Justia U.S. 5th Circuit Court of Appeals Opinion Summaries

Articles Posted in ERISA

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After the BP Stock Fund lost significant value, the affected investors filed suit alleging that the plan fiduciaries breached their duties of prudence and loyalty by allowing the Plans to acquire and hold overvalued BP stock; breached their duty to provide adequate investment information to plan participants; and breached their duty to monitor those responsible for managing the BP Stock Fund. The district court held that the stockholders had failed to overcome the Moench v. Robertson presumption and dismissed their claims. The stockholders appealed, and while their appeal was pending in this court, the Supreme Court issued Fifth Third Bancorp v. Dudenhoeffer, holding that there was no such “presumption of prudence” under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. On remand, the district court held that the stockholders had plausibly alleged that defendants had inside information; and the stockholders had plausibly alleged two alternative actions that defendants could have taken that met the Fifth Third standard: freezing, limiting, or restricting company stock purchases; and disclosing unfavorable information to the public. The district court granted the motion to amend with respect to pleading these alternative actions. It then certified defendants’ motion for interlocutory appeal. The court concluded, however, that the district court here erred when it altered the language of Fifth Third to reach its holding. Under the Supreme Court’s formulation, the plaintiff bears the significant burden of proposing an alternative course of action so clearly beneficial that a prudent fiduciary could not conclude that it would be more likely to harm the fund than to help it. In this case, the stockholders have failed to do so. Because the stockholders' amended complaint is insufficient and the district court erred in granting their motion to amend, the court reversed and remanded. View "Whitley v. BP, P.L.C." on Justia Law

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Plaintiffs, on behalf of themselves and others similarly situated, sought declaratory relief under section 502(a)(3) of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(a)(3), injunctive relief, damages, attorney’s fees, and costs, against Berkshire and Acme. The district court granted defendants' motion to dismiss all claims. The court concluded that Acme did not violate the plans and did not breach its fiduciary duties when it adopted the amendment consistent with the plans’ terms and the law. Therefore, dismissal of plaintiffs' claims against Acme was appropriate. The court held that plaintiffs have pleaded sufficient facts to assert a plausible claim to relief against Berkshire. All of plaintiffs’ claims against Berkshire may proceed, except for its breach-of-contract claim that was not appealed and its participation in Acme’s breach-of-fiduciary-duty claim. Because the court found that plaintiffs did not plead sufficient facts to assert a plausible breach-of-fiduciary-duty claim against Acme, the court also found that the derivative participation claim fails against Berkshire. Accordingly, the court affirmed in part, reversed in part, and remanded. View "Hunter v. Berkshire Hathaway" on Justia Law
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Plaintiff filed suit against his former employer, Ericsson, asserting a claim under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. Despite filing that federal claim in a federal forum, plaintiff alternatively sought declaratory relief that ERISA did not govern this dispute over the Severance Plans. The district court ruled that ERISA governed the case and later granted summary judgment for Ericsson. The court concluded that Ericsson’s Plans check off most of the factors indicative of ERISA plans, and thus plaintiff's suit seeking to obtain benefits available under them, are governed by the federal statute. On the merits, the court concluded that the district court did not err in ruling as a matter of law that the Plan allowed Ericsson to deny benefits on the ground that plaintiff failed to meet the return of property condition. Given the absence of language entitling plaintiff to severance pay based solely on the release of legal claims, it is not inconsistent with the Plan to impose other conditions reasonably related to the termination of the employment relationship. In this case, a provision requiring the return of property is in line with the overall terms of the Plans, which are aimed at providing severance to those who depart the company on good terms through no fault of their own. Accordingly, the court affirmed the judgment. View "Gomez v. Ericsson, Inc." on Justia Law
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After Prudential denied coverage of a life insurance policy, plaintiff filed suit claiming that she had no notice of the exclusion for active-duty servicemen and that the exclusion is otherwise unenforceable. The district court granted summary judgment for Prudential and UPS. Plaintiff worked for UPS and participated in a plan which provides group insurance coverage to UPS employees. Plaintiff sought coverage after plaintiff's husband was killed in a weekend motorcycle accident while off base and not on duty. The court concluded that Prudential correctly interpreted the exclusion as barring the claim where the plan indicates that a spouse is not a qualified dependent when the spouse is on active-duty in the armed forces of any country. Moreover, it was not an abuse of discretion for Prudential to interpret the exclusion to apply regardless of whether a spouse was on military duty at the time of an occurrence. The court rejected plaintiff's claim that she was not on notice of the exclusion, concluding that the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., only requires the court to simply interpret the plan. The court rejected plaintiff's claims and affirmed the judgment. View "Singletary v. Prudential Ins. Co." on Justia Law
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Plaintiffs, former employees of NOPSI, filed claims against RTA and others under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq., and later 42 U.S.C. 1983 and various state laws. The district court granted summary judgment on the federal claims and declined to exercise supplemental jurisdiction on the state law claims. The court held that the plan at issue was a governmental plan and thus exempt from ERISA. Accordingly, the district court did not err in granting summary judgment as to the successor liability claims against the RTA. The court expressed no opinion as to whether successor liability applies to ERISA violations by predecessor entities. The court also concluded that plaintiffs' section 1983 claims are barred by the statute of limitations. Finally, plaintiffs failed to demonstrate that the district court abused its discretion in denying their FRCP 56(d) motion. Accordingly, the court affirmed the judgment. View "Smith v. Regional Transit Auth." on Justia Law
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The Secretary filed suit alleging that defendants breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., when acting as trustees for an Employee Stock Ownership Plan (ESOP). In a three year period, BAI's owner Herbert C. Bruister sold 100% of his BAI shares to BAI's employees through a series of transactions. Two plan participants, Rader and Sealy, filed suit raising generally the same claims as the Secretary and seeking relief on behalf of the ESOP as a whole. The court concluded that Sealy has standing to sue on behalf of the ESOP; the district court applied the law correctly and did not clearly err in finding that Bruister was a fiduciary of the ESOP; defendants breached the duties of loyalty and prudence in their conduct with respect to the stock sales and engaged in prohibited transactions; the district court did not abuse its discretion by denying rescission of the BAI stock sales but granting equitable restitution in the amount the ESOP overpaid; the district court did not clearly err in holding BFLLC jointly and severally liable with the other defendants; the district court’s award and calculation of prejudgment interest were not an abuse of discretion; under the totality of circumstances, the district court did not abuse its discretion in barring defendants from serving as ERISA fiduciaries in the future; and, to alleviate any misconception and avert double recovery, the court modified the concurrent judgments in each consolidated case into a single judgment that disposes of them together. Accordingly, the court affirmed the judgment, but modified its concurrent judgments. View "Perez v. Bruister" on Justia Law
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After Prudential denied plaintiff's claim for long-term disability benefits, plaintiff subsequently filed suit against Prudential under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. The district court granted summary judgment for Prudential. Because the Plan expressly grants Prudential discretionary authority, the court held that the district court correctly reviewed Prudential’s denial for an abuse of discretion. As such, the court's de novo review of the district court's summary judgment ruling will also apply the abuse of discretion standard. The court concluded that, in light of this record, plaintiff has failed to raise a genuine dispute of material fact that Prudential abused its discretion in denying his claim for long-term disability benefits. Prudential acknowledged that while plaintiff does have depression and anxiety, typically depression and anxiety do not cause large changes in cognitive function, and in plaintiff's case, there is no evidence of valid cognitive impairment from any source. Accordingly, the court affirmed the judgment. View "Burell v. Prudential Ins. Co." on Justia Law
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Plaintiff filed suit against Aetna and Hewlett Packard to recover benefits as the beneficiary of her husband’s group life insurance plan under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(a)(1)(B). On appeal, plaintiff challenged the district court's final judgment affirming the decision of the ERISA plan administrator to deny benefits. The court concluded that plaintiff has not provided evidence that suggests that the method by which Aetna made its determination in her case was procedurally unreasonable; the court rejected plaintiff's claim that Aetna’s conflict should be given greater weight in the district court’s analysis because it has a history of biased claims administration; and evidence is sufficient to permit a reasonable mind to reach the conclusion that the husband's fall was due to or contributed to by illness. The court further stated that, even accounting for Aetna’s conflict of interest as both insurer and plan administrator, Aetna did not abuse its discretion in determining that the husband's fall was not a covered “accident” under the terms of the Policy, negating recovery under the Policy. Because Aetna's denial of plaintiff's claim was not an abuse of discretion, the court affirmed the judgment. View "Hagen v. Aetna Ins. Co." on Justia Law
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Defendant, a participant in the API Enterprises Employee Benefits Plan, appealed the district court's grant of summary judgment in favor of Humana, API's Plan Manager. Humana filed suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., against defendant seeking, inter alia, an injunction prohibiting him from disposing of an insurance payout and an "equitable lien to enforce ERISA and the terms of the Plan." The court concluded that the district court erred in determining that Humana is an ERISA fiduciary for two reasons: first, the district court's interpretation of the Plan Management Agreement (PMA) is not persuasive where the district court focused on the subrogation and recovery clause, which do not show that Humana had discretion over the Plan or its assets; and second, even if the court interpreted the PMA to give Humana broad power, the district court failed to explain why Humana is not a ministerial agent. Therefore, the court reversed and remanded for further proceedings. View "Humana Health Plan v. Nguyen" on Justia Law
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After RSL denied plaintiff's claim for long-term disability benefits, plaintiff, a helicopter pilot with an amputated leg, filed suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(a)(1)(B). The district court held that the evidence supported RSL's determination that plaintiff's depression and PTSD contributed to his Total Disability. Therefore, RSL did not abuse its discretion by determining that the Exclusion Clause limited plaintiff's right to benefits. Declining to consider whether plaintiff carried his burden to show a right to benefits, the court held that RSL abused its discretion when it determined that plaintiff was not Totally Disabled where there was no evidence to show that he could earn a substantially similar salary in another position. Further, there is no rational connection between the fact that plaintiff can do sedentary work and the conclusion that he could earn a substantially similar salary in any alternative position. The court also held that RSL abused its discretion when it determined that the Exclusion Clause limited plaintiff's right to benefits, and when it affirmed RSL's determination on this basis. Accordingly, the court reversed and remanded, rendering judgment for plaintiff. View "George v. Reliance Standard Life Ins. Co." on Justia Law
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