The U.S. Court of Appeals for the Fourth Circuit has issued a published decision holding that a plan administrator does not have discretionary authority, but only mere authority, under an ERISA plan that only designates the plan administrator to make timely benefit determinations. Accordingly, it remanded the benefits claim for de novo review, as opposed to the more deferential review for discretionary decisions.
In Ahuja v. Ericsson Inc., the U.S. Court of Appeals for the Fourth Circuit reversed an award of summary judgment in favor of the Ericsson Plan and remanded the case to the district court for the entry of an award in favor of the plaintiff, a former Ericsson employee who challenged the Plan Administrative Committee’s denial of severance pay benefits.
In a rather strange ERISA case, a plaintiff filed suit after the ERISA plan administrator denied his claim that sought retirement benefits pursuant to a Plan titled Kroger 30-And-Out even though he was never an employee of Kroger. The case is Beckner v. American Benefit Corp., et. al. (4th Cir. April 10, 2008). The 4th Circuit affirmed the denial of benefits.
The U.S. Equal Employment Opportunity Commission announced the release of new regulations regarding retiree health benefits on December 26, 2007. The rule allows employers who provide retiree health benefits to continue the practice of coordinating those benefits with Medicare, without ensuring that Medicare eligible retirees are receiving the same benefits as younger retirees.
On October 15, 2007, the U.S. District Court for the Northern District of Indiana certified a class of pickup and delivery drivers as to claims that the plaintiffs were misclassified as “independent contractors” under the Kansas Wage Payment Act and to common law claims for rescission, unjust enrichment and quantum meruit. The class includes 102 current drivers and an unknown number of former drivers. The plaintiffs seek rescission of their independent contractor agreements, repayment of costs and expenses, and payment of unpaid overtime.
The court also certified a national class with respect to the plaintiffs’ claims for a determination of participant status and entitlement to benefits under ERISA. According to the Court, FedEx Ground employs approximately 12,000 pickup and delivery drivers.
Here is the court’s opinion: In re FedEx Ground Package System, Inc. Employment Practices Litigation, No. 3:05-cv-00390-RLM-CAN (N.D.Ind. Oct. 15, 2007).
The case also contains a lengthy Daubert analysis with respect to FedEx’s motions. The Daubert challenge was overruled, but the court decided to disregard the experts’ testimony.
This case highlights the serious consequences for misclassifying workers as “independent contractors.” FedEx also recently lost an appeal before the California Court of Appeals (Estrada v. FedEx Ground Package System, Inc., B189031 (Cal. Ct. App. June 13 2007) involving the issue of whether their single work zone drivers were employees or independent contractors under California law with respect to their right to entitlement to reimbursement for work-related expenses. FedEx’s decision not to renew the contracts of all of the single work zone drivers in California after that decision has sparked additional litigation.
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