Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

St. Peter’s, a non-profit healthcare entity, runs a hospital, employing over 2,800 people, with ties to a New Jersey Roman Catholic Diocese. The Bishop appoints most Board of Governors members and retains veto authority over Board actions. The hospital has daily Mass and Catholic devotional pictures throughout the building. In 1974, St. Peter’s established a non-contributory defined benefit retirement plan; operated the plan subject to the Employee Retirement Income Security Act (ERISA); and represented that it was complying with ERISA. In 2006 St. Peter’s sought a church plan exemption from ERISA, 26 U.S.C. 414(e); 29 U.S.C. 1002(33), continuing to pay ERISA-mandated insurance premiums while the application was pending. In 2013, Kaplan, who worked for St. Peter’s until 1999, filed a putative class action alleging that St. Peter’s did not provide ERISA-compliant summary plan descriptions or pension benefits statements, and that, as of 2011, the plan was underfunded by $70 million. While the lawsuit was pending, St. Peter’s received an IRS private letter ruling. affirming the plan’s status as an exempt church plan. The Third Circuit initially affirmed the denial of a motion to dismiss, concluding that St. Peter’s was not a church. The court reversed, following a June 5, 2017, order by the Supreme Court of the United States. View "Kaplan v. Saint Peter's Healthcare System" on Justia Law

A “top-hat” plan “which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees,” 29 U.S.C. 1101(a)(1), 1051(2), 1081(a)(3), need not comply with many of the substantive provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Sikora sought to recover pension benefits under ERISA through the University of Pittsburgh Medical Center and its Health System and Affiliates Non-Qualified Supplemental Benefit Plan. The district court held, and the Third Circuit affirmed, that he was not entitled to obtain such relief because he sought benefits under a top-hat plan. The courts rejected Sikora’s argument that the defendants were required to prove that plan participants had bargaining power before a court could conclude that he participated in a top-hat plan. Plan participant bargaining power is not a substantive element of a top-hat plan. View "Paul Sikora v. University of Pittsburgh Medical Center" on Justia Law

Union Pacific employee Dowling became totally disabled by multiple sclerosis in 1997. His disability benefits ended in 2012 when he reached age 65 and began to draw a pension. Instead of calculating Dowling’s pension based on Dowling’s last 10 years of actual work—ending in 1997—the administrator operated as if Dowling had worked and been paid his final base salary— $208,000 per year— for his credited years of service, until his retirement in 2012, even though Dowling had not actually worked during that period. Dowling is covered by a 277-page retirement plan composed of introductory material, 19 articles of content, and various appendices—none of which explicitly address Dowling’s precise situation. The administrator’s interpretation provides Dowling with a lower monthly payment than he expected. Dowling challenged the administrator’s decision as contradicting the plan’s plain language. In Dowling’s suit under ERISA, 29 U.S.C. 1132(a)(1)(B), the district court found the plan ambiguous and the administrator’s interpretation reasonable. The Third Circuit affirmed. The plan’s terminology, silence, and structure render it ambiguous, so the plan accords the plan administrator discretion to interpret ambiguous plan terms. The mere existence of a conflict of interest is alone insufficient to raise skepticism of the plan administrator’s decision. View "Dowling v. Pension Plan for Salaried Employees of Union Pacific Co." on Justia Law

St. Peter’s, a non-profit healthcare entity, runs a hospital. It is not a church, but has ties to a New Jersey Roman Catholic Diocese. The Bishop appoints most members of its Board of Governors and retains veto authority over Board actions. The hospital has daily Mass and Catholic devotional pictures and statues throughout the building. In 1974, St. Peter’s established a non-contributory defined benefit retirement plan; operated the plan subject to the Employee Retirement Income Security Act (ERISA); and represented that it was complying with ERISA. In 2006 St. Peter’s filed an IRS application, seeking a church plan exemption from ERISA, 26 U.S.C. 414(e); 29 U.S.C. 1002(33). In 2013, Kaplan, who worked for St. Peter’s until 1999, filed a putative class action alleging that St. Peter’s did not provide ERISA-compliant summary plan descriptions or pension benefits statements, and that, as of 2011, the plan was underfunded by more than $70 million. While the lawsuit was pending, St. Peter’s received an IRS private letter ruling. affirming the plan’s status as an exempt church plan for tax purposes. The Third Circuit initially affirmed denial of a motion to dismiss, concluding that St. Peter’s could not establish an exempt church plan because it is not a church. Following consideration by the U.S. Supreme Court in 2017, the Third Circuit vacated and reversed. View "Kaplan v. Saint Peter's Healthcare System" on Justia Law

While Kwasny was managing partner at a now-dissolved law firm, the firm established a 401(k) profit-sharing plan for its employees. Kwasny was named as a trustee and fiduciary of the plan. Between September 2007 and November 2009, the plan sustained losses of $40,416.302 because plan contributions withdrawn from employees’ paychecks were commingled with the firm’s assets and were not deposited into the plan. In 2011, the Secretary of Labor received a substantiated complaint from a plan member; investigated; and filed suit to recover the lost funds, remove Kwasny as trustee and fiduciary of the plan, and enjoin Kwasny from acting as a plan fiduciary in the future. The Third Circuit affirmed summary judgment in favor of the Secretary, remanding for determination of whether the judgment should be offset by a previous Pennsylvania state court default judgment entered against Kwasny for the same misdirected employee contributions. The court rejected arguments based on res judicata and on the statute of limitations. There is no genuine issue of disputed fact regarding Kwasny’s violation of the Employee Retirement and Income Security Act. View "Secretary United States Department of Labor v. Kwasny" on Justia Law

Plaintiffs are trust funds and employee benefit plans for construction industry employees. MRS constructs commercial buildings. In 1997, MRS signed “me-too agreements” binding it to collective bargaining agreements (CBAs) bestowing rights on Plaintiffs. Under the agreement, MRS agreed to be bound by the 1997-2001 CBA in force between a multiemployer association and the union. According to Plaintiffs, MRS also agreed to be bound by later CBAs because the 1997 agreement contains an “evergreen clause” and MRS never gave the notice required to terminate the clause. MRS conceded that it never gave notice, but denied that the letter continuously granted bargaining rights. Under each CBA, employers had to make specified contributions to various Plaintiff funds and permit audits of records relevant to those obligations. Plaintiffs sent MRS requests for audits, believing that MRS had failed to make contributions required by the 2012-2015 CBA. When MRS did not comply, Plaintiffs sought post-audit relief under 29 U.S.C. 1145 for unpaid ERISA contributions and injunctive relief compelling MRS to comply with the 2012-2015 and subsequent CBAs. The Third Circuit reversed dismissal, rejecting an argument that all me-too agreements must satisfy two criteria in order to bind non-signatories to future CBAs. Absent that requirement, the plausibility of the complaint should be assessed under contract law principles and states a plausible claim for relief. View "Carpenters Health & Welfare Fund v. Mgmt. Res. Sys., Inc." on Justia Law

To stimulate economic development, Jersey City, New Jersey offers tax exemptions and abatements to private developers of projects in certain designated areas. Those tax benefits are conditioned on the developers’ entry into agreements with labor unions that bind the developers to specified labor practices. Employers and a trade group challenged that law, alleging that it is preempted by the National Labor Relations Act (NLRA) and Employee Retirement Income Security Act (ERISA) and barred by the dormant Commerce Clause of the U.S. Constitution. The district court dismissed the complaint, concluding that Jersey City acts as a market participant, not a regulator, when it enforces the law, so that NLRA, ERISA, and dormant Commerce Clause claims were not cognizable. The Third Circuit reversed, holding that Jersey City was acting as a regulator in this context. The city lacks a proprietary interest in Tax Abated Projects. The Supreme Court has recognized a government’s proprietary interest in a project when it “owns and manages property” subject to the project or it hires, pays, and directs contractors to complete the project; when it provides funding for the project; or when it purchases or sells goods or services. This case fits none of these categories. View "Assoc. Builders & Contractors, Inc. v. City of Jersey City" on Justia Law

St. Peter’s, a non-profit healthcare entity, runs a hospital, and employs over 2,800 people. It is not a church, but has ties to a New Jersey Roman Catholic Diocese. The Bishop appoints most members of its Board of Governors and retains veto authority over Board actions. The hospital has daily Mass and Catholic devotional pictures and statues throughout the building. In 1974, St. Peter’s established a non-contributory defined benefit retirement plan; operated the plan subject to the Employee Retirement Income Security Act (ERISA); and represented that it was complying with ERISA. In 2006 St. Peter’s filed an IRS application, seeking a church plan exemption from ERISA, 26 U.S.C. 414(e); 29 U.S.C. 1002(33), continuing to pay ERISA-mandated insurance premiums while the application was pending. In 2013, Kaplan, who worked for St. Peter’s until 1999, filed a putative class action alleging that St. Peter’s did not provide ERISA-compliant summary plan descriptions or pension benefits statements, and that, as of 2011, the plan was underfunded by more than $70 million. While the lawsuit was pending, St. Peter’s received an IRS private letter ruling. affirming the plan’s status as an exempt church plan for tax purposes. The Third Circuit affirmed denial of a motion to dismiss, concluding that St. Peter’s could not establish an exempt church plan because it is not a church. View "Kaplan v. Saint Peter's Healthcare Sys." on Justia Law

Until 2011, Woodbridge, the largest wholesale grocery distributor by revenue in the U.S., contributed to the fund pursuant to collective bargaining agreements (CBAs). Under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, Multiemployer Pension Plan Amendments Act (MPPAA), 29 U.S.C. 1381-1461, employers withdrawing from multi-employer pension plans must pay the share of the fund’s total unfunded vested benefits allocable to them. Woodbridge owes $189,606,875 and elected to satisfy its “withdrawal liability” through annual payments instead of a lump sum. Under the MPPAA, annual payments must be based on “the highest contribution rate at which the employer had an obligation to contribute under the plan.” The plan’s board claimed the single highest rate from the multiple contribution rates established in the three CBAs . Woodbridge argued that it was responsible only for a weighted average of those contribution rates. The board also claimed that Woodbridge’s payments should include a 10 % surcharge it had been paying under the 2006 Pension Protection Act, 29 U.S.C. 1085. The Third Circuit affirmed that the annual withdrawal liability payment should be based on the single highest contribution rate, but should not include the surcharge. The “highest contribution” rate means the single highest contribution rate established under any of the CBAs. View "Bd. of Trs. of the IBT Local 863 Pension Fund v. C&S Wholesale Grocers Inc" on Justia Law

NJBSC is a Bergen County neurosurgical medical practice. NJBSC treated three patients who were members of health-care plans governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, and administered by Aetna. Before surgery, each patient executed an assignment to NJBSC. Following treatment, Aetna allegedly underpaid or refused to pay claims for each of the patients. NJBSC filed suit The district court dismissed NJBSC’s complaint, holding that the assigned rights to payment did not give NJBSC standing to sue under ERISA. The Third Circuit reversed, holding that a patient’s explicit assignment of payment of insurance benefits to her healthcare provider, without direct reference to the right to file suit, is sufficient to give the provider standing to sue for those benefits under ERISA. View "N. Jersey Brain & Spine Ctr., v. Aetna Inc" on Justia Law