The ERISA Litigation Newsletter - February 2016

Editor's Overview

This month's article reviews a few non-ERISA cases before the U.S. Supreme Court, which may, depending on the breadth of the decisions, impact ERISA litigation. First, in Spokeo, Inc. v. Robins, the Court heard arguments on whether a plaintiff must have suffered individualized injury to assert a claim for statutory and regulatory violations. Second, in Tyson Foods, Inc. v. Bouaphakeo, the Court is considering two class certification issues under Federal Rule of Civil Procedure 23(b)(3): (i) whether a class may be certified where liability and damages will be determined with statistical techniques that presume all class members are identical to the average observed in a sample, and (ii) whether a class may be certified when the putative class includes members who were not injured and have no legal right to any damages. Third, in Campbell-Ewald Co. v. Gomez, the Court resolved a split among the circuits in deciding that a claim is not mooted as to a named plaintiff and a putative class after a defendant makes an unaccepted offer of complete relief.

In the Rulings, Filings, and Settlement of Interest, we review the Supreme Court's recent decision holding that an ERISA plan cannot enforce an equitable lien against general assets, wellness programs, retiree health benefit claims and IRS rules on safe harbor plans.

View From Proskauer: A Review of Current Supreme Court Cases That May Impact ERISA Litigation1

By Lindsey Chopin

This term, the Supreme Court heard argument in three cases which, although not arising under ERISA, could have the potential to significantly impact ERISA litigation.

First, in Spokeo, Inc. v. Robins, the Court heard arguments on whether a plaintiff must have suffered individualized injury to assert a claim for statutory and regulatory violations (213 PBD 213, 11/4/15).

Second, in Tyson Foods, Inc. v. Bouaphakeo, the Court is considering two class certification issues under Federal Rule of Civil Procedure 23(b)(3): (i) whether a class maybe certified where liability and damages will be determined with statistical techniques that presume all class members are identical to the average observed in a sample, and (ii) whether a class may be certified when the putative class includes members who were not injured and have no legal right to any damages.

Third, in Campbell-Ewald Co. v. Gomez, the Court resolved a split among the circuits in deciding that a claim is not mooted as to a named plaintiff and a putative class after a defendant makes an unaccepted offer of complete relief.

We briefly review each of these non-ERISA cases below and provide some perspective on their potential impact in ERISA litigation.

Article III Standing

A Supreme Court decision in a Fair Credit Reporting Act (FCRA) case may impact whether ERISA plan participants have Article III constitutional standing to bring claims based on a statutory violation of ERISA. In Spokeo, Inc. v. Robins, Dkt. No. 13-339, the Court is considering whether a statutory violation - without more - is sufficient to confer Article III standing on a person who the underlying statute expressly authorizes to file suit for such violations. Thomas Robins sued Spokeo, a website that aggregates publicly available information about individuals. He alleged that the website violated various provisions of the FCRA by publishing false information about the status of his employment, wealth, and education, all of which impeded his job search.

The Ninth Circuit held that Congress created a private right of action to redress statutory violations, and that Mr. Robins had sufficiently alleged injury to himself as a result of these violations (Robins v. Spokeo, Inc., 742F.3d 409 (9th Cir. 2014)). In so holding, the court determined that this was not a case in which Article III standing had been manufactured to elevate undifferentiated, collective injuries into statutory rights. Instead, Mr. Robins alleged that Spokeo had violated his statutory rights by publishing false information about him, and that these statutory rights protected interests that were" sufficiently concrete and particularized" for Article III purposes.

Spokeo sought review from the Supreme Court and, over objections from the Solicitor General among others, the Supreme Court granted certiorari. During oral argument, it was not clear how the Court will decide the issue, although the questioning indicated three possible outcomes. First, Justices Sotomayor and Ginsburg seemed willing to support the proposition that standing exists because Congress provided a legal right by statute and the statute was violated, without any further showing of harm (i.e. standing exists if there is proof that the defendant published inaccurate information in violation of the statute, without any need to show, for example, that a third party relied on such information and that such reliance harmed the plaintiff). Second, other Justices, including Chief Justice Roberts and Justice Scalia, seemed to believe that a mere violation of a statutorily created legal right is not enough to confer standing. Rather, Plaintiff must also prove actual harm, such as proof that the plaintiff was not selected for a job based on the false information in his credit report. Third, others, including Justices Kagan and Breyer, seemed inclined to avoid answering whether a plaintiff must prove actual harm to enjoy standing because they believed that the dissemination of false information about the plaintiff is in and of itself a concrete, actual harm - even if it is merely "psychic harm." Thus, in their view, Robinssuffered harm and has standing.

Proskauer's Perspective

Spokeo may have a significant impact on theability of planparticipants to seek relief from plan fiduciaries for statutory and regulatory violations on both an individualized and class-wide basis. ERISA authorizes plan participants to commence actions forviolations of the statute, such as notice violations. In many instances, the participant may have suffered no tangible harm as a result of the violation and, even if he or she did, there is an issue of whether such harm can be established on a class-wide basis. Depending on the outcome of Spokeo, the viability of these types of lawsuits may be called into question.

Class Certification

Federal Rule of Civil Procedure 23(b)(3) allows courts to certify a class where plaintiffs' claims involve "questions of law or fact common to class members predominate over any questions affecting only individual members," and class adjudication is superior to other methods. In two recent decisions, the Supreme Court increased the rigor needed to maintain class actions. First, in Wal-Mart v. Dukes, 131S. Ct. 2541(2011), it rejected a "trial by formula" approach, i.e. the use of statistics to extrapolate data from a sample of workers to the class as a whole. Second, in Comcast v. Behrend, 133S. Ct. 1426(2013), it held that the damages model must be consistent with the liability model - i.e., a model purporting to serve as evidence of damages in a class action must measure damages attributable to the class-wide theory of harm.

The Supreme Court is confronting another potential hurdle to class certification in Tyson Foods, Inc. v. Bouaphakeo, Dkt. No. 14-1146. There, employees of Tyson Foods sued the company for violations of the Fair Labor Standards Act (FLSA) and Iowa state law, arguing that they were undercompensated for time spent walking to their work sites and "donning and doffing" protective equipment necessary to perform their jobs. To prove liability and damages, plaintiffs first determined the average donning, doffing and walking time for a sample of workers, even though it was established...