Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Aug. 1 — Standardized-test maker Educational Testing Service can force an employee's widow to arbitrate her claims against the company's retirement plan, a federal judge ruled ( Luciano v. Teachers Ins. & Annuity Ass'n of Am. — Coll. Ret. Equities Fund , 2016 BL 246156, D.N.J., No. 3:15-cv-06726-MAS-DEA, unpublished 7/29/16 ).
The judge upheld a provision in ETS's retirement plan requiring that claims over plan benefits be submitted to a binding arbitration process in which the claimant and the plan “equally share” in the arbitration costs. The widow unsuccessfully argued that this cost-sharing provision violated the Employee Retirement Income Security Act.
The widow's proposed class action challenges the spousal benefit calculations made by ETS and its plan service provider, Teachers Insurance and Annuity Association of America-College Retirement Equities Fund (TIAA-CREF). According to the widow, ETS and TIAA-CREF placed impermissible restrictions on qualified pre-retirement spousal annuities available to surviving spouses of retirement plan participants.
ETS and TIAA-CREF argued that the widow's claims should be dismissed under a mandatory arbitration provision in the company's retirement plan. The widow disagreed, contending that the plan's arbitration provision violated ERISA Section 503's requirement that benefit claimants be given a reasonable opportunity for full and fair review of their claim.
In a July 29 unpublished decision, Judge Michael A. Shipp of the U.S. District Court for the District of New Jersey sided with the companies.
Shipp relied on Bond v. Twin Cities Carpenters Pension Fund , 307 F.3d 704, 8th Cir., 2002 , a split decision by a panel of judges for the U.S. Court of Appeals for the Eighth Circuit.
In Bond, two judges agreed that an ERISA plan participant was denied a “full and fair review” of his claim for pension benefits under Section 503 because the plan required him to pay half the costs associated with arbitrating an appeal of his denied benefit claims. The dissenting judge in Bond found Section 503 inapplicable because it required only full and fair review by a plan fiduciary, as opposed to any review by an outside body.
In weighing the widow's claims against ETS and TIAA-CREF, Shipp adopted the reasoning of the Bond dissent and ordered the widow to submit her claims to mandatory arbitration.
Despite this ruling, Shipp said in a footnote that the widow wouldn't be precluded from arguing in the future that the mandatory arbitration provision “would deny her a forum to vindicate her statutory rights.”
Post Polak Goodsell MacNeill & Strauchler PA and Cohn Lifland Pearlman Herrmann & Knopf LLP represented the widow. Walsh Pizzi O'Reilly Falanga LLP represented TIAA-CREF. Cozen O'Connor represented ETS.
To contact the reporter on this story: Jacklyn Wille in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com
Text of the decision is at http://www.bloomberglaw.com/public/document/Luciano_v_Teachers_Ins__Annuity_Assn_of_Am__Coll_Ret_Equities_Fun.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)