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First Circuit Reverses District Court in Sun Capital Case on Private Equity Partnerships

"On July 24, 2013, the U.S. Court of Appeals for the First Circuit reversed a Massachusetts district court in a widely-watched case addressing whether private equity partnerships are 'trades or businesses' for purposes of liability under Title IV of ERISA. The First Circuit held in Sun Capital Partners III, L.P. v. New England Teamsters & Trucking Ind. Pension Fund that where the management company affiliated with the two investing private equity funds engaged in active management of the contributing employer, an investing fund was more than a mere passive investor, and therefore was engaged in a trade or business. This case is significant for private equity investors holding interests in companies with unfunded pension liabilities, since the holding applies equally to single employer plan terminations as well as multiemployer plan obligations."

Text of D.C. Circuit Court of Appeals Opinion: ACA Subsidies Are NOT Legally Allowed for Policies Purchased on Federally-Run Exchanges (PDF)

72 pages. Excerpt: "We conclude that appellants have the better of the argument: a federal Exchange is not an 'Exchange established by the State,' and section 36B does not authorize the IRS to provide tax credits for insurance purchased on federal Exchanges. We reach this conclusion by the following path: First, we examine section 36B in light of sections 1311 and 1321, which authorize the establishment of state and federal Exchanges, respectively, and conclude that section 36B plainly distinguishes Exchanges established by states from those established by the federal government. We then consider the government's arguments that this construction generates absurd results but find that it does not render other provisions of the ACA unworkable, let alone so unreasonable as to justify disregarding section 36B's plain meaning. Finally, turning to the ACA's purpose and legislative history, we find that the government again comes up short in its efforts to overcome the statutory text." [Halbig v. Burwell, No. 14-5018 (D.C. Cir. July 22, 2014)]

Text of First Circuit Opinion: Wife Not Entitled to Portion of Husband's 401(k) Plan That Government Had Garnished (PDF)

"Shilo Abell does not challenge the government's authority to garnish her husband's account in this appeal. Rather, she renews her claim that Massachusetts law gives her a vested legal interest in Edward Abell's 401(k) account. She also argues for the first time on appeal that the contingent death benefit in the plan gives her some current interest in the account. Her remaining arguments rely on this initial premise that she has a current vested legal interest in the 401(k) account under Massachusetts divorce law and/or under the terms of the 401(k) plan itself. Because we reject both of these arguments we do not reach her other claims. Nor do we reach any broader argument as to [ERISA], the Mandatory Victim Restitution Act (MVRA), or preemption." [U.S. v. Abell, No. 20-1120 (1st Cir. Jan. 15, 2021)]

Text of First Circuit Opinion: Jurisdiction Exists for Multiemployer Plan Post-Judgment Action to Impose Withdrawal Liability on Successor Employer (PDF)

21 pages. "[It is uncontroverted in the First Circuit] that a plaintiff may seek to impose ERISA liability on an alter ego of the employer that formally bears the obligations imposed by the statute. The dispute here concerns the Fund's attempt to do so in a new action brought subsequent to a judgment against the signatory employer.... Here, the Fund maintains that N&D was -- at the pertinent times -- the same company as D&N and, as such, bore the same obligation under ERISA for the payment of that liability.... The Fund's claim against N&D was thus anchored in ERISA and premised on N&D's de facto status as an ERISA employer, and not ... on alleged wrongful conduct outside the scope of the federal statute." [New England Teamsters and Trucking Industry Pension Fund v.N&D Transportation Co., No. 15-2553 (1st Cir. Aug. 2, 2017)]

Text of First Circuit's Decision Finding DOMA Unconstitutional as Applied to Federal Benefits for Massachusetts Same-Sex Spouses (PDF)

"To conclude, many Americans believe that marriage is the union of a man and a woman, and most Americans live in states where that is the law today. One virtue of federalism is that it permits this diversity of governance based on local choice, but this applies as well to the states that have chosen to legalize same-sex marriage. Under current Supreme Court authority, Congress' denial of federal benefits to same-sex couples lawfully married in Massachusetts has not been adequately supported by any permissible federal interest." [ Commonwealth of Massachusetts v. US Department of Health and Human Services, No. 10-2204 (1st Cir. May 31, 2012)]

Discovery Under MetLife v. Glenn: First Circuit Decides Important Disability Case

Excerpt: [On May 6, 2009] the U.S. Court of Appeals for the First Circuit issued its long awaited decision in Denmark v. Liberty Life Ass. Co. The case involves Diane Denmark's assertion that Liberty Life wrongly denied her disability claim. The procedural history is long and torturous. The First Circuit ended up delaying a ruling in the case until MetLife v. Glenn, 128 S. Ct. 2343 (2008), was decided to get the Supreme Court's guidance on how an insurer's conflict of interest affects the standard of review a trial court should utilize in ERISA benefit denial cases.

Text of First Circuit Opinion: Private Equity Partners Not Responsible for Withdrawal Liability (PDF)

"The issues raised involve conflicting policy choices for Congress or PBGC to make. On one hand, imposing liability would likely disincentivize much-needed private investment in underperforming companies with unfunded pension liabilities. This chilling effect could, in turn, worsen the financial position of multiemployer pension plans. On the other hand, if the MPPAA does not impose liability and the Pension Fund becomes insolvent, then PBGC likely will pay some of the liability, and the pensioned workers (with 30 years of service) will receive a maximum of $12,870 annually. ... The district court held that there was an implied partnership-in-fact which constituted a control group. We reverse because we conclude the Luna test has not been met and we cannot conclude that Congress intended to impose liability in this scenario." [Sun Capital Partners III, LP v. New England Teamsters & Trucking Industry Pension Fund, Nos. 16-1376, 19-1002 (1st Cir. Nov. 22, 2019)]

Text of First Circuit Opinion: Failure to Include Time Limit for Filing of Civil Suit in Claim Denial Letter Renders Limitations Period Inapplicable (PDF)

"Claimants are obviously more likely to read information stated in the final denial letter, as opposed to included (or possibly buried) somewhere in the plan documents, particularly since, as was the case here, plan documents could have been given to a claimant years before his claim for benefits is denied. The [DOL], recognizing this, has required that the denial letters themselves include certain information that the Department has deemed critical to ensuring a fair opportunity for review. We think it clear that the Department has included the plan-imposed time limit for filing suit among this required information.... [We] conclude that MetLife's failure to include the time limit in the final denial letter rendered, as a matter of law, the contractual three-year limitations period altogether inapplicable." [Santana-Diaz v. Metropolitan Life Ins. Co., No. 15-1273 (1st Cir. Mar. 14, 2016)]

Text of First Circuit Opinion: Claimant Entitled to Attorney's Fees Because Procedural Victory Increased Likelihood of Successful Benefit Claim (PDF)

"[A] remand for a second look at the merits of her benefits application is often the best outcome that a claimant can reasonably hope to achieve from the courts.... [T]he question in each case is whether the claimant has achieved something more than trivial or procedural success. When an ERISA beneficiary has earned a second look at her claim based on a deficient first review, her success can be equally consequential whether or not the identified flaw is explicitly linked by the remanding court to a statute or regulation[.]" [Gross v. Sun Life Assurance Co. of Canada, No. 12-1175 (1st Cir. Aug. 14, 2014)]

First Circuit Upholds Dismissal of Employer Challenge to Massachusetts Earned Sick Time Law (PDF)

25 pages. "[The Massachusetts Earned Sick Time Law (ESTL)] broke new ground in Massachusetts by providing that employers of a certain size must compensate their employees for the sick time that they use for specified purposes.... the employers seek 'a judgment declaring that [the ESTL] is preempted with respect to employers who are signatory [sic] to collective bargaining agreements.' ... [We] hold, as the United States contends as amicus, that this case, even if characterized as a facial challenge, is not ripe and thus must be dismissed for lack of jurisdiction." [Labor Relations Div. of Construction Industries of Mass. v. Healey, No. 15-1906 (1st Cir. Dec. 16, 2016)]