintiffs alleged that the defendants breached their fiduciary duties by imprudently permitting plan participants to invest in Medtronic stock when the company faced financial difficulties due to problems with certain products, including the recall of its Fidelis implantable heart defibrillator. Relying on Moench v. Robertson, 62 F.3d 553 (3rd Cir.1995) and Quan v. Computer Sciences Corp., 623 F.3d 870, 882 (9th Cir.2010), the court noted that the “plaintiffs’ prudence claim can survive only if they have alleged sufficient facts to demonstrate that they have a non-speculative claim that investing in Medtronic stock during the class period was so risky that no prudent fiduciary would have invested any Plan assets in Medtronic stock.” In this case, the court concluded that the plaintiffs’ allegations of stock price declines of 19% and 16% were insufficient to satisfy the pleading standards. The court also dismissed the plaintiffs’ disclosure claim, finding that allegations regarding the failure to disclose material corporate information must be redressed under securities laws, not ERISA.