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

The National Labor Relations Board found that HH3 Trucking had committed unfair labor practices and ordered back pay for its workers. HH3 failed to comply. The NLRB petitioned for judicial enforcement. HH3 did not reply to the petitions. The Seventh Circuit we enforced the orders summarily. HH3’s liability is $190,000 plus interest. After finding that HH3’s owners, the Hudsons, could comply but had chosen not to do so, the court held the Hudsons in civil contempt, and ordered them to pay at least $600 a month until the full judgment had been satisfied. Nothing happened. The court directed the Marshals Service to place the Hudsons in custody until they paid. They promised compliance and were released. They paid $600, then stopped. They went back to jail. After they asserted that they are no longer able to comply, the court allowed them to be transferred to home confinement and investigated. Finding that, although Gretchen Hudson considers herself retired and William Hudson had (recently) become medically unable to work, they remain able to pay something by drawing on savings and sources of current income that include benefits from a retirement plan. They argued that money received from a pension plan covered by the Employee Retirement Income Security Act (ERISA), as their plan is, is free of all legal claims by third parties, 29 U.S.C. 1056(d)(1). The Seventh Circuit rejected the argument and, noting that the “scofflaws” have begun to receive Social Security benefits, which themselves exceed $600 monthly, ordered them to pay at least that amount. View "Nat'l Labor Relations Bd. v. HH3 Trucking, Inc." on Justia Law

Plaintiffs, employees of Antioch, participated in an employee stock ownership, plan (ESOP). In 2003, Antioch borrowed money to buy back all stock except the stock owned by the ESOP. The buy-out left Antioch bankrupt and ESOP worthless. Plaintiffs filed suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, claiming breach of fiduciary duties. The district court granted the defendants summary judgments. The presumptive limitation period for violations is six years from the date of the last action constituting part of the breach or violation, but the time is shortened to three years from the time the plaintiff gained “actual knowledge of the breach or violation.” Applying the three-year limitations period, section 1113(2), the court reasoned that proxy documents given to plaintiffs at the time of the buy-out and their knowledge of Antioch’s financial affairs after the transaction gave them actual knowledge of the alleged ERISA violations. The Seventh Circuit reversed. The claims for breach of fiduciary duty do not depend only on the disclosed substantive terms of the 2003 transaction, but also depend on the processes used to evaluate, negotiate, and approve the transaction. Plaintiffs’ knowledge of the substantive terms of the buyout, therefore did not give them “actual knowledge of the breach or violation” alleged in this case. View "Fish v. Greatbanc Trust Co." on Justia Law

In 2006 Finkl, a Chicago steel producer, initiated termination of its defined benefit pension plan under the Employment Retirement Income Security Act, apparently anticipating merger with another company. The Plan was amended in 2008, to include Section 11.6, a special provision for distributions in connection with the contemplated termination, to apply if a participant “ha[d] not begun to receive a benefit under the Plan at the time benefits are to be distributed on account of termination of the Plan.” In May 2008, Finkl decided not to terminate the Plan. Section 11.6 was deleted. Finkl notified the IRS that the Plan was not going to terminate. Seven Finkl employees sued, alleging that they were entitled to an immediate distribution of benefits while they were still working for Finkl and that repeal of Section 11.6 violated the anti-cutback terms of the Plan, I.R.C. 411(d)(6), and ERISA, 29 U.S.C. 1054(g). The IRS sent Finkl a favorable determination letter that the Plan had retained its tax qualified status. In 2011, the Seventh Circuit affirmed the district court’s award of summary judgment to Finkl. The employees then pursued a claim in the Tax Court, which ruled that they were collaterally estopped by the Seventh Circuit decision from challenging the 2009, determination letter, which concluded that the Plan had not been terminated and continued to qualify for favorable tax treatment. The Seventh Circuit affirmed. View "Carter v. Comm'r of Internal Revenue" on Justia Law

Lewis was injured in an automobile accident and her health plan paid $180,000 for her medical treatment Lewis filed a tort suit against the driver (her son-in-law), represented by Georgia lawyer Lashgari, and obtained a $500,000 settlement. Lashgari knew the plan had a subrogation lien, but split the proceeds between himself and Lewis. He claimed that the plan was owed nothing. The plan filed suit under ERISA to enforce the lien, 29 U.S.C. 1132(a)(3). The defendants argued that because the settlement funds have been dissipated, the suit was actually for damages, not authorized by ERISA. The district judge ordered the defendants to place $180,000 in Lashgari’s trust account pending judgment. The defendants did not comply. A year later, the defendants having neither placed any money in a trust account nor produced any evidence of their inability to pay, the judge held them in civil contempt, ordered them to produce records that would establish their financial situations, and ordered Lashgari to documents relating to the contempt to the General Counsel of the State Bar for possible disciplinary proceedings against him. The defendants appealed the contempt order. The Seventh Circuit dismissed, characterizing the appeal as frivolous and the defendants’ conduct as outrageous. View "Cent. States, SE & SW Areas Health & Welfare Fund v. Lewis" on Justia Law

Richard worked for GPI for 25 years until his 2009 death. He had a basic life insurance policy through GPI’s health and welfare plan and paid for an optional supplemental life insurance policy through GPI for several years. His wife, Maureen, was the beneficiary of both policies. At the end of 2008, Richard’s supplemental life insurance policy was cancelled. Richard’s pay stubs reflected the change, beginning in January 2009. When Richard died a few months later, GPI’s insurer, ABC, paid benefits on the basic life insurance policy. Richard had been diagnosed with stage 4 cancer in September 2008. Soon after Richard’s death, Maureen’s attorney requested information regarding Richard’s supplemental life insurance policy. The company refused the request, citing its confidentiality policy, indicating that the information would only be produced in response to a subpoena. Almost two years later, Maureen filed suit, claiming that either GPI or ABC breached the policy by terminating it without Richard’s consent, in violation of the Employee Retirement Income Security Act, 29 U.S.C. 1001. The district court awarded the defendants summary judgment. The Seventh Circuit affirmed. There was no material issue of fact as to whether Richard cancelled his supplemental policy. Although Maureen speculated that someone other than Richard terminated the policy, she presented no evidence to support her assertion. View "Herzog v. Graphic Packaging Int'l, Inc." on Justia Law

An employee benefits plan sued a medical college that provides patient care in clinics and hospitals and an affiliated children’s hospital, with which it had provider agreements, alleging ERISA violations and breach of contract under Wisconsin law. The suit was based on the plan’s determination that an employee’s child was not covered by the plan and the hospital’s denial of its subsequent request that the hospital refund about $1.7 million the plan had already paid on behalf of the child. The plan makes no mention of refunds. The district court dismissed and awarded attorneys’ fees to the hospital as a sanction for having filed frivolous claims. The Seventh Circuit affirmed dismissal of the ERISA claims but reversed dismissal of the breach of contract claim, rejecting the district court’s finding of preemption, and imposition of sanctions. On remand of the contract claim, the district court granted summary judgment in favor of the hospital. The Seventh Circuit affirmed, noting that the hospital, having been paid in full by the plan, has no possible claim against Medicaid, that the plan took 11 months to determine that the child was not a beneficiary, and that the hospital has not been unjustly enriched. View "Kolbe & Kolbe Health & Welfare Benefit Plan v. Med. Coll. of WI" on Justia Law

The Railroad owns the Corwith Rail Yard in Chicago and, until 2010, used an independent contractor, RTS, to operate Corwith. Teamsters Local Union 705 represented RTS employees, who were covered by the union’s health-and-pension plan. The Railroad contributed to the plan, as required by its contract with RTS. In 2010 the Railroad obtained wage-and-benefits concessions from Local 705. But when the Railroad ended its relationship with RTS and moved the Corwith work in-house, it entered into a bargaining agreement with a different union, TCIU. RTS terminated the employment of its Corwith employees. The employees could reapply with the Railroad, but its compensation package with TCIU was not as generous. Local 705 and employees filed a proposed class action, alleging violation of the Employee Retirement Income Security Act, 29 U.S.C. 1001 and conspiracy to violate ERISA. The district court dismissed. On appeal, the plaintiffs alleged unlawful interference with the attainment of retirement benefits in violation of ERISA and a related conspiracy claim. The Seventh Circuit affirmed. The plaintiffs alleged only an unlawful “discharge,” which presupposes an employment relationship. Only RTS was in an employment relationship with the membersof Local 705. The complaint alleged that RTS discharged the employees because it lost its contract, not for the purpose of interfering with their attainment of pension benefits. ERISA does not provide a cause of action for conspiracy. View "Teamsters Local Union No. 705l v. Burlington Northern Santa Fe, LLC" on Justia Law

Alpine was an irrigation business owned by Robert from 1961 until it closed in 2009. Alpine was in arrears on pension fund payments to the Union. After a Joint Arbitration Board awarded it $56,269.97, the Union sought to compel the award under the Labor Management Relations Act, 29 U.S.C. 185, and the Employee Retirement Security Act, 29 U.S.C. 1132(e)(1). During a deposition, Robert’s son, Jeffery, admitted his sole ownership of RWI and JV, which were established upon Alpine’s closing. Like Alpine, RWI services and installs lawn irrigation systems. JV’s sole business is leasing to RWI equipment that it purchased from Alpine. RWI operates out of Jeffery’s home, Alpine’s prior business address; all but one of RWI’s employees worked for Alpine. Almost all of RWI’s customers are former Alpine customers. The magistrate first denied the Union’s motion to impose judgment against RWI and JV as successors, but determined that the companies were successors under ERISA and that FRCP 25(c) provided an appropriate procedure and granted a motion to substitute. The Seventh Circuit affirmed, holding that the court properly applied the multifactor ERISA successorship test to find that an “interest” had been transferred within the meaning of FRCP 25(c) and properly resolved the motion without an evidentiary hearing. View "Sullivan v. Running Waters Irrigation, Inc." on Justia Law

From 1978 to 2000, Cerentano worked as a coal miner. He was injured in 15 mining incidents and received six separate awards of permanent partial disability, but was able to return to work after each injury. In 2000 Cerentano was wrongfully discharged after a false positive drug test. Months later, he was diagnosed with depression due to his firing and treated for dysthymia and anxiety. Eventually, Cerentano found work as a real estate agent and a vehicle transporter. In 2005, Cerentano’s car was hit, causing more injuries. Cerentano was awarded Social Security disability benefits. He was denied disability pension benefits under the United Mine Workers Pension Trust Plan, based on the trustees’ conclusion that there was no causal link between his mine injuries and the award of Social Security benefits. Cerentano sued under the Employee Retirement Income Security Act, 29 U.S.C. 1332(a)(1)(b). The district court granted summary judgment to the plan. The Seventh Circuit reversed and remanded. The trustees should have examined all of the injuries, severe and non‐severe, that the ALJ relied on in finding Cerentano disabled and should have determined which of those injuries were caused by mine accidents and whether, the mine‐related injuries, in combination, comprised “a causal link.” View "Cerentano v. UMWA Health & Retirement Funds" on Justia Law

After discovering that she had lung cancer that had spread to her brain, Killian underwent aggressive treatment on the advice of her doctor. The treatment was unsuccessful and she died. Her husband submitted medical bills for the cost of the treatments to her health insurance company. The company denied coverage on most of the expenses because the provider was not covered by the insurance plan network. The husband filed suit, seeking benefits for incurred medical expenses, relief for breach of fiduciary duty, and statutory damages for failure to produce plan documents. The district court dismissed denial-of-benefits and breach-of-fiduciary-duty claims, but awarded minimal statutory damages against the plan administrator. In 2012, the Seventh Circuit affirmed the dismissals, rejecting an argument that the plan documents were in conflict, but remanded for recalculation of the statutory damages award. On rehearing, en banc, the Seventh Circuit affirmed the denial of benefits and statutory penalties holdings, but reversed on the breach of fiduciary duty claim. The instructions given in plan documents were deficient and a reasonable trier of fact could rule in favor of Killian, based on telephone conversations in which Killian attempt to determine whether the physicians who were about to perform surgery were within the network. View "Killian v. Concert Health Plan" on Justia Law