ERISA & Employee Benefits Litigation Blog

Judge Garland’s ERISA Jurisprudence Reflects His Methodical and Moderate Reputation

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By Ada W. Dolph and Justin T. Curley

With President Obama’s recent nomination of Judge Merrick B. Garland of the U.S. Court of Appeals for the D.C. Circuit to the U.S. Supreme Court, we thought our loyal readers would be interested to learn a little about Judge Garland’s ERISA jurisprudence while on the D.C. Circuit. While Judge Garland’s oeuvre in this area of the law is limited despite his 19 years on the appellate bench, it does nonetheless reflect his methodical and restrained reputation, and his penchant for consensus-building, as the decisions that he has been a part of were all unanimous while still peppered with both Democratic- and Republican-appointed judges.

Judge Garland has authored two decisions that have substantively discussed ERISA and its regulations. In Boivin v. U.S. Airways, Inc., 446 F.3d 148 (D.C. Cir. 2006), retired pilots brought suit against the Pension Benefit Guaranty Corporation (“PBGC”), seeking to compel the PBGC to correct alleged errors in its calculation of estimated retirement benefits due the pilots under ERISA and the pilots’ pension plan. In a thorough and carefully crafted opinion, Judge Garland wrote for the panel that the pilots’ claims must be dismissed without prejudice, because the pilots had not yet exhausted their administrative remedies provided by the PBGC, and that they were required to do so before seeking judicial review. In so holding, the panel observed that while ERISA does not expressly require exhaustion of administrative remedies or condition judicial review upon “final” agency action, sound judicial discretion, the case law and the circumstances of the case favored requiring exhaustion.

In Francis v. Rodman Local Union 201 Pension Fund, 367 F.3d 937 (D.C. Cir. 2004), Judge Garland wrote the opinion which affirmed summary judgment for the defendant, reasoning that the plaintiff was not entitled to recover pension benefits alleged owed to him under the terms of an ERISA plan based on the additional hours that he arguably would have worked but for alleged racial discrimination charged and settled in prior litigation. Judge Garland analyzed the terms of the pension plan and the settlement agreement and laid out how the facts of the case demonstrated that the parties never intended the prior settlement payment to plaintiff to generate additional pension benefits, and noted that the plaintiff still retained the right to receive pension benefits under the plan for the hours that he actually worked.

While Judge Garland has not authored an opinion in a denial of benefits case, the decisions in which he participated as a member of the panel do not lean one way or the other, and instead reflect the reasoned, middle of the road approach for which he is known. In Fitts v. Unum Life Ins. Co. of Am., 520 F.3d 499 (D.C. Cir. 2008), the plaintiff challenged her disability plan’s determination that her bipolar disorder was a mental illness, as opposed to a physical illness, and therefore limited her disability benefits to two years. The district court had concluded that the meaning of mental illness was ambiguous, and resolved the ambiguity in favor of the plaintiff. On appeal, Judge Garland and the two other judges reversed, noting the conflicting evidence regarding the causes of bipolar disorder in general and of plaintiff’s bipolar illness in particular. Given the genuine dispute about the possible causes of bipolar disorder, and in light of the defendant’s evidence casting doubt on the cause of plaintiff’s illness, the panel ruled that the district court should not have granted summary judgment for the plaintiff.

In White v. Aetna Life Ins. Co., 210 F.3d 412 (D.C. Cir. 2000), the plaintiff had filed her appeal of a denial of benefits three months late, and the defendant refused to consider the untimely appeal. The district court granted summary judgment for the defendant. On appeal, Judge Garland and the panel reversed, holding that the denial notice did not substantially comply with the notice requirements of ERISA and its implementing regulations, and that therefore the plaintiff’s 60-day appeal deadline never began to run. Specifically, the denial notice failed to include a fourth reason for the benefits denial, which the panel concluded was a “major omission,” as it precluded the plaintiff from perfecting her benefit claim for appeal.

Judge Garland’s only decision touching on ERISA preemption is O’Connor v. UNUM Life Ins. Co. of Am., 146 F.3d 959 (D.C. Cir. 1998), a case in which the panel reversed the district court’s grant of summary judgment in favor of the defendant. The plaintiff had argued that the district court erred because the defendant failed to submit any evidence that it was prejudiced by the plaintiff’s failure to file timely proof of her claim. The plaintiff relied upon California’s so-called “notice-prejudice” rule, which provides that a defense based on an insured’s failure to give timely notice of a claim to the insurer requires the insurer to prove that it suffered substantial, actual prejudice due to the delayed notice. While the parties agreed that the notice-prejudice rule “relates to” an employee benefit plan and therefore falls within ERISA’s general preemption provision, they disputed whether ERISA’s savings clause for “any law of any State which regulates insurance, banking, or securities” applied. The panel concluded that the savings clause did apply because the notice-prejudice rule regulates insurance, and that accordingly ERISA does not preempt California’s notice-prejudice rule.

In sum, Judge Garland’s ERISA jurisprudence, albeit limited, reflects his reputation as a judicial centrist who is not reflexively pro-plaintiff or pro-defendant. The ERISA decisions in which he has participated, either as an author or panel member, are thoughtfully considered and well-reasoned, reveal consensus and bend toward the middle.

Seventh Circuit Does The Math and Sides with Plan Administrator in Pension Calculation Dispute

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By Ronald Kramer and Christopher Busey

On Wednesday, March 16, the Seventh Circuit inspired a collective sigh of relief among actuaries and plan administrators everywhere. In Cocker v. Terminal Railroad Association of St. Louis Pension Plan for Nonschedule Employees, 15-2690, the Court acknowledged the concept of actuarial equivalence in finding that the defendant plan’s calculation of the plaintiff’s pension benefit was correct.

The plaintiff, Roger Cocker, retired from Union Pacific Railroad in 2006, but went to work for Terminal Railroad at that time. Although his normal retirement age under the Union Pacific pension plan would have been in 2019, he elected to receive early pension benefits under that plan beginning in 2009. His monthly benefit under that plan was $1,022.94, rather than the $2,311.73 he would have received had he commenced benefits in 2019. The plaintiff then retired from Terminal in 2010 and claimed benefits pursuant to that employer’s plan. The Terminal plan provided that benefits from any other retirement plan would be offset for the amount “that would have been payable under such other plan in the form of a Single Life Annuity commencing on the Participant’s Normal Retirement Date.” The plan administrator concluded that this offset amount would be $2,311.73, the amount plaintiff would have begun receiving in 2019 based on plaintiff’s total years of work. The Southern District Court of Illinois disagreed, finding that the administrator should only have reduced plaintiff’s pension by the lesser amount he began receiving from the Union Pacific plan in 2009.

Judge Richard Posner—writing for the three-judge Seventh Circuit panel—disagreed with the lower court. The Court recognized that using the lower offset would have provided plaintiff with a windfall because the two amounts were actuarial equivalents. Under the Union Pacific plan, the plaintiff had the same total expected payment over his lifetime regardless of when he elected to commence payments. Forcing the Terminal plan to use the lower offset would place plaintiff in a better position by choosing to begin benefits earlier even though he had worked the same amount. The Court noted that this same conclusion was recently reached by the Eight Circuit in a “virtually identical case.” Ingram v. Terminal R.R. Ass’n of St. Louis Pension Plan for Nonschedule Employees, 812 F.3d 628 (8th Cir. 2016). The Court acknowledged the plan administrator’s conflict of interest, but found it irrelevant because its interpretation of the plan was correct. It thus found no violation of ERISA or the plan in using the higher offset.

While this decision does not break any new ground, it avoids a circuit split that could have been exploited by plaintiffs’ attorneys. It also provides some assurance to plan administrator’s that courts often recognize the concepts on which they routinely base decisions and administer plans.

Supreme Court Concludes That ERISA Preempts State Reporting Requirements

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By Ian Morrison, Sam Schwartz-Fenwick and Jim Goodfellow

In a closely observed federalism battle over the scope of ERISA preemption, the Supreme Court came down on the side of Federal power. Specifically, in Gobeille v. Liberty Mutual Insurance Company, the Court, in a 6-2 ruling, concluded that ERISA preempted a Vermont law.

The state law at issue required all health insurers, including self-insured health plans governed by ERISA, to provide the state with reports relating to claims data (e.g., claims submitted, claims paid) and other information related to health care. The purpose of the statute is to help provide information to consumers and to improve health care in Vermont.

Writing for the majority, Justice Kennedy concluded that because reporting, disclosure, and record keeping are central ERISA functions, and because violation of ERISA’s reporting requirements can result in civil and criminal liability, Vermont’s reporting regime intruded upon a central matter of ERISA plan administration and interfered with nationally uniform plan administration. The majority further observed that only the Secretary of Labor, not the states, may enact reporting requirements for ERISA plans. Justices Thomas and Breyer separately concurred in the Court’s decision. Justice Thomas’ opinion acknowledges that the outcome is correct under existing precedent, but questions whether ERISAs preemption provision is even constitutional or consistent with the limits on preemption applied to other federal laws.

Justices Ginsburg and Sotomayor dissented, concluding that Vermont’s reporting was designed to improve health care in the state, while ERISA’s reporting requirements were designed to eliminate fraud. This divergence in purpose was critical. The dissenters also noted that Vermont’s law would not significantly burden ERISA plans because the information Vermont seeks already is collected by plans, and the Vermont law does not require any additional administrative procedures.

For ERISA plan sponsors and administrator, this case reaffirms the broad preemptive scope of ERISA. That said, states are increasingly passing legislation related to health and retirement plans in the face of Congressional inaction. As this trend continues, it is almost certain that Gobeille will not be the Court’s last word on ERISA preemption.

What Amgen and Tackett Tell Us About ERISA Litigation Trend Lines

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By: Mark Casciari

Two recent Supreme Court decisions, and a recent Sixth Circuit analysis on remand from the Supreme Court, offer a roadmap of sorts on ERISA litigation. In both decisions, the Supreme Court did away with presumptions, and at the same time made it more difficult for plaintiffs to sue.

In Amgen, Inc. v. Harris, 2016 WL 280886 (Jan. 25, 2016), the Supreme Court affirmed its 2014 decision in Fifth Third Bancorp v. Dudenhoeffer, 134 S.Ct. 2459 (2014) that a claim for a breach of fiduciary duty of prudence against ERISA fiduciaries who manage publically-traded employee stock investments in 401(k) plans need not overcome a presumption of prudence. But the Court reversed a Ninth Circuit decision that imposed too low a burden on plaintiffs when arguing that the ERISA fiduciaries should have “done something” to halt a decline in stock values. The Court affirmed this critical Dudenhoeffer pleading standard for plaintiffs: The complaint must “plausibly allege” that “a prudent fiduciary in the same position could not have concluded that [ ] alternative action would do more harm than good.” (Emphasis added; internal quotation marks omitted.) There are two points to note with this affirmation of the Dudenhoeffer phrasing of the plaintiff’s burden: (1) “plausibility” has become at catch-word for specificity, and (2) alleging a negative with specificity is very hard to do.

In Tackett v. M&G Polymers USA, Inc., 2016 WL 240414 (6th Cir. Jan. 21, 2016), the Court of Appeals for the Sixth Circuit remanded a case to the District Court in light of the Supreme Court’s decision in M&G Polymers USA, LLC v. Tackett, 135 S.Ct. 926 (2015) that did away with a presumption of vesting of collectively bargained retiree welfare benefits. The Sixth Circuit instructed the District Court to evaluate the vesting issue under “ordinary principles of contract law.” The Sixth Circuit then listed many of these ordinary principles. Of note is the principle that “traditional rules of contractual interpretation require a clear manifestation of intent before conferring a benefit.” Combining this principle with plausibility means that plaintiffs must allege with specificity a plan sponsor intention to vest. A collective bargaining agreement’s durational language or incorporation of a plan document with a reservation of rights will make it hard for a plaintiff to allege with specificity the existence of vested benefits, even if the other governing language is vague.

So, what do these decisions suggest about the future of ERISA litigation? Expect a tougher road for plaintiffs to state claims upon which relief may be granted. Also expect stock drop and retiree welfare benefits litigation to shine a spotlight on an ERISA plan’s privately-held stock investments, the ERISA duty of loyalty (which was not the focus of the Amgen decision), and plans and collective bargaining agreements that, from a plan sponsor perspective, are badly drafted.

The Magic 8 Ball says –The Supreme Court’s Montanile Decision and The Seemingly Random Evolution of Supreme Court ERISA Remedies Jurisprudence

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It’s a common fact pattern.  A plan participant is injured and received benefits for treatment of his injuries.  The participant then sues a third party for damages based on his injuries.  The plan then seeks to recover a portion of the judgment or settlement in reimbursement.  So common is this fact pattern that the ability of the plan fiduciaries to recover on these facts has been the subject of four Supreme Court decisions.

In the latest decision, Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, No. 14-723 (January 20, 2016), the Court ruled 8-1 that no right of reimbursement exists if the participant already spent all the money received in the personal injury case.

Montanile involved the typical fact pattern, with a twist not present in the prior cases.  Here, the participant claimed to have spent some (if not all) of his personal injury settlement.  He challenged the claim brought by the health plan’s board of trustees under ERISA § 502(a)(3) for “appropriate equitable relief.”  Essentially, he argued that the trustees’ claim wasn’t equitable because he spent the settlement money and no longer held it in an identifiable fund.

To reach what dissenting Justice Ruth Bader Ginsberg characterized as a “bizarre conclusion” that the trustees had no claim, the Court consulted the Magic 8 Ball of ERISA remedies jurisprudence: “standard treatises on equity.”  Op. at 5.  According to these treatises and the Court’s prior decisions, to be an equitable remedy for which a plan fiduciary can sue, the remedy must be one that a court of equity would have typically awarded in the days of the divided bench.  The Court stressed that the claim and the remedy must be equitable in nature.  While the trustees’ claim for enforcement of an equitable lien by agreement was a typical equity claim, the remedy was not.  The Court reasoned that in a court of equity, “a plaintiff ordinarily could not enforce any type of equitable lien if the defendant once possessed a separate, identifiable fund to which the lien attached, but then dissipated it all.” Id. at 9.

All was not lost in this case, however, because the participant’s lawyer admitted at oral argument that a fact question existed as to whether the participant still had any of the settlement money in his possession.  The Court sent the case back to the lower courts to resolve this question and, if undissipated assets still existed, presumably to allow the trustees to recover them.

The practical consequences of the decision will be significant, because it will force plans to race to take action to recover funds faster than the participant can spend the money, which is not the norm now and may not be possible in practice.  The decision may also have consequences for other types of common reimbursement claims (such as for pension and disability benefit overpayments).  In the face of a Supreme Court decision that encourages participants to dissipate assets potentially subject to reimbursement obligations, plan sponsors may need to consider taking steps to avoid payment of benefits until potential overpayments are resolved, and fiduciaries should review and enhance their collection efforts.

Thoughts on Church Plan Status After Kaplan v. Saint Peter’s Healthcare System

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By Mark Casciari and Jennifer Neilsson

The Court of Appeals for the Third Circuit now is the first federal appellate court to decide whether a defined benefit plan sponsored by church-affiliated organization is a church plan under ERISA. The Court held that a hospital affiliated with a church could not establish a church plan exempt from ERISA. Kaplan v. Saint Peter’s Healthcare System, No. 15-1172, 2016 WL 9487719 (3d Cir. Dec. 29, 2015).

Under ERISA Section 3(33)(A), “church plan” means a plan “established and maintained. . . for its employees (or their beneficiaries) by a church or by a convention or association of churches which exempt from tax” (emphasis added). The Court reasoned that church plan status requires that the plan be established by a church, and the Saint Peter’s plan was not established by a church.

The Court found Saint Peter’s arguments regarding legislative history unpersuasive, and actually said that the legislative history more clearly indicated Congress’ intent to that church plan status be narrowly construed. The Court said that the fact that Saint Peter’s had received a private letter ruling from the Internal Revenue Service granting church plan status was not controlling.

Status of Church Plan Litigation. In the past three years, three other district courts have found that only churches can establish exempt church plans– Northern District of Illinois, District of Colorado, and Northern District of California. During a similar time period, three district courts have found that plans established and maintained by church agencies can qualify as exempt church plans– District of Maryland, District of Colorado, and Eastern District of Michigan. The Court of Appeals for the Seventh Circuit has heard arguments regarding the Northern District of Illinois case, but has not yet issued its opinion.

Importance of Cases. Many of the defined benefit plans at issue in the church plan litigation are severely underfunded. If the plans now must suddenly comply with ERISA, because they are not found to be church plans, the plan sponsors would face daunting funding requirements. Saint Peter’s plan was approximately $70 million underfunded at the time the lawsuit was filed, for example. Closing that gap under ERISA will not be easy. Plans newly subject to ERISA also would subject plan sponsors to PBGC scrutiny and impose PBGC insurance premium obligations. These financial strains may lead to corporate restructurings, layoffs, mergers or bankruptcies. The stakes are high, especially at a time when health care costs are rising, and of great concern. Imposing new ERISA costs on plans previously considered church plans will increase financial tensions.

The church plan litigation thus has consequences beyond the narrow issue of ERISA interpretation. Expect the litigation to continue in Courts of Appeals other than the Third Circuit, and expect as well the possibility of consideration by the Supreme Court if a circuit split develops. The Supreme Court might be tempted to resolve this issue not only because of the financial impact of finding church plan status, but also because of First Amendment religious freedom issues that are lurking in these cases.

Another Judge Puts the Breaks on EEOC Wellness Plan Overreach

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By: Mark Casciari

Our firm has acknowledged recently (see that there are some questions about the authority of the EEOC to issue its proposed wellness regulations that claim legitimacy under the Americans with Disabilities Act (ADA). Just before the New Year, Judge Crabb of the U.S. District Court for the Western District of Wisconsin added her voice to those who think the EEOC is overreaching.

The new decision arises out of EEOC v. Flambeau, Inc., No. 14-cv-638 (W.D. Wisc. Dec. 30, 2015).

The EEOC, in particular the Chicago office of the EEOC, argued that Flambeau, Inc. violated the ADA section found at 42 U.S.C. § 12112(d)(4)(A) by conditioning participation in an employer-subsidized, self-funded health plan on completion of a “health risk assessment” and “biometric screening test.” The health risk assessment “required each participant to complete a questionnaire about his or her medical history, diet, mental and social health and job satisfaction.” The biometric test “involved height and weight measurements, a blood pressure test and a blood draw.”

Judge Barbara Crabb summarily rejected the EEOC’s reliance on Section 12112(d)(4)(A). That section prohibits disability-related medical examinations or inquiries that are not job related and consistent with business necessity. The judge reasoned that any EEOC reliance on 12112(d)(4)(A) is trumped by the ADA benefit plan safe harbor in § 12201(c)(2), as long as the wellness provisions are terms in an employer health plan, and are used to help the employer administer and underwrite insurance risks. The judge said that the safe harbor may not apply to protect wellness programs that are not part of a plan, assuming Section 12112(d)(4)(A) invalidates such programs.

Judge Crabb relied on statements of the Flambeau Inc.’s consultants that they used the aggregate wellness data to classify health risks, project plan costs and determine participant premiums. That the wellness terms were not set forth in a summary plan description or collective bargaining agreement was not consequential. Judge Crabb also said that the ADA’s “subterfuge” exception to the ADA benefit plan safe harbor was not triggered because the EEOC offered no evidence that the employer’s wellness terms were used to discriminate against any employee in a non-benefit plan aspect of employment.

EEOC v. Flambeau, Inc. is important because it is yet another rejection of how the EEOC reads the ADA benefit plan safe harbor. (The Court of Appeals for the 11th Circuit also has stated in Seff v. Broward County, 691 F.3d 1221 (2012) that the EEOC position on the ADA benefit plan safe harbor is agency overreach.) The Flambeau decision will help employers with a proactive wellness culture to defend against EEOC attacks.

Three final points are worth making:

  • EEOC v. Flambeau, Inc. could, of course, be appealed to the Court of Appeals for the 7th Circuit.
  • Employers still need to be mindful of nondiscrimination and wellness rules under the Health Insurance Portability and Accountability Act (HIPAA) and under the Genetic Information Nondiscrimination Act (GINA) that apply to employer health plans.
  • Whether wellness plans actually provide a return on investment remains subject to debate. A new study has shown a positive correlation between wellness programs and stock performance, (see, but the return on investment debate continues.

Equitable in Name Only?: Tracing a Long and Tortured Path

Posted in Plan Administration Litigation, Uncategorized

By: Jules Levenson, Meg Troy and Ian H. Morrison

            Knowingly spending money that isn’t yours sounds like a no-no, but depending on how the Supreme Court rules in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan (No. 14-723), certain ERISA plan participants may well have that perverse incentive, owing to obscure and arcane distinctions between legal and equitable relief.

On November 9, the Supreme Court held oral argument in Montanile, a case positioned to shake up accepted ERISA plan practices related to collection of third-party recoveries. The petitioner, (Robert Montanile) was injured in a car accident caused by a drunk driver and the respondent Plan (a multi-employer health and welfare plan) paid substantial amounts to cover related medical expenses. Montanile then sued the other driver involved in the accident and settled the case for $500,000.

Following the settlement (and a $200,000 payment to Montanile’s lawyer), the plan entered into negotiations to recover the $121,000 it had paid for Montanile’s medical expenses, based on its subrogation rights under the plan documents. In the ensuing ERISA action, filed after negotiations broke down, the district court found the settlement proceeds to be an identifiable fund and upon which it could impose an equitable lien in favor of the Plan Trustees. Bd. of Trustees of Nat. Elevator Indus. Health Ben. Plan v. Montanile, 593 F. App’x 903 (11th Cir. 2014)

But there was a catch. It turned out that Montanile had already deposited the money into his general bank accounts and spent it, so any recovery would have been out of his assets, not from the monies specifically obtained in the settlement. So what? Well, ERISA allows only equitable remedies in a case like this, and if the money was not an identifiable fund, there might not be an equitable way to get it.

This nicety of equity jurisprudence set the stage for an oral argument that traveled back in time to the days of the divided courts and the treatises of Justice Story. The key question confounding the Court was what relief was equitable – and when, in the development of equity, did that relief have to originate?

Montanile’s attorney, raising the specter of funds clawed back from innocent beneficiaries, argued for a strict tracing rule, under which the plan could only recover if it could trace settlement money to specific monies, using equity presumptions as to which funds were from the settlement and which were just general assets. This position would permit participants like Montanile to have a windfall from getting their benefits and keeping third-party recoveries for the underlying injuries. That position, also supported by the Solicitor General, seems an about-face from the (losing) position taken by the Solicitor General in Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002), where the government argued for a broad construction of what relief was equitable. Conversely, the plan’s attorney argued for a broad theory of recovery, but was repeatedly pressed on his apparent insistence that the plan could recover the funds under equitable remedies that may have developed too late to be among the remedies “traditionally available in equity” that are available under ERISA.

Administrators and fiduciaries of ERISA health and welfare plans are waiting with baited breath for the decision, which could take several months. In the interim, ERISA plans should keep a close eye on payouts made to beneficiaries who might recover in a subsequent tort suit – and particularly to any settlements received. It may be possible to recover payments even under Petitioner’s tracing theory, but it will require vigilance and quick action. And so we wait to see: what gems are buried in the history of equity?


Don’t be Delinquent — Employer Loses Contribution Case by Default

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By Chris Busey and Mark Casciari

The Court of Appeals for the Seventh Circuit recently affirmed the importance of paying close attention to procedural rules.

In Central Illinois Carpenters Health & Welfare Trust Fund v. Con-Tech Carpentry, LLC, No. 15-1269, __ F.3d __ (7th Cir. Nov. 24, 2015), the plaintiffs, several multiemployer health and welfare benefit funds, sought roughly $70,000 in delinquent contributions from the defendant employer. The defendant failed to answer the complaint within 21 days. The plaintiffs then requested a default judgment, and the defendant again failed to respond. When the company failed to appear at the hearing on the default motion, the district court entered a default judgment. The funds then submitted proof of their damages and the court awarded nearly $100,000 in total damages. Defendant responded by filing a motion under Rules 60(b) and 55(c) of the Federal Rules of Civil Procedure. The district court denied the motion, and the company appealed.

Writing for a three judge panel, Judge Frank Easterbrook affirmed the lower court’s judgment. The company could not rely on Rule 55(c) because it did not seek to set aside the entry of default until after the court entered judgment. The company’s arguments also could not satisfy the Rule 60(b) standard of “excusable neglect.” It first argued that it believed answering was unnecessary because the parties were already discussing settlement. The court responded that a party can both answer a complaint and work towards settlement simultaneously. Defendant also contended that filing a substantive response would waive its right to arbitration. The court held, however, that nothing prevents a party from answering with a demand for arbitration. The defendant thus failed to show excusable neglect and instead decided “to march to the beat of its own drum.”

While this case offers nothing groundbreaking in terms of legal doctrine, it serves as a reminder of the options available to defendants seeking to avoid a default judgment. Once a judgment is entered, a defendant’s only recourse is to seek to avoid the judgment under the difficult Rule 60(b) standard. A right to arbitration does not excuse a default. As Judge Easterbrook said, the governing procedural rules require an answer to the complaint that demands arbitration.


Complicit in Sin: the Burden of the Opt-Out Form

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By: Sam Schwartz-Fenwick and Jules Levenson

Does filling out a form burden religious beliefs? We’re about to find out. On November 6, the Supreme Court agreed to review a group of seven cases (led by No. 14-1418, Zubik v. Burwell) brought by religious non-profit employers. The cases concern whether the contraception mandate in the Affordable Care Act (ACA) violates religious freedom under the Religious Freedom Restoration Act (RFRA).

These cases are a follow-up to Burwell v. Hobby Lobby. There, the Supreme Court held that RFRA allows closely-held for-profit corporations to avoid the ACA’s requirement that they provide insurance coverage for certain contraceptives. Subsequently, the Supreme Court vacated a Seventh Circuit ruling denying a preliminary injunction requested by the University of Notre Dame against the ACA’s contraceptive mandate. The Court ordered the appellate court to evaluate the appropriateness of the injunction in light of Hobby Lobby.

The issue in the Notre Dame matter, and the issue in the cases for which certiorari has now been granted, is whether the contraceptive mandate violates RFRA by requiring religious organization seeking to be excused from providing contraceptive coverage to notify the government in writing of their objection. Under the ACA, if a religious employer objects to providing contraceptive coverage it must submit an objection form to the government. The government then coordinates with the insurance carrier (or third-party administrator) to provide coverage without payment by (or involvement from) the objecting organization.

The religious organizations in these suits argue that requiring them to take an affirmative step (notifying the government of their objection) if they decline to provide contraceptive coverage on religious grounds, violates RFRA. The organizations contend that even though they themselves are not paying for the contraceptive coverage, their direct involvement in the process (by filling out the objection form) still makes them complicit in providing contraception (a practice barred by their sincerely held religious beliefs).

The government in contrast argues that the objection requirement does not violate RFRA, as it the least restrictive means of furthering the government’s substantial interest (the contraceptive mandate).

Until September, every Courts of Appeals to consider the question of whether the mandate improperly burdened the organizations’ beliefs ruled in favor of the government. On September 17, the Eight Circuit broke ranks and held (in a case not yet before the Supreme Court) that requiring the submission of an objection form substantially burdened religious freedom and was not the least restrictive way of furthering the government’s interest in making contraception available. Dordt Coll. v. Burwell, 801 F.3d 946, 950 (8th Cir. 2015).

Oral argument in Zubik has not yet been scheduled. The forthcoming decision will be  significant for employers and plan sponsors, as it will provide insight into what limits the Court is willing to place on a claim of religious freedom by entities (non-profit or otherwise) from generally applicable laws. Stay tuned.