Justia U.S. 2nd Circuit Court of Appeals Opinion Summaries

Plaintiffs, participants in retirement plans offered by defendants and covered by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., appealed from a judgment dismissing their ERISA class action complaint. Plan documents required that a stock fund consisting primarily of Citigroup common stock be offered among the plan's investment options. Plaintiffs argued that because Citigroup stock became an imprudent investment, defendants should have limited plan participants' ability to invest in it. The court held that plan fiduciaries' decision to continue offering participants the opportunity to invest in Citigroup stock should be reviewed for an abuse of discretion and the court found that they did not abuse their discretion here. The court also held that defendants did not have an affirmative duty to disclose to plan participants nonpublic information regarding the expected performance of Citigroup stock and that the complaint did not sufficiently allege that defendants, in their fiduciary capacities, made any knowing misstatements regarding Citigroup stock. Accordingly, the court affirmed the judgment.

Plaintiffs appealed from a judgment of the district court dismissing their class-action complaint, which asserted a single claim against MetLife under ERISA, 29 U.S.C. 1001 et seq. Plaintiffs alleged that through the use of "retained asset accounts" (RAAs), MetLife breached fiduciary duties imposed by ERISA by retaining and investing for its own profit life insurance proceeds due them under employee benefit plans that MetLife administered. The court held that the district court correctly determined that plaintiffs failed to state a claim, since MetLife discharged its fiduciary obligations under ERISA when it established the RAAs in accordance with the plans at issue, and did not misuse "plan assets" by holding and investing the funds backing the accounts. Accordingly, the court affirmed the judgment of the district court.

Plaintiffs sued defendants, former directors of a retirees association of former unionized transportation workers, alleging, among other things, that defendants breached their fiduciary duty to the retirees association and its members by buying and maintaining a health insurance policy with premiums that far outstripped the benefits received by members. When defendants prevailed on all counts, defendants appealed the district court's denial of their fees motion. At issue was whether the district court erred in denying the fees motion in light of the recent Supreme Court decision, Hardt v. Reliance Standard Life Insurance Co. The court affirmed and held that the district court did not abuse its discretion in denying fees where, although the district court did not have the benefit of Hardt in reaching its decision, nothing in the district court's opinion contradicted Hardt or suggested that the district court would have decided the matter differently in light of Hardt. Accordingly, Hardt did not require the court to reverse or remand. The court also held that, when determining whether attorney's fees should be awarded to defendants, the court focused on whether plaintiffs brought the complaint in good faith.

A non-profit hospital ("plaintiff") that provided medical services to beneficiaries of Local 272 Welfare Fund ("Fund"), an employee benefit plan governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. 1101, filed a complaint against defendants seeking payment for over $1 million in medical services provided to beneficiaries that the Fund had allegedly failed to reimburse. At issue was whether a healthcare provider's breach of contract and quasi-contract claims against an ERISA benefit plan were completely preempted by federal law under the two-pronged test for ERISA preemption established in Aetna Health Inc. v. Davila. The court held that an "in-network" healthcare provider may receive a valid assignment of rights from an ERISA plan beneficiary pursuant to ERISA section 502(a)(1)(B); where a provider's claims involved the right to payment and not simply the amount or execution of payment when the claim implicated coverage and benefit determinations as set forth by the terms of the ERISA benefit plan, that claim constituted a colorable claim for benefits pursuant to ERISA section 502(a)(1)(B); and in the instant case, at least some of plaintiff's claims for reimbursement were completely preempted by federal law. The court also held that the remaining state law claims were properly subject to the district court's supplemental jurisdiction.