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COLLECTED WISDOM™ on Court and Legal Actions Related to Retirement Plans

A directory and index of articles that review what is happening in the courts and legal system.

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Schlichter Targets Another MEP

The law firm of Schlichter Bogard & Denton has a new target, multiple employer plans. They've just filed their second excessive fee suit in that genre. This time the target is the Pentegra Defined Contribution Plan for Financial Institutions, a multiple employer plan, or MEP.

Source: Napa-net.org, September 2020

More Sutter Health 403b Plan Participants Challenge Plan Investments

A second lawsuit has been filed against fiduciaries of the Sutter Health 403b Savings Plan for breaches of their fiduciary duties under ERISA. As in a lawsuit filed in July, the plaintiffs in the recent case challenge the use of an actively managed TDF suite over an index suite.

Source: Planadviser.com, September 2020

How to Minimize Judicial Review of ERISA Fiduciary Decisions

The courts have stated that their review of fiduciary decisions is both exacting and deferential. A recent decision from the Court of Appeals for the Seventh Circuit offers help to ERISA benefit professionals who prefer to maximize judicial deference in favor of the fiduciaries.

Source: Beneficiallyyours.com, September 2020

A "Vaccine" for COVID-19 ERISA litigation

ERISA litigation tends to spike when economic uncertainty or turmoil rises. Although many things contribute to this historically verifiable trend, it is easiest for employers to think about just two of them. First, an employer-sponsored retirement plan, like a 401k or pension plan, is likely to suffer from market volatility. Second, employer-sponsored health and welfare plans will see upticks in claims issues during a health crisis. Here are some key considerations and preventive measures that every plan sponsor and fiduciary can monitor and implement to avoid a COVID-19-related spike in ERISA litigation.

Source: Constangy.com, September 2020

Latest 401k Lawsuit Filed in an Avalanche of COVID-19 Litigation

B. Braun Medical is among the latest companies sued so far this year in an unusual wave of 401k litigation. That company, which was sued Aug. 26 in U.S. District Court in the Eastern District of Pennsylvania, is among more than 60 others facing new claims this year, according to an analysis by Bloomberg Law.

Source: Investmentnews.com (registration may be required), September 2020

The CareerBuilder 401k Decision: Three Key Lessons for Plan Sponsors and ERISA Attorneys

Currently, we have different federal courts handing down various interpretations of ERISA. As a result, in some cases, the public's guaranteed rights and protections under ERISA are dependent on where the plan participants reside. These inconsistent interpretations and rulings are unnecessarily exposing plan sponsors to potential liability exposure. The purpose of this post is to alert plan sponsors, as well as attorneys, to these "traps" to ensure that plan participants are properly protected.

Source: Iainsight.wordpress.com, September 2020

Medical Device Manufacturer Hit With ERISA Excessive Fee Suit

Law firm Capozzi Adler has filed an ERISA lawsuit on behalf of former participants of the B. Braun Medical Inc. Savings Plan alleging plan fiduciaries failed in their duties to ensure investment fees were reasonable and not excessive. The case contains allegations similar to those in many complaints filed this year.

Source: Planadviser.com, August 2020

Participant Data: A Retirement Plan Asset?

In recent retirement plan litigation, a plaintiffs' counsel attempted to make the novel argument that retirement plan participant data is a plan asset that should be afforded the same protections of ERISA that apply to other plan assets, such as monetary assets. While the argument has not yet succeeded in the courts, some settlements have included terms involving restrictions as to the use of plan data. Is plan data considered a plan asset under ERISA?

Source: Cammackretirement.com, August 2020

Parties in Lawsuit Over Revenue Sharing in 401k Plan Agree to Settle

Parties in a lawsuit alleging BTG International and company officials allowed its Profit Sharing 401k Plan recordkeeper to receive excessive and unreasonable compensation through a variety of undisclosed channels have filed a motion for preliminary approval of a settlement agreement.

Source: Plansponsor.com, August 2020

Massive 401k Suit Settlement Struck

In a remarkably short period, an excessive fee suit involving proprietary funds has settled for what may be the largest monetary settlement among those cases to date.

Source: Napa-net.org, August 2020

Excessive Fee Suit Parties "Papering Up" Settlement

The parties in an excessive fee suit that had been dismissed by a federal court, have now come to terms. It was only just over a month ago that the suit, filed last fall by Carl Martin against CareerBuilder, claimed that the plan fiduciaries caused the plan to invest millions in imprudent investment options, motivated by revenue sharing payments back to ADP and Morgan Stanley.

Source: Napa-net.org, August 2020

LinkedIn Joins List of Plan Sponsors Targeted in Stream of Excessive Fee Suits

According to the complaint, the plan has at all times during the class period maintained more than $164 million in assets qualifying it as a large plan in the defined contribution plan marketplace and giving it "substantial bargaining power regarding the fees and expenses that were charged against participants' investments." The plaintiffs allege that the defendants did not try to reduce the plan's expenses or scrutinize each investment option that was offered in the plan to ensure it was prudent.

Source: Plansponsor.com, August 2020

401k Fiduciary Litigation on the Rise: Take These Steps Now to Avoid Liability Later

A recent spate of lawsuits against large employers' 401k retirement plans has refocused attention on the need for plan administrators to ensure that they are honoring their fiduciary duties and prudently managing their Plans. Plan administrators should take several steps now to ensure that they have good defenses when lawsuits are filed.

Source: Foley.com, August 2020

American Airlines 401k Plan Not Required to Offer Stable Value Fund

Among the many claims brought by plaintiffs challenging investment offerings in defined contribution plans is the claim that plans should offer stable value funds instead of more conservative capital preservation funds, such as money market funds and deposit accounts that are insured by the U.S. government. Plaintiffs have argued that stable value funds are inherently better than more conservative options because they typically provide a higher rate of return. A federal district court in Texas recently dismissed this type of claim in a case brought against American Airlines.

Source: Erisapracticecenter.com, August 2020

4th Circuit Ruling Supports ERISA Stock-Drop Plaintiffs

Since an influential Supreme Court ruling known as Dudenhoeffer, plaintiffs have struggled to defeat dismissal motions in so-call stock-drop lawsuits, but a new panel ruling in the 4th Circuit bucks that trend.

Source: Planadviser.com, August 2020

Estee Lauder and Costco Targeted in 401k Lawsuit Surge

Lawsuits involving 401k plans with more than $1 billion have been filed against large corporations in the past couple of months, all centered around regulatory violations and the general mismanagement of 401k retirement accounts. Estee Lauder and Costco are now among a growing number of companies facing overwhelming backlash from employees, consumers, and lawmakers for these alleged offenses.

Source: Forbes.com, August 2020

4th Circuit Revives Lawsuit Over 'Imprudent' Gannett 401k Plan

A federal appeals court has revived a proposed class-action lawsuit accusing Gannett Co Inc of imprudently maintaining a risky single-stock fund in its employees' 401k plan, resulting in tens of millions of dollars in losses.

Source: Reuters.com, August 2020

Mercy Health Corp. Faces 403b Plan Excessive Fee Lawsuit

An ERISA lawsuit has been filed against fiduciaries of Mercy Health Corp.'s 403b plan. Among other things, the lawsuit alleges the health care system unreasonably maintained investment advisers and consultants despite the known availability of others with lower costs and/or better performance histories.

Source: Plansponsor.com, August 2020

Judge Finds 401k Participants Proved No Harm From Lack of Stable Value Fund

A more than four-years-long lawsuit arguing American Airlines should have offered a stable value fund in its 401k plan rather than the AA Credit Union Fund has ended with a federal judge granting summary judgment to American Airlines.

Source: Planadviser.com, August 2020

Illinois Federal Court Dismisses ERISA Claims Against 401k Fiduciaries

ERISA requires plan fiduciaries to act prudently and loyally when making decisions about a plan. In Martin v CareerBuilder, LLC, a federal district court held that the plaintiff's allegations about expensive recordkeeping costs and imprudent investment options failed to give rise to an inference that the defendants had violated their ERISA obligations.

Source: Internationallawoffice.com, August 2020

Media Company Latest to Face Legal Scrutiny Over Fidelity Freedom Funds

A new ERISA lawsuit has been filed in the U.S. District Court for the Southern District of New York, naming as defendants the Omnicom Group and various individuals and committees who are alleged to be fiduciaries of the media company's retirement plan. The plaintiffs say these fiduciaries breached the duties of prudence and loyalty demanded by ERISA in their management and oversight of the plan's investment menu.

Source: Planadviser.com, August 2020

Avoiding COVID-19 Benefits-Related Litigation

The COVID-19 pandemic has brought about a staggering number of changes for employers in the past few months, requiring them to make significant changes to workplace processes and policies virtually on the fly. In this environment, it's important to review employee benefits plans to ensure these changes have not triggered any adverse consequences.

Source: Hallbenefitslaw.com, August 2020

Federal Court Dismisses ERISA Claims Against 401k Fiduciaries

ERISA requires plan fiduciaries to act prudently and loyally when making decisions about the plan. In Martin v. CareerBuilder, a federal district court held that the complaint's allegations about expensive recordkeeping costs and imprudent investment options failed to give rise to an inference that the defendants violated their ERISA obligations.

Source: Employeebenefitsblog.com, August 2020

Quest Diagnostics Faces Additional ERISA Litigation

A new ERISA lawsuit has been filed in the U.S. District Court for the District of New Jersey, naming Quest Diagnostics and several of its retirement plan committees as defendants. The medical testing company is already facing scrutiny for its use of actively managed investments within its retirement plan; it is now the subject of a broader excessive fee lawsuit.

Source: Planadviser.com, July 2020

Princeton ERISA Settlement Features $5.8M Price Tag

Details of a settlement of an ERISA lawsuit against Princeton University that was previously announced have been posted. The university has agreed to pay $5.8 million to settle a lawsuit alleging excessive fees for recordkeeping and investments. In addition to the payment into a settlement fund, Princeton has agreed to what the settlement agreement calls "therapeutic relief," including a pledge to not raise fees.

Source: Planadviser.com, July 2020

Citing "Endless Risk," District Court Disqualifies Firm From 401k Case

A New York district court judge earlier this month disqualified a firm representing hundreds of 401k plan participants based on a conflict of interest. The judge called the risks posed "endless," and requested additional briefing on whether the firm would be allowed to remain as counsel in related arbitration proceedings in Missouri. The ruling spotlights the sometimes-thorny conflict issues that can arise in ERISA litigation.

Source: Lexology.com (registration may be required), July 2020

Appeals Court Hands Wells Fargo Another Win in Stock Drop Case

The 8th U.S. Circuit Court of Appeals has affirmed a ruling out of the U.S. District Court for the District of Minnesota. Assuming there will not be a successful Supreme Court appeal, the ruling brings to a close a set of complex stock-drop lawsuits filed against Wells Fargo by its employees. The case represents yet another example of ‘stock drop’ litigation that has failed to make it beyond the pleading stage after the influential Supreme Court ruling in a case known as Dudenhoeffer.

Source: Planadviser.com, July 2020

Sutter Health 403b Plan the Target of Excessive Fee Suit

A lawsuit has been filed against fiduciaries of the Sutter Health 403b Savings Plan for breaches of their fiduciary duties under ERISA. Defendants are accused of failing to leverage the size of the plan to negotiate for lower investment and recordkeeping fees, among other things.

Source: Planadviser.com, July 2020

Matrix Trust Accused of Being Deceptive About Fees

Matrix Trust Co. is facing a 401k class-action lawsuit from a Minnesota engineering firm that alleges the company took millions of dollars from retirement plan accounts. MBA Engineering alleges Matrix Trust Co., a subsidiary of Broadridge Financial Solutions, unlawfully retained potentially hundreds of millions of dollars in 12b-1 fees, non-float cash interest, and float cash interest from more than 60,0000 customers through nondisclosure and concealment.

Source: Planadviser.com, July 2020

2nd Circuit Sends IBM Stock-Drop Case Back to District Court

The saga continues in the ERISA stock-drop litigation against the fiduciary committee for IBM's employee stock ownership plan. The 2nd Circuit has reinstated its 2018 decision to revive the case after the Supreme Court vacated that decision earlier this year (Jander v. Retirement Plans Comm. of IBM, No. 17-3518 (2nd Cir. June 22, 2020)). The case now heads back for reconsideration by the district court that originally dismissed the case in 2017.

Source: Mercer.com, July 2020

Stock Drop Litigation Is on the Rise: Will Your Retirement Plan Be a Target?

Stock price plunges caused by COVID and current market conditions create fertile ground for stockholder litigation, including claims by participants in retirement plans funded with employer securities that fiduciaries should have eliminated company stock investments to protect against declining values. These claims present a dilemma for plan fiduciaries who owe certain fiduciary duties to the plan and its participants but must also grapple with intricate securities laws governing company stock. One important aspect of defending these cases involves understanding the interplay between securities laws and fiduciary obligations under ERISA.

Source: Velaw.com, July 2020

Koch Industries Sued Over 401k Plan Fees

Koch Industries, the parent of Georgia-Pacific, Infor, and other companies, is being sued for allowing the record keeper of its 401k and other defined-contribution plans to charge fees that plaintiffs contend are excessive, according to a complaint filed in federal court in Atlanta.

Source: Investmentnews.com (registration may be required), July 2020

District Court Dismisses 401k Excessive Fee Lawsuit

The U.S. District Court for the Northern District of Illinois has dismissed a putative class action lawsuit brought under ERISA by a participant of 401k plan against the plan's fiduciaries, alleging that the fiduciaries allowed the plan to incur unreasonable expenses and retain underperforming investment options. In its opinion in Martin v. CareerBuilder, LLC, et al., issued on July 1, 2020, the court concluded that there were insufficient allegations of a fiduciary breach when the plan's investment lineup contained a diverse array of investment options with varying expense ratios.

Source: Hklaw.com, July 2020

Alleged Boeing Retirement Plan Fraudster Charged in California

A federal grand jury has indicted an Orange County man on charges that he fraudulently obtained access to Boeing employees' retirement accounts. The grand jury heard sufficient evidence to charge Hao Vo, who is 30, for the theft of hundreds of thousands of dollars from Boeing employees' accounts. Vo is charged with three counts of bank fraud and one count of aggravated identity theft.

Source: Plansponsor.com, July 2020

ERISA Complaint Filed Against Biogen

The latest ERISA fiduciary breach lawsuit has been filed by a proposed class of plaintiffs in the U.S. District Court for the District of Massachusetts, naming among others as defendants Biogen Inc. and its board of directors. The complaint points to 2018 as an example year, suggesting that a significant percentage of funds in the plan at that time were "much more expensive than comparable funds found in similarly sized plans."

Source: Plansponsor.com, July 2020

Coronavirus Benefits Lawsuits Have Begun

Former participants in a 401k profit-sharing plan recently filed suit in Federal court in New Jersey seeking recovery of investment losses allocated to their accounts by the employer-sponsor. The losses were incurred when the employer imposed a special valuation date of April 30, 2020, to reflect the plan's investment losses incurred during the COVID-19 lockdown. This mid-year valuation reduced the account balances available for distribution to the former participants.

Source: Gct.law, July 2020

New Cybersecurity Decision Highlights Potential Claims Against Plan Sponsors

Based on long-standing ERISA law, it seems likely that plan sponsors will be held accountable for failing to fulfill their fiduciary responsibilities of prudence and loyalty when the vendors they hire allow a breach to occur. However, one reason the law has not been clarified to date is that often these participant claims have been settled quietly. Even a much-publicized lawsuit against Estee Lauder and its plan committee ended up being settled before trial. A pending suit against Abbott Labs could proceed to trial and there have also been two preliminary decisions in another case with the potential to clarify the rules.

Source: Cohenbuckmann.com, July 2020

Retirement Plan Excessive Fee Litigation Heats Up This Summer

Until recently, it appeared that plaintiffs' firms had taken a hiatus from excessive fee litigation targeted at large companies. Now there has been an uptick in fiduciary litigation involving 401k and 403b plans of private employers. Last month, at least three new excessive fee cases were filed in Wisconsin and at least seven additional excessive fee cases were filed in other jurisdictions.

Source: Quarles.com, July 2020

Judge Refuses to Dismiss Goldman Sachs Self-Dealing Suit

A federal judge has denied a motion to dismiss a lawsuit alleging Goldman Sachs' 401k plan fiduciaries retained expensive, low-performing proprietary funds in the plan for the benefit of itself and a subsidiary. A participant in the Goldman Sachs 401k plan alleged that the defendants retained underperforming proprietary mutual funds that an objective fiduciary in their position would have removed.

Source: Planadviser.com, July 2020

Astellas, Aon Sued Over CITs in 401k Plan

The class-action lawsuit filed July 1st in U.S. District Court in Chicago alleges that after Astellas and the administrative committee appointed Aon as the plan's discretionary investment manager in 2016, the defendants replaced almost all the plan's mutual funds with six collective investment trusts, five of which were Aon's.

Source: Pionline.com, July 2020

Schlichter Makes His Case for Participant Data as Plan Asset

The plaintiffs in an excessive fee suit have reiterated their argument that participant data is a plan asset and that the use of that data for non-retirement plan related purposes constitutes a fiduciary breach. The response, asking for a denial of Fidelity's motion to dismiss a suit that, at least in part, alleged that Fidelity "misappropriated a Plan asset to derive substantial additional income and continues to do so while receiving excessive recordkeeping fees for managing that asset."

Source: Napa-net.org, July 2020

Man Accused of Stealing Boeing IDs, Looting Retirement Plan

A federal grand jury on Tuesday indicted an Orange County, California man on charges that he fraudulently obtained access to Boeing employees' retirement accounts. The man is accused of siphoning their money by making hundreds of thousands of dollars' worth of fraudulent money transfers to himself.

Source: 401kspecialistmag.com, July 2020

Another Lawsuit Challenges Use of Untested CITs in 401k Plan

Former employees of Astellas US have sued the pharmaceutical company, its board of directors, and its retirement plan administrative committee, as well as the plan's discretionary investment manager, Aon Hewitt Investment Consulting, for breaches of fiduciary duties and prohibited transactions under ERISA. According to the complaint, instead of acting in the exclusive best interest of participants, Aon Hewitt, now known as Aon Investments USA, acted in its own interest by causing the plan to invest in Aon's proprietary collective investment trusts for Aon's benefit. The Astellas defendants are also accused of failing to use the plan's bargaining power to negotiate reasonable fees for investment management services.

Source: Planadviser.com, July 2020

403b Plan's Use of Actively Managed TDFs Challenged in Lawsuit

A former participant of the MedStar Health Retirement Savings Plan has filed a proposed class-action lawsuit against MedStar, its 403b retirement plan committee, and individual committee members for breaching their fiduciary duties under ERISA. The lawsuit says the defendants not only selected and retained high-cost and poorly performing investments but also failed to fully disclose the expenses and risk of the plan's investment options to participants.

Source: Planadviser.com, July 2020

Supreme Court Rules "Actual Knowledge" Under ERISA "Means What It Says"

In Intel Corporation Investment Policy Committee v. Sulyma, the U.S. Supreme Court unanimously sided with the plan participant, allowing his breach of fiduciary duty claims to proceed because he claimed not to have "actual knowledge" under ERISA of claims challenging the plan fiduciaries' investment decisions, despite receiving plan literature disclosing the details of those investments. If the plan participant is found to have "actual knowledge" of the fiduciary breach, he or she has three years, running from the breach or violation, to file suit. Where no "actual knowledge" is found, however, a longer six-year statute of limitations applies.

Source: Icemiller.com, July 2020

401k Lawsuit Costs Fidelity $28.5 Million

Fidelity Investments is settling a lawsuit involving its 401k plan for $28.5 million, according to court records filed Thursday. The settlement resolves a class-action case brought in 2018 that alleged the firm breached its fiduciary responsibility to plan participants by including its products on the plan menu. The company had been similarly targeted in a prior lawsuit that it settled in 2014 for $12 million. As part of that, the company agreed to rebate revenue sharing from mutual funds on the plan menu back to the plan.

Source: Investmentnews.com (registration may be required), July 2020

Three New ERISA Lawsuits Bash Actively Managed TDFs

A participant in Costco's retirement plan filed a lawsuit claiming the fiduciaries of the plan breached their duties under ERISA by authorizing the plan to provide inappropriately expensive and underperforming active management funds. Similar allegations are echoed in three new lawsuits filed this week against Quest Diagnostics, IQVIA Holdings, and Eversource. All three suits question the use of actively managed funds provided by Fidelity, although the asset manager is not itself named as a defendant in any of the complaints.

Source: Planadviser.com, July 2020

Fifth Circuit Upholds Dismissal in Single Stock Fund 401k Case

The Fifth Circuit in Schweitzer v. Inv. Comm. of Phillips 66 Sav. Plan dismissed claims against 401k plan fiduciaries related to allowing plan participants to hold a single stock that was not an employer security as a plan investment alternative. As discussed here, the Court's decision offers meaningful guidance to fiduciaries of participant-directed plans and, more specifically, to those evaluating what to do with a company stock fund after a spinoff or divestiture.

Source: Erisapracticecenter.com, June 2020

Estee Lauder Faces 401k Plan Excessive Fee Lawsuit

The lawsuit argues that while the TDFs in the plan are CITs, they are private label CITs with much higher expense ratios than the typical CITs offered by JPMorgan.

Source: Planadviser.com, June 2020

Fiduciary Exception to Attorney-Client Privilege for ERISA Plans

This paper explains the doctrine commonly referred to as the fiduciary exception to the attorney-client privilege. It is important for plan sponsors, fiduciaries, and their legal advisors to understand the rules regarding when the fiduciary exception doctrine can result in communications between a plan fiduciary and an attorney not to be privileged and become susceptible to being produced in litigation. This paper also explains how the fiduciary exception doctrine has been used to try to obtain communications ordinarily protected by the attorney work product doctrine. The principles outlined in this paper can help employee benefits counsel and their clients better understand how best to protect the privacy of their communications and how to anticipate when these communications may be open to examination by plan participants.

Source: Amazonaws.com, June 2020

Costco Sued Over 401k Plan Investment, Recordkeeping Fees

A participant in the Costco 401k Retirement Plan has filed a lawsuit against the company alleging violations of ERISA. The complaint calls out the warehouse club's use of "more costly 'actively managed funds' rather than 'index funds' that offered equal or better performance at substantially lower cost."

Source: Planadviser.com, June 2020

Lessons Learned From a Litigation Settlement

The recent $17 million settlement involving Neuberger Berman stands out because, while those case citations remain, the narrative provides a kind of checklist for fiduciaries who might want to make their plans more secure from random litigation. Consider the points this settlement agreement said might arise, and be decided against the plaintiffs' case, and pointers to take from them.

Source: Napa-net.org, June 2020

2nd Circuit Bounces 401k Stock-Drop Case Back to District Court

A long-running 401k plan stock-drop case that could set a new standard on where the line between the obligations of corporate officials and ERISA plan fiduciaries has been remanded again to a lower court.

Source: Napa-net.org, June 2020

401k Plan Sued for COVID-19-Related Missteps

If you were wondering how long it would take someone to file suit regarding events related to the COVID-19 pandemic, wonder no more. In what seems to be the first suit filed against a 401k plan post-COVID-19 outbreak, the suit was brought by plaintiffs and former participants against the Behan Bros, Inc. Retirement Plan. Behan Brothers is a construction company located in Middletown, RI. The plan all participated in was a profit-sharing 401k plan, albeit one without participant direction.

Source: Napa-net.org, June 2020

TPA Embezzlers Plead Guilty

Vantage Benefits Administrators co-owner Jeffery Richie, 55, and his wife (and co-owner) Wendy Richie, 59, have pled guilty to several counts in federal court for their role in a $15 million embezzlement scheme.

Source: Napa-net.org, June 2020

Neuberger Berman 401k Committee Reaches $17 Million Settlement

A committee overseeing Neuberger Berman's 401k retirement plan reached a $17 million settlement to resolve claims it breached its fiduciary duties to employees by letting them invest large sums in a fund that suffered from high fees and "abysmal performance."

Source: Reuters.com, June 2020

Recordkeeping Fee Structure Questioned in KeyCorp ERISA Lawsuit

A new ERISA fiduciary breach lawsuit has been filed in the U.S. District Court for the Northern District of Ohio, naming KeyCorp as the primary defendant, along with the trust committee tasked with overseeing the company's DC retirement plan. The plaintiffs accuse KeyCorp of causing plan participants to pay excessive recordkeeping and related administrative expenses during the class period.

Source: Planadviser.com, June 2020

401k Lawsuits Keep Piling Up

Despite the slowdown that the COVID-19 pandemic has caused in many parts of the country, 401k litigation appears largely unaffected. The two recent lawsuits follow other claims filed weeks earlier against Land O' Lakes and Schneider Electric over their 401k plans. Cleveland-based KeyCorp, the parent of KeyBank National Association, was sued last Thursday in the U.S. District Court in the Northern District of Ohio. The plaintiffs accuse the plan sponsor of failing to rein in the plan's recordkeeping fees.

Source: Investmentnews.com (registration may be required), June 2020

Sixth Circuit: Chapter 13 Debtor May Exclude 401k Plan Contributions From Disposable Income

In a case of first impression, the US Court of Appeals for the Sixth Circuit held that a Chapter 13 debtor may exclude from her bankruptcy petition disposable income the post-petition 401(k) plan contribution dollar amount if she contributed that amount to her plan before her bankruptcy.

Source: Westlaw.com, June 2020

Chapter 13 Debtors Can Shield Ongoing 401k Contributions From Creditors, 6th Circuit

Wage-earners who contribute to an employer-sponsored retirement plan can continue to do so at the same rate after filing for Chapter 13 bankruptcy protection, a federal appeals court held Monday in a case of first impression nationwide.

Source: Reuters.com, June 2020

Appeals Court Upholds Dismissal of Phillips 66 401k Stock Case

A federal appeals court in New Orleans has upheld a lower court's dismissal of a complaint by participants in a Phillips 66 Co. 401k plan that fiduciaries violated their ERISA duties in managing a stock investment within the plan. "Plaintiffs claim that holding a single-stock fund is imprudent per se because of the risk inherent in holding an undiversified asset," the three-judge panel wrote on May 22. "But ERISA contains no prohibition on individual account plans' offering single-stock funds."

Source: Pionline.com, June 2020

Fifth Circuit Holds That Offering Single Stock Investments in a 401k Plan is Not Per-Se Imprudent

The Fifth Circuit held that although the stock of the former parent was not statutorily exempt from ERISA's diversification because it was no longer a "qualifying employer security," there was no obligation for the plan fiduciaries to force plan participants to divest from the funds. The court explained that ERISA contains no per se prohibition on individual account plans offering single-stock funds.

Source: Haynesboone.com, June 2020

Settlement Reached in Emory University 403b Excessive Fee Case

Schlichter Bogard & Denton filed a preliminary settlement approval motion on behalf of Emory University employees and retirees in their suit against the university involving their 403b retirement plan. The plaintiffs in the case, filed in August 2016, sued for alleged breach of fiduciary duty under ERISA. The settlement terms include the creation of a $16.75 million settlement fund for the plaintiffs, as well as substantial non-monetary relief involving changes in the 401k plan.

Source: Streetinsider.com, May 2020

Land O'Lakes Faces 401k Excessive Fee Suit

Law firm Capozzi Adler has struck again, this time with a lawsuit against fiduciaries of the Land O'Lakes Employee Savings & Supplemental Retirement Plan. As with the other complaints filed by the firm on behalf of retirement plan participants and beneficiaries, it alleges that plan fiduciaries breached their fiduciary duties under ERISA by failing to objectively and adequately review the plan's investment portfolio with due care to ensure that each investment option was prudent in terms of cost and by maintaining certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories.

Source: Plansponsor.com, May 2020

Retirement Plan Cyberfraud Suit Moves On With Claims Against Both Parties

Jess Leventhal, The Leventhal Sutton & Gornstein 401k Profit Sharing Plan, and Leventhal Sutton & Gornstein, Attorneys at Law sued MandMarblestone Group and Nationwide for breach of contract, breach of fiduciary duty under the ERISA and negligence related to cyber fraud against Jess Leventhal's plan account. A federal judge previously moved forward ERISA claims against retirement plan providers and has recently allowed for a counterclaim by the providers against the plan sponsor.

Source: Planadviser.com, May 2020

Judge Gives Parties in Cornell 403b Suit Options for Proceeding

The ERISA lawsuit against Cornell University could face a time delay due to the COVID-19 pandemic. A federal judge noted that the pandemic will affect civil jury trials in the Southern District of New York "for a considerable and presently unknowable time to come."

Source: Planadviser.com, May 2020

Details of JPMorgan Chase 401k Self-Dealing Suit Settlement Revealed

Parties in a suit accusing fiduciaries of the JPMorgan Chase 401k Savings Plan of self-dealing have filed a settlement agreement and motion for preliminary approval in federal court. A payment of $9 million will be made to "fully, finally and forever resolve, discharge and settle the released claims."

Source: Planadviser.com, May 2020

Appellate Court Calls for Another Look at a 403b Suit

A university that had won a dismissal of claims in an excessive fee suit will now have to confront some of those charges. Noting that, "at this point, the complaint only needed to give the district court enough to infer from what is alleged that the process was flawed," the Eighth Circuit Court of Appeals breathed new life into some of the claims brought against fiduciaries of St. Louis-based Washington University's $3.8 billion 403b plan.

Source: Ntsa-net.org, May 2020

ManTech ERISA Challenge Shows Cases Moving Down Market

The plaintiffs have filed a new class-action ERISA complaint against the ManTech International Corp., alleging several fiduciary breaches in the operation of the firm's defined contribution retirement plan. The plan in question has about $800 million in assets, meaning it is quite a bit smaller than many other employers that have faced fiduciary breach lawsuits.

Source: Planadviser.com, May 2020

Groom and Chubb Explore Surge in Litigation Against Fiduciaries of Retirement Plans

Groom Law Group, together with Chubb, explores the surge in litigation against fiduciaries of employer-sponsored retirement plans, regardless of size. In the whitepaper, "The War on Retirement Fees: Is Anyone Safe?" Groom principal, Lars Golumbic, and Chubb Senior Vice President, North America Financial Lines, Alison Martin, examine the recent history and trends relating to excessive fee claims. The paper also discusses the plan features that may make it a target of litigation, and the steps fiduciaries can take to potentially reduce exposure to excessive fee lawsuits.

Source: Groom.com, May 2020

Supreme Court Rules on Plan Communications

ERISA gives a plaintiff three years from the date he or she has "actual knowledge" of an alleged breach to file a claim. The Supreme Court held that plaintiffs do not necessarily have "actual knowledge" if they have not read, or cannot recall reading, the information contained in disclosures. Plan sponsors should review how this recent decision raises the bar for defending allegations of fiduciary breach.

Source: Pnc.com, May 2020

Excessive Fees, Conflicts of Interest Alleged in New ERISA Lawsuit

The lawsuit, filed as a class action on behalf of participants and beneficiaries of the Magna Group of Companies Retirement Savings Plans, says the defendants did not try to reduce the plan's expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the plan to ensure it was prudent.

Source: Planadviser.com, May 2020

ADP Multiple Employer Plan Facing Excessive Fee Lawsuit

The lawsuit alleges the ADP defendants "have allowed unreasonable recordkeeping/administrative expenses to be charged to the plan; failed to adequately monitor the plan's recordkeeper and its affiliates, who the ADP defendants have permitted to design an investment menu unreasonably favorable to them despite the recordkeeper's clear conflicts of interest; and, along with NFP Retirement, selected, retained, and/or otherwise ratified high-cost and poorly-performing investments, when more prudent alternative investments were available."

Source: Planadviser.com, May 2020

Lawsuit Argues Fees Are Excessive for University of Miami 403b

Another lawsuit has been filed challenging fees for a university's 403b plan, this one against the University of Miami. The plaintiffs say there is additional evidence for their claims, "such as incorrect reporting on mandatory Department of Labor disclosures about the amount of administrative fees paid by [the] participants."

Source: Planadviser.com, May 2020

Lawsuit Says Host International Discriminated Against Tipped Employees in 401k

A proposed class-action lawsuit has been filed against Host International, a provider of meals to various travel and entertainment venues, alleging it and other plan fiduciaries refused to properly defer compensation of certain employees to the HMSHost 401k Retirement Savings Plan and Trust under the terms of the plan document. The complaint notes that the definition of compensation for deferral purposes in the plan document includes tips received.

Source: Planadviser.com, May 2020

ADP MEP Tapped in Excessive Fee Suit

A new excessive fee suit has been filed, one that purports to represent a class of some 5,000 employers participating in a multiple employer plan, or MEP. The suit was filed in the U.S. District Court for the District of New Jersey by McCaffree Financial Corp., individually as a participating employer co-sponsor and a fiduciary of the ADP TotalSource Retirement Savings Plan.

Source: Napa-net.org, May 2020

Judge Sacks Trader Joe's Excessive Fee Suit

Plan fiduciaries found a friendly judicial ear in their motion to dismiss an excessive fee suit aided by what appears to have been a weak case by the plaintiffs.

Source: Napa-net.org, May 2020

ERISA Fee Motions After COVID-19: A Substantive and Procedural Review

Two recent lower court decisions provide a primer on when a prevailing party in an ERISA case may recover fees (as a fee award is not automatic) and a window into the future of video hearings to resolve fee motions.

Source: Beneficiallyyours.com, May 2020

Barrick Gold Accused of Fiduciary Failures Regarding 401k Investments

An ERISA lawsuit has been filed against Barrick Gold of North America and other fiduciaries of its defined contribution retirement plans. The lawsuit alleges the defendants did not try to reduce the plan's expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the plan to ensure it was prudent.

Source: Planadviser.com, April 2020

403b Retirement Plan Fee Litigation Update

Despite the COVID-19 pandemic, 403b retirement plan litigation remains largely uninterrupted. While not all claims are successful, to manage risk, plan sponsors should understand the issues and keep track of the litigation surrounding retirement plans. This is a comprehensive update on the status of 403b retirement plan lawsuits.

Source: Cammackretirement.com, April 2020

New Lawsuit Could Clarify Fiduciary Responsibility for Cybersecurity

Abbott, as the plan sponsor, is a fiduciary and was responsible for supervising Alight's procedures for safeguarding plan assets, yet the complaint provides no information about what Abbot did or did not do to monitor Alight. Abbott may also have breached its duties of loyalty and prudence by its failure to hire a vendor with adequate internal procedures. In that event, Abbott and its fiduciaries would also be required to restore the loss.

Source: Cohenbuckmann.com, April 2020

401k Plan Participants Say Fiduciaries Ignored Excessive Fees

In a lawsuit targeting the Pharmaceutical Product Development Retirement Savings Plan, the plaintiffs allege that fiduciaries of the plan violated their duties under ERISA. They say the plan fiduciaries failed to objectively and adequately review the plan's investment portfolio to ensure each investment option was prudent in terms of cost and maintained certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories.

Source: Planadviser.com, April 2020

Second Excessive Fee Suit Targets Cerner Corp.

The Cerner Corp. now faces a second excessive fee fiduciary breach lawsuit. The new lawsuit, filed in the U.S. District Court for the District of Kansas, closely mirrors another pending ERISA challenge filed earlier this year against the Cerner Corp. In that case, the defense has filed a motion to compel arbitration because the plaintiff allegedly signed an arbitration agreement. While it repeats very similar claims, this new lawsuit seeks to establish that the plaintiff did not sign such an agreement.

Source: Planadviser.com, April 2020

Liberty Mutual Sued Over Its 401k

Liberty Mutual is facing a class-action lawsuit brought by its 401k participants, who allege the plan's recordkeeping fees were out of control and the insurance giant allegedly violated ERISA by failing to rein them in.

Source: Investmentnews.com (registration may be required), April 2020

Another University 403b Excessive Fee Suit Settles

Approximately 20 of these suits have been filed since 2016, this would be the seventh settlement. This time the defendant is Princeton University, and the original suit was filed nearly three years ago by plaintiff Elysee Nicolas individually and as representative of a class of participants and beneficiaries of the Princeton University Retirement Plan and the Princeton University Retirement Savings Plan.

Source: Napa-net.org, April 2020

New Lawsuit Alleges Fiduciary Breaches for Quarter Million Dollar Cybertheft

A recently-filed lawsuit describes in specific detail the efforts cybercriminals often take to pilfer assets from retirement accounts. As a complaint, the filing provides only the plaintiff's version of what happened, and we have not yet heard from the defendants. But the complaint is particularly interesting in its description of how the theft occurred and may point to some useful approaches to try to reduce future fraud.

Source: Groom.com, April 2020

New Fidelity Fee Decision Addresses Several Important Issues for Plan Fiduciaries

The District of Massachusetts issued a decision finding that Fidelity breached its fiduciary duties to its 401k Plan by failing to monitor investments and administrative expenses. Although the decision involved unique facts relating to the implementation of a settlement of a prior case brought against Fidelity, the court's 67-page opinion addresses several significant legal issues. These issues include a plan fiduciary's obligations to self-directed brokerage accounts and the consideration of collective investment trusts and separate accounts as alternatives to mutual funds.

Source: Groom.com, April 2020

Court Finds Fault With Fiduciary Fee Review

A federal judge has found that a provider breached its fiduciary duty of overseeing its own 401k by failing to monitor proprietary funds and its recordkeeping expenses, though it was not obligated to consider options other than mutual funds.

Source: Asppa.org, April 2020

Seventh Circuit Upholds Dismissal of 403b Plan Lawsuit in Apparent Split With Third Circuit

Since the beginning of 2016, the ERISA plaintiffs' bar has filed nearly two dozen complaints targeting university-sponsored 403b plans. The majority of these lawsuits assert that plan fiduciaries breached their duties and engaged in prohibited transactions. In a significant development, the Seventh Circuit recently issued its decision in the case against Northwestern University and, in doing so, became the first court of appeals to uphold the dismissal of such claims in their entirety.

Source: Erisapracticecenter.com, April 2020

Minimizing the Risk of ERISA Litigation in a Turbulent Economic Climate

Based on past litigation experience, there are some types of investments that are considerably more likely to be the target of claims under ERISA. This article reviews these claims and also offers some thoughts on preventative measures that plan sponsors and fiduciaries can consider.

Source: Proskauer.com, April 2020

Judge Cans Anheuser-Busch Dismissal Motion in ERISA Lawsuit

At least some district courts across the U.S. seem to be willing to allow cases alleging the use of outdated mortality tables in the calculation of nonstandard annuity benefits to proceed to trial.

Source: Planadviser.com, April 2020

Fidelity Found Liable for Certain Fiduciary Breaches

A new district court decision finds Fidelity has breached its fiduciary duties in the operations of its retirement plan; importantly, the "case stated" ruling "addresses only the question of liability, not causation or loss."

Source: Planadviser.com, April 2020

University Wins Appeal of 403b Suit

A federal appellate court has ruled in favor of the fiduciaries of a university 403b plan excessive fee lawsuit. This was the second of the 403b university excessive fee suits to go to trial and the second in which the university defendants prevailed.

Source: Ntsa-net.org, April 2020

Lawsuit Questions Differing Investment Terms for 401k and DB Plan

The lawsuit accuses Nationwide 401k plan fiduciaries of not negotiating terms for a fixed-income contract comparable to that for its DB plan for the purpose of increasing its subsidiary's profits.

Source: Planadviser.com, March 2020

D.C. Circuit Rules That ERISA Plan Participant's Release Extends to Fiduciary Breach Claims on Behalf of the Plan

The D.C. Circuit Court upheld a district court ruling that an ERISA plan participant's broad release of claims includes breach of fiduciary duty claims against ERISA plan fiduciaries, notwithstanding the release's carve-out for any "claims for vested benefits." The ruling extinguishes a participant's class action claims under ERISA.

Source: Erisapracticecenter.com, March 2020

401k Lawsuits Keep Coming, Despite COVID-19

The pace of 401k litigation does not yet appear to be slowing. In the past week, Wells Fargo was sued over the use of proprietary funds in its retirement plan. A case was also filed against BOK Financial, and there was a major development this week in a lawsuit against Walgreens. To help reduce the spread of COVID-19, most federal courts are working remotely. Unless the courts are further hampered by the virus, with fewer judges available, for example, cases filed under ERISA might well not be delayed.

Source: Investmentnews.com (registration may be required), March 2020

Judge Moves Forward Suit Over Walgreen Plan TDF Mismanagement

In a concise order, U.S. District Judge Charles Ronald Norgle of the U.S. District Court for the Northern District of Illinois has declined to dismiss a lawsuit alleging fiduciaries of the Walgreen Profit-Sharing Retirement Plan breached their fiduciary duties by selecting and retaining poorly performing target-date funds for the plan. The judge rejected the defendants' argument that the complaint cannot be based solely on the funds' underperformance but must contain more specific allegations.

Source: Plansponsor.com, March 2020

New Lawsuit Accuses Wells Fargo 401k Plan Fiduciaries of Self-Dealing

A proposed class action lawsuit has been filed against alleged fiduciaries of the Wells Fargo & Co. 401k plan alleging violations of ERISA fiduciary duty and prohibited transaction provisions. Motives behind keeping higher cost, underperforming funds in plan alleged in the lawsuit include providing seed money for Wells Fargo to launch new fund products.

Source: Plansponsor.com, March 2020

Salesforce Is Latest National Employer to Face ERISA Fee Litigation

The latest ERISA lawsuit filed in federal court is targeting Salesforce for several alleged fiduciary breaches in the operation of its defined contribution retirement plan. The complaint was filed in the U.S. District Court for the Northern District of California and seeks class-action status on behalf of a sizable group of retirement plan participants and beneficiaries. Named as defendants are Salesforce itself, along with its board of directors and its investment advisory committee.

Source: Planadviser.com, March 2020

Access to Retirement Plan Data: The Next Wave of Fiduciary Litigation?

As retirement plan administration has become more and more digitized over the years, retirement plan sponsors and recordkeepers have become the custodian of a variety of sensitive plan participant data. Often, this information can paint a very accurate picture of a plan participant's financial wellness and retirement strategy. The value of this information is not lost on certain vendors who collect and retain it, and the use of this data is the focus of an emerging area of retirement plan fiduciary litigation.

Source: Mmmlaw.com, March 2020

Judge Pulls Plug on Centurylink 401k Lawsuit

CenturyLink has survived a class-action 401k lawsuit brought by a Denver-area personal-injury lawyer known for his television persona. The court granted summary judgment for the telecommunications firm, finding that its $5 billion plan did not violate federal law.

Source: Investmentnews.com (registration may be required), March 2020

Counterarguments Filed in ERISA Lawsuit Targeting Teva Pharmaceuticals

The defense says the lawsuit should be dismissed because the plaintiffs' theory of liability is "antithetical to the discretion afforded to ERISA plan fiduciaries in designing a 401k plan investment menu and contrary to precedent."

Source: Planadviser.com, March 2020

District Court Rules in Favor of Fiduciaries in Recent Prudence, Loyalty Breach Claim

A recent lawsuit argued in the federal appeals court for the Southern District of New York handed a win to plan fiduciaries on a prudence and breach of loyalty claim lawsuit. In the case, Patterson v. Morgan Stanley, the court dismissed an appeal filed by Morgan Stanley stating that, contrary to Plaintiff's claims, ERISA "does not require clairvoyance on the part of plan fiduciaries, nor does it countenance opportunistic Monday-morning quarter-backing on the part of lawyers and plan participants who, with the benefit of hindsight, have zeroed in on the underperformance of certain investment options."

Source: Hallbenefitslaw.com, March 2020

CenturyLink Wins ERISA Fiduciary Lawsuit Dismissal

The U.S. District Court for the District of Colorado has ruled once again in the case of Birse v. CenturyLink Inc., this time dismissing the lawsuit outright for its failure to state an actionable claim. This ruling comes after a complex procedural history in the case, which saw multiple versions of the complaint filed and various recommendations and orders filed by the court.

Source: Planadviser.com, March 2020

Plan's "Imprudent Preference" for Proprietary Funds Draws Suit

Noting that the plaintiff's "account would have been worth more at the time it was distributed from the Plan had Defendant not violated ERISA," another provider finds itself targeted by a participant in its 401k plan. This time the target is John Hancock.

Source: Napa-net.org, March 2020

Supreme Court: Written Disclosures Not Enough to Show Actual Knowledge in ERISA Suits

The United States Supreme Court unanimously decided last week that a plan participant who received written disclosures about the plan's investments, but does not remember reading them, does not necessarily have "actual knowledge" of the content of the disclosures. This is important because ERISA imposes a shorter statute of limitations for suits against a plan fiduciary where a participant has actual knowledge of a breach or violation.

Source: Verrill-law.com, March 2020

Parties in 401k Account Data Breach Suit Announce Settlement

A former participant in the Estee Lauder 401k plan (who sued the plan sponsor and plan providers for failing to safeguard her retirement account), the plan's recordkeeper Alight Solutions, and Estee Lauder have filed a Notice of Settlement in the U.S. District Court for the Northern District of California. Details of the settlement in the first case of its kind to call into question the cybersecurity defenses a plan sponsor and its providers had in place for retirement account fraud have not yet been revealed.

Source: Plansponsor.com, March 2020

The Way to Win an Excessive Fee Suit

There seems to an endless array of 401k plans taken to task for alleged fiduciary breaches and many find it more economical to settle, rather than taking their case to court. But there are lessons to be learned from one plan that didn’t settle.

Source: Napa-net.org, March 2020

John Hancock Sued Over "Self-Dealing" in 401k Plan Products

A former John Hancock employee is leveling class action claims against the company, alleging it broke the law by packing its 401k menu with proprietary products. The plaintiff, Jennifer Baker, was a participant in the insurance and investment provider's plan between 2014 and 2019. Ms. Baker allegedly suffered financial harm by being invested in John Hancock's products instead of comparable, lower-cost investments from third parties that produced higher returns.

Source: Investmentnews.com (registration may be required), March 2020

Oracle to Pay $12 Million to Settle 401k Lawsuit

Oracle Corp. is settling a long-running 401k lawsuit for $12 million, according to court records filed last Thursday. The settlement comes just before the trial was scheduled to begin. According to the agreement, the deal helps both parties avoid substantial risks that they faced in the process of reaching a court decision.

Source: Investmentnews.com (registration may be required), March 2020

Fidelity Wins Dismissal from ERISA Claims Based on "Infrastructure" Fees

Several highly publicized lawsuits were brought against the Fidelity organization in 2019 in connection with Fidelity's receipt of "infrastructure fees" from mutual fund families and other investment providers made available on Fidelity's "FundsNetwork" investment platform. On February 14, 2020, the District Court dismissed all claims against the Fidelity organization. This article summarizes the claims and the Court's ruling, and offer some initial insights.

Source: Groom.com, March 2020

Supreme Court Makes It Easier to Sue for Fiduciary Breach

A unanimous U.S. Supreme Court has just ruled in Intel Corp. Investment Policy Committee v. Sulyma that fulfilling ERISA's disclosure obligations is not sufficient to start the clock ticking to determine how long participants have to sue. The issue in this closely watched case was what constitutes "actual knowledge" of a fiduciary breach. The decision has the potential to expand participant protections at the expense of limiting those available to fiduciaries.

Source: Cohenbuckmann.com, March 2020

Supreme Court Sides With ERISA Plaintiff

The ruling in a case against Intel could make it easier for retirement plan beneficiaries to sue administrators for investing plan funds imprudently.

Source: Cfo.com, March 2020

Supreme Court Justices Unanimously Side With Retirement-Plan Participant

In a unanimous decision written by Justice Samuel Alito, the Supreme Court held that a plaintiff does not necessarily have actual knowledge of the information contained in disclosures that he receives but does not read or cannot recall reading. To satisfy the actual knowledge requirement, the plaintiff must "in fact have become aware of that information."

Source: Scotusblog.com, February 2020

Supreme Court Rules for Plaintiffs in Intel ERISA Lawsuit

The new ruling is being hailed as a victory for retirement plan participants as well as a potentially important precedent-setting case impacting the special three-year statute of limitations that exists under the Employee Retirement Income Security Act.

Source: Planadviser.com, February 2020


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