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Daniels-Hall v. National Educ. Ass’n, 629 F.3d 992, 160 Lab.Cas. P 10,333, 264 Ed. Law Rep. 58, 50 Employee Benefits Cas. 1481, 10 Cal. Daily Op. Serv. 15,660, 2010 Daily Journal D.A.R. 18,962, Pens. Plan Guide (CCH) P 24008Y

Facts

The plaintiffs, Jerre Daniels-Hall and David Hamblen, are members of the NEA and employees of local public school districts. They participated in their employers' section 403(b) retirement plans and selected Valuebuilder annuities, which were marketed by the NEA as favorable retirement options. The NEA, through its Member Benefits Corporation, worked with insurance companies to offer these annuities, receiving significant royalties and fees in return. The plaintiffs alleged that the NEA failed to disclose the high fees associated with these annuities, which led them to believe they were making a sound investment.

The NEA is a public employee labor union, consisting of over 3.2 million teachers, administrators, and other educators in public schools throughout the United States. The NEA provides numerous benefits to its members, including insurance coverage, discounts, and other services. Many of those benefits are provided through NEA's Member Benefits Corporation (“NEAMBC”), a wholly owned subsidiary of the NEA.

Issue

Whether the National Education Association established or maintained an employee pension benefit plan under the Employee Retirement Income Security Act of 1974 by endorsing and aggressively marketing certain tax-sheltered annuities.

We must decide whether the National Education Association established or maintained an employee pension benefit plan under the Employee Retirement Income Security Act of 1974 by endorsing and aggressively marketing certain tax-sheltered annuities.

Rule

ERISA applies to any employee benefit plan established or maintained by an employer or employee organization, but certain plans, including those established by governmental entities, are exempt from ERISA's requirements.

ERISA applies to “any employee benefit plan if it is established or maintained … by any employer … or … by any employee organization … or by both.”

Analysis

The court analyzed whether the NEA's actions constituted the establishment or maintenance of an employee pension benefit plan under ERISA. It concluded that the NEA's marketing and endorsement of the Valuebuilder annuities did not meet the criteria for establishing or maintaining a plan, as the annuities were not created or funded by the NEA or the school districts, which were governmental entities exempt from ERISA.

The court analyzed whether the NEA's actions constituted the establishment or maintenance of an employee pension benefit plan under ERISA. It concluded that the NEA's marketing and endorsement of the Valuebuilder annuities did not meet the criteria for establishing or maintaining a plan, as the annuities were not created or funded by the NEA or the school districts, which were governmental entities exempt from ERISA.

Conclusion

The court affirmed the district court's dismissal of the plaintiffs' claims, concluding that the NEA did not establish or maintain an employee pension benefit plan under ERISA.

The court affirmed the district court's dismissal of the plaintiffs' claims, concluding that the NEA did not establish or maintain an employee pension benefit plan under ERISA.

Who won?

The National Education Association prevailed in the case because the court found that it did not establish or maintain an employee pension benefit plan under ERISA.

The National Education Association prevailed in the case because the court found that it did not establish or maintain an employee pension benefit plan under ERISA.

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