Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

The defined-contribution pension plan allows participants to choose among 32 options, including 24 mutual funds that are open to the public. These funds are no-load vehicles that do not charge a fee to buy or sell shares. Purchases and sales occur at net asset value, calculated daily. A no-load fund covers its expenses by deducting them from the assets under management. Plan participants contend that administrators violated fiduciary duties under the Employee Retirement Income Security Act, 29 U.S.C. 1104(a), by offering retail mutual funds, in which participants get the same terms (and thus bear the same expenses) as the general public and by requiring participants to bear the those expenses themselves, rather than having the plan cover costs. Plaintiffs contend that there should be access to wholesale or institutional investment vehicles. The district court dismissed. The Seventh Circuit affirmed. The plan offers a menu of high-expense, high-risk, and potentially high-return funds, together with low-expense index funds that track the market, and low-expense, low-risk, modest-return bond funds; it leaves the choice to the people most interested in the outcome. The district court acted within its discretion in awarding about $42,000 in costs.

In attempting to enroll his infant daughter, a covered employee failed to complete parts of the form indicating whether the child resided with employee, was dependent upon employee for more than 50 percent support and maintenance, and whether the child qualified to be claimed as a tax exemption on employee's federal tax return. The plan made several inquiries before sending a notice that coverage was denied. The employee did not appeal. The plan sued under the Employee Retirement Income Security Act , 29 U.S.C. 1001, to recover $472,357.84 paid to the medical college and $1,199,538.58 paid to the hospital on behalf of the child. The district court dismissed. The Seventh Circuit affirmed dismissal of the ERISA claim. The plan reserves the right to recover against "covered persons" if it has paid them or any other party on their behalf. Neither the treating entities nor the child are covered persons. Because the plan is not implicated, state law claims were not preempted; the court reversed dismissal of those claims. Plaintiffs' position was not unreasonable; the district court abused its discretion in awarding attorney fees.

In 2007 employee retired when the steel plant, at which he had worked for 42 years, shut down. Under a plan negotiated by the union, his pension payment, without any offset, was $688.13 a month. Employee was told that payment of his pension would be deferred for more than 10 years because the plan required that employee pay back workers' compensation settlements that he had received after sustaining on-the-job injuries in 2005 and 2006. The plan refers to offset for payments for "disability in the nature of a permanent disability for which the Company is liable." The district court entered judgment for the employee. The Seventh Circuit reversed. The committee's decision was within its discretion; the plan's specific mention of workers' compensation supports its characterization.

When an employee left the company in 1997, took a $47,850 lump sum distribution of his pension. He later believed that the payment should have included the present value of future cost of living adjustments that would have been included had he received his pension as an annuity. In 2002, he filed a class action suit. The district court granted summary judgment on liability in favor of the class and the Seventh Circuit affirmed, holding that a COLA is an accrued benefit, as defined in ERISA, 29 U.S.C. 1002(23)(A). Before the district court ruled, the parties reached a settlement that each early retiree would receive roughly 3.5% of her original lump sum, unless the COLA on a normal-retirement-age-based annuity outweighed her early-retirement subsidy, a rare situation. The district court approved the proposed settlement and awarded attorney's fees. Objectors were not allowed to opt out. The Seventh Circuit affirmed, upholding determinations that the settlement was reasonable; that class counsel had adequately represented the early retirees and that further subclasses were unnecessary; that opt-out should be denied; and concerning attorney fees.

When plaintiff, a 14-year employee, was terminated from his position he negotiated a severance package based, in part, on his belief that he would be receiving a pension in a certain amount from the company's pension plan. The administrator for the plan, who was also the company's human resources manager, miscalculated. After signing off on the severance agreement, plaintiff learned of the error and brought an estoppel claim against the plan. The Seventh Circuit affirmed summary judgment in favor of the plan. Plaintiff did not present the extraordinary circumstances necessary for the court to entertain a claim for estoppel against an ERISA Plan and there was no evidence of intentional misrepresentation or detrimental reliance.

The company decided to voluntarily terminate its qualified plan under the Employment Retirement Income Security Act, 29 U.S.C. 1001, but after going through initial statutory steps, realized that it would be too expensive and formally withdrew from the process. During the process, the company amended its plan to provide that if the plan terminated, employees could keep working at the company while still receiving the annuities the company purchased for them. The amendment was made in anticipation of the final step of the statutory termination process, which requires the purchase of private annuities for plan beneficiaries. Employees sued. The district court found that plaintiffs’ ability to receive an annuity while still working is not a protected right under ERISA or the plan's own terms, which protect beneficiaries from amendments that decrease "accrued benefits." The Seventh Circuit affirmed. ERISA only protects certain benefits, and those relevant here are all tied to benefits available at retirement. In any event, the ability to receive an annuity while still working was contingent on the plan terminating, which did not occur.

The company previously gave retirees credit toward their share of health care costs, based on unused sick-leave. Union workers could take that sum in cash or put it toward the premium. Executives who quit before retirement, or decided not to participate in the plan, did not receive any other form of compensation for unused leave. It had value only as a credit toward retirement health-care costs. In 2008 the company amended the plan and stopped paying any part of retirees' health-care costs. Money for employees who could have taken their balances in cash is put in an account administered by the health-care plan. Retirees, including executives who never had an option to take balances in cash, plus one who had that option but elected to leave the money on deposit, filed suit under the Employee Retirement and Income Security Act, 29 U.S.C. 1081. The district court granted judgment on the pleadings to the company. The Seventh Circuit affirmed. The company, which did not take anything out of the plan, but simply reduced the amount it would pay in, reserved the right to amend its health-care plan. It is a business decision, not a legal question, whether to use that authority to retirees’ detriment.

After two years of contributing to a multiemployer pension plan established under a collective bargaining agreement, the company closed the covered facility, triggering withdrawal liability. The union notified the company of its liability under the Employment Retirement Income Security Act of 1974, 29 U.S.C. 1001, as amended by the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. 1301-1461, and set a 20-year schedule requiring payment of $652 per month. The union sent another letter, months later, saying that it had miscalculated monthly payments, but not the underlying withdrawal liability, and advised the company to increase monthly payments to $978. The company timely paid the original amount, but refused to pay the revised sum. The company requested arbitration, but after a finding that it was not required to pay the higher amount in the interim, withdrew. The district court dismissed the union's suit based on the calculation. The Seventh Circuit reversed and remanded without reaching the statutory interpretation issue, based on failure to exhaust administrative remedies. A plan may correct perceived errors in calculation and revise an assessment as long as the employer is not prejudiced. At that point the exhaustion provisions of the MPPAA apply to the revised assessment as they would to the original.

Plaintiff worked as a sales representative when she became disabled and sought long-term disability benefits under the company's ERISA plan (“the Plan”) after a series of back surgeries. In her suit under 29 U.S.C.1132(a)(1)(B) the district court held that she was ineligible for benefits after the first 24 months; the Seventh Circuit remanded. Having not heard from the Plan for almost five months, plaintiff again filed suit under ERISA, claiming that silence constituted a deemed denial of her benefit claim. A little over a month later, the Plan informed her that it would pay the benefits, moved to dismiss the case as moot. The district court denied the motion, issued a judgment against the Plan for the exact amount it had agreed to pay, and denied plaintiff's motion for fees. The Seventh Circuit vacated the grant of summary judgment on the benefit claim, which was moot, and affirmed denial of fees. The district court had jurisdiction over the fee claim, but the plaintiff did not adequately substantiate her request.

The company closed paper mills and eliminated a health-care subsidy for retirees. The union filed suit in Ohio under the Labor Management Relations Act, 29 U.S.C. 185, and the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132. The company filed a declaratory judgment suit in Wisconsin; the district court dismissed for lack of jurisdiction. The Seventh Circuit vacated and remanded. Although the suit does not seek equitable relief as described in Sect. 502 of ERISA, Sect. 2201 does authorize declaratory relief. The court further reasoned that the district court acknowledged its jurisdiction over the LMRA suit and that the union's suit came within the 502 grant of jurisdiction, so this mirror-image suit by the planâs sponsor also is within federal subject-matter jurisdiction. In dismissing the Wisconsin litigation, the district judge assumed that the controversy would be resolved in Ohio. That is no longer true because the union mistakenly named a parent company that was not a party to the collective bargaining agreements; the case has been dismissed.