237 ALI-ABA Course of Study ERISA Litigation May 11-13, 2006 Boston, Massachusetts Class Actions Under ERISA Study Outline and Presentation Slides By Thomas S. Gigot Christa D. Haas Groom Law Group, Chartered Washington, D.C.
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239 I. The Value of Maintaining an Action as a Class Action It has been said that certification as a class action serves important public purposes. These include judicial economy and efficiency, plus consistency of results and protection from inconsistent adjudications. The class action device also can afford aggrieved persons of a remedy if it is not economically feasible to obtain relief through the traditional framework of multiple individual damage actions. 5 James Wm. Moore, et al., Moore s Federal Practice 23.02 (3d ed. 1999). For defendants, the class action device likewise can provide protection from the asymmetry of collateral estoppel. Gunnells v. Healthplan Services, Inc., 348 F.3d 417 (4th Cir. 2003) (noting that if defendant lost on a claim to an individual plaintiff, subsequent plaintiffs could use offensive collateral estoppel to prevent the defendant from relitigating the issue, whereas a victory by defendant on a claim by an individual plaintiff would have no binding effect on future plaintiffs because the plaintiffs would not have been a party to the original suit). It is also worth noting that the vast majority of federal cases that are not resolved by motions practice are resolved by settlement rather than by trial. Recognizing this, a class action settlement is a valuable way to achieve finality and repose in situations where, as under ERISA, multiple potential plaintiffs exist. See, e.g., UAW v. General Motors Corp., No. 05-CV-73991-DT (March 31, 2006) (approving global settlement agreement over new retiree health benefit structure at GM) II. Kinds of ERISA Actions That Can Be Maintained as Class Actions A. Claims for Benefits Based on Plan Document 1. McDaniel v. North American Indemnity N.V., 2003 WL 260704 (S.D. Ind. 2003) (claims for welfare benefits certified under 23(b)(1), (2) and (3)). 2. Bower v. Bunker Hill, 114 F.R.D. 587 (E.D. Wash. 1986) (class of retirees challenging termination of medical insurance certified under 23(b)(2)). 3. Anderson v. John Morrell & Co., 830 F.2d 872 (8th Cir. 1987) (claim for retiree welfare benefits certified under 23(b)(3) with orders to give notice to class). 4. White v. Sundstrand Corp., 1999 WL 787455 (N.D. Ill. 1999) (claim challenging calculation of compensation in defined benefit plan partially certified under 23(b)(2)).
240 5. Smith v. United Healthcare Servs., Inc., 2002 WL 192565 (D. Minn. 2002) (class of healthcare plan participants challenging prescription drug copayments certified under 23(b)(2) and (b)(3)). 6. Senn v. United Dominion Indus., Inc., 951 F.2d 806 (7th Cir. 1992) (class of retirees claiming plan documents vested lifetime health and life insurance benefits certified under 23(b)(2)). B. Claims to Remedy Violation of ERISA Structural Requirements (e.g., vesting, benefit accrual) 1. In re Household International Tax Reduction Plan, F.3d, No. 06-8001 (7 th Cir. March 20, 2006) (claim alleging that partial termination occurred, triggering vesting of all benefits) 2. Dameron v. Sinai Hosp. of Baltimore, 595 F. Supp. 1404 (D. Md. 1984) (claim by class of retirees alleging that calculating of benefits violated ERISA and Taft-Hartley Act certified under 23(b)(2)). 3. Lumpkin v. Envirodyne Indus., Inc., 933 F.2d 449 (7th Cir. 1991) (finding antialienation clause does not apply to waiver of certain pension benefits in class settlement). 4. Morgan v. Laborers Pension Trust Fund for Northern California, 81 F.R.D. 669 (N.D. Cal. 1979) (claim challenging eligibility structure of union pension plan certified under 23(b)(2)). 5. Helm v. Local 705 Int l Brotherhood of Teamsters Pension Plan, 1998 WL 182513 (N.D. Ill. 1998) (claims challenging calculation of early retirement benefits under ERISA certified under 23(b)(2)). 6. Forbush v. J.C. Penney Co., Inc., 994 F.2d 1101 (5th Cir. 1993) (class of retirees challenging employer s method of calculating social security benefits certified under 23(b)(2)). 7. Becher v. Long Island Lighting Co., 164 F.R.D. 144 (E.D.N.Y. 1996) (claims by current and former employees challenging plan s determination that pension credits were forfeited certified under 23(b)(1) and 23(b)(2)). 8. Berger v. Xerox Corp. Retirement Income Guarantee Plan, 338 F.3d 755 (7th Cir. 2003): Action by cash balance plan participants challenging method of calculation of benefits. Seventh Circuit modified
241 and affirmed Southern District of Illinois s grant of summary judgment for participants. Court rejected argument that the action was one for monetary relief that could not be certified under Rule 23(b)(2). The court found the class had properly been certified because relief sought was declaratory and computation of damages followed mechanically after resolution of legal issue. C. Estoppel, Misrepresentation and other Reliance Claims 1. Jensen v. SIPCO, Inc., 867 F. Supp. 1384 (N.D. Iowa 1993) (class of retirees alleging employer promised to provide lifetime medical benefits certified under 23(b)(2)). 2. But see Heffner v. Blue Cross and Blue Shield of Alabama, Inc., F.3d, No. 04-15477 (11 th Cir. March 22, 2006) (reversing class certification of claims for benefits based on allegedly misleading SPDs); Sprague v. General Motors Corp., 133 F.3d 388 (6th Cir. 1998) (reversing class certification of retiree medical claims based on representations). D. Disputes over Plan Investments 1. DiFelice v. U.S. Airways, Inc., --- F.Supp.2d ----, 2006 WL 763657 (E.D. Va. March 22, 2006) (certifying class in stock-drop litigation) 2. Piazza v. Ebsco Indus., Inc., 273 F.3d 1341 (11th Cir. 2001) (finding fiduciary breach claims related to investment in employer stock should have been certified under 23(b)(1) or (b)(2), not (b)(3)). 3. Farrie v. Charles Town Races, Inc., 901 F. Supp. 1101 (N.D.W. Va. 1995) (breach of fiduciary duty allegations relating to investment of plan assets in horse racing certified under 23(b)(2)). E. Benefits Claims Secondary to Employee Classification Issues 1. Breedlove v. Tele-Trip Co., Inc., 1993 WL 284327 (N.D. Ill. 1993) (claims to benefits secondary to allegations that employees were misclassified as independent contractors certified under 23(b)(2) and (b)(3)). 2. Thomas v. SmithKline Beecham, 201 F.R.D. 386 (E.D. Pa. 2001) (class of leased workers brought claims alleging they were common law