An employer that deliberately, or with gross negligence, misinforms employees about potential retirement benefits - inducing them to remain with the company - may find itself on the hook to compensate those employees for lost opportunities. In this case, the Sixth Circuit affirms an ERISA judgment against a manufacturer and its retirement plan for equitable estoppel, breach of fiduciary duty, and an anti-cutback violation of ERISA.
Here are two employment cases about second-chances. A plan participant who filed an ERISA claim too late under a contractual limitations period is rescued by a decision that the plan violated its duty by not telling the participant about the shortened deadline. The EEOC wins a second opportunity to advance claims on behalf of a class of female victims of harassment, in the wake of Mach Mining, LLC v. EEOC, 135 S. Ct. 1645 (2015).
The end of the year often brings a haul of decisions, when the courts of appeal clear their dockets for year's-end. Here's a short, to-the-point decision, reversing summary judgment on an ADEA and ERISA case where the district court judge misapprehended a controlling Supreme Court decision.
The Supreme Court - presented with a simple question about ERISA's fiduciary-duty statute of limitations (29 U. S. C. § 1113) - lays the foundation for a potential new round of litigation about how strictly and often plan fiduciaries must monitor the performance of their retirement investment plans. The Court, without dissent, agrees that there is no set-it-and-forget-it rule for fiduciaries.
While ERISA does not provide a limitations period for most claims, it does impose a three-year limitations period after discovery of a breach of fiduciary duty, plus a six-year period of repose. Yet the statute also provides that "in the case of fraud or concealment, such action may be commenced not later than six years after the date of discovery of such breach or violation." The Tenth Circuit examined this quoted language today, and remanded parts of a class action to be reconsidered under this provision.
This class action, now over 13 years old - with a liability finding against CIGNA and its pension plan under ERISA for cutting back and misrepresenting benefits under an amended plan - returns from the U.S. Supreme Court to determine what kind of relief should be ordered. The Second Circuit affirms, holding that the district court properly reformed the pension plan to preserve all of the benefits earned under the pre-amended plan, up to the date of the amendment. The court also upholds the class certification order.
The duty of the administrator of a short-term disability (or other welfare benefit) plan can sometimes extend beyond reviewing the participant's submitted claim. The Fourth Circuit holds that it can also be an abuse of discretion for the administrator to disregard "readily available material evidence of which it was put on notice." Here, the administrator allegedly failed to follow up on a notation in the medical file indicating that the participant's recent widowhood "could have triggered PTSD caused by the [recent] death of her mother and children."
The crafters of the 1974 ERISA statute intended participants to have the broadest range of access to federal court, including a special venue statute and national service of process. Under ERISA, venue is proper in "the district where the plan is administered, where the breach took place, or where defendant resides or may be found." 29 U.S.C. § 1132(e)(2). But a 2-1 decision in the Sixth Circuit - four decades after ERISA's passage - threatens that accomplishment, holding that a plan choice-of-forum clause that limited venue to a single district in Iowa five hundred miles from the plan participant could be enforced.
The U.S. Supreme Court in Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010), held that ERISA plan participants who must sue to obtain review of a benefit denial can be awarded attorney's fees under 29 U.S.C. § 1132(g)(1) by achieving "some degree of success on the merits," regardless of whether they ultimately win the whole case. The First Circuit today, in a 2-1 decision, issues the first precedential appellate-level opinion in holding that fees may be awarded even if the participants' entire victory is having their cases remanded back to the plan administrator for reweighing under the correct standard of review.
A hidden difficulty many American employees face is that a huge amount of their retirement income - an estimated $4 trillion - is in 401(k) plans, too many of which are managed by individuals indifferent to (or not competent to advance) the interests of future retirees. In this Fourth Circuit case, the district court found the fiduciaries of the retirement plan in breach of their duty of prudence by their arguably poor timing in liquidating a company-stock fund when its shares were in a trough, without performing a reasonable investigation, but excused them from paying any relief to the participants. The court holds (2-1) that the judge erred in insulating the fiduciaries from remedying that breach, concluding that the fiduciaries had the burden of proving that a prudent fiduciary would have made the same decision.