The U.S. Court of Appeals for the Eleventh Circuit recently affirmed a federal district court’s grant of summary judgment to Allstate Insurance Company in Klaas v. Allstate Ins. Co., 2021 U.S App. LEXIS 38473 (11th Cir. Dec. 28, 2021). In that case, retired Allstate employees sued in a consolidated ERISA class action suit over Allstate’s decision to stop paying premiums on retirees’ life insurance policies.
As part of its employee welfare benefit plan, Allstate Insurance Company (“Allstate”) historically offered certain retired employees life insurance at no cost to them. Allstate’s summary plan descriptions (SPDs) advertised retiree life insurance benefits at “no further cost” to the retirees. However, Allstate’s SPDs also contained reservations of rights, which reserved to Allstate the right to change or terminate the plan terms at any time, and statements that that plan participants and their beneficiaries had no vested rights in the plan benefits. In 2013, Allstate notified all plan participants who had retired after 1990 that they would stop paying their life insurance premiums at the end of 2015.
One putative class of retired employees filed suit against Allstate in September 2013. Another putative class filed suit in March 2015. Both putative classes alleged violations of ERISA § 502(a)(1)(B) by Allstate for canceling the insurance benefits and violations of its fiduciary duty under ERISA § 502(a)(3) for making oral and written misrepresentations about the benefits. The federal district court granted summary judgment in favor of Allstate on both claims, and the plaintiffs appealed to the Eleventh Circuit.
The Eleventh Circuit first considered the claims that Allstate violated ERISA § 502(a)(1)(B). The Court agreed with the lower court that SPDs gave Allstate the right to change or terminate the plan terms at any time and clarified that the plan participants had no vested rights under the plan. Accordingly, since SPDs are the “statutorily established means of informing participants of the terms of plan and its benefits,” and the SPDs, in this case, were clear and unambiguous, the plaintiffs failed to establish any violation of ERISA § 502(a)(1)(B).
Regarding the second claim of breach of fiduciary duty under ERISA § 502(a)(3), the Eleventh Circuit found that ERISA § 413 barred the claims. This section establishes a statute of repose that bars claims for breach of fiduciary duty “after the earlier of (1) six years of the breach or (2) three years after the earliest date on which the plaintiff had actual knowledge of the breach” with an exception for claims based on fraud or concealment.
The Court reasoned that since Allstate last made representations about paying life insurance premiums for retirees in 2006, and a putative class did not file suit until 2013, then § 413 barred the claims. Therefore, since more than six years had passed since the last alleged breach had occurred, plaintiffs could not pursue their ERISA claims based on breach of fiduciary duty.
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