18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 319 sign up for a health plan that did not provide coverage to retirees in violation of the ERISA. Defendants filed a motion to dismiss on the grounds that Plaintiffs failed to exhaust their administrative remedies. The Court denied the motion. Under the terms of the collective bargaining agreement (“CBA”), the parties stipulated that the Union would obtain and provide a group health plan (the "Plan") for members within 60 days to replace a health plan administered by the company. The Union retained Myriad to design and negotiate the terms of the Plan, and Myriad subsequently negotiated a health benefits plan with MAPFRE Life Insurance Company ("MAPFRE"). Id . at *3. After the Union president informed Plaintiffs that they would be able to participate in the Plan, the Union sent a letter to Plaintiffs informing them that the Plan was being canceled for all retirees under the age of 60 due to "various complications of an operational character, as well as the high delinquency volume" for the retirees. Id . at *4. Plaintiffs thereafter filed their lawsuit. The Court explained that in considering whether to require exhaustion of administrative remedies for ERISA claims, the First Circuit has distinguished between “contract- based claims,” which concern the interpretation of the terms of a health plan, and "statute-based claims,” which concern the interpretation of the terms of the ERISA statute itself. Id . at *7. The Court held that Plaintiffs alleged that the Union and Myriad breached their fiduciary duties under the ERISA by knowingly inducing them to sign up for a health plan that did not provide coverage to retirees, which was statute-based. The Court also examined whether exhaustion was required for such a claim. The Court explained that the First Circuit has not decided whether statute-based ERISA claims require Plaintiffs to exhaust administrative remedies. Therefore, the Court ruled that absent a clear directive from Congress, it declined to “erect barriers to justice” in the name of efficiency. Id . at *10. Further, the Court determined that it was unclear what administrative remedies Plaintiffs were supposed to exhaust. Accordingly, the Court ruled that Plaintiffs were not required to exhaust administrative remedies for ERISA statute-based claims, such as the one at issue. For these reasons, the Court denied Defendants’ motion to dismiss. (iii) Appeal Issues In ERISA Class Actions Feinberg, et al. v. T. Rowe Price Group, Inc., 2021 U.S. Dist. LEXIS 124598 (D. Md. July 2, 2021). Plaintiffs, a group of participants in Defendant T. Rowe Price Group, Inc.’s U.S. Retirement Program (the "Plan"), filed a class action alleging that Trustees breached their fiduciary duties of loyalty and prudence while administering the Plan in violation of the ERISA. Plaintiffs filed a motion to amend the Court’s prior order granting Defendants’ motion for summary judgment in order to certify an interlocutory appeal on the question of whether certain language in Defendants’ retirement plan was void under the ERISA. The Court denied the motion. Plaintiffs alleged that the 2014 amendment to the Plan’s governing document, or the "hardwiring" amendment, which required the Trustees to offer only proprietary funds in the Plan violated the ERISA. Id . at *3. The Court held that Plaintiffs failed to present extraordinary circumstances justifying certification of an interlocutory appeal because Plaintiffs did not identify a controlling question of law, and an appeal would not materially advance the termination of this litigation. Id . at *7. The Court determined that the parties’ disagreement regarding the hardwiring amendment’s permissibility under the ERISA did not present a controlling question of law because it implicated factual disputes, and its resolution would not meaningfully save time or expense for the litigants. Id . at *9. The Court explained that the question was not controlling because it could not be classified as the "meaning of a statutory or constitutional provision, regulation, or common law doctrine." Id . The Court reasoned that determining whether the hardwiring amendment violated the ERISA would require it to analyze factual disputes. Even if the Fourth Circuit were to agree with Plaintiffs and hold that the hardwiring amendment violated the ERISA, that would not resolve the major dispute of whether the Trustees were liable for breaching the ERISA’s duties of loyalty and prudence. Id . at *10. For these reasons, the Court denied the motion to amend the ruling on summary judgement for purposes of certifying an interlocutory appeal. (iv) Arbitration Issues In ERISA Class Actions Cedeno, et al. v. Argent Trust Co., 2021 U.S. Dist. LEXIS 212926 (S.D.N.Y. Nov. 2, 2021). Plaintiff, a participant in Defendants’ retirement plan (“the Plan”) filed a putative class action alleging violations of the ERISA. Defendants moved to compel individual arbitration and to stay the case. The Court denied the motion. The Plan was governed by a Plan Document, which included a binding arbitration provision. Plaintiff asserted that § 17.10(g) of the Plan Document was void, and that because it was not severable from § 17.10, the entire arbitration agreement must fail, and the motion to compel arbitration must be denied. Id . at *6. The Court rejected Defendants’ contention that the ERISA does not confer a right to a plan-wide remedy for a participant in