Overview of ERISA Litigation Capabilities

2010 Contact: Todd D. Wozniak

Jonathan L. Sulds

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ERISA Litigation Overview The Global Benefits & Compensation Group seamlessly integrates skilled benefits practitioners with experienced ERISA trial and appellate lawyers to provide a wide array of ERISA Litigation services to our clients. Our team’s experience is far reaching — in fact, one of our attorneys was a principal designer and one of the drafters of the Employee Retirement Income Security Act (ERISA), and his publications have been cited on numerous occasions by the U.S. Supreme Court and other federal and state courts. We provide clients true national coverage by operating through each of the firm’s 27 U.S. offices. Our team includes: ▪

ERISA litigators who have secured precedent setting verdicts

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A renowned author and principal designer and drafter of ERISA

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Former senior hands in government

We regularly provide advice, analysis and risk assessment regarding potential ERISA claims. In addition, our shareholders have been involved in ERISA litigation for more than 20 years and have handled virtually every type of ERISA claim: ▪

Fee disclosure

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Employer stock litigation

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Benefit discrimination / retaliation claims / §510

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Breach of fiduciary duties

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Cash balance

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Claims and claim process litigation

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Wrongful denial of benefits

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DOL investigations

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Varity claims

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Withdrawal liability

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Complex ERISA preemption Issues

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ESOPs

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Fiduciary / compliance audits

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Select Team Member ERISA Litigation Experience (Published Cases) Young v. Verizon’s Bell Atlantic Cash Balance Plan, Case No. 05 C 7314 (N.D. Ill., 2009). Served as local counsel to Verizon in a $1.67 billion ERISA class action. Class asserted that Verizon failed to comply with plan language that called for a transition factor when the company switched from one pension plan to another (switch undertaken by Bell Atlantic prior to its acquisition by Verizon). After two days of trial, Chicago federal district court ruled that the language in question was mistakenly included and that Verizon could reform its ERISA plan to correct the drafting error. In re United States Sugar ESOP class action (S.D. Fla, 2009). Defense of all but two of the members of the board of directors and all of the members of the ESOP committee of U.S. Sugar Corporation in four ESOP valuation class action cases. Verizon Employee Benefits Committee v. Kozinski v. Hewitt Associates, LLC., Case No. 08-4202 (E.D. Pa., 2009). Defended Hewitt against a claim of negligence arising out of an alleged failure to change a beneficiary designation on a life insurance policy. On August 3, 2009, the court granted our motion to dismiss based upon our contention that the state law claim for negligence was pre-empted by ERISA even though Hewitt is a non-fiduciary. Bayer v. Fluor Corporation, Hewitt Associates, LLC, et al. (E.D. Pa., 2009). Represented Hewitt in a suit claiming that certain life insurance benefits were paid to the wrong beneficiary. We filed a motion to dismiss, which was granted by the court, arguing that plaintiff’s sole remedy was a claim against the plan for payment of benefits, and not a claim against our client. McCord v. Aetna Health Inc., Class Action Litigation (S.D. Fla, 2009). Defense of Aetna in nationwide class action on behalf of 700,000 physicians alleging RICO and unfair trade practice claims against 10 managed care companies. Greenberg Traurig served as liaison counsel for entire defense group, as well as co-counsel for Aetna, Inc. and Aetna U.S. Healthcare, Inc. McDonough v. Horizon Blue Cross-Blue Shield, (D. NJ 2009). We are currently defending a New Jersey health insurer in a putative class action brought against the insurer by its members concerning the manner in which the insurer reimburses claims for out-of-network healthcare services. The complaint alleges violations of ERISA, including ERISA breach of contract, ERISA breach of fiduciary duty and various ERISA procedural violations, as well as violations of certain health insurance regulations, based on alleged underpayments for out-of-network services and alleged failure to disclose the methodologies for calculating such payments. Morgan Stanley & Co. (2009). Defense of a Morgan Stanley financial advisor who is being sued by the financial plan’s participants, as well as the financial plan’s trustee, in state court. This case is significant in that it involves issues of investment advisor liability under state law and tens of millions of dollars in claimed damages. Caplan v. CNA Financial Corp., 544 F.Supp.2d 984 (N.D.Cal. 2008). Represented the STD plan and achieved a significant win for the client in the unpublished portion establishing that the STD plan’s “advance and re-capture” funding mechanism did not render it a non-ERISA payroll practice subject to California state wage and hour law.

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Vaught v. Scottsdale Healthcare Corp. Health Plan, (9th Cir. 2008). Represented Scottsdale Healthcare Corporation health plan in a denial of benefits case. Obtained summary judgment in the district court, on the basis that the claimant had failed to exhaust prescribed remedies under the plan. The district court also granted summary judgment as to the claim that the plan had failed to abide by ERISA document disclosure requirements. The Ninth Circuit reversed, in part, regarding the exhaustion issue, and affirmed as to the disclosure issue. On remand, the district court permitted the plaintiff to supplement the record, and then asked that the parties submit briefs, based upon which the court would rule on the underlying issue of whether the plan's denial of coverage was proper. After undertaking that review, the court upheld the plan's determination denying coverage. Schottler v Wachovia LTD Plan, (E.D. Cal 2008). Single Plaintiff termination of LTD Benefits based on lack of documentation of continued eligibility. Dameron Hospital Association v. Premera Blue Cross, et al. Case No. 2:07-cv-01818GEB-DAD (E.D. Cal finally resolved 2008). Dispute between hospital and Blue Cross and multiple self-funded welfare plans over rates for reimbursement degenerated and contract expired. Western Conference of Teamsters Benefits Trusts v. ABF Freight Systems, (N.D. Cal 2007). Complex ERISA collections action. Estrada v. FedEx Ground, 154 Cal.App.4th 1 (2007). Lead trial counsel and appellate counsel for first two successful appeals. In essence, it was an independent contractor reclassification class action tried to verdict after class was whittled down from 800+ to 200. As to the employee benefits aspects, we were successful in eliminating the ERISA benefits eligibility issues relatively early in the case and prevailed at trial on the workers compensation coverage issue. Hinson v. Medstaff / CrossCounty Healthcare, Case No 04-cv-102 TUC FRZ (D.Az/ED. PA 2006). Benefit claim by former contractor who waived health care eligibility then sued in the wrong venue. Case dismissed on motion following venue transfer. In re WorldCom (2005). Retained by MCI to represent the former Executive Vice President of Human Resources at WorldCom Corporation and a pension plan fiduciary in a massive nationwide class action alleging violations of ERISA arising out of the fiduciaries' decision to keep company stock as an investment option in its 401(k) plan, at a time when the company's senior management was allegedly committing a widespread fraud. Our client was the only defendant also required to submit to a Department of Labor deposition. The case settled in a public settlement that did not require any financial contribution from our client, and the Department of Labor agreed not to pursue claims against our client. Tracy v. Pfizer, (E.D. Pa., 2005). Represented Pfizer, Inc. in a case brought by a plaintiff alleging breach of fiduciary duty after all of the plaintiff’s stock and stock options were cancelled following termination of his employment because he did not timely execute a severance agreement that would have preserved those benefits. Following extensive litigation, the court granted Pfizer’s motion for summary judgment, finding that Pfizer’s

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communications concerning the terms of the employee benefit plans were clear, and no fiduciary duty was violated. In Re Royal Dutch Shell Transport ERISA Litigation, 04-1398 (D.N.J. 2005). 401(k) stock drop case. Kentucky Association of Health Plans Inc. v. Miller, U.S. , 155 L.Ed.2d 468 (2003). Amicus counsel for Society of Human Resources Management on ERISA preemption of state "any willing provider" statutes regulating managed health care. Montesano v. Xerox Corp Ret. Income etc., 256 F. 3d 86 (2d Cir. 2001). Judgment on pleadings dismissing nationwide class of contingent workers' claims for benefits, as well as ERISA §510 claims. Davenport v. Harry N. Abrams, 249 F. 3d 130 (2d Cir. 2001). Summary judgment where contingent worker failed to exhaust remedies. Allen v. Phoenix American Insurance, (E.D. Cal 2000). Disability denial claim by incarcerated former plaintiff lawyers seeking LTD benefits during term of imprisonment. Bakner v. Xerox Corp Employee Stock Ownership Plans, 2000 U.S. Dist. LEXIS 21540 (W.D. Tex 2000); Lawrence v. Xerox etc., 56 F Supp. 2d 442 (D.N.J. 1999). Nationwide putative varity class action; class certification denied and claims dismissed via motion. Mick v. Ravenswood, 178 F.R.D. 90 (S.D. W.VA. 1998). Misleading communications about benefit charges alleged; summary judgment for defendant. Denk V. The Boeing Company, No. 94-4117 (E.D. Pa.) aff’d. 82 F. 3d 404 (3d Cir., 1996). Represented client in a case that involved a 16-count complaint arising out of a welfare plan’s denial of coverage for experimental medical treatment. Summary judgment was obtained and affirmed by the Court of Appeals for the Third Circuit. O'Neill v. Retirement Plan (RKO GEN.), 37 F. 3d 55 (2d Cir. 1994). Interpretation of compensation for purposes of computing benefits. Counsel of Record, Concrete Pipe and Products v. Construction Laborers Pension Trust for Southern California, 508 U.S. 602, 124 L.Ed.2d 539 (1993). Complex ERISA litigation involving fiduciary responsibility/actuarial disputes resulting from the Multiemployer Pension Plan Amendments Act and a dispute over the constitutionality of various provisions and circumstances under which a collective bargaining relationship has ceased. Hass and Cass v. The Boeing Company, U.S. Dist. LEXIS 13240 (1992). Putative class action alleging that the break in service rules in the company’s pension plan violated ERISA. The amount in controversy was in excess of one billion dollars. After substantial discovery, we obtained summary judgment for the company and its pension plan, and the class action certification motion was dismissed as moot. The decision was affirmed by the Third Circuit. In re Budd Company Pension Plan Litigation, W.L. 237473 (1991). Private plaintiff class action, as well as a Department of Labor enforcement action, alleging breach of fiduciary duty arising out of the termination of four large pension plans and the purchase of terminal annuities from Executive Life Insurance Company. The case was vigorously litigated and a public settlement was reached that did not require any monetary payment by the company. Greenberg Traurig, LLP | gtlaw.com

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DeMato, et al. v. CIGNA, No. 89-0724 (1989). Class action litigation involving termination of medical benefits by a health insurance carrier to both active employees and retirees of a bankrupt company. After obtaining partial summary judgment for the defendant on the principal issue of fiduciary liability, the case settled favorably on confidential terms. Lynn-Edwards Corp., 290 NLRB No.28 (1988); on remand from NLRB v. LynnEdwards Corp., 825 F.2d 413 (9th Cir. 1987). Established the status of ESOP as a retirement plan governed by ERISA and that the employer did not violate LMRA by excluding union employees with collectively bargained retirement benefits from participation in the ESOP. I.A.P.E. v. Dow Jones, 671 F. Supp. 1365 (S.D.N.Y. 1987). Plan sponsor was deemed not a fiduciary. Becker v. Simpson Building Supply Co., 675 F. Supp. 271 (M.D. Pa., 1987). Represented client in a “mass action” ERISA case arising out of the shutdown and sale of a facility. We obtained summary judgment for the defendant. Daly v. The Budd Company, C.A. No. 82-5703 (E.D. Pa., 1985). Dispute over furlough payment to an employee affected by a corporate relocation. In was the first ERISA case tried to verdict in federal court in Philadelphia, requiring us to litigate many ERISA issues as a matter of first impression. Obtained a trial verdict for the defendant, affirmed by the Third Circuit. Walsh v. Great Atlantic & Pacific Tea, 726 F. 2d 956 (2d Cir. 1983). "Partial termination" under Section 411(d)(3) of the Internal Revenue Code. The case established for the first time that a partial termination could occur over several years as the result of a significant corporate event. District 65 v. Harper & Row, 576 F. Supp 1468 (S.D.N.Y. 1983). Valuation of a participant's accrued benefit in a defined benefit pension plan. The case led to legislation requiring qualified plans to state and limit the interest rate used in valuing benefits. Levy v. Lewis, 635 F. 2d 960 (2d Cir. 1980). The Second Circuit Court of Appeals held that New York State Superintendent of Insurance, acting as rehabilitator and liquidator of an insurance company under state court orders, could not be considered a "fiduciary" within the meaning of ERISA when he terminated retirement benefits of former employees of an insurance company.

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Select Team Member ERISA Litigation Experience (Unpublished Cases) Stiefel Laboratories, Inc. We are currently defending this ERISA litigation case, as well as a related SEC inquiry. We are representing Stiefel Laboratories, Inc., which was recently acquired by GlaxoSmithKline, as well as the Stiefel Board of Directors and several Stiefel officers, against claims that they breached their fiduciary duties under ERISA, breached corporate fiduciary duties, and engaged in federal and state securities fraud. The allegations are centered on stock valuations performed regarding the Employee Stock Bonus Plan, and whether information regarding GSK’s purchase of Stiefel should have been disclosed sooner to plan participants. Fritz v. Pennsylvania Rural Electric Association. Represented client in a case that involved denial to an employee of the right to participate in a company’s early retirement incentive program. The employee alleged both age discrimination and violation of ERISA. The company’s initial defense counsel was unsuccessful in obtaining summary judgment. Tried the case, obtaining both a directed verdict on the age discrimination claim following a jury trial and a bench verdict in favor of the company on the ERISA claim. Board of Directors Members. Defense of most of the members of the board of directors of a public company in this ESOP violation case. Plaintiffs allege that the company, its board of directors and other defendants withheld material information regarding an offer to purchase all of the stock of the company in an effort to (1) avoid losing their positions, (2) cash-out employees who participate in an employee stock ownership plan (ESOP) at artificially low prices; and (3) increase the founding family’s ownership and control of the company at the employees’ expense. The case settled after the court dismissed the vast majority of plaintiffs' claims. Airline Company. Defense of an airline in an ERISA class action filed in the District of New Jersey alleging a multitude of benefits and breach of fiduciary duty claims in connection with the company’s administration of a medical plan and the plan’s reimbursement of out-of-network medical expenses. The case was transferred and consolidated as part of a multidistrict litigation. The claims against the company were ultimately dismissed on Railway Labor Act preclusion and other grounds. Confidential Client. Defense of multiple self-funded group health plans in health care provider claims based on dispute with health benefit intermediary regarding renewal rates for hospital services. Employer/Plan Sponsor. Defense of employer/plan sponsor in an ERISA/COBRA/WARN class action arising from the plant closing of entity member of controlled group of brother and sister corporations. Confidential Client. Defense of seller in class action litigation and DOL enforcement action involving disputed value of ESOP shares. Confidential Client. Defense of an ERISA/COBRA/ADEA class action with certification denied as to class allegations and favorable resolution on remaining claims.

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Confidential Client. Defense of ERISA-covered status of an employer short-term disability plan against attack as non-ERISA payroll practice that would render claims decisions subject to state wage payment statute claims. Confidential Client. Advised a company regarding its declaratory judgment action against a defendant class filed in an effort to establish that a target benefit plan negotiated by the company and its union did not violate the ADEA or ERISA’s age discrimination provisions. Confidential Client. Defense of a company pension plan and all of its fiduciaries in a combined private plaintiff class action and DOL proceeding alleging breach of fiduciary duty arising out of the termination of four pension plans and the purchase of an Executive Life annuity after Executive Life (then the largest annuity provider) was placed in receivership by the California AG. Manufacturer. Advice to a major manufacturer in a class action brought by its union on behalf of employees asserting that plan provisions which resulted in forfeiture of benefits due to pre-ERISA breaks in service violated ERISA’s accrual and anti-cutback provisions; summary judgment for the company. Insurance Company. Defense of an insurance company in a class action claim brought by a union and private plaintiffs asserting that the company breached its duty to plan participants when it terminated both active and retiree medical benefits when its client, a steel company, stopped paying premiums and then declared bankruptcy; summary judgment that insurer had no fiduciary duty to plaintiff. Additional Select Engagements Confidential Client. ERISA counsel in a suit for benefits as a result of termination prior to vesting in qualified pension plans, which resulted in the dismissal of litigation. Board of Trustees. ERISA counsel to a joint board of trustees in support of the trustees’ decision on the board’s fiduciary obligation to pursue a claim for benefits against service providers. Confidential Client. Representation of client in an ERISA litigation brought against former union and employer trustees of a multibillion-dollar pension fund. The claims were for breach of fiduciary duty under ERISA and common law fraud, as well as other related claims, all arising from wide-spread corruption in the management of funds. Welfare Benefit Plans. Representation of welfare benefit plans with regard to claims under subrogation clauses for the reimbursement of medical benefits paid for injuries caused by a third-party tort teasor. Bankruptcy Trustees. Representation of bankruptcy trustees with respect to the administration of qualified pension plans. Confidential Client. ERISA counsel in connection with claim for damages from an escrow fund created under an acquisition agreement where the seller failed to comply with ERISA reporting and disclosure requirements.

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ERISA Litigation Team Map

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