Opinion ID: 1359769
Heading Depth: 2
Heading Rank: 1

Heading: The Inapplicability of ERISA

Text: ERISA generally applies to any employee benefit plan if it is established or maintained by an employer engaged in commerce and/or an employee organization representing employees engaged in commerce. 29 U.S.C. § 1003(a). ERISA allows an employee benefit plan to be terminated, under stated conditions. See generally id. § 1341. One method of plan termination is the purchase [of] irrevocable commitments from an insurer to provide all benefit liabilities under the plan, id. § 1341(b)(3)(A)(i), i.e., the purchase of annuities. See generally Beck, 127 S.Ct. at 2316-17. When an employer terminates an employee benefit plan and provides for the payment of benefits by purchasing annuities in accordance with 29 U.S.C. § 1341(b)(3)(A)(i), the annuities and the benefits they provide are no longer covered by ERISA: [T]erminating a plan through purchase of annuities (like terminating through distribution of lump-sum payments) formally severs the applicability of ERISA to plan assets and employer obligations. Upon purchasing annuities, the employer is no longer subject to ERISA's multitudinous requirements, such as (to name just one) payment of insurance premiums to the [Pension Benefit Guaranty Corporation (PBGC)], § 1307(a). And the PBGC is likewise no longer liable for the deficiency in the event that the plan becomes insolvent; there are no more benefits for it to guarantee. The assets of the plan are wholly removed from the ERISA system, and plan participants and beneficiaries must rely primarily (if not exclusively) on state-contract remedies if they do not receive proper payments or are otherwise denied access to their funds. Beck, 127 S.Ct. at 2318 ( are  emphasized in original; other emphases added). There is no contention here that Merrill Lynch failed to comply with the ERISA requirements for termination of the relevant Plan. Thus, the district court erred in ruling that the Annuity contracts . . . constitute the pension plan, 541 F.Supp.2d at 596 (emphasis added). The purchase of the Annuities instead terminated the Plan; and termination formally sever[ed] the applicability of ERISA. Beck, 127 S.Ct. at 2318. Plaintiff's claims that MetLife should have been, and should be, paying the surviving spouse benefits to plaintiff or to Hallingby's Estate, rather than to Harrison, are claims under the Annuities. The Annuities are not governed by ERISA, and plaintiff's claims must be resolved on the basis of state-law principles.