Vander Luitgaren v. Sun Life Assurance Co. of Canada
765 F.3d 59
1st Cir.2014Background
- Vander Luitgaren, beneficiary of an employer-sponsored Plan, claimed ERISA fiduciary duties in Sun Life's payment method for death benefits.
- The Plan delegated claim determinations to Sun Life, which paid benefits via a retained asset account (RAA) at State Street Bank.
- The full death benefit ($151,000) was credited to the RAA; Sun Life credited interest at 2% and mailed the beneficiary drafts.
- Beneficiary could withdraw any amount, subject to a $250 minimum withdrawal; Sun Life could close the RAA if balance fell below $250.
- Within days, the beneficiary withdrew the entire $151,000; Sun Life closed the RAA and paid $74.48 in interest.
- The district court granted partial summary judgment for Sun Life on §406(b) and later on §404(a); this court reviewed for consistency with Merrimon.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the RAA payment method was self-dealing in plan assets under §406(b). | Vander Luitgaren argues RAA funds were plan assets and Sun Life's use breached §406(b). | Sun Life argues assets backing RAAs are not plan assets; payment via RAA complies with plan terms. | Conclusion aligned with Merrimon: no §406(b) violation. |
| Whether Sun Life's RAA payment violated ERISA fiduciary duties under §404(a). | Vander Luitgaren contends RAA payment failed to act solely in beneficiaries' interests. | Sun Life contends plan language allowed non-lump-sum payment; RAA does not unlawfully burden beneficiary. | Conclusion: payment via RAA did not breach §404(a) given plan language and immediate full access. |
Key Cases Cited
- Edmonson v. Lincoln Nat'l Life Ins. Co., 725 F.3d 406 (3d Cir. 2013) (RAA payments not per se fiduciary breach when aligned with plan terms)
- Mogel v. Unum Life Insurance Co., 547 F.3d 23 (1st Cir. 2008) (plan language governing lump-sum payments controls fiduciary duty)
- Katz v. Pershing, LLC, 672 F.3d 64 (1st Cir. 2012) (statutory standing; constitutional standing distinction in ERISA context)
- US Airways, Inc. v. McCutchen, 133 S. Ct. 1537 (Supreme Court 2013) (ERISA fiduciary duties and plan protection principles)
- Lexmark Int'l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (Supreme Court 2014) (statutory standing framework; congressional authorization to sue)