Articles Posted in ERISA

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The Tennessee Valley Authority (TVA) funds a retirement plan, administered by “the Board, and provides defined benefits to participants that includes a cost-of-living adjustment. In 2009, the Plan found that its liabilities exceeded its assets and it needed to make some changes to ensure its long-term stability. The Board temporarily lowered cost-of-living adjustments and increased the age at which certain participants would become eligible for cost-of-living adjustments. Plaintiffs, a class of participants, maintain that the Board failed to give proper notice to the TVA and Plan members before making the cuts and violated the Plan’s rules by paying their cost-of-living adjustments for certain years out of the wrong account. The district court rejected both claims on summary judgment. The Sixth Circuit affirmed in part, agreeing that the Board gave the required 30 days’ notice to the TVA and Plan members, after which the TVA may “veto any such proposed amendment” within the 30-day period, “in which event it shall not become effective.” The court vacated and remanded the accounting claim with instructions to dismiss it for lack of subject-matter jurisdiction. Plaintiffs have suffered no injury-in-fact, and have no standing. View "Duncan v. Muzyn" on Justia Law

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The plaintiffs, former employees at Honeywell’s Boyne City, Michigan auto parts plant, were represented by the UAW while working. The collective bargaining agreement (CBA) between that union and Honeywell that became effective in 2011 and expired in 2016 stated: Retirees under age 65 who are covered under the BC/BS Preferred Medical Plan will continue to be covered under the Plan, until age 65, by payment of 16% of the retiree monthly premium costs ... as adjusted year to year,” Article 19.7.4. The plaintiffs took early retirement under the 2011 CBA and received Honeywell-sponsored healthcare, consistent with Article 19.7.4. Other Boyne City employees had retired before the 2011 CBA took effect, but were still eligible for benefits under Article 19.7.4. In 2015, Honeywell notified the UAW and the Boyne City retirees that it planned to terminate retiree medical benefits upon the 2011 CBA’s expiration. The plaintiffs, citing the Labor Management Relations Act, the Employment Retirement Income Security Act, and Michigan common law estoppel, obtained a preliminary injunction. The Sixth Circuit reversed, reasoning that the CBA did not clearly provide an alternative end date to the CBA’s general durational clause, so the plaintiffs have not shown a likelihood of success on the merits. View "Cooper v. Honeywell International, Inc." on Justia Law

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Cincinnati ordinances provide guidelines for selecting the “lowest and best bidder” on Department of Sewers projects to “ensure efficient use of taxpayer dollars, minimize waste, and promote worker safety and fair treatment of workers” and for bids for “Greater Cincinnati Water Works and the stormwater management utility division,” to employ skilled contractors, committed to the city’s “safety, quality, time, and budgetary concerns.” Allied alleged that the Employee Retirement Income Security Act (ERISA) preempted: a requirement that the bidder certify whether it contributes to a health care plan for employees working on the project as part of the employee’s regular compensation; a requirement that the bidder similarly certify whether it contributes to an employee pension or retirement program; and imposition of an apprenticeship standard. Allied asserts that the only apprenticeship program that meets that requirement is the Union’s apprenticeship program, which is not available to non-Union contractors. The ordinances also require the winning contractor to pay $.10 per hour per worker into a city-managed pre-apprenticeship training fund, not to be taken from fringe benefits. The district court granted Allied summary judgment. The Sixth Circuit reversed. Where a state or municipality acts as a proprietor rather than a regulator, it is not subject to ERISA preemption. The city was a market participant here: the benefit-certification requirements and the apprenticeship requirements reflect its interests in the efficient procurement of goods and services. View "Allied Construction Industries v. City of Cincinnati" on Justia Law

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Under the Multiemployer Pension Plan Amendments Act, part of ERISA, a construction industry employer who withdraws from a multiemployer pension plan owes liability to that plan if the employer conducts work “in the jurisdiction of the collective bargaining agreement (CBA) of the type for which contributions were previously required,” 29 U.S.C. 1383(b)(2)(B)(i). The Iron Workers Local 17 Pension Fund assessed pension liability against Stevens Engineers claiming that Stevens’s activities on a certain construction project involved such work within the jurisdiction of their previous CBA. An arbitrator, the district court, and the Sixth Circuit found that Stevens did not owe pension liability to the Fund because the work identified by Local 17 did not fall within the jurisdiction of the relevant CBA, and did not otherwise require contributions by Stevens. The CBA instead allowed Stevens to assign jobs like the ones at issue to other trade unions, and a job did not trigger pension liability to the Fund if, as here, it was properly assigned to a different union. View "Stevens Engineers & Constructors, Inc. v. Local 17 Iron Workers Pension Fund" on Justia Law

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Bruce and Bridget married in 1993. Their only child, Sierra, was born in 1995. In 2003, Bruce signed up for a life insurance plan sponsored by his employer and governed by the Employee Retirement Income Security Act (ERISA). Bruce listed his uncle as the sole beneficiary. Bruce and Bridget divorced in 2006. Bruce died in 2013, insured for $48,000 in basic life insurance and $191,000 in optional life insurance. In their 2006 divorce decree, Bruce and Bridget agreed to maintain any employer-related life insurance policies for the benefit of Sierra until she turned 18 or graduated from high school. Bruce had not changed his beneficiary. The district court ordered payment to Sierra. The Sixth Circuit affirmed. The divorce decree suffices as a qualified domestic relations order that, incorporating the Jacksons’ separation agreement and their shared parenting plan, “clearly specifies” Sierra as the beneficiary under 29 U.S.C. 1056(d)(3)(C). Her parents’ (alleged) non-compliance with the decree does not limit Sierra’s rights under ERISA. View "Sun Life Assurance Co. v. Jackson" on Justia Law

Posted in: ERISA, Family Law

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Corey worked as a machine operator in Eaton’s Ohio factory. Corey has long suffered from cluster headaches— extremely painful attacks that strike several times per day for weeks on end. In 2014, Corey applied for short-term disability benefits under Eaton’s disability plan after a bout of headaches forced him to miss work. After granting a period of disability, the third party administering Eaton’s disability plan discontinued benefits because Corey failed to provide objective findings of disability. Under the plan, “[o]bjective findings include . . . [m]edications and/or treatment plan.” Corey’s physicians treated his headaches by prescribing prednisone, injecting Imitrex (a headache medication), administering oxygen therapy, and performing an occipital nerve block. The district court upheld the denial. The Sixth Circuit reversed, citing the Employee Retirement Income Security Act, 29 U.S.C. 1132(a)(1)(B). Corey’s medication and treatment plan satisfy the plan’s objective findings requirement. View "Corey v. Sedgwick Claims Management Services, Inc." on Justia Law

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The Sixth Circuit affirmed the Bankruptcy Court’s order in Conco’s Chapter 11 bankruptcy, interpreting Conco’s Confirmed Plan to prohibit the sale of the Employee Stock Ownership Plan (ESOP)-held Conco stock (Equity Interests) and enjoining any such sale through December 31, 2018. The creditor’s committee had agreed to support the Plan, which provided both defined distributions and contingent distributions, to be funded by the operation of the Conco’s business, to continue through December 31, 2018. The Plan guaranteed the creditors a higher recovery than if the business were sold. ESOP participants sued Conco, its Board of Directors, the ESOP, and ESOP Trustees (ERISA Litigation) claiming breach of fiduciary duties by not evaluating and responding to offers by to purchase the Equity Security Interests. The Bankruptcy Court found, and the Sixth Circuit agreed, that the four corners of the Confirmed Plan, and the creditors’ abandonment of an objection under the absolute priority rule of 11 U.S.C. 1129(b)1 to the ESOP’s retention of the Equity Interests, evidenced an intent for the Equity Interests not to be sold through December 31, 2018. View "In re: Conco, Inc." on Justia Law

Posted in: Bankruptcy, ERISA

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Plaintiffs, CNH employees who retired between 1994 and 2004, filed suit in 2004, seeking a declaration that they were entitled to lifetime healthcare benefits without paying premiums, based on collective-bargaining agreements (CBAs), negotiated by UAW beginning in 1971. The case was remanded to the district court twice. While the second remand was pending, the Supreme Court (Tackett, 2015) abrogated Sixth Circuit precedent creating an inference in favor of employees in collective-bargaining cases. Initially, the district court ruled in favor of CNH, noting that it was “[c]onstrained by the Supreme Court’s decision” in Tackett. On reconsideration, the district court found not only that plaintiffs’ rights were vested even after Tackett, but also that CNH’s proposed changes were unreasonable. The Sixth Circuit affirmed as to vesting, noting that the CBA is ambiguous and extrinsic evidence indicated that parties intended for the healthcare benefits to vest for life. The court remanded because the court failed to properly weigh the costs and the benefits of the proposed plan, as previously instructed. “To find ambiguity in this case, partially from the silence as to the parties’ intentions, does not offend the Supreme Court’s mandate from Tackett that we not infer vesting from silence.” View "Reese v. CNH Industrial, N.V." on Justia Law

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Plaintiffs, Medicare-eligible retirees from Kelsey-Hayes' Detroit automotive plant, retired before the plant’s 2001 closing and were members of a UAW bargaining unit. The final (1998) collective bargaining agreement (CBA) provided for comprehensive healthcare for retirees. A Plant Closing Agreement stated that it did not extinguish pension or retiree healthcare obligations. Kelsey-Hayes continued to provide retiree healthcare coverage for 10 years, consistent with the 1998 CBA. In 2011, Kelsey-Hayes announced that it was replacing the retirees’ group-insurance plan with company-funded health reimbursement accounts (HRAs) from which retirees could purchase individual Medicare supplemental insurance plans. In 2012, Kelsey-Hayes contributed $15,000 to each participant’s HRA; in 2013 and 2014, it contributed $4,300 per year. Plaintiffs sued under the Labor Management Relations Act, 29 U.S.C. 185, and the Employee Retirement Income Security Act, 29 U.S.C. 1001. The Sixth Circuit stayed litigation pending the Supreme Court’s 2015 Tackett decision. The district court then granted the plaintiff-retirees partial summary judgment and ordered defendants to reinstate the group insurance plan. The Sixth Circuit affirmed, distinguishing the language and history of the Kelsey-Hayes CBAs from the language at issue in Tackett. Tackett explicitly overruled Sixth Circuit precedent and held that a presumption toward lifetime benefits violates basic principles of contract interpretation; however, pre-Tackett courts’ interpretation of language that parties subsequently agree to maintain can inform interpretation of their intent at the time they entered into the CBA. View "International Union, United Automobile, Aerospace & Agricultural Implement Workers of America v. Kelsey-Hayes Co." on Justia Law

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The economic health of Cliffs, a publicly-traded iron-ore and coal-mining company, depends on Chinese economic growth. In 2011, Chinese construction projects drove iron-ore prices to all-time highs. Cliffs financed the purchase of Bloom Lake Mine in Quebec. Projecting that the mine would increase cash-flow, Cliffs upped its stock dividend to double the S&P 500 average. In 2012, a global demand slump halved the price of iron ore. The mine became a major liability. In 2013, Cliffs stock performed worse than any other company in the S&P 500. Cliffs lost 95% of its value between 2011 and 2015. Plaintiffs are Cliffs employees who participated in the company’s 401(k) defined-contribution plan, which allowed participants to invest in 28 mutual funds, including an array of target-date, stock, and bond funds, or an Employee Stock Ownership Plan (ESOP) that invested solely in Cliffs stock. If the employee failed to choose an investment option, the fiduciary directed contributions into a money-market fund. The Sixth Circuit affirmed dismissal of plaintiffs’ class action under the Employee Retirement Income Security Act, 29 U.S.C. 1104(a)(1), which claimed that the plan’s fiduciaries imprudently retained Cliffs stock as an investment option. The court stated that any change in policy with respect to diversification and ESOPs must come from Congress. View "Saumer v. Cliffs Natural Resources, Inc." on Justia Law

Posted in: ERISA