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Varity
Corporation v. Howe, 116 S.Ct. 1065 [19 EBC 2761] (1996)
-- Syllabus
Dissent
As part of its reorganization, Varity encouraged its employees to
voluntarily transfer their employee benefits to subsidiary
corporation called Massey Combines. A group of beneficiaries
claim that the plan administrator, through trickery, led them to
withdraw from the plan and to forfeit their benefits. They seek
reinstatement as participants in the employer's ERISA plan. The
Supreme Court held that Varity acted in a fiduciary capacity when
it made misrepresentations regarding employee benefits. Applying
the law of trusts, the Court found that where Varity conveyed
information about future plan benefits, thereby permitting
beneficiaries to make informed choices about continued
participation, it was exercising a power "appropriate"
to carrying out important plan purposes. Further, the Court found
that Varity breached its fiduciary duty to act solely in the
interest of beneficiaries when it made material
misrepresentations regarding the security of the Massey Combines
plan. Finally, the Court held that the participants were entitled
to reinstatement in Varity's benefit plan under ERISA's civil
enforcement provision which provides for "appropriate
equitable relief."
Peacock
v. Thomas, 116 S.Ct. 862 [19 EBC 2601] (1996) -- Syllabus Dissent Former
employee brought action against former employer (Tru-Tech) and
its officer (Peacock) for breach of fiduciary duty under ERISA.
(Peacock I). The district court found Tru-Tech did breach its
fiduciary duty, however Peacock was not a fiduciary. The Court of
Appeals affirmed the judgment. Thomas brought a second suit
(Peacock II) asserting a claim for "Piercing the Corporate
Veil Under ERISA and Applicable Federal Law" to impose
liability for monetary judgment obtained in Peacock I. The
district court agreed and entered judgment against Peacock, and
the Court of Appeals again affirmed. The Supreme Court reversed
ruling that the Federal courts do not possess ancillary
jurisdiction over new actions in which a federal judgment
creditor seeks to impose liability for a money judgment on a
person not otherwise liable for the judgment. The Court
determined that ERISA does not provide for imposing liability for
an extant ERISA judgment against a third party, and ERISA's
"appropriate equitable relief" provision would not
extend to impose liability on Peacock, who was found not to be a
fiduciary. Although the Court recognized that ancillary
jurisdiction was proper to dispose factually interdependent
claims or to enable a court to function successfully by
effectuating its decree, the court found in this case, no factual
or logical interdependence sufficient to grant ancillary
jurisdiction. Since in Peacock II alleges civil conspiracy and
fraudulent transfer of Tru-Tech's assets, the court explained
that Peacock II is founded on different facts and different
theories of liability than Peacock I (an ERISA action). Other
than the existence of the ERISA judgment itself, the court held
that Peacock II had very little connection to the ERISA case.
Zuckerbrod v. Phoenix Mutual Life Ins., 78 F.3d 46 (1st Cir. 1996)- This is a claim for benefits under 29 U.S.C. § 1132(a)(1)(B) for private duty nursing. The First Circuit found it to be an arbitrary and capricious decision of defendant not to pay for the nursing services. The Defendant claims that its consultants relied in part upon the letters of the plaintiff's doctors. The First Circuit noted that nothing in those letters suggest that private duty nursing was only available part of the day. The First Circuit also found it arbitrary and capricious for defendant to rely upon the surgical consultant to deny the claims since the consultant stated it was up to the treating physician to determine staffing adequacy. The First Circuit also found it significant that the Defendant authorized one shift of nursing per day with no adequate explanation. The First Circuit also noted that the defendant's' claim manual states claims determinations should be resolved in favor of the claimant. See detailed analysis.
Meagher
v. Board of Trustees of the Pension Plan of the Cement and
Concrete Workers District Council Pension Fund, 1996 WL
118352 (2d Cir. 1996) - Download
in RTF Meagher brought action claiming that the Trustees were
operating the Pension Plan in violation of ERISA [29 U.S.C.
§§1001 et. seq.]. The district court dismissed the Complaint
with prejudice on the ground of res judicata. Meagher had brought
a prior action claiming the Fund had fraudulently denied pension
benefits (Meagher I). The district court granted the Fund summary
judgment in Meagher I. The Second Circuit affirmed the district
court's dismissal and rejected Meagher's argument that the two
actions were not identical since Meagher I was brought in his
individual capacity, whereas the present action was in his
representative capacity. The court explained that where the
representative is also a "beneficiary" of the subject
matter of the action, res judicata would bar the second action
arising from the same factual circumstances.
Jaspan
v. Glover Bottled Gas Corporation, 1996 WL 118589 (2d
Cir. 1996) - Download
in RTF Plaintiffs sought monetary relief in a suit to compel
an employer to produce work records for an audit. The Funds
asserted that they were entitled to, under the terms of the trust
agreement, to monetary relief in the amount of 50% of Glover's
contributions, by reason of Glover's failure to keep records.
Although the district court ordered Glover to produce the
records, it denied the Funds monetary relief. The Second Circuit
held Glover was not obligated under the trust agreement to pay
50% of its contributions for failure to produce records for an
audit because since it was not a party to the agreement. Although
Glover did sign a collective bargaining agreement, the court held
that an agreement to make contributions does not justify holding
Glover to the terms of a liquidated damages provision in a trust
agreement it never joined. Further, the court rejected the Funds
argument that the district court erred it its refusal to award
the 50% relief under its power to grant "appropriate
equitable relief" pursuant to 29 U.S.C. §1132(a)(3)(B)
since the Fund made no request for any specific form of monetary
equitable relief other than the 50% penalty provided in the Trust
Agreement.
Webb
v. Gaf Corporation, C.A. 95-7201 (2d Cir. 3/07/96)- Download
in RTF This is an action involving the increase in premiums
and deductibles for early retirees and retirees 65 and over in a
collectively bargained medical plan. At the district court level
a jury verdict found against the plaintiffs in their claim
regarding the increase in deductible. However, the jury
determined that the defendant breached the collective bargaining
agreement when it raised the premiums for early retirees and
instituted premiums for retirees 65 and over. The district court
entered a preliminary injunction (enjoining any increase in
premiums) while it decided post-trial motions heard on December
4, 1992. During the pendency of this appeal the district court
decided the post-trial motions by adopting the jury verdict. It
made the preliminary injunction permanent. The Second Circuit
determined the present appeal was moot.
Ryan v.
Federal Express Corporation, 78 F.3d 123 [19 EBC 2889]
(3d Cir. 1996) -- The Ryans received insurance benefits for their
infant daughter under Federal Express Group Health Plan
("the Plan"). The Plan, however, had a subrogation
clause which required beneficiaries to reimburse the plan if
their injuries were caused by actions of a third party and the
beneficiary receives payment from the third party. The Ryans
received insurance benefits in the amount of $190,000.00 under
the Plan. The Ryans also received $1,486,357.67 under a
settlement agreement in a malpractice action. Federal Express
asserted a subrogation lien, however, the Ryans offered to pay
only part of the lien, insisting that they be permitted to
subtract a pro rata share of attorneys fees they had incurred in
pursuing their malpractice claim. Applying common law principles,
the district court entered judgment in favor of the Ryans finding
that implementation of the provision would confer an "unjust
benefit" to Federal Express. The Third Circuit reversed. It
held that although under appropriate circumstances, the federal
courts have the power to apply common-law doctrines to ERISA
actions, the doctrine of unjust enrichment would not apply in
this case where the unambiguous language of the plan governs the
rights of the parties. Furthermore, the court explained that the
subrogation clause did not conflict with ERISA's statutory
policy, therefore, it was unnecessary to invoke a common law
right.
Jenkins
v. Montgomery Industries, Inc., 1996 WL 93731 (4th Cir.
1996) - Jenkins sought insurance coverage for injuries he
received from a gun shot to his hand. The employer denied
coverage under the plan's provision which excluded injuries
sustained or contracted while a person is intoxicated. Rejecting
the employer's position that the exclusion operates to preclude
recovery "anytime and anywhere a person is intoxicated, the
district court read the exclusion to require some causal
connection between the intoxication and the injury. Finding no
causal relation, the district court entered judgment against the
employer. The Fourth Circuit affirmed. First, the court stated it
is to review the plan administrator's decision under an abuse of
discretion standard. However, the court noted that since the
employer is also the named fiduciary with a financial interest in
the outcome of its interpretation, it would review the
fiduciary's decision under a less deferential standard. Second,
the Court of Appeals determined the district court did not err in
applying South Carolina state law in interpreting the plan. Under
South Carolina law, an insurer is relieved from liability under a
policy exclusion provision only if it demonstrates a causal
connection between the exclusion and the loss claimed. The Fourth
Circuit recognized that ERISA contains broad provisions
precluding state law, however it determined that ERISA does not
render inapplicable common law concepts. It explained that
general principles of contract law, insurance law, or trust law,
as long as they do not conflict with ERISA's purposes, are
applicable by courts considering ERISA-regulated plans. Further,
the court reasoned, requiring a causal relation to the exclusion
provision is consistent with ERISA's goals of "promoting the
interests of employees and their beneficiaries in employee
benefit plans and protecting contractually defined
benefits[.]"
Haley
v. Paul Revere Life Insurance Company, 1996 WL 89627 (4th
Cir. 1996) -- Paul Revere denied Haley's disability benefits
relying on a preexisting condition exclusion in the plan.
Applying an abuse of discretion standard, the district court
found that Paul Revere's interpretation was not arbitrary and
capricious, therefore it granted summary judgment in Paul
Revere's favor. Haley appealed claiming the district court erred
in giving deference to Paul Revere's decision. On appeal, the
Fourth Circuit clarified the standard for reviewing an
administrator's interpretation of a benefit plan: [W]hen
reviewing [a] ... plan administrator's decision ..., a court must
first decide de novo whether the plan's language prescribes the
benefit or whether it confers discretion on the administrator to
determine the benefit. If the plan confers discretion, the court
must decide, again de novo, whether the administrator, in making
its determination, acted within the scope of that discretion.
And, finally, if the plan administrator's contractually conferred
discretion, the court may review the merits of an administrator's
decision only for an abuse of discretion. The court must not
disturb the administrator's decision if it is reasonable, even if
the court itself would have reached a different conclusion.
Further, the court set out the following factors a court should
consider in deciding whether an administrator abused its
discretion: (1) the scope of the discretion conferred; (2) the
purpose of the plan provision in which the discretion is granted;
(3) any external standard relevant to the exercise of that
discretion; (4) the administrator's motives; and (5) any conflict
of interest under which the administrator operates in making its
decision. In this case, the court determined the preexisting
condition exclusion did not grant Paul Revere authority to
determine whether an employee's disability falls within its
scope, therefore, Haley's claim for benefits should have been
reviewed de novo. Nonetheless, the Fourth Circuit concluded that
even applying a de novo standard, the record supported Paul
Revere's determination that Haley's disability was preexisting,
thus it properly denied his claim.
Mullins
v. Blue Cross & Blue Shield of Virginia, Inc., 1996
WL 118612 (4th Cir. 1996) -- Mullins was employed by Better
Business Services, Inc. and sought insurance benefits under the
Random Supply Employee Benefit Plan, sponsored by Random Supply
Company. Mullins was never employed by Random Supply Company.
Additionally, there was no evidence that Random Supply and Better
Business Services had at least 51% common ownership. Mullins,
however, was on the enrollment list of, and premiums were timely
paid by or on behalf of Mullins, with respect to, a group health
insurance policy issued by defendant Blue Cross & Blue Shield
of Virginia under the Random Supply Employee Benefit Plan. Under
the terms of the plan, a person is not an eligible person unless
a full-time employee of the contract holder [Random Supply] or a
related company of the contract holder (at least 51% common
ownership). Because Mullins was never an employee of Random
Supply, the Fourth Circuit held she was not a participant.
Further, the court refused to apply "equitable
estoppel" to vary the terms of the written plan.
Denzler
v. Questech, Inc., 1996 WL 118610 (4th Cir. 1996) -- Upon
retirement, Denzler sought pension benefits under the Officers
and Managers Deferred Compensation Plan ("the Plan").
By letter, the Board of Directors informed Denzler that he would
be paid a basic benefit (actuarially provided) and an "added
benefit." Denzler was paid the basic and added benefit in
1990, 1991 and 1992, however in 1993, Questech reduced the
benefit paid to Denzler as a result of the failure of the Plan
holdings to generate the expected return. Denzler filed suit
alleging he was entitled to his full retirement benefits, not
just a basic benefit. Reading the plan, both the district court
and the Fourth Circuit agreed that there was no ambiguity in the
language to support Questech's denial of Denzler's full benefit.
Under the terms of the plan, Denzler was to receive $350,000 in
retirement benefit, regardless of Plan surplus. As to damages,
the Fourth Circuit remanded to the lower court for recalculation
and directed damages were the actuarial equivalent amount of
$350,000 utilizing the then current Interest Rate for discounting
or compounding. Finally, the Fourth Circuit remanded the district
court's award of attorneys fees to Denzler since the lower court
failed to conduct the five step analysis to determine whether an
award was appropriate. Denzler also requested fees for defending
Questech's appeal. The Fourth Circuit awarded fees on the
liability issue, but determined that Questech did not act in bad
faith in appealing the damages and attorneys fees award,
therefore, Denzler was not entitled to attorneys fees on the
latter issues.
Rokohl
v. Texaco, Inc., 1996 WL 77703 (5th Cir. 1996) - Although
he never applied for benefits, Texaco granted Rokohl LTD
benefits. It was undisputed this action constituted termination
of employment. Rokohl suffered from epilepsy and was required to
take a number of brief medical leaves of absence. His treating
physician, however, determined that Rokohl could resume work on
the condition that he avoid driving, climbing and operating
hazardous machinery. Rokohl brought action claiming Texaco (1)
discriminated against him because of his disability in violation
of TCHRA, and (2) dismissed him to avoid paying maximum
retirement benefits, in violation of ERISA. The district court
determined that Rokohl's TCHRA claim was preempted by ERISA and
granted Texaco summary judgment. The Fifth Circuit reversed. It
held that the heart of Rokohl's claim was Texaco wrongfully
discharged him because of his disability. The court explained
that Rokohl's TCHRA claim would have arisen if Texaco discharged
him through the use of the LTD plan or in some other manner.
Since Rokohl's claim does not "cease to exist" when
'stripped to [its] link' to the plan" the connection between
his claim and Texaco's LTD plan was too remote and tenuous to
warrant preemption. Further, the court reasoned that preemption
in this case would allow Texaco, and other employers, to escape
state anti-discrimination laws by disguising all termination
decision as benefits decision.
Shahid
v. Ford Motor Company, 1996 WL 86675 (6th Cir. 1996) --
Shahid inquired into Ford's VTP plan when she learned her
position was going to be eliminated. Before she enrolled, Ford
terminated her employment alleging she received kickbacks from an
outside supplier. Shahid claimed Ford terminated her in order to
avoid paying benefits under its employer's voluntary termination
plan (VTP). The Sixth Circuit first determined that since the VTP
provided for a number of benefits, including severance payments,
it qualified as an ERISA employee benefit plan. Second, the court
held that Shahid had standing to sue since she may have become
eligible for participation if Ford had not improperly terminated
her as alleged. Next the court determined that Shahid met her
burden of establishing a prima facie case for an ERISA §510
claim. A plaintiff must show that there was (1) prohibited
employer conduct (2) taken for the purpose of interfering (3)
with the attainment of any right to the employee may become
entitled. The court rejected Ford's argument that since the
gratuitous VTP was discretionary and could be terminated at any
time, Shahid had no vested right to interfere with, therefore no
discrimination claim could be made. It explained that an
employees reliance on an ERISA plan is protected until an
employer complies with the applicable amendment or termination
procedures. Therefore, so long as the plan is in effect, the plan
must administer it in a nondiscriminatory manner. Nonetheless,
the Sixth Circuit affirmed the district court's grant of summary
judgment to Ford since Shahid failed to show that Ford's
articulated reasons for terminating her were pretextual.
Schachner
v. Blue Cross and Blue Shield of Ohio, 1996 WL 99295 (6th
Cir. 1996) -- Blue Cross denied Schachner's claim for insurance
benefits for his cardiac rehab therapy. It claims the costs of
cardiac rehab are not covered under the plain language of the
insurance certificate. The court granted Blue Cross summary
judgment. The Sixth Circuit reversed. First, the court determined
that the contract language at issue was not ambiguous. The
insurance certificate provides coverage for "Treatment by
Physical Means" which included treatment to relieve pain,
restore maximum function and prevent disability following
disease, injury or loss of a body part. Blue Cross claims that
cardiac rehab was not covered unless separately listed in the
certificate, and it submitted copies of other insurance
certificates with separate listings for cardiac rehab. The Sixth
Circuit, however, determined the language on Schachner's
certificate was unambiguous, and the district court erred in
considering extrinsic evidence (other insurance certificates) to
create an ambiguity. It held, an ambiguity must appear on the
face of the contract, and only when such an ambiguity is patent
may a court review outside evidence to clarify what the parties
mean. Thus, the district court erred in granting summary
judgment. The Sixth Circuit remanded the case to the district
court to determine whether cardiac rehab is "Treatment by
Physical Means" as defined by the unambiguous language in
the certificate. Next, the court vacated the district court's
denial of class certification. The district court refused to
certify the class upon finding the certificate language was
ambiguous, which was an incorrect legal conclusion. The district
court reasoned that since it would have to consider a number of
outside contracts, individual negotiations would predominate over
common ones. The Sixth Circuit, however, directed the district
court to reconsider Schachner's attempt to certify a class.
Finally, the Sixth Circuit held that Schachner's state law bad
faith claim is preempted by ERISA. Schachner's claimed that the
ERISA "savings clause" which states "nothing in
this subchapter shall be construed to exempt or relieve any
person from any law of any State which regulates
insurance[.]" Since Ohio common law requires insurers
"to act in good faith," Schachner asserts this duty is
a law of Ohio which regulates insurance, and thus saved from
preemption. However, the court held that since the law was not
"specifically directed" toward the insurance industry,
it did not regulate insurance. Accordingly, the law is not saved
from ERISA preemption.
Sullivan
v. Cox, 1996 WL 106364 [19 EBC 2926] (7th Cir. 1996) --
The court determined whether Cox accepted personal responsibility
for delinquent contributions to benefit plans under ERISA, when
he signed collective bargaining agreements as
"President" of the corporation, but failed to provide
the full legal name of the corporation as called for by the
contract. Finding that state contract law did not conflict with
ERISA in this case, the Seventh Circuit applied Illinois for
governing principles of contract interpretation. Under Illinois
law, "[w]hen an officer signs a document and indicates next
to his signature his corporate affiliation, then absent evidence
of contrary intent in the document, the officer is not personally
liable." Thus, the court found that Cox signed in a
representative capacity, despite his failure to include the full
name of the corporation. The court reasoned that intent of the
parties would govern. Here, since Cox included his title
"President," and the corporate identity, it was clear
to the court he did not intend to be personal liable.
Ramsey
v. Hercules, Inc., 1996 WL 86343 (7th Cir. 1996) --
Ramsey brought action after Hercules denied her claim for LTD
benefits. The district court reviewed Ramsey's decision under an
"arbitrary and capricious" standard and granted summary
judgment to Hercules. However, the Seventh Circuit found the plan
did not grant Hercules discretion to determine eligibility under
the LTD plan, therefore the proper standard to review Hercules
decision was de novo.
The court recognized a distinction between discretion in plan
interpretation and discretion in factual determinations. Thus, a
plan which grants an administrator discretion over interpretation
generally, must also grant discretionary authority with respect
to eligibility determination to escape de novo review of its
decision. In this case, the court found that the LTD plan listed
four objective conditions which would result in a loss of
benefits, and did not designate the administrator to determine
whether the conditions for eligibility had been met. Further, the
court determined that language in the plan which provided that
decision by the administrator are final, conclusive and binding,
did not have the effect of making Hercules' decisions
discretionary with respect to long term disability benefits.
Lindeman
v. Mobil Oil Corporation, 1996 WL 135666 (7th Cir. 1996)
- Lindeman applied and was denied severance benefits when she was
terminated from Mobile for excessive absences. Lindeman brought
action claiming she was wrongfully terminated for making a claim
under Mobil's employee benefits plan. She sought reinstatement
and back pay as her remedy for the violation. The district court
found that Lindeman failed to exhaust administrative remedies,
therefore it granted summary judgment in Mobil's favor. On
appeal, Lindeman claimed that she was not required to exhaust
administrative remedies since hers was not a claim for benefits,
but rather a wrongful termination claim. Further, she argued that
she should be excused from the exhaustion requirement since it
would have been futile. She argued that since Mobile was
unwilling to grant her severance benefits, it would also deny her
wrongful termination claim. The Seventh Circuit rejected her
argument and found no relevant difference between a benefits and
a wrongful termination claim. It explained the exhaustion
requirement is useful to provide a court with a factual record
and may resolve many disputes before reaching the courts.
Furthermore, the court found Lindeman's futility argument
unpersuasive since there was no evidence showing that Mobile
would not hear her wrongful termination.
Fuller
v. Skornicka, 1996 WL 140281 (7th Cir. 1996) -- Trustees
of multiple employer welfare plan filed a declaratory judgment
action against state officials to preclude state from requiring
trust to become licensed as insurance company in order to provide
worker's compensation benefits. The district court dismissed
Fuller's complaint for failure to state a claim since ERISA
expressly exempts worker's compensation laws from its coverage.
The Seventh Circuit affirmed holding that state regulation of
worker's compensation plan is not preempted by ERISA, and the
plan may properly be required to maintain a separate worker's
compensation plan to comply with state law.
Central
States, Southeast and Southwest Areas Pension Fund v. Art Pape
Transfer, Inc., 79 F.3d 651(7th Cir. 1996) -- Court found successor-in-interest
not responsible for withdrawal
liability. See detailed analysis.
Grottkau
v. Sky Climber, Inc., 1996 WL 122177 (7th Cir. 1996) --
Grottkau alleged that Sky Climber retaliated against him for
reporting to the Department of Labor Sky Climber's failure to
make contribution to its 401(k) profit sharing plan. Sky Climber
claims it terminated him because he misused company property and
allowed unauthorized vacation time to employees he supervised.
Finding Sky Climber's reasons for his discharge were not
pre-textual, the district court granted summary judgment to
defendant. Applying the McDonnell Douglas burden-shifting
analysis, the Seventh Circuit found that Grottkau failed to show
that Sky Climber's proffered reasons for his discharge was
pre-textual for its discrimination against him for reporting to
the DOL.
Nagy v.
Riblet Products Corporation, 79 F.3d 572 (7th Cir.
1996) -- The Seventh Circuit held that ERISA does not govern in
cases involving private employment contracts where the beneficiary
is not a participant in a employee benefit plan. See detailed analysis.
Wahlin
v. Sears, Roebuck & Co., 1996 WL 11867 (7th Cir.
1996) -- Wahlin sought benefits under defendant's 1993 Early
Retirement Incentive Program for Exempt Associates ("the
1993 Plan"), which Sears denied since Wahlin agreed to and
received benefits from the previous early retirement incentive
plan ("Plan No. 501"). Sears determined that Wahlin was
ineligible under the 1993 Plan because he officially retired in
1992. The Seventh Circuit reviewed Sears decision under an
arbitrary and capricious standard and found that Sear's reading
of the unambiguous language in the separate plans was reasonable.
Accordingly, the plan applicable at the time Wahlin retired was
Plan No. 501. Although the 1993 Plan was more lucrative, Wahlin
assumed the risk of foregoing a more beneficial package when he
agreed to accept the early retirement incentive of Plan No. 501.
Nielsen
v. Trans World Airlines, Inc., 1996 U.S. App. LEXIS 5557 (8th Cir.
Mar. 27, 1996) -- Nielsen brought action alleging in Count I that TWA
breached its fiduciary duties in administering its employee
assistance program (Special Health Services). In Count II,
Nielsen alleged TWA retaliated for, or interfered with, the
assertion of rights provided under ERISA. In an unpublished per
curiam opinion, the Eighth Circuit affirmed the district court's
ruling that the pilots lacked standing to bring the lawsuit since
the Special Health Services was not an employee welfare plan, and
the pilots failed to show that TWA breached any fiduciary duty.
In addition, the Court of Appeals affirmed the district court's
grant of summary judgment to TWA on Count II since the pilots
presented no evidence of adverse employment action.
Employee
Painters Trust v. J & B Finishes, 1996 WL 87188 (9th
Cir. 1996) -- The president of Northwest Interior, Inc., William
Canon, signed a collective bargaining agreement that bound the
"employer" to contribute to a multi employer pension
plan. Employee Painters brought suit claiming Canon was
personally liable for delinquent contributions. The agreement
provided that corporate officers and the signatory of the
agreement would be personally liable for unpaid trust fund
contributions.
The Ninth Circuit held that when "clear and specific
language in a labor agreement is at issue, federal courts are
uniform in their strict interpretation of such language."
Thus, the court rejected Canon's argument that state contract law
should apply. Despite Canon's failure to read or understand the
agreement to impose personal liability, the court found that his
signature bound him.
Inter-modal
Rail Employees Association v. Atchison, Topeka and Santa Fe
Railway Company, 1996 WL 135257 (9th Cir. 1996) --
Plaintiffs brought suit alleging Railway company conspired to
transfer its work from Santa Fe Terminal Services to In-Terminal
Services for the express purpose of depriving members of pension
and welfare benefits. The district court dismissed plaintiffs
claim and the Ninth Circuit affirmed, holding that employers are
free to terminate employee welfare plans without considering the
employees' interests. The court explained that the employees have
no present "right" to future, anticipated welfare
benefits. The court further held that Plaintiff's claim of
interference with benefits due them under the Railroad Retirement
Act (RRA) was also properly dismissed since plans under the RRA
are exempt from ERISA coverage.
