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Boston Children's Heart Foundation, Inc. v. Nadal-Ginard, 1996 WL 5570 (1st Cir. 1996) -- Nadal-Ginard reconstructed the severance benefit plan (the Nadeau Plan). Under the new plan (the Banks Plan), Nadal-Ginard was to receive far more benefits than under the Nadeau Plan. Upon Nadal-Ginard's own initiative, the Banks Plan was terminated, paying him benefits in cash and securities valued over $4,000,000. BCHF, Inc. claimed Nadal-Ginard breached his fiduciary duties with respect to his involvement in the creation of the plan and his representation to the Board. Nadal-Ginard contended that ERISA explicitly exempts these types of severance benefit plans from its fiduciary provisions. Further, he alleged that ERISA preempted state law. After a discussion on the scope of ERISA preemption, the First Circuit held that ERISA did not preempt Massachusetts fiduciary laws in this instance. "State laws that have merely a 'tenuous, remote, or peripheral connection with a covered benefit plan' may not be preempted by ERISA." Rosario Cordero v. Crowley Towing & Transp. Co., 46 F.3d 120, 123 (1st Cir. 1995). To determine whether a state law is "tenuous, remote,..." the court is required to look at the facts of particular case. Here, the court found the following factors to be determinative: (1) breach related to his action in establishing the Banks plan without disclosing information that a self-interested fiduciary would be required to reveal to his fellow directors; (2) his conduct preceded the formal adoption of the plan; (3) legal determination that his conduct was a fiduciary breach does not require resolution of any dispute about the interpretation or administration of plan; and (4) the application of state law in this case does not raise the core concern underlying ERISA preemption.
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Lehman v. The Prudential Insurance Company of America, 1996 WL 14466 (1st Cir. 1996) -- Lehman claimed unlawful pension discrimination in violation of ERISA 510 [29 U.S.C. 1140] alleging Prudential hire a younger person for the co-managing director position to avoid the high cost of funding his pension. To establish a prima facie case of unlawful pension discrimination, a plaintiff must show that: (1) he had the opportunity to attain rights under an ERISA benefit plan; (2) he was qualified for the position at issue; and (3) he was subjected to adverse action under circumstances that give rise to an inference of discrimination. Barbour v. Dynamics Research Corp., 63 F.3d 32, 37-38 (1st Cir. 1995). To defeat the inference of discrimination, the employer must only articulate, it need not prove, a nondiscriminatory reason for its hiring decisions. Dister v. Continental Group, Inc., 859 F.2d 1108, 1115 (2d Cir. 1988). Finally, the plaintiff must show that employer was motivated by "the specific intent of interfering with the employee's ERISA benefits." Barbour, 63 F.3d at 37. ERISA provides no relief if the loss of an employee's benefits was incidental to, and not the reason for, the adverse employment action. Therefore to establish specific intent, a plaintiff must show: (1) that employer's articulated reason for its employment actions was a pretext; and (2) the true reason was to interfere with employee's receipt of benefits. Id. at 39. The First Circuit found that Prudential did not discriminate. Mere awareness of the high cost of pension obligations combined with the single isolated ambiguous remark by the President of the sales division was insufficient, by themselves to establish Prudential's discriminatory intent. Also, the record showed (1) Prudential's benefit costs were calculated on a company-wide basis; (2) top management, who made the hiring decision, received no individual employee calculation of pension costs; (3) Prudential did not have knowledge of his wife's age, which was necessary to compute his pension obligation; and (4) no material connection appeared between the cost of funding his pension and Prudential's decision to hire someone else.
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Cottrill v. Sparrow, Johnson & Ursillo, Inc., 1996 WL 15837 (1st Cir. 1996) -- Cottrill sought pursuant to 29 U.S.C. 1001, et seq. [ERISA], to vacate revocation by the Sparrow, Johnson & Ursillo, Inc. Profit Sharing Plan and Trust of his beneficial interest of $18,775.52. The plan counterclaimed, alleging that Cottrill, acting in a fiduciary relationship, was responsible for losing an investment of $130,000 of plan assets. The district court found that Cotrill was a fiduciary because he exercised "both effective and actual authority and control over the management and disposition of the $130,000. It found that (1) Cotrill was a "principal" of SJU, and a participant in the SJU profit-sharing plan; (2) he recommended the $130,000 investment to Ursillo; (3) he assumed responsibility for managing the investment and obtaining documentation, disbursing and collecting the income generated by the $130,000 investment; (4) he was a partner in North Main, the vehicle for making the investment, and listed himself on its account record as the partner in charge of the investment. The First Circuit reversed. Cottrill's role as principal was merely a "letterhead" title for client purposes. His power to recommend investment did not amount to "authority over the management" of the assets. Schloegel v. Boswell, 994 F.2d 266, 271-72 (5th Cir.), cert denied __U.S.__, 114 S.Ct. 440, 126 L.Ed.2d 374 (1993) ("[m]ere influence over the trustee's investment decisions ... is not effective control over plan assets," where ultimate decision-making authority rests elsewhere). |
Giroux Bros. Transportation, Inc. v. New England Teamsters & Trucking Industry Pension, 73 F.3d 1 (1st. Cir. 1996) -- Case involving the statute of limitations for assessing withdrawal liability. First Circuit held the principal question raised by Giroux's action, whether the Fund timely made its demand, is explicitly governed by 29 U.S.C. § 1399. Case must be resolved by arbitration pursuant to agreement. See detailed analysis.
| NYSA-ILA Medical and Clinical Services Fund v. Axelrod, M.D., 1996 WL 11826 [19 EBC 2361] (2d Cir. 1996) -- The Trustees of NYSA-ILA Medical & Clinic Services Fund brought this suit seeking a declaration that ERISA preempts New York Public Health Law 2807-d to the extent that the Health Facility Assessment (HFA) taxes contributions and other payments for health care benefits received by two medical centers operated by the Fund. The 2d Cir. held that ERISA preempted state law because HFA directly affected and was therefore "related to" the Fund in its principal role as an employee welfare plan. The Supreme Court granted cert. and remanded the case for further consideration in light of New York State Conference v. Travelers Ins. Co., __U.S.__, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995), rev'g 14 F.3d 108 (2d Cir. 1994). In Travelers, the Supreme Court concluded that "a law operating as an indirect source of merely economic influence on administrative decisions [by ERISA plans], as here, should not suffice to trigger pre-emption." Travelers, __U.S.__, 115 S.Ct. at 1680. Upon reconsideration, the Second Circuit affirmed its previous decision and distinguished this case from Travelers on several grounds. First, the court found that there was no third party between the plan and the tax imposed pursuant to the HFA. Rather, the statute at issue depletes the Fund's assets directly, and thus has an immediate impact on the operations of an ERISA plan. There is "an immediate tax on payments and contributions which were intended to pay for participant's medical benefits ...[and] thus directly affects the Fund in its principal role as an employee welfare benefit plan." |
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Third Circuit |
| In re Unisys Savings Plan Litigation, 1996 WL 4423 [19 EBC 2393] (3d Cir. 1996) -- Participants in individual account pension plans that Unisys Corporation maintained for its employees, alleged, inter alia, that the defendants breached ERISA's fiduciary duties of prudence and diversification by investing plan assets in Executive Life guaranteed investment contracts, as well as ERISA's fiduciary duty of disclosure by providing participants with misleading or incomplete communications regarding these investments and Executive Life's financial condition. Defendants claim that 1104(c) relieves fiduciary liability for losses which result from a plan participant's exercise of control over individual account assets. The Third Circuit vacated the district court's grant of summary judgment in favor of Unisys and remanded the case to the district court for further proceedings. The court generally discussed ERISA's fiduciary duty provision [29 U.S.C. 1104] emphasizing ERISA's underlying purpose: "to protect and strengthen the rights of employees, to enforce strict fiduciary standards, and to encourage the development of private retirement plans." 29 U.S.C. 1001; H.R.Rep. No. 533, 93d Cong.2d Sess. (1974), reprinted in 1974 U.S.Code Cong. & Admin. News 4639, 4639-43. As to the participants claim that Unisys breached its duty to investigate, the court applied the common law of trusts. "[A] trustee is required to use due care, which means he must investigate the safety of the investment and its potential for income by securing reliable information, and may take into consideration the advice of qualified others, as long as he exercises his own judgment; to use the skill of a man of at least ordinary intelligence; and to use caution, with a view to the safety of the principal and to the securing of a reasonable and regular income." Restatement (Second) of Trusts 227 (1959), cmts. (a)--(c), (e). Consistent with these common law principles, the courts measure 1104(a)(1)(B)'s prudence requirement by asking whether a fiduciary employed the appropriate methods to investigate and determine the merits of a particular investment. Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915, 917-18 (8th Cir. 1994); Fink v. National Savings and Trust Co., 772 F.2d 951, 955-56 (D.C. Cir. 1985); Katsaros v. Cody, 744 F.2d 270, 279 (2d Cir.), cert. denied, 469 U.S. 1072 (1984); Donovan v. Mazzola, 716 F.2d 1226, 1232 (9th Cir. 1983), cert. denied, 464 U.S. 1040 (1984). The court held that "ERISA requires fiduciaries to review the data a consultant gathers, to assess its significance and to supplement when necessary." The court determined that a reasonable fact finder could infer from the evidence that Unisys failed to analyze the bases underlying their consultant's (Johnson & Higgins) opinion of Executive Life's financial condition and to determine for itself whether credible data supported Johnson & Higgins' recommendation that Unysis consider investing plan assets with the insurer. Further, a reasonable fact finder could also conclude that Unysis passively accepted its consultant's positive appraisal of Executive Life without conducting the independent investigation that ERISA requires. As to the participant's diversification claim, the court cited the factors to be considered in determining whether a breach occurred: (1) purpose of plan; (2) amount of plan assets; (3) financial & industrial conditions; (4) type of investment; (5) distribution as to geographic location; (6) distribution as to industries; and (7) dates of maturity. If the a plaintiff proves a failure to diversify, the burden shifts to the defendant to demonstrate that nondiversification was nonetheless prudent. Finding the record too incomplete to determine whether Unisys breached its diversification requirement, the court held that summary judgment in Unisys favor is premature. It remanded to the court to judge a motion for summary judgment based on the above principles. With regard to plaintiff's disclosure claim, the court stated that "a fiduciary may not materially mislead those to whom 1104(a)'s duties are owed." In Re Unisys Corp. Retiree Medical Benefit "ERISA" Litigation, 57 F.3d 1255, 1261 (3d Cir. 1995); Curcio v. John Hancock Mut. Life Ins. Co., 33 F.3d 226, 238 (3d Cir. 1994). Thus, "a plan administrator may not make affirmative material misrepresentations to plan participants when asked about changes to an employee pension benefits plan. A misrepresentation was "material" if there was a "substantial likelihood that it would mislead a reasonable employee in making an adequately informed decision about if and when to retire." In this case, there was evidence of several communications made by Unisys to plan participants on an individual or systematic basis regarding the nature of and risks associated with investments. Whether the communications constituted misrepresentations and whether they were material are questions of fact that are properly left for trial. Finally, addressing Unisys defense that §1104(c), which provides a fiduciary is not liable for any loss or breach which results from a participant's exercise of control over assets in his or her individual account, applies in this case, the court held that Unisys is not entitled to summary judgment. The court first looked to see whether Unisys gave participants a wide array of investments with materially different risk and return characteristics. To determine participant control, it also looked to whether a particpant could remove his or her assets from, one vehicle to another comparable vehicle. If the plan did not offer an acceptable alternative to GIC investments, a particpant did not have freedom and, in turn, the control to decide how his or her assets were ultimately invested. Additionally, the court determined that a reasonable fact finder could conclude that the duration and pervasiveness of the restrictions imposed upon by the Plans so significantly limited their ability to decide to switch Funds their respective assets were allocated, and that the restrictions are antithetical to the concept of "independent control," thus precluding summary judgment on this issue. |
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Fourth
Circuit
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Hightower
v. Texas Hospital Association, 73 F.3d 43 (5th Cir. 1996) --
Court denied rehearing of appellees argument that if the scope of
Title I and Title IV of ERISA are not construed consistently with
regard to governmental plans that have been transferred to
private entities, a number of problems will arise. Since
appellees did not originally make this argument in their
appellate briefs, the arguments have been raised too late in
appellate process to be useful to the court, and are deemed
waived.
| United States v. Sawaf, 1996 WL 28317 (6th Cir. 1996) -- The Sixth Circuit determined whether the anti-alienation provision, ERISA §206(d), prohibits the IRS from garnishing taxpayers' vested interest in an ERISA qualified pension fund in order to satisfy an IRS judgment for unpaid taxes. Under §3205(a) of the Federal Debt Collection Procedure Act (FDCPA), the U.S. may collect a judgment owed it by obtaining a garnishment against "property ... in which the debtor has a substantial nonexempt interest and which is in the possession, custody, or control of a person other than the debtor." Accordingly, the court determined (1) whether vested interest in a pension fund is the type of "property" that may be reached by FDCPA garnishment orders; and (2) if it is, whether ERISA nevertheless exempts the pension fund from such orders. The debtor bears the burden of showing he is entitled to the exemption. ERISA §206(d) [29 U.S.C. §1056(d)] mandates that each qualified pension plan "shall provide that the benefits provided under the plan may not be assigned or alienated." However, Treasury regulation §1.401(a)-13(b)(2) lists two exceptions to that rule -- "a plan provision satisfying the [anti-alienation] requirements of subparagraph (1) of this paragraph shall not preclude the following: (I) (t)he enforcement of a Federal Tax levy made pursuant to §6331; and (ii) (t)he collection of the United States on a judgment resulting from an unpaid tax assessment. Finding that the regulations was not "arbitrary, capricious, or manifestly contrary to the statute," the court was required to give the regulations controlling weight. Accordingly, ERISA's anti-alienation provision does not bar IRS access to pension funds. |
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| Golden v. Kelsey-Hayes Company, 1996 WL 15582 (6th Cir. 1996) -- The court reviewed the district court's grant of preliminary injunction to plaintiffs. The Sixth Circuit affirmed the district court's holding that the Plaintiff would likely prevail on the merits. The moving party Plaintiffs claimed they have a "vested" right to the comprehensive health insurance benefits created under a collective bargaining agreement, even after the CBA terminated. Whether benefits survive the termination of a CBA depends on the intent of the parties. International Union, United Automobile Workers v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983), cert. denied, 465 U.S. 1007, 104 S.Ct. 1002, 79 L.Ed.2d 234 (1984). The court must first look to the explicit language of the CBA for clear manifestations of intent. Id. Additionally, the court "should interpret each provision in question as part of the integrated whole. If possible, each provision should be construed consistently with the entire document and the relative positions and purposes of the parties." Id. Following Yard-Man, the court determined that "it is unlikely that [life and health insurance] benefits, which are typically understood as a form of delayed compensation or reward for past services, could be left to the contingencies of future negotiations." Therefore, an inference exists that the parties likely intended those benefits to continue as long as the beneficiary remains a retiree. Additionally, the court found that language in the SPD ("those employees who retire without pension eligibility because they have not been with the company long enough to participate in the pension plan will, nonetheless have lifetime health coverage at no cost") indicated that the company guarantees health benefits. |
| |
| Lake
v. Metropolitan Life Ins., 1996 WL 16613 (6th Cir.
1996) -- Former employees who became disabled brought
action under ERISA against employer (GE) and its benefits
plan administrator (Met Life) to recover benefits
allegedly due them. Plaintiffs are six former employees
who became disabled while at GE and who received LTD
benefits under the Long-Term Disability Income Plan for
Hourly Workers. Three plaintiffs (collectively called the
"Lake Plaintiffs") each had their benefits
reduced after receiving a retroactive lump-sum SSDI
award. The other three plaintiffs (collectively the
"Pauley Plaintiffs) each received reduced benefits
as a result of being eligible for social security early
retirement benefits. Although Met Life was given
discretionary authority to determine who is eligible for
benefits, the language of the plan did not give it
discretion over decisions concerning the level of
benefits payable to Plan beneficiaries. The court
conducted de novo review and considered this a case of
contract interpretation. Thus, under the de novo standard
of review, the court must interpret the terms of the plan
"without deferring to either party's interpretation.
Firestone v. Bruch, 489 U.S. at 112, 109 S.Ct. at 955.
The Plan provided that benefits paid monthly will be 1/24
of the participant's annual salary reduced by ...
"any primary Social Security benefits. ..."
Rejecting the Lake Plaintiff's argument, the court found
no basis for distinguishing between retroactive and
prospective SSDI payments. Relying on other court's
interpretation of similar plan language, the Sixth
Circuit read GE's LTD plan to permit recoupment of
retroactive SSDI awards. The court found no ambiguity in
the plan language, since the Plan clearly refers to
benefits which are "payable retroactively."
Additionally, the court held the SPD put plan
participants on notice. Even if the SPD violated 29
U.S.C. §1022(a)(1), plaintiffs could not recover
substantive damages. The Court also rejected the Pauley
Plaintiffs allegation that "primary Social Security
benefits" did not include Social Security
early-retirement benefits. Read in context, the court
concluded that Met Life was permitted to carve-out LTD
benefits to account for social security retirements
payable at age 62. In addition, although the court
affirmed that plan summary may control inconsistent terms
in the plan, the slightly ambiguous language in GE's SPD
did not trump the Plan's clearly unambiguous language. |
|
Seventh Circuit |
| Panaras v. Liquid Carbonic Industries Corporation, 1996 WL 19022 (7th Cir. 1996) -- Panaras alleged violation of the ERISA's notice provision (§1024(b)(1)(B) and §1024(a)(1)(B)) and breach of his contract employment. Defendant challenged Panaras standing as a participant, however the court adopted the Supreme Court's definition of participant as set forth in Firestone v. Bruch, 489 U.S. 101, 117-18 (1989) ("either employees in, or reasonably expected to be in, currently covered employment, or former employees who have ... a reasonable expectation of returning to covered employment or who have a colorable claim to vested benefit." Accordingly, the Court found that Panaras' argument (that he was entitled to severance benefits despite his refusal to sign release form because the severance plan was modified without properly notifying him of the change) was "not so bizarre or so out of line with existing precedent--that he necessarily stumbles over the low threshold of the 'colorable' requirement. Furthermore, the fact that Panaras' interest did not "vest" until he signed the release does not defeat his standing. To establish that Panaras "may become eligible for benefits," he may show a colorable claim that "eligibility requirement that will be fulfilled in the future." Firestone, 489 U.S. at 117-118. |
| Nonetheless, the Seventh Circuit upheld the district court's dismissal of plaintiff's suit. Although Panaras sufficiently alleged defendant violated ERISA's notice requirement, the Court held that "a claim for monetary benefits in a suit based on technical violations of the notice provision will be awarded only in 'exceptional circumstances' involving bad faith, intentional concealment or prejudice to the employee." Kreutzer v. A.O. Smith Corp., 951 F.2d 739, 743. Although the Court recognized that a plaintiffs allegation of bad faith will rarely be appropriately resolved on a Rule 12(b)(6) motion, dismissal was justified in this case since Panaras complaint "consisted of conclusory allegations unsupported by factual assertions." Palda v. General Dynamics Corp., 47 F.3d 872, 874 (7th Cir. 1995). |
| Additionally, although the Court recognized that prejudice to participants might naturally result from an administrator's failure to give notice. Specifically, it stated, "[a]t some level of egregiousness, breaches of the notice requirements "alter the substantive relationship between employer and employee that disclosure, reporting and fiduciary duties sought to balance somewhat more equally." Blau v. Del Monte Corp., 748 F.2d 1348 (9th Cir. 1984), cert. denied, 474 U.S. 865 (1985). It nonetheless held that Panaras' allegation of prejudice was insufficiently pleaded since he failed to inform the court or the defendant what harm he specifically has suffered as a result of defendant's ERISA violation. |
| Finally, Panaras' alleges that modification of the severance plan was a breach of his employment contract. That is, Defendant's modification was a new offer of continued employment. However, the plan clearly stated that the plan should not be interpreted as any "expressed, implied, written or oral contract of employment." Additionally, Panaras' alleged "Defendant breached their duties under ERISA, namely, the notice and disclosure violations, which duties were an implied term of Plaintiff's contract of employment." The Court held that "ERISA preempts all state law claims for severance benefits." Kreutzer, 951 F.2d at 743. |
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| Central States, Southeast and Southwest Areas Pension Fund v. Kroger Co., 1996 WL 8099 (7th Cir. 1996) -- Multiemployer pension fund brought action under ERISA alleging that employer did not meet is burden to contribute to fund on behalf of certain employees. ERISA §515 requires employers to make contributions to a multiemployer plan in accordance with the terms and conditions of such plan or agreement. Thus, the CBA and contribution agreements establish the employer's obligation tot he fund. The Seventh Circuit applied federal common law rules of interpretation in considering this contract in the context of ERISA. |
| Ambiguity in the CBA is a question of law that must be reviewed de novo. Illinois Conference of Teamsters & Employers Welfare Fund v. Mrowicki, 44 F.3d 451, 459 (7th Cir. 1994). The CBA is ambiguous if it is susceptible to more than one reasonable interpretation. Brewer v. Protexall, Inc., 50 F.3d 453, 458 (7th Cir. 1995). If the CBA is unambiguous, the court may declare its meaning as a matter of law. If it is unclear, then questions of interpretation must be resolved by the trier of fact. Jos. Schlitz Brewing Co. v. Milwaukee Brewery Workers' Pension Plan, 3 F.3d 994, 999 (7th Cir. 1993), aff'd __U.S.__, 115 S.Ct. 981, 130 L.Ed.2d 932 (1995). When parties suggest different, yet reasonable interpretations of a contract, the contract is ambiguous. Murphy v. Keystone Steel & Wire Co., 61 F.3d 560, 565 (7th Cir. 1995). |
| Here, the parties disagree as to the meaning of "part-time employee," which the court found was susceptible to more than one reasonable meaning. Part-time could mean casual or it could refer to a regular employee who works a shorter week. The provision appeared to indicate that employees who work a shorter week are part-time employees eligible for pension benefits, whereas casual employees (hired on a short-term basis) are not. Because the CBA is ambiguous, the district court erred in declaring its meaning as a matter of law. Therefore, the matter was returned to the trier of fact for a determination of the meaning of part-time. |
|
Eighth Circuit
|
| Donaho v. FMC Corporation, 1996 WL 34483 (8th Cir. 1996) -- Donaho claimed that FMC wrongfully denied her LTD benefits. The Court first discussed the standard of review and rejected the district court's "extraordinarily imprudent or extremely unreasonable" standard, which resulted in deference to FMC's decision. The Court held the proper inquiry is "whether the plan administrator's decision was reasonable; i.e., supported by substantial evidence. The pejorative adjectives of "extraordinarily (imprudent) or "extremely" (unreasonable) are encompasses in a reasonableness test." Therefore, "so long as the [plan committee's] findings are reasonable, they may not be displaced on review even if the court might have reached a different result had the matter been before it de novo." Laro Maintenance Corp. v. NLRB, 56 F.3d 224, 229 (D.C.Cir. 1995). |
| The Court then determined that FMC's denial was unsupported by the overwhelming evidence, which indicated Donaho's continuing disability. Significant to the Court's finding that FMC acted unreasonably was the committee's physician's, Dr. Zaloudek, inconsistent diagnosis. Initially, he accepted Danaho's treating physician's opinion that she was totally disabled, however, without further evidence, and after talking with the plan administrator, he reversed his opinion and found her "not totally prevented from carrying out her software engineer duties." |
| Importantly, the evidence showed Dr. Zaloudek was a reviewing physician; he never examined Donaho, therefore, his evaluation was not as determinative as FMC claimed. The Court stated, |
| "[w]e have held, in Social Security cases, that a reviewing physician's opinion is generally accorded less deference than that of a treating physician, Thomas v. Bowen, 850 F.2d 346, 349 (8th Cir. 1988), and we apply this rule in disability cases under ERISA as well. Certainly, where the reviewing physician's conclusions are contradicted by an examining physician and two treating physicians, reliance on the reviewing physician's conclusions 'seems especially misplace' and constitutes an abuse of discretion." See Totz v. Sullivan, 961 F.2d 727, 730 (8th Cir. 1992). |
| The case was remanded to the district court with instructions to remand to the plan administrator. The plan administrator was required to acknowledge liability and allow additional evidence to determine the duration of additional disability. |
|
Ninth Circuit
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| To determine the preemptive force of ERISA in this case, the Court must conduct a three-part inquiry: (1) whether the proposed expanded apprentice program was an employee benefit plan under ERISA; (2) whether the state requirement of demonstrated "need" for the expanded program "related to" the employee benefit plan and thus was preempted; and (3) whether the "savings" clause exempts the state regulation from preemption. |
| The Court held that "[a]n apprentice program is an employee welfare benefit plan under ERISA, which specifically provides that the term 'employee welfare benefits plan' includes 'apprenticeship or other training programs.' 29 U.S.C. § 1002(1). See Dillingham Const. N.A., Inc. v. County of Sonoma, 57 F.3d 712, 716 (9th Cir. 1995), pet. for cert. filed, 64 U.S.L.W. 3380 (U.S. Nov. 16, 1995) (No. 95-789). Additionally, the court concluded that state law relating to apprenticeship plans are preempted, since it has a connection or reference to ERISA. Id. at 718. |
| Furthermore, the Court rejected defendant's contention that its action is "saved" from preemption because Cal. Labor Code §3075 is a state law upon which federal law (the Fitzgerald Act) depends on for its enforcement. The court held that while the Fitzgerald Act is not preempted by ERISA, "any state regulation of apprenticeship programs that is separate and apart from the authorization given by the Fitzgerald Act and its accompanying regulations is preempted by ERISA. Electrical Joint Apprenticeship Comm. v. McDonald, 949 F.2d 270, 274 (9th Cir. 1991), cert. denied, 505 U.S. 1204 (1992). Additionally, the Court noted that the Fitzgerald Act did not embody the "need" requirement that the state law mandated, therefore the state law is not wholly consistent. |
| Finally, the Court denied AGC's request for attorneys fees. Since AGC requested fees under 42 U.S.C. §1988, and not under ERISA [29 U.S.C. §1132(g)]. Here, AGC claim of preemption was grounded on considerations of power, and not individual rights. Under §1988, a claim of attorneys' fees can only be supported when a prevailing party vindicated an enforceable right under §1983. |
| |
| Barkley v. Conner, 73 F.3d 258 (9th Cir. 1996) -- The Court determined whether the debtor's interest in her pension and profit-sharing plan is exempted from the bankruptcy estate under 11 U.S.C. §541(c)(2). Responding to the trustee's emphasis on the debtor's access and control over the assets in the fund (debtor could withdraw at any time), the Court cited its own precedent, In re: Rueter, 11 F.3d 850 (9th Cir. 1993), supported by the Supreme Court. Patterson v. Shumante, 504 U.S. 753, 112 S.Ct. 2242, 119 L.Ed.2d. 519 (1992). |
| In Rueter, the Ninth Circuit previously held that a debtor's interest in an ERISA qualified plan was excluded from the 'property of the estate,' even though the plan allowed employees to withdraw their own contributions at any time and to withdraw employer contributions after two years. Rueter, 11 F.3d at 851. Similarly, in Shumante, the Supreme Court held that ERISA plans are exempted from the bankruptcy estate, even though ERISA only requires restraints on alienation to third parties. The Supreme Court, in interpreting ERISA §514(c)(2) [anti-alienation provision], appeared to discount any distinctions based on the debtor's control of their assets. |
| Accordingly, debtor's interest in the ERISA plans were not included in the bankruptcy estate. |
| |
| Agredano v. Mutual Omaha Companies, 1996 WL 39418 (9th Cir. 1996) -- The Court determined whether plaintiff could recover expert witness costs under 29 U.S.C. §1132(g)(1), which authorizes cost- shifting in ERISA actions brought by plan participants and beneficiaries. The Supreme Court held that "absent contract or explicit statutory authority to the contrary, "a federal court may not shift expert witness fees, except in the amount [$40 per day] allowed by 28 U.S.C. §1821(b). Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 439 (1987). Plaintiff argued §1132(g)(1) allowance for cost of action is statutory authority to award costs of expert witnesses, however, the Ninth Circuit interpreted this cost shifting language to include only those costs permitted under 28 U.S.C. §1920 and 28 U.S.C. §1821. |
| |
| The Penn Central Corporation v. Western Conference of
Teamsters Pension Trust Fund, 1996 WL 39400 (9th Cir.
1996) -- Penn was the parent company for three
subsidiaries, two of which ceased operations (G.K. and
Marathon). The third subsidiary (Buckeye Gas) was sold to
the Ferrel Companies, Inc. The fund assessed withdrawal
penalties against Penn for the G.K. and Marathon. Penn
argued it was exempt from withdrawal liability from an
MPPAA plan because, according to Penn, it ceased to exist
as a covered employer "solely" by reason of a
change in corporate structure. The Ninth Circuit
disagreed and held that under the statute, only a
successor corporation that purchases one of the companies
under a parent's common control becomes the original
employer of that company and may be exempt from an
assessment of withdrawal liability only for that company.
Therefore, the Fund properly assessed withdrawal
liability for G.K. and Marathon. In addition, the court
held that the Fund was not entitled to mandatory
attorneys fees under 29 USC §1132(g)(2) since Penn was
never delinquent in paying the assessment of withdrawal
liability. Nonetheless, the district court, in its
discretion, may award the Fund attorneys fees under 29
USC §1132(g)(1). Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferber Corporation of California, Inc., 1996 WL 14273 (9th Cir. 1996) -- The Ninth Circuit held that the Fund's claim for withdrawal liability from Ferber was time barred. The court rejected the Fund's argument that the cause of action arose on the date of default, and held that under 29 USC §1383(b), the limitations period begins to run from the date of complete withdrawal. Therefore, since the Fund did not bring this action until more than six years from the date of complete withdrawal, the district court properly granted summary judgment to Ferber. American Medical International Inc. v. Valliant,
1996 WL 14227 (9th Cir. 1996) -- American Medical sought
a declaratory judgment by the district court that
Valliant was not entitled to any further severance
benefits under the two-year employment contract (the
"Agreement"). First, the Ninth Circuit
determined that although ERISA does not specifically
provide an administrative exhaustion requirement, as a
general rule, however, a claimant must avail himself of a
plan's own internal review procedures before bringing
suit in federal court. Nonetheless, a district court has
discretion to waive the exhaustion requirement. Since
both parties in this case waived their right to
administrative exhaustion, the court did not require it.
In addition, the court reversed the district court's
grant of summary judgment for American Medical. It found
the contract was ambiguous and the ambiguities were
susceptible to more than one reasonable interpretation.
Therefore, a triable issue of material fact was raised
and summary judgment may not be granted.
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