31 F.4th 459
6th Cir.2022Background
- Elmer Chelf, a Wal‑Mart hourly associate, elected basic and optional ($25,000) term life insurance through Prudential and went on short‑ and then long‑term disability; premiums were payroll‑deducted.
- While on disability, Wal‑Mart continued to collect certain short‑ and long‑term disability premiums it allegedly should not have, and did not remit some optional life premiums to Prudential; Chelf had ~50.8 hours PTO that could have covered any owed optional premiums.
- Chelf died on April 17, 2016; Prudential paid basic life benefits but denied the optional life claim. Wal‑Mart and the Plan Administrator denied administrative claims and appeals.
- Ruth Chelf sued under ERISA § 1132(a)(3) for breach of fiduciary duty, alleging failures to remit premiums, to correct premium errors, to apply PTO, and to notify of conversion rights and other material information.
- The district court dismissed the fiduciary‑breach claims with prejudice, concluding the challenged acts were administrative/ministerial and that no independent disclosure duty arose; the Sixth Circuit affirmed in part, reversed in part, and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wal‑Mart acted as an ERISA fiduciary when handling premiums/plan assets | Wal‑Mart exercised control over plan assets by collecting/applying premiums and denying appeals, so it was a fiduciary for those acts | Wal‑Mart performed ministerial/administrative functions (mere collection/application) and thus was not a fiduciary under 29 C.F.R. § 2509.75‑8 | Wal‑Mart was acting as a fiduciary for the challenged premium‑handling and appeal‑denial functions; dismissal reversed on these claims |
| Whether misapplied/ unremitted premiums and failure to apply PTO state a breach of fiduciary duty | These acts mishandled plan assets and failed to correct known errors, causing harm and entitling plaintiff to equitable relief (surcharge) | Such premium handling is administrative/ministerial and outside ERISA fiduciary duties | Plaintiff adequately pleaded breach based on alleged premium improprieties; dismissal of these claims reversed |
| Whether failure to disclose conversion rights (and related omissions) independently breached fiduciary duty | Wal‑Mart failed to notify Chelf of conversion rights and other material facts, causing unreasonable reliance and harm | ERISA imposes no independent disclosure duty here; any required notice is limited to SPD and plan terms | Complaint lacked facts showing one of Sprague’s disclosure exceptions or that plan terms independently imposed a notice duty; dismissal of disclosure claims affirmed; leave to amend on remand discretionary |
| Whether court may consider Plan text on appeal and whether plaintiff forfeited plan‑based theory | Plaintiff argues plan text requires notice and supports the claim | Wal‑Mart contends plan text not before district court and that plan‑based argument is forfeited on appeal | Appellate court will not consider Plan text newly introduced post‑decision, but plaintiff’s reliance on plan terms is not forfeited as a claim; however Complaint failed to plead plan‑based theory sufficiently and may seek leave to amend on remand |
Key Cases Cited
- Varity Corp. v. Howe, 516 U.S. 489 (1996) (discretionary determinations about benefit eligibility are fiduciary acts)
- Sprague v. Gen. Motors Corp., 133 F.3d 388 (6th Cir. 1998) (recognized three circumstances creating ERISA fiduciary disclosure duty)
- Haviland v. Metro. Life Ins. Co., 730 F.3d 563 (6th Cir. 2013) (applies Sprague’s disclosure framework)
- James v. Pirelli Armstrong Tire Corp., 305 F.3d 439 (6th Cir. 2002) (elements of ERISA fiduciary‑breach claim)
- Pipefitters Local 636 Ins. Fund v. Blue Cross & Blue Shield of Mich., 722 F.3d 861 (6th Cir. 2013) (ask whether entity is a fiduciary with respect to the particular act)
- Guyan Int’l Inc. v. Prof’l Benefits Adm’rs, Inc., 689 F.3d 793 (6th Cir. 2012) (control over disposition of plan assets can create fiduciary status)
- Krohn v. Huron Mem’l Hosp., 173 F.3d 542 (6th Cir. 1999) (standard of care for fiduciaries: prudence and diligence)
- Braden v. Wal‑Mart Stores, Inc., 588 F.3d 585 (8th Cir. 2009) (ERISA plaintiffs may lack plan details pre‑discovery; pleading flexibility)
- Allen v. GreatBanc Tr. Co., 835 F.3d 670 (7th Cir. 2016) (ERISA breach claims need not plead inaccessible plan details but must plausibly allege a breach)
- United States v. Barrow, 118 F.3d 482 (6th Cir. 1997) (appellate court should consider the record and facts before the district court)