Does LaRue Alter the Rules for Class Actions?
As a general rule, I don’t write blog posts about cases I am handling. For the most part, nothing good can come of it. I do make an exception once and awhile, but only to the extent of passing along a particular ruling, without commentary, that may be of broader relevance and interest. Today is one of those days, in which I am posting this recent federal district court decision from one of my cases which concerns class certification related to a 401(k) dispute, and I post it only because the Court provides a nice synopsis of one particular wrinkle raised by the Supreme Court’s ruling in LaRue, namely its impact, if any, on the propriety of certifying a class in a dispute involving a defined contribution plan. In the words of the Court:
There is a question whether the Supreme Court’s decision in LaRue v. DeWolff,
Boberg & Assoc., Inc., 552 U.S. 248 (2008), bars class certification of fiduciary breach claims by participants in defined contribution plans because participants as a result of LaRue’s holding may now pursue individual ERISA actions against plan fiduciaries. Although some courts have so held, see, e.g., In re First Am. Corp. ERISA Litig., 622 (C.D.Cal. 2009), other courts, including this one, have not been persuaded that so radical a revision of Rule 23 was intended by the Supreme Court. See Hochstadt v. Boston Scientific Corp., 2010 WL 1704003 at *12 n.12 (D. Mass. Apr. 27, 2010); see also Stanford v. Foamex L.P., 263 F.R.D. 156, 174 (E.D. Pa. 2009) (“The availability of an individual account claim under § 502(a)(2) [of ERISA] does not alleviate the concerns cited by numerous courts that have certified ERISA class actions pursuant to Rule 23(b)(1)(B) in situations where claims on behalf of the Plan are identical to those on behalf of an individual account.”).
You can find the discussion at footnote 4.
A Middle of the Road Supreme Court?
Permalink | Here is an interesting article in which a former Solicitor General argues that the popular - and perhaps a little bit intellectually lazy - characterization of the current Supreme Court as “pro-business” may, at a minimum, be overstating the case a bit. Certainly, the ERISA rulings out of the Court this past term were hardly pro-employer or pro-business community, as both LaRue and MetLife v. Glenn weakened the defenses of plan sponsors and administrators and, at least in the case of LaRue, opened up new lines of potential liability. It is hard to argue that these rulings were pro-business at all, except perhaps from the perspective of those critics who felt that the Court actually didn’t go far enough in favor of claimants in its opinion in MetLife and should have instead drastically altered the nature of the standard of review applicable to cases presenting the circumstances at issue in that case, something the Court certainly did not do in its opinion. In that sense, with regard to the ERISA rulings, it would be much fairer to characterize the Court rulings as moderate and middle of the road, than as anything else.
Insurance and the World at Large
Permalink | I am asked on occasion about the topics of this blog and their connection to my practice, more particularly how I ended up focusing the blog on its two primary subjects. For years, my litigation practice has focused primarily on three areas: intellectual property, ERISA and insurance coverage, in no particular order. A joke which I have long used and which always fails to elicit anything more than a pained half-smile is that 50% of my practice is insurance coverage, 50% of my practice is ERISA litigation, and 50% of my practice is intellectual property litigation.
Why did the blog end up focusing on two of those topics - ERISA and insurance coverage - and not the third, intellectual property? Well, one reason is that my experience is that intellectual property cases are heavily fact driven more than they are a product of interesting evolution in case law, limiting the appeal of blogging on them, and another is that, as a very knowledgeable legal blogging guru told me when I started the blog, there were already a lot of - mostly very good - intellectual property focused blogs; all you have to do is take one quick look at William Patry’s copyright blog to see how well tilled that soil already is.
But beyond that, and in contrast, I have found that my other two primary areas of practice, which are the central focuses of this blog (although as the digression section over on the blog topic list on the left hand side of your screen reflects, I do on occasion venture here into intellectual property issues of interest to me), provide a rich vein of endlessly interesting topics and legal developments. ERISA litigation, for instance, is a remarkably and endlessly evolving area of the law, as the courts develop what is in essence a federal common law covering the field, and as the courts deal with new types of retirement plans, plan investments, and increased litigation over both. And the intersection of insurance and the business world is a truly fascinating place to be, as the two come together at every major point in the economy and at every major issue in it as well. Here’s a good story, about the general counsel at Lloyd's of London, that makes that point.
Mike Webster to Ted Johnson: Are the NFL and the New York Times Kidding?
I don’t want to turn this blog into a soapbox, and as someone who really likes newspapers, I also don’t want to join the Greek chorus of self-appointed media watchdogs that seems to make up much of the blogosphere. Some things, however, such as this article in the New York Times, call out for a skeptical and critical reaction. The article explains how the NFL has now created a program to provide some funding for long term, home or facility, care for former pro players who “have various forms of dementia,” even though the NFL insists that football injuries to the brain - multiple concussion syndrome, anyone, for those of you who follow the sport? - are not the cause. The article seems to credit the NFL for providing this help to former players - help that, despite the vast wealth of the league, is capped at $88,000 a year - and praises the idea that this problem is being resolved through this program rather than by litigation, i.e. by former players suing the NFL. Astoundingly, the article describes the program as addressing an unmet need because, and I quote the Times here on this, “former players who have dementia do not qualify for the N.F.L.’s disability insurance program, because neither the league nor the union consider their conditions football-related, a stance that has been cast in doubt by several scientific studies.”
And yet, as I discussed in this post several months ago, the family of the late Pittsburgh Steelers center Mike Webster litigated that exact issue for years, finally defeating the NFL, the players association and the plan before the Fourth Circuit court of appeals, to recover benefits under the league’s ERISA governed pension and disability system for exactly this type of injury. The Fourth Circuit’s opinion, in fact, was a pretty powerful condemnation of the roadblocks that had been tossed in Webster and the estate’s path in their attempt to obtain the benefits.
Which brings me to a couple of points that should be kept in mind in reading the Times article and considering the value of the NFL’s new program that the article praises. First, I suspect that the pension plan/disability plan system that the Webster family targeted provides far greater benefits than does this separate plan discussed in the article. If so, the idea that former players should pursue help under that program, rather than through the pension plan, is a disservice to retired players. Second, again if I am right about the greater benefits available under the pension/disability plan, then one has to wonder whether the separate NFL plan discussed in this article, although commendable for providing some help to aging players, actually serves as something of a Trojan horse (not a perfect analogy, I know) that, intentionally or otherwise, draws retired players away from seeking the larger payouts of the pension/disability system and instead to this plan. And third, given that a leading federal court of appeals with a significant track record in ERISA cases has already found that the NFL’s pension and disability plan actually does cover brain injuries of this type, the article is simply off-base in stating that dementia falls outside of the plan.
The article notes the relevance of this issue to some high profile recent players, such as Ted Johnson of the Patriots, 34, whose doctors”said he was exhibiting the depression and memory lapses associated with oncoming Alzheimer’s.” Those players should, notwithstanding this article, first be looking to the NFL’s pension and disability plans, particularly in light of the Fourth Circuit’s ruling in the Webster case, for compensation and care, before settling for the limited assistance provided by this alternative plan.
And finally, this whole matter brings me back to an issue I have talked about in the past, about questionable decision making by courts concerning what decisions to publish and what ones not to publish in the ERISA context. The Fourth Circuit’s decision in the Webster case, to my recollection, was not marked for publication (you can locate it, however, at my earlier post on that case). Yet, really, the scope of NFL plan benefits for this type of mental injury had never been resolved before, and it remains, as this article in the Times reflects, not well understood, making this an opinion that probably should have been published, and should not have been part of what I have called in the past “the hidden law of ERISA.”
Electronic Discovery and the Amendment to Rule 26
Permalink | I came out on the wrong side of this order from one of my cases, but that’s alright; although John Barth’s fictional lawyer in the Floating Opera may have never lost a case, any real life lawyer who tells you the same thing is, well, speaking fiction.
But it is an interesting ruling nonetheless, on a relatively new and important issue, namely the scope of electronic discovery obligations imposed by the e-discovery amendment to the federal rules. This decision by a U.S. magistrate judge presents the factors that should be considered to determine whether electronic discovery should be ordered, or is instead too burdensome to be allowed.
There is also in the decision a little lesson for ERISA governed plans, namely, to make sure that electronic databases and electronic claim files are structured in a manner that allows for easy recall and searching of data, because as this order reflects, the courts will order such searching and production of electronic data if that data is in play in the case, even if the data is stored in a way that makes it very expensive to uncover.
The Hidden Law of ERISA: An Introduction
I don't always understand the thinking of the federal courts with regard to selecting opinions to publish and those not to publish. Certainly, I understand the criteria they seek to apply, but sometimes the end result is curious. The federal district court for Massachusetts recently chose not to publish a summary judgment opinion in the case of Kansky v. Aetna Life Insurance Company and Coca-Cola Enterprises. Obviously, the court' s prerogative. The opinion, however, is 42 pages long and surveys a range of issues of significance in ERISA benefits litigation, although on many of those points it may not break any new ground. Of some note, though, the court explicitly addressed and distinguished as inapplicable to the case before it a leading published First Circuit decision on preexisting condition limitations, Glista v. Unum Life Insurance Company, 378 F.3d 113(1st Cir. 2004). Glista is regularly cited by plaintiffs challenging plan determinations concerning preexisting condition limitations, and it would certainly be useful for both the bar and courts to have access to a well reasoned opinion, such as the Kansky decision, that explains when Glista is inapplicable.
As this case illustrates there is, in essence, a hidden law of ERISA, one that cannot completely be researched through published decisions. I speak here not only of final rulings that are not published but might at least be available on westlaw or similar services, but also of interlocutory rulings that are unlikely ever to "be published on westlaw," as brief writers who are violating court rules about citing unpublished decisions like to say.