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At least some district courts across the U.S. seem to be willing to allow cases alleging the use of outdated mortality tables in the calculation of nonstandard annuity benefits to proceed to trial.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

Share Class Choices Challenged in New 401k Lawsuit

The lawsuit says for at least 18 of the 27 mutual fund share classes available within The Vail Corporation plan, the same issuer offered a different share class from that selected by the plan that charged lower fees, and consistently achieved higher returns.

Source: Planadviser.com, February 2020

Supremes Rein in "Actual Knowledge" Standard

In a unanimous ruling, the nation's highest court says you don't need more than a dictionary to know the meaning of "actual knowledge" when it comes to participant awareness regarding 401k disclosures.

Source: Napa-net.org, February 2020

SCOTUS ERISA Ruling May Open Floodgates for Increased Lawsuits

In a unanimous decision, the Supreme Court declined to limit the timeframe in which disgruntled employees could bring suit challenging the investment decisions made by plan fiduciaries. This development opens employers and retirement plan fiduciaries up to an increased risk of legal challenges while heightening the standard for evaluating breach claims and class action certifications.

Source: Fisherphillips.com, February 2020

Brotherston v. Putnam's Far Reaching 401k Fallout

In the case of Brotherston v. Putnam Investments, the First Circuit Court of Appeals handed down a decision that could have far-reaching impact in the 401k industry. Putnam's efforts to have the decision reviewed by the U.S. Supreme Court certainly speaks to this but, now that the Supreme Court has denied that opportunity, the industry seems to have gone silent, either in hopes that no one is paying attention or because they are stunned into inactivity.

Source: 401kspecialistmag.com, February 2020

District Court Rules in Favor of Fidelity in Revenue Sharing Fee Litigation

In litigation brought by 401k plan participants contesting revenue sharing fees that Fidelity charges mutual fund providers for access to its FundsNetwork investment platform, the US District Court for the District of Massachusetts granted Fidelity's motion to dismiss for failure to state a claim.

Source: Westlaw.com, February 2020

Fidelity Fends Off FundsNetwork Suit

Having been named in at least three separate suits regarding its FundsNetwork platform structure, Fidelity has prevailed in at least one. This particular suit claims that beginning in or about 2017, Fidelity began requiring various mutual funds and other investment advisors, instruments, or vehicles that are offered to the plans through Fidelity's FundsNetwork to make what the suit calls "secret payments to Fidelity for its own benefit in the guise of 'infrastructure' payments or so-called relationship-level fees" in violation of ERISA's prohibited transaction rules.

Source: Napa-net.org, February 2020

District Court Opines on Successor Fiduciary Liability

A recent case highlights the importance of paying attention to successor fiduciary liability when taking on a benefits plan. This case provides important color to the ERISA provision that prevents plan fiduciaries from facing liability for breaches that occurred before and after their tenure as a fiduciary responsible for the benefit plan.

Source: Hallbenefitslaw.com, February 2020

Eighth Circuit Rules Stable Value Provider Is a Fiduciary

The Eighth Circuit Court of Appeals ruled that Principal was a fiduciary with respect to one of its stable value products because of (1) its ability (unilaterally) to set the guaranteed rate on the PFIO and (2) the sponsor's inability (without paying a 5% surrender charge or waiting 12 months) to withdraw from the PFIO, (3) notwithstanding that participants could (individually) withdraw their assets from the PFIO subject only to an "equity wash." This article very briefly reviews the decision and consider its implications for plans with stable value options.

Source: Octoberthree.com, February 2020

Bombshell 401k Lawsuit Ruling Sends Principal Back to Court

An appeals court this week revived a class-action lawsuit against Principal Life Insurance Co. that alleges the insurer breached its fiduciary duty to plan participants. The court found that Principal was a fiduciary to a plan that used its Principal Fixed Income Option, contrasting with a recent decision in a suit against Great-West. The development "is a stunner," said Greg Ash, a partner at the law firm Spencer Fane, who is not involved in the case.

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

Judge Scales Back Claims Against Voya in Excessive Fee Suit

All but one charge against Voya Financial has been dismissed in a lawsuit alleging that asset-based fees led to a 19-participant retirement plan paying $1,819 per participant for recordkeeping services in 2015. The only charge that survived regarded Voya providing "false and misleading" participant fee disclosures.

Source: Plansponsor.com, February 2020

Excessive Fee Suit Targets Navy Defense Contractor Serco

A new ERISA lawsuit, filed in the U.S. District Court for the Eastern District of Virginia, Alexandria Division, targets the Navy defense contractor Serco Inc. The lawsuit resembles many others that have been filed under, suggesting an employer permitted excessive recordkeeping and mutual fund fees in its 401k plan.

Source: Planadviser.com, January 2020

Fidelity, Shell Oil Company Face Latest ERISA Lawsuit

The latest ERISA lawsuit, filed in the U.S. District Court for the Southern District of Texas' Galveston Division, names as defendants the Shell Oil Company and various business units of Fidelity, along with a handful of Shell executives and named plan fiduciaries.

Source: Planadviser.com, January 2020

Shell Oil, Fidelity Sued for Fiduciary Breaches

Participants in a Shell Oil Co. 401k plan sued the company and plan fiduciaries alleging multiple violations of their fiduciary duties for selecting investment options, monitoring the plan, setting fees and dealing with the plan's recordkeeper. The participants also sued the recordkeeper, Fidelity Investments, plus its parent company, FMR LLC, and several other Fidelity units, claiming that Fidelity also violated guidelines outlined in ERISA.

Source: Pionline.com, January 2020

The Supreme Court Decides Not to Decide

The U.S. Supreme Court has an unusual number of ERISA petitions before it in the 2019-20 term. Two recent decisions may increase uncertainty around the use of actively managed funds, as well as the inclusion of company stock, in a defined contribution plan's investment lineup.

Source: Callan.com, January 2020

Supreme Court Remands IBM Stock Drop Litigation to the Second Circuit

The US Supreme Court issued a per curiam decision in Retirement Plans Committee of IBM v. Jander, vacating and remanding the case to the US Court of Appeals for the Second Circuit. The Second Circuit will decide whether to entertain issues relating to the duties of employee stock ownership plan fiduciaries who have inside information regarding company stock. This question was raised in briefing by the parties before the Supreme Court but had not been not addressed by the Second Circuit.

Source: Westlaw.com, January 2020

ERISA Cases to Watch in 2020: All Eyes on the High Court

2020 is shaping up to be a banner year for benefits law, with three ERISA cases already on the US Supreme Court's docket and a number of other high-profile lawsuits at the circuit court level that could attract the justices' attention. While waiting on the high court's ERISA decisions, lawyers are watching litigation trends develop in the lower courts and waiting to see if the high court picks up another two ERISA cases.

Source: Mwe.com, January 2020

Northrup Grumman Agrees to Settle 401k Excessive Fee Suit

The long legal battle began in 2006 with a related lawsuit alleging that the plan was paying excessive administrative fees. That case was settled for $16,750,000 in 2017, but it limited the damages period to May 11, 2009. The participants of the 401k plan alleged that they continued to be charged excessive fees after the damages period in the first lawsuit ended and the current class action was brought in 2016 on similar claims. By August 2019, the only claim that remained in the case asserted that Northrop violated its fiduciary duties by choosing an active-management style for the emerging markets fund instead of a low-cost passive-management style. Northrop switched to a passive management style in 2014.

Source: Californiaworkplacelawblog.com, January 2020

Supreme Court Vacates Ruling in IBM ERISA Stock-Drop Suit

The U.S. Supreme Court declined to act on an ERISA stock-drop lawsuit, vacating and remanding an appeals court ruling that had represented a rare victory by participants over 401k plan sponsors. The case involves a plan participant's complaint that fiduciaries should have taken corrective action to protect investors who held IBM stock in an IBM 401k plan.

Source: Pionline.com, January 2020

Northrop Grumman Would Pay $12.4 Million as Part of ERISA Settlement

Northrop Grumman Corp., agreed on a tentative settlement of an ERISA complaint against the company's 401k plan by offering to pay $12.4 million, according to a preliminary settlement notice filed Monday in U.S. District Court in Los Angeles. This is the second part of a long-running ERISA suit against Northrop Grumman. Participants in two company retirement plans sued in 2006 and 2007. The cases were consolidated.

Source: Pionline.com, January 2020

Supreme Court Declines to Consider Putnam Fiduciary Breach Case

The U.S. Supreme Court declined to hear a petition by Putnam Investments asking to rule on the contentious issue of whether plaintiffs must prove a loss in an ERISA fiduciary breach lawsuit or whether sponsors must disprove a loss and that the loss was caused by the fiduciary breach. The Supreme Court provided no explanation for its decision.

Source: Pionline.com, January 2020

Chemical Distributor Faces Excessive Fee Suit Against 401k Plan

An ERISA lawsuit has been filed against chemical distributor Brenntag North America Inc. alleging the company and other fiduciaries of the Brenntag USA Profit Sharing Plan failed to take measures to ensure reasonable investment and recordkeeping fees. The plaintiffs say defendants failed to utilize the lowest cost share class for many of the mutual funds within the plan, and failed to consider collective trusts, commingled accounts, or separate accounts as alternatives to the mutual funds in the plan, despite their lower fees.

Source: Planadviser.com, January 2020

Lawsuit Against Trade Association's 401k Plan Moves Forward

National Rural Electric Cooperative Association is facing a lawsuit regarding excessive fees and prohibited transactions. U.S. District Judge Liam O'Grady of the U.S. District Court for the Eastern District of Virginia has found that a lawsuit alleging prohibited transactions against fiduciaries of a trade association's 401k plan "contains sufficient well-pleaded facts to survive a motion to dismiss."

Source: Plansponsor.com, January 2020

ERISA 403b Litigation Informs Plan Governance Practices

In the past three years, 403b plan sponsors have been subjected to the same ERISA fiduciary breach lawsuits that 401k plans have been fighting. 403b plan sponsors need help understanding their fiduciary duties, reviewing plan investment lineups and benchmarking fees.

Source: Planadviser.com, January 2020

Revenue Sharing, Recordkeeping Fees at Issue in Trader Joe's Lawsuit

The Trader Joe's Company has been named as the defendant in a new ERISA lawsuit filed in the U.S. District Court for the Central District of California. Employees of the grocery chain accuse their employer of acting imprudently in the selection of retirement plan investment options and of failing to monitor the services and fees paid.

Source: Planadviser.com, January 2020

M&T Bank 401k Lawsuit Settlement Agreement Includes Review of Investments

Defendants in a lawsuit alleging self-dealing by fiduciaries of the M&T Bank 401k plan have reached a settlement agreement. Under the terms of the proposed settlement, M&T Bank or its insurers will pay a gross settlement amount of $20,850,000 into a common fund for the benefit of class members. The settlement also includes a number of non-monetary terms.

Source: Planadviser.com, January 2020

Retirement Plan Participants Sue Ardent Health Services

Ardent Health Services is the target of a new ERISA lawsuit. The proposed class action complaint was filed in the U.S. District Court for the Middle District of Tennessee and names as defendants Ardent Health Services, the company's board of directors and more than 30 individual fiduciary defendants both named and unnamed.

Source: Planadviser.com, January 2020

Past Practices Cited in ERISA Lawsuit Against Plan Sponsors

A participant in the Rollins 401k Savings Plan has sued that plan and the Western Industries Retirement Savings Plan, as well as the plans' administrative and investment committees and various John Does, for breaches of ERISA fiduciary duties. Although the complaint notes that the defendants acted to replace higher-cost share classes with lower-cost ones in 2019, it says that action did nothing to repair participants' accounts for past practices.

Source: Plansponsor.com, December 2019

The Year in ERISA Litigation

As have previous years, 2019 brought major settlements and decisions in retirement-plan focused litigation, including some precedent-setting appellate and Supreme Court decisions.

Source: Planadviser.com, December 2019

Plan Sponsors Sued for Investment Menu Practices

With regard to "improper selection and monitoring of plan service providers," the lawsuit specifically names a broker/dealer representative whom it says was terminated in 2014 for "failure to follow firm policies and industry regulations."

Source: Planadviser.com, December 2019

UPenn Petitions Supreme Court to Review 403b Plan Case

The University of Pennsylvania has filed a petition for a writ of certiorari in the U.S. Supreme Court asking whether the pleading standard the court established in its decision in Bell Atlantic Corp. v. Twombly governs breach of fiduciary duty claims under ERISA.

Source: Planadviser.com, December 2019

Third Party Sued for Alleged Fiduciary Breach Involving Retirement Plans

A recent lawsuit, Chavez, et al. v. Plan Benefits Services, Inc., et al., focuses on a dispute regarding two benefit plans, a retirement plan, and a health and welfare plan sponsored by Training, Rehabilitation & Development Institute. The plan participants did not sue TRDI, the plan sponsor, but rather third-party entities responsible for marketing and supporting these plans.

Source: Hallbenefitslaw.com, December 2019

Cintas Corporation Accused of ERISA Fiduciary Breaches

A new ERISA lawsuit filed in the U.S. District Court for the Southern District of Ohio names as defendants the Cintas Corporation, its board of directors, its retirement plan investment committee, and some 30 John Does. Among other allegations, the national work uniform provider is accused of permitting high-cost mutual funds to persist on the retirement plan menu while cheaper but otherwise identical funds were available.

Source: Planadviser.com, December 2019

Cyberfraud: Must a Plan's Security Policies Meet the Duty of Prudence?

Criminals attempting to steal employees' benefits is not a new issue. However, the means by which they commit such crimes have changed with the advancement of technology and how benefits are paid. Two recent cases alleging breach of fiduciary duty under ERISA in connection with the distribution of participant account balances in DC plans highlight the compliance and litigation risks associated with plan losses. This article provides an in-depth analysis of these cases.

Source: Groom.com, December 2019

Putnam Says Feds Biased in ERISA Burden of Proof Case

The feds said the Supreme Court didn't need to bother with a case involving the burden of proof in an ERISA case, but the petitioners in the case say they have a bias. The petitioners in this case are Putnam Investments and they had asked for a Supreme Court review of the case to resolve two issues: which party bears the burden of proof on the issue of causation once a plaintiff has established a breach of fiduciary duty under ERISA and related plan losses, and to address whether passively managed index funds can be appropriate benchmarks for establishing losses from the improper monitoring of actively managed funds.

Source: Napa-net.org, December 2019

Supreme Court Ruling in Intel ERISA Statute of Limitations Suit Could Have Far-Reaching Implications

The "actual knowledge" question is an important one because it concerns a critical threshold issue in ERISA fiduciary duty claims. Of the near 80,000 ERISA cases filed in the past decade, a major share of the litigation has included suits against plan fiduciaries for allegedly breaching their fiduciary duties, and the statute of limitations is potentially implicated in many such cases. Given the importance of this issue, Groom attorneys attended oral argument, which are summarized here.

Source: Groom.com, December 2019

Top Five ERISA Litigation Developments of 2019

As 2019 draws to a close, it is a good time to reflect on the biggest developments in ERISA litigation this past year. If this year is any indication, we expect 2020 to include landmark Supreme Court opinions and more.

Source: Icemiller.com, December 2019

Supreme Court Hears Polarized Arguments in Intel ERISA Case

While not divided across political lines, the parties in Sulyma v. Intel Corporation Investment Policy Committee view the question of what establishes "actual knowledge" of an alleged fiduciary breach under ERISA very differently.

Source: Planadviser.com, December 2019

MFS Excessive Fee Settlement Gets Judicial OK

A federal judge says the terms are a "fair, reasonable, and adequate settlement and compromise of the claims asserted in the Class Action." The terms of the settlement (approved on Dec. 5th) were announced in mid-June, and news of the settlement itself just before the parties were slated to go to trial. The parties had announced having come to terms last month, just days before the case was set to go to trial.

Source: Napa-net.org, December 2019

Mandatory Individual Arbitration Clauses in 401k Plans, a Good Idea?

The dispute resolution landscape for ERISA fiduciary breach claims may be shifting. The Ninth Circuit's decision in Dorman v. Charles Schwab Corp. upheld a provision in Charles Schwab's 401k plan mandating individual arbitration, and waiving class actions, for certain types of fiduciary breach claims. Should employers add a similar mandatory individual arbitration clause to their own plans? The answer requires a careful balancing of potential pros and cons of mandatory individual arbitration clauses.

Source: Troutman.com, December 2019

Court Provides Guidance on Monitoring ERISA Investment Fiduciaries

The U.S. District Court for the Western District of Pennsylvania in Scalia v. WPN Corporation wrote regarding the duty to monitor investment fiduciaries. Given the potential risk related to a breach this fiduciary duty, the WPN opinion is likely to be an important one for Appointing Fiduciaries. In its opinion, the WPN court provided the guidance for assessing the extent to which an Appointing Fiduciary has a duty to monitor and, if so, for determining whether the Appointing Fiduciary has fulfilled that duty.

Source: Financialservicesemploymentlaw.com, December 2019

Justices Wary of Intel Committee Position in 401k Dispute

A majority of justices on the Supreme Court seem to think posting 401k plan documents online isn't enough for companies to shorten the amount of time participants have to sue plan managers for mishandling investments. The case, which stems from a dispute over hedge fund and private equity investments in Intel Corp.'s 401k plan, has the potential to set a standard for determining how long employees have to file a lawsuit under ERISA.

Source: Bloomberglaw.com, December 2019

Arbitrator to Decide Whether ERISA Fiduciary Claims Should Be Arbitrated

A federal district court in Texas referred to arbitration a 401k plan participant's ERISA breach of fiduciary duty action based on allegations that certain plan investment options charged excessive fees.

Source: Erisapracticecenter.com, December 2019

Court Upholds ERISA Plan's Forum Selection Clause

Citing ERISA 502(e)(2), which provides that an action may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found, the employee argued that, despite the plan's forum selection clause, ERISA gave her the right to litigate in her choice of the three venues. The court found, however, that while ERISA sets forth three possible venue options, it does not expressly invalidate forum selection clauses in employee benefit plans.

Source: Thomsonreuters.com, November 2019

Podcast: Supreme Court May Resolve Key ERISA Statute of Limitations and Proprietary Fund Litigation Questions

In this Ropes & Gray podcast, litigation & enforcement partners Amy Roy and Dan Ward, and ERISA and benefits partner Josh Lichtenstein, discuss 401k litigation risk assessment and management. They review current trends in proprietary funds litigation, the key legal issues surrounding the statute of limitations for claims arising under ERISA, and the upcoming Intel case before the Supreme Court that could have significant ramifications for 401k plan sponsors and employers.

Source: Ropesgray.com, November 2019

Lawsuit Raises Tough Questions About ERISA Remedies for 401k Account Thefts

A recently filed ERISA action raises troubling questions about the safety of 401k plan participant account assets and the proper allocation of financial responsibility when account assets are stolen. The case alleges that the Estee Lauder 401k Plan, acting through its recordkeeper, Alight Solutions LLC (formerly Hewitt Associates, LLC), processed a series of three unauthorized distributions from the plaintiff's account in the amounts of $12,000, $37,000 and $50,000, respectively, over the course of approximately three weeks.

Source: Psca.org, November 2019

Settlement Announced in Invesco Self-Dealing Suit

Parties in a lawsuit accusing Invesco of self-dealing in its 401k plan have filed a Notice of Settlement. It may seem strange that Invesco has agreed to settle the case since a U.S. District Court Judge previously granted summary judgment in favor of Invesco. However, in that opinion, the court also allowed the plaintiffs 20 days to file an amended complaint and the plaintiff was in the process of doing so.

Source: Plansponsor.com, November 2019

DOL Sues Ben Shinn Trucking Over Handling of 401k

The DOL has filed a lawsuit against Iowa trucking company Ben Shinn Trucking for allegedly failing to remit about $465,000 in employee salary deferral contributions to the company's retirement plan. The lawsuit against Ben Shinn Trucking and owner Roger Shinn was filed in U.S. District Court in Des Moines on Nov. 18.

Source: Landline.media, November 2019

Retirement Plan Committee's Prudent Process Defeats DOL

A recently released case highlights the protection afforded by a retirement plan committee that takes its role seriously. In Scalia v. WPN Corp., a Pennsylvania federal court ruled that the U.S. Department of Labor was wrong in its insistence that retirement committee members were liable under ERISA for failing to monitor the committee's investment manager.

Source: Carltonfields.com, November 2019

Supreme Court Considering Three ERISA Cases in October Term 2019

The Employee Retirement Income Security Act has generated numerous U.S. Supreme Court decisions since its enactment, and this year's term is no exception. The Court is currently considering three ERISA cases involving a range of significant issues.

Source: Truckerhuss.com, November 2019

Sutherland Global Services Accused of ERISA Fiduciary Breaches

A group of participants in the Sutherland Global Services Inc. 401(k) Plan has filed a proposed class action ERISA lawsuit against their employer in the U.S. District Court for the Western District of New York. The lawsuit names as defendants Sutherland Global Services Inc. and CVGAS LLC, doing business as Clearview Group. The complaint also directly names as defendants several Sutherland’s senior leaders who are plan fiduciaries, along with some 20 John and Jane Doe defendants.

Source: Planadviser.com, November 2019

Is Mandatory Individual Arbitration Another Tool for the Plan Design Toolbox?

Recent decisions by the US Court of Appeals for the Ninth Circuit have reinvigorated the debate over whether mandatory individual arbitration provisions are enforceable with respect to ERISA claims and, if so, whether these provisions are worth including in your ERISA plan document.

Source: Morganlewis.com, November 2019

Prudential's GoalMaker Offering Targeted in New Excessive Fee Suit

A new participant lawsuit claims that an asset allocation program "was not a model of asset allocation but a model of plan mismanagement." The plaintiffs in the case are participants in the AutoZone 401k plan, which has some $545 million in assets and approximately 15,000 participants, according to the suit. While they raise a number of issues in common with this genre of excessive fee lawsuits, they devote most of their focus on Prudential's GoalMaker offering, which had been established as the plan's default investment option.

Source: Napa-net.org, November 2019

Ninth Circuit Passes on Rehearing of ERISA Arbitration Case

A plaintiff's request for a rehearing by the full court of an appellate court decision backing an arbitration clause in an ERISA claim has been rejected. The Ninth Circuit's decision supporting the application of the arbitration clause before filing suit stands, at least in the Ninth Circuit.

Source: Napa-net.org, November 2019

Prudential Latest Recordkeeper to Face Self-Dealing ERISA Lawsuit

Prudential faces a self-dealing lawsuit filed by participants in its defined contribution retirement plan. Plaintiffs challenge the use of proprietary products in Prudential's defined contribution retirement plans, an arrangement they say impermissibly benefitted the company at the expense of plan performance.

Source: Planadviser.com, November 2019

Goldman Sachs Sued Over 401k Plan

The Goldman Sachs Group is facing a lawsuit that accuses the company of breaching its fiduciary duty by filling its 401k plan with underperforming proprietary mutual funds. The lawsuit, which is led by one of its 401k plan participants, alleges that Goldman Sachs "engaged in unlawful self-dealing with respect to the plan in violation of ERISA, to the detriment of the plan and its participants and beneficiaries."

Source: Ai-cio.com, November 2019

Attorneys Argue for Stricter Reading of "Actual Knowledge" in ERISA Cases

Responding to a case against Intel 401k plan fiduciaries, U.S. attorneys say just because retirement plan participants receive investment disclosures doesn't mean they have actual knowledge that a fiduciary breach occurred.

Source: Planadviser.com, November 2019

CenturyLink's Investment Management Company Faces ERISA Claim

On the third try in a lawsuit against CenturyLink and its investment management company, a judge has recommended all but one claim by participants in the firm's Dollars & Sense 401k Plan be dismissed.

Source: Planadviser.com, October 2019

Individual Arbitration Ordered in Greystar ERISA Lawsuit

The order comes after an important appellate ruling in the 9th Circuit endorsing the forced arbitration of ERISA claims, but notably, the lawsuit in question here was filed outside the 9th Circuit.

Source: Planadviser.com, October 2019

Goldman Sachs Sued for 'Unlawful' 401k Management

Goldman Sachs has been sued for the alleged "unlawful" management of its company 401k plan related to the plan's use of in-house actively managed mutual funds, which the lawsuit says provided the firm with a financial benefit at the expense of employees' retirement savings.

Source: Investmentnews.com (registration may be required), October 2019

University Faces Setback in 403b Plan Fiduciary Breach Case

The ongoing case, Sweda v. the University of Pennsylvania, is currently before the U.S. Court of Appeals for the Third Circuit. The Third Circuit ruled that the district court erred in granting the University's motion to dismiss. This is a major setback for the University in their current ERISA fee and fiduciary breach case.

Source: Hallbenefitslaw.com, October 2019

401k Participant Files ERISA Lawsuit Against Goldman Sachs

According to the proposed class action complaint, the defendants failed to administer the 401k plan in the best interest of participants and failed to employ a prudent process for managing the plan. Instead, plaintiffs allege, defendants managed the plan in a manner that benefited Goldman Sachs at the expense of participants.

Source: Planadviser.com, October 2019

Judge Recommends Columbia University ERISA Suit Moves Forward

A magistrate judge found that there are genuine issues of material fact as to whether Columbia acted prudently throughout the class period by not consolidating to a single recordkeeper. The lawsuit is now a consolidation of two that have been filed against the university alleging plan fiduciaries allowed the plan to maintain excessively high fees for investments, administration and recordkeeping.

Source: Planadviser.com, October 2019

Cybertheft of 401k Plan Assets - New Case Highlights Fiduciary Exposure

ERISA was enacted before the computer age, and it has never been amended or interpreted to impose a specific duty on plan fiduciaries to maintain appropriate cybersecurity protections. However, fiduciaries should not have their heads in the sand about this issue. The duties of prudence and loyalty will likely be interpreted to include a responsibility to keep plan assets safe from hackers. A lawsuit recently filed against Estee Lauder Inc, its 401k plan committee, recordkeeper and custodian highlights some security flaws in plan distribution procedures and has the potential to make new law in this area.

Source: Cohenbuckmann.com, October 2019

Vanderbilt University Settlement Finally Settled

A federal judge has approved a settlement of another of the 403b university excessive fee suits. Chief Judge Waverly D. Crenshaw Jr. of the U.S. District Court for the Middle District of Tennessee has signed off on the $14.5 million settlement between Vanderbilt University and plaintiffs represented by the law firm of Schlichter Bogard & Dentonon.

Source: Napa-net.org, October 2019

New Case Raises Difficult Questions About ERISA Remedies for 401k Account Thefts

A recently filed ERISA case raises extremely troubling questions about the safety of 401k plan participant account assets and the proper allocation of financial responsibility when account assets are stolen. For the 401k plan industry as a whole, the facts of this case expose some ugly truths about the potential vulnerability of 401k plan assets to theft.

Source: Groom.com, October 2019

How 401k Bankruptcy Exemption Can Be Lost

A recent case decided by the United States District Court for the District of Connecticut discusses some of the issues that can arise when an individual who is the principal owner of a small business files for bankruptcy and seeks the protection of the retirement funds exemption for amounts held for the owner's benefit in the business' qualified retirement plan.

Source: Blankrome.com, October 2019

The Theory of 401k Peak Litigation

What is "peak 401k fee litigation"? It's Ary Rosenbaum's theory that eventually the big money 401k high fee cases will end. Large corporations with 401k plans will eventually fix their plans when it comes to paying high fees and ERISA litigators are going to try to find new ways to target 401k plan sponsors.

Source: Jdsupra.com, October 2019

Recordkeeper, Plan Sponsor Charged in 401k Account Theft

A group of seven Republican senators is urging the Senate Majority Leader to act on one of the most consequential pieces of retirement security legislation in more than a decade. "We encourage the Senate to take action on the SECURE Act as soon as possible. Doing so would demonstrate to our constituents that the Senate can lead in a bipartisan way for workers saving for retirement, for tax fairness, and for family financial security," says the Oct. 15 letter.

Source: Napa-net.org, October 2019

North Carolina Court Awards $41k for Failure to Produce Documents Requested by Plan Participants

A recent decision by the United States District Court for the Western District of North Carolina, Charlotte Division (Kinsinger v. Smartcore LLC, 2019 US Dist. LEXIS 145052 (August 27, 2019)), vividly illustrates the perils in failing to comply with document requests by participants.

Source: Benefitslawadvisor.com, October 2019

CareerBuilder Sued by Former 401k Participant

A former participant in a 401k plan offered by CareerBuilder, Chicago, sued the company and plan fiduciaries, alleging violations of the Employee Retirement Income Security Act. The complaint said the plan contained "excessively expensive" mutual funds, causing participants to pay "excessive fees" to the plan's recordkeeper and investment adviser.

Source: Pionline.com, October 2019

A Fiduciary "Win" -- for Now -- in Excessive Fee Case

A federal judge has given the plaintiff in an excessive fee suit an "incomplete," but left the door open for another shot. This time the defendant is Invesco, a suit filed a little more than a year ago by participant-plaintiff Diego Cervantes in the U.S. District Court for the Northern District of Georgia.

Source: Napa-net.org, October 2019

401k Lawsuits Get More Complex

Lawsuits targeting 401k plan sponsors increasingly involve issues that are complex and granular. It's a trend that's likely to continue as such litigation proliferates and one that some advisers and attorneys fear may leave employers paralyzed when it comes to retirement plan design.

Source: Investmentnews.com (registration may be required), October 2019

401k Plan Participant Cannot Pursue Claims on Behalf of Plans in Which She Did Not Participate

A federal district court in Ohio concluded that a 401k plan participant could assert fiduciary breach and prohibited transaction claims only on behalf of the plan in which she participated, and not on behalf of other plans. In this case, the plaintiff was a participant in Andrus Wagstaff, PC's 401k plan, and she alleged that the plan's recordkeeper charged the plan excessive recordkeeping fees.

Source: Erisapracticecenter.com, October 2019

401k Fiduciary Litigation -- Still Chaotic

Michael Barry, president of O3 Plan Advisory Services LLC, discusses how differing views by courts in various ERISA cases results in no clear guidance.

Source: Plansponsor.com, October 2019

Supreme Court to Hear Three ERISA Cases in Upcoming Term

The upcoming term of the U.S. Supreme Court is shaping up to be a busy one with respect to cases arising under the Employee Retirement Income Security Act of 1974. There have been other terms with multiple ERISA cases -- for example the 2015 term had at least three1 -- and it looks like the upcoming term will again be an extremely eventful one for ERISA in the Court.

Source: Dechert.com, October 2019

Summary Judgement Goes for Invesco in ERISA Lawsuit

The U.S. District Court for the Northern District of Georgia, Atlanta Division, has issued summary judgement in favor of the defense in a broad ERISA lawsuit targeting Invesco. However, the judge voiced concerns about the amount of plan assets invested in proprietary products and has granted the plaintiffs leave to again amend their compliant.

Source: Planadviser.com, September 2019


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