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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Fifth Circuit Appeals Court Sends DOL ESG Case Back to Texas Court

A Texas district court will rehear a challenge to the Department of Labor's environmental, social, and governance rule for investing in defined contribution retirement plans after the U.S. 5th Circuit Court of Appeals remanded the case due to a recent Supreme Court decision. In his ruling, U.S. Circuit Judge Don R. Willett cited the Supreme Court overturning of the longstanding Chevron standard, claiming that in initially upholding the DOL's rule, the district court had relied upon the decades-old Chevron deference doctrine.

Source: Planadviser.com, July 2024

Are the Floodgates About to Open After the Demise of Chevron Deference?

In 2021, the DOL adopted a new rule that interpreted ERISA to allow retirement plan managers to consider the ESG factors. The new rule was immediately challenged by a group of states, companies, and trade associations. The district court, following the mandate of Chevron, deferred to the interpretation of the current DOL and rejected the challenge. Plaintiffs appealed. And then SCOTUS overruled Chevron. In a new decision, a three-judge panel of the Fifth Circuit has elected not to answer that weighty question on appeal "Given the upended legal landscape, and our status as a court of review, not first view, we vacate and remand so that the district court can reassess the merits." Are we about to see a slew of these types of decisions revisiting agency regulations after the demise of Chevron?

Source: Cooleypubco.com, July 2024

Qualcomm Bid for Dismissal of 401k Forfeiture Suit Denied

A federal district court judge denied Qualcomm's motion to dismiss a lawsuit filed by a former employee and current company 401k retirement plan participant. Antonio Perez-Cruet alleges in his ERISA suit that Qualcomm violated its duty of prudence when it used forfeited retirement funds to reduce its plan contributions rather than decrease administrative expenses borne by plan participants. The judge ruled that Perez-Cruet met his burden of alleging a plausible cause of action.

Source: Hallbenefitslaw.com, July 2024

Takeaways From Dismissal of Anti-ESG Lawsuit Against New York City Pension Funds

The New York County Supreme Court has dismissed a case that challenged the decision by several New York City Pension Funds to divest billions of dollars of investments in companies involved in the extraction of fossil fuels. The N.Y. court decided dismissal is appropriate because the plaintiffs participate in defined benefit plans that entitle them to fixed benefits each month and therefore face no injury and lack standing to challenge investment decisions that have no impact on the guaranteed retirement benefits they will receive.

Source: Cohenbuckmann.com, July 2024

How to Prevent a Lawsuit Over Retirement Plan Forfeitures

There has been a rash of lawsuits recently challenging how forfeitures are used in retirement plans. The novel theory in these suits -- a purported misuse of discretion in the application of forfeitures -- has recently gained some steam and legitimacy after surviving a motion to dismiss in Perez-Cruet v. Qualcomm. Employers with retirement plans that provide discretion over the use of forfeitures should consider making a simple plan design change to avoid being a litigation target.

Source: Bradley.com, July 2024

First Reasoned ERISA Forfeitures Decision Dismisses Complaint

Since September 2023, ten lawsuits have been filed alleging a novel theory of liability against ERISA plan sponsors for their use of forfeited employer-matching retirement plan contributions. Motions to dismiss have been filed or will be filed in all the lawsuits. After thoughtful deliberation, a federal trial judge in Silicon Valley dismisses the ERISA 401k plan forfeitures suit against HP Inc., albeit with leave to amend.

Source: Nixonpeabody.com, July 2024

401k Forfeitures Under Fire: Unpacking Recent Legal Battles -- Podcast

In this podcast, Richard and Sarah are joined by Ian Morrison, a Partner in Seyfarth's ERISA Litigation group to delve into a new line of cases alleging that forfeitures are plan assets, and must be used to benefit plan participants.

Source: Seyfarth.com, July 2024

Evonik Corporation Beats 401k Plan Challenge With Evidence of Rigorous Fiduciary Process

A New Jersey federal district court recently granted summary judgment in the defendant's favor in an ERISA excessive fee case accusing Evonik’s 401k plan fiduciaries of keeping imprudent investments in the plan and of allowing participants to pay excessive recordkeeping fees. At the core of the decision was the court’s finding that Evonik's fiduciaries followed a rigorous, prudent process for reviewing plan investments and fees.

Source: Erisalitigationadvisor.com, July 2024

District Court Grants Motion to Dismiss Forfeiture Complaint

That article discusses the May 24, 2024, decision by the United States District Court for the Southern District of California denying Qualcomm's motion to dismiss. It outlines how the district court in Qualcomm addressed and overruled arguments seeking to dismiss six substantive causes of action based on allegations asserting the misuse of plan forfeitures and the court's conclusion that the plaintiff in that case had plausibly alleged violations of ERISA.

Source: Wagnerlawgroup.com, July 2024

Why Chevron Reversal May Make Retirement's "Most Cautious" Players More Risk-Averse

In late June, the Supreme Court struck down the so-called Chevron doctrine through a decision in Loper Bright Enterprises v. Raimondo. The overturning of a longstanding standard of deference to federal agencies may make those in the already cautious 401k plan industry all the more "plain vanilla," according to experts.

Source: Planadviser.com, July 2024

DOL's ESG Rule Challengers Cite Chevron Reversal

The U.S. Supreme Court's decision to overturn the longstanding Chevron standard of deference to federal agencies will likely get a first test in the U.S. 5th Circuit Court of Appeals in a case seeking to overturn the DOL's ESG rule. The case will become the first concerning environmental, social, and governance factors to go before a judge in the post-Chevron era, with plaintiffs in Utah et al. v. Julie Su, Acting Secretary of Labor, arguing that the new Loper Bright decision has a direct bearing, while the DOL notes it did not rely on Chevron in its earlier rebuttal, making the June decision irrelevant to the appeal.

Source: Planadviser.com, July 2024

Lawsuit vs. ESG Investing in 401k Plans Marks Courts' First Test After Chevron Ruling

A lawsuit challenging a Biden administration rule permitting socially conscious investing by employee retirement plans will test the courts' approach to federal regulations following a pivotal Supreme Court decision. The New Orleans-based 5th US Circuit Court of Appeals will hear arguments from 25 Republican-led states opposing the DOL's rule on Tuesday, reported Reuters.

Source: Investmentnews.com, July 2024

Open Season for Regulatory Challenges: Supreme Court Overturns Chevron Deference and Expands Opportunities to Attack Federal Rules

On June 28, 2024, in a 6-3 decision, the Supreme Court overturned Chevron v. Natural Resources Defense Council, the most-cited case in administrative law. Chevron established a framework for how the federal courts decide challenges to agency interpretations of statutes and served as a bedrock support for upholding agency interpretations of statutes for the last 40 years.

Source: Groom.com, July 2024

District Court Dismisses Challenge to Use of Plan Forfeitures

A federal district court recently granted a motion to dismiss claims that defined contribution plan fiduciaries breached their fiduciary duties of loyalty and prudence, and violated ERISA's anti-inurement and prohibited transaction rules, by using forfeited funds to satisfy a portion of the employer's matching contribution obligations where the plan also permitted using such forfeitures to pay administrative expenses.

Source: Erisapracticecenter.com, July 2024

In Overturning Chevron, Supreme Court Makes It Easier for Regulated Entities to Challenge Agencies on Statutory Interpretation

The longstanding Chevron doctrine required courts to defer to agencies' construction of ambiguous statutes, even as to the scope of those agencies' authorities, so long as the agency's construction of the ambiguous statute was reasonable and thus a "permissible" one. Supreme Court's decision strips agencies of this presumptive deference and invites new litigation over interpretations of statutory language that govern many areas of law and business. The decision also signals that more changes to administrative law may be on the horizon.

Source: Ropesgray.com, July 2024

Supreme Court Overturns the Chevron Doctrine, Sending Statutory Interpretation Back to the Courts

This article considers the Supreme Court's recent decision in Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al., June 28, 2024, overturning the Chevron Doctrine, what it is, what it does, and how it might affect current and future disputes over agency decisions concerning ERISA, primarily decisions by the Department of Labor.

Source: Octoberthree.com, July 2024

Chevron Doctrine Overruled: US Supreme Court Upends Longstanding Foundation of Administrative Law

The US Supreme Court on June 28 overturned the Chevron doctrine that for four decades has required federal courts to defer to administrative agencies' interpretations of ambiguous or broad statutes. The doctrine was a foundation of administrative law and afforded successive US presidential administrations flexibility to interpret statutes via agency adjudications and rulemaking. The Court's decision will have a substantial impact on both regulated industries and agencies.

Source: Morganlewis.com, July 2024

Supreme Court Rolls Back "Deference" to Federal Agencies and Opens Up More Challenges to Regulations

Because of today's Chevron decision, courts will no longer defer. Instead, they will give statutes their "best" interpretation. That means agencies -- including labor and employment agencies -- will have less leeway to write broad rules. They will instead have to write rules that hew more closely to statutory language. They may also have to defend some existing rules against closer scrutiny in court.

Source: Littler.com, July 2024

Conflicting Decisions Foreshadow Upcoming Disputes in ERISA 401k Forfeiture Class Actions

Conflicting orders on motions to dismiss from two California courts foreshadow issues for a new theory of ERISA liability. Employers have faced a recent wave of novel ERISA class actions that challenge the reallocation of defined contribution plan forfeitures. The recent lawsuits challenge an employer's decision to use plan forfeitures to make later employer contributions rather than defray administrative fees otherwise payable by the participants.

Source: Erisalitigationadvisor.com, July 2024

Could SCOTUS Chevron Decision Undermine Fiduciary Rule?

With far-reaching implications -- likely including the DOL's fiduciary rule -- the nation's highest court has set aside a long-standing judicial deference to federal regulators in interpreting the law. While the full implications will take time to emerge, it's almost certainly going to produce more litigation, and in the process, less certainty for advisors, plan sponsors, and recordkeepers trying to operate within those boundaries.

Source: Asppa.org, July 2024

Novel 401k Plan Lawsuits Over the Use of Forfeitures: Swinging for the Fences or Plausible Claims?

This article summarizes the factual similarities in the two lawsuits over the use of plan forfeitures to offset employer contributions, highlights and contrasts key aspects of each court's claims analysis, and offers some commentary. It also provides steps for plan sponsors to consider taking in light of what may be a growing trend in ERISA litigation.

Source: Verrill-law.com, June 2024

Judge Dismisses 401k Excessive-Fee Lawsuit Against PNC Financial

PNC Financial Services Group Inc. has had a lawsuit dropped from workers accusing the company of paying excessive recordkeeping fees for their incentive savings plan. Judge Christy Criswell Wiegand decided that an expert witness for the plaintiffs was unreliable, leading to a dismissal of the allegations.

Source: Planadviser.com, June 2024

Plaintiff Lawyers Can Now Use AI to Identify Potential Plan Issues

Tech and legal firm Darrow uses AI as a tool for ERISA lawsuit allegations such as underperforming plans and excessive fees. Attorney Levine, who often represents fiduciary defendants, says that the use of AI in this field of law is relatively new, but its use is "very much a data processing tool," and little else. Fiduciaries should generally follow the same principles as before, he says, but since AI models tend to focus on data procured from Form 5500s, sponsors should consider evaluating their Form 5500 reporting to be sure everything is accurate.

Source: Planadviser.com, June 2024

CFP Board Backs DOL Fiduciary Rule in Federal Court

Writing in an amicus, the CFP Board cautions that "If the Court accepts Plaintiffs' arguments, then this will leave open significant regulatory gaps that allow advisors to recommend financial products, including insurance products, that are not in the best interests of retirement investors, in contravention of [ERISA's] mandate to provide a high level of protection for retirement assets."

Source: Napa-net.org, June 2024

Can a TPA's Exploitation of a Plan Sponsor'S Breach of ERISA Duty Make the TPA a Fiduciary?

The new theory of liability is that TIAA knew of the plan sponsors' failure to exercise oversight of TIAA's sales tactics, a clear breach of fiduciary duty by the plan sponsors. TIAA allegedly knowingly exploited this failure for its benefit. Therefore, even though the company was a service provider and arguably not a fiduciary under ERISA, this knowing collaboration in the sponsor's breach brought it within the ambit of the law. It is a creative argument, it is convoluted, and it is one to watch for the future.

Source: Lawyersandsettlements.com, June 2024

Salesforce Settles ERISA Class Action With 50k Workers

Just a week before a bench trial was scheduled to begin, Salesforce reached a settlement with as many as 50,000 of its employees in a class action lawsuit over its 401k plan. The San Francisco-based software company faced claims of breach of its fiduciary duties under ERISA for failing to replace costly and underperforming investment options in the 401k plan. The workers had sought over $5 million in damages, plus prejudgment interest, to be divided among the plan participants in proportion to their account losses.

Source: Hallbenefitslaw.com, June 2024

DOL Files Counter-Brief to Retirement Security Rule Challenge

The DOL answered one of two open lawsuits in the federal courts challenging the Retirement Security Rule on June 14. The regulator's first response in court argued that the new rule is compliant with existing case law and is substantially different from a 2016 regulation that was vacated by the U.S. 5th Circuit Court of Appeals.

Source: Planadviser.com, June 2024

Dueling Decisions Spur Employer Confusion on 401k Forfeitures

Employers tasked with reallocating 401k assets forfeited by former employees are encountering a wave of litigation alleging the misuse of plan funds, as well as an emerging disagreement between judges on these suits' viability.

Source: Bloomberglaw.com, June 2024

HP Prevails in "Novel" 401k Forfeiture Reallocation Suit

The third of the forfeiture reallocation suits to come before a federal judge was described as a "swing for the fences" and dismissed, with a "catch." Judge Freeman commented that the plaintiff "advances a novel legal theory under which it is a breach of fiduciary duty to allocate forfeited amounts to reduce employer contributions rather than to pay administrative costs." She went on to note that "to date, there is no binding authority that addresses this theory...."

Source: Napa-net.org, June 2024

Milliman Manages a Win in TDF Fiduciary Breach Suit

This suit was filed in January 2022 and made several allegations regarding practices by the fiduciaries of the Milliman, Inc. Profit Sharing and Retirement Plan. At issue was a suite of target risk funds. Those funds were put in the plan menu in 2013, but the suit comments that "having only been launched in November 2012, the Unified Funds were brand new, had no investment track record, and were untested."

Source: Napa-net.org, June 2024

Upcoming Appellate Arguments for Benefits Attorneys to Watch

Several important benefits cases are pending before various U.S. Courts of Appeals. Benefits attorneys should look out for the upcoming appellate arguments in these cases including Tanika Parker et al. v. Tenneco Inc. et al., case number 23-1857, U.S. Court of Appeals for the Sixth Circuit. In this class action lawsuit, workers allege that their automotive company employers mismanaged their 401k plan by charging excessive recordkeeping fees and maintaining high-cost investment offerings.

Source: Hallbenefitslaw.com, June 2024

Many Workers Don't Realize They Are Not Contributing to Workplace Plans

The Department of Labor filed an amicus brief to the U.S. 6th Circuit Court of Appeals in May which argued that a mandatory arbitration provision in a 401k plan document is unenforceable if it is tied to a class-action waiver. Most appeals courts have so far agreed with them.

Source: Plansponsor.com, June 2024

Another Employer Targeted With Forfeiture Fiduciary Breach, With a New Twist

Another national employer's 401k plan has been sued for a fiduciary breach in its use of plan forfeitures to reduce employer contributions with the plaintiff represented by a law firm new to this arena. The plan is the Wells Fargo & Company 401k Plan.

Source: Napa-net.org, June 2024

DOL Fiduciary Rule Challenge Gains More Support

The Hispanic Leadership Fund has filed an amicus brief in support of a suit brought by the Federation of Americans for Consumer Choice and others that "seeks to grant the motion to stay the Rule's effective date and to issue a preliminary injunction." It follows another amicus brief filed last week by the U.S. Chamber of Commerce in support of the legal challenge.

Source: Napa-net.org, June 2024

Participant-Plaintiffs Shift Argument, Outcome in TIAA Rollover Suit

A suit that challenged a program designed to "drive members from their ERISA plans and into TIAA-sponsored offerings, with little upside to those participants," has moved past a motion to dismiss. The suit, filed in September 2022 by plaintiffs against Teachers Insurance Annuity Association of America (TIAA) and TIAA-CREF, had asserted "...a variety of claims under the Employee Retirement Income Security Act of 1974."

Source: Napa-net.org, June 2024

District Court Denies Motion to Dismiss Forfeiture Complaint

The United States District Court for the Southern District of California found that the Plaintiff had made a plausible complaint for a violation of ERISA § 404(a)(1). In particular, the Court described the exact nature of the harm alleged by Plaintiff as well as its basis for concluding that Plaintiff's claim of disloyalty was plausible.

Source: Wagnerlawgroup.com, June 2024

TIAA Retirement Suit Foreshadows Future 401k Rule Litigation

A New York federal district court ruling tying TIAA to the alleged misconduct of its clients offers a rare glimpse at the upturned legal landscape awaiting pension servicers when a new 401k advice rule takes effect.

Source: Wagnerlawgroup.com, June 2024

Use of 401k Plan Forfeitures Continues to be Scrutinized in Litigation

Forfeitures typically occur when an employee leaves a company before fully vesting in the 401k plan, thus leaving the employer with excess contributions. In a handful of recent lawsuits, plan sponsors have been questioned about their use of forfeitures assets to reduce employer contributions in 401k plans.

Source: Plansponsor.com, June 2024

Lawsuit Against TIAA Over Managed Account Service Moves Forward

TIAA's request to dismiss an amended lawsuit filed against it regarding a managed account service for participants was denied by a federal district judge in New York, with an order for the firm to provide an answer by June 21. The plaintiffs alleged that TIAA breached its fiduciary duties to participants under ERISA for allegedly cross-selling the firm's adviser-managed account service known as Portfolio Advisor, which comes at a higher cost than remaining in the plan.

Source: Planadviser.com, June 2024

401k Lawsuits Over "Forfeited" Money Get a Lifeline

A new type of 401k lawsuit recently survived its first big challenge. Since one law firm began filing plan forfeiture cases last year, observers said they did not expect them to go very far. However, there are reportedly at least nine such lawsuits now pending, and the recent development in the Qualcomm case represents a tailwind for the plaintiffs.

Source: Investmentnews.com, June 2024

Bechtel Faces 401k Suit Over Default Managed Accounts

Engineering and construction firm Bechtel, its board, and its trust and thrift plan committee have been sued for allegedly defaulting plan participants into managed accounts that were not justified for the fees. The plaintiffs are seeking payment including "all profits which participants would have made if the defendants had fulfilled their fiduciary obligations."

Source: Planadviser.com, June 2024

TDF Fiduciary Hygiene: An Appropriate IPS, Customized Benchmarks, and Thorough Committee Minutes

On May 20, 2024, the United States District Court for the Northern District of California dismissed the plaintiffs' complaint in Bracalente v. Cisco Systems, Inc., holding that defendant Cisco did not violate ERISA's prudence requirement in selecting (and retaining) a suite of BlackRock target-date funds as the Cisco 401k plan's qualified default investment alternative. This article reviews the court's decision, highlighting three issues of practical significance for sponsor fiduciaries.

Source: Octoberthree.com, June 2024

Recent Developments in 401k Forfeiture Cases: Key Updates for Plan Sponsors

This article reviews two significant developments in the arena of 401k forfeiture cases that could have far-reaching implications for employers and plan sponsors. These recent legal decisions underscore the need for vigilance and proactive management of plan documents and forfeiture practices.

Source: Boutwellfay.com, June 2024

Bugielski v. AT&T Services, Inc.: Another Key Case Toward Defining the Future of 401k Litigation

SCOTUS may soon have yet another ERISA-related case to review. AT&T Services, Inc. recently petitioned SCOTUS for a writ of certiorari to review the Ninth Circuit's decision in Bugielski v. AT&T Services, Inc. AT&T presented the question for the Court as follows: Whether a fiduciary to an employee benefit plan causes the plan to engage in a prohibited transaction under Section 406(a)(1)(C) of ERISA by entering into a routine, arm's-length agreement for plan services.

Source: Fiduciaryinvestsense.com, May 2024

Nine Insurance Trade Groups File Suit Against DOL's New Fiduciary Proposal

The DOL went into the Memorial Day weekend with a fresh lawsuit seeking to undo its Retirement Security Rule filed by nine insurance trade associations. The associations filed the suit in the U.S. District Court for the Northern District of Texas, which is within the jurisdiction of the Fifth Circuit Court of Appeals. The associations cited the Fifth Circuit in the complaint because several years ago the court overturned a prior rule DOL intended to change the definition of what it means to give fiduciary advice for retirement investments.

Source: Planadviser.com, May 2024

South Carolina 401k Plan Smacked With Excessive Fee Suit

Another multi-billion-dollar 401k plan has been sued for what are allegedly excessive fees by a firm not previously noted in this genre. The suit alleges that, rather than acting for the exclusive benefit of the Sonoco Plan and its participants and beneficiaries, the defendants "allowed the Sonoco Plan's recordkeeper to receive excessive compensation for the services it provided."

Source: Napa-net.org, May 2024

Humana Prevails in Excessive Fee Suit

Evidence of a prudent process -- and a lack of valid comparator plans -- produced a win in federal court for the fiduciary defendants of a $6.5 billion plan in an excessive fee suit. The suit was filed four years ago. The claims were pretty vanilla for the genre, alleging that the plan fiduciaries breached the duties they owed to the plan, to plaintiffs, and the other participants of the plan.

Source: Napa-net.org, May 2024

Packaging Co. Hit With Excessive Fee Suit on $1.2B 401k

A South Carolina-based product packaging company's board and benefits committee is the latest to be hit with a lawsuit alleging excessive participant fees in its 401k plan. The complaint brought in the US District Court for the District of South Carolina Florence Division alleges a breach of fiduciary duty under ERISA for allowing for excessive fees in the $1.2 billion 401k plan, which was record kept by Empower.

Source: Planadviser.com, May 2024

Plaintiffs File Lawsuit Challenging DOL's Amendment of ERISA's Advice Fiduciary Rule

On May 2, 2024, a group of plaintiffs filed a complaint against the DOL challenging the validity of DOL's recently finalized amendment to the ERISA advice fiduciary regulation. This article highlights key claims plaintiffs are making in this case: that DOL's imposition of the general ERISA fiduciary obligations of prudence and loyalty on IRA advisers and its refusal to provide a carve-out for brokers as mere salespersons cannot be supported by the statute and that the 2024 amendment to the rule must be vacated.

Source: Octoberthree.com, May 2024

401k Forfeiture Fiduciary Breach Suit Sent to Arbitration

Roughly a half-dozen fiduciary breach suits have been filed against national employers alleging a breach of their fiduciary duties in how they applied forfeitures, one has now been sent to arbitration. Having filed both a motion to compel arbitration -- and to dismiss the action -- the Tetra Tech defendants point to an arbitration provision in the plan document that they claim precludes litigation without first having gone to arbitration.

Source: Napa-net.org, May 2024

Dismissal Expected Soon in Multiple 401k Forfeiture Proposed Class Action Lawsuits

At least nine pending proposed class action lawsuits challenging how companies use 401k forfeitures are facing rulings on motions to dismiss in the coming weeks. The pending cases include those involving large companies such as Mattel, Honeywell, Clorox, Intuit, and HP. In every case, benefits litigators are closely watching the outcomes of these and similar cases for trends and opportunities for future litigation.

Source: Hallbenefitslaw.com, May 2024

California District Court Dismisses Conclusory ERISA Fee Complaint Unsupported by Facts

In the past few years, hundreds of employers have been hit with proposed class actions challenging their "excessive" retirement plan fees. Plaintiffs have had mixed results in court. Recently a California federal court granted an employer win in an ERISA excessive fee case when it dismissed a proposed class action brought by an ex-employee of Schenker, Inc., a transportation logistics company.

Source: Erisalitigationadvisor.com, May 2024

Defense Contractor L3Harris to Pay $650k to Settle 401k Class Action

Aerospace and defense technology company L3Harris has agreed to settle an ERISA class action lawsuit for $650,000. Plan participants in the company's $5.2 million 401k plan claimed that the defense contractor violated ERISA by charging excessive fees and retaining expensive investment options. The settlement resolves the lawsuit before the court could rule on a pending motion for summary judgment.

Source: Hallbenefitslaw.com, May 2024

Who Owns Plan Forfeitures? New Cases Challenge IRS Guidance

Several lawsuits have been filed recently challenging 401k plan sponsors' use of forfeitures to reduce employer contributions. Is this a new phase in ERISA litigation or a wrong turn by plaintiffs' counsel? While it is always risky to predict how courts will rule on issues, motions to dismiss filed by defendants Clorox and Fisher Scientific target the holes in plaintiffs' cases. Further, it is not clear that participants would benefit even if plaintiffs were to prevail. Here are some of the reasons why using forfeitures to reduce employer contributions should not be restricted.

Source: Cohenbuckmann.com, May 2024

J.P. Morgan Sued for Data Exposure

A participant in a retirement plan managed by J.P. Morgan Chase & Co. has initiated legal action against the company following recent reports of a data breach where over 451,000 plan participants' details were exposed. According to the lawsuit filed in the U.S. District Court for the Southern District of New York on May 3, former Long Island Railroad employee Benjamin Valentine's personal information -- which he entrusted with J.P. Morgan on the mutual understanding that the firm would protect it against disclosure -- was "targeted, compromised and unlawfully accessed due to the data breach."

Source: Planadviser.com, May 2024

401k Advice Rule Puts New Fiduciaries in Litigation Crosshairs

A newly finalized rule from the DOL is poised to spur a new crop of suits under federal employee benefits law over alleged fiduciary breaches by defendants who previously weren't held to the strictest standard of care in handling retirement savers' funds. Lawsuits focusing on the extent to which an insurance agent, broker-dealer, or another party becomes a fiduciary by giving investment advice for a fee, a matter that hasn't been litigated frequently in federal courts, could emerge from the new fiduciary standard, according to benefits lawyers.

Source: Wagnerlawgroup.com, May 2024

Fifth Circuit Reverses Dismissal of 401k Fees Claims

The Fifth Circuit recently reversed a district court's dismissal of claims that the fiduciaries of a 401k plan breached the duty of prudence under ERISA by offering participants retail share classes instead of cheaper institutional share classes and causing the plan to pay allegedly excessive recordkeeping fees. The decision is notable for articulating the level of detail that may be sufficient in the Fifth Circuit for these kinds of claims to survive a motion to dismiss.

Source: Proskauer.com, May 2024

Settlements Struck in Several Excessive Fee Suits

The settlements are lining up in several so-called excessive fee suits -- including one at the 11th hour -- all with plaintiffs represented by Capozzi Adler PC. A considerable amount of time and energy has been spent in legal proceedings and the terms of any of these settlements are not yet known.

Source: Napa-net.org, May 2024

2024 DOL ERISA Investigation Update: Recent Publications Offer Insight Into Possible Areas of Focus

The DOL maintains a robust investigatory program for auditing employee benefit plans for potential ERISA violations. ERISA plan fiduciaries and service providers can expect the DOL to continue its ever-evolving enforcement program targeting both fiduciaries and nonfiduciary service providers. Recent reporting by the DOL provides insight into its current official and unofficial enforcement priorities and may help plan fiduciaries and in-house counsel seeking to track the DOL's enforcement activities.

Source: Morganlewis.com, May 2024

First Challenge of the DOL Investment Advice Fiduciary Final Rule

The fiduciary rule regulations are already being challenged by an advocacy group for independent insurance professionals claiming that the final rule creates heavy compliance burdens and hurts their ability to make commissions by unlawfully turning insurance agents into ERISA fiduciaries. The DOL responded to these and other numerous comments during the regulatory process and made certain changes and clarifications discussed in this article that narrow the contexts in which a covered recommendation will constitute ERISA fiduciary investment advice.

Source: Cohenbuckmann.com, May 2024

New Fiduciary Suits, TDF Demographics and a Prudent Process Primer

The new year has brought with it two new genres of ERISA litigation, including the first-ever case of an employee alleging a fiduciary breach by the employer's health care plan practices. That said, cases involving prudent selection and monitoring of investments persist and continue to dominate the ERISA litigation arena. Most importantly for plan sponsors, several victories for plan fiduciaries remind us that a prudent process generally prevails and may be effective in fending off litigation.

Source: Napa-net.org, April 2024

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