Summary Judgment Rulings in ERISA Retained Asset Account Cases


Earlier this month, U.S. District Courts in Pennsylvania and Maine ruled on summary judgment motions in two putative class actions challenging the use of retained asset accounts in connection with ERISA-governed plans. The court in Edmonson v. Lincoln Nat’l Life Ins. Co., Civil Action No. 10-4919 (E.D. Pa.), granted the defendant-insurer’s motion for summary judgment, while the court in Merrimon v. Unum Life Ins. Co., Civil Action No. 2:10-CV-447-NT (D. Maine), granted partial summary judgment to plaintiffs.

On February 3, 2012, the U. S. District Court for the Eastern District of Pennsylvania granted the defendant-insurer’s motion for summary judgment in Edmonson v. Lincoln Nat’l Life Ins. Co., Civil Action No. 10-4919 (E.D. Pa.). Plaintiff’s putative class action complaint alleged that, by establishing retained asset accounts to pay life insurance proceeds to beneficiaries and investing the funds backing those accounts in its general account, defendant breached its ERISA fiduciary duties. The court had previously denied defendant’s motion to dismiss the complaint for lack of subject matter jurisdiction and for failure to state a claim. (Please click here for Sutherland’s April 6, 2011 Legal Alert.) However, after further development of the facts through discovery, the court held that defendant was entitled to summary judgment on plaintiff’s breach of fiduciary duty claim because: (1) defendant lacked “any authority and control” over the management or disposition of the funds backing plaintiff’s retained asset account; and (2) such funds were not ERISA “plan assets.”

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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