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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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Principal Prevails in Price-Fixing Fiduciary Suit

In a complicated case that a federal judge acknowledged "...presents interesting issues about what it means to be an ERISA fiduciary under the circumstances presented," Principal Life once again fended off fiduciary claims regarding the operation of its PFIO offering.

Source: Napa-net.org, April 2021

Another Court Finds 401k Plan Participant Data Is Not a Plan Asset

In its role as the plan's recordkeeper, Fidelity Investments Institutional Operations Company, Inc., maintained various categories of confidential participant data, including participants' names, contact information, social security numbers, financial information, account balances, age, income, and marital status. The plaintiffs alleged that the participant data is a "plan asset" under ERISA, making Fidelity an ERISA fiduciary and that Fidelity breached its fiduciary duties by sharing the participant data with the other Fidelity defendants, which allegedly used the data to solicit participants for additional Fidelity products.

Source: Faegredrinker.com, April 2021

Can Mandatory Arbitration Rein in ERISA Litigation? Appellate Courts Weigh In

Mandatory arbitration of fiduciary breach claims is the latest and most significant battleground. ERISA is silent on arbitration, but the Federal Arbitration Act encourages arbitration of disputes. Two relatively recent Supreme Court decisions upheld arbitration clauses in the employment context, although the Supreme Court has not specifically addressed the permissibility of mandatory arbitration under ERISA. In the meantime, federal courts are grappling with these issues in inconsistent decisions.

Source: Cohenbuckmann.com, April 2021

Is Data a Plan Asset: Another Court Says No

Last week marked a key development in the nascent and still evolving body of case law addressing the status of 401k plan participant data as an ERISA "plan asset." The U.S. District Court for Southern District of Texas granted Fidelity Investments' dismissal motion in Harmon v. Shell Oil, based on the Court's inability to draw a conclusion that plan participant data is a "plan asset," the exercise of control over which would give rise to fiduciary responsibility (and potential liability) under ERISA.

Source: Groom.com, April 2021

Lawsuit Says Retirement Plan Fiduciaries Failed to Monitor and Limit Revenue Sharing

According to the lawsuit, from 2015 through 2019, plan participants paid a portion of the fees for retirement plan services provided by the plan's recordkeeper directly through deductions from their accounts. Also, RPS fees were paid indirectly through revenue sharing. "Based upon a review of the plan's Forms 5500, and upon information and belief, the plan did not rebate any of the monies received from the revenue sharing back to plan participants to offset the RPS fees paid by the participants," the complaint says.

Source: Planadviser.com, April 2021

IBM Stock Drop Settles Case, Not Issues

The essence of the suit was that the employer's stock price dropped suddenly and plaintiffs argued that the plan fiduciaries -- who allegedly had awareness of the news and its impact before its public disclosure -- had an obligation to alert/take action concerning the retirement plan accounts that had invested in the employer stock. After nearly six years of litigation, the settlement terms of an ERISA litigation case that went to the U.S. Supreme Court have come to light.

Source: Napa-net.org, April 2021

Ninth Circuit Enforces Forum Selection Clause in 401k Plan

On April 1, 2021, the Ninth Circuit became the third circuit court to conclude that a forum-selection clause in an ERISA 401k plan is enforceable. The Ninth Circuit thus denied a petition for mandamus seeking to overturn a district court decision transferring an ERISA action from the Northern District of California to the District of Minnesota.

Source: Erisapracticecenter.com, April 2021

Courts Split on Class Action Waivers, Arbitration Provisions in ERISA Litigation

Courts have struggled through the years when considering the enforceability of mandatory class action waivers and arbitration provisions contained within ERISA plans and other employment-related agreements. Courts have taken various approaches in determining whether class action waivers and arbitration provisions are enforceable in ERISA-based litigation. These approaches are discussed here.

Source: Hklaw.com, April 2021

Judge Moves Forward Claims in Lawsuit Against Schneider Electric

A federal judge has moved forward a lawsuit brought by participants in the Schneider Electric 401k Plan alleging plan fiduciaries and Aon Hewitt Investment Consulting breached their fiduciary duties and engaged in prohibited transactions in violation of ERISA. In the lawsuit, the plaintiffs say that instead of acting in the exclusive best interest of participants, the defendants selected and retained proprietary Aon Hewitt collective investment trusts that only benefited Aon Hewitt.

Source: Planadviser.com, April 2021

Fidelity Fends Off Participant Data Claims

Another federal court has weighed in on the status of participant data as a plan asset. The issue arose most recently last January in an excessive fee suit brought by the St. Louis-based law firm of Schlichter, Bogard & Denton on behalf of four participant-plaintiffs in Shell Oil's $10.5 billion 401k plan. The Schlichter firm took issue with the use of participant data by the recordkeeper to solicit non-plan-related services.

Source: Napa-net.org, April 2021

The Relentless Rules of Humble Arithmetic: 401k/403b Fiduciary Litigation at the Crossroads

SCOTUS is currently deciding whether to hear the Hughes v. Northwestern University 403b case. The key issue in the case is an allegation of fiduciary breach by the plan concerning the level of the plan's fees. A number of large financial services firms have recently sold their 401k/403b divisions. Could a possible explanation be concern over a possible review and adverse decision by SCOTUS? Could the humble arithmetic and simplicity of the Active Management Value Ratio metric be a contributing factor in these decisions to leave the 401k/403b arena?

Source: Iainsight.wordpress.com, April 2021

The Key to Avoiding Retirement Plan Excessive Fee Litigation

The recent increase in litigation over retirement plans and, specifically, the fees those plans are being charged for administration and management, has many companies concerned about what they need to do to protect the plans they manage. Two recent federal district court rulings illustrate the necessity for plan sponsors to have a prudent decision-making process in place to successfully defend against excessive fee litigation.

Source: Hallbenefitslaw.com, April 2021

Is Participant Data a Plan Asset? Another Court Says No

A closely watched case was filed in Texas against Shell Oil Company and Fidelity, the plan's recordkeeper, alleging that Fidelity engaged in a prohibited transaction by profiting from the use of participant data through its cross-selling practices. A ruling for plaintiffs would have required the court to go further than other courts that have addressed this issue and make a threshold determination that participant data is a plan asset. Once that hurdle was cleared, plaintiffs would have had to show that Fidelity was a fiduciary violating the ERISA prohibition in Section 406 against benefiting from the use of plan assets. However, on March 30, the Shell court dismissed the claims against Fidelity for failure to state an ERISA claim.

Source: Cohenbuckmann.com, April 2021

Fee and Investment Litigation 2015-2020: Five Year Review of Developments and Best Practices to Mitigate Risk

In this two-part article, the authors provide a brief overview of 2020 trends and developments in fee and investment litigation and then explore more closely the key rulings and developments since 2015 and their impact on ERISA fee and investment litigation. This is part one of the article.

Source: Jacksonlewis.com, March 2021

Settlement Struck in BlackRock 401k Suit

The settlement -- which will wind up covering some 17,000 participants in BlackRock's Retirement Savings Plan, 70% current participants and 30% former who no longer have an active account, according to the agreement -- comes in a case filed on April 5, 2017, by Charles Baird alleging, as do most of these excessive fee suits, that the defendants breached their fiduciary duties by, among other things (and with the involvement of investment consultant Mercer Investment Counseling) charging excessive hidden fees, picking investments that charged up to 871% more than required and costing hundreds of millions of dollars in losses.

Source: Napa-net.org, March 2021

Investment Platform Provider Not Acting as a Fiduciary When Collecting Access Fees From Mutual Funds

The appellate court acknowledged that the provider, as a directed trustee, has some fiduciary duties. But the court also observed that fiduciary status is not an all-or-nothing proposition, and held that the provider's fiduciary duties do not extend to the access fees. According to the court, charging access fees does not translate to control over the compensation paid by participants due to a series of intervening and independent decisions outside of the provider's control.

Source: Thomsonreuters.com, March 2021

Appeals Court Affirms Dismissal Of Fidelity "Infrastructure Fee" Lawsuit

The 1st US Circuit Court of Appeals recently upheld the dismissal of a class-action lawsuit against Fidelity over "infrastructure fees" charged to third-party mutual funds on the company's FundsNetwork investment platform. Fidelity describes the fee as compensation for the costs of maintaining the platform. But the plaintiffs alleged the fee is a "pay-to-play" charge for access to Fidelity's retirement plan investors that violates Fidelity's ERISA fiduciary duties. The threshold question in the case concerned whether Fidelity was a functional fiduciary when negotiating the fee. If not, no fiduciary breach could have occurred.

Source: Mercer.com, March 2021

Another MEP Targeted by Excessive Fee Suit

The law firm of Capozzi Adler, P.C. has found another 401k plan to sue, and this one a multiple employer plan. The plan -- more specifically the plan fiduciaries -- targeted are those of Nextep, Inc., a Professional Employer Organization, as well as the firm's board of directors, the investment committee, and members of that committee.

Source: Asppa.org, March 2021

Johnson & Johnson Prevails in Fiduciary-Breach Suit

A U.S. District Court in Newark, N.J., dismissed a complaint by participants in three Johnson & Johnson 401k plans, who alleged that plan fiduciaries failed to protect their investments in company stock offered as a plan investment option. The participants argued that Johnson & Johnson fiduciaries should have acted following allegations that talc and asbestos had been found in some company products. The resulting controversy depressed Johnson & Johnson's stock price.

Source: Pionline.com, March 2021

$40 Million Excessive Fee Settlement Okayed

One of the largest 401k excessive suit settlements has been approved. The settlement arose in a case involving Reliance Trust and its role regarding the Insperity 401k Plan, in which the plaintiffs were enrolled. The plaintiffs are four participants in this plan for Insperity clients. However, the settlement did not actually involve Insperity but was an agreement between Reliance Trust and the plaintiffs.

Source: Napa-net.org, March 2021

Cybertheft Lawsuit: Court Dismisses Fiduciary Breach Claims Against Plan Sponsor for a Second Time/a>

On February 8, 2021, in the latest turn in the saga of a closely-watched ERISA cybersecurity lawsuit, the Northern District of Illinois again dismissed fiduciary breach claims against Abbott Laboratories relating to the cyber theft of $245,000 from a participant’s account in Abbott Laboratories Stock Retirement Plan. The decision marks the second time the court has dismissed claims against Abbott Labs.

Source: Groom.com, March 2021

Fidelity Fends Off FundsNetwork Fiduciary Appeal

A federal appellate court has again rejected claims that Fidelity's relationship with those fund companies in its FundsNetwork made it a fiduciary. Ultimately, while the appellate court acknowledged that Fidelity does have some fiduciary duties vis-à-vis the plans and their participants, it pointed out that "Fidelity's actions in a fiduciary capacity are not the subject of plaintiffs' complaint."

Source: Asppa.org, March 2021

Practice of Rebranding Investments Questioned in ERISA Lawsuit

The American Red Cross is accused of allowing excessive investment and recordkeeping fees in its 401k plan. The defendants are also accused of failing to timely consider available collective investment trusts that were identical to the funds offered by the plan and lower in cost. The complaint explains that the plan has engaged in a rebranding process in which it contracts with providers of CITs to offer each provider's CIT bearing the Red Cross name with the only difference being additional cost.

Source: Planadviser.com, March 2021

"Astronomical" RK Fees, Branded CITs, Draw Excessive Fee Suit

Just when you thought all the $1 billion 401k plans had been sued, another one shows up. This time the target is none other than the American Red Cross, sued by four of the 22,000 participants (with account balances) in the plan that had over $1.2 billion in assets at the end of 2019 (according to the suit). The case presented is relatively straightforward; plan participants paid higher fees than participants in a "jumbo" 401k plan should have.

Source: Napa-net.org, March 2021

Another Lawsuit Concerning 401k Theft

Theft of 401k account balances by cybercriminals or other types of criminals is an actual thing and they will become more and more popular as long as third-party administrators fail in their role and don't use common sense. The latest lawsuit by Raymond J. Mandli and Mandli Communications, Inc. claims that the TPA, American Trust made an unauthorized distribution in the total amount of $124,105 from Mr. Mandli's plan.

Source: Jdsupra.com, March 2021

Principal Life Insurance Named in Self-Dealing ERISA Suit

A new ERISA lawsuit filed in the U.S. District Court for the Southern District of Iowa accuses the Principal Life Insurance Co. of committing various fiduciary breaches in the operation of two retirement plans open to its employees. Related self-dealing claims made against other national financial services providers by participants in their retirement plans have met varying degrees of success.

Source: Planadviser.com, March 2021

Natixis Investment Managers Target of ERISA Lawsuit

A lawsuit has been filed against Natixis Investment Managers and its retirement committee, claiming they breached their fiduciary duties and engaged in unlawful self-dealing with the company's 401k Savings and Retirement Plan, in violation of ERISA.

Source: Planadviser.com, February 2021

Three Takeaways From Intel Retirement Plan Leaders' ERISA Win

The status of alternative investments as viable options on 401k plan menus received a significant boost on Jan. 21, as a California federal judge granted defendants' motion to dismiss in the latest development in the closely watched Anderson v. Intel Corp. Investment Policy Committee case. For plan sponsors who have watched the recent 401k litigation wave progress with no sign of relenting in recent months, this decision comes as a welcome development as it should help raise the bar for plaintiffs looking to challenge these types of plan investment options. In addition, the court's opinion may provide a road map for changes to fiduciary decision-making processes that could limit the ability of plaintiffs to bring these types of cases.

Source: Ropesgray.com, February 2021

NFP Named in ERISA Lawsuit Alongside Plan Sponsor

A new ERISA lawsuit filed in the U.S. District Court for the Central District of California names both the plan sponsor and various financial service providers as defendants, including NFP Retirement. Much of the text of the complaint is dedicated to detailing the reduction in the average fees paid by large U.S. retirement plans for both investments and administrative services.

Source: Planadviser.com, February 2021

Another Stock Drop Case Dropped, Again

Once again, plaintiffs find the "more harm than good" bar too high to clear in employer stock litigation. This time the plaintiff is one Adele Varga, and she is appealing the March 5, 2020 judgment of the U.S. District Court for the Northern District of New York that dismissed her class action complaint alleging that General Electric Company and Jeffrey Robert Immelt "failed to exercise their fiduciary duty of prudence to the participants of the GE Retirement Savings Plan in violation of the Employee Retirement Income Security Act."

Source: Asppa.org, February 2021

Abbott Lab Defense Again Succeeds in ERISA Case

The U.S. District Court for the Northern District of Illinois, Eastern Division, has ruled once again in an ERISA lawsuit involving Abbott Laboratories and the Abbott Laboratories Stock Retirement Plan. Technically, the latest ruling grants Abbott Lab's motion to dismiss an amended complaint that was filed in the suit after the court soundly rejected the plaintiff's initial formulation.

Source: Planadviser.com, February 2021

Land O'Lakes ERISA Excessive Fee Suit Receives Mixed Ruling

A new ruling published by the U.S. District Court for the District of Minnesota in an ERISA fiduciary breach lawsuit targeting the Land O'Lakes dairy company grants some elements of the defense's motion to dismiss while rejecting others.

Source: Planadviser.com, February 2021

Having an IPS Doesn't Necessarily Increase Plan Sponsor Liability

Retirement plan sponsors aren't required by ERISA to have an investment policy statement, but it is considered a prudent and best practice. However, Bruce Ashton, a partner in the Faegre Drinker Biddle & Reath LLP Employee Benefits and Executive Compensation Practice Group, says he's heard some plan sponsors say they don't want an IPS because it will increase their liability. "I don't think that's true," he says. "The issue is what's in the IPS and whether plan fiduciaries are following it."

Source: Plansponsor.com, February 2021

Another MEP Targeted in Excessive Fee Suit

The platform may be different, but the excessive fee allegations directed toward a multiple employer plan are all too familiar. The plaintiff this time was employed by Heartland Coca-Cola Bottling Company an employer that participated in the Coca-Cola Bottlers' Association 401k Retirement Savings Plan, a multiple employer plan. The plan covers about 19,000 participants, and as of December 2019 had nearly $800 million in assets spread across 24 investment options, including a Coca-Cola Common Stock Fund.

Source: Napa-net.org, February 2021

Participants in Terminated 403b Plan File ERISA Lawsuit

A group of 403b plan participants is suing their employer for allegedly keeping imprudent investments as choices in the plan and for causing them to pay excessive fees for plan investments, among other things. According to the ERISA lawsuit, "for the period beginning January 1, 2015, through the date the plan was terminated, May 31, 2019, plan participants lost approximately $4.6 million due to excessive fees and costs as a result of Columbus Regional's breaches of fiduciary duty."

Source: Plansponsor.com, February 2021

Excessive Fee Suit Challenges Plan Choices, Fees, Practices

A new name in excessive fee litigation emerges, filing suit against a (relatively) smaller plan, treading some new ground, and covering some familiar territory. The participant-plaintiffs here claim that Columbus Regional (which terminated the plan in question effective May 31, 2019, but at the time had approximately $183 million in assets and some 4,700 participants) "failed its duties from start to finish."

Source: Napa-net.org, February 2021

Defending Against Excessive Fee Cases: It's All About Procedure

There has been a surge of excessive fee lawsuits filed against plan sponsors in recent years. But there are strategies retirement plan sponsors and their attorneys can take to defend themselves, Carol Buckmann, ERISA attorney and founding partner of Cohen & Buckmann. "Even if a trial progresses, there are a lot of effective arguments that fiduciaries can make," Buckmann says.

Source: Plansponsor.com, January 2021

DOL Objects to Terms of Excessive Fee Settlement

The DOL has called "foul" on the terms of a proposed excessive fee litigation settlement involving DST Systems' 401k plan. The move comes following three class action settlements filed Jan. 8 in a federal district court by DST, investment manager Ruane, Cunniff & Goldfarb, and the former CEO of Ruane, in which the defendants agreed to pay nearly $80 million to settle claims made by participant-plaintiffs in the DST 401k profit-sharing plan.

Source: Napa-net.org, January 2021

Mercedes-Benz Participants Steer 401k Complaint Into Court

Participants in a 401k plan run by Mercedes-Benz U.S. International sued the company and its fiduciaries, alleging violations of their duties under ERISA. "Failures by ERISA fiduciaries to monitor costs for reasonableness have stark consequences for retirees," said the complaint filed Jan. 19 in a U.S. District Court in Tuscaloosa, Ala.

Source: Pionline.com, January 2021

ERISA Breaches Cited in Takeda 401k Plan Suit

Three 401k plan participants filed suit against Takeda Pharmaceuticals alleging the company, its executive compensation committee, and officials mismanaged the investment options in the plan. The suit, filed in U.S. District Court in Boston, said the company and other defendants violated the ERISA by utilizing a target-date fund lineup that underperformed compared to comparable target-date funds.

Source: Pionline.com, January 2021

Dueling Dismissal Motions Denied in BlackRock Self-Dealing Lawsuit

A new ruling has been issued by the U.S. District Court for the Northern District of California in an ERISA lawsuit involving BlackRock. Underlying the lawsuit are allegations that BlackRock engaged in self-dealing within its retirement plan. The complaint suggests plan fiduciaries selected and retained high-cost and poor-performing investment options with "excessive layers of hidden fees that are not included in the fund expense ratios."

Source: Planadviser.com, January 2021

Retirement Plan Trustee Faces Cybersecurity-Related Lawsuit

A plan sponsor is suing the trustee for its 401k plan for breaches of fiduciary duties related to a fraudulent distribution from a participant's account made in 2020. American Trust is the trustee for the Mandli Communications 401k Plan and Trust. One of the services it provides to the plan is reviewing and approving all distributions from the plan.

Source: Planadviser.com, January 2021

Court Filing Details $13M UPenn 403b Lawsuit Settlement

A new court filing in the U.S. District Court for the Eastern District of Pennsylvania describes the terms of a settlement reached between the University of Pennsylvania and plaintiffs in a long-running and complex ERISA fiduciary breach lawsuit.

Source: Planadviser.com, January 2021

When Can 401k Fiduciaries Get Excessive Fee Suits Dismissed? Anatomy of Two Recent Wins

Fiduciaries are wondering if it is ever possible to avoid a trial or extensive discovery if they are sued. Sometimes it is, as two recent federal district court decisions have shown. One was dismissed with prejudice, which means that the plaintiffs can't refile and bring the claims again. These decisions may provide a template for further dismissals of cases filed based on conclusory allegations and speculation rather than the actual conduct of the defendants.

Source: Cohenbuckmann.com, January 2021

BlackRock 401k Plan Class Action Headed for Trial

A class action alleging that BlackRock entities favored their proprietary funds when selecting investment options for BlackRock's 401k Plan is headed for trial after Judge Haywood S. Gilliam, Jr. denied both parties' motions for summary judgment. BlackRock sought summary judgment on Plaintiffs' claims for breaches of fiduciary duty. The court denied the motion for several reasons.

Source: Benefitslawadvisor.com, January 2021

Fake 401k Distribution Request Triggers Suit

A new case of 401k theft has led to a lawsuit by the participant, and the plan, against a provider. The suit alleges that on Feb. 14, 2020, "American Trust made an unauthorized distribution in the total amount of $124,105 from Mr. Mandli's Plan account in response to a request for a distribution from an unknown third party."

Source: Asppa.org, January 2021

Lessons Learned From ERISA Class Action Litigation Arising Out of the "Great Recession"

Often fiduciary duties are magnified and called into question when the country is plunged into an economic crisis and retirement plans suffer significant losses. Most notably, we saw an increase in the number of ERISA class action lawsuits in the wake of the Great Recession of 2008. This article analyzes the ERISA litigation trends that emerged after the Great Recession, the lessons learned, and what we may expect in the wake of the economic impacts resulting from the novel coronavirus pandemic, COVID-19.

Source: Dechert.com, January 2021

Vail Resorts Wins Dismissal of ERISA Fiduciary Breach Lawsuit

A new ruling out of the U.S. District Court for the District of Colorado grants the dismissal motion filed by the defense in an ERISA lawsuit known as Kurtz v. Vail Corp. The underlying lawsuit accuses the Vail Corp. of permitting excessive fees in the Vail Resorts 401k Retirement Plan.

Source: Planadviser.com, January 2021

401k Plan Administrator Sues VALIC Over Surrender Fees Charged to Plan

The administrator of the D.L. Markham, DDS, MSD, INC. 401k Plan has filed a lawsuit against the Variable Annuity Life Insurance Co. over fees he says were improperly withheld from plan assets. The insurer is charged with engaging in a prohibited transaction under ERISA when the fees were charged during a move to a new provider, as well as with self-dealing.

Source: Planadviser.com, January 2021

DST Systems Settles Lawsuit Over Risky Retirement Plan Investment

The lawsuit said the DST Systems Inc. profit sharing and 401k plans were invested too much in Valeant Pharmaceuticals. A settlement amount of $27 million to be paid by DST Systems was reached.

Source: Planadviser.com, January 2021

Vail 401k Lawsuit Dismissed

Vail Resorts on Wednesday won dismissal of a lawsuit over the Colorado-based skiing company's 401k plan. The plaintiff failed to raise issues with the company's process of selecting and monitoring funds, a judge wrote.

Source: Investmentnews.com (registration may be required), January 2021

Allstate Faces Additional ERISA Fiduciary Breach Lawsuit

A new complaint filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, accuses Allstate of various breaches of fiduciary duty and prohibited transactions under ERISA. A new complaint echoes allegations leveled against the insurance company in a complaint from November.

Source: Planadviser.com, January 2021

Plaintiffs Claim Fiduciary Breach in Recent Retirement Plan Class Action

Nestle USA and its board of directors have been served with an ERISA class action on behalf of 401k plan participants and their beneficiaries. The suit alleges that Nestle and its representatives failed to monitor fees or act to reduce expenses passed along to plan participants. Plaintiffs claim fiduciary breach while acknowledging insufficient data to determine reasonable fee levels.

Source: Hallbenefitslaw.com, January 2021

2020 ERISA Litigation Trends Hint at What's Ahead This Year

By any measure, 2020 was a record-setting year for litigation under the Employee Retirement Income Security Act. The U.S. Supreme Court issued four ERISA decisions, more than it has issued in a single year in the 45-year history of the statute. And just over 200 new ERISA class actions were filed, a record that represents an 80% increase over the number of ERISA class actions filed in 2019 and more than double the number filed in 2018. This trend shows no sign of slowing down, with important developing issues related to fee and performance litigation for smaller retirement plans, COBRA notices, arbitration clauses and class action waivers, actuarial assumptions, cyber theft, and employee stock ownership plans, or ESOPs.

Source: Groom.com, January 2021

Supreme Court Ruling Addresses ERISA Preemption

A recent decision filed by the U.S. Supreme Court has significant implications in the area of ERISA preemption of state laws and regulations, though the direct impact on retirement plans could be muted.

Source: Planadviser.com, December 2020

Is the Tide of ERISA Litigation Turning?

One ERISA attorney who tends to represent plaintiffs says the future might hold fewer cases, thanks to certain key Supreme Court rulings and broad improvements in plan design and governance.

Source: Planadviser.com, December 2020

Back to the Basics: How Will Your Plan Fare in an Audit or Lawsuit?

This is the time of year when we see lots of articles on hot plan trends for 2021 and what benefits innovations plan sponsors are adopting. But the beginning of the new year is also a good time for fiduciaries to review basic plan policies and operations to see how they can be improved. The better these are, the greater the chances your plan will survive an audit or prevail in a fiduciary breach lawsuit. Here are some places to start.

Source: Cohenbuckmann.com, December 2020

Retirement Plans Will Likely Face More Litigation in 2021

Plan sponsors should keep a close watch on retirement plan litigation, as the effects of COVID-19 might spark new lawsuits. The market volatility experienced in March and April, coupled with the cybersecurity risks of remote work, could position some employers to face litigation in the new year, industry experts say.

Source: Planadviser.com, December 2020

401k Lawsuits Explode in 2020

Lawsuits against 401k sponsors have been pervasive this year, with nearly 100 new cases alleging breaches of fiduciary duties in connection with the fees workers incur. That trend has coincided with a steep rise in cost for fiduciary liability insurance and a lower ceiling on limits. The volume of new claims is higher than usual, though so is the number that have been dismissed. Whether many of the defendants in the recent wave of cases can get claims dismissed at an early stage will influence how likely other defendants will be to fight claims rather than settle.

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

District Court Dismisses ERISA Fee Litigation against 401k Plan for Failure to Exhaust

A federal district court in Georgia recently dismissed claims brought by a participant in the Rollins, Inc. 401k Plan, on behalf of a putative class of all plan participants, alleging that defendants breached their fiduciary duties by charging excessive recordkeeping fees, selecting and retaining costly and underperforming funds in the Plan and failing to diversify the plan's investment options. Defendants moved to dismiss on the basis that the plaintiff's claims were barred by her failure to exhaust the plan's administrative remedies before filing suit, among other reasons.

Source: Erisapracticecenter.com, December 2020

Judge Throws the Book at TPA Embezzlers

The owners of Vantage Benefits Administrators have been sentenced by a federal judge for their role in a $15 million embezzlement scheme. Vantage Benefits Administrators co-owners Jeffery Richie, 55, and his wife Wendy Richie, 59, pled guilty to several counts in federal court for their role in the aforementioned embezzlement scheme in June. In all, the pair admitted to more than 90 unauthorized distribution requests from 13 pension plans and seven retirement plans from 2014 and 2017.

Source: Asppa.org, December 2020

Judge Rebuffs 401k Excessive Fee Settlement

A proposed excessive fee suit settlement has been rejected by the court. The settlement in question was for $2.55 million, and it involves allegations regarding the $1.9 billion 401k plan of Teva Pharmaceuticals USA Inc. While there wasn't anything particularly unusual about the suit or its allegations, Judge Kearney had an issue regarding "distributional fairness" in how the current plan of allocation outlined the process of notification.

Source: Napa-net.org, December 2020

Complaint Accuses Cognizant of Breach of 401k Fiduciary Duties

In the District of New Jersey, plaintiffs who participated in the Cognizant Technology Solutions 401k Savings Plan filed a putative class-action complaint against digital solutions company Cognizant, its Board, and the 401k investment committee. The defendants allegedly violated ERISA by breaching their fiduciary duties.

Source: Lawstreetmedia.com, December 2020

Exposing Excessive Fee Litigation

This 24-page white paper explores the problems with the recent surge in excessive fee litigation. Plaintiff law firms have flooded the federal courts with cookie-cutter ERISA class action litigation against defined contribution plans. The copy-cat lawsuits -- now nearly 200 in number with over 90 filed in 2020 alone -- attack retirement plan investment options that are commonplace and longstanding. The paper suggests four systemic reforms needed to restore a fair and uniform fiduciary standard of care.

Source: Euclidspecialty.com, December 2020

Freedom Funds Focus of Another Excessive Fee Suit

Another 401k plan fiduciary was sued for excessive fees and an allegedly imprudent selection of target-date funds. The plaintiffs, former employees of independent bottler Coca-Cola Consolidated Inc. and current participants in the Coca-Cola Consolidated, Inc. 401k plan, charged that the defendants breached their fiduciary duties to the plan.

Source: Napa-net.org, December 2020

Class Certified in Suit Over TIAA's Plan Loan Practices

A U.S. District has granted class certification in a lawsuit seeking to recover money that TIAA allegedly "unlawfully took" from retirement accounts similarly situated in the Washington University Retirement Savings Plan and across its U.S. business. The judge noted there are more than 460,000 loans at issue.

Source: Planadviser.com, November 2020

Coca-Cola Bottler Faces ERISA Fiduciary Breach Complaint

A bottler working for the famous soft drink company Coca-Cola is facing an ERISA fiduciary breach lawsuit filed in the U.S. District Court for the Western District of North Carolina. It's anyone's guess at this early juncture whether the fiduciary breach lawsuit will fizzle, though it includes some familiar allegations from other lawsuits filed by Capozzi Adler.

Source: Planadviser.com, November 2020

"Imprudent" Asset Allocation Suit Settles for $17.5 Million

A suit which had alleged that a profit-sharing plan's investment allocation was inappropriate and the plan fiduciaries' actions in establishing and maintaining it imprudent has settled. Unlike most of the litigation dealing with excessive fees and stock drop litigation, this involved a traditional profit-sharing plan, with participants' accounts funded solely by employer contributions, subject to a six-year vesting schedule.

Source: Napa-net.org, November 2020

Amway Faces Excessive Fee Lawsuit

Former participants in the Amway Retirement Savings Plan have filed a lawsuit accusing fiduciaries of breaching their duties under ERISA by failing to monitor appropriate investment costs. Among other allegations, the complaint says defendants continued to offer certain funds in the plan despite the availability of alternative, lower-cost ones.

Source: Plansponsor.com, November 2020

A Look at the Current State of ERISA Class-Action Litigation

This piece looks at the current ERISA class-action litigation landscape, including the types of ERISA cases that currently are being filed, the recent Supreme Court decisions, and the substantial settlements paid in many recent ERISA cases.

Source: Dechert.com, November 2020

Boeing Gets Reprieve in 401k Stock-Drop Case

401k participants who sued Boeing over stock losses stemming from the firm's disastrous 737 Max crashes were this week dealt a major setback. A judge dismissed claims the company breached its fiduciary duty to plan participants by failing to disclose safety issues with its 737 Max model.

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

LinkedIn's 401k Plan Latest Target in Lawsuit Alleging Fiduciary Breach

A class-action lawsuit has been filed in the U.S. District Court for the Northern District of California against LinkedIn Corporation, its Board of Directors, and its 401k Committee, for breach of fiduciary duty under ERISA. The complaint alleges that the defendants failed to fulfill their fiduciary duties by neglecting to consider lower-cost alternative funds or certain collective investment trusts "as alternatives to mutual funds in the plan, despite their lower fees and materially similar investment objectives."

Source: Hallbenefitslaw.com, November 2020

Another Self-Dealing ERISA Fiduciary Breach Lawsuit Filed

Northern Trust is the latest financial services company to face an ERISA legal challenge, this one filed in the U.S. District Court for the Northern District of Illinois, Eastern Division. The lead plaintiff in the suit says Northern Trust has inappropriately prioritized its investments within a profit-sharing retirement plan offered to employees.

Source: Planadviser.com, November 2020

401k Retirement Plan Fee Litigation

The coronavirus pandemic and resulting mandated closures did not slow the volume of 401k retirement plan fee litigation during 2020. This year alone, there were 35 new 401k lawsuits, with the majority filed after the pandemic began in March. This chart lists the cases that were either newly filed, dismissed, went to trial, or settled, thus far, in 2020.

Source: Cammackretirement.com, October 2020

Supreme Court Review of Excessive Fee Litigation?

On June 19, 2020, plaintiffs in Hughes v. Northwestern University -- an "excessive fee" case -- filed a Writ of Certiorari, asking the Court to review a Seventh Circuit decision affirming a district court's grant of defendants' motion to dismiss. On October 5, 2020, the Supreme Court invited the Acting Solicitor General to file a brief "expressing the views of the United States" in this case. This article briefly reviews what may be at stake for 401k plan sponsors in a possible Supreme Court review.

Source: Octoberthree.com, October 2020

401k Fee Lawsuits: What Can a Plan Sponsor Do?

Most weeks, a plan sponsor is sued for breach of fiduciary duty in connection with the investment choices offered under its 401k or 403b plans. A few of these cases get dismissed early in the proceedings. A few go to trial, but most cases settle. Unless dismissed, these claims, whether tried or settled, often involve million-dollar recoveries. What can a plan sponsor do to establish the best record possible if the sponsor and its fiduciaries decide that they want to defend themselves?

Source: Foley.com, October 2020

Plan Participant Personal Information: Retirement Plan Asset?

A lawsuit filed in U.S. District Court for the Southern District of Texas, against Shell Oil Company by several participants in the company’s 401k plan, claimed that Shell allowed its plan recordkeeper to use the participants’ personal information to cross-sell other financial products and services outside the plan in breach of its fiduciary duties under ERISA. At the heart of the plaintiff’s case is their contention that 401k plan participant data is a plan asset and the use of that data for nonplan purposes constitutes a breach of fiduciary duty under ERISA. Is participant data a plan asset?

Source: Hallbenefitslaw.com, October 2020

Cybertheft Lawsuit: Claims Dismissed Against Plan Sponsor but Move Forward Against Recordkeeper

For the court, the determinative issue at this stage of the litigation was the fiduciary status of each of the defendants. As described here, the court concluded that Alight was the only defendant sufficiently alleged to be a fiduciary, and thus dismissed all claims against the Abbott Labs defendants but allowed the claims against Alight to move forward. The case highlights the evolving nature of ERISA cyber-security litigation and represents the second case where plaintiffs survived a motion to dismiss alleging that plan service providers were fiduciaries when allegedly failing to prevent cyber fraud from draining participant accounts.

Source: Groom.com, October 2020

Schlichter Strikes a $40 Million Settlement

Noting that the settlement agreement is "fair, reasonable, and adequate, and within the range of possible approval," the parties in an excessive fee suit have come to terms. The settlement comes in a case involving Reliance Trust and its role regarding the Insperity 401k plan, in which the plaintiffs -- represented by the law firm of Schlichter Bogard & Denton -- are enrolled.

Source: Napa-net.org, October 2020

Nestle Sued Over Its 401k

A new 401k lawsuit filed against Nestle USA targets the administrative and managed accounts fees the plan's participants have paid since 2014. Unlike most other excessive fee claims filed amid this year's enormous surge in 401k litigation, investment management costs are not at issue in the case. Rather, the plaintiffs in the class-action lawsuit cite recordkeeping and administrative costs that were allegedly more than twice as expensive as what the nearly $4.3 billion plan could have negotiated.

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

Court Says TPA May Be Held Liable for ERISA Fiduciary Breach and Consumer Fraud

The opinion is unique because it raises important questions -- not just about the scope of a TPA's ERISA fiduciary liability for distributing plan benefits that end up in a cyber criminal's pocket -- but whether ERISA plan TPA's can be sued for both ERISA fiduciary breach claims and state law consumer fraud claims resulting from the same alleged misconduct: the failure to enact cybersecurity procedures that prevent the theft of plan assets. The result of the Abbott decision has serious implications.

Source: Wagnerlawgroup.com, October 2020

Lessons From a Rare ERISA Excessive Fee Suit Dismissal

The complexity of retirement plan lawsuits often makes district court judges reluctant to approve early dismissal motions plaintiffs, but Salesforce has succeeded in defeating a complaint alleging it committed various fiduciary breaches.

Source: Plansponsor.com, October 2020

Stock Drop Litigation Cases and COVID-19: Retirement Plans Beware!

During times of stock market volatility, there is typically an increase in the number of ERISA claims filed seeking recovery of investment losses. The COVID-19 pandemic certainly qualifies as a market volatility event, giving plaintiffs an opportunity to bring breach of fiduciary claims based on company stock losses in qualified retirement plans.

Source: Hallbenefitslaw.com, October 2020

Abbott Defendants are Dismissed From Plan Cybertheft Lawsuit-At Least for Now

The plaintiff named Abbott Labs as a defendant, but the court dismissed these claims on the ground that the plaintiff did not show that Abbott Labs acted as a fiduciary or was identified as a fiduciary in the plan document. No acts were specified that linked Abbott to the alleged theft, and a complaint must allege that Abbott acted in a fiduciary capacity when it took actions that were the basis for the lawsuit.

Source: Cohenbuckmann.com, October 2020

Abbott Escapes Retirement Plan Cybersecurity Suit

Abbott Laboratories defendants have been dismissed from a lawsuit alleging failures related to an employee's retirement account theft. District Judge Thomas M. Durkin of the U.S. District Court for the Northern District of Illinois, however, denied recordkeeper Alight Solutions' motion to dismiss.

Source: Planadviser.com, October 2020

SCOTUS Seeks Fed Input on Excessive Fee Suit

The nation's highest court has sought the federal government's input on a case that the law firm of Schlichter Bogard & Denton says is having a "chilling effect" on excessive fee litigation. Specifically, the U.S. Supreme Court has "invited" the Acting Solicitor General to "file a brief in this case expressing the views of the United States" in a suit brought against Northwestern University and the fiduciaries of its 403b plan.

Source: Napa-net.org, October 2020

TriNet Sued Over MEPs

Human resources outsourcing firm TriNet is among the latest companies to be targeted over the multiple-employer plans it sponsors, having been sued last week by several participants. The Sept. 29 class-action complaint was brought by law firm Capozzi Adler, which this year has filed by far the most new 401k excessive-fee lawsuits. The case against TriNet is different, however, because it involves MEPs rather than a single-employer 401k plan.

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

Are MEPs the Next Big Target for Lawsuits?

At least three cases were filed recently against providers of multiple employer plans, and two other cases have been settled. This year also has seen a wild rise in the number of 401k lawsuits, though relatively few of them have involved MEPs.

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

Schlichter Attorneys Sanctioned for "Reckless" ERISA Suit

Attorneys from the law firm of Schlichter Bogard & Denton, which arguably could be said to have started the flood of ERISA excessive fee litigation against retirement plans that has been going on for more than a decade, has been sanctioned by a federal judge for a "reckless" lawsuit.

Source: Planadviser.com, October 2020

Judge Tosses Second Class Action Against Trader Joe's

A federal judge in Los Angeles dismissed another class action filed against Trader Joe's and other related parties that alleged a series of ERISA violations in managing the grocery store chain's $1.7 billion 401k plan.

Source: Pionline.com, September 2020

Schlichter Sanctioned for "Reckless" Litigation

Determining that the decision to pursue litigation was "objectively reckless," a federal judge has sanctioned the law firm of Schlichter Bogard & Denton with a fine of (up to) $1.5 million.

Source: Napa-net.org, September 2020

403b Retirement Plan Fee Litigation Update

Despite the COVID-19 pandemic, there have been no signs of a slowdown in the litigation arena. Since the last comprehensive update on 403b retirement plan fee litigation in April, there have been some significant updates.

Source: Cammackretirement.com, September 2020

MGM Resorts Hit With 401k Plan Excessive Fee Suit

MGM Resorts International has been sued by participants of its 401k plan alleging breaches of ERISA fiduciary duties by allowing excessive recordkeeping and investment fees. The allegations are similar to many other pieces of litigation challenging the use of actively managed funds over passive funds and the use of higher-cost share classes.

Source: Plansponsor.com, September 2020

Dudenhoeffer Strikes Again: Eighth Circuit Dismisses Two Stock Drop Cases Based on Nonpublic Information

The Eighth Circuit has affirmed the dismissal of two cases in which plan participants claimed that their plan's fiduciaries breached their duties of prudence and loyalty by failing to act on nonpublic information about events that later caused a substantial drop in the value of their employer's stock. In each case, the participants argued that they met the pleading standard established in the Supreme Court's Dudenhoeffer decision.

Source: Thomsonreuters.com, September 2020

Duke Energy Sued for Allegedly Excessive 401k Fees

A former participant in a Duke Energy Corp. 401k plan sued the company and plan fiduciaries alleging they violated ERISA rules in managing the plan. The plaintiff argued that the Duke plan paid recordkeeping fees that were well above "competitive marketplace rates." The 401k plan has had the same recordkeeper "for at least the past decade, and the fees remained "roughly the same between 2014 and 2018 while marketplace rates were dropping," the former participant alleged.

Source: Pionline.com, September 2020

Avoiding ERISA Lawsuits Isn't Hard

Proposed class-action lawsuits by retirement plan participants against their employers are on track for a fivefold increase between last year and this year, according to a Bloomberg Law analysis. Sixty-five class-action suits have been filed so far in 2020 and many of these suits are for excessive fees and/or the use of overpriced share classes. Often the reason for these lawsuits is simple neglect. Here are a few simple actions that can improve fiduciary processes and reduce litigation risk.

Source: Nwpsbenefits.com, September 2020

Latest Excessive Fee Suit Strikes Utility Chord

You might think there couldn't be another multibillion-dollar 401k plan to be sued and yet there is. The 25-page suit presents a relatively succinct case regarding its claims that the Duke plan defendants breached their fiduciary duties of loyalty and prudence, and that Duke energy failed to monitor the actions of the plan fiduciaries.

Source: Napa-net.org, September 2020

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


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