• On the same day that the United States Supreme Court in CIGNA Corp. v. Amara (see above) suggested that the remedy of surcharge was one of equity and may be available under ERISA, the Fourth Circuit in McCravy v. Metro. Life Ins. Co., 2011 WL 1833873 (4th Cir. May 16, 2011), concluded the opposite, finding that an employee of Bank of America could not recover the full value of her daughter’s life insurance policy via the remedy of surcharge under Section 502(a)(3) of ERISA. The Fourth Circuit affirmed the district court’s ruling that plaintiff was entitled to recover the premiums that were improperly withheld by the plan, but could not recover the full value of the life insurance policy. The court reasoned that plaintiff “s[ought] a monetary award in the amount of the life insurance benefits lost[,]…but [wa]s not the true owner of any funds in MetLife’s possession,” and thus, was not seeking equitable relief. Plaintiff’s counsel intends to file a motion for reconsideration in light of the Supreme Court’s ruling in Amara.

Plan Language Controls:

  • In Farhner v. United Trans. Union Discipline Income Protection Program, No. 09-4431-cv, 2011 WL 1641551 (6th Cir. May 3, 2011), the Sixth Circuit affirmed the district court’s ruling that the denial of a participant’s application for income replacement benefits was not arbitrary and capricious because it was based on the express terms of the plan, which required the denial of benefits to participants who were discharged for insubordination. Plaintiff argued that the administrator should have looked beyond the plan language to determine if his discharge was lawful, contending that he was improperly terminated because his employer improperly failed to grant him leave under the Family and Medical Leave Act. The Sixth Circuit rejected these arguments, concluding that “the Plan Administrator was not required to look beyond the language of the Plan” to determine if the plaintiff was properly terminated for insubordination, “where the language of the Plan was unambiguous and the Plan did not require it to do so.”

Fiduciary Exception to Attorney-Client Privilege:

  • In Solis v. Food Employers Labor Relations Association & United Food & Commercial Workers Pension Fund, No. 10-1687, 2011 WL 1663597 (4th Cir. May 4, 2011), the DOL sought communications between the defendant funds’ fiduciaries and their attorneys in connection with an investigation into the funds’ indirect investments in Bernard L. Madoff’s Ponzi scheme, which resulted in a $10.1 million loss in plan assets. The Fourth Circuit held that the fiduciary exception to attorney-client privilege extends to communications between an ERISA trustee and a plan attorney regarding plan administration, as well as when the DOL initiates an investigation or audit under ERISA Section 504. In so holding, the Fourth Circuit concluded that applying the fiduciary exception in the context of a DOL subpoena under ERISA did not require “a showing of good cause; instead, its application turns on the context and content of the individual communications at issue.” The court found that the documentation requested related to the funds’ administration and was therefore information that ERISA trustees had a fiduciary obligation to disclose, provided that it did not relate to the fiduciary’s own legal defense. The court did not reach the issue of whether the work product doctrine is subject to the fiduciary exception because the funds failed to carry their burden to demonstrate applicability of the work product doctrine.


  • In Santomenno v. John Hancock Life Ins. Co. (U.S.A.), No. 10-cv-01655, 2011 WL 2038769 (D.N.J. May 23, 2011), the court held that the participants and beneficiaries of employer-sponsored 401(k) plans cannot maintain claims against plan service providers without joining the plan trustees, who entered into the agreements with the plans’ service providers. Plaintiffs alleged that John Hancock charged the plans excessive fees for investment services in violation of ERISA Section 502. Applying traditional trust law principles, the court held that the plaintiffs could not sue third-party service providers without first making a demand on the trustees, or at least alleging the futility of making such demand or some allegations, which if proven, would establish that the trustees improperly refused to bring suit. Because plaintiffs failed to assert such factual allegations and because the trustees were not joined in the suit, the court dismissed plaintiffs’ complaint.

In In Re Principal U.S. Property Account ERISA Litig., No. 4:10-cv-198, 2011 WL 1898915 (S.D. Iowa May 17, 2011), the district court denied defendants’ partial motion to dismiss based on the argument that plaintiffs lacked statutory standing to bring claims related to those plans in the putative class in which they were not participants. The court rejected defendants’ argument on the grounds that a plaintiff’s ability to represent a putative class depends only on satisfaction of Rule 23’s requirements for class certification. Thus, the court reasoned that individual who is not a participant in an ERISA plan may still represent the plan as part of a class action, despite the fact that the individual could not commence an action directly on behalf of the plan.

Breach of Fiduciary Duty:

  • In Tullis v. UMB Bank N.A., No. 09-4370, 2011 WL 1885978 (6th Cir. May 18, 2011), the Sixth Circuit affirmed the district court’s ruling that the directed trustee of a 401(k) plan did not breach its fiduciary duties under ERISA by allegedly failing to inform participants of nonpublic information that the outside account manager selected by the trustee had previously engaged in illegal activity. The court found that UMB was shielded from liability by ERISA Section 404(c). Plaintiffs conceded that the prerequisites of the safe harbor defense were met, with the exception of one: that UMB concealed from them material non-public facts regarding the account manager’s fraud, thereby depriving them of “control” over their accounts. The court, however, found that plaintiffs failed to furnish evidence to create a genuine issue as to whether UMB concealed this information. Consequently, the court concluded that plaintiffs exercised “independent control in fact” over their accounts and UMB’s conduct fell within the Section 404(c)’s safe harbor.
  • In Guyan Intl., Inc., v. Professional Benefits Administrators, Inc., 10-cv-823 (N.D. Ohio May 10, 2011), the district court granted plaintiff’s motion for partial summary judgment, holding that Professional Benefits Administrators, Inc. violated its fiduciary duties under ERISA by using assets of the plans that it was hired to administer to pay its own operational expenses. The court concluded that PBA was a fiduciary to its plan clients because it had “practical control” over their assets, as it was able to issue checks on its clients’ behalf and also had the authority to deposit the plans’ assets into different accounts of its own choosing while it had control over the funds.
  • In Stark v. Mars, Inc., No. 2:10-cv-642, 2011 WL 1792261 (S.D. Ohio May 11, 2011), the district court denied in part and granted in part defendants’ motion to dismiss plaintiff’s claims. Plaintiff alleged that defendants misrepresented in various communications that her monthly pension benefits were almost double what they actually were. After months of overpayment, her benefits were reduced to reflect the proper amount and to recoup the prior overpayments. Plaintiff brought four claims relating to this alleged misrepresentation against both her former employer and the plan administrator. The court found that plaintiff alleged sufficient facts to support her breach of fiduciary duty and denial of benefits claims, but only as against the plan administrator. It dismissed the claims against Mars, finding that plaintiff failed to allege facts sufficient to show that Mars was acting in a fiduciary capacity in making the alleged misrepresentations to plaintiff, and the plan administrator is the proper defendant in a claim for benefits. The court also found that plaintiff could pursue her fiduciary breach claim under ERISA Section 502(a)(3) in conjunction with her claim for denial of benefits under Section 502(a)(1)(B), concluding that her fiduciary breach claim was not “a repackaged benefits claim.” Finally, the court found that plaintiff alleged sufficient facts to satisfy the elements of estoppel, including extraordinary circumstances based on defendants’ repeated and consistent misrepresentations.

Retiree Benefits:

  • In CNH America LLC v. International Union, United Automobile, Aerospace & Agricultural Implement Workers of America (UAW), — F.3d —, 2011 WL 1833202 (6th Cir. May 16, 2011), the Sixth Circuit, in a split decision, held that the Labor Management Relations Act did not preempt an employer’s state-law tort claims based on a union’s alleged misrepresentations regarding its authority to bind retirees during collective bargaining over changes to retiree health insurance coverage. The appeals court determined that resolving the claims would not require an interpretation of the collective bargaining agreement, and, further, that UAW’s actions giving rise to the claims took place before the CBA’s formation. The Sixth Circuit also affirmed the district court’s determination that a VEBA unambiguously contained no covenant by the UAW not to sue with respect to retiree benefit contributions, and thus no breach of such covenant could have occurred.

Cert. Denied:

  • On May 23, 2011, the Supreme Court denied without comment cross-petitions for certiorari in Young v. Verizon’s Bell Atlantic Cash Balance Plan, 615 F.3d 808 (7th Cir. 2010), cert. denied, 2011 WL 1936084 (May 23, 2011) and 2011 WL 1936085 (May 23, 2011). In this case, plaintiffs sued for additional retirement benefits, alleging that the Plan failed to follow the written terms of the benefit formula. A victory for plaintiffs would have resulted in at least $1 billion in liability. Because the benefit formula incorrectly multiplied benefits by the same factor two times, the district court rejected plaintiffs’ claim and granted the Plan’s counterclaim for reformation due to the scrivener’s error. The Seventh Circuit affirmed the reformation of the Plan under ERISA Section 502(a)(3). Plaintiffs filed for certiorari, arguing that the lower courts erred by reforming an unambiguous plan provision because such action undermined ERISA’s plan document rule. Defendants cross-filed for certiorari on the issue of whether a benefit committee with broad discretionary powers acted within the scope of its authority by correcting a scrivener’s error in response to a benefit inquiry.


  • A large group of former General Motors executives filed an ERISA complaint alleging that their retirement benefits were improperly reduced in violation of the terms of GM’s Executive Retirement Plan (“ERP”). Tate v. Gen. Motors LLC, No. 2:11-cv-12028-GCS-MAR (E.D. Mich. May 9, 2011). The ERP provides that participants who have a retirement benefit in excess of $100,000 per year shall have any benefit above $100,000 reduced by 2/3. Plaintiffs argue that GM incorrectly interpreted this provision to count benefits received under the separate General Motors Retirement Program for Salaried Employees, in which the plaintiffs are also participants, towards the $100,000 figure. Two of the plaintiffs also brought a claim under ERISA Section 502(c)(1) for failure to furnish requested plan documents in a timely fashion.
  • In Palmason v. Weyerhauser Co., No. 11 Civ. 00695 (W.D. Wash. Apr. 25, 2011), a participant in the Weyerhaeuser Company’s defined benefit plan filed a class action complaint against Weyerhauser and the Plan’s fiduciaries alleging that they breached their duties under ERISA by investing in “risky alternative investments,” including various private equity and hedge funds. The complaint states that the Plan lost several millions of dollars since 2006, when it began investing pursuant to the “portable alpha strategy,” which allegedly resulted in the investment of 81% of the Plan’s assets in alternative “risky” investments. The lawsuit contends that the Plan fiduciaries’ motivation for taking an aggressive investment approach was to improve Weyerhauser’s financial position, which constituted a breach of their fiduciary duties under ERISA, and ultimately caused severe losses for the Plan. Notably, the defendant in this case is a defined benefit plan, not a defined contribution plan.


  • In In re PFF Bancorp, Inc. ERISA Litigation, No. 08-01093 (C.D. Cal. Apr. 27, 2011), the district court approved a $3.4 million settlement in an employer stock drop case based on the employer’s alleged failure to accurately disclose its financial condition prior to its ultimate bankruptcy, and certified a class of approximately 1,000 ESOP participants who invested in the stock between 2003 and 2010.
  • In George v. Duke Energy Retirement Cash Balance Plan, No. 06-00373 (D.S.C. May 16, 2011), the district court approved a $30 million settlement to resolve a class action wherein cash balance retirement plan participants alleged that their lump sum distributions and interest credits were calculated incorrectly.
  • In Paulsen v. CNF, Inc., No. 03-03960 (N.D. Cal. May 6, 2011), Towers Perrin agreed to pay $9.2 million to settle class action claims that it breached its fiduciary duty by using unreasonable actuarial assumptions in providing services to the Consolidated Freightways Corporation Pension Plan, which was terminated, while underfunded, following the company’s bankruptcy.
  • In Mack Trucks, Inc. v. Int’l Union, United Automobile, Aerospace & Agricultural Implement Workers of America – UAW, No. 07-3737, 2011 WL 1833108 (E.D. Pa. May 12, 2011), the district court preliminarily approved a settlement to resolve class claims relating to the employer’s proposed reductions to retiree healthcare benefits. Under the proposed settlement, Mack Trucks would contribute $525 million to a Voluntary Employees’ Beneficiary Association (VEBA) trust to fund approximately 85% of the cost of a restructured retiree medical program.