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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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District Court Rules in Favor of 401k Plan Recordkeeper in Lawsuit Over Foreign Tax Credits

In a case involving novel issues around foreign tax credits in the ERISA setting, a federal district court held that a 401k plan's recordkeeper did not have an obligation under the ERISA to provide plans with rebates for the foreign tax credits that the recordkeeper received.

Source: Westlaw.com, May 2022

Federal District Courts Disagree on Compelling Individual Arbitration of ERISA Class Action

In recent years, it has become more common for ERISA governed benefit plans to include arbitration and class action waiver provisions in their plan documents. These provisions have engendered litigation, with plan participants and beneficiaries challenging plan fiduciaries' ability to enforce these terms, which require the participants and beneficiaries to arbitrate their claims individually. Federal courts have not responded uniformly to these challenges.

Source: Americanbar.org, May 2022

Schlichter Expands flexPath Targets

The law firm of Schlichter Bogard & Denton has a new target in an excessive fee suit, the plan's investment advisor. More specifically, plaintiffs -- who just two months ago filed suit against the plan fiduciaries of the Molina Salary Savings Plan -- have now filed suit on behalf of the Plan against Defendant NFP Retirement, Inc. for breach of fiduciary duties under ERISA.

Source: Napa-net.org, May 2022

Participant Standing Challenged in Excessive Fee Suit

According to the defendants here (Nohara v. Prevea Clinic Inc.), Nohara didn't have that legal right to bring suit because "she could not have sustained an injury-in-fact that is anything but de minimis." Prevea explained that she only participated in the plan for two weeks at the time she brought suit and "…this action results in alleged damages of, at most, $0.22 and that federal jurisdiction is not available for such de minimis claims."

Source: Napa-net.org, May 2022

Data Breach Suit Targets Consultant

A consulting firm's data breach has triggered a second class-action lawsuit by an affected participant on behalf of a class of some 2,500,000 individuals. The suit, brought by plaintiff Greg Torrano, claims that 2,537,261 individuals signed up for benefits plans through their employers only to subsequently find out personally identifiable information, including names, birthdates, and Social Security numbers, had been stolen in a data breach.

Source: Ntsa-net.org, May 2022

Another Circuit Court Rules on ERISA Arbitration Rules

The 6th U.S. Circuit Court of Appeals has ruled that certain types of ERISA claims, while brought by individual participants, ultimately belong to the plan as a whole, meaning individual arbitration agreements cannot as a matter of course prevent such claims from proceeding in court.

Source: Planadviser.com, May 2022

ERISA Class Action Complaint Targets O'Reilly Automotive

A new ERISA fiduciary breach lawsuit has been filed in the U.S. District Court for the Western District of Missouri, naming as defendants the O'Reilly Automotive company, its board of directors, and the committee tasked with operating the firm's 401k plan. The lawsuit closely resembles numerous others previously filed by the law firm Capozzi Adler but adds new argumentation based on a recent Supreme Court ruling.

Source: Planadviser.com, May 2022

DOL Urges 7th Circuit to Vacate Dismissal of Northwestern ERISA Case

The DOL recently sent a letter to the U.S. Court of Appeals, for the 7th Circuit, urging the court to vacate its dismissal of an ERISA class action concerning Northwestern University's 403b retirement plan. An Illinois federal district court originally dismissed the ERISA suit filed by Northwestern employee retirement plan participants for failure to state a valid claim. The 7th Circuit agreed and upheld the district court's decision. The U.S. Supreme Court then disagreed.

Source: Hallbenefitslaw.com, May 2022

The O'Reilly Automotive Excessive Fee Case is Based on False Recordkeeping Fees

The author writes, "Plaintiff law firms and their clients have the correct numbers, but continue to file misleading lawsuits... This time it is a case filed by the Capozzi Adler law firm on May 2, 2022, against O'Reilly Automotive, Inc. The lawsuit of former O'Reilly employees alleges that the recordkeeping fee was $49.55 per participant in the last year listed in the lawsuit. But that number is wrong. Plaintiffs ignored the truthful data from their participant fee disclosure that the actual recordkeeping fee was a very reasonable $31 per participant."

Source: Euclidspecialty.com, May 2022

Insights From the First Twenty-Five Excessive Fee and Investment Imprudence Cases of 2022

The most common excess fee claim filed this year is against plans that allegedly have high recordkeeping fees and investments in high-fee retail share classes, led by a concerted attack against plans in the active Fidelity Freedom target-date funds. From the author's perspective, the most concerning development are that plaintiffs have been filing cases challenging isolated actively managed investments in plans with otherwise overall low fees. This article provides insights from the first twenty-five excessive fee and imprudence cases filed against defined contribution plans in 2022.

Source: Euclidspecialty.com, May 2022

Capital One Seeks to Dismiss Proposed Class Challenging 401k Plan Administration

Capital One Financial Corp. has filed a motion to dismiss an ERISA suit, arguing that there is insufficient evidence that it mismanaged its 401k plan. In Morales v. Capital One Financial Corp. et al., U.S. District Court for the Eastern District of Virginia, the proposed class of Capital One 401k plan participants claims that Capital One violated ERISA by violating its fiduciary duty to make prudent decisions on behalf of plan participants and monitor the committee that oversaw the 401k plan.

Source: Hallbenefitslaw.com, May 2022

Sixth Circuit Rejects Arbitration for Proposed Fiduciary Breach Class Action

The Sixth Circuit, in a matter of first impression for that Circuit, held an arbitration clause contained in an individual employment agreement did not apply to ERISA fiduciary breach claims brought on behalf of a defined contribution plan. The case is Hawkins et al. v. Cintas Corp.

Source: Erisapracticecenter.com, May 2022

The Ninth Circuit Reversals of the Salesforce and Trader Joe's Excessive Fee Cases

Nearly every court that has decided a motion to dismiss in an excessive fee case following the January 26 Northwestern Supreme Court opinion has allowed the complaint to proceed to discovery. A North Carolina court in the Shoe Show case went so far as to rule that it is an issue of fact as to whether a $40 million plan has sufficient bargaining leverage to reduce recordkeeping fees. And now the Ninth Circuit piles on by reversing both the Salesforce and Trader Joe's dismissals of excessive fees cases.

Source: Euclidspecialty.com, April 2022

Excessive Fee Lawsuit Will Proceed Against Xerox

The breach of fiduciary duty lawsuit against Xerox Corporation's 401k retirement plan fiduciaries will proceed after a District Court denied the defendants' motion to dismiss the complaint. The complaint alleged a breach of fiduciary duty obligations and excessive fees for recordkeeping services.

Source: Planadviser.com, April 2022

Ninth Circuit Court of Appeals Revives Two 401k Fee Cases, Potentially Making It More Difficult for Plan Fiduciaries to Obtain Early Dismissal

Plaintiffs in "excessive fee" lawsuits commonly allege that plan fiduciaries selected and retained investment options that were overly priced and underperformed against their benchmarks, and that plan recordkeeping fees were unreasonably high. While fiduciary defendants have obtained recent early wins in this litigation by challenging the plausibility of the plaintiffs' allegations, these Ninth Circuit decisions bucked those trends and gave significant deference to the plaintiffs' claims. Both opinions took a strict approach in accepting all of the plaintiffs' allegations as true for purposes of ruling on the defendants' motions to dismiss; and, if they stand, they could make it easier for plaintiffs to proceed past the early pleading stage and attempt to develop their cases through discovery.

Source: Truckerhuss.com, April 2022

401k Excessive Fee Suit Tossed

A 401k excessive fee case was dismissed for failing to make a case sufficient to go to trial, but given a chance to remedy that situation.

Source: Napa-net.org, April 2022

Kroger Demands Dismissal of Proposed ERISA Class-Action Over Recordkeeping Fees

Kroger asked an Ohio federal court to dismiss a proposed class-action lawsuit in which workers claim that they paid excessive, unreasonable, and undisclosed annual recordkeeping fees to participate in the employer's retirement savings plan. According to Kroger, employees paid reasonable yearly fees in line with federal law and received annual fee disclosures stating the yearly expense ratios.

Source: Hallbenefitslaw.com, April 2022

Washington University ERISA Lawsuit Reaches Settlement

A settlement agreement has been struck in the ERISA lawsuit filed against Washington University in St. Louis in the U.S. District Court for the Eastern District of Missouri. Though the defendants admit no wrongdoing in the settlement agreement, they have agreed to pay $7.5 million into a gross settlement account from which the funds will be distributed to class members and used to pay the plaintiffs' sizable attorneys' fees.

Source: Planadviser.com, April 2022

Ninth Circuit Revives Second Excessive Fee 401k Plan Litigation

For the second week in a row, the Ninth Circuit reversed the dismissal of a 401k plan excessive fee litigation challenging the offering of retail share classes of mutual funds instead of cheaper institutional share classes.

Source: Erisapracticecenter.com, April 2022

New York Federal District Court Dismisses 401k Fee Class Action

A New York district court recently dismissed, without prejudice, a 401k plan participant's putative class action complaint alleging breaches of fiduciary duty. The plaintiff alleged that the plan fiduciary defendants breached their duties of prudence and loyalty by failing to properly monitor the plan's costs. This decision may provide a roadmap on how district courts can address complaints alleging breaches of fiduciary duty which fail to explicitly provide the formula used to calculate the alleged imprudent recordkeeping fees.

Source: Erisalitigationadvisor.com, April 2022

Victim of an "Excessive" Investment Fee Case Has Low-Cost Vanguard Target-Date Funds

The plaintiffs, in this case, assert that a few active funds are imprudent, but do not disclose that the plan's QDIA with the majority of plan assets is invested in the Vanguard index target-date funds, the gold standard of institutional investments. The author writes, "This is the third time in the last month that the plaintiff excessive fee bar has filed a misleading complaint alleging excessive investment fees against a plan with overall low investment costs."

Source: Euclidspecialty.com, April 2022

Ninth Circuit Gives Excessive Fee Plaintiffs Another Chance

In the first ruling since the Supreme Court's Hughes v. Northwestern University decision, an appellate court has resurrected a plaintiffs' case in an excessive fee case that had been rejected at the district court level.

Source: Asppa.org, April 2022

Wells Fargo Agrees to Pay $32.5 Million to Settle ERISA Suit

Parties in a lawsuit against Wells Fargo 401k plan fiduciaries have filed a motion for preliminary approval of a settlement. The lawsuit accused Wells Fargo of using its 401k plan to seed new proprietary funds, among other things.

Source: Planadviser.com, April 2022

Former Goldman Sachs Workers Achieve Class Status in 401k Mismanagement Case

U.S. District Judge Edgardo Ramos granted class status to tens of thousands of Goldman Sachs Group Inc. ex-employees in an ERISA suit related to the mismanagement of its employee 401k plan. In support of its motion to certify the class, Falberg also pointed to other courts which recently have certified ERISA classes of retirement plan participants suing financial services providers for unfairly promoting proprietary funds in their plans.

Source: Hallbenefitslaw.com, April 2022

The Humana Excessive Fee Case Allowed to Proceed Despite Low Recordkeeping Fees Negotiated in Competitive RFPs

The original model of an excessive fee lawsuit under ERISA was to allege that the plan fiduciary committee failed to conduct a request-for-proposal to ensure that the plan had the lowest possible costs. But plaintiff law firms are now challenging plans that negotiated low fees based on competitive bidding. They know it is worth the minimal cost to file a lawsuit because if they can somehow get passed a motion to dismiss, they have settlement leverage based on large-plan damage models that are, in the words of a leading plaintiff firm, "astronomical." The only protection for plan sponsors is the "careful, context scrutiny" that federal court judges are required to perform to protect plan fiduciaries.

Source: Euclidspecialty.com, April 2022

Wells Reaches Excessive Fee Deal

The parties in an excessive fee suit focused on the adoption of collective investment trusts have come to terms. The suit alleges that "defendants selected and retained Wells Fargo products over materially identical, yet cheaper, non-proprietary alternatives; selected Wells Fargo products that had no performance history that could form the basis of a fiduciary's objective decision-making process; and failed to remove proprietary funds despite sustained underperformance." More specifically, the plaintiffs took issue with the use of target-date CITs with a relatively short (less than three years) track record.

Source: Napa-net.org, April 2022

Federal Judge Grants Class Certification to Astellas Workers Over 401k Losses

The employees allege that violations of fiduciary duty and prohibited transactions caused them to lose millions in retirement savings. An Illinois federal judge granted class certification to three classes of Astellas Pharma US Inc. 401k retirement plan participants in their ERISA suit. The "equitable relief" class consists of all plan participants with a current account balance, about 4,000 workers. The other two classes, the "payment of plan assets" class and the "investment loss" class, consist of those workers who invested in certain funds, or about 2,500 and 2,300 workers, respectively.

Source: Hallbenefitslaw.com, April 2022

Small(er) Plan Targeted with Excessive Fee Suit

Another 401k has been charged with falling short of its fiduciary obligations and of failing to leverage its "tremendous bargaining power," though it's a smaller plan than most caught in those crosshairs. The plan, in this case, is 99 Cents Only Stores, an American deep-discount retailer operating primarily in California and the Southwest, a plan that, as of Dec. 31, 2020, had 2,715 participants with account balances and $69,907,378 in assets.

Source: Asppa.org, April 2022

Judge Refuses to Dismiss Lawsuit Against DST Systems and Investment Manager

The lawsuit alleges 401k plan fiduciaries and a former investment manager breached their fiduciary duties by allowing a large portion of plan assets to be invested in Valeant Pharmaceuticals stock.

Source: Planadviser.com, March 2022

Ruling Permits Key Parts of Pentegra ERISA Suit to Proceed

A new order has been issued in an ERISA lawsuit filed against Pentegra Retirement Services in the U.S. District Court for the Southern District of New York, granting in part the defendant's motion to dismiss but siding mostly with the plaintiffs. The core allegations in the complaint can now proceed to discovery and potentially to trial.

Source: Planadviser.com, March 2022

Whitepaper: Debunking Recordkeeping Fee Theories in Excessive Fee Cases

According to Euclid's whitepaper, "most large defined contribution retirement plans in this country have low recordkeeping fees – fees that are often five to ten times lower than the recordkeeping fees in most under $100 million small-asset plans." This new whitepaper, authored by Euclid's Managing Principal Daniel Aronowitz, reviews the common tactics used by plaintiff law firms to allege excessive plan administration fees.

Source: Euclidspecialty.com, March 2022

Work Product in the ERISA Context

Documents that are used in the administration of a retirement plan and would have been prepared regardless of pending litigation are not protected by the work product doctrine. Similarly, "as a general rule, investigatory reports and materials are not protected by the attorney-client privilege or the work product doctrine merely because they are provided to, or prepared by, counsel." Thus, the proponent of the work product privilege must show, at the very least, "some articulable claim likely to lead to litigation has arisen." The threshold inquiry when analyzing the work product doctrine is whether the documents were prepared in anticipation of litigation.

Source: Wagnerlawgroup.com, March 2022

District Court Dismisses ERISA Lawsuit Against Principal

A new order has been issued in a complex ERISA lawsuit involving Principal, granting the defense's motion to dismiss and likely bringing a convoluted litigation process to a close. The litigation was originally focused on fiduciary breach allegations leveled against a hospital network -- claims which have since been settled -- but it also included separate accusations against Principal.

Source: Planadviser.com, March 2022

Investment and Recordkeeping Fees Questioned in ERISA Lawsuit Against DaVita

Retirement plan participants have filed a class-action complaint against health care provider DaVita Inc., its board of directors, and the retirement plan administrative committee alleging ERISA breaches of fiduciary duty. Plaintiffs claim the plan charged excessive fees for investments and recordkeeping services for a plan of DaVita's size.

Source: Planadviser.com, March 2022

Another Suit Targets "Untested" TDFs

The $741 million, 15,686 participant plan is accused primarily of causing the plan to invest in flexPATH's "untested target-date funds, which replaced established and well-performing target-date funds used by participants to meet their retirement needs." The plan fiduciaries are also alleged to have "failed to use the Plan's bargaining power to obtain reasonable investment management fees, which caused unreasonable expenses to be charged to the Plan."

Source: Napa-net.org, March 2022

Addressing Excessive Fee Litigation Risk in the Wake of Hughes v. Northwestern

The Supreme Court's January 24, 2022 decision in Hughes v. Northwestern University, has caused alarm in some corners, with panicked predictions of a proliferation of ERISA suits alleging that defined contribution plans provided imprudent investment options. However, Hughes should be more properly understood as rejecting an attempt by the U.S. Court of Appeals for the Seventh Circuit to impose a novel limit on excessive fee suits. The Supreme Court instead emphasized the application of its existing precedent in Tibble v. Edison International.

Source: Workforcebulletin.com, March 2022

Defensive Plan Provisions Designed to Prevent ERISA Lawsuits

Plan sponsors may consider adding three different types of defensive provisions to their retirement plans to help cut down on the number of participants filing claims alleging violations of ERISA. These defensive provisions can include claims procedure requirements, plan limitation periods, mandatory arbitration clauses, and class action waiver and venue provisions. All these provisions can help plan sponsors control any litigation that ultimately occurs.

Source: Hallbenefitslaw.com, March 2022

Costco Agrees to $5.1M ERISA Case Settlement

The parties in an ERISA lawsuit filed against Costco have reached a settlement that will see the company pay $5.1 million to resolve allegations that it committed fiduciary breaches in the provision of retirement benefits to employees. The lawsuit arose in June 2020, when a participant in the Costco 401k Retirement Plan filed a suit against his employer, its board of directors, and the members of a benefits committee.

Source: Planadviser.com, March 2022

Participant Sues for Right to Defer More

A new 401k suit has been filed with a participant-plaintiff charging an employer with failing to let him save as much as he wants to. That's right, one Lance Baird has accused his employer Hyatt Corporation of failing to properly honor his repeated requests to increase the amount of his salary that would go to his 401k account.

Source: Napa-net.org, March 2022

Supreme Court Decision Impacts 401k Plan Litigation

Are plan fiduciaries protected from excessive fee lawsuits just because they offer participants a menu of investment funds that includes some low-fee investment choices? Or are plan sponsors and other fiduciaries required to do more than that? The answer to these questions may determine whether an excessive fee lawsuit is dismissed quickly and before an expensive, time-consuming trial.

Source: Penchecks.com, March 2022

Class Action Suit Challenges Big CUSIP Licensing Fees

A class-action complaint was filed last week in the Southern District of New York that could have a ripple effect on the retirement industry's infrastructure, and, at least potentially, the costs of operation.

Source: Napa-net.org, March 2022

Upcoming ERISA Cases for Benefits Attorneys to Monitor

Various ERISA cases are pending at the U.S. Supreme Court and lower federal courts that could significantly affect ERISA law. Here is an overview of the cases you may wish to monitor in the upcoming months.

Source: Hallbenefitslaw.com, March 2022

SCOTUS Scuttles CalSavers Challenge

Despite a request -- and an apparent consideration of that request -- the nation's highest court has decided not to take on a case challenging the CalSavers state-run IRA program for private-sector workers. The Supreme Court "denied certiorari" which leaves the decision of the lower court -- and CalSavers -- intact.

Source: Asppa.org, March 2022

Addressing Excessive Fee Litigation Risk in the Wake of Hughes v. Northwestern

The Supreme Court's January 24, 2022 decision in Hughes v. Northwestern University, has caused alarm in some corners, with panicked predictions of a proliferation of ERISA suits alleging that defined contribution plans provided imprudent investment options. However, Hughes should be more properly understood as rejecting an attempt by the U.S. Court of Appeals for the Seventh Circuit to impose a novel limit on excessive fee suits. The Supreme Court instead emphasized the application of its existing precedent in Tibble v. Edison International.

Source: Workforcebulletin.com, February 2022

Podcast: Key ERISA Fee and Investment Litigation Developments and the Impact of Hughes v. Northwestern University

This podcast reviews the current state of affairs concerning the litigation challenging the fees charged and investments offered in defined contribution plans; and The Supreme Court's recent decision in Hughes v. Northwestern University where the court reversed and remanded the Seventh Circuit's decision affirming dismissal of a 403b plan excessive fee litigation.

Source: Proskauerpodcasts.com, February 2022

Attorney-Client Privilege in ERISA Matters

Although the concept of the attorney-client privilege is recognized in ERISA matters, it is modified by the fiduciary exception. Most communications between fund counsel and a fund are directed to a plan administrator with rarely any communication directed to participants and/or beneficiaries. However, it is those participants and the beneficiaries who are the clients. The fiduciaries and administrators are not the "client" personally but only in their representative roles.

Source: Erisalitigationadvisor.com, February 2022

Taylor Corp. Facing ERISA Recordkeeping Fee Suit

The lawsuit represents yet another case of a sub-$1 billion retirement plan finding itself the subject of excessive recordkeeping fee litigation.

Source: Planadviser.com, February 2022

Workers' Attorneys Receive $1Million Share of $4M Koch ERISA Settlement

A putative class of roughly 101,000 participants in multiple retirement plans for Koch employees, reached a $4 million settlement with Koch Industries Inc., Koch Business Solutions LP, and the Koch Benefits Administrative Committee, in July 2021. Almost six months later, in December 2021, a federal judge in Georgia approved a $1 million award of attorney's fees to lawyers from the law firms of Nichols Kaster PLLP and the Sanford Law Firm in Kinder et al. v. Koch Industries Inc.

Source: Hallbenefitslaw.com, February 2022

Fiduciary Rule Draws Second Legal Challenge

Last week, a group representing advisors who sell annuities challenged the legality of the fiduciary rule in federal court. And now a second suit filed in a different federal court accuses the Labor Department of making law with a series of FAQs.

Source: Napa-net.org, February 2022

Heightened Litigation Risk Is Not a Basis to Shield Attorney-Fiduciary Communications in 401k Litigation

The district court ordered the communications to be produced and differentiated between attorney review based on pending or anticipated litigation, which is privileged, and review based on "a general fear of liability," which is not privileged. The court was "not persuaded that the prevalence of other 401k litigation during the relevant period is a specific enough litigation risk" to trigger the protection of attorney-client privilege.

Source: Erisalitigationadvisor.com, February 2022

Latest 401k Fee Suit Targets Custom Funds, RK Fees

Another excessive fee suit targets recordkeeping fees, actively managed funds, and a custom target-date fund series. As of December 31, 2020, the plan in question had 15,062 participants with account balances and assets totaling approximately $3.45 billion, according to the suit.

Source: Asppa.org, February 2022

Long-Anticipated Supreme Court Decision on Excessive Fees -- Hughes v. Northwestern University

Essentially, this Supreme Court decision confirms that plan fiduciaries cannot rely on the availability of a variety of options or plan participants’ choice in investment options to avoid liability for offering imprudent funds or having high recordkeeping expenses. This has been the law of the land since Tibble, and litigants in excessive fee litigation have already been following this rule. Therefore, the reach of this decision may be quite limited.

Source: Truckerhuss.com, February 2022

Annuity Group Sues DOL Over Fiduciary Rule

The Federation of Americans for Consumer Choice has gone to court to try to block a DOL revival of an Obama-era definition of the term fiduciary. FACC contends that the department made the interpretation change in the preamble, or official introduction, to a "prohibited transaction exemption" revision, rather than in the actual text of the revised exemption.

Source: Thinkadvisor.com, February 2022

Supreme Court Reinforces ERISA Fiduciary Duty to Monitor Investment Options

The Supreme Court's unanimous holding is an important reminder to plan fiduciaries that simply offering a vast menu of investment options does not alleviate the responsibility to independently evaluate and continually monitor each investment option. This obligation extends to recordkeeping fees.

Source: Mcguirewoods.com, February 2022

District Court Enforces 403b Plan Arbitration Clause

A federal district court in Florida sent a proposed ERISA breach of fiduciary duty class action to individual arbitration based on a plan arbitration clause that allowed for individual relief and plan-wide injunctive relief. The case is Holmes v. Baptist Health South Florida.

Source: Erisapracticecenter.com, February 2022

Hughes v. Northwestern University: Key Takeaways for 401k and 403b Plan Sponsors and Fiduciaries

The Court issued a narrow, unanimous opinion that vacated the Seventh Circuit's decision and remanded for further proceedings so that the participants' allegations may be reevaluated as a whole. Despite the high level of industry attention focused on this case, the Court passed on the opportunity to elaborate on what the applicable pleading standard should be for bringing a claim of fiduciary imprudence in violation of ERISA in connection with the management of a defined contribution plan.

Source: Ropesgray.com, February 2022

NYC Courier Faces ERISA Breach Lawsuit

The DOL has accused the plan sponsor and plan administrator of failing to operate the employer-sponsored 401k plan in the best interests of participants and instead allowing plan assets to benefit the company.

Source: Planadviser.com, February 2022

District Court Declines to Dismiss 401k Fee Litigation Case in First Decision Post-Hughes

In declining to dismiss plaintiffs' investment management fee claims, the district court relied heavily on Hughes. The court expressed its view that Hughes "suggested" that a defined contribution plan participant may state a prudence claim by merely alleging that the plan offered higher-priced retail class mutual funds instead of available identical lower-cost institutional class funds. The district court also rejected the defendant's argument that plaintiffs' claims should be dismissed in part because the plan offered a variety of investment options that participants could select, including lower-cost passive investment options.

Source: Erisapracticecenter.com, February 2022

What the Supreme Court's Hughes Decision Means to Plan Sponsors

In a unanimous decision by Justice Sonia Sotomayor in Hughes v. Northwestern University, the Supreme Court addressed a narrow issue on the standard of pleading an ERISA fiduciary breach: Whether, if plaintiffs can allege the existence of overpriced or otherwise imprudent investment options or recordkeeping arrangements, their complaint will survive a motion to dismiss, and may proceed to trial, even if participants could have chosen from among other investments that were not similarly flawed. The Supreme Court answered this question yes.

Source: Eforerisa.com, February 2022

Judge Cites Recent Supreme Court Ruling in Denying Dismissal of Excessive Fee Suit

Just two days after the U.S. Supreme Court handed down its decision in the Hughes v. Northwestern University lawsuit, a federal court has used the high court's reasoning to deny a motion to dismiss a lawsuit against 403b plan fiduciaries.

Source: Planadviser.com, January 2022

Bessemer Trust Company Faces ERISA Self-Dealing Lawsuit

A former retirement plan participant of the Bessemer Trust Company 401k and Profit-Sharing Plan has filed a lawsuit against the company and its plan committee alleging breaches of fiduciary duty under ERISA. The plaintiffs say the firm's retirement plan was stuffed full of high-cost, proprietary funds.

Source: Planadviser.com, January 2022

Supreme Court Clarifies ERISA Fiduciary's Duty of Prudence

The decision in Hughes makes clear that merely providing investors with a broad menu of investment options does not excuse a fiduciary's allegedly imprudent decisions. A retirement plan that includes prudent investment options alongside imprudent options may be insufficient because a fiduciary must protect investors by continually monitoring and removing those imprudent investments. This duty is not discharged simply because investors have the choice to select their investments.

Source: Paulweiss.com, January 2022

The Supreme Court Holds Process Determines Prudence in 401k and 403b Fee Litigation

This week, the Supreme Court reminded fiduciaries that, while deference to their decisions may be warranted, ERISA's duty of prudence will be satisfied by a fiduciary exercising its judgment after a thoughtful process relative to the issue presented. The decision reinforces that there are no hard and fast rules on the appropriateness of fees in 401k and 403b plans; the determination of whether an ERISA fiduciary has acted prudently in offering investment choices and approving the fees associated with those choices is fact- and context-specific.

Source: Debevoise.com, January 2022

The Supreme Court Weighs in on Northwestern DC Case

The U.S. Supreme Court vacated an appellate court's decision in Hughes v. Northwestern, in a ruling issued Jan. 24. This lawsuit had hinged on the "duty of prudence" outlined in ERISA, related to the selection of the investment options in DC plans and recordkeeping fees. These are common themes in ERISA DC plan litigation, and this ruling may have broad impacts on the industry which are touched on here.

Source: Callan.com, January 2022

What Does the Supreme Court's Newest Fee Decision Mean for Retirement Plans?

On January 24, the U.S. Supreme Court issued a short unanimous opinion in Hughes v. Northwestern University. The importance of the opinion will likely be modest. At a basic level, all the Supreme Court did was reinstate a case that was thrown out of the lower courts too early. But there are two key takeaways from the Hughes v. Northwestern opinion.

Source: Bradley.com, January 2022

SCOTUS Vacates Northwestern Rulings

In a decision that's almost certainly unwelcome news for retirement plan sponsors, the Supreme Court said lower courts paid too much attention to whether the university's inclusion of some low-cost options in its plans is sufficient to show fiduciaries abided by their duties.

Source: Investmentnews.com (registration may be required), January 2022

After Supreme Court Ruling, Are TDFs a Ticking Time Bomb of Fiduciary Liability?

The Supreme Court did not rule on the viability of Hughes' claim nor on whether the case should be heard. It just stated that the Seventh Circuit cannot dismiss the case in the manner which it did. The Seventh Circuit must now reconsider whether to dismiss the case. Despite the nature of the Hughes case, the wording in the Supreme Court decision may have an impact on how other 401k cases are treated.

Source: Fiduciarynews.com (registration may be required), January 2022

What Plan Documents Must You Surrender if You Are Sued Under ERISA?

When a retirement plan participant files a lawsuit to recover damages from harm due to the plan sponsor's alleged breach of fiduciary duty, employers and plan administrators must furnish certain plan documents on demand. While ERISA requires the production of relevant materials, employers and plan administrators are not required to undertake any extensive searches for irrelevant documents. A recent court case, Theriot v. Building Trades United Pension Trust Fund, offers guidance on the extent to which employers and plans must go to meet their duties and where to draw the line.

Source: Hallbenefitslaw.com, January 2022

401k Plan Trustees Sue John Hancock Over Retention of Foreign Tax Credits

A federal court has certified a class of trustees, sponsors, and administrators of employee benefit plans that purchased a group variable annuity contract from John Hancock Life Insurance Co. via its Signature platform, which is run by John Hancock's Retirement Plan Services division. Last year, trustees of the Romano Law, PL 401k Plan sued John Hancock over tax credits related to investments they chose for their plan. The plaintiffs allege John Hancock breached their ERISA fiduciary duty of loyalty by receiving and retaining foreign tax credits for the international investment options, resulting in an alleged reduction in the value of the plan's assets.

Source: Plansponsor.com, January 2022

Northwestern ERISA Case Highlights Compliance Lessons

Litigation against ERISA retirement plan sponsors and administrators has plagued workplace fiduciaries for the last two decades. Then, in 2020, ERISA lawsuits reached unprecedented levels and affected fiduciaries of ERISA retirement plans nationwide. This article evaluates the issues before the Supreme Court in Hughes. It also provides an overview of best practices for plan sponsors aimed at avoiding costly and time-consuming ERISA fiduciary breach claims.

Source: Hallbenefitslaw.com, January 2022

New Decision Sends Excessive Fee Suit to Arbitration

In the absence of Supreme Court guidance, federal courts dealing with motions to compel arbitration of these disputes have issued inconsistent decisions on the requirements to force arbitration of ERISA fiduciary breach claims and class action waivers. A decision just issued by a federal district court judge in Florida has upheld a plan's mandatory arbitration policy and highlights the importance of adding plan language setting out a plan's mandatory arbitration policy in a plan amendment.

Source: Cohenbuckmann.com, January 2022

Arbitration Clause Pauses Excessive Fee Suit

The addition of an arbitration clause has -- for the moment, anyway -- paused an excessive fee suit. But what's interesting is how the court applied the terms of that clause. The suit had been brought by plaintiffs against the fiduciaries of the $1.5 billion Baptist Health South Florida 403b Employee Retirement Plan.

Source: Asppa.org, January 2022

$10 Billion 403b Smacked With Excessive Fee Suit

This time the defendants are the fiduciaries (and those who appointed them) of the Consolidated 403b Program of Mass General Brigham and Member Organizations, A plan that "at all times during the Class Period, the Plan had at least 6.4 billion dollars in assets under management." The suit notes that at the Plan's fiscal year-end in 2020 and 2019, the Plan had over $10.2 billion and $9.2 billion, respectively.

Source: Napa-net.org, January 2022

Lawsuit Alleges Choice of Target-Risk Funds Caused Losses to Participants

A participant in Milliman's 401k plan has filed an ERISA fiduciary breach lawsuit against the company, its board of directors, and members of its 401k investment and administrative committees. The proposed class-action lawsuit accuses the defendants of failing to prudently monitor the plan's investments and failing to remove three of the plan's "poorly performing investment options."

Source: Planadviser.com, January 2022

Several New ERISA Lawsuits Target Big Retirement Plan Sponsors

Litigation over retirement plan fees and investments is already occurring at a fast pace in 2022, with three new lawsuits filed this week against sponsors of multibillion-dollar 401ks and 403bs. Litigators this week brought class-action lawsuit claims against PPL Corp., Mass General Brigham, and Milliman.

Source: Investmentnews.com (registration may be required), January 2022

LinkedIn Employees Must Rework Proposed Class Action Lawsuit Under ERISA

In November 2021, a California federal court dismissed a suit claiming that LinkedIn Corp. kept underperforming funds in its $817 million retirement fund. The judge dismissed the proposed class action but with leave to amend and add additional facts. LinkedIn asked the court to dismiss the proposed class action in January 2021, arguing that the plan participants' dislike of the investment options did not implicate LinkedIn with any violation of federal labor law.

Source: Hallbenefitslaw.com, January 2022

TriNet ERISA Lawsuit Latest to Clear Dismissal Motion

The U.S. District Court for the Middle District of Florida has issued a ruling against the defense's dismissal motion in an ERISA lawsuit filed against TriNet HR. In considering the defense's dismissal motion, the District Court engages in a substantial discussion regarding the fiduciaries' duties prescribed by ERISA, as well as the various precedents that have been set in such matters in the relevant federal court circuit and by the U.S. Supreme Court.

Source: Plansponsor.com, January 2022


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