Faber v. Metropolitan Life Insurance
648 F.3d 98
2d Cir.2011Background
- ERISA beneficiaries allege MetLife breached fiduciary duties by using retained asset accounts (TCAs) to retain and invest life-insurance proceeds.
- TCAs credit benefits to beneficiaries and provide a checkbook; funds backing TCAs are held by MetLife and invested for its own profit.
- SPDs for Kodak and GM plans describe TCA-based distributions and guaranteed interest; MetLife issues Customer Agreements governing TCAs.
- Plaintiffs received full benefits under the plans; district court dismissed for lack of state claims and standing concerns.
- DOL submitted amicus briefing, aligning with plaintiffs that ERISA duties may extend beyond mere distribution once TCAs are created.
- Second Circuit affirmed, holding MetLife discharged ERISA fiduciary duties by establishing TCAs per plan terms and not retaining plan assets.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to seek injunctive relief | Faber has standing due to ongoing fiduciary violation. | No redressability; ongoing remedy not likely. | Faber has standing to seek injunctive relief |
| Statutory standing to seek relief | Beneficiary status persists to recover profits as benefits. | No statutory standing since all benefits were received. | Assumed statutory standing for merits review |
| Whether MetLife remained ERISA fiduciary after establishing TCAs | Funds backing TCAs remain plan assets; fiduciary duties persist. | Once TCAs are set up, relationship is creditor-debtor, not ERISA fiduciary. | MetLife discharged duties by creating TCAs; no retained assets |
| Whether funds backing TCAs are plan assets | Retained funds and profits are plan assets subject to ERISA. | General account funds do not become plan assets; relationship is not fiduciary. | Funds not plan assets; ordinary debtor-creditor relation applies |
| Mogel v. UNUM interpretation relevance | Mogel supports treating retained assets as plan assets regardless of lump-sum terms. | Mogel turned on lump-sum payment terms not present here. | Mogel distinguished; SPDs here contemplate TCAs, not lump sums |
Key Cases Cited
- In re Halpin, 566 F.3d 286 (2d Cir. 2009) (deference to DOL plan-asset interpretations)
- Central States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C.,, 433 F.3d 181 (2d Cir. 2005) (standing distinctions for injunctive relief vs. disgorgement)
- Kendall v. Empls. Ret. Plan of Avon Prods., 561 F.3d 112 (2d Cir. 2009) (statutory standing considerations in ERISA actions)
- Mogel v. UNUM Life Ins. Co. of Am., 547 F.3d 23 (1st Cir. 2008) (retained assets and lump-sum payment terms)
- Henry v. Champlain Enters., Inc., 445 F.3d 610 (2d Cir. 2006) (ERISA aim to make plaintiffs whole, not windfall)
- LaScala v. Scrufari, 479 F.3d 213 (2d Cir. 2007) (injury requirement and fiduciary duties)
- Lockheed Corp. v. Spink, 517 U.S. 882 (1996) (prohibited transaction purpose of § 1106)
- Kalda v. Sioux Valley Physician Partners, Inc., 481 F.3d 639 (8th Cir. 2007) (plan asset interpretations under ERISA)
- In Re Luna, 406 F.3d 1192 (10th Cir. 2005) (plan assets identification guidance)
- Hughes Aircraft Co. v. Jacobson, 525 U.S. 432 (1999) (plan design latitude in distribution methods)