CHAPTER 12 CIVIL PRACTICE AND PROCEDURE

CHAPTER 12 CIVIL PRACTICE AND PROCEDURE

AMERICAN BAR ASSOCIATION

LABOR AND EMPLOYMENT SECTION EMPLOYEE BENEFITS COMMITTEE

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Co-Chairs

R. Joseph Barton, Block & Leviton LLP Employee/Plaintiff Co-Chair

Joseph Creitz, Creitz & Serebin LLP

Employee/Plaintiff Co-Chair

Tulio D. Chirinos, Proskauer Employer/Management Co-Chair

Joseph Clark, Proskauer

Employer/Management Co-Chair

Jennie Arnold, Ledbetter & Parisi, LLC Union Co-Chair

Usha Rengachary, United States Department of Labor

Neutral Co-Chair

Contributors

Benjamin Flaxenburg

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I. INTRODUCTION

II. CLAIMS FOR RELIEF

A. Section 502(a)(1)(A): Suits to Redress Failure to Provide Required Information

1. Claim for Relief

In the absence of a written request for documents such as a summary plan description, a collective bargaining agreement, trust agreement, or contract, a claim brought under 502(a)(1)(A) does not sufficiently allege a claim for relief. Maldonado v. Empire Healthchoice Assurance, No. 2:20-cv-01387-SVW-SK, 2020 U.S. Dist. LEXIS 162456, at *15-16 (C.D. Cal. June 29, 2020)

If a request for documents is not made in writing, a statutory penalty for a failure to respond to a request is not available. Conner v. Associated Radiologists, Inc., No. 2:19-cv-00329, 2020 U.S. Dist. LEXIS 26058, at *7 (S.D. W. Va. Feb. 14, 2020)

A complaint alleging a failure to provide requested information failed based on the fact that the plaintiff did not allege their request for documents was made in writing. Metro. Surgical Inst., LLC v. Cigna, Civil Action No. 19-15827 (MAS) (LHG), 2020 U.S. Dist. LEXIS 136605, at *14 (D.N.J. July 31, 2020)

Following a request for “documents relevant to a claim,” the court concluded the request was broad enough that the plan administrator should have provided all “legal documents governing a plan” that were responsive. The court found that a “participant or beneficiary may not know how to identify the specific instruments sought,” and thus the broad request was sufficient. Meucci v. Aurora Network Plan, No. 19-CV-1188, 2020 U.S. Dist. LEXIS 99833, at *19 (E.D. Wis. June 8, 2020)

2. Plaintiffs

A plaintiff was no longer employed, but was still a “participant or beneficiary” entitled to bring suit because there was a colorable claim to an entitlement to benefits under the relevant plan. Thus that participant was entitled to bring suit under the statute. Alberth v. S. Lakes Plumbing & Heating, Inc., No. 19-CV-62, 2020 U.S. Dist. LEXIS 39136, at *22-23 (E.D. Wis. Mar. 6, 2020)

Where a complaint did not specifically explain whether a participant’s assignment of rights to a medical provider included the right to obtain plan documents, as opposed to a right to benefits payable, a claim for relief was not sufficiently pleaded to allow a claim by a medical provider. Surgery Ctr. of Viera, LLC v. Unitedhealthcare, Inc., 465 F. Supp. 3d 1211, 1218 (M.D. Fla. 2020)

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3. Defendants

A request for documents must be addressed to the true plan administrator, and not a claims administrator. If a request is addressed only to a claims administrator, there is not a sufficient basis for statutory penalties for a failure to provide requested documents. N.R. v. Raytheon Co., No. 20-10153-RGS, 2020 U.S. Dist. LEXIS 101197, at *27 (D. Mass. June 9, 2020)

Where a request for documents was addressed to a claims administrator, and not to the plan administrator, ERISA disclosure requirements were not triggered and statutory penalties were not appropriate. David P. v. United Healthcare Ins. Co., No. 2:19-cv-00225-JNP-PMW, 2020 U.S. Dist. LEXIS 21967, at *57-58 (D. Utah Feb. 7, 2020)

No party other than the plan administrator may be held liable for a failure to requested documents. Claims administrators are not liable for a failure to respond to document requests. Morris v. Aurora Network Plan, 465 F. Supp. 3d 868, 876-77 (E.D. Wis. 2020)

4. Statute of Limitations

ERISA itself does not contain a statute of limitations for claims for statutory penalties for a failure to respond to requests for documents. Thus, the courts must look to analogous state statutes of limitations. In Tennessee, the closest state statute of limitations was found to be a one year statute of limitations. The statutory time period began to run 30 days after the unfulfilled request was made. Day v. S. Elec. Ret. Fund Bd. of Trs., No. 1:19-cv-253, 2020 U.S. Dist. LEXIS 219911, at *6-8 (E.D. Tenn. Aug. 27, 2020)

5. Remedies

Having determined at summary judgment that statutory penalties for a failure to provide requested information were warranted, the court indicated that it would wait until the conclusion of a planned trial in order to determine the appropriate amount of penalty. Alberth v. S. Lakes Plumbing & Heating, Inc., No. 19-CV-62, 2020 U.S. Dist. LEXIS 39136, at *26 (E.D. Wis. Mar. 6, 2020)

6. Other Actions to Obtain Documents

No developments to report.

B. Section 502(a)(1)(B): Suits to Enforce Benefit Rights or Plan Terms

1. Claim for Relief

In Sullivan-Mestecky v. Verizon Commc’ns Inc., 961 F.3d 91 (2d Cir. 2020), plaintiff, as the beneficiary of her mother’s life insurance policy, sued her mother’s former employer and its insurer under Sections 502(a)(1)(B) and (a)(3) after defendant allegedly failed to pay her the entire benefit amount. Prior to her death, plaintiff’s mother

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had received various erroneous communications from defendant’s service provider representing that her life insurance coverage amount was $679,000, which was based on an incorrect calculation. Upon her mother’s death, plaintiff only received a death benefit of $11,400, which was consistent with the plan’s terms. Plaintiff subsequently challenged the benefit amount and was informed of the service provider’s calculation error, but was still denied any additional benefits under the policy. Plaintiff then sued defendant and its insurer under 502(a)(1)(B) for unpaid benefits, arguing that the terms of the plan entitled her to more generous benefits and that defendant’s flawed interpretation resulted in an impermissible retroactive amendment to the plan after her death. The Second Circuit upheld the district court’s dismissal of plaintiff’s claims because defendant chose, in its sole discretion, to pay the benefits consistent with the plan’s terms. (However, the Second Circuit reversed the district court’s dismissal of the Section 502(a)(3) claim).

2. Plaintiffs


3. Defendants

In Wolff v. Aetna Life Ins. Co., 2020 WL 1637938 (M.D. Pa. Apr. 2, 2020), a claimant for long-term disability benefits brought a putative class action against defendants Aetna Life Insurance Company and The Rawlings Company LLC (“Rawlings”), alleging that defendants improperly demanded subrogation from a tort settlement she had previously received. The court dismissed plaintiff’s 502(a)(1)(B) claim against Rawlings as an improper defendant, reasoning that plaintiff did not allege that Rawlings possessed “final authority over any decision involving the plan.” The court emphasized that a proper defendant in a 502(a)(1)(B) claim is the plan or a person who controls the administration of benefits, and noted that plaintiff’s alleged only that Rawlings was a third-party service provider.



5. Remedies


C. Section 502(a)(2): Suits to Redress Breaches of Fiduciary Duty

1. Claim for Relief

In Thole v. U.S. Bank N.A., 140 S. Ct. 1615, 1620-21 (2020), the Supreme Court affirmed that just because a statute grants a person a statutory right, and authorizes that person to vindicate such a right, does not mean that a plaintiff need not otherwise satisfy the requirement that they allege a concrete injury in order to state a viable claim for

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relief. The plan at issue was a defined benefit plan, and the participants who brought the claim received all of their monthly benefits to date, and “they will receive those same monthly payments for the rest of their lives,” and thus could not allege that they suffered an injury in fact.

In N.R. v. Raytheon Co., 2020 U.S. Dist. LEXIS 101197, *16-17 (D. Mass. June 9, 2020), the court held that a participant failed to allege facts that would establish a basis on which the plan would be entitled to relief. The participant alleged the plan sponsor breached its fiduciary duties by denying certain treatment for autism, claiming it and other plan participants suffered losses as a result. The participant did not, however, allege that the plan suffered losses; rather, the participant alleged the plan sponsor’s conduct resulted in unjust retention of funds. The court held that the relief sought would benefit only individuals personally, not the plan.

In Moitoso v. FMR LLC, 451 F. Supp. 3d 189, 217 (D. Mass. Mar. 27, 2020), the court considered whether participants in a 401(k) plan sufficiently pled losses to the plan where the participants alleged they were made to pay excessive recordkeeping expenses due to the fiduciaries’ failure to monitor. Though losses to an individual account could give rise to a cause of action for fiduciary breach under Section 502(a)(2), as explained in LaRue v. DeWolff, Boberg & Assoc., 552 U.S. 248 (2008), the court concluded there still must be some net loss to the plan to create cognizable liability, which was not the case here.

In Scheinoff v. Zelnick, Mann, & Winikur, P.C., 2020 U.S. Dist. LEXIS 221089 (E.D. Pa. Nov. 25, 2020), an employee sued his employer, alleging he was wrongfully denied an opportunity to participate in the employer’s retirement plan. The court granted the employer’s motion to dismiss, in relevant part, for lack of a remedy under Section 502(a)(2). The plan was a defined contribution plan (so LaRue might have applied), but the court determined the alleged breach did not even impair the assets in the employee’s individual account because the employee was never actually enrolled in the plan.

2. Plaintiffs

In Metro. Surgical Inst., LLC v. Cigna, 2020 U.S. Dist. LEXIS 136605, *12 (D.N.J. July 31, 2020), an insurer moved to dismiss a provider’s lawsuit on the grounds that the provider was not a proper plaintiff pursuant to anti-assignment provisions in “many Cigna plans.” The court noted that while anti-assignment provisions are generally enforceable, the insurer failed to direct the court to the operative anti-assignment provisions relevant to this case. The court rejected the insurer’s argument that it was the provider’s responsibility to provide the court with these provisions, and held that, “until the anti-assignment provisions…are available to the Court, the Court is unable to determine their enforceability and applicability.” Accordingly, the provider adequately pleaded derivative standing by assignment for purposes of Section 502(a).

In Pizella v. Vinoskey, 2020 U.S. Dist. LEXIS 15464. *7-8 (W.D. Va. Jan. 29, 2020), a bank argued that the Secretary of Labor could not be a proper plaintiff in an

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action under Section 409 because “only the plan is explicitly entitled to monetary relief.” Citing the express language of Section 502(a)(2), wherein the Secretary is specifically authorized to bring civil actions for relief under Section 409, the court rejected the bank’s argument and noted that “[a] clearer authorization for the Secretary to pursue damages would be difficult to find.”

In Teamsters Local Union No. 786 v. Blevins, 2020 U.S. Dist. LEXIS 184704, *9-10 (N.D. Ill. Oct. 6, 2020), the court held that a union was a proper plaintiff under Section 502(a)(2). In the Seventh Circuit, a party may be considered a fiduciary where it has authority to select and retain plan administrators. The trustees of the plan argued that the union no longer had such authority following certain amendments they made to the trust agreements. These amendments, however, were exactly the amendments the union was challenging through this action, and the court stated “it would be perverse to permit defendants to deprive a plaintiff of standing through the very act they seek to challenge as unlawful. The court also noted that in the Seventh Circuit plaintiffs are not required to show that a plan lost money as a result of alleged breaches of fiduciary duties, so it also rejected the trustees’ argument the union failed to plead any financial losses.

3. Defendants

In Select Specialty Hosp.-Memphis v. Trs. of the Langston Cos., 2020 U.S. Dist. LEXIS 130740 (W.D. Tenn. July 24, 2020), the court found that the plan’s third party administrator and a vendor selected by the third party administrator to assist with reviewing, auditing, and making benefit determinations, were both fiduciaries for purposes of an action brought under Section 502(a)(2). Pursuant to an administrative services agreement, the administrator had discretionary authority over plan benefit, coverage determinations, and services. The administrator also made representations to the plaintiff provider regarding coverage and payment determinations, which support a finding that the administrator was a fiduciary. Likewise, as alleged, the vendor had control and full discretionary authority to adjudicate, deny and approve claims on behalf of the plan, and its determinations were binding on beneficiaries, the administrator, and the plan.

In Bator v. Dist. Council 4, Graphic Communs., IBT, 972 F.3d 924, 932 (7th Cir. 2020), the Seventh Circuit affirmed the lower court’s dismissal of the claim on the grounds that the union was not a proper defendant. The participants alleged the union acted as a fiduciary to the extent it had control over the amount of revenue that is, or is not, contributed to the plan. The Court held, however, that when a union sets, changes, or enforces contribution rates, the union acts as a settlor, and cannot be held liable for a duty that belongs only to fiduciaries.



5. Remedies

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D. Section 502(a)(3): Suits to Enforce ERISA and Plan Provisions

1. Claim for Relief

a. Varity Corp. v. Howe


b. Post-Varity Developments

In Outward v. Eaton Corp. Disability Plan for U.S. Employees, 808 Fed. Appx. 296 (6th Cir. 2020), the Sixth Circuit determined that a participant’s claim under ERISA Section 502(a)(3) was barred because it merely repackaged her claim for benefits under ERISA Section 502(a)(1)(B). The participant alleged that the plan administrator breached its fiduciary duty by “erroneously and unconscionably” interpreting the plan document in an overly restrictive manner when denying her administrative claim for benefits. Citing both Varity Corp. v. Howe, 516 U.S. 489 (1996) and its own precedent, the Sixth Circuit explained that the claim was nothing more than an attempt to re-adjudicate the claim for benefits through Section 502(a)(3).

(i) Equitable Estoppel Claims


(ii) Statutory Violations


(iii) Plan Term Violations


(iv) Claims for Interest on Delayed Benefit Payments


(v) Claims for Contribution, Indemnification, and Restitution


(vi) Interpleader Actions


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2. Plaintiffs

See Standing, infra at Section III.A.1.

3. Defendants

See Chapter 10, Fiduciary Responsibility, at VII.H., Liability of Nonfiduciaries for Fiduciary Misconduct.



5. Remedies

a. Supreme Court Jurisprudence


b. Impact of the Supreme Court Rulings on the Types of Available Relief

(i) Claims for Restitutionary Relief

In Zirbel v. Ford Motor Co., 980 F.3d 520 (6th Cir. 2020), the Sixth Circuit upheld a district court’s order awarding an employer a reimbursement of pension overpayments issued to a beneficiary. The Sixth Circuit determined that the relief granted to the employer, i.e. the overpayment reimbursement, constituted equitable restitution—as opposed to restitution at law—and thus could be awarded under ERISA Section 502(a)(3). The Sixth Circuit explained that unlike legal restitution, which merely imposes liability for a sum of money, equitable restitution creates a lien on particular funds in the possession of the responsible party. After acknowledging that an equitable lien cannot attach to funds spent after they are spent on non-traceable items, such as food, the Sixth Circuit ruled that the funds at issue were susceptible to an equitable lien because the beneficiary deposited the overpayments into an account. In so ruling, the Sixth Circuit explained that even though the overpayments had been commingled with rightfully possessed assets in the beneficiary’s account, nothing prevents an equitable lien from attaching to commingled assets.

(ii) Breach of Fiduciary Duty Claims

In Sullivan-Mestecky v. Verizon Commun. Inc., 961 F.3d 91 (2d Cir. 2020), the Second Circuit reversed a district’s court dismissal of a plaintiff’s claim contending that she was entitled to generous life insurance benefits due to misrepresentations made to her mother as the holder of the life insurance policy. During the years that preceded the lawsuit, the administrator of the policy had repeatedly informed the plaintiff’s mother, in numerous mailings and oral communications, that her retiree life insurance coverage

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exceeded half a million dollars. With the understanding that she would be the recipient of those generous benefits as the policy’s beneficiary, the plaintiff allowed her mother to live with her rent free, paid off her mother debts and covered her mother’s living expenses. After her mother passed, the plaintiff filed a claim for benefits only to be informed that the previously conveyed coverage was incorrect due to a calculation error. Rather than receiving over $500,000 as she anticipated, the plaintiff received only twenty dollars plus the cost of her mother’s funeral expenses. Among other claims, the plaintiff asserted an ERISA Section 502(a)(3) against the plan administrator seeking the amounts promised to her mother under equitable estoppel, surcharge and reformation theories of recovery. At the initial pleading stage, the district court dismissed claim. The district court reasoned that the plaintiff failed to state a claim under Section 502(a)(3) because she sought only monetary damages and not equitable relief. On appeal, the Second Circuit reversed the district court’s ruling. The Second Circuit agreed with the plaintiff that the Supreme Court’s ruling in CIGNA Corp. v. Amara made clear that equitable relief could include monetary compensation. The court then determined that the plaintiff had stated a claim under equitable estoppel, surcharge and reformation theories of recovery. First, the Second Circuit explained that the extraordinary circumstances requirement for equitable estoppel was met in light of repeated oral assurances given to the plaintiff’s mother about the value of the policy. The Second Circuit also held, for the first time, that equitable estoppel could be pled in the absence of intentional inducement if the complaint alleged gross negligence amounting to constructive fraud. Next, the Second Circuit determined that the plaintiff adequately pled surcharge—a remedy available to compensate a fiduciary’s breach of trust—by alleging that the plan administrator acted without skill, care and diligence when consistently failing to provide complete and accurate life insurance benefit information. Finally, the Second Circuit held that the plaintiff stated a claim for reformation because the plan administrator’s misrepresentations rose to the level of equitable fraud.

(iii) Subrogation Issues


(iv) Section 510 Litigation.


(v) Other Types of Claims Raising Remedy Issues Under Section 502(a)(3)

In Damiano v. Inst. for In Vitro Scis., 799 Fed. Appx. 186 (4th Cir. 2020), the Fourth Circuit affirmed a district court’s dismissal of a claim seeking a surcharge remedy because the participant failed to make a sufficient showing of actual harm at the summary judgment stage. The participant’s claim, brought under ERISA Section 502(a)(3), alleged

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that the fiduciary misrepresented the continuation of her disability insurance and sought a surcharge remedy. The Fourth Circuit began by explaining that in order to defeat the fiduciary’s motion for summary judgment, the participant was required to show actual harm by a preponderance of the evidence. The court concluded that the participant had not made such a showing because she failed to present any specific facts demonstrating what she would have done differently had the fiduciary not misrepresented the availability of disability coverage, e.g., demonstrating that she would have obtain coverage from another provider.

In a case of first impression, Castillo v. Metro. Life Ins. Co., 970 F.3d 1224 (9th

Cir. 2020), the Ninth Circuit held that attorney’s fees incurred by a participant during the administrative phase of ERISA’s claims process cannot be recovered under ERISA Section 502(a)(3). After his claim for lifetime disability benefits was initially denied, the participant retained counsel and obtained a reversal of the denial on administrative appeal. The participant then filed suit in federal court seeking reimbursement of the fees he incurred during the administrative appeal under ERISA Section 502(a)(3), alleging that the plan administrator breached its duties by initially failing to recognize his entitlement to the benefits he sought. The district court dismissed the claim, ruling that fee awards are not appropriate equitable relief under ERISA Section 502(a)(3). On appeal, the Ninth Circuit affirmed. The court of appeal began by restating its prior holding that although ERISA specifically allows for an award of attorney’s fees under Section 502(g), that provision only applies to fees incurred during a judicial proceeding. The Ninth Circuit then determined that a fee award under Section 502(a)(3) for administrative fees would be improper for three reasons. First, it would require a re-characterization of the denial of benefit as a fiduciary breach. Second, it would run counter to the court’s prior conclusion that an award of administrative fees under Section 502(g) would frustrate ERISA’s intent to promote plan soundness and stability. Third, it would be inconsistent with ERISA’s overall scheme, which affirmatively allows for fees incurred during civil actions under Section 502(g) but remains silent as to fees incurred during the administrative process.

E. Section 502(a)(4): Suit for Violation of ERISA Section 105(c)

1. Claim for Relief


2. Plaintiffs


3. Defendants



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5. Remedies


F. Section 502(a)(5): Claim for Relief by the Secretary of Labor

ERISA 502(a)(5) authorizes the court to enjoin actions which are violations of ERISA, and to award equitable relief of the type traditionally available in equity. Under these standards, the court could appoint an independent fiduciary to control plan assets and apportion the cost of distributing plan assets pro rata. The Secretary was awarded the relief requested in a default judgment. Scalia v. Onsite Oil Tools 401(k) Plan, No. 3:20-cv-00984-S, 2020 U.S. Dist. LEXIS 220144, at *9 (N.D. Tex. Oct. 27, 2020)

Where the Secretary presented uncontroverted evidence regarding the defendant’s failure to adequately fund its plans, the court entered a permanent injunction against the defendants, prohibiting them from acting as a fiduciary or service provider for any ERISA plan. Acosta v. WH Adm'rs, Inc., 449 F. Supp. 3d 506, 520-21 (D. Md. 2020)

A report and recommendation from a magistrate judge recommended that the

Secretary be granted a default, and that the Secretary be awarded the cost of an independent fiduciary “to distribute the recovery of any remaining [p]lan assets.” The magistrate further recommended that defendants be removed as fiduciaries and enjoined from acting as fiduciaries in the future. Scalia v. Marzett, Civil Action No. 1:19cv1164 (TSE/JFA), 2020 U.S. Dist. LEXIS 135646, at *31 (E.D. Va. June 19, 2020)

G. Section 502(a)(6): Suits to Collect Civil Penalties


H. Section 502(a)(7): Suits to Enforce Compliance with a Qualified Medical Child Support Order

1. Claim for Relief


2. Plaintiffs


3. Defendants


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5. Remedies


I. Section 502(a)(8)


J. Section 502(a)(9)

1. Claim for Relief


2. Plaintiffs


3. Defendants




5. Remedies


K. Section 502(a)(10)


L. Section 502(k): Actions for Review, Restraint, and Mandamus

1. Claim for Relief

A plan sponsor brought suit challenging the Department’s opinion related to working owners and limitations about who could participate in the relevant benefit plan. The court had jurisdiction to review because the opinion was a final opinion from the Department, and legal consequences could flow from the decision. The Department

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opposed judicial review, suggesting it was premature, but the court disagreed and found that the plan sponsor was not required to violate the Department’s position and face enforcement proceedings in order to seek judicial review. The court found that the Department failed “to adhere to its own articulated definition of working owner,” and that the Department’s actions were “suspect and unsupported by present law.” The court thus concluded that the Department was not entitled to agency deference.

In analyzing the Department’s opinion, the court found that the plan in question was an ERISA plan, contrary to the Department’s conclusion. The court granted the plan sponsor’s request for summary judgment, concluding that the Department’s opinion was arbitrary and capricious and that limited partners of the sponsor were working owners entitled to participate in the plan. Data Mktg. P’ship, LP v. United States Dep't of Labor, Civil Action No. 4:19-cv-00800-O, 2020 U.S. Dist. LEXIS 177617 (N.D. Tex. Sep. 28, 2020)

2. Plaintiffs

Faced with arguments that plaintiffs did not have standing to bring suit, a court found that the Department could not both submit that its conclusion was binding on a particular point while also arguing that the Department’s opinions were advisory and non-final. The Court found the plaintiffs had standing to challenge the Department’s opinion. Data Mktg. P’ship, LP v. United States Dep’t of Labor, Civil Action No. 4:19-cv-00800-O, 2020 U.S. Dist. LEXIS 177617 (N.D. Tex. Sep. 28, 2020)

3. Defendants




M. Section 502(m): Penalty on Impermissible Distributions

1. Claim for Relief


2. Plaintiffs


3. Defendants


4. Remedies

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III. GENERAL PROCEDURAL ISSUES

A. Standing

1. Article III Standing

In Ely v. Board of Trustees of the Pace Industry Union-Management Pension Fund, No. 3:18-cv-00315-CWD, 2020 WL 7038540 (D. Id. Nov. 30, 2020), a Taft-Hartley pension plan participant sued his plan’s fiduciaries to enjoin their implementation of an exit fee penalizing employers who might withdraw from the fund. The exit fee was implemented with the plan in critical status, and designed to shore up the plan’s assets and forestall potential impending insolvency. Relying in part on the Supreme Court’s decision in Thole v. U.S. Bank, N.A., 140 S. Ct. 1615 (2020), the court concluded that the plaintiff lacked standing to pursue the remedy for which he prayed. The evidence submitted on summary judgment showed that the exit fee was not likely to accelerate the plan’s insolvency, and thus the claim that the litigation could redress the plaintiff’s injury was speculative and insufficient to establish Article III standing. Ely, 2020 WL 7038540 at **19-20.

In Boley v. Universal Health Services, Inc., No. 20-2644, 2020 WL 6381395

(E.D. Penn. October 30, 2020), the plaintiffs challenged the fiduciary propriety of investment options offered in their employer’s defined contribution pension plan. The defendants moved to dismiss the lawsuit, asserting that the plaintiff’s lacked standing to complain about the management fees charged on investment options that the plaintiffs themselves did not invest in. Citing the Supreme Court’s decision in Thole v. U.S. Bank, N.A., 140 S.Ct. 1615 (2020), the defendants argued that, win or lose, the plaintiffs would not receive a penny less (or more) if they prevailed than if they lost, and therefore lacked Article III standing. The district court denied the defendants’ motion. The court observed that the distinction between defined contribution plans such as the one at issue, and the defined benefit plan at issue in Thole, was a critical one. The court found that the plaintiffs had adequately pleaded that the fiduciaries’ investment offerings had damaged them personally both by way of diminished investment returns, and added costs.

In Mitchell v. Blue Cross Blue Shield of North Dakota, 953 F.3d 529 (8th Cir.

2020), a plan participant sued for reimbursement of air ambulance charges. The Eighth Circuit reversed in part, and affirmed in part, a mixed summary judgment ruling from the district court. The Eighth Circuit rejected the plan insurer’s argument that the participant lacked Article III standing, even though the air ambulance provider had agreed to waive any amounts due not recovered in the litigation. Relying on cases from other circuits that had rejected the balance-billing standing argument, the Eighth Circuit reasoned that a participant suffers an injury in fact for Article III standing purposes when their plan fails to pay a provider in accordance with plan terms – even if the benefits have been assigned to the provider. Because the participant was a former (no longer current) employee of the plan’s sponsoring employer, the insurer also challenged his statutory standing, but the

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court held that a former employee with a colorable claim to benefits has statutory standing under 29 U.S.C. § 1132(a).

In Williamson v. Travelport, LP, 953 F.3d 1278 (11th Cir. 2020), the Eleventh

Circuit partially reversed the district court’s dismissal of a retiree’s complex ERISA claims asserted against the plan administrator of her pension plan. Among the retiree’s claims was a claim for injunctive relief to correct its recordkeeping practices and to warn participants about its recordkeeping failures. The Court held that she lacked standing to pursue these injunctive claims where she already had the documents relating to herself, a warning would be futile, and the other consequence of the recordkeeping issues (specifically, a miscalculation of her benefit) had already been remanded for consideration under 29 U.S.C. § 1132(a)(1)(B).

2. Statutory Standing: Enumerated Parties a. Participants

(i) Employees

No developments to report. (ii) Former Employees

In Mitchell v. Blue Cross Blue Shield of North Dakota, 953 F.3d 529 (8th Cir. 2020), a plan participant sued for reimbursement of air ambulance charges. The Eighth Circuit reversed in part, and affirmed in part, a mixed summary judgment ruling from the district court. The Eighth Circuit rejected the plan insurer’s argument that the participant lacked Article III standing, even though the air ambulance provider had agreed to waive any amounts due not recovered in the litigation. Relying on cases from other circuits that had rejected the balance-billing standing argument, the Eighth Circuit reasoned that a participant suffers an injury in fact for Article III standing purposes when their plan fails to pay a provider in accordance with plan terms – even if the benefits have been assigned to the provider. Because the participant was a former (no longer current) employee of the plan’s sponsoring employer, the insurer also challenged his statutory standing, but the court held that a former employee with a colorable claim to benefits has statutory standing under 29 U.S.C. § 1132(a).

(iii) Non-employees: Sole Proprietors, Partners, and

Owners


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(iv) Standing of Participants of One Plan to Sue on Behalf of Participants in Other Plans


b. Beneficiaries

In Crowder v. Delta Air Lines, Inc., 963 F.3d 1197 (11th Cir. 2020), the Eleventh Circuit upheld the district court’s determination that a widowed ex-spouse who had never been formally named as a beneficiary by the decedent plan participant was not an automatic spousal beneficiary and therefore was not entitled to sue for benefits under ERISA.

c. Fiduciaries

No developments to report. d. The Secretary of Labor


3. Statutory Standing: Non-Enumerated Parties

a. Plans

No developments to report. b. Unions

No developments to report. c. Employers


d. The PBGC

No developments to report. e. Assignees

In Regional Medical Center of San Jose v. WH Administrators, Inc., 795 Fed. App’x 524 (9th Cir. 2020), the Ninth Circuit reversed the district court’s dismissal of a hospital’s ERISA claims for lack of standing. There, the Ninth Circuit recognized that a party outside the enumerated plaintiffs authorized under 29 U.S.C. § 1132(a) could

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secure derivative standing by way of an assignment. Because the assignments at issue included a right to sue, the patients assigned all of their rights and benefits under their respective plans. Although the plans purportedly contained anti-assignment provisions, the court found them inadequate to prohibit assignment of suits for benefits.

In Cell Science Corp. v. Louisiana Health Service, 804 Fed. App’x 260 (5th Cir.

2020), the Fifth Circuit affirmed a district court’s dismissal of ERISA claims brought by a health care provider, for lack of standing. The Court found that the provider was not a party authorized to sue under 29 U.S.C. § 1132(a), and therefore lacked statutory standing to pursue the claims. The provider had assignments from some patients reading “I hereby assign all medical benefits to which I am entitled…” – but the assignments did not explicitly assign any right to sue for benefits or raise any other claims under ERISA. Therefore, the assignments were insufficient to confer third-party standing upon the provider.

f. Executors and Administrators

No developments to report. g. Other

In Dixon v. Washington, 819 Fed. App’x 95 (3rd Cir. 2020), the Third Circuit upheld the district court’s dismissal of ERISA claims against a church plan that were asserted by congregants of the church. The Third Circuit agreed with the district court that the plan was not an ERISA regulated benefit plan, but even if it had been, none of the parishioners was an employee, participant, or beneficiary authorized to bring suit under 29 U.S.C. § 1132(a). As such, they lacked statutory standing to pursue ERISA claims against the church and its plan. To the extent that there was a plan conferring benefits upon parishioners, it was not an employee benefit plan and therefore not subject to ERISA.

B. Subject Matter Jurisdiction for Suits Brought Under Section 502

1. Exclusive and Concurrent Jurisdiction

On a motion for entry of default judgment, the court in Broach v. Metro. Exhibition Servs., 2020 U.S. Dist. LEXIS 121779, *12-13 (S.D.N.Y. July 10, 2020) found subject matter jurisdiction under Section 502(e)(1) because of the inclusion of a court-appointed independent fiduciary among the plaintiffs. The fund itself, relying on Section 502(d)(1), could not bring an ERISA claim under Section 502(a) as an “entity” because, under Section 502(a)(3), only participants, beneficiaries, and fiduciaries have standing.

In Verso Corp. v. United Steel, 2020 U.S. Dist. LEXIS 55377, *18-19 (S.D. Ohio Mar. 26, 2020), the court rejected arguments by an employer that it filed suit in his dual role as a fiduciary, and thus the court had subject matter jurisdiction, on the grounds that

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the relief sought was merely a declaration that its decision to eliminate the plan did not violate ERISA. The court reasoned such relief was not equitable because whether plan benefits are vested and cannot be eliminated is a matter of contract interpretation, not plan enforcement.

Where a suit brought by a union failed to make any allegations as to whether the plaintiff is a participant, beneficiary, or fiduciary, the court in United Association of Journeymen & Apprentices of the Plumbing & Pipe Fitting Industries v. Johnson Controls, 2020 U.S. Dist. LEXIS 173966 (S.D. Ga. Sept. 22, 2020) declined to rule on whether it had subject matter jurisdiction to hear the merits of the case. Noting that neither the Eleventh Circuit nor the Supreme Court has directly addressed whether such an omission deprives a court of federal subject matter jurisdiction, the court recognized that the Ninth Circuit has at least implied that that would be the case. The court ordered additional briefing on the matter.

2. Involvement of Plan Required for Subject Matter Jurisdiction

In Minturn v. Monrad, 2020 U.S. Dist. LEXIS 201269, *7-8 (D. Mass. Oct. 29, 2020), the court held a participant pled facts sufficient to allege that an agreement providing for compensation and other benefits between trustees was an ERISA plan. The court stated that the most important consideration is whether the plan creates an ongoing administrative program subject to the discretion of the employer. As alleged by the participant, the agreement was ongoing, because the participant was to receive quarterly payments for ten years following retirement, and subject to the discretion of the trustee defendants as they were authorized under the agreement to exercise some amount of control over the distribution of assets.

In Doe v. Anthem Health Plans of Va., Inc., 2020 U.S. Dist. LEXIS 241350, *20-21 (D. Mass. Dec. 22, 2020), the court ruled that a health plan offered by a law firm was not an ERISA plan because the plan had only ever covered the owner of the law firm and his dependents, and a plan must cover one or more employees other than the owner. That certain employees hypothetically could have enrolled in the plan but declined was not enough to confer federal jurisdiction under ERISA.

In Fannaly v. LEI, Inc., 2020 U.S. Dist. LEXIS 173486, *15-18 (E.D. La. Sept. 22, 2020), the court rejected arguments from the employer that the plan was an ERISA plan because the plan did not involve an ongoing administrative scheme and because no reasonable person could ascertain procedures for receiving benefits under the plan. Payments under the plan, a “phantom stock appreciation plan,” were made once per year, based on a “fixed, straightforward mathematical calculation typical of similar employee compensation arrangements,” and no discretion was required. Further, at the time the employee was terminated, and the filing of suit, the court concluded no information about how to process an appeal could be found in the plan itself nor gleaned from the prior experience of similarly-situated colleagues. After the suit was filed, the employer sent a “claim denial letter” describing appeal rights, but the court held that this attempt to retroactively establish a claims procedure was too late.

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After holding that whether a plan is an ERISA plan is an element of the plaintiff’s case and not a jurisdictional inquiry, in Sanzone v. Mercy Health, 954 F.3d 1031 (8th Cir. 2020), the Eighth Circuit considered whether the plan at issue was a church plan and therefore exempt from ERISA. Church plans include those “maintained” by a principal-purpose organization, and a principal-purpose organization is an “organization” (1) that has the primary purpose of administering or funding a plan for the employees of a church, and (2) is controlled by or associated with a church. The court of appeals easily concluded the plan was “maintained” by the plan’s management committee because the committee had sole responsibility for administration of the plan, discretionary powers and authority over carrying out the provisions of the plan, and the power to interpret and apply the plan, among other things. Moreover, the committee was a principal-purpose “organization” under the ordinary meaning of the word because it constitutes “a group of people who work together in an organized way for a shared purpose.”

3. Supplemental Jurisdiction


4. Enjoining State Action

In Kinder Morgan, Inc. v. Crout, 814 Fed. Appx. 811 (5th Cir. 2020), the Fifth Circuit considered whether to retain jurisdiction over a dispute between a deceased participant’s children and his spouse as to which of them were the lawful beneficiary of his estate. In declining to yield jurisdiction, the court held that none of the Burford abstention doctrine factors applied. The underlying action and each counterclaim arise under ERISA; the accrued benefits at issue were not in fact estate property nor in the custody of the state probate court; resolution of the federal action did not require inquiry into issues of state law or local facts; no state interest was clearly involved; and, citing Section 502(a)(3)(B) and Section 502(e) generally, the Fifth Circuit affirmed the principle that federal court should resolve most types of actions that may be brought pursuant to ERISA.

5. Effect of Agreement to Arbitrate

In Galli v. PricewaterhouseCoopers LLP Notice/Severance Policy as Amended & Restated Effective February 1, 2011, 2020 U.S. Dist. LEXIS 94185, *32-34 (S.D.N.Y., Mar. 29, 20020), the court granted an employer’s motion to compel arbitration of various ERISA claims. The arbitration agreement provided that disputes over the arbitration agreement, including arbitrability, were to be decided by a court. But because the arbitration agreement was severable from the employee’s employment agreement, and because the underlying action challenged the employee’s employment and all related contractual agreements (not just the arbitration clause), the court held that under Buckeye Check Cashing, Inc. v. Cardenga, 546 U.S. 440 (2006), the challenge must be considered by an arbitrator.

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In Vest v. Nissan Supplemental Exec. Ret. Plan II, 2020 U.S. Dist. LEXIS 242708, *26-28 (M.D. Tenn. Dec. 28, 2020), the court denied the plan’s motion to compel arbitration on the ground that it effectively failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim. Though the participant was required to arbitrate her claim under the terms of the plan, and though she initially filed a claim for arbitration after the plan persisted in “injecting unwarranted steps” into the claims procedure, the plan failed to timely commence the arbitration. The participant withdrew her demand for arbitration and filed suit. Because the plan failed to follow its own claims procedures, the court deemed the participant to have exhausted her administrative remedies, including the obligation to arbitrate, thus entitling her to pursue any remedy available under Section 502(a).

In Ramos v. Natures Image, Inc., 2020 U.S. Dist. LEXIS 88181, *17-19 (C.D. Cal. Feb. 19, 2020), the court held that the employee participants’ individual claims for breach of fiduciary duty were not arbitrable under the arbitration clause in their individual employment agreements. The agreements at issue only covered claims “between you and the company.” The court acknowledged recent Ninth Circuit precedent holding that ERISA claims are generally arbitrable, but went on to reason that breach of fiduciary duty claims are arbitrable only if the arbitration agreement also bound the plan. This is because ERISA claims for breach of fiduciary duty “ultimately belong to the plan,” so the plan – not just a participant suing on behalf of the plan – must also have agreed to arbitrate ERISA claims.

In CHCA Woman’s Hosp., LP v. Rocky Mt. Hosp. & Med. Serv., 2020 U.S. Dist. LEXIS 30815, *10-18 (S.D. Tex. Feb. 24, 2020), a hospital sued an insurer for ERISA claims related to a premature birth, and separately moved the court to compel arbitration of the claims pursuant to arbitration provisions in the hospital’s network participation agreement. Because the insurer was not a signatory to the participation agreement, the court determined that the question of arbitrability was for the court, not an arbitrator. Next, the court analyzed whether the insurer could be bound by the agreement to arbitrate under a “direct-benefits estoppel” theory. First, the insurer did not seek to enforce the underlying participation agreement against the hospital, nor did it “directly benefit” from the participation agreement. The court noted that merely gaining access to lower rates is too indirect to force arbitration under an estoppel theory. Second, the relationship between the claim – medical services allowed under the plan – and the network participation agreement was also too attenuated. Finally, the hospital failed to show the insurer had sufficient knowledge of the terms of the participation agreement such that it could, and did, knowingly exploit it by demanding benefits on such terms. Because all three direct-benefits estoppel factors failed, the court held that no valid arbitration agreement existed between the parties.

In Smith v. Greatbanc Trust Co., 2020 U.S. Dist. LEXIS 151992, *10-13 (N.D. Ill. Aug. 21, 2020), the court denied a motion to compel arbitration brought by the ESOP plan’s board of directors and trustee. Among other things, the participants alleged the board of directors breached their fiduciary duties and engaged in prohibited transactions in connection with certain stock transactions. Noting that the Seventh Circuit has not yet

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ruled on the issue, the court “[assumed] arguendo that ERISA claims are generally arbitrable.” The board sought to compel arbitration pursuant to an arbitration clause added to the plan after the participant ceased employment with the plan sponsor. But the court was unpersuaded that a participant could be forced to arbitrate pursuant to terms unilaterally executed by the plan sponsor. Citing with approval the Ninth Circuit’s opinion in Dorman v. Charles Schwab & Co., 2018 U.S. Dist. LEXIS 9107, *5 (N.D. Cal. Jan. 18, 2018), the court held that “a plan document drafted by fiduciaries…should not prevent plan participants and beneficiaries from vindicating their rights in court.” The court also held that by limiting the remedy for breach of fiduciary duties to individual arbitration, the arbitration agreement was a prospective waiver of a party’s rights to pursue statutory remedies and, as such, unenforceable on public policy grounds. 29 U.S.C. § 1132

6. Title 28 U.S.C. Section 1331


C. Declaratory Judgment Actions

In Destifanes v. Bricklayers Local #1 of Missouri Supplemental Pension Fund, No. 4:20-CV-00750-NCC, 2020 WL 6342664, at *3 (E.D. Mo. Oct. 29, 2020), plaintiff sought a declaration that she was entitled to supplemental pension proceeds. Pending was a state probate case to resolve the issue of who was married to the decedent – plaintiff or the individual named as sole beneficiary of the benefits. Noting that federal courts have more discretion to abstain when relief is sought under the Declaratory Judgment Act, the court found that abstention was warranted pending resolution of the probate proceeding and that a temporary stay would protect all the parties.

In Vasu v. Combi Packaging Sys. LLC, No. 5:18-CV-1889, 2020 WL 2733756, at

*9 (N.D. Ohio May 25, 2020), plaintiff sought a declaration in a suit against his father’s employer that he was entitled to benefits under his father’s life insurance policies on the basis of the employer’s alleged failure to comply with its responsibilities under the policies. The court dismissed his claim as redundant because it was duplicative of his ERISA claim for benefits against the issuer of the policies, the denial of which the court found was not arbitrary and capricious.

In Raya v. Calbiotech, No. 18-CV-2643-WQH-BGS, 2020 WL 2394925, at *9

(S.D. Cal. May 12, 2020), the court denied defendant’s request for declaratory relief to cap any potential statutory penalties under ERISA. The court declined to exercise its discretion to declaratory relief at this stage of the litigation because it was redundant of the issue of how much recovery the plaintiff was entitled to that would be decided at trial.

In Wolff v. Aetna Life Ins. Co., No. 4:19-CV-01596, 2020 WL 1637938, at *2

(M.D. Pa. Apr. 2, 2020), reconsideration denied, No. 4:19-CV-01596, 2020 WL 4754253 (M.D. Pa. Aug. 17, 2020), the court declined to proceed with plaintiff’s claim for a “declaratory judgment under ERISA § 502(a)(1)(B)” because it duplicated a separate

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count in plaintiff’s claim for relief under ERISA. Both counts were grounded in the same conduct and were based on the same statute.

D. Removal and Relationship to State Proceedings

1. Removal Based on Concurrent or Exclusive Federal Jurisdiction


2. Removal on the Basis of Complete Preemption

a. The “Well-Pleaded Complaint” Rule


b. The Complete Preemption Exception Generally

In Blakney v. Prasad, 817 F. App'x 504 (9th Cir. 2020), the Ninth Circuit affirmed a district court decision holding that plaintiff’s state medical malpractice claims were not completely preempted under ERISA Section 502(a). Plaintiff filed suit in Alaska state court after alleging that he received negligence medical treatment. Defendants responded by asserting an affirmative defense that plaintiff’s claims were limited by Alaska’s insurance subrogation rules. Plaintiff then filed suit in federal court seeking a declaratory judgment that the affirmative defense was preempted by ERISA. The Ninth Circuit held that it was not because regardless of whether plaintiff’s claim for medical malpractice could have been brought under ERISA Section 502(a), preemption would not be warranted because plaintiff could not show that the duties implicated by the state law medical malpractice claims did not derive from ERISA.

c. Complete Preemption in ERISA Cases

(i) Availability of Claim Under Section 502(a) and Standing


(ii) Independent Legal Duties


(iii) Viability of Claim in Federal Court After Removal


d. Contrast with Defensive Preemption Under Section 514

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The Supreme Court, in Rutledge v. Pharm. Care Mgmt. Ass’n, 141 S.Ct. 474 (2020), overturned an Eighth Circuit decision holding that an Arkansas law that regulated pharmacy benefit managers (“PBMs”) reimbursement was preempted under ERISA Section 514(a). As way of background, in 2015, Arkansas passed legislation in response to growing concerns that reimbursement rates set by PBMs were often too low to cover pharmacies’ costs, and that many local pharmacies, particularly rural and independent ones, were at risk of closing. The law also permits an Arkansas pharmacy to refuse to sell a drug if the PBM’s reimbursement rate is lower than the pharmacy’s acquisition cost. In effect, the law requires PBMs to reimburse intrastate pharmacies at a price equal to or higher than each pharmacy’s wholesale cost. The Pharmaceutical Care Management Association, which represents the 11 largest PBMs in the country, sued the Attorney General of the State of Arkansas, alleging that the state law is preempted by ERISA because it contains a prohibited reference to ERISA.

The Eighth Circuit held that ERISA preempted the Arkansas statute because it

both “related to” and “had a connection with” ERISA-governed employee benefits plans. In so ruling, the Eighth Circuit opined that the state law made an “implicit reference” to ERISA by regulating PBMs that administer ERISA plan benefits, and that the law was “impermissibly connected” with ERISA plans because it “governed central matters of plan administration” by mandating an appeal process for pharmacies to challenge PBM reimbursement rates.

The Supreme Court disagreed. In overturning the Eighth Circuit’s decision, the

Supreme Court concluded that the Arkansas law amounted to “cost regulation,” which does not bear an “impermissible connection with or reference to ERISA.” The Court observed that the state law does not “refer to” ERISA because it equally applies to all PBMs, regardless if they manage an ERISA plan. The Court also explained that requiring PBMs to reimburse pharmacies at or above their acquisition costs “does not require plans to provide any particular benefit to any particular beneficiary in any particular way.” Instead, the law “simply establishes a floor for the cost of the benefits that plans choose to provide.”

3. Burden of Proving Federal Jurisdiction, Motions for Remand


4. Complete Preemption Doctrine in Federal Court Actions


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E. Venue

1. Section 502(e)(2)

a. Where the Plan Is Administered


b. Where the Breach Occurred


c. Where the Defendant Resides or May Be Found

In McCurry v. Mars, Inc., No. 19-cv-04067, 2020 WL 190826 (N.D. Ill. Oct. 15, 2020), a federal district court in Illinois dismissed claims against the provider of short-term disability benefits because venue was not proper. In so ruling, the court rejected plaintiff’s argument that because the provider could be served nationwide that the defendant could be “found” in the Northern District of Illinois for venue purposes. The court explained that “ERISA service of process does not automatically establish venue” and that under ERISA, whether an entity can be found in a district turns on the “minimum contacts” test set forth in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). As to the minimum contacts, the court found the fact that the provider arranged for a medical examination of the plaintiff in the Northern District of Illinois and that the provider regularly does business in Illinois to be insufficient. Thus, the court dismissed for improper venue under Section 502(e)(2).

2. Transfer of Venue

a. Forum Selection Clause Enforced

In Becker v. Wells Fargo & Co., No. 20-cv-01803, 2020 U.S. Dist. LEXIS 207330 (N.D. Cal. Sept. 21, 2020), a federal district court in California enforced a forum selection clause in a 401(k) plan and on that basis transferred the case to Minnesota federal court. In so ruling, the court held that forum selection clauses are not invalid under ERISA and are “routinely” upheld by other federal courts. The court also rejected plaintiff’s argument that the forum selection clause contravened public interest in conserving judicial resources because not all defendants were a party to the forum selection clause (i.e., they were not the plan sponsor of, or a participant in the 401(k) plan) because each defendant was either an employee of or affiliated with the plan sponsor and because the alleged conduct of each was related to the plan so as to allow them to benefit from the forum selection clause.

In Mendiola v. Home Depot U.S.A., Inc., No. 20-cv-1561, 2020 U.S. Dist. LEXIS 179070 (M.D. Fla. Sept. 29, 2020), a federal district court in Florida enforced a forum selection clause in a medical and dental insurance plan and transferred the cases to

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Georgia federal court. In so ruling, the court rejected plaintiff’s argument that ERISA’s venue provision guarantee a plaintiff’s choice of one of the three venue options under the statute. The court also held that the forum selection clause, which required transfer of any actions “arising out of or related to the plan”, encompassed claims under COBRA because the claims related to notices sent at the termination of the plan and therefore “easily” arise out of or relate to the plan.

In Coleman v. Brozen, No. 19-cv-705, 2020 U.S. Dist. LEXIS 79367 (E.D. Tex May 6, 2020), a federal district court in the Eastern District of Texas enforced a forum selection clause in an employee stock ownership plan and transferred the case to the Northern District of Texas. In so ruling, the court explained that ERISA’s venue provision is permissive, not mandatory, and thus rejected the plaintiff’s argument that ERISA’s venue provision guaranteed her a right to litigate in her choice of one of the three designated venues in ERISA § 502(e), i.e., where the action “may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found.” The court also rejected the argument that the forum selection clause was invalid because it was added to the plan without participant consent in part because the plan had the right to “freely adopt, modify, or terminate” the plan.

b. Forum Selection Clause Not Enforced

In Group 1 Auto., Inc. v. Aetna Life Ins. Co., No. 20-cv-1561, 2020 U.S. Dist. LEXIS 124455 (S.D. Tex. July 15, 2020), a federal district court in Texas refused to enforce a forum selection clause in an administrative service agreement between a self-funded health plan and an insurer providing third-party administrative services for the self-funded plan. In so ruling, the court held that the forum selection clause, based on traditional cannons of contract interpretation, did not cover claims arising out of federal law, like the ERISA suit at issue. The court also found that the traditional factors (discussed below) did not warrant transfer.

c. Traditional Factors Analyzed

In Group 1 Auto., Inc. v. Aetna Life Ins. Co., No. 20-cv-1561, 2020 U.S. Dist. LEXIS 124455 (S.D. Tex. July 15, 2020), a federal district court in Texas found that the traditional venue factors did not favor transferring an action brought by a self-funded health plan against the plan’s third-party administrator for paying benefits not covered by the plan. Among other arguments, the third-party administrator argued that transfer to Connecticut was warranted because the witnesses with relevant knowledge of its claims processing policies and procedures were located at the third-party’s headquarters in Connecticut. The court determined that because the third-party administrator could not show that it had substantially more witnesses in Connecticut than the plan had in Texas that transferring the action would “only shift cost from” the defendant to the plaintiff.

In Osborne v. Employee Benefits Admin. Bd. of Kraft Heinz, Nos. 2:19-cv-00307; 2:19-cv-00549, 2020 U.S. Dist. LEXIS 62443 (W.D. Pa. Apr. 9, 2020), a case involving certain accounting adjustments by Kraft that lead to an SEC investigation and a dozen

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lawsuits in multiple federal courts, including claims under ERISA brought by participants in Kraft’s pension plan. ERISA defendants sought to transfer venue to Illinois arguing that the Northern District of Illinois was the locus of the center of gravity of the claims and where the first-filed actions were pending. ERISA plaintiffs sought to maintain venue in Pennsylvania, because that is where the plan is administered and where the assets are held in trust and because plaintiffs’ choice of venue should control. Applying the traditional factors, the court held that the private and public factors weighed strongly in favor of transfer and noted the following as to the ERISA defendants motion to transfer: (1) plaintiffs’ choice of forum was entitled to less deference than usual as the case was brought as a class action; (2) because the alleged misconduct was a breach of fiduciary duty the breach is considered to have arose where defendants acted or failed to act, unlike a benefits claim, and because all evidence pointed to Illinois as the location where the accounting decisions were made this factor weighed “significantly in favor of transfer”; and (3) the convenience of the parties weighed in favor of transfer in part because plaintiffs would have little documentary evidence to provide. The court also held that transfer was appropriate under the first-filed rule even though the various litigations involved claims under separate federal statutes because the overall conduct that formed the basis of the claims was substantially similar allowing for application of the first-filed rule.

F. Service of Process and Personal Jurisdiction

In GCIU-Employer Ret. Fund v. Coleridge Fine Arts, 808 F. App’x 655, 657 (10th Cir. 2020), the Tenth Circuit affirmed a district court’s dismissal for lack of personal jurisdiction over two foreign corporations with controlling interests in an American company because the Court did not have specific jurisdiction over the defendants. Plaintiff failed to establish that defendants were involved in the day-to-day management of the American company or involved in the negotiation of the CBA requiring the subsidiary’s contributions to the plan. In addition, the Court considered the “customary markers” for personal jurisdiction: “(1) whether the defendant purposefully directed its activities at residents of the forum state; (2) whether the plaintiff’s injury arose from those purposefully directed activities; and (3) whether exercising jurisdiction would offend traditional notions of fair play and substantial justice.” Even taking into account defendants’ nationwide contacts, the court found that the first two factors had not been met, making it unnecessary to examine the third. With respect to the first prong, the Court concluded that plaintiff did not make a prima facie showing of purposefully-directed activities by defendants with respect to the American company’s withdrawal from a pension fund. With respect to the second prong, the Court concluded that the plaintiff had forfeited any argument that its injuries arose out of defendants’ alleged contacts with the United States.

In Angelina Emergency Med. Assocs. PA v. Health Care Serv. Corp., No. 3:18-CV-00425-X, 2020 WL 7259222, at *10 (N.D. Tex. Dec. 10, 2020), the court noted that “strange as it seems,” the Fifth Circuit has adopted the principle that whether defendant has had minimum contacts with the United States is determinative, not minimum contacts

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with any one state, for a court to exercise personal jurisdiction based on a federal statute providing for nationwide service of process. The court held that it had personal jurisdiction because ERISA provides for nationwide service of process and the defendant had minimum contacts with the United States.

In Colorescience, Inc. v. Bouche, No. 20CV595-GPC (DEB), 2020 WL 6712221, at *4 (S.D. Cal. Nov. 16, 2020), the court held that it lacked personal jurisdiction over out-of-state defendants because the plaintiff was not participant or beneficiary of the plan at issue. Accordingly, ERISA did not apply to provide a basis for jurisdiction.

In Fink on behalf of Nation Safe Drivers Employee Stock Ownership Plan v.

Wilmington Tr., N.A., 473 F. Supp. 3d 366, 372–73 (D. Del. July 21, 2020), the court concluded that the national contacts test, in which federal court personal jurisdiction may be assessed on the defendant’s national contacts, applies whenever a statute authorizes nationwide service of process, including ERISA. Defendants argued that the court lacked personal jurisdiction over them on the basis that the national contacts test applies only to foreign defendants. The court disagreed and found that the defendants had sufficient minimal contacts to exercise personal jurisdiction over them.

In Abira Med. Labs., LLC v. Johns Hopkins Healthcare LLC, No. 2:19-CV-05090-AB, 2020 WL 3791565, at *4 (E.D. Pa. July 7, 2020), plaintiff, an out-of-network provider, brought both ERISA and state law claims against defendant who administered insurance for self-funded employer health plans sponsored by Maryland employers. The court granted defendant’s motion to dismiss for lack of personal jurisdiction because plaintiff failed to establish that defendants had sufficient minimum contacts in Pennsylvania for specific jurisdiction purposes.

G. Exhaustion of Administrative Remedies Under Statutory Claims

Other Than Section 510 Claims


H. Jury Trials

In Divane v. Nw. Univ., 953 F.3d 980, 993–94 (7th Cir. 2020), plaintiffs alleged that defendants breached their fiduciary duties by offering a large number of investment options, by including a financial services provider’s stock account as an investment offering while allowing the provider to serve as recordkeeper, by failing to solicit competitive bids for fixed per-capita recordkeeping, and by offering investment options that allegedly charged excessive fees. Although it did not reach the issue, the Court stated that no right to a jury trial existed because “this case involves a suit against a fiduciary for breach of trust, the traditional equitable remedy is surcharge (the requirement to make the beneficiary whole for any losses caused by the breach), not a legal remedy.”

In Sec’y of U.S. Dep’t of Labor v. Kavalec, No. 1:19-CV-00968, 2020 WL

1694560, at *3 (N.D. Ohio Apr. 7, 2020), the court granted the plaintiff Secretary of

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Labor’s motion to strike defendants’ jury demand because the claims brought by the Secretary were the kind of claims that would have been brought in a court of equity and the remedies requested by the Secretary were equitable in nature.

I. Extracontractual Compensatory and Punitive Damages


J. Attorneys’ Fees and Costs

1. General Principal Applicable to All Circuits

In Mitchell v. Blue Cross Blue Shield of N. Dakota, No. 2:15-CV-86, 2020 WL 5731803, at *2 (D.N.D. July 15, 2020), defendants sought attorney fees from a non-party to the suit. The court concluded that even if it were to consider the merits of awarding attorney fees, the court did not view the case as one where fees would be awarded, particularly because there was no bad faith by the plaintiffs.

2. Presumption Favoring Award Under § 502(g)(1) to Prevailing Parties in Some Circuits


3. Awards Under § 502(g)(1) to Prevailing Defendants

In Cheap Easy Online Traffic Sch. v. Peter L. Huntting & Co., 818 F. App’x 683, 686 (9th Cir. 2020), the Ninth Circuit affirmed the lower court’s denial of defendants’ motion for attorneys’ fees and costs where the district court “correctly observed that Plaintiffs’ failure to prevail on the merits did not demonstrate culpability or bad faith, and that an award would serve no deterrent purpose.”

In Almont Ambulatory Surgery Ctr. v. Int’l Longshore, No.

CV142177MWFVBKX, 2020 WL 2078794, at *6 (C.D. Cal. Mar. 31, 2020), the court determined the factor of considering the relative merits of the parties’ positions weighed significantly in defendant plan’s favor. Here, the defendant achieved a “complete victory” on appeal even though that victory was not “technically on the merits.”

In Worlitz v. Bd. of Trustees, Dist. #9, No. 4:18 CV 1974 CDP, 2020 WL 529309,

at *1 (E.D. Mo. Feb. 3, 2020), the court cited plaintiff’s bad faith in bringing a suit for benefits, forcing the plan to spend participant-funded resources to defend against his untenable claim. In granting defendant’s motion for attorney fees, the court stated that such award “reflects the bad faith nature of plaintiff’s claim and the relative merits of defendants’ position; provides a benefit to the Trust’s beneficiaries in recouping its expended costs; and serves as a deterrent for others who would seek to bring similarly misguided claims under the Welfare Plan’s subrogation procedures.”

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4. Awards Under § 502(g)(1) to Nonprevailing Parties—What is “Some Success on the Merits?”

In Royal v. Ret. Bd. of Bert Bell/Pete Rozelle NFL Player Ret. Plan, No. 19-CV-5164 (AJN), 2020 WL 6820750, at *2 (S.D.N.Y. Nov. 20, 2020), the court stated that in order to show “some degree of success on the merits,” the party must establish a link between some judicial action related to the merits of the case—even if partial or tentative—and the relief it obtained. It is not enough if a party voluntarily dismisses a case believing it would have prevailed on the merits. The court concluded that plaintiff had not achieved some degree of success on the merits after the plaintiff dismissed his complaint after minimal litigation and “without a word from the Court on the merits of his claims.” The court ultimately found that a fee award was inappropriate because the plaintiff was not culpable even though the plaintiff dismissed his claims.

In Buffalo Laborers Welfare Fund v. Leone Constr., Inc., No. 18-CV-00544-JJM, 2020 WL 6264451, at *3 (W.D.N.Y. Oct. 23, 2020), the court applied the lodestar method and reduced the requested award by 30% because it found that the hours charged were excessive. Plaintiffs argued that they were fully successful on their claim, however, the court pointed out that the case would have been resolved much sooner if plaintiffs had produced certain key evidence at the outset. In the court’s view, much of the motion practice that took place before plaintiffs’ grant of summary judgment was not reasonably necessary to litigate the case.

In Steve C. v. Blue Cross & Blue Shield of Massachusetts, Inc., 450 F. Supp. 3d

48, 62 (D. Mass. March 30, 2020), the court stated that because it was not dismissing plaintiffs’ claims, it would not dismiss plaintiffs’ demand for attorneys’ fees. The court noted that if it were to dismiss plaintiff’s claims, then plaintiffs’ request for attorneys’ fees would be denied.

5. Amount of Fee under § 502(g)(1)


6. Common Fund Awards

In Trustees of v. Cotto, No. 18-CV-7123(AMD)(CLP), 2020 WL 5763942, at *6 (E.D.N.Y. Sept. 28, 2020), the court denied an award of attorneys’ fees where defendants argued that plaintiff plan could not impose a constructive trust on the entire amount of a third-party settlement fund on the basis that a portion of the fund belonged to defendant’s counsel in a state court personal injury case. However, the terms of the plan limited the common fund doctrine by providing that the fund’s priority took priority over defendants’ attorneys’ fees. Therefore, the defendants were not entitled to recover their attorneys’ fees until the fund was paid in full. In Marshall v. Northrop Grumman Corp., No. 16-CV-6794 AB (JCX), 2020 WL 5668935, at *4 (C.D. Cal. Sept. 18, 2020), the court noted that class counsel obtained an

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exceptional result following over thirteen years of litigation. Starting with the 25% benchmark established by the Ninth Circuit, the court found that an award equal to approximately 29% of the claimed damages at trial appropriate. In noting the experience of class counsel, the court found that “Schlichter, Bogard & Denton is exceptionally skilled having achieved unparalleled success in actually pioneering complex ERISA 401(k) excessive fee litigation, such as this case and Grabek. The Court agrees with other district courts that Schlichter, Bogard & Denton are attorneys of the ‘highest caliber’. This Court agrees that, in creating the field of 401(k) excessive fee litigation, when neither the Department of Labor or any private law firm had ever filed such a case, Schlichter Bogard & Denton functioned as a private attorney general.”

In Stevens v. SEI Investments Co., No. CV 18-4205, 2020 WL 996418, at *11

(E.D. Pa. Feb. 28, 2020), the court justified the percentage-of-recovery method as “the customary and favored method for determining an attorneys’ fee award in ERISA class action settlements resulting in common fund settlements.” The court noted that the Third Circuit favors the percentage-of-recovery method considering the significant risks undertaken by counsel in ERISA class actions on a contingency basis. In approving the percentage-of-recovery method, courts consider the complexity of the case, the risk of non-payment and the amount awarded in similar ERISA cases.

In Kelly v. Johns Hopkins Univ., No. 1:16-CV-2835-GLR, 2020 WL 434473, at

*2 (D. Md. Jan. 28, 2020), the court noted that districts within the Fourth Circuit prefer the percentage method in common fund cases but has not identified the factors for district courts to apply. In considering the seven factor test used by some courts and the twelve factor test used by other courts, the court found the attorney fee request reasonable and appropriate given the “significant risk of nonpayment.” “In particular, for this case, and 403(b) excessive fee cases in general, the risk of nonpayment was tremendous. No other excessive 403(b) fee lawsuit had been filed before Class Counsel did, and no other law firm had been willing to devote the necessary resources to prosecute this type of action.” The size and complexity of the issues and the novelty of the ERISA claims involving a 403(b) plan more than sufficiently justified a one-third award. “Indeed, the fact that excessive 403(b) litigation did not exist until Schlichter, Bogard & Denton began ‘holding employers responsible’ for their misconduct exemplifies the difficulty and uncertainty in obtaining any recovery in this litigation.”

K. Prejudgment Interest

1. In General

In Bd. of Trustees of Indiana Laborers Welfare Fund v. Van Dalsen, No. 218CV00463JPHMJD, 2020 WL 786752, at *5 (S.D. Ind. Feb. 18, 2020), report and recommendation adopted, No. 218CV00463JPHMJD, 2020 WL 1448214 (S.D. Ind. Mar. 25, 2020), the court found that prejudgment interest would be inappropriate because the defendant acted in good faith in seeking documents to support its claim that it had mistakenly made benefits to an ineligible dependent.

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2. Discretionary Standard

In Finkel v. KLK Elec., Inc., No. 19CV04945NGSJB, 2020 WL 3885739, at *3 (E.D.N.Y. June 25, 2020), the court noted that there is a presumption in favor of prejudgment interest where, as in this case, an arbitration agreement states that the arbitration decision is “final and binding.” See also Finkel v. Allstate Elec. Corp., No. 19-CV-6260-ARR-RLM, 2020 WL 3867136, at *9 (E.D.N.Y. July 8, 2020) (same); Finkel v. High Volt Elec. Corp. of Am., No. 19CV05028NGJO, 2020 WL 3885738, at *3 (E.D.N.Y. June 25, 2020) (same).

3. Factors Considered in Determining Whether to Award

Prejudgment Interest

In Smith v. Aetna Life Ins. Co., No. 18-CV-1463 JLS (WVG), 2020 WL 6055147, at *13 (S.D. Cal. Oct. 14, 2020), the court stated that, in its discretion, the equities of the case did not warrant awarding pre-judgment interest on an award of past benefits where Defendant reversed its denial decision and voluntarily paid the benefits before plaintiff obtained a ruling on the merits.

4. Accrual of Prejudgment Interest Claims

In Trustees of Local 7 Tile Indus. Welfare Fund v. AM Tile Specialty Constr., No. 19-CV-1809-RPK-SJB, 2020 WL 7034025, at *10–11 (E.D.N.Y. Sept. 23, 2020), report and recommendation adopted, No. 19CV1809RPKSJB, 2020 WL 7021646 (E.D.N.Y. Nov. 30, 2020), the court determined that the midpoint of the period of unpaid contributions that plaintiffs sought was the reasonable date to begin calculating prejudgment interest. The court adopted the intermediate approach because the trustees did not explain differences between the terms of the CBA and the terms of the fund’s collection policy regarding the date on which interest should accrue.

In Bricklayers Ins. & Welfare Fund v. Shelbourne Constr. Corp., No. 20-CV-998

(BMC), 2020 WL 5752118, at *2 (E.D.N.Y. Sept. 25, 2020), the court calculated prejudgment interest from the midpoint of its delinquency period in for unpaid contributions.

In Trustees of Sheet Metal Workers’ Local Union No. 28 Funds & Plans v. Air

Wise Heating & Cooling, Inc., No. 18CIV11569JGKGWG, 2020 WL 2846693, at *4 (S.D.N.Y. June 2, 2020), report and recommendation adopted, No. 18CV11569 (JGK), 2020 WL 3440503 (S.D.N.Y. June 23, 2020), the court awarded prejudgment interest beginning from the midpoint of the period covering various dates in which plaintiff’s claims for unpaid contributions to the fund arose.

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5. The Rate of Prejudgment Interest Awarded

In Mason Tenders Dist. Council Welfare Fund v. Shelbourne Constr. Corp., No. 19-CV-7562 (AJN), 2020 WL 7028530, at *8 (S.D.N.Y. Nov. 30, 2020), the court concluded that where the collective bargaining agreements were silent on the interest rate applied for plan contributions, a prejudgment interest award at an annual rate of nine percent pursuant to New York state law was appropriate. .

In Jamie F. v. UnitedHealthCare Ins. Co., No. 19-CV-1111-YGR, 2020 WL 6802416, at *2 (N.D. Cal. Nov. 19, 2020), plaintiff dependent sought an award of benefits for residential treatment paid for in part by the dependent’s parents and with a portion still owing to the residential facility. Of the portion that the plaintiff’s parents paid, the court applied prejudgment interest at the rate of 3.5% per annum because plaintiff submitted evidence that the parents paid a portion by withdrawing money from their investment account that earned an average interest rate of 3.5% for the relevant period. For the portion still owing, the court applied prejudgment interest at the rate of 9% per annum based on the contractual interest rate established by the residential facility for the unpaid balance.

In Bricklayers & Trowel Trades Int’l Pension Fund v. NY Big Apple Constr. Corp., No. 1:19-CV-03552 (TNM), 2020 WL 6683061, at *3 (D.D.C. Nov. 12, 2020), the court selected the amount specified in the CBA for delinquent contributions: the annual interest rate of 15 percent.

In Montefiore Med. Ctr. v. Local 272 Welfare Fund, No. 09-CV-3096 (RA)(SN),

2020 WL 5518981, at *2 (S.D.N.Y. Aug. 25, 2020), report and recommendation adopted, No. 09-CV-3096 (RA) (SN), 2020 WL 5518963 (S.D.N.Y. Sept. 14, 2020), the court found that an award of prejudgment interest at the federal prime rate, calculated as simple interest rather than compound interest, would be sufficient to compensate plaintiff medical provider that sought payment from a fund for services. The court rejected plaintiff’s arguments that an interest award greater than the federal prime rate was necessary. The court pointed out that prejudgment interest should generally be measured by interest on short-term, risk-free obligations, such as Treasury bills. In addition, the plaintiff did not establish that it normally invested patient revenue in its endowment fund that earned a higher return.

In Finkel v. Allstate Elec. Corp., No. 19-CV-6260-ARR-RLM, 2020 WL

3867136, at *9 (E.D.N.Y. July 8, 2020), the court followed the “common practice” of courts in the Second Circuit of awarding interest at a rate of nine percent, the rate of pre-judgment interest under New York State law.

In Finkel v. KLK Elec., Inc., No. 19CV04945NGSJB, 2020 WL 3885739, at *3 (E.D.N.Y. June 25, 2020), the court awarded prejudgment interest as specified in the fund’s collection policy. See also Finkel v. High Volt Elec. Corp. of Am., No. 19CV05028NGJO, 2020 WL 3885738, at *3 (E.D.N.Y. June 25, 2020) (same).

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In Kinsinger v. SmartCore, LLC, No. 317CV00643FDWDCK, 2020 WL 2926476, at *7 (W.D.N.C. June 3, 2020), plaintiffs requested an award of prejudgment interest for wrongful denial of medical benefits based on the amount the employer was billed instead of the amount plaintiffs actually paid, as suggested by defendants. The court acknowledged that plaintiffs were entitled to prejudgment interest because they were deprived of the use of their funds, but an award based on an amount that the plaintiffs did not ultimately pay would result in a windfall to plaintiffs compared to the sum defendants unjustly deprived them of in fact.

In Ramos v. Banner Health, 461 F. Supp. 3d 1067, 1135 (D. Colo. May 20, 2020), the court found that the IRS underpayment rate in 26 U.S.C. § 6621 was appropriate because it reasonably approximated lost earning investment opportunity and was not punitive to defendants. The court also found that monthly compounding more accurately reflected plaintiff’s losses instead of daily compounding as permitted by 26 U.S.C. § 6622(a).

In Spears v. Liberty Life Assurance Co. of Bos., No. 3:11-CV-1807 (VLB), 2020 WL 2404973, at *5–6 (D. Conn. May 12, 2020), the court determined that defendant’s suggested rate of the average prime interest rate during the time of its initial denial of long-term disability benefits until the court granted summary judgment was more appropriate than the plaintiff’s request for 10% pre-judgment interest rate pursuant to Connecticut General Statute Section 37-3a(a) with respect to compensating plaintiff without penalizing defendant. The plaintiff had made no argument as to the actual damages she suffered, rather she speculated that she would have earned more than the prime rate if had she timely received her benefits which indicated that she did not have to borrow money at a high rate, a factor important to setting the pre-judgment interest rate.

In Monroe v. Metro. Life Ins. Co., No. 215CV02079TLNCKD, 2020 WL

1430005, at *26 (E.D. Cal. Mar. 24, 2020), the court awarded prejudgment interest at the interest rate set forth in 28 U.S.C. § 1961 because the parties provided no information or evidence about the rate and the plaintiff did not support her request for ten percent under Cal. Ins. Code § 10111.2 as opposed to the federal standard.

In McCarron v. Deloitte LLP, No. 15-CV-10243-IT, 2020 WL 3412576, at *2 (D.

Mass. Mar. 6, 2020), the court found that the rate proposed by the defendant for an award of prejudgment interest, the federal statutory rate pursuant to 28 U.S.C § 1961, was not sufficient where plaintiff was owed the benefits for which she was seeking prejudgment interest over a decade earlier. Instead, the court found that the Massachusetts state rate of 12% was appropriate to accomplish the goals of ensuring no unjust enrichment, fully compensating the beneficiary for the loss of use of the money, and promoting settlement and deterring any attempt to benefit from litigation delay.

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IV. Class Actions

A. Application of Rule 23

1. Rule 23(a)

a. Impracticability of Joinder & Membership in the Class

Claims challenging whether liposuction were included met Rule 23(a)(1) where between 27 and 34 denials potentially met class criteria. Caldwell v. UnitedHealthcare Ins. Co., C 19-2861 WHA, 2020 WL 7714394, at *3 (N.D. Cal. Dec. 29, 2020)

Rule 23(a)(1) was not met where plaintiffs failed to submit data showing how many persons met the class definition. Crosby v. California Physicians’ Serv., SACV1701970, 2020 WL 6535790, at *6 (C.D. Cal. Nov. 2, 2020)

Rule 23(a)(1) was met where there were between 38 and 44 class members. Atzin

v. Anthem, Inc., 217CV06816ODWPLAX, 2020 WL 2198031, at *3 (C.D. Cal. May 6, 2020)

b. Commonality

Arguments about uncommon injury did not defeat commonality where “the claimed harm is one of process not outcome,” and defenses against some members of the class does not affect the availability of classwide relief. Caldwell v. UnitedHealthcare Ins. Co., C 19-2861 WHA, 2020 WL 7714394, at *4 (N.D. Cal. Dec. 29, 2020)

Allegation that defendants breached their fiduciary duties by paying class members less than fair value for their stock is an issue common to all class members. Glynn v. Maine Oxy-Acetylene Supply Co., 2:19-CV-00176-NT, 2020 WL 6528072, at *3 (D. Me. Nov. 5, 2020)

Commonality was not met where the court could not determine “in one stroke” whether defendants’ alleged policy was lawful or unlawful as to every class member because the challenged claims process involved highly individualized determinations about a member’s behavior and circumstances at the time of each request and the allegedly wrongful considerations are not hard-and-fast rules that determine outcomes when applied. Crosby v. California Physicians’ Serv., SACV1701970CJCJDEX, 2020 WL 6535790, at *7 (C.D. Cal. Nov. 2, 2020)

Commonality not met where plaintiffs did not provide sufficient evidence

demonstrating that defendants applied a uniform practice on a classwide basis. Briscoe v. Health Care Serv. Corp., 16-CV-10294, 2020 WL 5702146, at *4 (N.D. Ill. Sept. 24, 2020)

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Commonality existed despite defendants’ arguments about whether accounts performed well because commonality does not require class members to have suffered the same harm, only that they were subject to the same allegedly unlawful practices and, therefore, pursue claims based on a “common contention” and each class member was affected by the fiduciaries’ decision because they subscribed to the services and paid the associated fee. Pizarro v. Home Depot, Inc., 1:18-CV-01566-WMR, 2020 WL 6939810, at *9 (N.D. Ga. Sept. 21, 2020)

Commonality not met where plaintiffs could not establish fiduciary status or

breach based on common, classwide proof where the PBM/client contracts are the foundation for their claims and vary from client to client. In re: EpiPen ERISA Litig., CV 17-1884 (PAM/HB), 2020 WL 4501925, at *5 (D. Minn. Aug. 5, 2020)

Commonality not met despite allegation that defendants had a uniform policy of

excluding coverage for wilderness therapy based on it being experimental, investigational, or unproven because defendants did not apply the policy to all claims for coverage of wilderness therapy and there were differences in the proposed class members’ medical conditions, the type of wilderness therapy and programs for which coverage was sought, and the terms of the proposed class members’ benefits plans. Amy G. v. United Healthcare, 2:17-CV-00413-DN-EJF, 2020 WL 3065414, at *3-4 (D. Utah June 9, 2020)

Commonality met although 64 purported class members signed general releases

that include ERISA claims and class action waivers. While the validity and effect of these releases are additional issues that will probably have to be litigated on the merits, there are common questions of law and fact, as the claims depend on Defendants’ actions, and Defendants do not dispute that their actions affected each class member. Woznicki v. Raydon Corp., 618CV2090ORL78GJK, 2020 WL 857050, at *8 (M.D. Fla. Feb. 20, 2020), report and recommendation adopted, 618CV2090ORL78GJK, 2020 WL 1270223 (M.D. Fla. Mar. 16, 2020)

c. Typicality

Allegations that Defendants forced ESOP participants to sell their shares back to the company at a price significantly below market value met typicality requirements. Glynn v. Maine Oxy-Acetylene Supply Co., 2:19-CV-00176-NT, 2020 WL 6528072, at *3 (D. Me. Nov. 5, 2020)

Any individual issues of reliance as a central element of a claim did not

undermine typicality where claims of class derived from a single course conduct by defendants and are based on the same legal theory. King v. State Farm Mut. Automobile Ins. Co., 1:19-CV-1120-JES-TSH, 2020 WL 4784733, at *5 (C.D. Ill. Aug. 18, 2020)

Typicality was met where claims were based on documents sent to all class

members, the claims alleged omissions, which were subject to presumption of reliance

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and defendants’ arguments about different statute of limitations were subject to the exact same defense. Baleja v. Northrop Grumman Space & Missions Sys. Corp., EDCV17235JGBSPX, 2020 WL 3213708, at *4 (C.D. Cal. Mar. 26, 2020)

Plaintiffs’ claims were not atypical merely because the named plaintiffs may have had more familiarity with ERISA or even Defendants’ interpretation of the Atmel Plan than other class members. Schuman v. Microchip Tech. Inc., 16-CV-05544-HSG, 2020 WL 887944, at *7 (N.D. Cal. Feb. 24, 2020)

d. Adequacy of Class Representatives

Arguments that claims would hurt company or somehow adversely affect current employees did not create conflict between current and former employees because relief sought would not result in systemic changes to the company that might make current employees worse off. Glynn v. Maine Oxy-Acetylene Supply Co., 2:19-CV-00176-NT, 2020 WL 6528072, at *6 (D. Me. Nov. 5, 2020)

Plaintiff who allegedly “demonstrated a lack of familiarity with some basic

information about the case” was still adequate because plaintiff is “aware of fundamental aspects of the case,” and “demonstrat[ed] [an] interest and engagement in the litigation [that] is considerable.” Jacobs v. Verizon Commun., Inc., 16 CIV. 1082 (PGG), 2020 WL 5796165, at *9 (S.D.N.Y. Sept. 29, 2020)

Plaintiffs were not adequate under Rule 23(a)(4) because the relief sought—

reforming the definition of “Actuarial Equivalent” in the plans—would harm some class members they seek to represent. Torres v. Am. Airlines, Inc., 4:18-CV-00983-O, 2020 WL 3485580, at *11 (N.D. Tex. May 22, 2020)

Plaintiff was adequate notwithstanding defendants’ argument that a small

percentage of the class may receive a smaller benefit under plaintiff’s theory, as that did not demonstrate that plaintiff has a conflict with the rest of the class. Baleja v. Northrop Grumman Space & Missions Sys. Corp., EDCV17235JGBSPX, 2020 WL 3213708, at *5 (C.D. Cal. Mar. 26, 2020)

Plaintiffs were adequate although they had not suffered actual harm warranting

equitable surcharge because they are seeking surcharge under an “unjust enrichment theory,” and the “surcharge would [ ] be determined on a class-wide basis, using [defendant’s] own records, and would not require any individualized findings regarding the extent of any particular class member’s injury (financial or otherwise) as a result of [defendant’s] breach.” Schuman v. Microchip Tech. Inc., 16-CV-05544-HSG, 2020 WL 887944, at *8 (N.D. Cal. Feb. 24, 2020)

Plaintiff’s actions and statements that demonstrated hostility towards certain

defendants did not amount to “extreme personal animus” toward defendants such that she would be an inadequate class representative because she had and was willing to consider

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an appropriate settlement for the class. Woznicki v. Raydon Corp., 618CV2090ORL78GJK, 2020 WL 857050, at *11 (M.D. Fla. Feb. 20, 2020), report and recommendation adopted, 618CV2090ORL78GJK, 2020 WL 1270223 (M.D. Fla. Mar. 16, 2020)

e. Appointment & Adequacy of Class Counsel

Despite not previously litigating an ERISA action, and making some mistakes in drafting the complaint, counsel experienced in federal court were adequate based on their work in the case. Glynn v. Maine Oxy-Acetylene Supply Co., 2:19-CV-00176-NT, 2020 WL 6528072, at *7 (D. Me. Nov. 5, 2020)

Counsel who had experience in class action matters, but not necessarily ERISA

class actions, was still adequate. King v. State Farm Mut. Automobile Ins. Co., 1:19-CV-1120-JES-TSH, 2020 WL 4784733, at *5 (C.D. Ill. Aug. 18, 2020)

2. Rule 23(b)

a. Rule 23(b)(1)

Claims for breaches of fiduciary duty were certified under Rule 23(b)(1)(A) and (b)(1)(B) although the “primary remedy sought” by plaintiffs is “monetary relief” and rejecting argument that LaRue created right for individual remedies for individual accounts. Pizarro v. Home Depot, Inc., 1:18-CV-01566-WMR, 2020 WL 6939810, at *12 (N.D. Ga. Sept. 21, 2020)

Claims that the Trustees breached their fiduciary duties as a result of a single

transaction entered into on behalf of the Fund as a whole were certified under Rule 23(b)(1)(A) and (b)(1)(B) in part because the challenged fee was paid from the corpus of the Fund rather than as a fee charged separately to individual Fund beneficiaries when they are paid and the Fund will either pay the entire Service Fee or none of it. Risto v. Screen Actors Guild-Am. Fedn. of TV and Radio Artists, 218CV07241CASPLAX, 2020 WL 5518600, at *10-11 (C.D. Cal. Sept. 14, 2020)

Claim for equitable surcharge defeated request for certification under Rule

23(b)(1)(A). Schuman v. Microchip Tech. Inc., 16-CV-05544-HSG, 2020 WL 887944, at *11 (N.D. Cal. Feb. 24, 2020)

Claim challenging a single transaction affecting all participants in the ESOP

whether the price paid for stock was more than fair market value was suitable for certification under Rule 23(b)(1). Woznicki v. Raydon Corp., 618CV2090ORL78GJK, 2020 WL 857050, at *14 (M.D. Fla. Feb. 20, 2020), report and recommendation adopted, 618CV2090ORL78GJK, 2020 WL 1270223 (M.D. Fla. Mar. 16, 2020)

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b. Rule 23(b)(2)

A claim under ERISA § 510 and a claim under ERISA § 502(a)(3) to reform the plan based on fiduciary breaches were certifiable under Rule 23(b)(2) despite arguments about differences among subunits within the company and arguments about monetary relief, which the court found could be calculated on a uniform basis based on applying the requirements in the Plan. Carlson v. Northrop Grumman Severance Plan, 13-CV-02635, 2020 WL 6870785, at *5 (N.D. Ill. Nov. 23, 2020)

Claims challenging service fee was also certified under Rule 23(b)(2) even though

they included request for disgorgement of the service fee assessed because that did not raise individual “damage questions.” Risto v. Screen Actors Guild-Am. Fedn. of TV and Radio Artists, 218CV07241CASPLAX, 2020 WL 5518600, at *12 (C.D. Cal. Sept. 14, 2020)

Certification of an ERISA benefits claim was appropriate under Rule 23(b)(2)

where the monetary relief flows “directly from liability to the class as a whole on the claims forming the basis of the injunctive or declaratory relief.” Baleja v. Northrop Grumman Space & Missions Sys. Corp., EDCV17235JGBSPX, 2020 WL 3213708, at *6 (C.D. Cal. Mar. 26, 2020)

Claims for breach of fiduciary duty claim was certified under Rule 23(b)(2) even

though it included request for equitable surcharge where surcharge would not require individual determinations. Schuman v. Microchip Tech. Inc., 16-CV-05544-HSG, 2020 WL 887944, at *12 (N.D. Cal. Feb. 24, 2020)

c. Rule 23(b)(3)

Claims challenging common practices by one defendant as to multiple plans was properly certified under Rule 23(b)(3) but not Rule 23(b)(1) where all of the plans had the same material terms. Haley v. Teachers Ins. and Annuity Assn. of Am., 17-CV-855 (JPO), 2020 WL 6947460, at *11 (S.D.N.Y. Nov. 25, 2020)

Common questions predominate because the crux of the plaintiffs’ claims is that the defendants allegedly bought back the ESOP shares of the members of the putative class at the same below-market rate in a manner that breached their fiduciary duties to all of the putative class members. Glynn v. Maine Oxy-Acetylene Supply Co., 2:19-CV-00176-NT, 2020 WL 6528072, at *8 (D. Me. Nov. 5, 2020)

The existence of a DOL Action over same issues did not undermine superiority of

class action. Glynn v. Maine Oxy-Acetylene Supply Co., 2:19-CV-00176-NT, 2020 WL 6528072, at *10 (D. Me. Nov. 5, 2020)

Where action was certifiable under Rule 23(b)(1) and (b)(2), it would not be

superior to certify claims under Rule 23(b)(3). Risto v. Screen Actors Guild-Am. Fedn. of

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TV and Radio Artists, 218CV07241CASPLAX, 2020 WL 5518600, at *13 (C.D. Cal. Sept. 14, 2020)

Common questions of whether Defendants represented that specific services were

covered expenses under the Plan, and whether class members are entitled to reimbursement for those services predominated over individual issues where they could be resolved for all members of the class in a single adjudication, and the questions specific to each individual class member, such as damages and possibly reliance, do not predominate over the common questions affecting the class as a whole. King v. State Farm Mut. Automobile Ins. Co., 1:19-CV-1120-JES-TSH, 2020 WL 4784733, at *6 (C.D. Ill. Aug. 18, 2020)

Predominance was satisfied for denial of benefits claim despite existence of

releases signed by class members because issue concerned whether the releases are invalid is based on class-wide communications that misrepresented the terms of the Plan. Schuman v. Microchip Tech. Inc., 16-CV-05544-HSG, 2020 WL 887944, at *13 (N.D. Cal. Feb. 24, 2020)

B. Class Definitions and Ascertainability

1. Procedural and Other Issues

Class definition was ascertainable where determinations could be made based on examining individual medical records. Caldwell v. UnitedHealthcare Ins. Co., C 19-2861 WHA, 2020 WL 7714394, at *6 (N.D. Cal. Dec. 29, 2020)

After trial, class definitions were modified to exclude individuals who were

granted all of the benefits that they sought following an administrative appeal and decertified as to Rule 23(b)(3) remedies to exclude certain class members who were omitted from the class lists because of the flaw in the method used to identify class members. Wit v. United Behavioral Health, 14-CV-02346-JCS, 2020 WL 6462401, at *13 (N.D. Cal. Nov. 3, 2020)

Class definition was an impermissible fail safe definition as it includes only those

persons who “have vested rights to retirement benefits that have been denied” where the question of whose rights have vested is central to the merits of this action. White v. Hilton Hotels Ret. Plan, CV 16-856 (CKK), 2020 WL 5946066, at *3 (D.D.C. Oct. 7, 2020)

Class definition was ascertainable although Plaintiff had not alleged a defined

time frame within the three-year statute of limitations for ERISA claims. Jacobs v. Verizon Commun., Inc., 16 CIV. 1082 (PGG), 2020 WL 5796165, at *9 (S.D.N.Y. Sept. 29, 2020)

The district court concluded that the Seventh Circuit requires plaintiffs to demonstrate ascertainability “regardless of whether certification was sought under Rule

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23(b)(1), (2), or (3)” and found lack of objective criteria for class definition. Briscoe v. Health Care Serv. Corp., 16-CV-10294, 2020 WL 5702146, at *5 (N.D. Ill. Sept. 24, 2020)

In a non-ERISA case, the Sixth Circuit held that a class definition for a Rule

23(b)(3) class “must be sufficiently definite so that it is administratively feasible for the court to determine whether a particular individual is a member of the proposed class” and whether a class member had damages was a merits, not standing question. Hicks v. State Farm Fire and Cas. Co., 965 F.3d 452, 464 (6th Cir. 2020)

The Court granted a motion to strike class allegations without prejudice where the

complaint adequately failed to plead common issues and also plead a fail-safe class and plaintiff did not propose any alternative definition. Day v. Humana Ins. Co., 335 F.R.D. 181, 201 (N.D. Ill. 2020)

2. Appeals

To sustain a class certification on appeal, a district court must detail with specificity its reasons for certifying class by explaining and applying the substantive law governing the plaintiffs’ claims to the relevant facts and defenses, articulating why the issues are fit for classwide resolution as well as responding to defendants’ legitimate protests of individualized issues that could preclude class treatment. Chavez v. Plan Benefit Services, Inc., 957 F.3d 542, 546 (5th Cir. 2020)

3. Non-Class Actions under ERISA


CHAPTER 12 CIVIL PRACTICE AND PROCEDURE

Documents

Transcript of CHAPTER 12 CIVIL PRACTICE AND PROCEDURE