retirement

Dawson v. Steager

Issues

Does a West Virginia law that provides a state tax benefit to certain retired state and local law-enforcement officers, but not to retired U.S. Marshals, unlawfully discriminate against federal retirees in violation of the doctrine of intergovernmental tax immunity, as codified by 4 U.S.C. § 111?

This case asks the Supreme Court to examine § 11-21-12(c)(6) of the West Virginia Code (“§ 12(c)(6)”), which grants an income tax exemption for the retirement compensation of state retirees, but not of federal retirees. Petitioner James Dawson contends that § 12(c)(6) violates federal law 4 U.S.C. § 111 (“§ 111”), which prohibits discriminatory tax treatment against federal employees by state governments. Under the Supreme Court’s Davis test, according to Dawson, a state law violates § 111 by imposing higher taxes on income from the federal government than income from the state government when there are no significant differences between the two to justify the heavier tax burden placed on federal income. Respondent Dale Steager, the State Tax Commissioner of West Virginia, counters that § 12(c)(6) does not discriminate against federal retirees because § 12(c)(6) applies in very narrow cases. Steager further argues that West Virginia treats federal employees the same as state employees, and Dawson is not similarly situated to state retirees that are eligible for this tax exemption. The outcome of this case will affect state-level taxing policy and tax exemptions afforded only to state employees.

Questions as Framed for the Court by the Parties

Whether the doctrine of intergovernmental tax immunity, as codified in 4 U.S.C. § 111, prohibits the State of West Virginia from exempting from state taxation the retirement benefits of certain former state law-enforcement officers, without providing the same exemption for the retirement benefits of former employees of the United States Marshals Service.

Petitioner, James Dawson, retired from his position as a U.S. Marshal on March 31, 2008. Steager v. Dawson at 2. Dawson currently receives retirement income from the Federal Employee Retirement System (“FERS”). Id.

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LaRue v. DeWolff, Boberg & Assoc.

Issues

1. May an individual bring a claim on behalf of the plan under ERISA section 502(a)(2) for failure to follow the individual's investment instructions, where the only recovery would be to the individual's personal account?

2. When ERISA section 502(a)(3) limits a participant to suing for equitable relief, does that include reimbursement by a fiduciary for lost profits to a 401(k) retirement plan?

 

James LaRue, an employee of the management consulting firm DeWolff, Bobert & Associates, sued his employer for improper management of his 401(k) pension plan. Under DeWolff's pension plan, LaRue could choose among a variety of investment options for his individual account. In his suit, LaRue alleged that DeWolff failed to follow his investment instructions. LaRue sued under sections 502(a)(2) and 502(a)(3) of the Employee Retirement Income Security Act (ERISA). The Fourth Circuit held that neither section authorized LaRue's claim because it was an individual claim and because LaRue sought compensatory damages. LaRue argues that his claim benefits the plan as a whole rather than himself individually, and that he seeks equitable relief rather than compensatory damages. The outcome of this case will determine whether an individual can use these provisions to sue an employer for improper management of a pension fund.

Questions as Framed for the Court by the Parties

1. Section 502(a)(2) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. 1132(a)(2), provides that a "civil action may be brought ... by a participant ... for appropriate relief under section 1109 of this title." 29 U.S.C. 1109 states that "a fiduciary with respect to a plan who breaches any ... duties imposed upon fiduciaries ... shall be personally liable to make good to such plan any losses to the plan resulting from each such breach."

The First Question Presented is:

Does ? 502(a)(2) of ERISA permit a participant to bring an action to recover losses attributable to his account in a "defined contribution plan" that were caused by a fiduciary breach? Hereinafter, this will be referred to as the "502(a)(2) Question."

2. Section 502(a)(3) of ERISA, 29 U.S.C. 1132(a)(3), provides that a "civil action may be brought ... by a participant ... to obtain other appropriate equitable relief ... to redress ... violations" of the statute.

The Second Question Presented is:

Does ? 502(a)(3) permit a participant to bring an action for monetary "make-whole" relief to compensate for losses directly caused by fiduciary breach (known in pre-merger courts of equity as "surcharge")? Hereinafter, this will be referred to as the "502(a)(3) Question."

James LaRue, an employee of the management consulting firm DeWolff, Boberg & Associates ("DeWolff"), brought suit against his employer and his employer's 401(k) plan for breach of fiduciary duty with respect to administration of the plan, in which LaRue was a participant. See LaRue v. DeWolff, Boberg & Assoc., Inc.

Acknowledgments

The authors would like to thank Professors Davidson Douglas and Emily Sherwin for their insights into LaRue v. DeWolff.

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Stanley v. City of Sanford, Florida

Issues

Under the Americans with Disabilities Act, does a former employee lose her right to sue over discrimination with respect to post-employment benefits solely because she no longer holds her job?

This case asks the Supreme Court whether a former employee can sue over discrimination under the Americans with Disabilities Act after they have already left their job. Stanley argues that retirees, such as herself, have the right to sue regardless of whether they meet the definition of a qualified individual, and alternatively, that she qualifies as an eligible qualified individual even though she is suing post-employment. Sanford contends that Stanley did not previously argue that retirees have the right to sue regardless of their status as qualified individuals and has therefore waived her right to make this argument. Moreover, Sanford maintains that Stanley does not meet the definition of a qualified individual because Congress did not intend for employees to sue under the ADA post-employment. The outcome of this case has implications for disabled employees’ retirement benefits and the economic freedom of both employers and cities. 

Questions as Framed for the Court by the Parties

Whether, under the Americans with Disabilities Act, a former employee — who was qualified to perform her job and who earned post-employment benefits while employed — loses her right to sue over discrimination with respect to those benefits solely because she no longer holds her job.

In 1999, Karyn Stanley became a firefighter for the City of Sanford, Florida and served for over fifteen years before being diagnosed with Parkinson’s disease in 2016. Stanley v.

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variable life insurance

Variable life insurance is a form of whole life insurance that accumulates cash value on a tax-deferred basis. Variable life insurance operates similarly to a mutual fund because the insured pays premiums that go into a separate investment account owned by the insured. The variable life insurance policy yields a minimum death benefit to the insured like other life insurance policies.

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