Second Circuit Rules on Retiree Medical Allowances

  • In United Steel, Paper & Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. Workers Int'l Union v. Cookson Am., Inc., No. 12-1032-cv, 2013 WL 1092824 (2d Cir. Mar. 18, 2013), the Second Circuit held that a plant closure did not terminate a company's obligation to pay retiree medical allowances (RMA) where the facility closure agreement (FCA) required the company to honor the CBA's RMA provision. In so ruling, the court found that the FCA's independent requirement that the company honor the RMAs extended the parties' arrangement beyond the terms of the CBA and the closure of the facility.

District Court Rejects DOL's Attempt to Invalidate Indemnification Agreement

  • In Harris v. GreatBanc Trust Co., No. 5:12-cv-01648-R-DTB (C.D. Cal. Mar. 15, 2013), the court held that an indemnification agreement in favor of an ESOP fiduciary did not violate ERISA Section 410(a), which prohibits exculpatory agreements for fiduciary breaches. The court found that the indemnification agreement was not invalid because it expressly prohibited indemnification if a court entered a final judgment from which no appeal could be taken that the fiduciary breached its duties under ERISA. The court also held that the agreement was not void under ERISA Section 410(a) merely because it provided indemnification in the event of a settlement, even if the fiduciary admitted it breached its fiduciary duties.

No Plausible Fiduciary Breach Claim Arising From "Underperforming" Default Fund

  • In Laboy v. Bd. of Trustees of Bldg. Service 32BJ SRSP, 2013 WL 811735 (2d Cir. Mar. 6, 2013) (unpublished), the Second Circuit affirmed that there was no fiduciary breach arising from plaintiffs' claims that trustees of a multi-employer pension plan maintained an underperforming default investment vehicle, with excessive fees, for a 401(k) plan. Plaintiff's excessive fee claim failed because the fees charged by the default fund were within the range of fees charged by similar investment vehicles. Similarly, plaintiffs' claim that the fund should have been replaced due to underperformance was rejected because the complaint acknowledged that the fund performed within the top third of its peer group during the relevant period. Finally, there was no allegation of self-dealing or conflict of interest to form the basis of a plausible fiduciary breach claim.

Fourth Circuit Says District Court Properly Considered Evidence of Administrative Record

  • In Helton v. AT&T Inc., No. 11–2153, 2013 WL 812118 (4th Cir. Mar. 6, 2013), the Fourth Circuit found that the district court properly considered limited evidence outside of the administrative record; that AT&T breached its statutory and fiduciary duties to Helton, and that the district court did not err in awarding Helton "retroactive" benefits. Relying on principles of agency, the Fourth Circuit reasoned that plan administrators may be deemed to "have knowledge of information acquired by its employees in the scope of their employment and the content of its books and records."

Untimely Claim for Benefits Accrued Upon Payment of Severance Benefit

  • In Fuller v. Owens Corning Fiberglas, 12-cv-01087 (W.D. Tenn. Mar. 26, 2013), a district court ruled that the statute of limitations for plaintiff's claim for additional severance benefits began to run at the time defendant approved his severance claim and issued him a severance check. In so ruling, the court held that plaintiff's complaint was untimely because it was filed more than six years from the date of his severance payment and he should have filed a claim for additional benefits sooner if he believed that he was not paid the correct amount.

Monetary Damages Potentially Available For Inadequate Disclosure

  • In Weaver Bros. Ins. Assoc., Inc. v. Braunstein, No. 11-5407, 2013 WL 1195529 (E.D. Pa. Mar. 25, 2013), a district court denied the plan administrator's motion for judgment on the pleadings, ruling that monetary relief may be available for ERISA violations associated with the plan administrator's failure to properly communicate the participant's benefit rights following conversion from full-time employment to disabled status. The participant, Ms. Braunstein, was covered by a life insurance policy through her employer, but coverage lapsed 12 months after she left "active" employment for disability leave. The court first determined that the plan administrator failed to provide an adequate summary plan description and that this precluded Ms. Braunstein from independently learning of her right to convert to an individual policy. The court also determined that since the plan administrator had actual knowledge of Ms. Braunstein's prolonged illness, it had an affirmative duty to inform her of "material information that could affect [her] benefits" - such as the policy conversion clause. Finally, relying on CIGNA Corp v. Amara, 131 S. Ct. 1866 (2011), the court rejected the plan administrator's argument that damages were limited to non-monetary "equitable" relief, and that under these circumstances, the participant's estate may be entitled to recover the face value of the participant's life insurance policy as a "surcharge" remedy.