Walter Dean v. National Production Workers Un
46 F.4th 535
7th Cir.2022Background
- Plaintiffs (Parsec employees formerly represented by NPWU Local 707) participated in two multiemployer defined-contribution plans: a Severance Trust Plan and a 401(k) Plan. After Parsec stopped contributing following decertification of the union, participants’ accounts became inactive but remained in the NPWU plans.
- Plaintiffs requested plan documents and rollovers to the Teamsters’ plan; administrators refused rollovers and did not respond to later written rollover requests. Plaintiffs also discovered allegedly excessive fees, undisclosed payments to union officers/relatives, and large salary increases for a trustee (Senese) and the administrator (Meltreger).
- Plaintiffs sued under ERISA alleging entitlement to rollovers (§ 502(a)(1)(B) and § 502(a)(3)), breaches of fiduciary duties (§ 404/§ 502(a)(2) and § 502(a)(3)) for failing to amend plans to permit rollovers, excessive fees/payments, and that the administrator violated disclosure duties (§ 502(c)(1)(B)).
- The district court dismissed the complaint for failure to state a claim and converted dismissals to judgments with prejudice after plaintiffs declined to amend. Plaintiffs appealed.
- The Seventh Circuit affirmed in part, vacated in part, and remanded: it rejected most claims but reinstated (vacated dismissal of) claims challenging two salary increases and certain disclosure failures by the plan administrator.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Entitlement to rollover from Severance Plan under § 502(a)(1)(B) / § 502(a)(3) | Plan should permit rollovers; alternatively equitable remedy under § 502(a)(3) | Plan terms do not make participants eligible for distributions (no severance/death/age 65); no statutory violation | Denied: plan terms do not entitle plaintiffs to distributions or rollovers; § 502(a)(3) claim fails for lack of plan/statutory violation |
| Entitlement to rollover from 401(k) Plan (incl. auto-termination argument) | Automatic-termination on employer cessation should trigger wind-up and rollovers | Automatic-termination preserves accounts until trust termination; only trustees can terminate trust | Denied: automatic-termination provision does not require rollovers; no right to rollover shown |
| Failure to amend plans / fiduciary duty to permit rollovers (§ 404/§ 502(a)(2)/(a)(3)) | Trustees breached loyalty/prudence by not amending plans to allow rollovers; equitable relief available | Plan amendment is not a fiduciary act; ERISA does not require amendments; cited guidance does not mandate immediate distributions | Denied: amendments are not actionable fiduciary acts; plaintiffs’ statutory theories (e.g., § 1415) inapplicable to defined-contribution plans |
| Excessive fees, undisclosed payments, and salaries (breach of fiduciary duty / § 406 party-in-interest issues) | Administrative fees, accounting payments to Krol, and payments to NPWU officers/relatives were excessive and conflicted; salary increases unreasonable | Plaintiffs’ expense-ratio methodology is flawed; comparisons are to inapposite pooled plans; dual roles are permitted; defendants justify raises | Mixed: claims about overall administrative expenses and accounting fees dismissed for inadequate pleading/benchmarking; payments to NPWU members not plausibly a breach; claims that two salary increases (Senese and Meltreger) were excessive survive |
| Failure to provide information (§ 502(c)(1)(B)) | Administrator failed to timely produce required documents (2018 benefit statements, SPD for 401(k), settlement agreement, and other documents) | Some duties rest with the plan (not individual admin); some requests were too general or were provided; delays harmless | Mixed: individual administrator not liable for denial of a benefits-denial letter; but claims survive for missing 2018 benefit statements, the Severance Plan’s settlement agreement, the missing 401(k) SPD, and an alleged 12-day untimely production of Severance Plan documents; other disclosure claims dismissed |
Key Cases Cited
- Taha v. Int’l Bhd. of Teamsters, Local 781, 947 F.3d 464 (7th Cir.) (standard of review for motions to dismiss)
- 188 LLC v. Trinity Indus., Inc., 300 F.3d 730 (7th Cir.) (consideration of documents referenced in complaint)
- Varity Corp. v. Howe, 516 U.S. 489 (U.S.) (§ 502(a)(3) as equitable remedy for injuries not adequately remedied elsewhere)
- CIGNA Corp. v. Amara, 563 U.S. 421 (U.S.) (district court equity powers under § 502(a)(3) to reform plan terms)
- Griffin v. Teamcare, 909 F.3d 842 (7th Cir.) (pleading standard for ERISA benefits claims)
- Allen v. GreatBanc Tr. Co., 835 F.3d 670 (7th Cir.) (elements of § 502(a)(2) fiduciary breach and reasonable-compensation defense)
- Hughes Aircraft Co. v. Jacobson, 525 U.S. 432 (U.S.) (distinction between defined-contribution and pooled plans regarding asset commingling)
- Hecker v. Deere & Co., 556 F.3d 575 (7th Cir.) (plan fiduciary not required to offer cheapest possible funds)
- Loomis v. Exelon Corp., 658 F.3d 667 (7th Cir.) (assessing investment/fee reasonableness using expense-to-assets ratio)
- Ames v. Am. Nat. Can Co., 170 F.3d 751 (7th Cir.) (§ 104(b)(4) covers formal legal plan governance documents)
- Wilczynski v. Lumbermens Mut. Cas. Co., 93 F.3d 397 (7th Cir.) (administrator liability limited to personal duties under § 502(c))