18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 313 (vii) Seventh Circuit Berceanu, et al. v. UMR, Inc., 2021 U.S. Dist. LEXIS 239350 (W.D. Wis. Dec. 15, 2021). Plaintiffs, a group of participants in two healthcare plans, filed a class action alleging that Defendant, the plans’ administrator, maintained coverage guidelines that were overly restrictive, which contravened generally accepted standards of medical care and therefore violated the plan requirements in violation of the ERISA. Plaintiffs filed a motion for class certification of all plan members whose requests for coverage or residential treatment services for mental illness or substance use disorder was denied by Defendant. The Court granted the motion. The Court found that Plaintiffs submitted evidence that at least 1,600 individuals were denied coverage by Defendant, the vast majority of which involved a denial due to the application of the allegedly overly restrictive guidelines. Hence, Plaintiffs established the numerosity requirement. The Court agreed with Plaintiffs’ position that the case presented a common challenge to whether Defendant’s guidelines violated the terms of the plans at issue by being more restrictive than the generally accepted standards of medical practice. Id . at *12. Accordingly, the Court concluded that Plaintiffs met their burden of demonstrating the commonality requirement. Defendant contended that Plaintiffs were not typical of the proposed class members because they exhausted their administrative review, whereas most putative class members had not. Id . at *15. The Court rejected that argument. It found that Defendant could not establish why the difference would distinguish the named Plaintiffs’ claims and right to general, equitable remedies. Id . at *16. The Court also determined that Plaintiffs and Plaintiffs’ counsel were sufficiently adequate to represent the proposed class. Turning to the Rule 23(b) requirements, the Court reasoned that since Plaintiffs were not requesting monetary damages, certifying the case under Rule 23(b)(2) would allow for Plaintiffs’ claims to be fully resolved. Id . at *18. Thus, there would be no individual issues of liability, and any relief provided would go no further than entry of an injunction requiring a remand to Defendant for a review of individual class member’s denials under revised guidelines that complied with the ERISA. Id . at *19. For these reasons, the Court held that a class action would the appropriate method of adjudication, and it thereby granted Plaintiffs’ motion for class certification. Godfrey, et al. v. Greatbanc Trust Co., 2021 U.S. Dist. LEXIS 31932 (N.D. Ill. Feb. 21, 2021). Plaintiffs, a group of participants in McBride & Son Employee Stock Ownership Plan (“the Plan”), filed a putative class action alleging that Defendants, the Plan’s sponsor, corporate officers of the sponsor, and the Plan’s trustee, breached their fiduciary duties under the ERISA by conducting transactions that stripped the Plan of its valuable assets and converted those assets for their own benefit. Id . at *2. Plaintiffs alleged Defendants’ conduct in connection with a 2013 business reorganization and 2017 stock sale breached their fiduciary duties. Plaintiffs moved for class certification, which the Court granted. The Court held that the class size of 171 members met the numerosity requirement. The Court also ruled that Plaintiffs met the commonality requirement because their claims all were based on Defendants’ identical actions in: (i) the 2013 transaction; and (ii) the 2017 transaction. Defendants argued that Plaintiffs failed to meet the typicality requirement with respect to claims concerning the 2017 transaction because of "internal class conflict," inasmuch as those who voted for the 2017 transaction had distinct interests from the named Plaintiffs, who either abstained from the vote or did not vote. Id . at *14. The Court rejected Defendants’ argument. It found that all class members were all members of the Plan during the proposed class period, and were making the same claims. Id . at *15. The Court also held that Plaintiffs met the adequacy requirement because they had a common interest and sought to recover for the same injury. Finally, the Court concluded that class certification under Rule 23(b)(1) was appropriate because the Plaintiffs brought their claims on behalf of the Plan and adjudication of the lawsuit would be dispositive of the interests of the other participants’ claims on behalf of the Plan. Id . at *22. For these reasons, the Court granted Plaintiffs’ motion for class certification. Rush, et al. v. Greatbanc Trust Co. , 2021 U.S. Dist. LEXIS 112312 (N.D. Ill. June 16, 2021). Plaintiff filed a class action asserting claims under the ERISA against Defendants for breach of fiduciary duty, engaging in prohibited transactions, and knowing participation in and receipt of benefits from ERISA. The lawsuit arose out of the sale of Segerdahl to ICV Partners, LLC, an outside investment capital firm. The ESOP owned 100% of the outstanding common stock of Segerdahl at the time of the sale, so that employees who participated in the ESOP had a significant interest in ensuring that the company was sold for the best possible price. Ultimately, Segerdahl was sold to ICV Partners for $265 million. Plaintiff asserted that Defendants failed to sell to competitors, which would have been more profitable, because Segerdahl’s executives sought to retain their own jobs and capture transaction bonuses through the sale with ICV Partners at the expense of the ESOP