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Seventh Circuit Affirms Dismissal of ESOP Stock Drop Case

"With inevitable fluctuations in the stock market, ERISA's simultaneous demands to comply with plan documents and to exercise prudence in choosing investment options for plan participants can place fiduciaries on a razor's edge.... If ESOPs are to fulfill their purposes, fiduciaries ... need substantial protection from liability ... Without this shield, the duty of prudence would leave fiduciaries exposed to liability based on 20-20 hindsight for ... circumstances in which reasonable fiduciaries and other investors could easily disagree about the better course of action." [White v. Marshall & Ilsley Corp., No. 11-2660 (7th Cir. Apr. 19, 2013)]

Terms of Collective Bargaining Agreement Precluded Alteration of Retiree Health Benefits

"[The Sixth Circuit found that although] healthcare is a 'welfare benefit,' not entitled to the same ERISA protection as pension benefits, employers are free to waive their power to alter welfare benefits. [The plan sponsor] did so by offering vested healthcare coverage to retired employees and spouses, and by agreeing that CBAs could only be modified with signed, mutual consent of the parties." [Moore v. Menasha Corp., Nos. 10-2171 and 10-2173 (6th Cir. Aug. 22, 2012)]

Sixth Circuit Upholds ERISA Preemption of State Law Claims Against Nonfiduciary Bank Holding 401(k) and Health Plan Assets

"[Tennessee's Uniform Fiduciary Act ('UFA')] shields depositary banks from liability arising from the actions of a fiduciary depositor, unless the bank acts with 'actual knowledge' of a breach or 'knowledge of such facts that its action ... amounts to bad faith.' Because ERISA provides a remedy against nonfiduciaries who knowingly participate in a fiduciary's violation of ERISA, see 29 U.S.C. Section 1132(a)(3), the district court found that ERISA preempted any allegations of 'knowing' or 'bad faith' conduct that escaped the UFA's bar. We agree." Editor's note: See also the strong dissenting opinion: "There is no ERISA purpose or policy served by withdrawing the protection of state laws of general application. What is the possible harm caused by the enforcement of state laws providing damages if a bank recklessly allows its depositors' money to be embezzled by a fiduciary?" [McLemore v. Regions Bank, Nos. 10-5480/5491, (6th Cir. June 8, 2012)]

Tenth Circuit to Plan Administrators: 'Get It Right the First Time' When Denying a Claim

"[The 10th Circuit Court of Appeals] will not permit Defendant to sandbag Plaintiff with its after-the-fact interpretation of an entirely different section of the Plan.... Thus, not only was the [federal district court] not required to defer to Defendant's post hoc interpretation of these newly asserted provisions, but the district court should not even have considered this interpretation in the first place.... Consistent with our precedent, [this court] will consider only the specific basis upon which the Plan administrator relied in its administrative denial of benefits." (Spradley v. Owens-Illinois Hourly Employees Welfare Benefit Plan, Tenth Circuit Court of Appeals 10-7100, June 10, 2012)

Eighth Circuit Addresses Standard of Review in Long-Term Disability Insurance Dispute (PDF)

"Standard's [disability insurance] policy language reserving the power to 'resolve all questions ... [of] interpretation' indicates the administrator has discretionary power to construe ambiguous terms. Thus, our standard of review is for abuse of discretion.' (Hankins v. Standard Insurance Company, 8th Cir., May 14, 2012).

11th Circuit Adopts Moench Standard in Suit Over Home Depot ESOP (PDF)

"Because the purpose of a plan is set by its settlors (those who created it), that is the same thing as saying that a fiduciary abuses his discretion by acting in compliance with the directions of the plan only when the fiduciary could not have reasonably believed that the settlors would have intended for him to do so under the circumstances. That is the test.... The defendants were not required to depart from the Plan's directives regarding Home Depot stock just because they were aware that the stock price likely would fall."

Fourth Circuit Determines Appeal Not Available from District Court Remand to Plan Administrator

In a case of first impression, the Fourth Circuit followed the majority of other Circuits in determining that "a district court order remanding [a claim denial] to an ERISA claims administrator for reconsideration does not constitute a final decision" and held that the Court therefore had no jurisdiction to rule on Aetna's appeal of that remand. [Dickens v. Aetna Life Ins. Co., No. 11-1434 (4th Cir. Apr. 20, 2012)]

Aggrieved Former Steel Mill Employees Sue Employer, Union and Plan Administrator Under Variety of Theories But None Sticks

"The employees claim that their union, employer, and plan administrator violated [ERISA] and Ohio common law by intentionally misleading them regarding how pension benefits would be calculated, inducing some to retire early.... The district court dismissed, concluding that certain ERISA claims were time-barred, that the others failed to state a claim for relief, and that the common-law claims were preempted by federal law. The Sixth Circuit affirmed." [Cataldo v. U.S. Steel, No. 10-3583 (6th Cir. Apr. 13, 2012)]

Eighth Circuit Court of Appeals Affirms Summary Judgment in Favor of Plan Sponsor in ADEA Case Challenging Target Benefit Plan

In Northwest Airlines, Inc. v. Phillips, the 8th Circuit has rejected a claim of age discrimination by a group of older airline pilots, who challenged the formula used in a target benefit plan created as part of the airline"s bankruptcy proceeding in which benefits under the airline's defined benefit plan were frozen.

Secretary of Labor Suit for Breach of Fiduciary Duty Alleged Defendants Established ERISA Health Benefit Plan

"Defendants had retained, as compensation, a substantial portion of payments made by businesses to enroll their employees. The complaint alleged improper diversion of funds and that defendants were required by ERISA to use the assets only for the defraying reasonable plan expenses for the benefit of plan participants." [Sec'y of Labor v. Doyle, No. 10-3598 (3d Cir. Mar. 27, 2012)]