Greenbrier Hotel Corporation v. Unite Here Health, 5:13-cv-11644

Background

Plan Unit 155 was a separately underwritten plan unit within the UNITE HERE Health multiemployer Fund, created in 2004 to provide health benefits exclusively to Greenbrier employees; contributions were pooled but unit performance was tracked separately.
By January 31, 2013 the Fund terminated Plan 155 after a union affiliation dispute; plaintiffs (the Greenbrier and affected employees) demanded transfer of Plan 155’s surplus to a new Greenbrier trust.
Plan documents (2004 Rules and Summary Plan Description) stated that on plan termination excess assets would be used for purposes consistent with the Plan or transferred to another fund providing similar benefits; in December 2012 the Trustees amended Plan Rules to replace “consistent with the Plan” with “consistent with the Trust Agreement as determined by the Trustees.”
The Fund refused to transfer surplus and did not provide a contemporaneous reasoned fiduciary decision; plaintiffs sued under ERISA for breach of fiduciary duty seeking $5,503,181 in surplus attributed to Plan 155.
Court found amendment of Plan Rules was discriminatory, in bad faith, and made to deprive Plan 155 participants of assets; it held Plan 155 had a $5,503,181 surplus at termination and Trustees breached fiduciary duties by refusing transfer; judgment awarded that amount to the New Greenbrier Trust and plaintiffs' attorneys’ fees.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Plan 155 surplus must be transferred on plan-unit termination	Plan language unambiguously requires excess be used for Plan 155 participants or transferred to a similar plan; surplus here must be transferred	Trustees/ Fund say Trust Agreement and amendment permit retention; assets are Fund assets and Trustees have discretion	Court held original Plan language required transfer; December 2012 amendment was invalidly discriminatory and cannot defeat unambiguous termination provision
Whether ERISA anti-inurement bars transfer to Greenbrier's new plan	Transfer funds to pay benefits for same employees does not inure to employer; funds would be used for benefits	Transfer would improperly inure to employer and breach §1103(c)(1)	Court held anti-inurement did not bar transfer because money would be used to provide benefits to contributors’ employees
Whether Trustees’ denial is entitled to deference as a discretionary fiduciary decision	If Trustees had discretion, their decision to retain funds was reasonable and consistent with Trust Agreement	Plaintiffs argue Trustees abused discretion or breached fiduciary duty and gave no reasoned decision	Court found no adequate pre-litigation reasoned fiduciary decision to defer to; even under Booth factors Trustees acted unreasonably and with conflict of interest
Whether Plaintiffs are entitled to attorneys’ fees	Plaintiffs sought fees based on defendants’ bad faith and breach	Defendants opposed	Court awarded fees, finding bad faith (last-minute amendment, failure to justify denial) and that fee factors weigh for an award

Key Cases Cited

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (standard for de novo review absent plan discretion)
Raymond B. Yates, M.D., P.C. Profit Sharing Plan v. Hendon, 541 U.S. 1 (ERISA anti-inurement purpose and trust-law principles)
Booth v. Wal–Mart Stores, Inc. Associates Health & Welfare Plan, 201 F.3d 335 (4th Cir. 2000) (factors for reviewing discretionary fiduciary decisions)
Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017 (4th Cir. 1993) (factors guiding award of ERISA attorneys’ fees)
Trapani v. Consolidated Edison Employees’ Mutual Aid Soc., Inc., 891 F.2d 48 (equitable considerations supporting return of assets to departing participants)