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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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Federal Magistrate Recommends Dismissal of ERISA Case Against Dish Network

A federal magistrate recommended the dismissal of a lawsuit brought under ERISA against the Dish Network Corporation for its use of actively managed Fidelity Freedom Funds. The recommendation -- in this case, dismissal for failure to state a claim -- is not binding until a U.S. district judge reviews and approves it, but recommendations of this kind are normally approved.

Source: Planadviser.com, February 2023

Employees' 401k Fee Suit Against Capital One Tossed

Capital One won a recent dismissal in one of the many ERISA suits, filed by workers, concerning the low-performing BlackRock target-date-funds. On the same day that he dismissed a similar suit against Booz Allen Hamilton, Judge Michael S. Nachmanoff dismissed the Capital One employee suit. Still, as in the Booz Allen case, he gave the employees 14 days to amend their suit.

Source: Hallbenefitslaw.com, February 2023

Wisconsin District Court Rulings Signal Potential New Trend Favoring the Defense of ERISA Fee and Investment Performance Lawsuits

In a striking reversal of approach beginning in the summer of 2022, the District Court for the Eastern District of Wisconsin went from denying, in whole or in part, virtually every motion to dismiss ERISA lawsuits targeting plan recordkeeping fees and investment fund selections to granting all of them. This nearly 180-degree pivot comes on the heels of the Seventh Circuit's ruling in Albert v. Oshkosh Corp. which affirmed the dismissal of such claims.

Source: Erisapracticecenter.com, February 2023

Courts Continue to Scrutinize Arbitration Clauses in ERISA Plans

A recent district court decision highlights the continued uncertainties about what it means to include an arbitration clause in an ERISA plan. While courts generally agree that such clauses are, in theory, enforceable, the extent to which courts will enforce a specific clause remains uncertain given divergent outcomes of decisions regarding motions to compel arbitration.

Source: Beneficiallyyours.com, February 2023

Early Excessive Fee Case Nears Settlement

The parties in one of the first university 403b excessive fee suits -- by participant-plaintiffs represented by the Schlichter law firm -- have come to terms on the eve of going to trial. The suit, filed in August 2016, involved two plans sponsored by the University of Southern California.

Source: Ntsa-net.org, January 2023

7th Circuit Poised to Revive Northwestern ERISA Suit

The U.S. Court of Appeals for the Seventh Circuit appeared receptive to reviving an ERISA class action suit against Northwestern University, claiming mismanagement of the workers' 403b plan, albeit on a limited scale. The employees alleged that Northwestern breached their fiduciary duties under ERISA by allowing too many investment options, causing them to pay excessive fees. In addition, they claimed that including the more expensive share classes of mutual funds precluded their access to lower-fee institutional share classes of mutual funds.

Source: Hallbenefitslaw.com, January 2023

Federal Judge Dismisses Booz Allen 401k Mismanagement Suit

In Tullgren v. Booz Allen Hamilton Inc., Judge Michael S. Nachmanoff of the U.S. District Court for the Eastern District of Virginia dismissed an employee's 401k mismanagement suit against Booz Allen Hamilton, at least for now. The judge gave the employee leave to file an amended complaint within 14 days.

Source: Hallbenefitslaw.com, January 2023

New York District Court Rejects ERISA Excessive Fee Claims as Insufficient

A district court in New York recently dismissed a putative class action challenging retirement plan recordkeeping and investment management fees. The case is Singh v. Deloitte LLP. The court's decision adds to the growing number of Second Circuit district courts relying on out-of-circuit appellate decisions to dismiss excessive recordkeeping and investment management fee claims for failure to plead proper benchmarks against which to measure fees. It also lends support to a standing argument advocated by the defense bar that, if it were to gain more traction, could substantially reduce the financial exposure in similar lawsuits.

Source: Erisapracticecenter.com, January 2023

Allianz Asset Management of America Dealt Lawsuit Over 401k Plan

A pair of Allianz Asset Management of America 401k Savings and Retirement Plan participants have claimed in federal court that plan fiduciaries engaged in self-dealing, according to the complaint. The plaintiffs' attorneys allege two counts of fiduciary breach -- of loyalty and prudence -- against the company, the plan committees, and numerous individuals, and failure to monitor fiduciaries.

Source: Plansponsor.com, January 2023

Sports Agency Owner Charged for Allegedly Stealing Retirement Assets

The Houston-based sports agent was served a civil suit by the Department of Labor for allegedly dipping into employee retirement savings for company operations. The co-owner of a sports agency has been charged with a civil lawsuit alleging five counts of fiduciary breach including the theft of workers' retirement plan assets.

Source: Planadviser.com, January 2023

Can 401k Fee Dispute Cases Survive Based on Bare Allegations

Plaintiffs typically allege that plan fiduciaries breached the duties that ERISA imposes on employee retirement plans, namely, that the fiduciaries breached their duties of loyalty and prudence by including subpar investment options in employee 401k plans. These suits are seemingly driven by Monday-morning quarterbacking, where disillusioned plan participants with the benefit of hindsight contend that investment decisions were imprudent.

Source: Beneficiallyyours.com, January 2023

Another TDF Suite Draws Excessive Fee Suit

Plan fiduciaries' decision to retain an actively managed target-date fund suite has drawn another excessive fee suit. The suit, filed against the $5.6 billion 401k plan of Quest Diagnostics Inc., claims that the "defendant's failure to disclose the options for the lowest-cost share class available caused plan participants to pay excessive fees when they chose the higher-cost share class for the same funds."

Source: Napa-net.org, January 2023

$10 Billion 401k Smacked With Excessive Fee Suit

Yet another multi-billion-dollar plan has been sued for recordkeeping and managed account services that the plaintiffs' claim was twice what could have been paid for those services. The target this time is the U.S. Bank 401k Savings Plan.

Source: Napa-net.org, January 2023

Court Dismisses 403b ERISA Claim Against Employer, but Not the Plan's Adviser

The U.S. District Court for the Northern District of Texas filed a partial order on December 29, 2022, ruling on summary judgment motions from both defendants. District Judge Brantley Starr ruled that the plaintiffs have standing to bring the suit, but Legacy Counseling Center is exempt from the ERISA requirements in this case. Peveto Financial Group, on the other hand, cannot be held liable for IRS corrective damages, yet can still be held liable for not permitting wider plan participation if they are found to be a fiduciary.

Source: Planadviser.com, January 2023

ERISA Lawsuit Filed Against Ventura Foods

An ERISA class action suit was brought against Ventura Foods LLC, a Brea, California-based food production and processing firm, in the U.S. District Court for the Central District of California by a current Ventura employee. The lawsuit, filed on December 21, 2022, alleges that Ventura overpaid its recordkeeper by allowing variable indirect fees to grow unreasonably high.

Source: Planadviser.com, January 2023

401k Excessive Fee Settlement Hits a Snag

So, what's the snag? Well, as you might suspect, it has to do with the party that was NOT involved in the partial settlement, FirstGroup and its plan fiduciaries. Their concern, according to Bloomberg Law, is that the proposed settlement includes a bar order, one that blocks FirstGroup from asserting counterclaims against Aon Hewitt. In an objection filed last week, FirstGroup says the "overly broad" order prejudices FirstGroup and curtails its legal rights beyond the extent necessary to effectuate the settlement.

Source: Napa-net.org, January 2023

The Colgate Participant Account Cyber Theft Case Survives Dismissal

A New York federal district court ruled on December 19, 2022, that a participant in the Colgate-Palmolive defined contribution plan adequately alleged breach of fiduciary duty claims against the plan recordkeeper and the plan fiduciary committee. It is a curious decision that is worth studying to understand whether plan participants have potentially viable claims against the plan recordkeeper and plan fiduciaries when a participant's account is hacked.

Source: Euclidspecialty.com, December 2022

Excessive Fee Suit Targets Service Provider "Overpayments"

Commenting that "the proliferation of 401k plans has exposed workers to big drops in the stock market and high fees from Wall Street money managers," another excessive fee suit has been filed against a plan smaller than typical for this genre.

Source: Napa-net.org, December 2022

Wells Fargo Settles Multimillion Dollar 401k Suit With DOL

Wells Fargo has settled with the DOL after an investigation revealed that the fund overpaid for company stock purchased for the plan during specific years. The settlement requires Wells Fargo to pay almost $132 million to its 401k plan participants and a penalty of nearly $13.2 million. The lawsuit involves Wells Fargo and Company, Wells Fargo Bank, and GreatBanc Trust Company, a trustee of the 401k plan.

Source: Hallbenefitslaw.com, December 2022

$4 Billion 401k Strikes $4 Million Settlement

A $4 billion plan has struck a $4 million settlement and "meaningful prospective relief" in a suit that challenged the fees it paid itself as recordkeeper for its plan. Plaintiffs brought suit against Xerox Corporation, the Xerox Corporation Plan Administrator Committee and John Does 1-30 for breaching their fiduciary duties "with respect to the Xerox Corporation Savings Plan in violation of ERISA, to the detriment of the Plan, its participants, and their beneficiaries."

Source: Napa-net.org, December 2022

DOL Moves to Dismiss Suit Challenging Its 401k Cryptocurrency Investment Guidance

The DOL recently asked a District of Columbia federal court judge to dismiss a lawsuit challenging its 401k cryptocurrency investment guidance. ForUsAll, a San Francisco-based 401k recordkeeping firm, sued the DOL in June 2022, claiming that the agency had changed policy in violation of the Administrative Procedure Act, which requires a public notice and comment period. In response, the DOL argues that its regulatory guidance does not have the force of law.

Source: Hallbenefitslaw.com, December 2022

Employment Law Firm Files Another Excessive Fee Suit

Another multi-billion-dollar 401k plan has been sued for "grossly excessive" fees. This time the target is the 16,000-participant, $2 billion plan of NCR Corporation. The plaintiffs in this case claim that "over the past six years, Plan participants have paid more than $20,000,000.00 (twenty million) in administrative fees," a sum that they allege is "nearly eight times what they should be."

Source: Napa-net.org, December 2022

Aon Hewitt Carves Out Settlement in Fiduciary Suit

After over four years of hard-fought litigation, the parties in a suit involving fund menu construction have come to a partial settlement with Aon Hewitt Investment Consulting as part of a suit relating to the FirstGroup America Retirement Savings Plan and the Aon Hewitt Funds.

Source: Napa-net.org, December 2022

Court Voids ERISA Plan's Arbitration Provision

A district court in New York recently refused to enforce an arbitration provision in an ERISA fiduciary breach lawsuit challenging the valuation of an ESOP. The ruling exposes the continued uncertainty as to the enforceability of arbitration provisions when applied to ERISA fiduciary breach claims.

Source: Erisapracticecenter.com, December 2022

District Court Dismisses Two ERISA Lawsuits Challenging BlackRock TDFs

A judge in the U.S. District Court for the Eastern District of Virginia last week dismissed two lawsuits brought against two plan sponsors under ERISA. The suits had been brought against Capital One and Booz Allen Hamilton for using a BlackRock target-date fund series as their qualified default investment alternative.

Source: Planadviser.com, December 2022

Class Dismissed: TIAA Dodges Massive Class Action Suit

A participant suit targeting TIAA for its loan practices in retirement plans has come up short in identifying a potential class on whose behalf to bring suit. The suit, filed back in early 2017, was brought by one Melissa Haley, who filed suit to recover money that she claims the Teachers Investment and Annuity Association unlawfully took from her retirement account in the Washington University Retirement Savings Plan.

Source: Napa-net.org, December 2022

DC Plan Sponsors Prevail in Two Recent Stock-Drop Rulings

Two different federal appeals courts recently upheld the dismissal of lawsuits challenging the prudence of employee stock ownership plan offerings in DC plans. Both of these stock-drop cases involved allegations that plan fiduciaries -- who were corporate insiders privy to nonpublic information about the sponsor -- breached their ERISA duties by failing to take appropriate action based on that information. In each case, the court ruled that plaintiffs hadn't met the pleading standard set by the Supreme Court in Fifth Third Bancorp v. Dudenhoeffer.

Source: Mercer.com, December 2022

Federal Judge Dismisses Two of the BlackRock TDF Suits

Two of the suits challenging the prudence of plans holding the BlackRock Lifepath target-date funds were dismissed recently. The suits were both dismissed by U.S. District Judge Michael S. Nachmanoff following oral arguments, reportedly rejecting the arguments that the BlackRock funds could be compared with the so-called "comparator" funds without considering different strategies, glide paths, and investments.

Source: Napa-net.org, December 2022

Judge Dismisses Charge of "Unreasonable" 401k Fees by Electronics-Maker Ricoh

A federal district court bounced two fiduciary breach claims brought by participants against Ricoh USA, saying plaintiffs failed "to plausibly allege the committee breached its ERISA-imposed fiduciary duty by charging unreasonable recordkeeping fees."

Source: Planadviser.com, November 2022

Share Class Choice Criticized in 401k Excessive Fee Suit

For the fourth month in a row, a relative newcomer to excessive fee litigation has brought suit against a multi-billion-dollar 401k plan. The allegations are familiar -- that the fiduciary defendants breached their duties under ERISA by "selecting and retaining imprudent share classes and investments for the plan" -- in this case the $2 billion Old Dominion 401k Retirement Plan and on behalf of its 24,000+ participants.

Source: Napa-net.org, November 2022

ERISA Fee Complaint Dismissed in Pennsylvania District Court, Extending Favorable Trend

In Krutchen v. Ricoh USA, a Pennsylvania district court dismissed an ERISA excessive fee complaint for failing to provide enough information about alleged comparator plans that allegedly paid less for recordkeeping services. The decision is notable for delivering defendants a victory in the Third Circuit, which previously allowed excessive recordkeeping claims to survive dismissal, and for citing favorably to recent defendant-friendly opinions from the Sixth, Seventh, and Eighth Circuits.

Source: Erisapracticecenter.com, November 2022

ICI Defends Revenue Sharing and Higher-Fee Share Classes in the Tenth Circuit Barrick Gold Case

The Barrick Gold case is noteworthy because the Investment Company Institute filed an amicus brief in which they defend the use of revenue sharing and actively managed investment options. The article's author thinks it is the best argument they have seen explaining how rampant excessive fee litigation is causing plan fiduciaries to limit their investment choices in retirement plans by avoiding investments with higher potential returns because of the fear of litigation. ICI argues that defensive investment selection will harm participant outcomes.

Source: Euclidspecialty.com, November 2022

Proposed Settlement Would Cost Juniper Networks $3 million

Juniper Networks, Inc. has agreed with plaintiffs to settle for $3 million in a lawsuit brought in August 2021 under ERISA. The settlement was submitted in September and motioned for preliminary approval last week, although it is still subject to U.S. District Court approval. Juniper, a networking hardware company based in California, admitted no fault or wrongdoing as part of the settlement.

Source: Planadviser.com, November 2022

Takeover Target Targeted in Excessive Fee Suit

An excessive fee suit involving proprietary funds claims that fiduciary breaches not only undermined participant retirement security but played a role in a recordkeeping acquisition. The suit alleges that a "flawed process resulted in a series of outcomes that caused the Plan and its participants and beneficiaries to sacrifice retirement savings to poor performance and swollen costs which inured to the benefit of MassMutual's bottom line."

Source: Napa-net.org, November 2022

Three Million Dollar Settlement Struck in Managed Accounts Suit

The suit, which had alleged that "...many managed account services merely mimic the asset allocations available through a target-date fund while charging additional unnecessary fees for their services," has announced a cash settlement.

Source: Napa-net.org, November 2022

Webcast: Current Trends in Target-Date Fund Litigation

Litigation of 401k plan fees and investment fund performance is on the rise. This webcast provides a review of recent 401k litigation cases, trends involving both active and index/passive target-date funds, and fiduciary best practices to avoid litigation.

Source: Fiducientadvisors.com, November 2022

Arbitration of ERISA Plan Disputes

This article discusses the general enforceability of arbitration clauses in certain disputes, including class actions, with a particular focus on the enforceability of arbitration clauses involving legal claims made under ERISA. It also specifically analyzes the advantages and disadvantages of arbitration provisions for retirement plan sponsors.

Source: Wagnerlawgroup.com, November 2022

Crypto Keeper Presses Court to Hold DOL to Its Word(s)

ForUsAll, a recordkeeper that has sued the Labor Department based on its comments regarding cryptocurrency in defined contribution plans, has told a federal judge it's fine with dismissing its suit if the court will hold the agency to its previous statements.

Source: Napa-net.org, November 2022

Seventh Circuit Still Skeptical of Excessive Fee Claims After High Court Ruling

The 7th US Circuit Court of Appeals recently upheld the dismissal of a participant's claims that DC plan fiduciaries imprudently allowed excessive administrative and investment fees (Albert v. Oshkosh Corp.). The court was unpersuaded by the participant's request to vacate the original district court decision dismissing his lawsuit in light of the Supreme Court's decision in Hughes v. Northwestern University. The 7th Circuit's decision, in this case, extends a growing trend of federal appeals courts expressing skepticism toward some of the most common allegations in many ERISA excessive fee lawsuits since the high court's Northwestern ruling.

Source: Mercer.com, November 2022

Iowa Court in the Hy-Vee Case Calls Out Credibility of Defense "Playbook" of Filing Indiscriminate Motions to Dismiss in Every Excessive Fee Case

Plan sponsors have had good recent success in excessive fee and performance lawsuits, with three federal circuit courts of appeal upholding motions to dismiss. But before we start reaching any conclusions as to whether the tide has changed in the long war in excessive fee cases an Iowa court in Rodriguez v. Hy-Vee, Inc. has applied the recent appellate case law and come to mixed conclusions on familiar claims of excessive investment and recordkeeping fees.

Source: Euclidspecialty.com, November 2022

Goldman Sachs Successful in Getting 401k Fee Class Action Dismissed

A New York district court recently summarily dismissed, with 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 under ERISA by (1) failing to adopt an Investment Policy Statement, and (2) making decisions regarding the choice to remove or retain certain underperforming investment options based on their self-interest.

Source: Erisalitigationadvisor.com, November 2022

403b Plan Fiduciaries Fend Off Excessive Fee Claims

Yet another excessive fee suit has been dismissed for failing to make a "plausible" case. The plaintiff, in this case, is Kaila Gonzalez, a participant in the Northwell Health 403b Plan, who filed suit against Northwell Health, Inc., the Northwell Health 403b Plan Committee, and 10 other unidentified Plan fiduciaries. She alleged that the defendants here allowed the Plan to be charged excessive recordkeeping fees and imprudently retained certain investment options in the Plan's investment menu in violation of ERISA.

Source: Ntsa-net.org, October 2022

Yale 403b Plaintiffs Move Ahead to Jury Trial

Plaintiffs in one of the first university 403b suits to be filed will get their day in court. The suit against Yale University was one of the first to be filed in this area by Schlichter Bogard & Denton LLP in August 2016. As has been the case with most in this genre, it alleged that employees paid excessive recordkeeping fees in addition to selecting and imprudently retaining funds which the plaintiffs claim have historically underperformed for years.

Source: Napa-net.org, October 2022

Federal Court Orders Company and Its Owner to Repay 401k Plan

A federal court in Illinois has found David Rine and Julieta Mitra, president and owner, respectively, of Home Bound Healthcare, in default after they failed to respond to a complaint the Department of Labor filed on March 31 concerning the company's 401k plan. The court ordered Rine, Mitra and the company to repay $85,402 to the company plan.

Source: Investmentnews.com, October 2022

Court Finds No ERISA Liability for Plan Provider Who Delivered Self-Interested Rollover Advice

A New York federal court recently held that a service provider for employer-sponsored retirement plans was not liable as a fiduciary under ERISA when it used participant information to encourage certain plan participants to roll over assets into its more expensive managed account program.

Source: Erisalitigationadvisor.com, October 2022

New ERISA Retirement Plan Court Cases Pending

ERISA class action lawsuits, alleging that plans have charged excessive fees or provided poorly performing investment selections in retirement plans, have continued in recent months. The U.S. Supreme Court's January 2022 ruling in Hughes v. Northwestern University has not stopped the deluge of these filings, even as summer rulings in the Sixth Circuit have potentially narrowed the pleading standards for these types of lawsuits.

Source: Hallbenefitslaw.com, October 2022

What DC Plan Sponsors Should Know About Recent Litigation Trends: Part 1

Callan reviewed 165 lawsuits filed against mid- to mega-sized defined contribution plans ($175 million to $10 billion-plus) between January 2019 and August 2022, to provide an analysis of trends in litigation centered on the fiduciary duties outlined in ERISA. For ERISA litigation, 2020 was a bumper year, with 73 new cases filed. After the U.S. Supreme Court agreed to hear Hughes v. Northwestern in September 2021, the rate of new lawsuits slowed. As a result, 2021 saw only 39 lawsuits. After the decision was issued in January 2022, the rate of litigation resumed. As of August 15, this year has seen 32 new lawsuits.

Source: Callan.com, October 2022

What DC Plan Sponsors Should Know About Recent Litigation Trends: Part 2

Callan reviewed 165 lawsuits filed against mid- to mega-sized DC plans ($175 million to $10 billion-plus) between January 2019 and August 2022, to study trends in DC plan litigation centered on the fiduciary duties outlined in ERISA. The first article on this topic outlined some major findings. This article discusses the four key themes identified in Callan's analysis of these suits.

Source: Callan.com, October 2022

Failure to Identify Sound Comparisons Sinks ERISA Fee, Investment Claims in Eighth Circuit

Plaintiffs must plead a "sound basis for comparison -- a meaningful benchmark" to sustain their claims of imprudent investment and excessive fee against a 401k plan, the federal appeals court in St. Louis has held, dismissing a class action lawsuit for breach of fiduciary duties under ERISA. The U.S. Courts of Appeals for the Sixth and Seventh Circuits reached similar conclusions in dismissing cases before them.

Source: Jacksonlewis.com, October 2022

Latest Excessive Fee Target is a MEP

Most of the claims we are familiar with (as was the plaintiffs' attorney), but there were some interesting nuances in the arguments in the latest excessive fee case, which happens to involve a multiple employer plan, or MEP.

Source: Napa-net.org, October 2022

Two More District Courts Reject ERISA Fee and Performance Claims as Insufficient

Two recent district court decisions add to the growing number of courts granting motions to dismiss putative ERISA class actions challenging defined contribution plan fees and investment performance. These decisions from the Eastern District of New York and the Eastern District of Wisconsin are the latest victories for defendants at the motion to dismiss stage in this arena and come on the heels of multiple similar decisions in the Sixth and Seventh Circuits.

Source: Erisapracticecenter.com, October 2022

ERISA Suit Brought Against Quanta Services

Two former employees of Quanta Services in late September brought a class action suit against the company under the Employee Retirement Income Security Act, alleging that Quanta had maintained underperforming and expensive investment options in its sponsored retirement plan. Quanta Services, an electrical power company, sponsored a retirement plan that covered 16,317 participants, with $1.21 billion in assets as of December 21, 2020, according to the lawsuit.

Source: Planadviser.com, October 2022

Stable Fund Focus in Another Excessive Fee Suit

The latest excessive fee suit targets "wildly excessive compensation," an allegedly imprudent stable value offering, and the unmonitored use of "float" income. More specifically, the participant-plaintiffs of Miami, Florida-based Lennar Corp. are raising issues with the recordkeeping/administrative fees paid by the plan, the prudence of retaining Prudential's stable value fund, and the use of float income by Prudential (the plan's recordkeeper).

Source: Napa-net.org, October 2022

Two District Courts in the Seventh Circuit Grapple with Pleading Standards in ERISA Excessive Fee Cases

In Baumeister v. Exelon and Coyer v. Univar Sols. USA Inc., two Illinois district courts became the first courts in the Seventh Circuit to rule on motions to dismiss ERISA fee and investment claims following the Seventh Circuit's ruling in Albert v. Oshkosh, which affirmed the dismissal of similar ERISA claims. In a familiar slate of allegations, plaintiffs in both cases claimed that plan fiduciaries breached their fiduciary duties under ERISA by permitting their respective plans to pay excessive recordkeeping fees.

Source: Erisapracticecenter.com, October 2022

Fiduciary Status for Rollovers Not a Given and New Developments in Uses of Plan-Related Data Under ERISA

A September 27, 2022, decision by the Southern District of New York addresses several key theories recently advanced by the plaintiffs' bar in ERISA-based lawsuits against plan service providers. The Court also rejected fiduciary liability claims concerning alleged uses of plan information available to the Provider in its plan service provider role. The decision includes a reasoned analysis of the DOL's "shifting perspective" on defining investment advice fiduciaries under ERISA.

Source: Groom.com, October 2022

Searching for Solutions to Participant Account Theft When the Recordkeeper Disclaims Liability

Most of us have heard that a plan participant in the Colgate-Palmolive 401k plan suffered a cyber theft of her entire account balance, and sued the plan fiduciaries, the recordkeeper, and the bank custodian, all three of which are disclaiming fiduciary liability. There has to be a better answer than saying "I’m sorry" to a plan participant who has lost his entire account balance. This article explores these issues after a summary of the case and the positions of each defendant in their respective motions to dismiss.

Source: Euclidspecialty.com, October 2022

Eighth Circuit Holds Principal Did Not Breach Its Fiduciary Duty to 401k Plan Participants

The U.S. Court of Appeals for the Eighth Circuit recently affirmed a District Court's finding that Principal Life Insurance Company did not breach its fiduciary duties regarding its stable value contract for 401k plans.

Source: Erisalitigationadvisor.com, October 2022

Home Depot Victorious in ERISA Suit

A federal judge for the U.S. District Court for the Northern District of Georgia ruled in Home Depot's favor in an ERISA lawsuit last Friday. Plaintiffs Jaime Pizarro and Craig Smith brought the class action lawsuit in April 2018. They alleged that Home Depot offered imprudent investment options for their retirement plans and failed to monitor their performance in violation of ERISA over a class period beginning in April 2012.

Source: Planadviser.com, October 2022

TIAA Prevails in Rollover Recommendation Suit

A case involving allegations of a fiduciary breach related to a rollover recommendation provides some interesting perspectives on several operational issues. The variety of claims notwithstanding, Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York said it was "predicated in large measure on the Court finding that Defendants were not ERISA fiduciaries during the relevant timeframe."

Source: Napa-net.org, October 2022

Rash of Recent Lawsuits Focus on BlackRock Indexed Target-Date Options: Even Low-Cost Funds Are Being Attacked

Over the past several weeks, a single law firm, Miller Shah, LLP, has filed nearly a dozen lawsuits against fiduciaries of defined contribution plans that offer the BlackRock LifePath Index target date funds. The cases represent a shift in approach relative to earlier waves of ERISA litigation.

Source: Truckerhuss.com, October 2022

ERISA Self-Dealing Lawsuit Targets Wells Fargo and Ex-CEO Sloan

Plaintiffs have brought an Employee Retirement Income Security Act lawsuit seeking class certification against Wells Fargo, former CEO Tim Sloan, GreatBanc Trust Company, and the employee benefits review committee for alleged breaches of fiduciary duty to participants saving for retirement in the Wells Fargo 401k and employee stock ownership plans. The lawsuit, filed in the U.S. District Court for the District of Minnesota, alleges that Wells Fargo 401k plan fiduciaries engaged in "corporate self-dealing at the expense of the retirement savings of company employees."

Source: Plansponsor.com, October 2022

New Wave of ERISA Class Actions Accuse Fiduciaries Of 'Imprudently' Using Low-Fee, High-Rated Funds, Like Blackrock TDFs

Retirement plan sponsors are fake fiduciaries if they offer cheap, highly rated funds from premium brands in 401k plans without factoring in fund performance, according to a fresh wave of ERISA class action cases. Most of the 11 outstanding class actions allege that plan sponsors chose BlackRock LifePath target-date funds as their default 401k option simply because they had the superficial markings of a fiduciary process rather than engaging in an authentic one.

Source: Riabiz.com, September 2022

Seventh Circuit Helps Clarify New Pleading Standards for 401k Fee Cases

A recent US Court of Appeals for the Seventh Circuit case supplies answers to many questions left open in 401k fee litigation cases after the US Supreme Court's ruling earlier this year in Hughes v. Northwestern University. Specifically, to survive a motion to dismiss in the Seventh Circuit, the recent ruling in Albert v. Oshkosh Corp. reiterated that plaintiffs must allege both high fees and substandard services or performance in comparison to other similar 401k plans.

Source: Mwe.com, September 2022

Wells Fargo Facing Class Action Over 401k Stock Purchases

The San Francisco-based bank thought it was in the clear when it agreed to pay $145 million earlier this month to resolve charges that it overpaid for company stock in its employees' retirement plan. Unfortunately for Wells Fargo, three of those plan participants are launching a class-action suit against it, opening the door for even more cases.

Source: Investmentnews.com, September 2022

Costco ERISA Suit Ends in $5.1 Million Deal

A Wisconsin federal judge approved a $5.1 million settlement of a class action lawsuit against Costco concerning its 401k plan. Costco Wholesale Corp.'s retirement plan participants alleged that the company violated ERISA. An independent fiduciary, Fiduciary Counselors, approved the settlement, which represents an amount that is about 16% of the allegedly excessive fees that Costco charged plan participants.

Source: Hallbenefitslaw.com, September 2022

Business Owners Owe $2M+ in DOL Fiduciary Breach Case

Investing your company's retirement plan funds heavily in another company you have significant ties to is a no-no for a plan fiduciary. The fiduciaries of an international design firm in Moorestown, N.J. must pay more than $2 million to restore mismanaged assets to the company's retirement plan and in penalties after the DOL agreed to a settlement last Friday following an investigation and litigation.

Source: 401kspecialistmag.com, September 2022

Wake Forest University Retirement Plan Lawsuit Will Proceed

A federal judge has allowed an ERISA lawsuit to proceed. Defendants previously alleged that the 403b university plan was mismanaged by plan fiduciaries because it was filled with excessive-fee investments, that the plan fiduciaries misused revenue sharing to pay for administrative expenses, and that they failed to conduct periodic bids to the market to ensure that the recordkeeping and administrative costs remained competitive.

Source: Plansponsor.com, September 2022

Seventh Circuit Affirms Dismissal of Excessive Fee Claims

The Seventh Circuit has affirmed a trial court's dismissal of a participant's ERISA fiduciary claims against a 401k plan. The trial court dismissed the suit, observing that the participant had failed to allege that the fees were excessive in relation to the services provided or that a lower-cost alternative would have provided comparable services.

Source: Thomsonreuters.com, September 2022

Three Defendants Move to Dismiss Cybersecurity ERISA Suit

The Colgate-Palmolive employee relations committee, plan recordkeeper Alight Solutions, and custodian Bank of New York Mellon Corporation have all filed to dismiss an ERISA lawsuit brought by Paula Disberry, an employee of Colgate-Palmolive from 1993 to 2004. The defendants are accused of ignoring several red flags, resulting in over $750,000 being stolen from a retirement account.

Source: Planadviser.com, September 2022

Cruise Line Docked with Excessive Fee Suit

The plan size is somewhat smaller, and the plaintiff's law firm is relatively unknown in these matters, but the claims are familiar. The suit claimed that based on reasonable inferences from the facts set forth in this complaint, during the Class Period Defendants failed to have a proper system of review in place to ensure that participants in the plan were being charged appropriate and reasonable fees for each of the plan's investment options.

Source: Napa-net.org, September 2022

Three 401k Excessive Fee Suits Settle

The pace of excessive fee settlements seems to be accelerating, but the size of those same settlements seems to be declining. Last week three of them -- in different courts, filed at different times, but with similar allegations -- announced that the parties had come to terms.

Source: Napa-net.org, September 2022

Goldman Sachs Sacks 401k Excessive Fee Suit

Another excessive fee suit, this one involving proprietary funds, has been decided in favor of the plan fiduciaries. The suit alleged that the Goldman Sachs defendants "...retained these proprietary funds despite persistent underperformance and steep asset declines, adversely affecting participant balances while allowing Goldman Sachs to continue to draw fees and stem the consequences of losing one of the largest investors in the funds -- the Plan."

Source: Napa-net.org, September 2022

ERISA Litigation: Seventh Circuit Confirms DOL's Broad Subpoena Power

In Walsh v. Alight Solutions, LLC, the Seventh Circuit affirmed a district court order requiring Alight Solutions to produce documents in response to a DOL subpoena, confirming that the DOL has broad authority to issue subpoenas to investigate possible ERISA violations, even against non-fiduciaries.

Source: Faegredrinker.com, September 2022

Janus Henderson Sued for Allegedly Favoring Its Own Funds in Its Retirement Plan

Asset manager Janus Henderson is being sued by one of its retirement plan participants, who alleges that the company breached its fiduciary duty by loading its 401k plan with poorly performing proprietary funds burdened by high fees.

Source: Planadviser.com, September 2022

DOL Seeks Dismissal Of Cryptocurrency Guidance Lawsuit

A "meritless" lawsuit seeking to vacate the Department of Labor's cryptocurrency guidance for 401k plan fiduciaries should be dismissed, the agency said in a court filing. ForUsAll Inc., a 401k plan administrator that offers cryptocurrency to participants through a self-directed brokerage window, filed a lawsuit in June in U.S. District Court in Washington, alleging that the Labor Department's guidance is "arbitrary and capricious" and violated the Administrative Procedure Act.

Source: Pionline.com, September 2022

DOL Pushes Back on Cryptocurrency Suit

Having been sued for issuing its Compliance Assistance Release on cryptocurrency by cryptocurrency recordkeeping platform provider ForUsAll, the Labor Department is pushing back. The DOL's motion to dismiss the suit -- filed in the U.S. District Court for the District of Columbia -- pushed back on the claims made by ForUsAll on several fronts.

Source: Napa-net.org, September 2022

In ERISA Excessive Fee Cases, the Pendulum May Be Swinging Back in Favor of Plan Sponsors

The Oshkosh decision appears to create a favorable precedent for plan sponsors in the 7th Circuit since it narrowly applies the holding in Hughes. From the 6th and 7th Circuit, it appears that allegations have to compare the fees being charged with the quality and/or type of services being provided. Plan sponsors should review their investment lineup, compare investments under this standard, and maintain minutes of the deliberation process. Having a process-driven policy should mitigate fiduciary risk. Plan sponsors should also review their service agreements with their recordkeepers to fully understand how recordkeepers are compensated.

Source: Foxrothschild.com, September 2022

How Should Courts Analyze Arbitration Clauses in ERISA Plans?

The validity of arbitration clauses should be considered by comparing the legitimate rationales for their inclusion in plans against the harm to the private attorney general model they engender, rather than by simply considering whether such clauses are legal when analyzed under traditional doctrines developed in the private contracting model.

Source: Bostonerisalaw.com, September 2022

Proprietary Funds Draw Another 401k Excessive Fee Suit

A new suit claims that the decision to retain proprietary funds in the 401k was "polluted by self-interest," driven by a "blind preference" and that "defendants' favoritism has led to the payment of excessive investment management fees." This time the plaintiff is bringing suit against the fiduciaries (and those that appointed them) of the Janus 401k and Employee Stock Ownership Plan.

Source: Napa-net.org, September 2022

Third Circuit Backs J&J in Stock-Drop Appeal

The Third U.S. Circuit Court of Appeals has issued a new ruling in an ERISA stock-drop lawsuit targeting Johnson & Johnson, affirming the dismissal of the lawsuit as ordered by a district court in May 2020. The new ruling emphasizes that a stock-drop plaintiff must do more than allege a general economic theory of why earlier disclosure of a financial issue would have been preferable.

Source: Planadviser.com, September 2022

Judge Rejects Chamber's Commentary in ERISA Suit

The U.S. District Court for the Eastern District of Michigan has issued a new ruling in an ERISA lawsuit targeting the automotive components and supply business GKN North American Services Inc. The court rejects the defense's motion to dismiss the case but denies the U.S. Chamber of Commerce's bid to submit an amicus brief in the proceedings.

Source: Planadviser.com, September 2022

Seventh Circuit Provides Hope for Fiduciaries Defending Plan Fee Litigation

The Seventh Circuit recently provided a ray of sunshine in what has largely been a gloomy stretch for plan sponsors and fiduciaries defending ERISA breach of fiduciary duty claims based on allegedly excessive investment and administrative fees and investment underperformance. In this particular case, Oshkosh emerged victorious with the Seventh Circuit affirming the dismissal of claims that it mismanaged its 401k plan by paying excessive recordkeeping fees, failed to ensure investment options were prudent, and unreasonably maintained high-cost investment advisors.

Source: Erisapracticecenter.com, September 2022

Seventh Circuit Ruling Sheds Light Into the post-Hughes 401k Litigation Era

Since the Supreme Court's January ruling in Hughes v. Northwestern University, circuit courts throughout the country have issued varying rulings regarding 401k fee litigation cases. These include the Ninth Circuit in Trader Joe's Co. and Salesforce.com, Inc., and the Sixth Circuit in CommonSpirit Health, Inc. and TriHealth, Inc. Most recently, the Seventh Circuit has weighed in, affirming the dismissal of a 401k fee litigation in Albert v. Oshkosh Corporation.

Source: Erisalitigationadvisor.com, September 2022

Two Losses for Pension Plan Participants Challenging Investment Fees

In two recent cases, 401k plan fiduciaries defeated claims by participants that they breached their duties under ERISA with respect to investment fees.

Source: Yourerisawatch.com, September 2022

Fiduciary Lessons From Recent Litigation

The Supreme Court's Hughes v. Northwestern University holding has already revealed its expected impacts: (1) retirement plan fee lawsuits are more likely to survive a motion to dismiss; and, as a result (2) retirement litigation continues to accelerate. A recent collection of litigation activity provides another opportunity for plan fiduciaries to identify helpful protective steps and best practices.

Source: Qualifiedplanadvisors.com, September 2022

Low-Cost Index Funds in the Crosshairs of New 401k Lawsuits

A series of new lawsuits demonstrate that plan fiduciaries' selection of any fund may be at risk for fiduciary breach claims, having a robust system of plan governance in place can make a company's 401k plan a less attractive target for plaintiffs' lawyers and provides necessary defenses should litigation arise. It is also very likely that compliance with ERISA Section 404(c) will be an important defense in these cases.

Source: Hklaw.com, September 2022

BlackRock 401k Suits Pressure DOL to Act

At least 11 companies, including Booz Allen Hamilton Inc., Citigroup Inc., and Microsoft Corp., have been named in a spate of almost identical lawsuits going after a target-date index suite operated by BlackRock Inc. This surge in new lawsuits challenging workplace retirement plans over the set-it-and-forget-it funds they default investors into is renewing calls from industry critics who say the US Labor Department should be doing more to protect 401k savers.

Source: Bloomberglaw.com, September 2022

Plaintiffs Say 401k Plan Omitted Target-Date Funds Among Problems

The plaintiffs claim that the defendants "flagrantly" breached fiduciary duties owed to the plan and plan participants by mismanaging the plan's recordkeeping fees and investment options. In addition, the plaintiffs claim in the complaint that the TTEC 401k plan was administered during the class period without "crucial" protocol, namely, an investment policy statement, and did not include target-date funds in the plan's investment menu until "late" 2019 when five Vanguard options were added.

Source: Planadviser.com, September 2022

District Court Rejects Cross-Selling Claims in Mixed ERISA Ruling

Much of the ruling sides with plaintiffs and permits the case to move to discovery, but the defendants successfully defeat claims related to cross-selling and data-sharing among providers.

Source: Planadviser.com, September 2022

Split Decision for 401k Excessive Fee Suit

Auto parts maker GKN North America Services Inc. managed to fend off some, but not all, claims in an excessive fee suit involving its use of Prudential's GoalMaker product.

Source: Napa-net.org, September 2022


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