The ERISA Industry Committee Testifies Before the U.S. Court of Appeals
For Immediate Release
Washington, DC – The ERISA Industry Committee (ERIC), the only national trade association focused exclusively on advocating for the employee benefit and compensation interests of the country’s largest employers, has been hard at work defending the rights of large employers by participating in several court cases.
On October 6, Winn Allen from Kirkland & Ellis argued on behalf of ERIC in M&G Polymers USA, LLC, et al. v. Hobert Freel Tackett et al. before the U.S. Court of Appeals for the Sixth Circuit. This case is on remand from the U.S. Supreme Court. ERIC emphasized three principles of collective-bargaining-agreement interpretation that stem from the Supreme Court’s decision. First, when a Collective Bargaining Agreement includes a general durational clause, the ordinary rule is that retiree healthcare benefits terminate when the contract terminates. Second, while parties can agree to override the general rule, courts cannot interpret contractual ambiguity or silence to accomplish that result. Third, tying eligibility for health care benefits to receipt of pension benefits does not mean benefits are vested for life.
Separately, on September 30, ERIC filed an amicus brief with the U.S. Supreme Court in Fulghum et al. v. Embarq Corporation et al. The brief, filed jointly with the American Benefits Council and the Chamber of Commerce of the United States of America, argues that the “fraud” exception to the six-year statute of repose that Congress included in the Employee Retirement Income Security Act (ERISA) does not apply to this case.
“ERIC believes that the Tenth Circuit misinterpreted the definition of fraud that applies to ERISA claims and we fully support the Embarq Corporation’s efforts to reverse the court’s decision,” said Annette Guarisco Fildes, president and CEO, ERIC. “If the Tenth Circuit’s decision is allowed to stand, it opens the door for companies to have to perpetually defend against decades-old claims that no longer have living witnesses or lack documented evidence.”
The brief points out the significant harm that would be caused by the application of the Tenth Circuit’s analysis, especially in light of recent case law recognizing that individuals can seek equitable relief for fiduciary breach under Section 502(a)(3) of ERISA for alleged fraudulent misstatements. Applying the Tenth Circuit’s analysis, such claims would essentially never be subject to the six-year ERISA statute of repose, which was adopted by Congress years before such a cause of action was recognized under federal common law and includes only a narrow exception clearly aimed solely at situations in which a fiduciary engages in fraudulent conduct to conceal a separate breach. The brief noted that the plaintiffs’ filing date is well past the six year deadline, with some participants suing for alleged oral misrepresentations made more than twenty years ago. By allowing old claims, ERIC believes plans are more exposed to lawsuits alleging fraudulent misstatements, making it virtually impossible for plans and providers to defend themselves against such claims. The court’s decision ultimately discourages employers from offering benefit plans to their employees for fear of opening themselves up to expensive lawsuits.