Greenbrier Hotel Corporation v. Unite Here Health
16-2116
| 4th Cir. | Jan 3, 2018Background
- Greenbrier (hotel employer) joined a multiemployer Taft-Hartley welfare fund in 2004 and negotiated a bespoke, separately underwritten plan unit (Plan Unit 155) whose documents (Participation Agreement and Plan Unit 155 Rules and Regulations) governed its benefits and stated how excess assets on termination would be handled.
- The Fund (formerly HEREIU Welfare Fund, later UNITE HERE HEALTH) pooled assets for tax/administrative purposes but maintained discrete underwriting and administrative rules for Plan Unit 155.
- After a union split (2009), Greenbrier was forced out of the Fund; trustees amended Plan Unit 155’s termination language in December 2012 to broaden the destination of excess assets and then terminated Plan Unit 155 effective January 31, 2013.
- Greenbrier formed a New Greenbrier Trust and demanded transfer of Plan Unit 155’s excess assets (~$5.5 million); Fund refused and provided no detailed accounting.
- Greenbrier sued asserting ERISA fiduciary-breach claims and alternative state-law claims (breach of contract, unjust enrichment); district court dismissed non-ERISA claims as preempted, held trustees breached ERISA fiduciary duties, awarded $5,503,181 plus ERISA attorney’s fees; Fund appealed.
- Fourth Circuit concluded the dispute is primarily a contract interpretation matter (state-law), affirmed the transfer of $5,503,181 to the New Greenbrier Trust on contract grounds, and vacated the ERISA-based attorney’s fees award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Greenbrier’s state-law contract claims are preempted by ERISA §514 | Greenbrier: contract dispute over parties’ agreed terms; no clear congressional intent to preempt ordinary contract law | Fund: state-law claims “relate to” an ERISA plan and are therefore preempted; case belongs in ERISA framework | Not preempted — Fourth Circuit applied conflict-preemption analysis and held ordinary contract claims are not displaced by ERISA here |
| Whether the Fund breached fiduciary duties under ERISA by refusing to transfer excess assets | Greenbrier: Plan Unit 155 Rules unambiguously require excess assets be used consistent with the Plan or transferred to another employee benefit fund (e.g., New Trust) | Fund: Trust Agreement’s anti-inurement clause bars employers from receiving fund assets; Plan units are administrative only and assets remain with Fund | Court treated dispute as contract interpretation and ruled for Greenbrier — transfer of $5,503,181 required; fiduciary-duty framing was misplaced |
| Validity of December 2012 amendment to Plan Unit 155 Rules and Regulations | Greenbrier: amendment was untimely, made in bad faith, violated amendment procedures and cannot defeat pre-existing termination provision | Fund: trustees validly amended Rules to control disposition of assets upon termination | Amendment invalid — district court’s finding of bad faith and improper procedure upheld by Fourth Circuit |
| Entitlement to attorney’s fees under ERISA §502(g) | Greenbrier: fees warranted because Fund acted in bad faith and plaintiffs prevailed | Fund: fees inappropriate if case decided on non-ERISA (contract) grounds | Fees vacated — because appellate decision rests on non-ERISA contract grounds, district court’s ERISA-fee award was vacated |
Key Cases Cited
- Shaw v. Delta Air Lines, 463 U.S. 85 (1983) (earlier broad interpretation that a law "relates to" an ERISA plan if it has a connection with or reference to such a plan)
- Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987) (state common-law claims against plan administrators can be preempted by ERISA)
- N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (1995) (narrows §514 preemption; focus on congressional intent and conflict preemption)
- De Buono v. NYSA-ILA Medical & Clinical Servs. Fund, 520 U.S. 806 (1997) (rejects expansive literal reading of "relate to" and reinforces Travelers)
- CIGNA Corp. v. Amara, 563 U.S. 421 (2011) (summary plan descriptions are informative but do not themselves constitute plan terms enforceable as such)
- Gobeille v. Liberty Mut. Ins. Co., 136 S. Ct. 936 (2016) (ERISA’s focus is to protect participants; context for preemption analysis and statutory purposes)