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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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Fidelity Gets Industry Support in Stable Value Fund Appeal

Abstract: The Securities Industry and Financial Markets Association is urging a federal appeals court to reject a legal challenge to Fidelity's stable value fund, which 401k investors accused of carrying excessive fees and using an unduly conservative investment strategy.

Source: Bna.com (registration may be required), November 2017

Nordstrom Sued Over Excessive Fees in Its $2.8B 401k Plan

Abstract: Nordstrom is the latest large company accused of violating federal benefits law by allegedly selecting and retaining high-cost investment options in its $2.8 billion 401k plan when lower-cost options were available.

Source: Bna.com (registration may be required), November 2017

Franklin Templeton, Execs Sued Over High 401k Fees

Abstract: Franklin Resources and more than a dozen of its executives are accused of violating federal benefits law by allegedly causing the company's $1 billion 401k plan to invest in high-cost, poorly performing in-house funds when better investments were available.

Source: Bna.com (registration may be required), November 2017

Thrivent, DOL Both Win in Fiduciary Rule Case

Abstract: Unlikely as it would seem, both Thrivent Financial and the DOL could be considered winners when a U.S. District Court judge on November 3, 2017, granted an injunction against a key aspect of the DOL's investment fiduciary guidance.

Source: Ascensus.com, November 2017

Chapter 13 Debtor Can Put Earnings Into 401k

Abstract: Chapter 13 debtors can deduct 401k contributions in calculating their disposable income that must be contributed to a payment plan, even if they weren't contributing in the six months prior to the bankruptcy, an Illinois bankruptcy judge ruled Oct. 30.

Source: Bna.com (registration may be required), November 2017

Plan Sponsor Fee Litigation Cases on the Rise

Abstract: There are three main types of excessive fee litigation: 1) Excessive fee litigation involving lawsuits against large corporate plan sponsors challenging fees and expenses associated with employee plans. 2) Excessive fee litigation involving lawsuits against financial institutions who also happen to be plan sponsors. 3) Excessive fee litigation involving university-sponsored 403b plans. This article examines each of these three types of excessive fee lawsuits.

Source: Groom.com, November 2017

GE Hit With Second Lawsuit Over 401k Plan Investments, Fees

Abstract: General Electric faces a second lawsuit challenging the allegedly imprudent investments in proprietary mutual funds included in the company's $28 billion 401k plan. GE's selection of in-house mutual funds for the plan allegedly provided its financial services subsidiary, GE Asset Management, a constant source of fees and helped inflate GEAM's market value for a subsequent sale of the subsidiary, according to a lawsuit.

Source: Bna.com (registration may be required), November 2017

University 403b Plan Fees and Investments Under Scrutiny

Abstract: Over the past year, 16 private universities became the target of lawsuits alleging breaches of fiduciary duty with respect to 403b plan fees and investment options. This article reviews some of the key topics covered by the allegations in the cases grouped by trends in the district courts' rulings to date.

Source: Hodgsonruss.com, October 2017

Northrop Grumman's $16.8m Deal Leads to $5.6M in Attorneys' Fees

Abstract: Law firm Schlichter Bogard & Denton was awarded $5.58 million in attorneys' fees following the $16.8 million deal it reached earlier this year in a case involving Northrop Grumman's retirement plans.

Source: Bna.com (registration may be required), October 2017

Xerox Nixes Challenge to Robo-Adviser Fees in Ford 401k Plans

Abstract: Xerox HR Solutions escaped a lawsuit by participants in three Ford Motor Co. 401k plans challenging the allegedly excessive fees charged for investment advice provided by robo-adviser Financial Engines Advisors.

Source: Bna.com (registration may be required), October 2017

ERISA Preempts State Law Revoking Beneficiary Designation Upon Divorce

Abstract: Plan administrators must be alert to the risk of conflicting benefit claims. These claims raise the possibility of double-payment liability for any plan that disburses benefits, such as life insurance proceeds, without prior court approval. The judicial procedure called "interpleader," which was used by the plan in this case, can protect a plan facing conflicting claims.

Source: Thomsonreuters.com, October 2017

District Court Halts Some Portions of MIT ERISA Challenge

Abstract: Interpreting and applying a series of detailed recommendations from a magistrate judge, the district court will allow some parts of the litigation against MIT's retirement plan fiduciaries to proceed.

Source: Planadviser.com, October 2017

Employee Benefits in the Supreme Court

Abstract: Eversheds Sutherland took a look back at the Court's work in employee benefit cases since the enactment of ERISA. They found 128 decisions, spanning a broad range of statutory and constitutional issues. This white paper takes a detailed look at the numbers and dynamics behind these cases.

Source: Eversheds-Sutherland.com, October 2017

ERIC Challenges Oregon Reporting Requirements for Retirement Plans

Abstract: McDermott Will & Emery filed a lawsuit on behalf of the ERISA Industry Committee (ERIC) challenging new reporting requirements under Oregon law as applicable to retirement plans subject to ERISA.

Source: Employeebenefitsblog.com, October 2017

Excessive Fee Litigation Sets Sights on Corporate Retirement Plans

Abstract: Of all the industries facing these risks, few have seen more litigation than the financial industry which has faced a barrage of lawsuits over the in-house mutual funds in their respective 401k plans. Currently, there are more than 20 different financial institutions facing lawsuits challenging these in-house 401k investments.

Source: Willistowerswatson.com, October 2017

ERISA Excess Fee Litigation: Waiting for the Deluge

Abstract: ERISA fee litigation is moving downstream to smaller plans and that this ought to be a source of worry for small plan sponsors.

Source: Fiduciaryplangovernance.com, October 2017

Fidelity Found Not Liable in Excessive Fee Suit

Abstract: Participants of the of the Delta Family-Care Savings Plan sued Fidelity entities regarding excessive fees charged for the plan's advice offering as well as its self-directed brokerage account option.

Source: Planadviser.com, October 2017

Johns Hopkins Employees Advance Retirement Plan Fee Suit

Abstract: Johns Hopkins University is the latest prominent college to lose an early round in a lawsuit challenging the fees and investment options in its retirement plan.

Source: Bna.com (registration may be required), October 2017

Verizon Fee Disclosure Lawsuit Sees Most Claims Dismissed

Abstract: Verizon Communications is largely free of a proposed class action claiming it implemented an overly complex and risky investment structure for its defined contribution retirement plans and failed to explain how the plans charged fees.

Source: Bna.com (registration may be required), October 2017

Penn Succeeds in Dismissing Retirement Plan Proposed Class Action

Abstract: Since August 2016, sixteen elite colleges and universities have faced class action lawsuits related to management of their 403b retirement plans. After five cases previously survived motions to dismiss, the University of Pennsylvania became the first college to secure a complete victory when accused of retirement plan mismanagement.

Source: Erisa-employeebenefitslitigationblog.com, September 2017

Dismissal of Case Against UPenn Good News for 403b Plan Sponsors

Abstract: Colleges and universities have finally received some encouraging news in the recent spate of class action suits against higher education 403b plans. Last week a federal judge dismissed all claims against the University of Pennsylvania, marking the first time that one of these recent law suits has been be dismissed in full.

Source: Employeebenefitsupdate.com, September 2017

Lawsuits Targeting 403b Plan Fiduciaries

Abstract: Fiduciaries of 403b plans are increasingly facing the same type of litigation that mirrors other retirement plan fiduciary lawsuits. This results in fiduciaries facing liability from plan members even without the stricter ERISA standards.

Source: Bsllp.com, September 2017

GE Hit With Lawsuit Over High Fees in Its $28 Billion 401k

Abstract: General Electric is accused of filling its $28.5 billion 401k plan with high-cost, poorly performing in-house mutual funds, causing its employees to lose hundreds of millions of dollars in their retirement savings.

Source: Bna.com (registration may be required), September 2017

401k Lawsuit Attacks Excessive Advisory Fees Paid to UBS

Abstract: A company sponsoring a $157 million 401k plan has been sued for allowing unreasonably high fees to be charged for plan services, including advisory services provided by UBS.

Source: Investmentnews.com (registration may be required), September 2017

Supreme Court May Have First ERISA-Free Term in Six Years

Abstract: The U.S. Supreme Court returns next week with nary an ERISA case on its docket and only a handful of significant petitions to watch. This is the second year in a row the justices have started their term with no Employee Retirement Income Security Act cases slated for oral argument.

Source: Bna.com (registration may be required), September 2017

University of Pennsylvania Wins Dismissal of Case Against 403b

Abstract: U.S. District Judge Gene E. K. Pratter of the U.S. District Court for the Eastern District of Pennsylvania dismissed all claims against the University of Pennsylvania and its vice president of human resources. The case had challenged multiple recordkeepers, multiple investment options and the use of retail share class funds.

Source: Planadviser.com, September 2017

Jerry Schlichter's Fee Lawsuits Have Left an Indelible Mark on the 401k Industry

Abstract: It's had a tremendous impact and brought awareness to the fees being charged in plans. But, observers say the litigation has also contributed to fee hysteria among employers and, following some large monetary settlements, resulted in a plaintiff's bar that seems to be unnecessarily piling on the litigation to score a quick payday.

Source: Investmentnews.com (registration may be required), September 2017

Novitex Sued Over 401k Plan Fees, Not First Modest Plan Hit

Abstract: Novitex Enterprise Solutions is the latest company to be accused in federal court of letting its 401k plan participants be charged excessive recordkeeping and administrative fees. The lawsuit is the latest to target a company with a modest 401k plan.

Source: Bna.com (registration may be required), September 2017

Gucci Sued Over 401k Plan Fees, Transamerica Funds

Abstract: The lawsuit challenges Gucci's relationship with its 401k service provider, Transamerica Retirement Solutions. Gucci allowed Transamerica to fill its $96.5 million plan with expensive, proprietary funds that earned fees for Transamerica at the expense of plan participants, according to the complaint.

Source: Bna.com (registration may be required), September 2017

403b Litigation Concerns

Abstract: Over the last year, many colleges and universities have been the subject of lawsuits over the management of their 403b retirement plans. The complaints in the lawsuits have common threads and they identify patterns of high-risk practices. The courts have begun to weigh in on some of these issues, but their interpretations of the issues vary.

Source: Sentinelgroup.com, September 2017

Fiduciary Liability Defenses for Advisers Under ERISA

Abstract: If an investment adviser makes a recommendation to a retirement plan sponsor or investment manager, who then follows that recommendation and later challenges it as a breach of fiduciary duty, there are several types of defenses available to the adviser.

Source: Investmentnews.com (registration may be required), September 2017

Voya Charged Big Fees to Small 401k, Lawsuits Says

Abstract: Voya Financial is accused in a new lawsuit of charging excessive recordkeeping and administrative fees to a small 401k plan.

Source: Bna.com (registration may be required), September 2017

Recent Plan Fiduciary Victories in ERISA Single-Stock Fund Litigation

Abstract: Over the last few months, there have been a significant number of court decisions ruling against plaintiffs alleging ERISA breach of fiduciary claims related to single-stock funds. These recent decisions suggest a new era in the ongoing saga of ERISA single-stock fund litigation, and one that may bode well for ERISA plan fiduciaries.

Source: Morganlewis.com, September 2017

Proving Loss Causation in Breach of Fiduciary Claims -- The Split Widens

Abstract: Most circuit courts of appeals agree that ERISA requires that causation between the alleged breach and the claimed loss must be established before any liability may be imposed upon a breaching fiduciary. The courts are split, however, as to whether an ERISA plaintiff or the defendant-fiduciary bears the burden of proving the causal link between breach and loss.

Source: Jacksonlewis.com, September 2017

Edison International Agrees to Pay $13.2 Million in 401k Fee Lawsuit

Abstract: Parties in the landmark Tibble v. Edison lawsuit have agreed the defendant, Edison International, will pay more than $13 million in damages to cover allegations of excessive 401k fees.

Source: Investmentnews.com (registration may be required), September 2017

DST, Ruane Cunniff Sued Again Over Valeant Stock in 401k Plan

Abstract: Investment firm Ruane Cunniff & Goldfarb Inc. and DST Systems Inc. face a third lawsuit over the alleged imprudent investment of DST's 401k plan assets in Valeant Pharmaceuticals stock.

Source: Bna.com (registration may be required), August 2017

Morningstar and Prudential Deny Racketeering Claims

Abstract: Another ERISA lawsuit has emerged in federal court, this one naming both Morningstar and various Prudential companies as defendants in the U.S. District Court for the Northern District of Illinois. The complaint suggests the companies engaged in “Tammany-like” collusion to steer assets into more favorable investments; both providers have issued strong denials and requests for summary judgement.

Source: Planadviser.com, August 2017

NYU Retirement Plan Suit Trimmed by Judge but Moving Forward

Abstract: New York University convinced a federal judge to dismiss several challenges to its retirement plans, but claims attacking the plans’ record-keeping fees and actively managed funds are moving forward.

Source: Bna.com (registration may be required), August 2017

Excessive Fee Suit Alleges Fiduciary "Abdication"

Abstract: A new excessive fee suit claims that plan fiduciaries "abdicated" their responsibilities, allowing the plans' trustee "to lard the Plans with high-cost mutual funds."

Source: Napa-net.org, August 2017

Standing and Plausibility in ERISA

Abstract: A district court in New York has held that a plaintiff cannot assert claims against a plan in which she did not participate and cannot assert claims of fiduciary breach without plausible allegations of wrongdoing.

Source: Erisa-employeebenefitslitigationblog.com, August 2017

Edison Hit With $7.5m Judgment in Long-Running 401k Suit

Abstract: Edison International must pay more than $7.5 million to compensate employees for its decision to include high-fee retail share mutual funds in its 401k plan when identical institutional share classes were available at lower cost.

Source: Bna.com (registration may be required), August 2017

ERISA (7th Circuit): Are ERISA Plan Forum Selection Clauses Enforceable?

Abstract: ERISA gives plan beneficiaries a choice on where to bring suit seeking ERISA benefits. Section 1132(e)(2) allows plan beneficiaries to bring suit "in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found." But what happens when the plan has a forum-selection clause? Are forum selection clauses enforceable?

Source: Boomerisablog.com, August 2017

Seventh Circuit Upholds ERISA Plan's Forum Selection Clause

Abstract: In a mandamus petition involving an issue of first impression, the US Court of Appeals for the Seventh Circuit held that ERISA's venue provision did not invalidate a forum selection clause in an ERISA-governed health plan.

Source: Westlaw.com, August 2017

Sears Hit With Second Lawsuit Over Company Stock in 401k Plans

Abstract: Sears Holdings was sued for the second time in a month over its decision to retain and continue purchasing its own declining stock as an investment option in the retailer's 401k plans

Source: Bna.com (registration may be required), August 2017

Participant Fails to Establish Class Status in Prudential Lawsuit

Abstract: A federal district court judge has denied class action status to an ERISA challenge filed by a retirement plan participant invested in a stable value product offered by Prudential. The denial of the class certification motion goes into some detail regarding what it takes to establish class standing under ERISA.

Source: Plansponsor.com, August 2017

What Hitchcock v. Cumberland Means for Plan Fiduciaries

Abstract: Earlier this year, the 6th U.S. Circuit Court of Appeals ruled that the participants in a university's pension plan do not have to exhaust administrative remedies before they pursue claims of ERISA violations. A recent blog entry discusses what this ruling means for plan fiduciaries.

Source: Asppa.org, August 2017

Arch Coal Beats ERISA Lawsuit Over Company Stock in 401k Plan

Abstract: Arch Coal defeated a lawsuit by employees accusing it of failing to divest their 401k plan of the company's stock during a three-year period when its value declined from $680 to $1.42 per share.

Source: Bna.com (registration may be required), August 2017

Winning Early Motions to Dismiss Breach of Fiduciary Claims, the Ministerial Defense

Abstract: One argument to use in seeking early dismissal of breach of fiduciary duty claims is the ministerial defense. The recent case that highlights the point is Turner v. Volkswagen Group of America, Inc.

Source: Boomerisablog.com, August 2017

Reliance Escapes Lawsuit Over SandRidge's 401k Stock Losses

Abstract: Reliance Trust isn't liable for the losses suffered by SandRidge Energy employees who invested their retirement savings in the natural gas company's stock as it declined into bankruptcy, a federal court ruled.

Source: Bna.com (registration may be required), August 2017

Target Defeats Challenge Over Company Stock in Its 401k Plan

Abstract: Target Corp. defeated a lawsuit by employees challenging the retailer's decision to allow company stock in its 401(k) plan despite allegedly knowing its value was artificially inflated because of its now-defunct Canada operations.

Source: Bna.com (registration may be required), August 2017

Voya's Win in 401k Fee Suit Bodes Well for Other Recordkeepers

Abstract: The dismissal of a lawsuit against Voya Financial for its relationship with 401k robo-adviser Financial Engines could be a harbinger of success for other major retirement-plan record keepers locked in similar legal battles.

Source: Investmentnews.com (registration may be required), July 2017

Franklin Templeton 401k Challenge Gets Class Treatment

Abstract: Participants in the Franklin Templeton 401k Retirement Plan who sued the company over the plan's in-house mutual funds got permission to move forward as a certified class.

Source: Bna.com (registration may be required), July 2017

Plan Sponsor Admits to Stealing From 401k

Abstract: The owner of PCI, a commercial janitorial company that contracted with area school districts, and CDM, a company that performed construction and property management services in a metro area in Kansas, has pleaded guilty to theft from an employee benefit plan.

Source: Planadviser.com, July 2017

The Supreme Court Indirectly Stiffens a Fiduciary Breach Time Limit

Abstract: The Supreme Court appears to have barred equitable tolling under ERISA Section 413's six-year statute of repose for fiduciary breach claims, subject only to well-pled allegations and proof of fraud or concealment.

Source: Erisa-employeebenefitslitigationblog.com, July 2017

Sears Hit With 401k Class Action Over Company Stock

Abstract: Sears kept its own stock as an investment option in the 401k plan although it knew or should have known that the retailer was in "extremely poor financial condition," workers allege in a new lawsuit.

Source: Bna.com (registration may be required), July 2017

Appointing and Monitoring a 401k Investment Manager Under ERISA

Abstract: Employee-benefit attorneys advising retirement plan sponsors frequently mention that plan fiduciaries are not liable for the acts or omissions of an appointed investment manager, and aren't obligated to invest or otherwise manage plan assets subject to their oversight. However, a recent district court decision has implications for how retirement plan sponsors should monitor their adviser.

Source: Investmentnews.com (registration may be required), July 2017

Tracking Down the Valid Claims-More Victories for 401k and 403b Fiduciaries

Abstract: Even responsible fiduciaries get caught in the net of retirement plan class action litigation. At least a few courts are carefully examining the conclusory allegations in these complaints and finding them wanting. It is too early to tell whether this is will be a trend in fee litigation, but responsible fiduciaries should be heartened by these victories.

Source: Cohenbuckmann.com, July 2017

MFS Investment Management Sued Over Claims of Self-Dealing in 401k Plans

Abstract: MFS Investment Management has been sued for self-dealing in its company 401k plans, becoming the latest fund firm to be targeted for stocking its retirement plan primarily with proprietary investments.

Source: Pionline.com, July 2017

Trial Lawyers Want to Defend Fiduciary Rule in Court

Abstract: Industry groups that support the Labor Department's fiduciary rule came out swinging in new legal briefs, one of which offers to defend in court a key provision of the rule that the DOL is no longer defending.

Source: Bna.com (registration may be required), July 2017

Voya Beats Lawsuit Over Stable Value Funds in Retirement Plans

Abstract: Voya Retirement Insurance and Annuity Co. beat a lawsuit accusing it of earning undisclosed profits by setting the crediting rate for its stable value funds in retirement plans for its own benefit.

Source: Bna.com (registration may be required), July 2017

Brown University Sued Over Retirement Plan Fees

Abstract: Brown University is accused of filling its two retirement plans with high-cost, poorly performing investment options, allegedly causing participants millions of dollars in losses.

Source: Bna.com (registration may be required), July 2017

DOL's New Stance on Fiduciary Rule at Odds in Thrivent Case

Abstract: Thrivent Financial for Lutherans stepped up its fight against the fiduciary rule's anti-arbitration condition that would bar class litigation against financial advisers by citing the Labor Department's latest court argument.

Source: Bna.com (registration may be required), July 2017

Marathon Petroleum Execs Sued Over Stock in Retirement Plan

Abstract: Marathon Petroleum executives are accused in a new lawsuit of wrongly allowing workers to invest their retirement savings in the stock of Marathon Oil Corp.

Source: Bna.com (registration may be required), July 2017

Pioneer Natural Resources Sued Over 401k Fees

Abstract: Pioneer Natural Resources USA is accused of choosing inappropriate, high-cost mutual funds in its 401k plan and paying Vanguard unreasonable, excessive recordkeeping fees.

Source: Bna.com (registration may be required), July 2017

Nationwide's 401k Recordkeeping Fees Are Excessive, Lawsuit Claims

Abstract: Nationwide has been sued for allegedly charging 401k plans excessive recordkeeping and administration fees in a lawsuit that also challenges the practice of assessing fees based on the amount of plan assets.

Source: Investmentnews.com (registration may be required), June 2017

Waddell & Reed Sued Over In-House Funds in Its 401k Plan

Abstract: Waddell & Reed Financial Inc. is the latest financial services company accused of filling its workers' 401k plan with high-fee, poorly performing in-house funds, when less expensive, better performing outside options were available.

Source: Bna.com (registration may be required), June 2017

Washington University Sued Again Over Its $3.8B Retirement Plan

Abstract: Washington University in St. Louis was hit with a second lawsuit accusing it of filling its $3.8 billion retirement plan with duplicative, expensive, and underperforming investment options.

Source: Bna.com (registration may be required), June 2017

Putnam Beats Class Action Over In-House 401k Investments

Abstract: Putnam Investments defeated a class action challenging the allegedly high-fee proprietary investment funds in the company's 401k plan.

Source: Bna.com (registration may be required), June 2017

Fidelity Defeats Class Action Over Stable Value Fund

Abstract: Fidelity Management Trust is free of a class action by 401k investors who said the company's stable value fund carried excessive fees and used an unduly conservative investment strategy.

Source: Bna.com (registration may be required), June 2017

Revenue Sharing Spurring 401k Lawsuits With More to Come

Abstract: With the focus on 401k and 403(b) lawsuits, it may be time for employers sponsoring a corporate retirement plan to get out of the line of fire by eliminating revenue sharing altogether.

Source: 401ktv.com, June 2017

Allianz Workers Get Class Treatment in Suit Over 401k In-House Funds

Abstract: Allianz Asset Management of America L.P. workers won class certification on their lawsuit challenging the allegedly high-fee, in-house mutual funds in their 401k plan.

Source: Bna.com (registration may be required), June 2017

401k and 403(b) Lawsuit Update: Two Cases Settled and One Filed

Abstract: In what is becoming common place in the rash of 401k and 403(b) lawsuits, two cases were settled and one new one filed in the span of just one week. Northrup Grumman plan sponsors settled; a case against the Washington University 403(b) plan was filed; and Merrill Lynch settled claims against it by a plan sponsor.

Source: 401ktv.com, June 2017

401k Self-Dealing Suit Filed Against Capital Group

Abstract: The lawsuit claims that when selecting and retaining investment options in the plan, the Capital Group's benefits committee did not act prudently and solely in the interest of plan participants and beneficiaries, but put the interest of Capital Group and its subsidiaries first by selecting, retaining and failing to remove expensive group-affiliated investment options managed by CGTC, CRMC, and/or CII.

Source: Planadviser.com, June 2017

Northrop Grumman Settles Multi-Million Dollar 401k Fee Suit

Abstract: With the sting of defeat still fresh from a federal judge's dismissal of his Chevron suit, tort lawyer Jerry Schlichter bounced back with the announcement of a $16.75 million 401k fee settlement with Northrop Grumman.

Source: 401kspecialistmag.com, June 2017

Washington University Is 15th School Sued Over Retirement Plan

Abstract: Washington University in St. Louis is the latest college to face a proposed class action over the fees and investment options in its retirement plan.

Source: Bna.com (registration may be required), June 2017

Merrill Lynch to Pay $25M in Lawsuit Over Fees in Small 401ks

Abstract: Merrill Lynch, Pierce, Fenner & Smith Inc. will pay $25 million to settle a lawsuit that accused the broker-dealer firm of profiting from excessive fees charged to small 401k plans.

Source: Bna.com (registration may be required), June 2017

Another Court Dismisses Conclusory 401k Fee Suit

Abstract: We have now had a second case in Minnesota in which a judge looked under the hood and found no substance there. The Minnesota judge dismissed the case with prejudice (meaning plaintiffs won't have a second bite at the apple.) Is this the beginning of a trend?

Source: Cohenbuckmann.com, June 2017

Questioning 401k Lawsuits Based on Investment Outcomes

Abstract: No one can predict the excess return relative to a benchmark (Alpha) that is usually associated with active investment management. Then it should come as no surprise that no one can predict the market (beta). Choosing investments is a subjective endeavor. So why are so many legal actions and allegations against Employer Retirement Plans Sponsored Plans based on subjective endeavors with unknown outcomes?

Source: 401khelpcenter.com, June 2017

Lawsuit Filed for Retirement Plans Using United of Omaha GICs

Abstract: The lawsuit alleges United of Omaha breached its ERISA duties by improperly exercising its discretionary authority "to maximize its own compensation and retain large profits rather than crediting the participants and beneficiaries of the plans with appropriate returns."

Source: Planadviser.com, June 2017

Partial Victories to Two Universities in Their Motions to Dismiss Code Section 403(b) Fee Litigation

Abstract: Ddistrict courts in Georgia and North Carolina, respectively, ruled on defendants' motions under Henderson v. Emory University and Clark v. Duke University. Although the defendants in these cases has some success in eliminating certain causes of action, other causes of actions involving the payment of excessive fees and use of multiple recordkeepers will continue through litigation.

Source: Mwe.com, June 2017

Chevron Again Defeats Lawsuit Over Its $19 Billion 401k

Abstract: Chevron Corp. defeated for the second time a proposed class action accusing it of breaching fiduciary duties by allowing poorly performing investments that allegedly carried high management fees in its $19 billion 401k plan.

Source: Bna.com (registration may be required), June 2017

Wells Fargo Scores Rare Win in 401k Fee Litigation Series

Abstract: Wells Fargo & Co. defeated a proposed class action claiming the company stuffed its $35 billion 401k plan full of expensive and poorly performing target-date funds affiliated with the company.

Source: Bna.com (registration may be required), May 2017

Another Bundled 401k Provider Sued by Employees

Abstract: T. Rowe Price has become the latest bundled 401k provider accused of self-dealing in their 401k plan. A former employee has accused the Maryland based money manager of offering expensive, retail share classes to their plan participant/employees when other, less expensive share classes existed.

Source: Nwp401k.com, May 2017

Princeton Joins List of Schools Sued Over Retirement Plans

Abstract: Princeton University is the latest college to be hit with a proposed class action challenging the fees and investment options offered through the school's retirement plans.

Source: Bna.com (registration may be required), May 2017

University of Chicago Latest College Hit With Retirement Plan Suit

Abstract: The University of Chicago is accused in a new lawsuit of carrying high fees and offering a poor selection of investment funds in its two retirement plans ( Daugherty v. The University of Chicago).

Source: Bna.com (registration may be required), May 2017

Update on University Section 403(b) Cases: Inconsistent Rulings

Abstract: A novel theory proceeding in both the Duke and Emory cases is the claim that the defendants were imprudent to hire multiple recordkeepers, where consolidating services with one recordkeeper could have resulted in lower fees for participants.

Source: Benefitslawadvisor.com, May 2017

Courts' Interpretations of 401k Fiduciary Laws Are Changing

Abstract: It appears that laws of fiduciary prudence under ERISA are evolving. A recent district court decision, in Lorenz v. Safeway, demonstrates this point. The prudence requirement in being gauged based on the portfolio in aggregate but also on individual investment options.

Source: Investmentnews.com (registration may be required), May 2017

Duke Is Second School to Lose Round in Retirement Plan Lawsuits

Abstract: A lawsuit accusing Duke University's retirement plan of high fees and poor investments is moving forward after a federal judge issued a mixed ruling on the school's motion to dismiss.

Source: Bna.com (registration may be required), May 2017

Breach of Fiduciary Duty Case Against University Survives Motion to Dismiss

Abstract: The U.S. District Court for the Northern District of Georgia issued the highly anticipated first ruling in the university breach of fiduciary duty cases. In Henderson v. Emory University, the court ruled that, for most of the claims asserted, the plaintiffs had properly stated a claim that survives the defendants' motion to dismiss.

Source: Ballardspahr.com, May 2017

Fourth Circuit Agrees: Fiduciaries' Faulty Process for Eliminating Stock Funds Did Not Cause Plan's Losses

Abstract: This case demonstrates that the "would have" standard for showing that a plan fiduciary's breach did not cause a loss is difficult, but not impossible, to satisfy. Making a prudent choice by an inadequate process, however, is just lucky. Plan fiduciaries are on much safer ground when they establish and carefully follow a prudent process.

Source: Thomsonreuters.com, May 2017

Emory Is First College to Lose in Retirement Plan Lawsuits

Abstract: Emory University must continue defending a lawsuit accusing its retirement plans of carrying high fees and offering poor investment options.

Source: Bna.com (registration may be required), May 2017

Fourth Circuit Upholds Ruling in Tatum v. RJR Pension Investment Committee

Abstract: The district court ruled that the defendant's breach of its duty of procedural prudence, occurring when the plan sold non-employer stock funds, did not cause the substantial losses in the retirement plan.

Source: Erisalawyerblog.com, May 2017

Are Your Target-Date Funds Making You a Target?

Abstract: Although participants' entire accounts may be invested in these funds, all too many TDFs are selected by fiduciaries simply because it is convenient, or there is some incentive, to offer their provider's funds. This makes them an easy target for class action lawyers. Custom TDFs, which are designed for an employer's specific participant group, are also vulnerable if they don't include appropriate investments.

Source: Cohenbuckmann.com, May 2017

Starwood Hotels Can't Escape ERISA Lawsuit Over 401k Fees

Abstract: Starwood Hotels must defend a proposed class action accusing it of violating federal benefits law by allegedly mismanaging the company's $1.2 billion 401k plan.

Source: Bna.com (registration may be required), May 2017

District Court Dismisses Allegations That Stable Value Fund is Too Conservative

Abstract: A district court in Rhode Island dismissed claims by participants in the CVS Employee Stock Ownership Plan that plan fiduciaries imprudently invested plan assets in the plan's stable value fund.

Source: Erisapracticecenter.com, May 2017

At the Intersection of the NFL Draft, ERISA, Divorce, Venue and Spousal Benefits

Abstract: Judge Woodlock, in the United States District Court for the District of Massachusetts, just issued an order on venue and QDROs in ERISA litigation that is a "must read" as a tutorial on a number of ERISA issues.

Source: Bostonerisalaw.com, May 2017

R.J. Reynolds Cleared Again in Nabisco 401k Stock Dump

Abstract: R.J. Reynolds Tobacco Co. once again escaped liability for losses suffered by its 401k plan when the company sold off the stock of its Nabisco subsidiaries.

Source: Bna.com (registration may be required), May 2017

Advisory Firm Dodges ERISA Suit Against BB&T

Abstract: Often when a retirement plan participant files suit against a plan sponsor, investment manager or recordkeeper, the advisory firm gets dragged in as well. While in this case the advisory firm has now been dismissed from the pool of defendants, the wider case itself will still apparently move forward.

Source: Planadviser.com, April 2017

Get Over the Fear of Hiring an ERISA Attorney

Abstract: Plan sponsors should get over their phobia of lawyers and hire an ERISA attorney when they need to. This article is when and why retirement plan sponsors should hire an ERISA attorney.

Source: Jdsupra.com, April 2017

Disney Execs Escape Lawsuit Over Valeant Stock in 401k

Abstract: Walt Disney Co.'s 401k plan fiduciaries don't have to defend a proposed class action challenging their decision to allow plan participants to invest their retirement assets in a mutual fund that invested heavily in Valeant Pharmaceuticals International stock.

Source: Bna.com (registration may be required), April 2017

401k Lawsuits Can Be Avoided With the Right Fiduciaries

Abstract: The complicated task of establishing a Retirement Committee or a Benefits Committee come with some basic Do's and Don't's and selecting the right fiduciaries is as important as selecting the right advisor or vendor. This article covers some tips for plan sponsors when selecting committee members.

Source: 401ktv.com, April 2017

PODCAST: 403(b) Plan Fee Litigation Update

Abstract: Employee Benefits attorneys Eric Altholz and Chris Lockman provide a brief update on class action lawsuits alleging various breaches of fiduciary duties under ERISA pending against a dozen major universities. All of these lawsuits are related to the administration of the 403(b) plans maintained by the universities, but these issues are not limited to higher education institutions.

Source: Employeebenefitsupdate.com, April 2017

JPMorgan Stable Value Fund Lawsuit Gets Class Treatment

Abstract: Thousands of workers who invested their retirement savings in JPMorgan's stable value funds got approval to sue the company as a certified class.

Source: Bna.com (registration may be required), April 2017

Fear of Litigation Looms Over DC Plans

Abstract: In a list of the most important factors driving decision-making at defined contribution plans, litigation risk ranked second only to meeting participant retirement goals. Investment fees and plan costs are a top concern for defined contribution plan sponsors, according to PIMCO's annual consultant survey.

Source: Institutionalinvestor.com, April 2017

Investors Can Go After Fiduciary Advisers Even if DOL Doesn't

Abstract: There is a threat of litigation hanging over advisers' heads, even as the DOL says it will focus on compliance around the fiduciary rule. The rule invites the plaintiffs' bar to go after bad actors, making any temporary freezes on enforcement of limited value.

Source: Bna.com (registration may be required), April 2017

Fujitsu Loses Early Bid to Toss 401k Fee Lawsuit

Abstract: Fujitsu Technology couldn't convince a federal court in California to dismiss a lawsuit accusing it of breaching fiduciary duties by making imprudent investments in its 401k plan.

Source: Bna.com (registration may be required), April 2017

Charles Schwab Seeks to Arbitrate 401k Case

Abstract: Charles Schwab Corp. urged a federal court to order a former employee challenging the investment options in the company's 401k plan to submit his claims to individual, non-class arbitration.

Source: Bna.com (registration may be required), April 2017

Fiduciary Litigation: Another One Bites the Dust

Abstract: Plaintiffs seeking to obtain an emergency injunction blocking the DOL's fiduciary regulation were rebuffed again by the U.S. Court of Appeals for the Fifth Circuit. The denial kept the DOL's fiduciary litigation streak unblemished.

Source: Asppa.org, April 2017

How to Avoid Costly Beneficiary Designation Litigation

Abstract: A recent federal district court opinion in Florida demonstrates the potential pitfalls that plan administrators may face with respect to disputes over beneficiary status and provides guidance as to how administrators may avoid costly disputes.

Source: Lexology.com, April 2017

Five Major 401k Lawsuits That Directly Impact Advisors

Abstract: There's a clear need to increase awareness about litigation risk and to understand the key issues that have made their way to the highest courts. These decisions have implications for 401k retirement plan advisors, plan sponsors and other plan fiduciaries alike. Recent decisions should help shape compliance strategies for those responsible for managing defined contribution plans.

Source: 401kspecialistmag.com, April 2017

Cliffs Natural Resources Beats ERISA Challenge to Stock Drop

Abstract: Iron mining company Cliffs Natural Resources beat back claims that it harmed workers' retirement savings by allowing them to invest in the company's declining stock.

Source: Bna.com (registration may be required), April 2017

Putnam Prevails in 401k Self-Dealing Suit

Abstract: Before ultimately finding plaintiffs' claims were time-barred, a judge found Putnam's mutual fund fees were reasonable and a comparison to Vanguard funds was "apples to oranges."

Source: Planadviser.com, April 2017

Judge in Putnam 401k Suit Deals Potential Setback to Plaintiffs Using Vanguard as Fee Benchmark

Abstract: A federal judge has seemingly dealt a blow to plaintiffs bringing claims against financial services companies for excessive retirement plan fees, following a recent ruling in a self-dealing lawsuit involving Putnam Investments' 401k plan. Specifically, the judge shot down arguments that Putnam received excessive management fees from their proprietary mutual funds, saying plaintiffs' comparison of Putnam fund fees to those of Vanguard Group's passively managed funds was "flawed."

Source: Investmentnews.com (registration may be required), April 2017

BlackRock Accused of Self-Dealing With 401k Plan

Abstract: BlackRock Inc. and its subsidiaries are accused in a new lawsuit of loading the company's $1.56 billion 401k plan with its "expensive and poor-to-mediocre" in-house investment options.

Source: Bna.com (registration may be required), April 2017

Court Finds Intel Alternative Investment Suit Time-Barred

Abstract: The lawsuit claimed the defendants breached their fiduciary duties by investing a significant portion of the plans' assets in risky and high-cost hedge fund and private equity investments through custom-built target-date funds.

Source: Planadviser.com, April 2017

Jackson National Target of DC Plan Self-Dealing Suit

Abstract: The lawsuit says disclosures show the proprietary funds used in the DC plan lineup were far more expensive than comparable funds and underperformed their benchmarks.

Source: Planadviser.com, April 2017

Peabody Energy Cleared in ERISA Challenge to Stock Losses

Abstract: Peabody Energy Corp. isn't liable to employees who allegedly lost retirement savings by investing in the bankrupt coal company's stock, a federal judge ruled.

Source: Bna.com (registration may be required), April 2017

American Airlines Loses Round Over Mutual Fund Fees

Abstract: American Airlines Inc. can't escape a proposed class action challenging the affiliated mutual funds in its 401k plan.

Source: Bna.com (registration may be required), April 2017


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