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

Under the Employee Retirement Income Security Act, 29 U.S.C. 1001, plan fiduciaries have a duty of prudence that generally requires diversification. To “solve the dual problems of securing capital funds for necessary capital growth and of bringing about stock ownership by all corporate employees,” Employee Stock Ownership Plans (ESOPs) are permitted to invest primarily in qualifying employer securities, rather than diversifying across securities of many companies. In 1995, the Third and Sixth Circuits adopted a presumption that an ESOP fiduciary’s decision to remain invested in employer securities is prudent. In 2008, GM faced severe business problems that resulted in its bankruptcy. GM employees, invested in the GM ESOP, sued State Bank, the fiduciary of the GM Common Stock Plan. That Plan lost money in 2008, but State declined to stop buying GM stock until November, 2008, and did not sell GM stock until March, 2009. In 2010, the district court dismissed, applying the presumption of prudence. In 2012, the Sixth Circuit remanded. After class certification, the district court, applying the presumption, granted State summary judgment. In the meantime, the Supreme Court abrogated the presumption altogether. The Sixth Circuit affirmed summary judgment, noting that during the relevant period, State’s managers repeatedly discussed whether to continue the GM investments, engaging in a “prudent process.” View "Pfeil v. State St. Bank & Trust Co." on Justia Law

In 2007, Durand filed an Employee Retirement Income Security Act, 29 U.S.C. 1001–1461 (ERISA) class action against her former employer and the pension plan it sponsors, challenging the projection rate used by the Plan to calculate the lump-sum payment Durand elected to receive after ending her employment at the Company in 2003. The Plan then used a 401(k)-style investment menu to determine the interest earned by members’ hypothetical accounts. Durand alleged that it impermissibly used the 30-year Treasury bond rate instead of the projected rate of return on her investment selections in the “whipsaw” calculation required under pre-2006 law. The Sixth CIrcuit reversed dismissal for failure to exhaust administrative remedies. Defendants then answered the complaint and raised defenses, including that the claims of putative class members “who received lump-sum distributions after December 31, 2003” were barred due to an amendment to the Plan that took effect after that date. Plaintiffs argued that the 2004 Amendment was an illegal reduction or “cutback” in benefits. The Sixth Circuit affirmed that the “cutback” claims were time-barred and did not relate back to the “whipsaw” claim asserted in the original class complaint. View "Durand v. Hanover Ins. Group, Inc." on Justia Law

Waskiewicsz suffers from type-1 diabetes, major depression, and gender identity disorder She worked as a product design engineer for Ford from 1990 until October, 2010, when she suffered “a debilitating emotional breakdown.” In December, after her father found her barricaded in her house, she sought long-term disability benefits under Ford’s Plan, governed by the Employment Retirement Income Security Act, 29 U.S.C. 1001. Under the plan: An Active Employee whose employment is terminated . . . shall cease to be eligible for Benefits as of the earlier of: (a) the date the Employee has been notified; or (b) the day prior to the date of such termination (in the case of retroactive terminations) . .... An employee is required to notify the Claim Processor ... if the employee is absent for more than five (5) consecutive Workdays.” She did not give notice within the five-day period and was, apparently, terminated in the interim. UniCare concluded that she did not qualify for benefits. The Sixth Circuit reversed. On remand, Waskiewicz must be given the opportunity to show that her alleged failure to comply with the requirements of the Plan was due to the very disability for which she seeks benefits. View "Waskiewicz v. UniCare Life & Health Ins. Co." on Justia Law

The Iron Workers negotiated a contract that required JD Steel to make contributions, on behalf of its employees, to the pension funds for local unions in which the employees performed work, amounting $10.00 for every hour that a JD employee worked in the local union's territory. Later, the Iron Workers negotiated a similar contract with Davis Rebar, except that, rather than require contributions to the local unions’ pension funds, the contract required Davis to make identical contributions to the local unions’ defined-contribution plans, such as a 401(k) plan. In 2013, JD worked on a parking garage at Cleveland’s Fairview Hospital while Davis worked on a garage at University Hospital. Both jobs were within the territory of the Local 17 Iron Workers Union. Davis apparently used equipment bearing JD’s name and logo. The companies shared a foreman and supervisors. The pension plan sued under 29 U.S.C. 1132(a)(3), alleging that JD and Davis are actually the same company, so that Davis is bound by JD’s contract and must make additional payments. Each company has made all payments required by its individual contract. The Sixth Circuit affirmed dismissal. Reasoning that the same association of unions negotiated and signed both agreements, the court declined to set aside the association’s judgment regarding its members’ best interests. View "Bd. Trs. Local 17 Iron Workers Pension Fund v. Harris Davis Rebar LLC" on Justia Law

The NEI Board administers a self-funded, multi-employer health plan covered by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001. A Trust Agreement, executed by the participating companies and the Board, does not specify Plan details, but provides that “[t]he detailed basis on which payment of benefits is to be made … shall be set forth in the Plan of Welfare Benefits … subject to amendment by the Trustees.” The National Elevator Industry Health Benefit Plan Summary Plan Description, (SPD) provides the details and includes a subrogation provision: The Plan has the right to recover benefits advanced to a covered person for expenses or losses caused by another party. The Plan is only obligated to provide covered benefits resulting from that illness or injury that exceed amounts recovered from another party (regardless of whether designated to cover medical expenses). The Plan sought reimbursement for medical expenses paid on Moore’s behalf, following Moore’s settlement of a negligence action against entities responsible for injuries he suffered in an accident. Moore counterclaimed, alleging that the Board had violated its fiduciary duty by misrepresenting the Plan terms. The Sixth Circuit found that the SPD containing the subrogation provision set out the binding terms of the Plan and that the plain language of the provision required reimbursement. View "Bd. of Trustees v. Moore" on Justia Law

Nine multi-employer pension and welfare fringe benefit trust funds sued G&W Construction and its president, under the Labor Management Relations Act, 29 U.S.C. 185(a), and the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1145, to recover delinquent fringe-benefit payments under a contract between G&W and the Union. The defendants raised affirmative defenses of laches, estoppel, and waiver, alleging that the Union led G&W to believe that fringe benefit payments were due only for union members and that G&W relied upon the acts and omissions of the Union and the funds by bidding and accepting work on the reasonable understanding that Union wages and benefits did not apply to non-members. The Funds moved to strike the affirmative defenses, arguing that ERISA bars equitable defenses. The district court denied the motion to strike. The Sixth Circuit reversed in part. The district court should have granted the motion to strike the defenses of laches and equitable estoppel; the court declined to consider the district court’s ruling on the waiver defense. View "Operating Eng'rs Local 324 v. G & W Constr. Co." on Justia Law

In 2000, Rochow sold his interest in Universico to Gallagher and became President of Gallagher. As Gallagher employee, Rochow was covered under a LINA disability policy. In 2001, Rochow began to experience short term memory loss, chills, sweating, and stress. Gallagher demoted Rochow and forced Rochow to resign in January, 2002. In February 2002, Rochow experienced amnesia, was hospitalized, and was diagnosed with HSV-Encephalitis, a rare, severely debilitating brain infection. LINA repeatedly denied Rochow benefits stating that Rochow’s employment ended before his disability began. Rochow sued Cigna, LINA’s parent company, alleging breach of fiduciary duty under ERISA, 29 U.S.C. 1104(a). In 2007 the Sixth Circuit affirmed a decision that denial of Rochow’s claims was arbitrary and did not appear to have been made solely in the interest of the participants and beneficiaries or the exclusive purpose of providing benefits to participants and beneficiaries as required by ERISA. Rochow died in 2008. In 2009, the district court ordered an equitable accounting of profits and disgorgement of $3,797,867 under an equitable theory of unjust enrichment. The Sixth Circuit affirmed in 2013. Following rehearing en banc, the Sixth Circuit later vacated the disgorgement award and remanded the case to determine whether Rochow is entitled to prejudgment interest. View "Rochow v. Life Ins. Co. of North Am." on Justia Law

In 2005, Girl Scouts of the United States (GSUSA) chartered 312 councils until it combined them into 112 councils. It merged councils that did not participate in the National Girl Scout Councils Retirement Plan with participating councils and made about 1,850 nonparticipating employees eligible for a lifetime pension benefit without having previously contributed to the Plan. In 2006, GSUSA added the Voluntary Early Retirement Incentive Plan, enabling participants to subsidize and accelerate eligibility for their pensions. Girl Scouts of Middle Tennessee (GSMT) sued, claiming that the realignment and the early retirement amendment caused GSMT to incur massive new liabilities. As of 2007, the Plan had a surplus of over $150 million, but by 2011, it had a deficit close to $340 million. GSUSA implemented an increase of its councils’ contribution rates. GSMT wanted to withdraw from the Plan and form its own retirement plan. GSUSA would not grant GSMT permission to withdraw. GSMT sued under the Employee Retirement Income Security Act, federal and state common law, and Tennessee Code 48-53-104. The district court dismissed. The Sixth Circuit affirmed. GSMT has no claim under ERISA and the court declined to create federal common law. GSMT failed to properly plead its state law claim, which would fail as preempted by ERISA. View "Girl Scouts of Middle TN, Inc. v. Girl Scouts of U.S.A." on Justia Law

Smith was an employee CGC, which offered some employees, including Smith, enhanced compensation if they would remain with CGC through its merger with AEGON. Under the Voluntary Employee Retention and Retirement Program (VERRP) Smith would retire in 2000. Smith elected to receive $1,066.54 under the qualified plan and $1,122.97 under the non-qualified plan, through the “AEGON USA Pension Plan: Election for Distribution and Explanation of Benefits.” An attachment informed Smith that “you will be entitled to receive additional benefits from the [CGC] Retirement Plan.” The two plans subsequently merged. Smith retired and the Plan paid him a lump sum plus $2,189.51 per month. In 2007, AEGON amended the Plan to add a “Restriction on Venue. A participant or Beneficiary shall only bring an action in connection with the Plan in Federal District Court in Cedar Rapids, Iowa.” In 2011, the Plan told Smith that it had overpaid him by $1,122.97 per month for 11 years and eliminated Smith’s entire monthly payment to obtain recoupment. Smith exhausted administrative remedies then filed suit against CGC in state court, asserting breach of contract, wage and hour statutory violations, estoppel, and breach of the duty of good faith and fair dealing. CGC removed the action to federal court, which dismissed, finding that that the VERRP was regulated by ERISA, that Smith was suing to recover benefits under this ERISA plan, and that only the Pension Committee, not CGC, was a proper defendant. The Sixth Circuit affirmed. Smith filed suit against the AEGON Plan in the U.S. District Court for the Western District of Kentucky. The district court dismissed based on the venue selection clause. The Sixth Circuit affirmed, upholding the venue selection clause as applying to all actions brought by a participant or beneficiary, not just claims for benefits. View "Roger Smith v. Aegon Companies Pension Plan" on Justia Law

More than nine years ago, Butler checked into a substance-abuse treatment facility to obtain inpatient rehabilitation for her alcohol addiction. She sought coverage for the treatment through her husbandView "Butler v. United Healthcare of TN" on Justia Law