Justia U.S. 6th Circuit Court of Appeals Opinion Summaries

Heartland is an investment firm that formerly held an ownership interest in Metaldyne, an automotive supplier. Leuliette is a co-founder of Heartland and was the CEO and Chairman of the Board of Metaldyne. Tredwell is also a Heartland co-founder and a Metaldyne Board member. In 2006, Heartland agreed to sell its interest in Metaldyne to Ripplewood. Metaldyne submitted an SEC “Schedule 14A and 14C Information” report that detailed the terms of the acquisition, but failed to mention that Metaldyne would owe plaintiffs, former executives, approximately $13 million as a result of the sale, under a change-of-control provision in Metaldyne’s “Supplemental Executive Retirement Plan,” in which Plaintiffs participated. The SERP is subject to Employee Retirement Income Security Act of 1974. Ripplewood threatened to back out of the deal when it found out about the obligation. In response, Leuliette and Tredwell persuaded Metaldyne’s Board to declare the SERP invalid without notifying Plaintiffs. The Ripplewood deal closed less than a month later. Leuliette personally collected more than $10 million as a result. Plaintiffs claimed tortious interference with contractual relations. The district court dismissed. The Sixth Circuit reversed, holding that the state law claims were not “completely preempted” under section 1132(a)(1)(B) of ERISA. View "Gardner v. Heartland Indus. Partners, LP" on Justia Law

Former employees of AK Steel filed a class action under the Employee Retirement Income Security Act (ERISA), including claims for a “whipsaw” calculation of their benefits from a pension plan in which they participated before terminating their employment. The employees were originally involved in a related class action that included identical claims against the same defendants, but were excluded from that litigation due to their execution of a severance agreement and release that each of them signed during the that litigation. The district court ruled in favor of the employees. The Sixth Circuit reversed an award of prejudgment interest for failure to consider case-specific factors, but otherwise affirmed denial of a motion to dismiss; class certification; and partial summary judgment on liability. The employees’s future pension claims were not released as a matter of law because the whipsaw claims had not accrued at the time of the execution of the severance agreements and because the scope of the contracts did not relate to future ERISA claims. View "Schumacher v. AK Steel Corp." on Justia Law

Judge, who worked as an airline baggage handler and ramp agent for 20 years, underwent surgery to repair an aortic valve and a dilated ascending aorta. He applied for disability benefits under a group insurance policy issued by MetLife. MetLife denied benefits, finding that Judge was not totally and permanently disabled under the terms of the Plan. After exhausting internal administrative procedures, Judge sued to recover benefits under 29 U.S.C. 1132(a)(1)(B), the Employee Retirement Income Security Act (ERISA). The district court granted judgment on the administrative record in favor of MetLife. The Sixth Circuit affirmed, rejecting arguments that MetLife applied the wrong definition of “total disability,” erred in failing to obtain vocational evidence before concluding that Judge was not totally and permanently disabled, erred in conducting a file review by a nurse in lieu of having Judge undergo independent medical examination, and that there was a conflict of interest because MetLife both evaluates claims and pays benefits under the plan. View "Judge v. Metro. Life Ins. Co." on Justia Law

The Fund, a multi-employer pension plan under ERISA, has a Plan, providing for administration by a Board with authority to make benefit determinations and amend the Plan, including retroactively. No amendment may result in reduced benefits for any participant whose rights have vested, except in specified circumstances. Price began receiving Plan disability benefits under the “Total and Permanent Disability Benefit” category in 1990, after work-related injuries left him unable to work. In 2001, the Fund notified Price that he no longer qualified for benefits under this category, but that he could continue receiving benefits under provisions for “Occupational Disability Benefit.” His benefits were discontinued after 2006, according to an Amendment. Price became eligible for early retirement in 2012. The Board rejected an appeal. The district court granted Price judgment in his suit under ERISA, 29 U.S.C. 1132(a)(1)(B). On remand from the Sixth Circuit, for review determination of vesting under the arbitrary and capricious standard, the judge again ruled in favor of Price. The Sixth Circuit again reversed; the court failed to look to the terms of the plan but instead found that because the Board’s decision letter did not discuss whether the benefits vested, the Board’s decision was arbitrary and capricious. View "Price v. Bd. of Trs. of IN Laborers' Pension Fund" on Justia Law

In 1992 Navistar attempted to reduce its costs for retired employee health and life insurance benefits. Navistar’s retirement benefit plan is a registered employee health benefit plan under the Employee Retirement Income Security Act, 29 U.S.C. § 1001 and Navistar is both plan administrator and fiduciary. In 1993, the district court entered judgment in a class action challenging the change, adopting an agreement between the parties and retaining jurisdiction. The Agreement established the Retiree Health Benefit and Life Insurance Plan. The Plan established the Health Benefit Program Summary Plan Description, which contains a description of the health benefits and is furnished to all beneficiaries. The Agreement divides health benefits into two plans: Plan 2 for those eligible for Medicare and Plan 1 for those who are not eligible. A prescription drug benefit was provided under the Agreement, identical for both Plan 1 and Plan 2. When Navistar moved to substitute Medicare Part D into the Plan, class members claimed violation of the Agreement. The district court ordered Navistar to reinstate, retroactively, the prescription drug benefit that was in effect before Navistar made the unilateral substitution. The Sixth Circuit affirmed,View "Shy v. Navistar Int'l Corp." on Justia Law

While employed at PPG, plaintiffs were represented by three labor unions. In 2001 PPG modified health benefits for retirees, requiring that retirees pay a portion of the cost. The unions thought the modification was a breach of collective bargaining agreements and sued, requesting that the Pennsylvania district court order PPG to arbitrate the benefit dispute with the unions. The district court entered judgment for PPG, holding that the benefits had not vested. The Third Circuit affirmed. Meanwhile, in 2005, more than a year before the district court entered judgment, several individual retirees filed a putative class action in the Southern District of Ohio. Their core allegation was identical to that in the Pennsylvania action; they asserted claims under the Labor Management Relations Act and ERISA and sought monetary damages and an injunction ordering reinstatement of full coverage. The district court held that the Pennsylvania judgment collaterally estopped the plaintiffs from arguing the contrary in this case. The Sixth Circuit reversed. The district court in the Pennsylvania action neither certified a class nor employed any other “special procedures” to protect the retirees’ interests in that action, so the plaintiffs are not bound to that decision. View "Amos v. PPG Indus., Inc." on Justia Law

Plaintiff is the surviving spouse of a 39-year AK employee, who died in 2008, then receiving a monthly pension benefit of $1,386. Plaintiff applied for the surviving spouse benefit and was advised that she was entitled to$693 (50%), reduced by 50% of her social security widow’s benefit (not yet determined), but not less than $140 per month. SSA first advised AK that plaintiff’s monthly benefit would be $458. Weeks later, SSA indicated that the widow’s benefit would be $1469. AK calculated the $140 benefit. Plaintiff received a statement from SSA indicating her widow’s benefit amount was $485 and plaintiff’s own earnings benefit was $973: a total monthly payment of $1,458. Plaintiff calculated that 50% of the $485 widow’s benefit, subtracted from $693, yielded a monthly benefit of $450.50 under the AK Plan. According to AK, $458 represented only the remainder of the entire widow’s benefit, $1,469, after offset for plaintiff’s own old-age retirement benefit, $1,011. In an action under ERISA, 29 U.S.C. 1001, the district court awarded judgment to plaintiff. The Sixth Circuit reversed, holding that AK’s proposed interpretation of the plan language to be truer to its plain meaning when read with reference to the law it expressly refers to. View "Lipker v. AK Steel Corp." on Justia Law

A collective bargaining agreement governs the relationship between Acument and its retired employees. Prior to 2008, the company paid healthcare and life-insurance benefits to qualified retirees. When Acument ended these benefits in 2008, a class of 64 retirees claimed that the company had violated the CBA in violation of the Employee Retirement Income Security Act and the Labor Management Relations Act. The district court granted Acument summary judgment. The Sixth Circuit affirmed, characterizing the issue as “a matter of contract.” The relevant language states that the company “reserves the right to amend, modify, suspend, or terminate the Plan,” consisting of: retiree medical coverage; retirement income; disability income; and life insurance. View "Witmer v. Acument Global Tech., Inc." on Justia Law

In a 2009 opinion, the Sixth Circuit held that, in a 1998 collective bargaining agreement, CNH agreed to provide health-care benefits to retirees and their spouses for life, but rejected the suggestion that the scope of this commitment in the context of healthcare benefits, as opposed to pension benefits, meant that CNH could make no changes to the healthcare benefits provided to retirees. The court remanded for a determination of reasonableness with respect to CNH’s proposed changes to its retiree healthcare benefits, under which retirees, previously able to choose any doctor without suffering a financial penalty, would be put into a managed-care plan. The court listed three considerations: Does the modified plan provide benefits “reasonably commensurate” with the old plan? Are the proposed changes “reasonable in light of changes in health care”? And are the benefits “roughly consistent with the kinds of benefits provided to current employees”? On remand, the district court granted CNH summary judgment without reaching the reasonableness question or creating a factual record from which the determination could be made on appeal. The Sixth Circuit again remanded.View "Reese v. CNH America LLC" on Justia Law

Former Fifth Third employees participated in a defined contribution retirement plan with Fifth Third as trustee. Participants make voluntary contributions and direct the Plan to purchase investments for their individual accounts from preselected options. The options included Fifth Third Stock, two collective funds, or 17 mutual funds. Fifth Third makes matching contributions for eligible participants that are initially invested in the Fifth Third Stock Fund but may be moved later to other investment options. Significant Plan assets were invested in Fifth Third Stock. Plan fiduciaries incorporated by reference Fifth Third’s SEC filings into the Summary Plan Description. Plaintiffs allege that Fifth Third switched from being a conservative lender to a subprime lender, its loan portfolio became increasingly at-risk, and it either failed to disclose or provided misleading disclosures. The price of the stock declined 74 percent. The district court dismissed a complaint under the Employee Retirement Income Security Act, 29 U.S.C. 1001, based on a presumption that the decision to remain invested in employer securities was reasonable. The Sixth Circuit reversed, holding that the complaint plausibly alleged a claim of breach of fiduciary duty and causal connection regarding failure to divest the Plan of Fifth Third Stock and remove that stock as an investment option. View "Dudenhoefer v. Fifth Third Bancorp" on Justia Law