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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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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

More Sutter Health 403b Plan Participants Challenge Plan Investments

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

Source: Planadviser.com, September 2020

How to Minimize Judicial Review of ERISA Fiduciary Decisions

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

Source: Beneficiallyyours.com, September 2020

A "Vaccine" for COVID-19 ERISA litigation

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

Source: Constangy.com, September 2020

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

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

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

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

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

Source: Iainsight.wordpress.com, September 2020

Medical Device Manufacturer Hit With ERISA Excessive Fee Suit

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

Source: Planadviser.com, August 2020

Participant Data: A Retirement Plan Asset?

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

Source: Cammackretirement.com, August 2020

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

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

Source: Plansponsor.com, August 2020

Massive 401k Suit Settlement Struck

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

Source: Napa-net.org, August 2020

Excessive Fee Suit Parties "Papering Up" Settlement

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

Source: Napa-net.org, August 2020

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

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

Source: Plansponsor.com, August 2020

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

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

Source: Foley.com, August 2020

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

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

Source: Erisapracticecenter.com, August 2020

4th Circuit Ruling Supports ERISA Stock-Drop Plaintiffs

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

Source: Planadviser.com, August 2020

Estee Lauder and Costco Targeted in 401k Lawsuit Surge

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

Source: Forbes.com, August 2020

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

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

Source: Reuters.com, August 2020

Mercy Health Corp. Faces 403b Plan Excessive Fee Lawsuit

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

Source: Plansponsor.com, August 2020

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

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

Source: Planadviser.com, August 2020

Illinois Federal Court Dismisses ERISA Claims Against 401k Fiduciaries

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

Source: Internationallawoffice.com, August 2020

Media Company Latest to Face Legal Scrutiny Over Fidelity Freedom Funds

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

Source: Planadviser.com, August 2020

Avoiding COVID-19 Benefits-Related Litigation

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

Source: Hallbenefitslaw.com, August 2020

Federal Court Dismisses ERISA Claims Against 401k Fiduciaries

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

Source: Employeebenefitsblog.com, August 2020

Quest Diagnostics Faces Additional ERISA Litigation

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

Source: Planadviser.com, July 2020

Princeton ERISA Settlement Features $5.8M Price Tag

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

Source: Planadviser.com, July 2020

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

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

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

Appeals Court Hands Wells Fargo Another Win in Stock Drop Case

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

Source: Planadviser.com, July 2020

Sutter Health 403b Plan the Target of Excessive Fee Suit

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

Source: Planadviser.com, July 2020

Matrix Trust Accused of Being Deceptive About Fees

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

Source: Planadviser.com, July 2020

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

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

Source: Mercer.com, July 2020

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

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

Source: Velaw.com, July 2020

Koch Industries Sued Over 401k Plan Fees

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

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

District Court Dismisses 401k Excessive Fee Lawsuit

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

Source: Hklaw.com, July 2020

Alleged Boeing Retirement Plan Fraudster Charged in California

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

Source: Plansponsor.com, July 2020

ERISA Complaint Filed Against Biogen

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

Source: Plansponsor.com, July 2020

Coronavirus Benefits Lawsuits Have Begun

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

Source: Gct.law, July 2020

New Cybersecurity Decision Highlights Potential Claims Against Plan Sponsors

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

Source: Cohenbuckmann.com, July 2020

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