Edmonson v. Lincoln National Life Insurance
777 F. Supp. 2d 869
E.D. Pa.2011Background
- Edmonson sues Lincoln National Life Insurance under ERISA §502(a)(3) seeking equitable relief for fiduciary breach and disgorgement.
- Lincoln issued group life policies to fund an ERISA plan for Schurz Communications; Edmonson was a beneficiary, husband a participant.
- Lincoln paid death benefits via SecureLine retained asset accounts; Plaintiff alleges funds were not deposited promptly and were invested, earning a spread.
- Plaintiff contends Lincoln retained the spread and invested benefits for its own gain, harming beneficiaries.
- Plaintiff seeks class certification, constructive trust, disgorgement, attorney’s fees; Lincoln moved to dismiss for lack of jurisdiction and failure to state a claim.
- Court denied dismissal in the memorandum, allowing limited discovery on fiduciary duty and plan assets; issues remain for trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue under ERISA | Edmonson has Article III injury in fact and statutory standing as an ERISA beneficiary seeking equitable relief. | Edmonson lacks constitutional and statutory standing because she no longer has a benefit and claims are speculative. | Plaintiff has both Article III and statutory standing |
| Fiduciary status of Lincoln regarding SecureLine assets | Lincoln exercised control over plan assets, creating fiduciary duties. | No fiduciary status; actions complied with plan terms and assets were not subject to ERISA fiduciary duties. | Fiduciary status is a mixed question of fact and law; discovery warranted |
| Whether SecureLine assets are plan assets | Benefits and interest maintained by SecureLine are plan assets subject to fiduciary duties. | Exemption for guaranteed benefit policy may apply; assets possibly outside ERISA plan assets. | Facts adequate to find plan assets; not decided as law at this stage |
| Remedy of disgorgement under ERISA 502(a)(3) | Disgorgement of ill-gotten profits (spread) is an equitable remedy traceable to the plan. | Disgorgement is not available or properly characterized under 502(a)(3). | Disgorgement/constructive trust available where funds traceable to ERISA plan |
Key Cases Cited
- Graden v. Conexant Systems, Inc., 496 F.3d 291 (3d Cir. 2007) (broad statutory standing for beneficiaries in ERISA cases)
- Leuthner v. Blue Cross & Blue Shield of Northeastern Pa., 454 F.3d 120 (3d Cir. 2006) (standing and broad enforcement of ERISA rights)
- Daniels v. Thomas & Betts Corp., 263 F.3d 66 (3d Cir. 2001) (standing measured at time of breach for ERISA claims)
- Mogel v. UNUM Life Insurance Co. of America, 547 F.3d 23 (1st Cir. 2008) (fiduciary duties extend over retained asset accounts; plan assets analysis)
- Harris Trust & Sav. Bank v. John Hancock Mut. Life Ins. Co., 510 U.S. 86 (U.S. 1993) (guaranteed benefit policy exemption narrowly construed)
- Pegram v. Herdrich, 530 U.S. 211 (U.S. 2000) (fiduciary status may attach to mixed determinations requiring fact-law analysis)
- Fotta v. Trustees of United Mine Workers Health & Retirement Fund, 165 F.3d 209 (3d Cir. 1998) (equitable relief for interest on delayed benefits; disgorgement allowed)
- Skretvedt v. E.I. DuPont De Nemours, 372 F.3d 193 (3d Cir. 2004) (traceable funds in equitable relief contexts under ERISA)