Sixth Circuit Affirms Dismissal of Class Claims Regarding Disability Benefits

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ERISA benefit claims are frequently of only modest size individually, but can become overwhelming in a class context. A decision this week from the Sixth Circuit affirms the dismissal of a putative class-wide disability claim under a company pension plan. The case is noteworthy because the court addressed the merits of the plaintiff’s individual claim before saddling both sides with class discovery and class issues.

In Radell v. Michelin Retirement Plan, Case No. 13-6401 (6th Cir. Aug. 21, 2014), the question was not entitlement to disability benefits, but, rather, whether the company could adjust those benefits for early retirement. The plaintiff contended that if he retired early due to a disability, the plan did not provide for an actuarial reduction. The plan, however, asserted that it did, and awarded a benefit based on the employee’s age (57) rather than the plan’s normal retirement age of 65. After exhausting his administrative remedies, the employee filed suit under ERISA.  He brought claims not only on his own behalf, but on behalf of all disability retirees who had also received actuarial deductions.

Interestingly, the Sixth Circuit found that the plan was ambiguous on this issue, and could be read to support either side. Because of good Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989), language, however, the court deferred to the plan’s interpretation and found that the plan was entitled to summary judgment in its favor. That ruling similarly put an end to the class claims.

The Radell case is a good example of an ERISA class claim that actually went right. ERISA is in many respects a litigation-adverse statute, with emphasis on trust law principles, trial to the court and not a jury, limited damages, and mandatory pre-litigation procedures. The district court and Sixth Circuit, by focusing rightly on the individual claim, prevented the case from taking on a life of its own through burdensome and unnecessary litigation costs. The district court did not simply certify the class upon finding that the parties both had supportable plan interpretations, but delved into the merits to find that under applicable law the plaintiff’s interpretation, while tenable, would not ultimately prevail.

The bottom line: Courts should dispose of ERISA class actions swiftly if the named plaintiff has only a colorable, but not viable, claim.

Topics:  Class Action, Disability, Disability Benefits, ERISA, Putative Class Actions

Published In: Civil Procedure Updates, Civil Rights Updates, Finance & Banking Updates, Labor & Employment Updates

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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