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Case 2:20-cv-10914-CAS-JEM Document 40-1 Filed 02/16/21 Page 1 of 34 Page ID #:192

1 Myron D. Rumeld*
mrumeld@proskauer.com
2 Neil V. Shah*
nshah@proskauer.com
3 Anastasia S. Gellman*
agellman@proskauer.com
4 PROSKAUER ROSE LLP
Eleven Times Square
5 New York, NY 10036
Tel.: 212.969.3000
6 Fax: 212.969.2900
7 Scott P. Cooper (SBN 96905)
scooper@proskauer.com
8 Jennifer L. Jones (SBN 284624)
jljones@proskauer.com
9 PROSKAUER ROSE LLP
2029 Century Park East, Suite 2400
10 Los Angeles, California 90067
Tel.: 310.557.2900
11 Fax: 310.557.2193
12 Jani K. Rachelson*
jrachelson@cwsny.com
13 Evan R. Hudson-Plush*
ehudson-plush@cwsny.com
14 COHEN, WEISS AND SIMON LLP
900 Third Avenue, Suite 2100
15 New York, NY 10022-4869
Tel.: 212.563.4100
16 Fax: 646.473.8254
17 * admitted pro hac vice
18 Attorneys for all Defendants
except Bob Kaliban
19
UNITED STATES DISTRICT COURT
20
CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
21
EDWARD ASNER, et al., Case No. 2:20-cv-10914-CAS-JEM
22
Plaintiffs, MEMORANDUM OF POINTS AND
23 AUTHORITIES IN SUPPORT OF
vs. DEFENDANTS’ MOTION TO
24 DISMISS COMPLAINT
THE SAG-AFTRA HEALTH FUND,
25 et al., Date: May 3, 2021
Time: 10:00 a.m.
26 Defendants. Courtroom: 8D
Judge: Hon. Christina A. Snyder
27
Action Filed: December 1, 2020
28

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS’


MOTION TO DISMISS COMPLAINT (2:20-cv-10914-CAS-JEM)
Case 2:20-cv-10914-CAS-JEM Document 40-1 Filed 02/16/21 Page 2 of 34 Page ID #:193

1 TABLE OF CONTENTS
2 Page

3 PRELIMINARY STATEMENT .............................................................................. 1


4 STATEMENT OF FACTS .......................................................................................2
5 LEGAL STANDARD FOR MOTION TO DISMISS ............................................. 7
6 ARGUMENT ...........................................................................................................8
7 I. PLAINTIFFS’ BREACH OF FIDUCIARY DUTY CLAIMS
FAIL BECAUSE THEY ARE NOT DIRECTED AT
8
FIDUCIARY CONDUCT ..................................................................... 8
9
A. Merger and Plan Amendment are Plan Design/Settlor
10 Decisions .....................................................................................8
11
B. The Trustees’ Actions With Respect to Collective
12 Bargaining Negotiations Are Not Actionable Under
ERISA .......................................................................................14
13
14 II. PLAINTIFFS HAVE NO VIABLE CLAIMS FOR BREACH
OF FIDUCIARY DUTY PREMISED ON ALLEGED
15 VIOLATION OF AGE DISCRIMINATION LAWS .........................16
16
A. Plaintiffs Cannot Use ERISA’s Fiduciary Rules to
17 Improperly Circumvent the Age Discrimination Laws ............ 17
18 B. The Benefit Changes Are Not Actionable As
19 Violations of Any Age Discrimination Laws ...........................20
20 1. The Requirement that Retired, Medicare-Eligible
21 Participants Qualify for Primary Coverage Based on
Sessional Earnings Only .................................................20
22
2. Change in Medicare-Secondary Coverage .....................23
23
24 III. PLAINTIFFS FAIL TO STATE A CLAIM FOR CO-
FIDUCIARY LIABILITY ..................................................................25
25
CONCLUSION ......................................................................................................25
26
27
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1 TABLE OF AUTHORITIES

2 Page(s)
3 CASES
4
Adams v. Avondale Indus., Inc.,
5 905 F.2d 943 (6th Cir. 1990) ..........................................................................8, 10
6 Ahlmeyer v. Nev. Sys. of Higher Educ.,
7 555 F.3d 1051 (9th Cir. 2009) ............................................................................18
8 Ameritech Benefit Plan Comm. v. Commc’n Workers of Am.,
220 F.3d 814 (7th Cir. 2000) ..............................................................................18
9
10 Ashcroft v. Iqbal,
556 U.S. 662 (2009) ........................................................................................8, 25
11
12 Bakos v. Am. Airlines, Inc.,
266 F. Supp. 3d 729 (E.D. Pa. 2017), aff’d, 748 F. App’x 468 (3d Cir.
13 2018) ...................................................................................................................16
14 Beck v. PACE Int’l Union,
15 551 U.S. 96 (2007) ..............................................................................................11
16 Bell Atl. Corp. v. Twombly,
17 550 U.S. 544 (2007) ..............................................................................................7

18 Biggs v. N. Cent. United Tel. Co.,


No. C-2-95-913, 1997 WL 829173 (S.D. Ohio Oct. 15, 1997) ..........................19
19
20 Bins v. Exxon Co. U.S.A.,
220 F.3d 1042 (9th Cir. 2000) .............................................................................. 9
21
Candelore v. Tinder, Inc.,
22 228 Cal. Rptr. 3d 336 (Cal. Ct. App. 2018) ........................................................22
23
Carson v. Lake County,
24 865 F.3d 526 (7th Cir. 2017) ..............................................................................21
25 Cent. States, Se. & Sw. Areas Pension Fund v. Gerber Truck Serv., Inc.,
26 870 F.2d 1148 (7th Cir. 1989) ............................................................................24
27
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Collins v. Mfrs. Hanover Tr. Co.,


1
542 F. Supp. 663 (S.D.N.Y. 1982) .....................................................................19
2
Collins v. Teamsters Benefit Tr.,
3 No. 4:12-cv-02984 YGR, 2013 WL 12343709 (N.D. Cal. Dec. 27,
4 2013) .............................................................................................................11, 13
5 Conkright v. Frommert,
559 U.S. 506 (2010) ..............................................................................................7
6
7 Curtiss-Wright Corp. v. Schoonejongen,
514 U.S. 73 (1995) ....................................................................................8, 12, 24
8
9 Elser v. I.A.M. National Pension Fund,
684 F.2d 648 (9th Cir. 1982) ..............................................................................13
10
Ely v. Bd. of Trs. of Pace Indus. Union-Mgmt. Pension Fund,
11 No. 3:18-cv-00315-CWD, 2019 WL 438338
12 (D. Idaho Feb. 4, 2019) ...........................................................................11, 13, 25
13 Endries v. Bd. of Dirs. of the Motion Picture Indus. Health Plan,
14 No. 2:20-cv-06347-RGK-AGR, 2020 WL 6253320 (C.D. Cal. Oct. 7,
2020) .......................................................................................................10, 12, 13
15
Fifth Third Bancorp v. Dudenhoeffer,
16 573 U.S. 409 (2014) ..............................................................................................7
17
Flanigan v. Gen. Elec. Co.,
18 242 F.3d 78 (2d Cir. 2001) .................................................................................11
19 Fulghum v. Embarq Corp.,
20 785 F.3d 395 (10th Cir. 2015) ............................................................................23
21 Galante v. Fin. Indus. Regul. Auth., Inc.,
22 No. 16-5198, 2018 WL 2063748 (E.D. Pa. May 2, 2018) .................................18

23 Godinez v. CBS Corp.,


81 F. App’x 949 (9th Cir. 2003) .........................................................................13
24
25 Hall v. Hill Refrigeration, Inc.,
36 F. Supp. 2d 1185 (C.D. Cal. 1999) ..........................................................14, 15
26
Harris v. County of Orange,
27
902 F.3d 1061 (9th Cir. 2018) ................................................................21, 22, 24
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Hartline v. Sheet Metal Workers’ Nat’l Pension Fund,


1
286 F.3d 598 (D.C. Cir. 2002) ............................................................................10
2
Hughes Aircraft Co. v. Jacobson,
3 525 U.S. 432 (1999) ..................................................................................9, 11, 12
4
Janese v. Fay,
5 692 F.3d 221 (2d Cir. 2012) ...............................................................................10
6 Johnson v. Riverside Healthcare Sys.,
7 534 F.3d 1116 (9th Cir. 2008) ............................................................................22
8 Ky. Ret. Sys. v. EEOC,
9 554 U.S. 135 (2008) ............................................................................................21

10 Lefevre v. Niagara Mohawk Power Corp.,


610 F. Supp. 2d 212 (N.D.N.Y. 2009)................................................................23
11
12 Lewis v. Pac. Mar. Ass’n,
No. C 06-04941 CRB, 2007 WL 2429554 (N.D. Cal. Aug. 24, 2007) .............. 22
13
Lockheed Corp. v. Spink,
14 517 U.S. 882 (1996) ..............................................................................4, 9, 12, 13
15
Malia v. Gen. Elec. Co.,
16 23 F.3d 828 (3d Cir. 1994) ...........................................................................11, 12
17 Milwaukee Area Joint Apprenticeship Training Comm. for the Elec.
18 Indus. v. Howell,
67 F.3d 1333 (7th Cir. 1995) ..............................................................................10
19
20 Nance v. Maxwell Fed. Credit Union (MAX),
186 F.3d 1338 (11th Cir. 1999) ..........................................................................18
21
NLRB v. Amax Coal Co.,
22 453 U.S. 322 (1981) ............................................................................................14
23
Nw. Airlines, Inc. v. Phillips,
24 675 F.3d 1126 (8th Cir. 2012) ............................................................................21
25 Pallas v. Pacific Bell,
26 940 F.2d 1324 (9th Cir. 1991) ............................................................................13
27
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Paulsen v. CNF Inc.,


1
559 F.3d 1061 (9th Cir. 2009) ............................................................................11
2
Pegram v. Herdrich,
3 530 U.S. 211 (2000) ..............................................................................................8
4
Phillips v. Alaska Hotel & Rest. Emps. Pension Fund,
5 944 F.2d 509 (9th Cir. 1991) ..............................................................................24
6 Pope v. Cent. States Se. & Sw. Areas Health & Welfare Fund,
7 27 F.3d 211 (6th Cir. 1994) ................................................................................10
8 Raya v. Barka,
9 No. 19-cv-2295-WQH-AHG, 2020 WL 3469374 (S.D. Cal. June 25,
2020) ...................................................................................................................25
10
Reilly v. Charles M. Brewer, Ltd. Profit Sharing Plan & Tr.,
11 No. CIV 02-2218-PHX-BTM, 2006 WL 8447738 (D. Ariz. Feb. 7,
12 2006) ...................................................................................................................11
13 Ronches v. Dickerson Emp. Benefits, Inc.,
14 No. CV 09-04279 MMM (PJWx), 2009 WL 10669571 (C.D. Cal.
Oct. 30, 2009) .....................................................................................................10
15
Saeyoung Vu v. Fashion Inst. of Design & Merch.,
16 No. CV 14-08822 SJO (Ex), 2015 WL 13545179 (C.D. Cal. Apr. 23,
17 2015) ...................................................................................................................17
18 Shaw v. Delta Air Lines, Inc.,
19 463 U.S. 85 (1983) ........................................................................................17, 18

20 United Indep. Flight Officers, Inc. v. United Air Lines, Inc.,


756 F.2d 1262 (7th Cir. 1985) ............................................................................15
21
22 Varity Corp. v. Howe,
516 U.S. 489 (1996) ....................................................................................7, 9, 19
23
Vaughn v. Air Line Pilots Ass’n, Int’l,
24 604 F.3d 703 (2d Cir. 2010) ...............................................................................16
25
Walling v. Brady,
26 125 F.3d 114 (3d Cir. 1997) ...............................................................................10
27
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Walsh v. Schlecht,
1
429 U.S. 401 (1977) ............................................................................................24
2
White v. Chevron Corp.,
3 752 F. App’x 453 (9th Cir. 2018) cert. denied,
4 139 S. Ct. 2646 (2019) ....................................................................................7, 13
5 Zombro v. Balt. City Police Dep’t,
868 F.2d 1364 (4th Cir. 1989) ............................................................................18
6
7 STATUTES
8 29 U.S.C. § 186(c)(5) .........................................................................................3, 13
9 29 U.S.C. § 628 ......................................................................................................23
10
29 U.S.C. § 1002(16)(B), ERISA § 3(16)(B).........................................................10
11
29 U.S.C. § 1002(21)(A), ERISA § 3(21)(A) .......................................................... 9
12
13 29 U.S.C. § 1052(a)(2), ERISA § 202(a)(2) ..........................................................17

14 29 U.S.C. § 1105(a), ERISA § 405(a) ....................................................................25


15 29 U.S.C. § 1106(a)(1), ERISA § 406(a)(1) ..........................................................13
16 42 U.S.C. § 6102 ....................................................................................................22
17
42 U.S.C. § 6103(b)(1)(A) .....................................................................................22
18
Affordable Care Act ...........................................................................................7, 22
19
20 Age Discrimination in Employment Act .........................................................passim

21 ERISA..............................................................................................................passim
22 OTHER AUTHORITIES
23 29 C.F.R. § 1625.32(b) .....................................................................................23, 24
24
29 C.F.R. § 1625.32 Q&A1..............................................................................23, 24
25
119 CONG. REC. S30, 409-10 (1973)......................................................................17
26
27 Cal. Civ. Code § 51.5 .........................................................................................7, 22

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Federal Rule of Civil Procedure 12(b)(6) ........................................................1, 2, 7


1
2 SAG-AFTRA, About webpage, https://www.sagaftra.org/about (last
visited Feb. 15, 2021) .........................................................................................16
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
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1 Defendants 1 the SAG-AFTRA Health Fund (the “SAG-AFTRA Plan” or


2 “Plan”), the former Board of Trustees of the Screen Actors Guild-Producers Health
3 Plan (the “SAG Board of Trustees”), the Board of Trustees of the SAG-AFTRA Health
4 Fund (the “SAG-AFTRA Board of Trustees”), and the individually named trustees of
5 the two Boards (the “SAG Trustees” and “SAG-AFTRA Trustees,” collectively, the
6 “Trustees”) respectfully submit this memorandum of points and authorities in support
7 of their motion to dismiss Plaintiffs’ Complaint (Dkt. 1) pursuant to Federal Rule of
8 Civil Procedure 12(b)(6).
9 PRELIMINARY STATEMENT
10 A group of retired Plan participants, and the spouse of a deceased participant,
11 commenced this breach of fiduciary duty lawsuit under the Employee Retirement
12 Income Security Act (“ERISA”) against the present trustees of the SAG-AFTRA Plan
13 and the former trustees of the predecessor Screen Actors Guild-Producers Health Plan
14 (“SAG Plan”). The lawsuit follows recent changes to the Plan’s benefit provisions to
15 address a projected funding shortfall. Plaintiffs claim that the amendments improperly
16 discriminate against them on the basis of age. They also contend that the funding
17 shortfall necessitating the changes is due to: the 2016 decision to merge the SAG Plan
18 with the AFTRA Health Plan (“AFTRA Plan”)—a decision that Plaintiffs claim was
19 imprudently made to serve the interests of the SAG-AFTRA Union (the “Union”); and,
20 more recently, the SAG-AFTRA Trustees’ failure to alert Union negotiators and Union
21 members of the Plan’s financial condition before the Union entered into collective
22 bargaining agreements that allegedly set the negotiated employer contributions to the
23 Plan at too low a level to sustain the existing benefit structure. Even without
24 considering the merits of Plaintiffs’ claims, the Court should dismiss them because they
25 are not properly brought as claims for breach of fiduciary duty under ERISA.
26
1
27 This motion is filed on behalf of all named defendants except Bob Kaliban,
who passed away following the filing of the Complaint.
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1 The decisions concerning the Plan merger and amendments are settlor—not
2 fiduciary—decisions. As such, these decisions are not actionable as breaches of
3 fiduciary duty under ERISA. The Supreme Court has so held in a series of rulings, and
4 all five circuit courts that have addressed the issue have applied the distinction between
5 settlor and fiduciary functions in the multiemployer plan context. Whatever actions
6 certain of the Trustees allegedly took—or failed to take—in connection with collective
7 bargaining negotiations are likewise unassailable under ERISA because these actions
8 were taken in the Trustees’ capacities as union or management negotiators, not plan
9 fiduciaries.
10 Plaintiffs’ challenge to the Plan amendments on grounds of age discrimination is
11 inappropriate for additional reasons. First, ERISA was not intended to address issues
12 of age discrimination, and thus should not be used as a vehicle to circumvent the
13 procedural prerequisites for filing suit under the laws that were intended to address
14 these issues. Second, whether challenged under the age discrimination laws or ERISA,
15 Plaintiffs’ claims are without merit because the Plan amendments distinguish among
16 participants based on their status as pensioners and as Medicare-eligible retirees, not
17 age. As such, they are not discriminatory. In fact, Equal Employment Opportunity
18 Commission (“EEOC”) regulations adopted pursuant to the Age Discrimination in
19 Employment Act (“ADEA”) explicitly exempt these types of decisions from scrutiny
20 under the ADEA.
21 For these and other reasons, the Complaint should be dismissed in its entirety.
22 STATEMENT OF FACTS
23 This Statement of Facts is based on the allegations in the Complaint, which are
24 presumed true solely for the purposes of this motion, and the documents attached to the
25 Declaration of Myron D. Rumeld (“Rumeld Decl.”), which may be considered on a
26 Rule 12(b)(6) motion under the “incorporation by reference” doctrine, as set forth in
27 the accompanying Request for Judicial Notice.
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1 The Plan
2 The Plan is a self-insured multiemployer welfare fund governed by the Taft-
3 Hartley Act, see 29 U.S.C. § 186(c)(5), and ERISA. Rumeld Decl., Ex. 1 at 8, 99. It is
4 jointly administered by a group of union-designated and employer-designated trustees
5 who have equal voting power. Compl. ¶ 44; see also 29 U.S.C. § 186(c)(5). It is
6 funded primarily through contributions made by contributing employers who are
7 parties to collective bargaining agreements with the Union, which represents
8 performers and other media professionals throughout the country. Compl. ¶ 44. The
9 contributions made to the Plan are generally calculated as a percentage of covered
10 earnings, which consist of both “sessional earnings”—meaning wages earned during a
11 day in which the performer renders services; and “residual earnings”—meaning
12 delayed compensation the performers receive for their prior work when it is exhibited
13 at a later point in another medium or in reruns. Compl. ¶ 71. Although contributions
14 are required for earnings up to specified maximum amounts, a participant for whom
15 contributions are made will not be eligible for benefits if she does not satisfy the
16 eligibility requirements described below.
17 Prior Plan Merger
18 The Plan is the product of a merger of the AFTRA Plan into what was previously
19 the SAG Plan, effective as of January 1, 2017. Compl. ¶¶ 43-44, 47. The merger of
20 these two plans took place nearly 5 years after the merger of the SAG and AFTRA
21 unions. 2 Compl. ¶ 42.
22 Benefits Provided by the Plan Before 2020
23 The Plan provides benefits to both (a) active employees engaged in employment
24 covered under the collective bargaining agreements, and (b) retired employees. See
25 Rumeld Decl., Ex. 2 at 127-29, 142-47. An employee’s entitlement to benefits
26
2
27 “SAG” was the Screen Actors Guild. AFTRA was the “American Federation
of Television and Radio Artists.”
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1 generally depends on having the requisite level of covered earnings reported to the
2 Plan, with corresponding contributions from the employers. See id. at 127-31. After
3 the merger of the plans but prior to the 2020 Plan amendments (discussed below),
4 participants could qualify for benefits under one of two levels of coverage, referred to
5 as Plan I or Plan II. In 2020, covered earnings reported to the Plan of at least $34,330
6 qualified a participant for Plan I. For Plan II, the earnings threshold was $17,690, but
7 only $13,000 if the Employee was at least 40 years old and had 10 years of credits
8 earned under specified collective bargaining agreements. See id. at 127-28. For
9 purposes of satisfying these eligibility thresholds, both sessional and residual earnings
10 were considered. See id. at 126-28.
11 Medicare-eligible participants could continue to receive the same benefits
12 available to pre-Medicare eligible participants if they met the earnings thresholds—
13 provided that they had at least one dollar of sessional earnings reported to the Plan. See
14 id. at 217. If they did not have any sessional earnings, they could still qualify for
15 coverage secondary to Medicare if they had the requisite residual earnings. Id. In
16 addition, Senior Performers—those who were at least 65 years old and receiving a
17 pension and, generally, had at least 20 service credits—could receive this secondary
18 coverage even if they had no earnings of any kind. Id. at 146.
19 As is true for employee welfare plans generally, participants did not “vest” in
20 any of the benefits provided by the Plan. See Lockheed Corp. v. Spink, 517 U.S. 882,
21 890 (1996). To the contrary, the Plan specifically reserved the right to alter or
22 eliminate the benefits provided and to revise the eligibility rules, including with respect
23 to retirees. See Rumeld Decl., Ex. 2 at 120, 244.
24 2020 Plan Amendments
25 In 2020, the SAG-AFTRA Trustees adopted a series of changes to the Plan’s
26 benefits structure (the “2020 Benefit Changes”), to be effective beginning January 1,
27 2021, and advised participants that the changes were necessitated by exponential health
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1 cost increases compounded by the loss of contributions during the pandemic. See
2 generally Rumeld Decl., Ex. 3 (letter and pamphlet mailed to participants announcing
3 2020 Benefit Changes). Many of the changes applied to all participants, regardless of
4 their age, including: collapsing the two benefit levels into one with an earnings
5 threshold in between the former Plan I and Plan II thresholds; requiring spouses with
6 their own employer health coverage to take that coverage as primary, leaving the Plan
7 to pay secondary; raising participant premiums; combining the medical and hospital
8 out-of-network deductibles; and eliminating the out-of-network out-of-pocket
9 maximum. See id. at 266-69, 278.
10 In addition, changes were made for Medicare-eligible retirees—i.e., participants
11 receiving a pension under the related AFTRA Retirement Fund or SAG-Producers
12 Pension Plan. See Rumeld Decl., Ex. 1 at 104. Among them were the replacement of
13 the Plan’s secondary coverage with individual plans purchased on a Private Medicare
14 Exchange operated by Via Benefits, and the establishment of a new Senior Performers
15 Health Reimbursement Account Plan (“HRA Plan”) to subsidize the cost of these plans
16 or other eligible health costs and to provide catastrophic prescription drug
17 reimbursement. See id. at 17, 28; Rumeld Decl., Ex. 3 at 270-74. Medicare-eligible
18 retirees can still qualify for primary coverage under the Plan but, now, only their
19 sessional earnings will count toward the earnings threshold. Rumeld Decl., Ex. 1 at 17.
20 There were also changes in the annual period used to determine whether the
21 earnings of Senior Performers satisfied the earnings threshold. Compl. ¶ 7. Before the
22 2020 Benefit Changes, Senior Performers could establish their entitlement to active
23 coverage on a rolling 4-quarter basis. By contrast, active participants established a
24 base earnings twelve-month period when they first qualified for benefits and kept that
25 same earnings period as long as they maintained coverage. As a result of the 2020
26 Benefit Changes, Senior Performers’ earnings will be evaluated on a yearly basis, using
27 an earnings period from October 1 through September 30 to determine whether primary
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1 active coverage is available for the following calendar year. See Rumeld Decl., Ex. 3
2 at 272. The use of this earnings period aligns the Plan’s coverage with Medicare’s
3 annual fall enrollment period and thus ensures that Medicare-eligible Senior Performers
4 who do not qualify for primary coverage under the Plan have an opportunity to enroll
5 in Medicare with no break in coverage. Id. Contrary to the allegations in the
6 Complaint (Compl. ¶ 95), no loss of coverage will result from this change. The
7 amendment provides for “run-out” periods that allow participants who had already
8 qualified for primary active coverage during a previous twelve-month period to
9 continue such coverage into 2021 until their coverage period can be aligned with the
10 new calendar-year periods, thereby ensuring that they have an opportunity to obtain
11 Medicare coverage if they no longer qualify for primary coverage, and that there are no
12 coverage gaps in between. See Rumeld Decl., Ex. 3 at 272.
13 Claims Asserted
14 The Complaint is brought by a number of Medicare-eligible participants, who assert
15 the following breach of fiduciary duty and prohibited transaction claims under ERISA:
16 Count I alleges that the former SAG Trustees acted imprudently and disloyally, and
17 in breach of plan documents, by agreeing to the merger of the two predecessor plans
18 because due diligence would have demonstrated that the merger would threaten the
19 sustainability of the benefits provided to SAG Plan participants. Compl. ¶ 128. Count I
20 also alleges unspecified prohibited transaction claims because the merger—which required
21 the approval of both union-and management-designated SAG Trustees—was allegedly
22 approved to benefit the Union. Id. ¶ 129.
23 Count II alleges that the SAG-AFTRA Trustees acted imprudently and disloyally,
24 and in breach of plan documents, by (i) failing to alert “union negotiators” engaged in
25 collective bargaining negotiations in 2019 and 2020, or the “SAG-AFTRA National
26 Board,” or the Union “membership” who ratified certain collective bargaining agreements
27 (“CBAs”) that benefit changes were “looming” because the Plan was unsustainably
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1 funded, thereby preventing the negotiating teams from negotiating for more substantial
2 contributions to the Plan and preventing the Union members from refusing to ratify the
3 CBAs in order to seek additional contributions; and (ii) agreeing to changes in benefits that
4 “penalize participants who take their vested pension and discriminate based on age in
5 violation of positive law” including the ADEA, the Affordable Care Act (“ACA”), and
6 California’s Unruh Civil Rights Act (“UCRA”). Id. ¶¶ 81, 135-36. The Complaint
7 provides no explanation as to why Plaintiffs have elected to proceed with their age
8 discrimination claims under ERISA, rather than the age discrimination laws.
9 Count III asserts claims for co-fiduciary liability against the SAG Trustees, arising
10 from the claims alleged in Count I; and Count IV alleges co-fiduciary liability claims
11 against the SAG-AFTRA Trustees arising from the claims alleged in Count II. Id. ¶¶ 139-
12 49.
13 Counts I and III are brought on behalf of a putative class of participants of the
14 predecessor SAG Plan. Counts II and IV are brought on behalf of a putative class of
15 participants of the Plan.
16 LEGAL STANDARD FOR MOTION TO DISMISS
17 A motion to dismiss under Fed. R. Civ. P. 12(b)(6) is an “important mechanism
18 for weeding out meritless claims” in ERISA cases. Fifth Third Bancorp v.
19 Dudenhoeffer, 573 U.S. 409, 425 (2014). The early dismissal of claims that are not
20 viable furthers Congress’ goal of encouraging the creation of ERISA plans by
21 defraying unnecessary litigation expenses that might “unduly discourage employers
22 from offering welfare benefit plans in the first place.” Varity Corp. v. Howe, 516 U.S.
23 489, 497 (1996); see also Conkright v. Frommert, 559 U.S. 506, 516-17 (2010).
24 “Dismissal of a complaint is appropriate if it fails to ‘state a claim to relief that is
25 plausible on its face.’” White v. Chevron Corp., 752 F. App’x 453, 454 (9th Cir. 2018)
26 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)), cert. denied, 139 S. Ct.
27 2646 (2019). To determine plausibility, the court must consider whether the factual
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1 content “allows the court to draw the reasonable inference that the defendant is liable
2 for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
3 Twombly, 550 U.S. at 556).
4 ARGUMENT
5 I. PLAINTIFFS’ BREACH OF FIDUCIARY DUTY CLAIMS FAIL
6 BECAUSE THEY ARE NOT DIRECTED AT FIDUCIARY CONDUCT
7 Counts I and II of the Complaint should be dismissed because they allege
8 breaches of fiduciary duty based on conduct not undertaken in a fiduciary capacity—
9 namely, the decision to merge the two predecessor health plans (Count I), the decision
10 to amend the Plan to change benefit eligibility requirements (Count II), and the alleged
11 failure to disclose information in aid of collective bargaining negotiations (Count II).
12 A. Merger and Plan Amendment are Plan Design/Settlor Decisions
13 “In every case charging breach of ERISA fiduciary duty, . . . the threshold
14 question is not whether the actions of some person . . . adversely affected a plan
15 beneficiary’s interest, but whether that person was acting as a fiduciary (that is, was
16 performing a fiduciary function) when taking the action subject to complaint.” Pegram
17 v. Herdrich, 530 U.S. 211, 226 (2000). It is well-settled that plan sponsors do not act
18 as fiduciaries when they make decisions concerning the structure or design of the plan,
19 including—as challenged here—decisions to merge plans and to amend the plan to
20 provide less generous benefits. Accordingly, these types of decisions cannot be
21 challenged under ERISA’s fiduciary liability provisions.
22 In a series of three cases in the late 1990s, the Supreme Court firmly established
23 that plan sponsors do not act in a fiduciary capacity when they decide to alter the terms
24 of an employee benefits plan, including any decision as to the structure of the plan or
25 who is entitled to benefits thereunder. See Curtiss-Wright Corp. v. Schoonejongen, 514
26 U.S. 73, 78 (1995) (“[A] [plan sponsor] does not act in a fiduciary capacity when
27 deciding to amend or terminate a welfare benefits plan.”) (quoting Adams v. Avondale
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1 Indus., Inc., 905 F.2d 943, 947 (6th Cir. 1990)); Lockheed Corp. v. Spink, 517 U.S.
2 882, 890-91 (1996) (holding that “[p]lan sponsors who alter the terms of a plan do not
3 fall into the category of fiduciaries” and thus “may decide to amend an employee
4 benefit plan without being subject to fiduciary review”) (citation omitted); Hughes
5 Aircraft Co. v. Jacobson, 525 U.S. 432, 444 (1999) (“ERISA’s fiduciary duty
6 requirement simply is not implicated where [the plan sponsor], acting as the Plan’s
7 settlor, makes a decision regarding the form or structure of the Plan . . . .”) (citing Shaw
8 v. Delta Air Lines, Inc., 463 U.S. 85, 91 (1983)).
9 As the Supreme Court noted, “[t]his rule is rooted in the text of ERISA’s
10 definition of fiduciary[,]” which makes a person a fiduciary only when performing
11 certain defined management or administration functions that do not include plan
12 design. Lockheed, 517 U.S. at 890 (citing 29 U.S.C. § 1002(21)(A), ERISA §
13 3(21)(A)); 3 see also Varity, 516 U.S. at 505 (noting that “amending or terminating a
14 plan . . . cannot be an act of plan ‘management’ or ‘administration’”); Bins v. Exxon
15 Co. U.S.A., 220 F.3d 1042, 1047 (9th Cir. 2000) (noting the “well established” rule that
16 a plan sponsor “does not act in its fiduciary capacity as a plan administrator when it
17 makes a business decision to amend a plan”). When plan sponsors perform a plan
18 design function, such as merging a plan or amending the terms of a plan, “they do not
19 act as fiduciaries, but are analogous to the settlors of a trust[.]” Lockheed, 517 U.S. at
20 890 (citations omitted).
21 Although the Supreme Court trilogy concerned single employer plans, every
22 circuit court of appeal considering the issue has held that the settlor-fiduciary
23 distinction applies with equal force to decisions made by trustees of multiemployer
24
25
3
“[A] person is a fiduciary with respect to a plan to the extent (i) he exercises
26 any discretionary authority or discretionary control respecting management of such
plan or exercises any authority or control respecting management or disposition of its
27 assets, . . . or (iii) he has any discretionary authority or discretionary responsibility in
the administration of such plan.” 29 U.S.C. § 1002(21)(A), ERISA § 3(21)(A).
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1 plans. 4 See Janese v. Fay, 692 F.3d 221, 227 (2d Cir. 2012) (holding “that the Court’s
2 language [in the trilogy] is equally applicable to multi-employer plans”); Hartline v.
3 Sheet Metal Workers’ Nat’l Pension Fund, 286 F.3d 598, 599 (D.C. Cir. 2002)
4 (“Nothing in the Supreme Court’s [trilogy of] decisions or ERISA itself creates an
5 exemption for multiemployer pension plans.”); Walling v. Brady, 125 F.3d 114, 117
6 (3d Cir. 1997) (“Lockheed speaks of ‘plan sponsors,’ a term that applies to both single-
7 employer sponsors and multi-employer sponsors under ERISA, and the opinion lacks
8 any hint that single- and multi-employer plans should be analyzed differently.”); see
9 also Pope v. Cent. States Se. & Sw. Areas Health & Welfare Fund, 27 F.3d 211, 213-14
10 (6th Cir. 1994) (holding even before the Supreme Court trilogy that the rationale for
11 not judging plan amendments “by fiduciary standards” applies equally to a
12 multiemployer welfare benefits plan) (quoting Adams, 905 F.2d at 947); Milwaukee
13 Area Joint Apprenticeship Training Comm. for the Elec. Indus. v. Howell, 67 F.3d
14 1333, 1338 (7th Cir. 1995) (holding that fiduciary duties do not apply to the
15 “formation, amendment, or modification” of a multiemployer plan).
16 The Ninth Circuit Court of Appeals has not yet considered the issue, but this
17 Court has stated its agreement that the trustees of multiemployer plans are not subject
18 to the fiduciary breach rules when engaged in plan design/settlor functions. See
19 Endries v. Bd. of Dirs. of the Motion Picture Indus. Health Plan, No. 2:20-cv-06347-
20 RGK-AGR, 2020 WL 6253320, at *3-4 (C.D. Cal. Oct. 7, 2020) (dismissing ERISA
21 breach of fiduciary duty claim against board of directors of multiemployer welfare
22 benefit plan because plan amendment is a settlor/non-fiduciary function and the
23 “principle applies equally in the context of an amendment to a multiemployer plan”);
24 Ronches v. Dickerson Emp. Benefits, Inc., No. CV 09-04279 MMM (PJWx), 2009 WL
25
4
26 For single employer plans, ERISA defines “plan sponsor” as the employer, but
in the case of multiemployer plans, the “plan sponsor” is “the association, committee,
27 joint board of trustees, or other similar group of representatives of the parties who
establish or maintain the plan.” 29 U.S.C. § 1002(16)(B), ERISA § 3(16)(B).
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1 10669571, at *11-14 (C.D. Cal. Oct. 30, 2009) (surveying case law and concluding that
2 Curtiss-Wright applies to multiemployer welfare benefit plans). Other district courts in
3 the Ninth Circuit have likewise dismissed fiduciary breach claims against the plan
4 sponsors of multiemployer plans for settlor acts. See, e.g., Collins v. Teamsters Benefit
5 Tr., No. 4:12-cv-02984 YGR, 2013 WL 12343709, at *10-11 (N.D. Cal. Dec. 27,
6 2013); Ely v. Bd. of Trs. of Pace Indus. Union-Mgmt. Pension Fund, No. 3:18-cv-
7 00315-CWD, 2019 WL 438338, at *7 (D. Idaho Feb. 4, 2019).
8 By virtue of these authorities, Plaintiffs have no viable claim for fiduciary breach
9 premised on the SAG Trustees’ decision to merge the two health plans (Count I)
10 because such a decision concerns the structure of the plan and falls squarely within the
11 realm of settlor functions. See, e.g., Hughes Aircraft, 525 U.S. at 444 (“ERISA’s
12 fiduciary duty requirement simply is not implicated where [the plan sponsor], acting as
13 the Plan’s settlor, makes a decision regarding the form or structure of the Plan . . . .”);
14 Beck v. PACE Int’l Union, 551 U.S. 96, 101-02 (2007) (“[B]ecause decision[s]
15 regarding the form or structure of a plan are generally settlor functions, . . . [the
16 defendant] acknowledges that the decision to merge plans is normally [a] plan sponsor
17 decisio[n] as well.”) (internal quotation marks and citations omitted); Paulsen v. CNF
18 Inc., 559 F.3d 1061, 1076 (9th Cir. 2009) (recognizing that the “decision to spin a
19 [pension] plan off” and transfer the assets into a new plan is “not a fiduciary act”);
20 Malia v. Gen. Elec. Co., 23 F.3d 828, 833 (3d Cir. 1994) (holding even before the
21 Supreme Court trilogy that the decision “to merge two pension plans do[es] not invoke
22 the fiduciary duty provisions of ERISA”); Reilly v. Charles M. Brewer, Ltd. Profit
23 Sharing Plan & Tr., No. CIV 02-2218-PHX-BTM, 2006 WL 8447738, at *12 (D. Ariz.
24 Feb. 7, 2006) (holding that the decision to merge pension plan into profit-sharing plan
25 was a settlor decision that cannot “serve as the basis for a breach of fiduciary duty
26 claim”); Flanigan v. Gen. Elec. Co., 242 F.3d 78, 87-88 (2d Cir. 2001) (collecting
27 cases and holding that decision to transfer assets from one pension plan to another does
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1 not trigger fiduciary duties because the plan sponsor acts “as a settlor, not a fiduciary”).
2 As the Third Circuit Court of Appeals stated in Malia, since the decision to merge two
3 ERISA plans is a “business decision[] related to modification of the design of a pension
4 plan, . . . the plan sponsor is free to act as an employer and not a fiduciary.” 23 F.3d at
5 833 (internal quotation marks and citation omitted).
6 Plaintiffs likewise have no viable claim for fiduciary breach premised on the
7 SAG-AFTRA Trustees’ decision to amend the Plan to change benefit eligibility
8 requirements (Count II). This claim is “directly foreclosed by [Lockheed’s] holding
9 that, without exception, ‘[p]lan sponsors who alter the terms of a plan do not fall into
10 the category of fiduciaries.’” Hughes Aircraft, 525 U.S. at 445 (quoting Lockheed, 517
11 U.S. at 890). A plan amendment that changes “who is entitled to receive Plan benefits”
12 is precisely the type of settlor action that was contemplated by the Supreme Court
13 trilogy. Id. at 444; see also Curtiss-Wright, 514 U.S. at 78 (“[T]hat [the plan sponsor]
14 amended its plan to deprive respondents of health benefits is not a cognizable
15 complaint under ERISA[.]”). 5
16 Following these authorities, this Court recently dismissed a similar ERISA
17 breach of fiduciary duty claim challenging a multiemployer plan amendment that
18 changed benefit eligibility requirements for healthcare coverage. See Endries 2020 WL
19 6253320, at *1-4. Like the Plaintiffs here, the Endries plaintiffs complained that the
20 changes “granted coverage to some participants while failing to extend it to other
21 similarly situated individuals” and thus treated “one group of plan participants
22 differently from another.” Id. at *1, *3. The Court dismissed the complaint in its
23 entirety, holding that the decision “to amend the terms of the Plan . . . does not
24
25
5
Because plan amendments are not acts of plan management or administration,
26 as discussed above, there is also no basis for a fiduciary breach claim challenging the
Plan amendment based on an alleged requirement in the SAG-AFTRA Trust
27 Agreement that the Plan be “managed and administered” in accordance with all
“applicable law.” Compl. ¶ 82.
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1 implicate fiduciary review.” Id. at *3-4.6 Likewise, in Collins, the Northern District of
2 California dismissed an ERISA fiduciary breach claim challenging a multiemployer
3 plan amendment requiring participants to pay monthly charges for post-retirement
4 healthcare coverage because such changes are a “settlor/non-fiduciary” function. See
5 2013 WL 12343709, at *10-11.
6 Finally, because the Plan merger was a settlor function, there are no viable
7 prohibited transaction claims either. Prohibited transaction claims regulate fiduciary
8 conduct only. See 29 U.S.C. § 1106(a)(1), ERISA § 406(a)(1) (“A fiduciary with
9 respect to a plan shall not cause the plan to engage in a transaction. . . .”) (emphasis
10 added); see also Lockheed, 517 U.S. at 889-91 (holding that “§ 406(a)’s requirement of
11 fiduciary status is not met” where the defendant “acted not as a fiduciary but as a
12 settlor” and dismissing § 404(a) fiduciary breach and § 406(a) prohibited transaction
13 claims premised on the act of plan amendment); Ely, 2019 WL 438338, at *7 (same). 7
14 In sum, because the merger and Plan amendment decisions were plan design
15
16 6
In so holding, this Court rejected the continued viability of a pre-trilogy Ninth
17 Circuit case, Elser v. I.A.M. National Pension Fund, 684 F.2d 648 (9th Cir. 1982), that
held a plan amendment’s discrimination among participants may constitute a fiduciary
18 breach under certain circumstances. See Endries, 2020 WL 6253320, at *4. The same
19 goes for another pre-trilogy Ninth Circuit case, Pallas v. Pacific Bell, 940 F.2d 1324
(9th Cir. 1991), that relied on Elser to permit a fiduciary breach claim challenging an
20 allegedly discriminatory plan amendment. Since the trilogy, allegations that plan
21 amendments discriminate among participants are typically dismissed on settlor/non-
fiduciary grounds. See, e.g., Godinez v. CBS Corp., 81 F. App’x 949, 949-50 (9th Cir.
22 2003).
7
23 Plaintiffs’ prohibited transaction claim regarding the merger is independently
dismissible because it is not “plausible on its face.” White, 752 F. App’x at 454. At the
24 root of Plaintiffs’ claim is the far-fetched notion that the SAG Trustees “disloyally
25 pushed through the hasty merger” for “political purposes to benefit the union and union
leadership.” Compl. ¶¶ 9, 17; see also Compl. ¶¶ 24, 68, 129. But the merger decision
26 was made equally by employer and union trustees, see Compl. ¶ 44; 29 U.S.C. §
27 186(c)(5), and it is implausible that the employer-designated SAG Trustees—who have
no allegiances to the Union—voted for the merger in order to benefit the Union.
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1 decisions made by the Trustees acting in their settlor capacity, rather than their
2 fiduciary capacity, Plaintiffs’ fiduciary breach/prohibited transaction claims in Counts I
3 and II premised on these decisions fail to state a claim and should be dismissed.
4 B. The Trustees’ Actions With Respect to Collective Bargaining
5 Negotiations Are Not Actionable Under ERISA
6 For similar reasons, the court should dismiss the portion of Plaintiffs’ fiduciary
7 breach claim in Count II that alleges that the SAG-AFTRA Trustees failed to disclose
8 to Union negotiators and Union membership the financial condition of the Plan and the
9 anticipated Benefit Changes, thereby foreclosing the opportunity to obtain higher
10 negotiated contributions to the Plan. See Compl. ¶¶ 81, 135. As is true for the conduct
11 relating to the merger and Plan amendment, collective bargaining activities are not
12 undertaken in a fiduciary capacity, and thus there is no fiduciary duty under ERISA to
13 disclose information to bargaining parties.
14 The “[Supreme] Court long ago made clear that collective bargaining activities . .
15 . do not constitute plan management by the trustee of an ERISA welfare plan” and,
16 therefore, are not considered fiduciary acts. Hall v. Hill Refrigeration, Inc., 36 F. Supp.
17 2d 1185, 1189 (C.D. Cal. 1999) (citing NLRB v. Amax Coal Co., 453 U.S. 322, 334
18 (1981)). “Thus, even if an employer or union representative also serves as an ERISA
19 trustee, his obligations as representative must be viewed separately from those imposed
20 on him as a trustee.” Id. (citing NLRB, 453 U.S. at 337 n.21). In the “administrative
21 realm,” the trustee is bound by “fiduciary duties to enforce the plan as it exists for the
22 sole benefit of the beneficiaries.” Id. (citing NLRB, 453 U.S. at 336-37). But, in the
23 collective bargaining realm, where “representatives negotiate on behalf of one side or
24 the other to define the scope and terms of the plan[,]” the “acts of the union or
25 employer representative . . . are governed not by fiduciary duties under ERISA, but by
26 the good faith bargaining rules of labor law.” Id.
27
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1 Here, the SAG-AFTRA Trustees’ activities in this collective bargaining realm


2 were decidedly outside the scope of their ERISA fiduciary duties. See id. at 1188-90
3 (holding that union and employer trustees of multiemployer pension and welfare
4 benefit plans “were not acting as trustees and were not subject to ERISA’s fiduciary
5 requirements” when they negotiated/approved CBAs reducing contributions without
6 union ratification); see also United Indep. Flight Officers, Inc. v. United Air Lines, Inc.,
7 756 F.2d 1262, 1267-68 (7th Cir. 1985) (dismissing ERISA breach of fiduciary duty
8 claim because union and employer were not acting as fiduciaries when engaging in
9 collective bargaining). Accordingly, any fiduciary breach claim in Count II premised
10 on the failure to disclose in the context of collective bargaining negotiations
11 information about the Plan fails to state a claim and should be dismissed.
12 Moreover, even if there were some affirmative duty under ERISA to make
13 disclosures to union negotiators (which there is not), the allegations here are so
14 implausible that they could not possibly give rise to a fiduciary breach. The notion
15 that, through their alleged failure to communicate to members of the negotiating
16 committee, or other Union members generally, the financial condition of the Plan, the
17 Trustees (some of whom led the cited negotiations or were on the negotiating
18 committees, Compl. ¶ 78) prevented the Union from bargaining for higher
19 contributions to the Plan is preposterous. Among other things, it ignores the inherent
20 implausibility of the notion that the Union negotiators would somehow have been able
21 to persuade the employers to increase their contributions enough to counteract
22 projected deficits of $141 million and $83 million in 2020 and 2021, respectively
23 (Compl. ¶ 98), when the television/theatrical employers had already agreed to “up to
24 $54 million,”—a sum the Union believed to be “transformative”” (Compl. ¶77). 8 It
25
8
26 The allegations are even more implausible insofar as they relate to the
negotiations involving the commercials contract and Netflix, as those negotiations
27 occurred in early to mid-2019, well before the more dire Plan deficit projections. See
Compl. ¶ 75.
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1 also ignores the simple fact that, since the overwhelming majority of Union members
2 do not receive any benefits from the Plan, the Union would have had to cut wages or
3 compromise wage increases or other contract terms for all members for the sake of
4 generating greater contributions to the Plan for the minority of members that qualify for
5 the Plan. Compare Compl. ¶ 6 (Plan had 33,000 participants), with SAG-AFTRA,
6 About webpage, https://www.sagaftra.org/about (last visited Feb. 15, 2021) (Union has
7 approximately 160,000 members).
8 Had Plaintiffs attempted to assert claims against the Union for breach of the duty
9 of fair representation on the basis of these far-fetched theories, their claims would very
10 likely have been rejected for lack of plausibility. See Vaughn v. Air Line Pilots Ass’n,
11 Int’l, 604 F.3d 703, 711 (2d Cir. 2010) (affirming grant of motion to dismiss duty of
12 fair representation allegation as implausible that absent misrepresentation, the members
13 “might have lobbied hard[er] to prevent termination” of a pension plan and the CBA
14 would have been “more generous to older” employees); Bakos v. Am. Airlines, Inc.,
15 266 F. Supp. 3d 729 (E.D. Pa. 2017), aff’d, 748 F. App’x 468 (3d Cir. 2018) (granting
16 motion to dismiss where plaintiffs failed to plausibly allege that employer would have
17 agreed to different terms). Plaintiffs should not be permitted to circumvent this result
18 by proceeding instead with a claim for breach of fiduciary duty under ERISA,
19 particularly when the challenged conduct is not fiduciary conduct to begin with.
20 II. PLAINTIFFS HAVE NO VIABLE CLAIMS FOR BREACH OF
21 FIDUCIARY DUTY PREMISED ON ALLEGED VIOLATION OF AGE
22 DISCRIMINATION LAWS
23 Even if it were not the case that the decision to amend the Plan was a settlor
24 function, Plaintiffs would still have no viable claim under ERISA because: (i) ERISA
25 cannot be used to circumvent the age discrimination laws; and (ii) the 2020 Benefit
26 Changes do not violate the age discrimination laws because they do not distinguish
27
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1 among participants based on age, but rather based on retiree and pension status, and
2 because they are expressly permitted by an EEOC regulation.
3 A. Plaintiffs Cannot Use ERISA’s Fiduciary Rules to Improperly
4 Circumvent the Age Discrimination Laws
5 The Complaint also purports to assert claims for breaches of fiduciary duty that
6 are premised exclusively on the contention that the 2020 Benefit Changes breached
7 free-standing age discrimination laws. ERISA was not intended to redress claims for
8 employment discrimination, and it certainly was not intended to serve as a vehicle for
9 avoiding the jurisdictional and procedural rules embodied in the age discrimination
10 laws. Accordingly, there is no basis for these claims to proceed under ERISA.
11 As the Supreme Court has noted, in the context of welfare benefit plans, “ERISA
12 does not mandate that employers provide any particular benefits, and does not itself
13 proscribe discrimination in the provision of employee benefits.” Shaw, 463 U.S. at 91.
14 In fact, the legislative history of ERISA shows that the Senate expressly considered and
15 rejected the idea of including any general provisions requiring nondiscrimination in
16 ERISA plans on the basis of protected categories because Title VII of the Civil Rights
17 Act already prohibits such discrimination and it was desirable to maintain “centralized
18 administration” of employment discrimination claims via the EEOC. Id. at 104 (citing
19 119 CONG. REC. S30, 409-10 (1973)). Accordingly, there is no violation of ERISA
20 where a welfare benefit plan distinguishes between groups of employees and excludes
21 some from participating as a matter of plan design. See id. at 91; see also, e.g.,
22 Saeyoung Vu v. Fashion Inst. of Design & Merch., No. CV 14-08822 SJO (Ex), 2015
23 WL 13545179, at *4 (C.D. Cal. Apr. 23, 2015) (noting employers may provide benefits
24 for some employees but not for others as a matter of plan design) (citations omitted).9
25
9
26 By contrast, in the context of pension plans, plan sponsors may not “exclude
from participation (on the basis of age) employees who have attained a specifi[c] age.”
27 29 U.S.C. § 1052(a)(2), ERISA § 202(a)(2). This shows that, where Congress wanted
to prohibit age discrimination under ERISA, it expressly did so.
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1 Whether such a distinction violates federal discrimination laws is a separate question to


2 be handled in the manner Congress intended under those other statutes.
3 Courts of Appeals in the Ninth Circuit and elsewhere have accordingly rejected
4 attempts to assert violations of the ADEA in a “backdoor” way through the use of other
5 causes of action. See, e.g., Ahlmeyer v. Nev. Sys. of Higher Educ., 555 F.3d 1051,
6 1056-57 (9th Cir. 2009) (rejecting the possibility of asserting a constitutional rights
7 claim under 42 U.S.C. § 1983 premised on age discrimination in part because it would
8 allow plaintiffs to “avoid” the ADEA’s “specific provisions”) (quoting Zombro v. Balt.
9 City Police Dep’t, 868 F.2d 1364, 1366 (4th Cir. 1989)); Nance v. Maxwell Fed. Credit
10 Union (MAX), 186 F.3d 1338, 1342-43 (11th Cir. 1999) (holding “that the enforcement
11 of rights secured through the ADEA must be pursued in the manner specified in the
12 ADEA, not through alternative state-law mechanisms” because plaintiffs cannot be
13 permitted to make an “end run” around the ADEA’s “complex statutory scheme” as
14 that would “surely frustrate congressional intent”).
15 This logic has also been specifically applied to ERISA claims premised on
16 alleged violations of the ADEA and/or other anti-discrimination laws. In rejecting such
17 claims, courts have reasoned that ERISA is not intended to redress discrimination
18 and/or that the plaintiffs’ claims can be adequately redressed under other statutes as
19 Congress intended. See Ameritech Benefit Plan Comm. v. Commc’n Workers of Am.,
20 220 F.3d 814, 825 (7th Cir. 2000) (rejecting ERISA fiduciary breach claim premised on
21 violation of Title VII and noting that “there may be a problem with shoehorning a [sex]
22 discrimination claim into the ERISA notion of fiduciary duty” because ERISA does not
23 prohibit discrimination and discrimination claims were intended to be evaluated under
24 Title VII) (citing Shaw, 463 U.S. at 91, 105-06); Galante v. Fin. Indus. Regul. Auth.,
25 Inc., No. 16-5198, 2018 WL 2063748, at *10 (E.D. Pa. May 2, 2018) (rejecting ERISA
26 fiduciary breach claim premised on violation of ADEA because, even assuming the
27 ADEA was violated, ERISA “does not itself proscribe discrimination”) (quoting Shaw,
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1 463 U.S. at 91); Collins v. Mfrs. Hanover Tr. Co., 542 F. Supp. 663, 671-72 (S.D.N.Y.
2 1982) (dismissing ERISA clarification of future benefits claim contending plaintiff’s
3 salary was “unnaturally low” due to age and sex discrimination because using ERISA
4 to redress such discrimination was “unorthodox” and unintended by ERISA; rather, the
5 ADEA and other federal discrimination statutes will provide plaintiff with a
6 “comprehensive” remedy); Biggs v. N. Cent. United Tel. Co., No. C-2-95-913, 1997
7 WL 829173, at *4 (S.D. Ohio Oct. 15, 1997) (dismissing ERISA claim premised on sex
8 discrimination that was “more recognizable as a Title VII or Equal Pay Act claim” and
9 noting that “[p]iling ERISA claims in with Title VII, EPA, PDA and the like is
10 unnecessary, as a successful claim under the anti-discrimination statutes will provide
11 for total recovery”). As the Biggs court noted, “ERISA was not passed to provide
12 plaintiff’s counsel with one more bite at the apple” if they, “for whatever reason,
13 cannot recover under the anti-discrimination statutes.” 1997 WL 829173, at *4.
14 In this case, Plaintiffs’ use of fiduciary breach claims to allege that the Plan
15 amendment violates age discrimination laws is not only inappropriate because it targets
16 non-fiduciary conduct, but is also a thinly veiled attempt to evade the requirements of
17 the ADEA. There is no disputing that the ADEA already provides a vehicle, through a
18 filing with the EEOC, for challenging discrimination in connection with the provision
19 of benefits. To permit Plaintiffs to nevertheless assert age discrimination claims in the
20 guise of fiduciary breach claims, and thereby frustrate Congress’ intent by
21 circumventing the procedural prerequisites for filing an age discrimination claim,
22 would be an improper use of the court’s equitable powers. See Collins, 542 F. Supp. at
23 671-72 (holding that it would be “inappropriate for the Court to exercise its equity
24 jurisdiction” under circumstances where there was “no authority for the proposition
25 that ERISA was intended to reach conduct of the sort described in the complaint” and
26 where “there are other available, comprehensive remedies” for discrimination); see also
27 Varity, 516 U.S. at 515 (“[W]here Congress elsewhere provided adequate relief for a
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1 beneficiary’s injury, there will likely be no need for further equitable relief, in which
2 case such relief normally would not be ‘appropriate’”). It would also unfairly expose
3 the Trustees to claims against them personally, when they would face no personal
4 exposure to an ADEA claim. Finally, the pursuit of age discrimination claims under
5 ERISA could create the risk of inconsistent adjudications, should other Plan
6 participants eventually file a federal court lawsuit under the ADEA.
7 Accordingly, Plaintiffs should not be permitted to proceed with ERISA claims
8 that are premised exclusively on alleged violations of age discrimination laws.
9 B. The Benefit Changes Are Not Actionable As Violations of Any Age
10 Discrimination Laws
11 Even if Plaintiffs could somehow use ERISA to pursue claims for violation of
12 the age discrimination laws, this would not change the fact that they have not alleged a
13 viable claim of age discrimination. Plaintiffs allege that the changes implemented by
14 the Plan are age discriminatory in two respects: first, because participants who are age
15 65 and older and who “take their vested pensions” may no longer include residuals to
16 qualify for earned active coverage in the Plan, Compl. ¶¶ 86, 87; see also id. ¶¶ 5, 11,
17 94; and second, because the provisions for Medicare-secondary retiree health coverage
18 for Senior Performers have been changed—though not eliminated, as Plaintiffs
19 mistakenly contend. Compl. ¶¶ 5, 7.10 For the reasons stated below, neither provision
20 violates any of the cited age discrimination laws.
21 1. The Requirement that Retired, Medicare-Eligible Participants
22 Qualify for Primary Coverage Based on Sessional Earnings Only
23 As the Supreme Court recognizes, the age discrimination laws do not regulate
24
10
The Complaint also makes passing reference to two other changes, without
25 explaining whether or why these changes are believed to be age discriminatory: (i) the
collapse of Plan I and Plan II and creation of one eligibility threshold of $25,950, see
26 Compl. ¶ 92; and (ii) the change in the base earnings period (the twelve-month period
used to determine retirees’ eligibility for a calendar year of coverage starting one
27 quarter later) to eventually align retirees to a set (as opposed to rolling) base earnings
period. As explained in the Statement of Facts, the first change applied to all
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1 decisions that distinguish between employees based on criteria other than age, even if
2 those criteria may correlate with age. See Ky. Ret. Sys. v. EEOC, 554 U.S. 135, 141
3 (2008) (under the ADEA, differential treatment based on factors that are correlated
4 with age, but nonetheless are “analytically distinct” from age, such as pension status,
5 are lawful). Retiree status and pension status are analytically distinct from age, and
6 their use in the determination of eligibility for retiree benefits thus does not violate the
7 ADEA. Id. at 143 (“age and pension status remain ‘analytically distinct’ concepts”);
8 Harris v. County of Orange, 902 F.3d 1061, 1072 (9th Cir. 2018) (retiree status is
9 analytically distinct from age, and an employer under ADEA “may treat retirees as a
10 group differently, with regard to medical benefits, than employees as a group”); Nw.
11 Airlines, Inc. v. Phillips, 675 F.3d 1126, 1133 (8th Cir. 2012) (no ADEA violation
12 where “differential treatment based on pension status, where pension status . . . itself
13 turns, in part, on age”) (quoting Ky. Ret. Sys., 544 U.S. at 148).
14 For example, in Carson v. Lake County, 865 F.3d 526 (7th Cir. 2017), the
15 employer terminated all age 65 and older employees who were covered by both
16 Medicare and an Aetna supplemental health insurance in order to preserve affordable
17 health insurance for some retirees. Id. at 529. In finding there was no ADEA violation,
18 the court determined that “age was a necessary but insufficient” factor in the decision-
19 making, and that “age and insurance eligibility” are analytically distinct. Id. at 535.
20 Likewise, in Harris, a county restructured its health benefit program by eliminating a
21 retirement premium subsidy and reducing a grant benefit when a retiree became
22 eligible for Medicare (at age 65). 902 F.3d at 1064. The Ninth Circuit determined that
23 under the ADEA (and California’s Fair Employment and Housing Act (“FEHA”)) an
24 employer “may treat retirees as a group differently, with regard to medical benefits,
25 than employees as a group,” taking into account that the cost of retiree benefits is
26
participants, regardless of age, and the second change does not result in any loss of
27 “pre-qualified” coverage, and thus cannot be the basis for an age discrimination claim
either. See Compl. ¶ 11; Rumeld Decl., Ex. 1 at 14.
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1 higher because retirees are older. Id. at 1072. Because consideration of retiree status is
2 analytically distinct from age, the decision is not “because of” age even if it takes “into
3 account the age distribution of the retiree group as a whole.” Id. at 1074-76.
4 Here, as in the cases cited, the Plan created new eligibility requirements that
5 were based, not on age, but on retirement and pension status. Specifically, the Plan
6 now provides that in order to qualify for primary benefits, Medicare-eligible
7 participants who are receiving a pension, and thus presumed to be retired, must meet
8 the requisite earnings threshold based on sessional earnings – i.e., earnings attributable
9 to active employment. As Plaintiffs concede in their Complaint, the distinction made is
10 not between older and younger participants, but rather is among older participants who
11 are retired and those who are not retired. Compl. ¶ 86 (alleging that the changes
12 impose a “penalty on participants who take their vested pensions”) (emphasis added);
13 see also Compl. ¶¶ 5, 7, 11, 19, 52, 87 136 (same). As such, it cannot be viewed as
14 discriminating based on age, whether under the ADEA (as in the cases cited above), or
15 under the other statutes cited by Plaintiffs that have indistinguishable statutory
16 language. See Cal. Civ. Code § 51.5 (Unruh Act, which prohibits business
17 establishment discrimination “on account” of, inter alia, age); 42 U.S.C. § 6102 (Age
18 Discrimination Act, which prohibits discrimination “on the basis of age”) (as
19 incorporated by 42 U.S.C. § 18116(a), Section 1557 of the ACA).11
20
11
The Unruh Act and ACA claims fail for additional reasons as well. The
21 purpose of the Unruh Act is to “secure to all persons equal access to public
accommodations no matter their personal characteristics.” Candelore v. Tinder, Inc.,
22 228 Cal. Rptr. 3d 336, 341 (Cal. Ct. App. 2018). It thus does not apply to the conduct
alleged here. Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1124-26 (9th Cir.
23 2008) (“employment discrimination claims are excluded” from the Unruh Act’s
protections); Lewis v. Pac. Mar. Ass’n, No. C 06-04941 CRB, 2007 WL 2429554, at
24 *11 (N.D. Cal. Aug. 24, 2007) (noting section 51.5 is “aimed at discrimination in
relationships similar to the proprietor/customer relationship, and does not apply to the
25 employment relationship”) (citation omitted). The ACA Section 1557 claim fails
because the Age Discrimination Act, on which this claim is based, explicitly permits a
26 program that “reasonably takes into account age as a factor necessary to the normal
operation or the achievement of any statutory objective of such program or activity.”
27 42 U.S.C. § 6103(b)(1)(A). Here, retirees who qualify for Medicare had their benefits
altered in order to prevent the financial collapse of the Plan so that the Plan could
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1 Any doubts as to the legality of the Plan’s rule are resolved by an explicit
2 regulatory exemption that authorizes the very type of distinction made by the
3 amendment. Section 9 of the ADEA authorizes the EEOC to “establish such
4 reasonable exemptions to and from any or all provisions of [the ADEA] as it may find
5 necessary and proper in the public interest.” 29 U.S.C. § 628. The EEOC, in turn,
6 recognizes that “employers are under no legal obligation to offer” retiree health
7 benefits. 29 C.F.R. § 1625.32 Q&A1 (EEOC regulation). Consistent with that
8 recognition, an EEOC regulation exempts from ADEA scrutiny provisions that alter,
9 reduce or eliminate health benefits for retired participants who are eligible for
10 Medicare. Id.; see Fulghum v. Embarq Corp., 785 F.3d 395, 419-21 (10th Cir. 2015)
11 (termination or reduction of company-paid medical and prescription drug benefits for
12 Medicare-eligible retirees exempted from ADEA prohibition through EEOC
13 regulation); Lefevre v. Niagara Mohawk Power Corp., 610 F. Supp. 2d 212, 215-16
14 (N.D.N.Y. 2009) (charging Medicare-eligible retirees a greater premium than non-
15 Medicare eligible retirees exempted through EEOC regulation). Here, in order to
16 preserve the long-term health of the Plan, the SAG-AFTRA Trustees determined to
17 reduce or alter health benefits for its retired participants who also qualify for Medicare,
18 in addition to making other significant changes affecting non-retired participants. The
19 EEOC regulation specifically permitted the Plan do so. 29 C.F.R. § 1625.32(b).
20 2. Change in Medicare-Secondary Coverage
21 Plaintiffs also insinuate that the change in Medicare-secondary coverage was age
22 discriminatory, presumably because the new coverage applies to participants who are
23 Medicare-eligible (over age 65). But in so contending, Plaintiffs overlook that: (i) the
24 secondary coverage applied only to retirees—i.e., those taking a retirement pension or
25 not working at all; (ii) the Plan was under no obligation to provide any coverage to
26
27 achieve its objective of providing quality health benefits to the greatest number of
participants possible.
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1 retirees (see, e.g., Harris, 902 F.3d at 1072; 29 C.F.R. § 1625.32 Q&A1); and (iii) the
2 Plan at all times reserved the right to amend or eliminate coverage for retirees (see
3 Rumeld Decl., Ex. 2 at 244). See also Curtiss-Wright, 514 U.S. at 78 (rejecting claim
4 that plan sponsor violated ERISA by amending plan to terminate retirees’ health
5 benefits). Accordingly, the fact that the Plan exercised the right to reduce coverage that
6 it was not obligated to provide in the first place cannot become a source of an age
7 discrimination claim merely because the coverage applied only to Medicare-eligible
8 participants. Cf. 29 C.F.R. § 1625.32(b) (explicitly permitting alteration or elimination
9 of retiree health benefits when a participant becomes eligible for Medicare).
10 The fact that the Plan collects contributions for retirees does not alter this
11 conclusion. See Compl. ¶ 7. Under ERISA, merely because contributions are made
12 with respect to a participant’s earnings does not give rise to an entitlement to coverage.
13 See, e.g., Walsh v. Schlecht, 429 U.S. 401, 410-11 (1977) (finding it permissible for
14 trust fund to accept contributions from employer for work of employees of non-
15 signatory subcontractor who never will receive benefits from the fund); Phillips v.
16 Alaska Hotel & Rest. Emps. Pension Fund, 944 F.2d 509, 512, 517 (9th Cir. 1991)
17 (holding that multiemployer fund’s rules in which only 3% of workers with respect to
18 whom employers contributed to the fund qualified for benefits were not unlawful); see
19 also Cent. States, Se. & Sw. Areas Pension Fund v. Gerber Truck Serv., Inc., 870 F.2d
20 1148, 1154-55 (7th Cir. 1989) (en banc) (noting that pension plans assume that “many
21 persons who work in the industry, and have contributions made on their behalfs, will
22 never collect because they do not satisfy the vesting rule”). Indeed, considering that
23 SAG-AFTRA has nearly five times as many members as there are Plan participants, it
24 is reasonable to assume that there are tens of thousands of employees—at all ages—for
25 whom the Plan receives contributions but who do not receive any medical benefits
26 under the Plan because they do not satisfy the criteria for coverage.
27 In short, for multiple reasons, Plaintiffs’ age discrimination claims fail on the
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1 merits.
2 III. PLAINTIFFS FAIL TO STATE A CLAIM FOR CO-FIDUCIARY
3 LIABILITY
4 Counts III and IV of the Complaint alleging co-fiduciary liability under ERISA §
5 405(a), 29 U.S.C. § 1105(a) should be dismissed because, for the reasons discussed
6 above, Plaintiffs have not adequately pled an underlying breach of fiduciary duty. See,
7 e.g., Raya v. Barka, No. 19-cv-2295-WQH-AHG, 2020 WL 3469374, at *7 (S.D. Cal.
8 June 25, 2020) (dismissing co-fiduciary breach claim under ERISA § 405(a) because a
9 “plaintiff cannot state a claim for co-fiduciary liability without first stating a claim for
10 breach of fiduciary duty under ERISA”); Ely, 2019 WL 438338, at *8 (dismissing co-
11 fiduciary breach claim against individual trustees because the board of trustees “was
12 not performing a fiduciary act” when it amended rehabilitation plan).
13 Alternatively, Counts III and IV should be dismissed because Plaintiffs have
14 pleaded only conclusory allegations in support of these counts. For example, in lieu of
15 factual allegations, the Complaint merely recites the statutory elements of 29 U.S.C. §
16 1105(a), ERISA § 405(a)—that the Trustees “knew of each breach of fiduciary duty
17 alleged herein arising out of the Health Plans Merger, and knowingly participated in,
18 breached their own duties enabling other breaches, and/or took no steps to remedy
19 these and the other fiduciary breaches.” Compl. ¶ 141. The court is not bound to
20 accept these legal conclusions as true and thus they do not suffice to sustain a claim.
21 See, e.g., Ashcroft, 556 U.S. at 678.
22 CONCLUSION
23 For the reasons set forth above, the Complaint should be dismissed in its entirety
24 for failure to state claims for breach of fiduciary duty or co-fiduciary breach.
25 Dated: February 16, 2021 By: /s/ Myron D. Rumeld
Myron D. Rumeld*
26 mrumeld@proskauer.com
Neil V. Shah*
27 nshah@proskauer.com
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Anastasia S. Gellman*
1 agellman@proskauer.com
PROSKAUER ROSE LLP
2 Eleven Times Square
New York, NY 10036
3 Tel.: 212.969.3000
Fax: 212.969.2900
4
Scott P. Cooper (SBN 96905)
5 scooper@proskauer.com
Jennifer L. Jones (SBN 284624)
6 jljones@proskauer.com
PROSKAUER ROSE LLP
7 2029 Century Park East, Suite 2400
Los Angeles, California 90067
8 Tel.: 310.557.2900
Fax: 310.557.2193
9
Jani K. Rachelson*
10 jrachelson@cwsny.com
Evan R. Hudson-Plush*
11 ehudson-plush@cwsny.com
COHEN, WEISS AND SIMON LLP
12 900 Third Avenue, Suite 2100
New York, NY 10022-4869
13 Tel.: 212.563.4100
Fax: 646.473.8254
14
* admitted pro hac vice
15
Attorneys for all Defendants
16 except Bob Kaliban
17
18
19
20
21
22
23
24
25
26
27
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS’
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