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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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Fifth Circuit: Plan Participants Lacked Standing to Bring ERISA Fiduciary Breach Claims

American Airlines, Inc. and its affiliated credit union recently defeated an appeal challenging a low-yield investment option in the airline's 401k plan when the Fifth Circuit ruled that the plan participants lacked Article III standing to bring their ERISA claims.

Source: Erisalitigationadvisor.com, July 2021

A Ninth Circuit Ruling Reminds ERISA Plans of the Importance of Administrative Accuracy

The Ninth Circuit's recent decision in Bafford v. Northrop Grumman affirmed the district court's dismissal of the plaintiffs' breach of fiduciary duty claims under ERISA but vacated the district court's holding that state-law professional and negligent misrepresentation claims were preempted. The plaintiffs alleged that Northrup, the Committee, and the recordkeeper breached their fiduciary duties and failed to provide benefits information required under ERISA. In addition, the plaintiffs alleged that the recordkeeper was liable for professional negligence and negligent misrepresentation.

Source: Faegredrinker.com, July 2021

Plaintiff Lacks Standing to Challenge Retirement Plan Investment Options and Fees

On July 16, 2021, the District Court for the Western District of Wisconsin dismissed without prejudice four ERISA claims brought by a former employee alleging mismanagement of Infinity's DC 401k plan. Plaintiff alleged that plan fiduciaries violated their fiduciary duties by offering allegedly imprudent, actively managed investment options, and by paying excessive administrative and recordkeeping fees. The court found that the plaintiff lacked standing to assert her ERISA claims for two main reasons.

Source: Erisalitigationadvisor.com, July 2021

Mitigating Fiduciary Risk: Lessons Learned About the Prudent Person Rule After Fifteen Years of Fee Litigation

Excessive fee litigation has encouraged the reexamination of fiduciary best practices. Although the facts underlying these cases vary, the fundamental questions in each case pertain to the process by which the fiduciaries carried out their responsibilities. As courts have grappled with questions of fiduciary responsibility, a body of case law has been developed that provides valuable guidance on methods plan fiduciaries may use to mitigate their risk if faced with a lawsuit or government investigation. This article addresses the duty of prudence in monitoring plan investments, thereby mitigating fiduciary risk through the lens of that body of case law.

Source: Truckerhuss.com, July 2021

MetLife Accused of Favoring Proprietary Index Funds in 401k

Current and former participants of the MetLife 401k Plan have filed a lawsuit alleging the plan's fiduciaries violated ERISA's duties of loyalty and prudence "by applying an imprudent and disloyal preference for MetLife index fund products within the plan, despite their poor performance, high costs and lack of traction among fiduciaries of similarly sized plans." According to the complaint, the defendants' conduct has cost plan participants millions of dollars over the period defined in the lawsuit.

Source: Planadviser.com, July 2021

TIAA Subsidiary's SEC Settlement Requires Rollover Reforms

The SEC revealed that TIAA-CREF Individual & Institutional Services LLC, a firm known as "TC Services," will pay $97 million to settle charges of making inaccurate and misleading statements to rollover clients. According to the SEC, the settlement will also resolve allegations that the firm failed to adequately disclose conflicts of interest to thousands of participants in TIAA record-kept employer-sponsored retirement plans.

Source: Plansponsor.com, July 2021

District Court Denies Interlocutory Appeal for Novel Issue of "Hardwired" 401k Plans

A federal district court in Maryland recently declined to certify an interlocutory appeal to the Fourth Circuit on the issue of whether financial institutions can "hardwire" a preference for their proprietary investment vehicles into their employees' 401k plans. In so ruling, the district court prevented, at least for now, an opportunity for an appellate court to consider an issue that could significantly impact the adjudication of fiduciary breach challenges to the offering of proprietary funds in 401k plans.

Source: Erisapracticecenter.com, July 2021

Supreme Court Will Hear Case Challenging Retirement Plan Investment and Recordkeeper Fees

The Supreme Court recently granted the writ of certiorari requested by Northwestern University retirement plan participants, following the Solicitor General's plea for the Court to hear the case. The certiorari petition phrased the question presented as: "[w]hether allegations that a defined-contribution retirement plan paid or charged its participants fees that substantially exceeded fees for alternative available investment products or services are sufficient to state a claim against plan fiduciaries for breach of the duty of prudence under ERISA."

Source: Erisalitigationadvisor.com, July 2021

Koch Industries Agrees to $4 Million Settlement of ERISA Excessive Fee Suit

Koch Industries has agreed to pay $4 million to settle a lawsuit alleging the company, Koch Business Solutions, and the Koch Benefits Administrative Committee allowed excessive recordkeeping fees to be charged to participants in Koch-affiliated DC retirement plans. In addition to the monetary relief, the terms of the proposed settlement provided that the defendants will issue an RFP for recordkeeping services for the plans within 180 days of the settlement effective date.

Source: Planadviser.com, July 2021

Tenth Circuit Addresses Damages for Excessive Recordkeeping Fee Claims

One of the recent cases challenging the recordkeeping fees of 401k plans recently made its way to the Tenth Circuit Court of Appeals. Following a bench trial that resulted in a determination that the fiduciaries of Banner Health’s 401k plan had failed to monitor the plan's uncapped, asset-based, revenue sharing arrangement with Fidelity, the Court affirmed the district court's rejection of the plaintiffs' expert testimony on damages and fashioning of its method to calculate the plan's losses due to the excessive recordkeeping fees.

Source: Erisapracticecenter.com, July 2021

ERISA 401k Performance and Fee Litigation Dismissed for Failure to Provide Comparable Benchmark

The District Court for the Southern District of Iowa recently dismissed an ERISA putative class action lawsuit challenging 401k performance and fees after plan participants failed to identify appropriate benchmarks in their complaint. The court reinforced the Eighth Circuit's standards for stating such claims, requiring that the plaintiffs allege facts establishing "a meaningful benchmark for assessing the performance of the challenged funds."

Source: Erisalitigationadvisor.com, July 2021

Schlichter Excessive Fee Bid Gets Whacked

After a split decision on the merits and a $3.1 million settlement, the plaintiffs' attorneys asked for a fee of $5.4 million. Guess what the judge allowed? In the case at hand -- Ramos v. Banner Health -- the plaintiffs just last month lost their appeal of parts of a decision that, largely, favored the fiduciary defendants in the $2.2 billion 401k plan.

Source: Napa-net.org, July 2021

401k Lawsuit Alleges Excessive Adviser Compensation

A comprehensive lawsuit filed this week against large AAA member groups alleges that plan participants overpaid for years for investments and services, including compensation to Wells Fargo and Captrust. The defendants did not appear to solicit competitive bids for record-keeping services and allowed funds with high revenue-sharing to compensate service providers, according to the complaint.

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

Supreme Court Set to Tackle Pleading Standard in Northwestern Retirement Plan Lawsuit

On July 2, 2021, the Supreme Court agreed to hear Hughes v. Northwestern, which involves a challenge to investment fees and recordkeeping fees in two 403b plans maintained by Northwestern University. The district court dismissed the complaint about failure to adequately plead a breach of the fiduciary duty of prudence, and the Seventh Circuit affirmed the dismissal. The Supreme Court will now weigh-in for the first time on the critical issue of what allegations are sufficient to state a plausible breach of fiduciary duty claim for excessive investment and recordkeeping fees.

Source: Groom.com, July 2021

Sweeping Excessive Fee Suit Targets Motor Club's 401k

An excessive fee suit filed by a litigator new to the ERISA space makes a series of new, sweeping allegations (including the plan's advisor and auditor) alongside some familiar challenges. The plaintiffs' arguments are extraordinarily detailed and tread ground(s) not often seen in these type of filings.

Source: Napa-net.org, July 2021

Court Affirms Arrangement Between Sponsor and Recordkeeper Not a Prohibited Transaction

The 10th U.S. Circuit Court of Appeals was asked to review a lower court's decision in Ramos v. Banner Health, in which participants in Banner Health's 401k plan alleged plan fiduciaries breached their duties under ERISA. Following an eight-day bench trial, the U.S. District Court for the District of Colorado concluded that Banner's uncapped, revenue-sharing agreement with its recordkeeper Fidelity did not constitute a prohibited transaction under ERISA.

Source: Planadviser.com, July 2021

SCOTUS Agrees to Hear ERISA "Excessive Fee" Case

The Supreme Court granted a petition for a writ of certiorari to review the Seventh Circuit's decision in Divane v. Northwestern University. Hughes is one of the numerous "excessive fees" class action cases that have come to dominate the ERISA fiduciary litigation landscape in recent years.

Source: Steptoe.com, July 2021

High Court Agrees to Review Northwestern University ERISA Suit

The U.S. Supreme Court has agreed to review the case of Hughes v. Northwestern University. The question before the high court is whether participants in a DC plan stated a plausible claim for relief against plan fiduciaries for breach of the duty of prudence by alleging that the fiduciaries caused the participants to pay investment management or administrative fees higher than those available for other materially identical investment products or services.

Source: Planadviser.com, July 2021

Arbitration of ERISA Retirement Plan Disputes

This 13-page practice note discusses the general enforceability of arbitration clauses in certain disputes, including class actions, with a particular focus upon the enforceability of arbitration clauses involving legal claims made under the Employee Retirement Income Security Act. It also specifically analyzes the advantages and disadvantages of arbitration provisions for retirement plan sponsors.

Source: Wagnerlawgroup.com, June 2021

Using Mandatory Arbitration to Avoid ERISA Class Actions

With the significant increase in fiduciary breach class actions, plan fiduciaries have added provisions, including mandatory arbitrations, to their contracts, to gain control of and rein in litigation. The burning question, however, is where do the courts stand on forcing ERISA plan participants to engage in arbitration.

Source: Cohenbuckmann.com, June 2021

Court Limits Fiduciary Breach Lawsuit to Claims Against Plan Sponsor and Plan Committee

It is not uncommon for fiduciary claims to be brought initially against every plausible party, including the plan sponsor's board and its members, and various individual employees. An interesting aspect of this case is the relative ease with which the court strips away the claims against individuals and the board in light of the plan sponsor's delegation of investment authority to the plan committee.

Source: Thomsonreuters.com, June 2021

Excessive Fee Lawsuits Expected to Continue to Rain Down on Plans

There have been approximately 200 "cookie-cutter" ERISA class-action lawsuits filed against retirement plans since 2015, including more than 90 cases filed in 2020 alone. With more "cookie-cutter" cases being filed, especially when the qualified default investment alternative is a "big ticket" target-date fund, there is no sign of these suits slowing down.

Source: Planadviser.com, June 2021

ERISA Excessive Fee Lawsuit Filed Against Generac Power Systems

Generac Power Systems and its board of directors have joined the list of recent targets of an ERISA excessive fee lawsuit. The complaint includes allegations similar to those in many suits filed over the past few years.

Source: Planadviser.com, June 2021

Eye on ERISA: A Chat With Groom Law's Litigation Chair

Groom principal and head of its litigation practice, Lars Golumbic, recently discussed ERISA litigation trends and how benefits law has evolved over the years in an interview with Law360. In the article, Golumbic shared his thoughts on several topics ranging from what issues he's keeping a close eye on to offering advice to future ERISA litigators.

Source: Groom.com, June 2021

CDI Corp. Agrees to $1.8M ERISA Lawsuit Settlement

The retirement plan in question in the suit is substantially smaller than many of those that have faced or settled similar lawsuits, and thus the size of the settlement is also reduced.

Source: Planadviser.com, June 2021

Wake Forest University Baptist Medical Center Sued Over 403b Plan Fees

Wake Forest University Baptist Medical Center, its board of directors, and its retirement benefits committee have been sued for allegedly failing to ensure the plan and its participants paid reasonable fees for investments and administration. The complaint alleges that many of the mutual funds in the Wake Forest Baptist Medical Center 403b Retirement Savings Plan were more expensive than comparable funds found in similarly sized plans, those with more than $1 billion in assets.

Source: Planadviser.com, June 2021

Khan v. PTC, Inc. -- Three Important Lessons From an Otherwise Unremarkable 401k Fee Case

The plaintiffs seek recovery against the plan's investment committee for breach of the fiduciary duties of prudence and loyalty and against PTC's board of directors for failing to adequately monitor the committee. A similar narrative might be found in any of the many dozens of such cases filed each year. Nevertheless, the case merits attention for three reasons.

Source: Mintz.com, June 2021

When 'Eating Your Own Cooking' Becomes Self-Dealing

One conclusion that can be drawn from the rash of self-dealing lawsuits filed in the retirement plan services industry is that providers must be just as diligent as their clients when it comes to prudently and loyally delivering workplace retirement benefits, perhaps even more so.

Source: Planadviser.com, June 2021

John Hancock Settles ERISA lawsuit for $14 Million

John Hancock Life Insurance Co. agreed to a $14 million settlement in a lawsuit filed by participants in a company 401k plan who alleged ERISA violations in the plan's management. Terms of the settlement were disclosed in a court filing in the U.S. District Court in Boston.

Source: Pionline.com, June 2021

Are ERISA Breach of Fiduciary Duty Claims Arbitrable?

Over the years, attempts to arbitrate breach of fiduciary duty claims under ERISA Section 502(a)(2) have had varying results. This issue is before two circuit courts of appeal this year. So far, the court rulings in the cases seem to provide some guidance while also creating further uncertainty.

Source: Littler.com, June 2021

Lowe's Settles for $12.5 Million and Change

The terms of an excessive fee settlement have come to light, and there's a (relatively) unique twist. The suit was filed nearly two years ago against the plan fiduciaries of the $5.2 billion Lowe's 401k plan and Aon Hewitt Investment Consulting, Inc. (which served as the plan's fiduciary investment consultant) for breach of their fiduciary duties under ERISA for what participant-plaintiff Benjamin Reetz alleged was an imprudent selection and retention of the Hewitt Growth Fund for the plan.

Source: Asppa.org, June 2021

Lowe's Reaches Settlement in 401k ERISA Case

Lowe's Cos. has filed a partial settlement with a participant in the company's 401k plan after a lawsuit alleged the company violated ERISA by making imprudent investment choices. Filed in the U.S. District Court for the Western District of North Carolina, the partial settlement was reached with Lowe's Cos. Inc. and its administrative committee. It excludes co-defendant Aon Hewitt Investment Consulting.

Source: Planadviser.com, June 2021

Columbia University Settlement: A Reminder of ERISA Litigation Risk

On May 21, 2021, the terms of the proposed class action settlement in Cates v. The Trustees of Columbia University in the City of New York were announced. The case, which was filed in 2016, involved allegations that plan fiduciaries breached their ERISA duties by causing the plan and participants to pay excessive fees to service providers and by selecting and retaining expensive and poor-performing investment options. In addition to a monetary payment of $13 million, the settlement agreement includes several non-monetary terms.

Source: Faegredrinker.com, May 2021

Russell Investments Draws Self-Dealing Scrutiny

Plaintiffs in a new ERISA lawsuit say Caesars Entertainment allowed Russell Investments to pack its plan with proprietary investment options, to the disadvantage of plan participant outcomes.

Source: Planadviser.com, May 2021

State Street Sees Self-Dealing Allegations in ERISA Lawsuit

A new ERISA lawsuit has been filed in the U.S. District Court for the District of Massachusetts, wherein a proposed class of plaintiffs argues State Street Corp. has engaged in self-dealing within one of its retirement savings programs for employees, the State Street Salary Savings Program.

Source: Planadviser.com, May 2021

Court Finds Sponsor Not Liable for Plan Account Theft

The US District Court for the Northern District of Illinois handed down a decision in Bartnett v. Abbott Laboratories, dismissing the plaintiff's claims against defendant sponsor fiduciaries in a case involving the theft of $245,000 in the plaintiff's Abbott retirement plan account. Particularly interesting for plan sponsors is the court's discussion of the sponsor fiduciary's standard of care concerning a plan provider's cybersecurity.

Source: Octoberthree.com, May 2021

Terms of Another University 403b Excessive Fee Suit Unveiled

The law firm of Schlichter Bogard & Denton has announced the terms of another settlement of a 403b excessive fee case. According to a press release by the St, Louis-based law firm, it has filed a preliminary settlement approval motion on behalf of Columbia University employees and retirees in their suit against the university involving their 403b retirement plan.

Source: Napa-net.org, May 2021

Third Circuit to Consider Class Certification Issues Percolating in ERISA Fee Litigation

The Third Circuit will review a Pennsylvania district court's decision to certify a 60,000+ person class in an ERISA fiduciary breach lawsuit claiming mismanagement of a defined contribution plan's investments and recordkeeping fees. This appeal queues up guidance on a hotly litigated issue in recent ERISA cases: can defined contribution plan participants challenge the prudence and loyalty of retaining a plan investment option they never invested in?

Source: Erisalitigationadvisor.com, May 2021

401k Lawsuit Claims Caesars Gambled and Lost

A class-action lawsuit alleges that the company breached its fiduciary duties in connection with a change in the investment menu. Most of the assets in the $1.4 billion plan went into Russell Investment target-date funds, according to the complaint.

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

Retirement Plan Fees Worsen Enterprise Risk

A new era of employee activism is underway in which plaintiff lawyers find fertile ground for litigation opportunities, catching many employers unprepared. The focal point of the growing number of such lawsuits is the compensation that employers arrange for payment to the vendors of services to the ERISA plans. Underestimating the economic and reputational risks related to deficiencies in the prudent management of ERISA plans threatens an entire enterprise.

Source: Rolandcriss.com, May 2021

Could a Quick Appeal Signal a Shift in ERISA Litigation?

A class action involving a $1.6 billion 401k plan has been fast-tracked to the U.S. Court of Appeals for the Third Circuit for a ruling on an issue of emerging concern in ERISA excessive fee litigation. The issue under consideration might produce a shift in litigation strategy, if not results.

Source: Napa-net.org, May 2021

As MEPs Grow, ERISA Lawsuits Rise With Them

As companies seek efficiency, lower cost, and reduced fiduciary headaches by joining a multiple-employer plan, the MEP providers are encountering the same ERISA challenges to their 401k or 403b plans as those faced by single-employer sponsors. Allegations range from excessive investment fees to poorly performing investments to inadequate monitoring of administrative costs.

Source: Pionline.com, May 2021

Humana Faces Classic Prudence Claims in New ERISA Lawsuit

Plaintiffs have filed a proposed class-action lawsuit against health insurance provider Humana in the U.S. District Court for the Western District of Kentucky, alleging breaches of the fiduciary duty of prudence required by ERISA. The plaintiffs allege that, with its billions of dollars in assets, the Humana DC retirement plan has substantial bargaining power regarding the fees and expenses charged against participants' investments.

Source: Planadviser.com, May 2021

Wells Fargo Fails to Shake 401k Suit

A lawsuit against Wells Fargo over the use of its investment products in the company's $40 billion 401k plan this week cleared a major hurdle. On Wednesday a federal judge denied a motion to dismiss the case, finding that the plaintiffs' "allegations are far more than general assertions, and that accepted as true, show that [the] defendants engaged in prohibited transactions." The development likely gives the plaintiffs more leverage for a settlement, as the class-action case has moved one step closer to a trial.

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

Judge Moves Forward Wells Fargo 401k Self-Dealing Suit

A federal district court judge has moved forward a lawsuit alleging that Wells Fargo 401k plan fiduciaries should have been able to obtain superior investment products at a very low cost but instead chose proprietary products for their benefit, increasing fee revenue for the company and providing seed money to newly created Wells Fargo funds.

Source: Planadviser.com, May 2021

Bronson Healthcare Group Sued Over 403b Plan Fees

Bronson Healthcare Group and its board of directors are facing an ERISA lawsuit alleging they allowed participants of the organization's 403b Tax Sheltered Matching Plan to be subjected to excessive administrative and investment fees, resulting in lower account balances.

Source: Planadviser.com, May 2021

University Pushes Back on Excessive Fee Class Claims

The fiduciary defendants in a 403b university excessive fee suit say the plaintiffs have not only failed to make their case but that they've taken actions in their account(s) that undermine their arguments. The suit was originally filed in June 2017 by Latasha Davis and Jennifer Elliott on behalf of the plan's more than 24,000 participants and beneficiaries.

Source: Napa-net.org, May 2021

KeyCorp Succeeds in Getting Some Claims Dismissed in Excessive Fee Suit

A court dismissed claims regarding KeyCorp plan's stable value fund option but moved forward some claims regarding excessive administrative and managed account fees.

Source: Planadviser.com, May 2021

CalSavers Upheld in Us Court of Appeals Case

A three-judge panel in the U.S. Court of Appeals for the Ninth Circuit affirmed a district court's dismissal of the case. The savings system is not a plan under the ERISA and is therefore not preempted by the law, the panel wrote in the opinion published yesterday.

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

BlackRock Signs Deal to End ERISA Class Action Claim

Following almost four years of litigation, a $9.65 million settlement has been reached in a complex ERISA class action brought by investors in the BlackRock Retirement Savings Plan that included allegations of self-dealing and excessive fees.

Source: Hallbenefitslaw.com, May 2021

Lawsuit Says Changes to University of Tampa 403b Plan Made Too Late

A participant in the University of Tampa's 403b plan has filed a lawsuit claiming that over the past six years, plan participants have paid at least $3 million in administrative fees, which it says is more than 10 times what they should be. The complaint says the plan's recordkeeper, TIAA, has been able to extract "such grossly excessive fees" because the fees are based not on services it provides to the plan but on a percentage of assets in the plan.

Source: Planadviser.com, May 2021

Curtain Falls on IBM Stock-Drop Case

After more than five years of litigation and a trip to the Supreme Court, the ERISA stock-drop litigation against fiduciaries for IBM's employee stock ownership plan has ended with a modest $4.75 million settlement. The opinion of the 2nd US Circuit Court of Appeals in the case -- which found plaintiffs' pleadings sufficient to survive a motion to dismiss -- still stands, possibly leaving a narrow path for future stock-drop litigation.

Source: Mercer.com, May 2021

Participant Data: Plan Asset or Fair Game for Recordkeepers to Use to Market Non-Plan Products?

In an emerging theory of liability, plan fiduciaries' treatment of participants' data is coming under scrutiny. Over the last five years, we have seen how the collection of many individuals' data can become a valuable asset in the right hands, whether it's used to influence an election, design a marketing plan that targets individuals based on their specific preferences and needs, or just to compile large troves of information to analyze trends.

Source: Truckerhuss.com, May 2021

WakeMed Quickly Settles 403b Fee Lawsuit

A settlement has been reached in an ERISA fiduciary breach lawsuit filed against WakeMed, an emergency and urgent care operator located in North Carolina. The ERISA lawsuit suggested it failed to meet its fiduciary duties of prudence and loyalty in the operation of a staff retirement plan.

Source: Planadviser.com, May 2021

Ninth Circuit Affirms Dismissal of ERISA Stock-Drop Suit

The plaintiff in Wilson v. Craver, a participant in the Edison 401k Savings Plan -- which included the Edison Company Stock Fund as an investment option -- alleged that the Plan's fiduciaries breached their fiduciary duty of prudence under ERISA by allowing the company's ESOP to remain invested in company stock while the price of the stock was artificially inflated. On April 19, 2021, the U.S. Court of Appeals for the Ninth Circuit affirmed the dismissal of an ERISA stock-drop lawsuit brought against fiduciaries of Edison International's employee stock ownership plan, holding that the plaintiff failed to meet the "more harm than good" pleading standard.

Source: Faegredrinker.com, April 2021

Lawsuit Challenges Fees in Kimberly-Clark's 401k Plan

Participants in the Kimberly-Clark Corp. 401k and Profit Sharing Plan have filed a proposed class-action ERISA lawsuit against consumer products manufacturer Kimberly-Clark, its board of directors, and its benefits administrative committee. They allege that the defendants breached their fiduciary duties by authorizing the plan to pay unreasonably high fees for retirement plan services.

Source: Planadviser.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

Emerging Case Law Supports Forum-Selection Clauses in ERISA Plans

A recent decision by the Ninth Circuit upholds the enforceability of forum-selection clauses in ERISA plans. The case, In re Becker v. United States Dist. Court, is in line with evolving case law trending towards the enforceability of forum-selection clauses in ERISA plan documents. The Ninth Circuit joins the Sixth and Seventh Circuits in this regard, and district courts in other circuits such as the Third and Fourth Circuits have also followed suit, although their respective circuit courts have yet to decide the issue. This article reviews the Becker case and identifies reasons why plan sponsors should consider amending their plans to include forum-selection clauses below.

Source: Groom.com, April 2021

Judge Finds Most Allegations Sufficient in Lawsuit Over CITs

A federal judge has moved forward claims in an ERISA lawsuit against pharmaceutical product manufacturing company Astellas US LLC, its board of directors, and its retirement plan administrative committee, as well as the plan's discretionary investment manager, Aon Hewitt Investment Consulting. Among other claims, the lawsuit says Aon and a 401k plan sponsor caused the plan to invest in Aon's proprietary collective investment trusts for Aon's benefit.

Source: Planadviser.com, April 2021

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


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