Justia Contracts Opinion Summaries

Plaintiff appealed from the district court's dismissal of his suit alleging claims of equitable estoppel and breach of fiduciary duties pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. The district court dismissed the complaint for failure to state a claim. The court held that plaintiff stated a claim for relief that was cognizable under ERISA, in light of CIGNA Corp. v. Amara. Because relief was available under the surcharge doctrine under Amara, the court did not address the equitable estoppel claim and the district court was free to consider that claim on remand. Finally, the district court did not err in dismissing Defendant Entergy Mississippi where plaintiff failed to allege that Entergy Mississippi sponsored or administered the plan or made any decisions with respect to his benefits. View "Gearlds, Jr. v. Entergy Services, Inc., et al" on Justia Law

A collective bargaining agreement governs the relationship between Acument and its retired employees. Prior to 2008, the company paid healthcare and life-insurance benefits to qualified retirees. When Acument ended these benefits in 2008, a class of 64 retirees claimed that the company had violated the CBA in violation of the Employee Retirement Income Security Act and the Labor Management Relations Act. The district court granted Acument summary judgment. The Sixth Circuit affirmed, characterizing the issue as “a matter of contract.” The relevant language states that the company “reserves the right to amend, modify, suspend, or terminate the Plan,” consisting of: retiree medical coverage; retirement income; disability income; and life insurance. View "Witmer v. Acument Global Tech., Inc." on Justia Law

In a 2009 opinion, the Sixth Circuit held that, in a 1998 collective bargaining agreement, CNH agreed to provide health-care benefits to retirees and their spouses for life, but rejected the suggestion that the scope of this commitment in the context of healthcare benefits, as opposed to pension benefits, meant that CNH could make no changes to the healthcare benefits provided to retirees. The court remanded for a determination of reasonableness with respect to CNH’s proposed changes to its retiree healthcare benefits, under which retirees, previously able to choose any doctor without suffering a financial penalty, would be put into a managed-care plan. The court listed three considerations: Does the modified plan provide benefits “reasonably commensurate” with the old plan? Are the proposed changes “reasonable in light of changes in health care”? And are the benefits “roughly consistent with the kinds of benefits provided to current employees”? On remand, the district court granted CNH summary judgment without reaching the reasonableness question or creating a factual record from which the determination could be made on appeal. The Sixth Circuit again remanded.View "Reese v. CNH America LLC" on Justia Law

David Day, an ERISA plan beneficiary, elected to roll over his pension benefits into an individual retirement account (IRA) upon separation from his employer, AT&T. Exercising its discretion, the plan's claims administrator construed Day's lump sum rollover as the equivalent of his having "received" his pension benefits and, according to the terms of AT&T's Disability Income Benefit Plan, reduced Day's long-term disability (LTD) benefits by the amount of the rollover. The district court entered judgment in favor of the plan. The Ninth Circuit Court of Appeals affirmed, holding (1) the administrator reasonably interpreted the plan; (2) AT&T did not breach its fiduciary duties by failing to disclose the possibility that Petitioner's LTD benefits would be reduced by his receipt of pension benefits; and (3) the administrator's actions did not violate the Age Discrimination in Employment Act.

Defendant appealed the district court's grant of partial summary judgment in favor of CGI in its action seeking "appropriate equitable relief" under section 502(a)(3) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. CGI appealed the district court's grant of partial summary judgment in favor of defendant's counsel and codefendant, dismissing the codefendant from the action. CGI also appealed the district court's grant of proportional fees and costs to the codefendant, deducted from CGI's recovery from defendant. The court affirmed the district court's grant of summary judgment in favor of the codefendant, dismissing it from the action. However, because the court saw no indication that in fashioning "appropriate equitable relief" for CGI, the district court did more than interpret the plain terms of the reimbursement provision, and no indication that the district court considered traditional equitable principles in assigning responsibility to CGI for attorneys' fees and costs, the court vacated the judgment in favor of CGI, vacated the judgment that the codefendant deducted fees and costs from CGI's entitlement, and remanded to the district court for further proceedings.

Appellee, as executrix of the estate of her father, and her sister, brought a breach of contract action in which they asserted that their father's second wife, appellant, contractually waived her right to retain the proceeds of their deceased father's employer-provided 401K plan and life insurance policy by entering a settlement agreement incorporated into an order of separate maintenance executed approximately a year prior to the father's death. At issue was whether the court of appeals erred in finding that decedent's children could maintain a state law action against the decedent's surviving spouse to recover proceeds distributed to the spouse as the beneficiary of the decedent's ERISA-governed benefits plans, 29 U.S.C. 1001 et seq., where the state law claims were based on a contention that the spouse waived her rights to such proceeds. The court answered in the negative, concluding that, in this case, since the proceeds of the ERISA-covered plans were paid out to appellant and were no longer in the control of the plan administrator, the trial court erred when it dismissed appellees' breach of contract claim against appellant.

Plaintiffs, employees at a defense plant in Arizona, collectively bargained for the right to receive employer-provided healthcare coverage after they retired. At issue was whether those employees, now retirees, were contractually entitled to receive premium-free healthcare coverage until age 65, or whether the contracts on which the retirees relied as providing that entitlement allowed their prior employer to start charging them for their insurance. The court held that Raytheon expressly agreed to provide 100% company-paid healthcare coverage for eligible retirees; that Raytheon's obligation survived the expectation of the collective bargaining agreements (CBAs); and that Raytheon's agreed-upon obligation could not be unilaterally abrogated by Raytheon, regardless of the rights Raytheon reserved for itself in Plan documents, because the CBAs did not incorporate the Plans' reservation-of-rights provisions with respect to employer contribution issues, as opposed to issues relating to the provision of monetary or in kind benefits for particular medical services. The court further held that the district court did not err in rejecting plaintiffs' claim for punitive and extra-contractual damages.

The collective bargaining agreement was scheduled to expire. During negotiations, the union disclaimed representation of the company's employees and terminated the collective bargaining process. The company then withdrew from the multiemployer pension plan. The pension fund imposed withdrawal liability and assessed $57,291.50, 29 U.S.C. 1399. The company demanded indemnification from the union pursuant to the collective bargaining agreement, which stated: "The Union shall indemnify the Company for any contingent liability which may be imposed under the Multiemployer Pension Plan Amendments Act of 1980." The district court concluded that an arbitration provision was enforceable. The arbitrator ordered the union to pay. The district court upheld the award. The Sixth Circuit affirmed, rejecting an argument that it would violate public policy for a union to indemnify an employer for any contingent liability to a pension plan established under the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1381-1461.

Plaintiffs brought a putative class action under the Employee Retirement Income Security Act, 29 U.S.C. 1001, to recover benefits under long-term disability benefit plans maintained by their former employers. The plans provide for reduction of benefits if the disabled employee also receives benefits under the Social Security Act, as both plaintiffs do. They dispute calculation of the reduction, claiming that the plans do not authorize inclusion in the offset of benefits paid to dependent children. Both plans require offsets for "loss of time disability" benefits. The district court dismissed. The Seventh Circuit affirmed, holding that children's Social Security disability benefits paid based on a parent's disability are "loss of time disability" benefits under the language of the plans.

The employer sought an early withdrawal from its obligation to make pension contributions to a multiemployer pension fund; it entered into a new collective bargaining agreement, six weeks before expiration of the existing agreement, that abrogated its obligation to make payments to the fund. The fund sued under the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1145. The district court entered summary judgment in favor of the fund. The Seventh Circuit affirmed, rejecting an argument that the agreement was ambiguous in providing that the employer could not “prospectively” change its obligation.