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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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Supreme Court Will Again Review the Pleading Standard for Retirement Plan "Stock Drop" Claims

Abstract: The justices will review the Second Circuit's unexpected holding that a complaint, which alleged that plan fiduciaries violated ERISA by failing to disclose information about overvalued employer stock held in a 401k plan, satisfied the high "more harm than good" pleading standard enunciated in Fifth Third Bancorp v. Dudenhoeffer. If upheld, this ruling -- which runs contrary to the recent trend in employer stock drop cases -- likely would lead to an increase in filings of such cases and in the number of such cases that survive early motions to dismiss.

Source: Eversheds-Sutherland.com, June 2019

Supreme Court Will Again Review the Pleading Standard for Retirement Plan "Stock Drop" Claims

Abstract: The Supreme Court granted certiorari in a case from the 9th Circuit Court of Appeals involving the statute of limitations applicable to claims under ERISA. The issue to be decided by the Supreme Court is, what does it mean for a plan participant to have "actual knowledge" of a potential claim to start the running of the statute of limitations?

Source: Blankromeworkplace.com, June 2019

Ninth Circuit Rules That a Domestic Partner Under California State Law Was a Spouse for an ERISA Plan

Abstract: In an unpublished decision dated May 16, 2019, the Ninth Circuit held that a plan administrator abused its discretion by denying surviving spouse benefits under an ERISA retirement benefit plan to a participant's domestic partner.

Source: Seyfarth.com, June 2019

Plan's Investment in Flailing SunEdison Stock Did Not Violate ERISA

Abstract: A U.S. appeals court on Tuesday tossed out claims that a former SunEdison Inc subsidiary violated federal law by failing to dump the renewable energy company's stock from an employee retirement plan before it declared bankruptcy.

Source: Reuters.com, June 2019

IBM's Surprise Loss in 401k Stock Fight Heads to Supreme Court

Abstract: IBM convinced the U.S. Supreme Court to wade into a fight over IBM stock in the company's 401k plan. The justices agreed June 3rd to review a surprise decision from the U.S. Court of Appeals for the Second Circuit that allowed employees participating in the company's 401k retirement plan to move forward with a proposed class action lawsuit they filed in 2015 after IBM's stock dropped by seven percent.

Source: Bloomberglaw.com, June 2019

Excessive Fee Suit Appeal Runs Out of Time

Abstract: There's that old caution about being a day late, and a dollar short -- well, the plaintiffs in an excessive fee suit were two days late -- and missed a key date. Judge Collyer noted that the plaintiffs "...filed too late to comply with Federal Rule of Civil Procedure 59(e), which governs motions to amend or alter a judgment."

Source: Ntsa-net.org, June 2019

Supreme Court to Hear 401k Stock-Drop Case

Abstract: The Supreme Court accepted a 401k lawsuit Monday that could reframe how employers think about company stock in their retirement plans. Plaintiffs in the case, Retirement Plans Committee of IBM v. Larry W. Jander, allege that plan fiduciaries acted imprudently by continuing to offer IBM stock as an investment option to retirement plan participants despite knowledge of "undisclosed troubles" relating to the company's microelectronics business.

Source: Investmentnews.com (registration may be required), June 2019

Can Employees Release ERISA Fiduciary Breach Claims?

Abstract: Plan fiduciaries looking to avoid protracted court cases filed by their plan participants are trying to develop the best fiduciary practices. They are also considering other options to control or restrict litigation, including trying to require mandatory arbitration of ERISA claims, seeking to designate a specific court to hear cases, and setting shorter periods to file claims for benefits in their plan documents. The courts are still trying to define the extent to which there are limits on these practices. However, a recent court case highlights an additional option, obtaining releases from terminating employees that cover ERISA fiduciary breach claims.

Source: Cohenbuckmann.com, May 2019

An ERISA Litigation Conversation With Jerry Schlichter

Abstract: Jerry Schlichter's firm has remained highly active in the space, representing a variety of classes of plaintiffs suing their employers for alleged mismanagement of retirement plan assets. In this interview, Schlichter reflected on changes he has seen in the industry over the last five years. In his estimation, a lot of good has come from the significant amount of litigation that has occurred under ERISA. At the very least, he said, many participants in defined contribution (DC) retirement plans today pay lower fees for investments and recordkeeping.

Source: Plansponsor.com, May 2019

Law Professors Ask SCOTUS to Expand Court Choice in ERISA Suits

Abstract: Eleven law professors called on the U.S. Supreme Court to rule that companies can't unilaterally limit the courts in which workers can sue over their health and retirement benefits. The case asks whether benefit plans governed by ERISA can force lawsuits over plan benefits into the company's preferred court. These plan provisions -- called forum selection clauses -- violate the statute's policy of giving benefit plan participants "ready access to the Federal courts," the professors said in a May 28 brief filed by Sandals & Associates PC.

Source: Bloomberglaw.com, May 2019

Supreme Court Could Soon Consider Several ERISA Cases

Abstract: Marcia Wagner, founder and managing partner of the Wagner Law Group, recently offered PLANADVISER an overview of the current litigation landscape, pointing out that writs of certiorari have been filed with the U.S. Supreme Court in four cases involving DC retirement plans. The cases include examples of "stock drop" litigation, litigation about the burden of proof to establish loss, a case that tests the "actual knowledge" standard for statute of limitations purposes, and a case that examines pleading standards under ERISA.

Source: Planadviser.com, May 2019

Court Rejects Attempt to Certify Class Against Third-Party Plan Administrator Under ERISA

Abstract: ERISA claims can potentially involve significant amounts in controversy, and in an effort to broaden the pool of potential defendants, ERISA plaintiffs are often fond of arguing that the Supreme Court's Harris Trust decision makes a party's status as an ERISA fiduciary or nonfiduciary irrelevant in determining liability under ERISA. A recent case provides a reminder that fiduciary status can and does still matter and may be a defendant's ticket out of an ERISA class action.

Source: Lexology.com, May 2019

Does Your Retirement Plan Incorporate State Law Into the Plan? Check Your Spousal Benefit Obligations

Abstract: A recent, unpublished Ninth Circuit court opinion held that the Plan's choice of California law required the plan to provide spousal survivor rights to registered domestic partners, because California law affords registered domestic partners the same legal status as spouses, and because doing so did not conflict with any provision of the plan document, ERISA or the Internal Revenue Code. In light of the opinion, plan sponsors should examine their plan documents to determine whether or not choice of law provisions carry state domestic partner rights into their plan document, and if this is the case, should consult with counsel as to how that might impact their plan distribution and plan loan approval procedures, and QDRO procedures as well.

Source: Eforerisa.wordpress.com, May 2019

Lessons From the University of Pennsylvania Appeal

Abstract: Diligent fiduciaries can be sued even when they tried to do everything right and followed a prudent process. It is in their interest to have the case dismissed at the earliest possible stage to avoid a lengthy and expensive trial. And we have had dismissals in some recent cases, including a district court decision involving the University of Pennsylvania and decisions involving Georgetown and Northwestern University.

Source: Cohenbuckmann.com, May 2019

Small 401k Plan Faces Excessive Fee Lawsuit

Abstract: A participant in the Greystar 401(k) Plan has filed a proposed class action lawsuit against the property management firm alleging it breached its fiduciary duties under ERISA by allowing excessive administrative and investment fees to be charged. The less than $250 million plan is accused of failing to employ a prudent and loyal process in evaluating investment and administrative fees.

Source: Plansponsor.com, May 2019

Participants Failed to Show That Fund Manager's Discretion Made It a Fiduciary

Abstract: In this class action, a 401k plan participant sued an investment fund manager, claiming that the manager is an ERISA fiduciary that breached its duties by setting a low crediting rate for its stable-value fund to increase its own compensation. The manager denied that it was a fiduciary and argued that the relief requested for the alleged prohibited transaction was unavailable under ERISA. The trial court ruled in favor of the manager and dismissed the claims. Upholding the ruling on appeal, the Tenth Circuit explained that a service provider is not a fiduciary when merely following contractual terms set in arm's-length negotiations, and that unilateral action regarding plan management or assets does not trigger fiduciary status if the plan or participants have a meaningful opportunity to reject that action.

Source: Thomsonreuters.com, May 2019

Third Circuit Resuscitates Claims Against University 403b Plan Fiduciaries

Abstract: Over the past several years, the ERISA plaintiffs' bar has targeted university-sponsored 403b plans, arguing that the plan fiduciaries breached their fiduciary duties and engaged in prohibited transactions in connection with offering certain investment options and the administrative fees associated with such plans. The Third Circuit recently issued the first circuit court decision addressing these claims and, in doing so, issued a split decision that breathed new life into a case involving a 403b plan sponsored by the University of Pennsylvania.

Source: Erisapracticecenter.com, May 2019

BB&T Excessive Fee Suit Settlement Approved

Abstract: A $24 million settlement -- including an $8 million attorneys' fee for plaintiffs' counsel -- has been approved in an excessive fee suit. Judge Catherine C. Eagles of the U.S. District Court for the Middle District of North Carolina signed the final approval order in the case involving BB&T and a potential class of as many as 67,000 current and former workers.

Source: Napa-net.org, May 2019

Excessive Fee Suit Remand Triggers Review in Fiduciary Breach Case

Abstract: The successful appeal of an excessive fee suit dismissal has triggered a review of another decision. The suit, involving the University of Pennsylvania Matching Plan, was given new life following an appellate court's remand following dismissal by the district court.

Source: Napa-net.org, May 2019

Plaintiffs Get Reprieve in Excessive Fee Case

Abstract: The plaintiffs in an excessive fee case have managed to keep their case alive on appeal, in a case that also has an intriguing dissenting opinion. The suit was not only one of the first of the university 403b excessive fee suits to be filed, the district court decision, in favor of the fiduciary defendants for the University of Pennsylvania Matching Plan, had been cited in a number of these cases, including those that had been settled.

Source: Ntsa-net.org, May 2019

City National Liable for Self-dealing in 401k Plan - 9th Circuit

Abstract: A federal appeals court has affirmed the bulk of a $7.4 million damages award won by the U.S. Department of Labor against Los Angeles-based City National Corp for allegedly charging excessive fees for services provided to its profit-sharing plan.

Source: Reuters.com, April 2019

Schlichter Strikes Another Excessive Fee Settlement

Abstract: After extensive litigation, lengthy discovery, and protracted arms-length negotiations with the assistance of a national mediator, the parties in an excessive fee suit have announced the terms of their settlement agreement and once again, it's about more than lost money. Specifically, Vanderbilt University has agreed to pay a sum of $14,500,000 into a Settlement Fund, as well as "certain additional relief."

Source: Ntsa-net.org, April 2019

Settlement in Vanderbilt 403b Case Raises Plan Data Questions

Abstract: The extent to which individuals should have control over their personal information and the data they generate in the on-line world has seized center stage in our national conversation. A new proposed settlement in Cassell v. Vanderbilt Univ. highlights the importance of these issues in the retirement plan marketplace.

Source: Groom.com, April 2019

Fee Litigation 2018 Round-Up: Recent Developments and Best Practices to Mitigate Risk

Abstract: The enhanced role of 401k and 403b plans has put increased pressure on plan performance and, since 2006, has led to multiple waves of ERISA litigation challenging the fees and the selection of mutual fund and other investments offered in these plans. This article explores important fee litigation developments from late 2017 forward.

Source: Jacksonlewis.com, April 2019

Vanderbilt 403b Plan Suit Settlement Includes Non-Monetary Relief

Abstract: The parties in a lawsuit against Vanderbilt University and its 403b plan fiduciaries have filed a motion for preliminary approval of a settlement agreement. According to the settlement agreement, the Vanderbilt defendants will deposit $14,500,000 in an interest-bearing account to be used to pay the recoveries to class members, as well as class counsel's attorneys' fees and expenses, administrative expenses of the settlement, and the class representatives' compensation as described in the settlement. Vanderbilt will also conduct a request for proposals for a new recordkeeper, among other things.

Source: Planadviser.com, April 2019

Tussey v. ABB Closes With $55 Million Settlement; Complex Case Changed Views of Fees, Fiduciary Duty

Abstract: Tussey v. ABB, after winding through earlier settlement awards to the plaintiffs, two appellate hearings in the 8th Circuit, and double rejections by the U.S. Supreme Court, ultimately will be remembered both as a case about plan sponsors' fiduciary duties and one that defined how to quantify participant losses from related breaches. As a result, the retirement plan industry has moved in a unified way to press for reductions in service provider fees, opt for lower-cost share classes, and insist upon greater transparency for recordkeeping and asset management costs.

Source: Blr.com, April 2019

District Court Again Allows Safeway ERISA Lawsuits to Proceed

Abstract: The district court rules Safeway's dismissal motions conflate the principle that investment decisions should not be evaluated based on hindsight with the need to use historic information available at the time the decision was made.

Source: Planadviser.com, April 2019

Boeing Faces ERISA Lawsuit Over 737 MAX Issues

Abstract: Participants in a Boeing retirement plan have filed an ERISA lawsuit related to the Boeing 737 MAX airplane issues. The complaint says Boeing should have warned defined contribution plan participant invested in the company's stock that issues the company was having caused the stock price to be inflated.

Source: Planadviser.com, April 2019

401k Lawsuit Over Vanguard Fees Ends With $23.7 Million Settlement

Abstract: Health insurer Anthem, sued by employees who claimed its 401k retirement plan had excessive fees even though its provider was the Vanguard Group, has settled the case for $23.7 million.

Source: Investmentnews.com (registration may be required), April 2019

Pay to Play Lawsuits -- Issues for Plan Sponsors

Abstract: After briefly reviewing current "pay to play" litigation, the article takes up the question, "do these arrangements pose an ERISA prudence challenge for sponsor fiduciaries?" Bottom line: as with other 401k fee litigation, the key question is likely to be, is the plan overpaying for these services? And the answer to that question is likely to turn on the issue of fair market value and the cost of alternative solutions.

Source: Octoberthree.com, April 2019

Are Class-Action Waivers the Future of ERISA Plans?

Abstract: Thanks to a recent ruling by the Supreme Court, employers can now be confident that arbitration agreements and class action waivers are enforceable and do not violate the National Labor Relations Act. This debate started in 2011 with AT&T Mobility Servs. v. Concepcion, which held that arbitration provisions were enforceable when included in consumer contracts. It further held that these agreements barred participation in class action litigation. Employers began to adopt similar agreements to protect their plans against significant litigation.

Source: Hallbenefitslaw.com, April 2019

Service Provider Managing Stable-Value Fund Was Not a Functional Fiduciary

Abstract: In litigation involving a service provider's management of a stable-value fund that was included as an investment option for an employer retirement plan, the US Court of Appeals for the Tenth Circuit affirmed the district court's grant of summary judgment in favor of the service provider. The Tenth Circuit held that the service provider was not a fiduciary under the Employee Retirement Income Security Act of 1974 (ERISA), and therefore could not be held liable for alleged breaches of fiduciary duty. The court also concluded that the participant could not recover on his alternative claim alleging the service provider was a non-fiduciary party in interest that participated in a prohibited transaction because he failed to show the relief he sought was equitable under ERISA.

Source: Westlaw.com, April 2019

Court Orders Briefing in George Washington University ERISA Suit

Abstract: The question in the lawsuit, according to a federal judge, is whether the plaintiff has standing to sue, for one, because she signed a settlement agreement with the university, and also, the defendants claim, she has not proved harm in her challenges to investments used in the university's 403b plan.

Source: Plansponsor.com, April 2019

ERISA Fiduciary Breach Claims Against Smaller Plans Increase in 2018

Abstract: As plaintiffs' attorneys noticed the reductions in plan fees and the successful litigation on the part of large plans, they begin to use these negotiated reductions as evidence against smaller plans. These cases argue that, previously, fiduciaries had not been paying attention as plan fees crept out of control. There is now a clear pattern for ERISA litigation, making it profitable to pursue smaller plans.

Source: Hallbenefitslaw.com, April 2019

Oracle Granted Partial Summary Judgment in 401k Fees/Investment Option Case

Abstract: The US District Court for the District of Colorado granted partial summary judgment to 401k fiduciaries, holding that ERISA's six-year statute of repose barred some claims and rejecting challenges to the plan's fees.

Source: Employeebenefitsblog.com, April 2019

Tenth Circuit Upholds Great-West Stable Value Win in ERISA Case

Abstract: The U.S. Court of Appeals for the Tenth Circuit affirms a District Court's holding that Great-West Life & Annuity Insurance Co. was not a fiduciary with respect to its stable value fund, even though it announced the fund's credited rate quarterly.

Source: Hklaw.com, March 2019

Tenth Circuit Tosses Massive ERISA Fiduciary Suit

Abstract: A federal appeals court has affirmed summary judgment in a class action suit involving 270,000 plan participants across more than 13,000 plans. The suit was filed in 2015 by plaintiff John Teets, a participant in the Farmers' Rice Cooperative 401k Savings Plan, which had contracted with Great-West for recordkeeping, administrative and investment services.

Source: Napa-net.org, March 2019

Longest Running 401k Fee Lawsuit Ends in $55 Million Settlement

Abstract: Parties in the longest running 401k fee lawsuit have agreed to a $55 million settlement, bringing to near conclusion a 12-year case that's one of the best-known of its kind. The lawsuit, Tussey v. ABB, was among the initial tranche of lawsuits attorney Jerome Schlichter brought in 2006, alleging that employers had caused their employees to lose out on retirement savings due to overpaying for 401k plan services such as recordkeeping and investment management.

Source: Investmentnews.com (registration may be required), March 2019

Podcast: Attorney-Client Privilege in the Employee Benefit Plan Context

Abstract: Paul Hamburger, co-chair of Proskauer's Employee Benefits & Executive Compensation Group, and associate Joe Clark discuss how the attorney-client privilege rules apply in an employee benefit plan context. The attorney-client privilege allows for the free flow of information between an attorney and a client in order to insure that the client gets the best possible representation. We discuss the various specific rules that apply in the employee benefit plan context where information is often shared between attorneys and plan fiduciaries.

Source: Erisapracticecenter.com, March 2019

ERISA Plan Controversy - Rising Stakes for Those Unprepared

Abstract: In a presentation at McDermott's Employment and Employee Benefits Forum, Ted Becker and Chris Scheithauer explored the various ways that disgruntled employees file lawsuits with plaintiffs' lawyers. Lawsuits have been brought in cases alleging, imprudence in the management of plans, challenging fees, involving company stock, actuarial equivalence and more. They used recent cases such as, NYU, American Century Services and IBM, as examples of the various types of lawsuits and the important lessons employers can take away from them.

Source: Employeebenefitsblog.com, March 2019

Understanding the Importance of Recent 403b Erisa Settlements

Abstract: If the 403b excessive fee litigation continues along a trajectory similar to its 401k predecessors, then we can expect the recent 403b settlements to usher in a new volley of suits brought against institutions overseeing slightly smaller retirement plans than the billion-dollar-plus plans at issue in the first wave of 403b cases.

Source: Thompsoncoburn.com, March 2019

BlackRock Board Fights $100M ERISA Mismanagement Suit

Abstract: The BlackRock Retirement Savings Plan board urged a California federal judge Thursday to toss most of a putative class action accusing it of violating the Employee Retirement Income Security Act and costing participants over $100 million, arguing the board operated within the terms of its contracts. Plaintiffs Charles Baird and Lauren Slayton hit BlackRock Inc., its subsidiaries and board members, along with BlackRock's investment consultant Mercer Investment Counseling, with a sprawling, 134-page, 11 count amended complaint in August.

Source: Cohenmilstein.com, March 2019

Mixed Ruling in Oracle ERISA Suit Strongly Favors Defense

Abstract: Despite a setback for Oracle at the class certification stage, a new ruling out of a federal court in Colorado pushes back strongly against many -- but not all -- of the plaintiffs' claims.

Source: Planadviser.com, March 2019

MIT 401k Plan Participants Not Entitled to Jury Trial of ERISA Breach of Fiduciary Duty Claims

Abstract: The District of Massachusetts court struck the plaintiffs' jury-trial demand in their ERISA complaint for damages and equitable relief against 401k plan fiduciaries. The court followed the "great weight of authority" in ruling that there is no right to trial by jury in ERISA actions for breach of fiduciary duty.

Source: Mwe.com, March 2019

Appeals Court Rejects Disney 401k Participants' Fiduciary Breach Complaint

Abstract: A federal appeals court unanimously rejected a complaint by participants in a Walt Disney Co. 401k plan that fiduciaries violated their duties by offering the Sequoia Fund, a mutual fund that several years ago plummeted in net asset value.

Source: Pionline.com, March 2019

Respondeat Superior in the ERISA Context

Abstract: Respondeat superior is a doctrine that a party is responsible for (has vicarious liability for) acts of their agents. Respondeat superior claims in the ERISA context may be made in one of two ways. While there is no circuit split on this issue, there is a split of authority as to the manner in which these claims should be addressed. This article considers these rulings.

Source: Wagnerlawgroup.com, March 2019

Fiduciaries Get Final Win in Lawsuit Over Disney 401k Investment in Sequoia Fund

Abstract: In their second amended complaint, the plaintiffs argued that the Sequoia Fund purported to be a value fund, but increased investments in Valeant Pharmaceuticals created a "clear indicia of a growth stock," and did not meet the Sequoia Fund's purported investing criteria of seeking out value stocks.

Source: Planadviser.com, March 2019

Wong vs. Fidelity -- A Sign of the Times

Abstract: A class action complaint1 was filed by Andre Wong, et al, representing the T-Mobile USA, Inc. 401k Retirement Plan against Fidelity Management & Research and a number of its affiliates for self-dealing and a breach of fiduciary responsibility. This could produce unintended consequences of limiting investment choices to participants in the future.

Source: Chaoco.com, March 2019

Intel Asks U.S. Supreme Court to Rule on ERISA Breach Case

Abstract: Intel's investment policy committee asked the court to review litigation involving a participant in two Intel defined contribution plans. The participant alleged that plan managers violated their ERISA obligations by offering too many alternative investments in the plans' lineups and that the plans' disclosures of investment information were inadequate. The investment policy committee has argued that the participant missed the three-year deadline for filing ERISA claims.

Source: Pionline.com, March 2019

Second Circuit Reverses Dismissal of Stock Drop Complaint: Opens Door to Possible Plaintiff Claims

Abstract: The U.S. Second Circuit Court of Appeals overturned a lower court's dismissal of a "stock drop" case in a way that could add to the list of allegations participants might use to overcome employers' motions to dismiss these types of cases. Although this case involved an employee stock ownership plan, the holding could equally apply to a 401k plan that has company stock as a participant-directed investment option.

Source: Compliancedashboard.net, February 2019

Fidelity Charged With "Secret" Payment Scheme in Violation of ERISA

Abstract: A lawsuit contends that kickback payments Fidelity requires from investment funds bear no relationship to the cost or value of services provided and are a replacement for declining amounts of revenue sharing payments received by Fidelity as a result of the increasing use of passive mutual funds, institutional and R6 share classes of mutual funds and collective trusts.

Source: Plansponsor.com, February 2019

Parties in Anthem ERISA Fee Litigation Propose Settlement

Abstract: The parties in an excessive fee lawsuit filed against the committee that oversees the Anthem 401k plan have reached a settlement agreement. Fiduciary defendants were accused of allowing unreasonable expenses to be charged to participants for administration of the plan and of retaining high-cost and poor-performing investments.

Source: Planadviser.com, February 2019

The First Circuit's Putnam Decision: Where Does ERISA 401k/403b Litigation Go Now?

Abstract: The First Circuit Court of Appeals recently handed down its decision in Brotherston v. Putnam Investments, LLC. The First Circuit vacated the lower court's decision in which the court had dismissed the plaintiff's ERISA excessive fees/breach of fiduciary duty action. The First Circuit has laid down the gauntlet for plan sponsors, investment fiduciaries and ERISA attorneys.

Source: Iainsight.wordpress.com, February 2019

VP of HR Sued Over 401k Operational Error

Abstract: A proposed class action lawsuit in the Northern District of Illinois, involving a failure to follow the terms of a 401k plan, personally names the Vice President of Human Resources for Conagra Brands, Inc. Karlson v. Conagra Brands as a defendant, and, as it happens, the lead plaintiff is the former senior director of global benefits at the company. Other named defendants included the benefits administrative and appeals committee of the Conagra board, both of which committees included the named VP of Human Resources among its members.

Source: Eforerisa.wordpress.com, February 2019

Franklin Templeton Settles 401k Lawsuit for $14 Million

Abstract: Franklin Templeton Investments has agreed to pay roughly $14 million to settle a lawsuit alleging the firm profited at the expense of its employees by loading its 401k plan with in-house investments.

Source: Investmentnews.com (registration may be required), February 2019

403b Plan Participants Drop ERISA Lawsuit Against Long Island University

Abstract: Participants in a 403b plan run by Long Island University have dropped their ERISA lawsuit after having accused plan manager of having allowed excessive fees. The three-sentence notice, filed Feb. 8 without explanation in U.S. District Court in Brooklyn, concludes the case of Mulligan et al. vs. Long Island University et al. "with each party to bear its own fees and costs."

Source: Pionline.com, February 2019

Charles Schwab 401k Lawsuit Trimmed but Moves Forward

Abstract: Charles Schwab convinced a federal judge to dismiss all but one claim in a proposed class action targeting investments in its 401k plan.

Source: Bna.com, February 2019

Court Dismisses Exxon Mobil Stock Drop Suit

Abstract: After giving plaintiffs a second chance at offering alternative action Exxon could have taken, the court again found the suggested action was something plan fiduciaries could believe would do more harm than good.

Source: Planadviser.com, February 2019

Evaluating Judicial Dismissals of 401k/403b Fiduciary Breach Actions

Abstract: Recently, there have been a number of court decisions dismissing 401k/403b ERISA breach of fiduciary actions. The author writes, "I am still puzzled by some of the decisions, as the rationales cited by some of the courts seems to be inconsistent with long-standing ERISA precedent."

Source: Iainsight.wordpress.com, February 2019

ERISA Lawsuit Filed Over Managed Account Arrangement

Abstract: The complaint alleges that Stadion Money Management and Mutual of Omaha abused their managed account arrangement by putting their own interests ahead of participants.

Source: Planadviser.com, January 2019

Second Circuit Opens Potential ERISA Avenue for Plaintiffs in "Stock Drop" Lawsuits

Abstract: The United States Court of Appeals for the Second Circuit issued a rare procedural victory to "stock drop" plaintiffs. The Jander ruling is a notable development that has already and will likely continue to encourage further stock drop litigation, and could also require plan fiduciaries to consider difficult questions about disclosure as a way to potentially limit litigation exposure.

Source: Groom.com, January 2019

Georgetown University Defeats Retirement Plan Fee Litigation and "If a Cat Were a Dog, It Would Bark"

Abstract: The court dismissed most of the claims on the grounds that plaintiffs had not plead sufficient facts showing that they had individually suffered an injury. Because they challenged defined contribution plans, the plaintiffs had to plead facts showing how their individual plan accounts were harmed. In this case, the named plaintiffs had not invested in the challenged funds, or the challenged fund had actually outperformed other funds, or, in the case of the early withdrawal penalty from the annuity fund, the penalty had been properly disclosed and neither plaintiff had attempted to withdrawal funds; thereby suffering no injury.

Source: Employeebenefitsblog.com, January 2019

Litigation Concerns Continue to Hamper 401k Plan Innovation

Abstract: The percentage of employers citing the threat of lawsuits as a major factor hampering their innovation has tripled since last year. More than 60% of employers say the threat of lawsuits hampers their innovation; this level is up from 53% of respondents who said the same in a 2018 study. Among these respondents in the 2019 study, 12% said the threat of lawsuits is a “major factor,” compared to only 4% in 2018.

Source: Asppa.org, January 2019

American Century Wins 401k Lawsuit Over In-House Funds

Abstract: American Century Investments won a class-action lawsuit alleging the asset manager profited from its company 401k plan at the expense of employees by loading the retirement plan with in-house funds. Judge Greg Kays of the U.S. District Court for the Western District of Missouri found in favor of American Century on all counts, saying plaintiffs failed to prove that American Century had breached its fiduciary duty to plan participants.

Source: Investmentnews.com (registration may be required), January 2019

Putnam Asks Supreme Court to Weigh in on Fund Comparisons in ERISA Cases

Abstract: Putnam Investments has filed a petition for writ of certiorari with the U.S. Supreme Court asking it to settle questions in a case in which it was accused of engaging in self-dealing by including high-expense, underperforming proprietary funds in its own 401k plan.

Source: Planadviser.com, January 2019

Duke University 403b Plan Lawsuits Settlement Details Announced

Abstract: A case accusing fiduciaries of the Duke Faculty and Staff Retirement Plan of causing the plan to pay unreasonable and greatly excessive fees for recordkeeping, administrative, and investment services, and a second complaint -- this one focusing on revenue sharing it took but didn't deliver for distribution to plan participants -- have been combined for a settlement agreement. A settlement agreement was announced by counsel for both parties, but details of a settlement had not at that time been reported to the U.S. District Court.

Source: Planadviser.com, January 2019

Federal Courts Still Parsing Prudent Plan Administration

Abstract: Attorneys with Mayer Brown say there has been little consensus or direction from the federal courts (at least so far) as to what exactly constitutes prudent administration of tax-qualified benefit plans; this will remain a challenge in 2019 and beyond.

Source: Planadviser.com, January 2019

The Georgetown University 403b Decision and the Future of 403b Fiduciary Litigation

Abstract: The recent dismissal of the Georgetown University 403b excessive fees/breach of fiduciary action has led some to suggest that such actions are now over. A closer look at the Georgetown decision suggests that that opinion may be premature.

Source: Iainsight.wordpress.com, January 2019

Ninth Circuit Clarifies "Actual Knowledge" for ERISA's Statute of Limitations

Abstract: In the Ninth Circuit, ERISA's three-year statute of limitations begins when the plaintiff has actual knowledge of the "nature of the alleged breach." Furthermore, the Ninth Circuit rejected a "constructive knowledge" standard, meaning participants are not charged with knowledge of documents they were provided but did not actually read.

Source: Mwe.com, January 2019

Have 403b Lawsuits Hit a Wall? Fifth University Wins Dismissal

Abstract: Losses continue to mount for university employees suing their schools over allegedly excessive retirement-plan fees. Georgetown University became the fifth defendant to successfully beat back such claims in court. Roughly two dozen lawsuits against universities for imprudent management of their 403b plans, which are defined-contribution plans for nonprofits, have been filed since August 2016.

Source: Investmentnews.com (registration may be required), January 2019

ERISA Litigation Defendants Take Note: Burden of Proof Is Becoming More Weighty

Abstract: Many parties to ERISA litigation and arbitration pay lip service to the burden of proof, put on their respective cases and leave it to the trier of fact to decide which side deserves the victory. Burdens of proof have become increasingly important, however, as procedural and substantive issues become more complex, and judges often have less time to deal with the subtleties in ERISA litigation. Burdens of proof thus demand more attention.

Source: Erisa-employeebenefitslitigationblog.com, January 2019

Another University Wins 403b Suit

Abstract: While there have been roughly two dozen of these 403b university lawsuits filed since 2016, Georgetown is now the fifth university to prevail at trial. The bottom line seems to be that the defendants willing and able to go to trial stand a pretty good chance of success.However, that bar is not so low as to permit an easy summary judgment dismissal of the claims made.

Source: Napa-net.org, January 2019

Georgetown University 403b Plan Defeats ERISA Challenge

Abstract: In a colorfully worded opinion, the district court judge chides plaintiffs for failing to acknowledge basic facts about the way annuities work and their well-established role in 403b plans.

Source: Planadviser.com, January 2019

New Class Action Lawsuit Examines How a Common Definition of Compensation Was Applied

Abstract: A recent class action lawsuit emphasizes the importance of clarity in plan language, particularly the definition of compensation, a frequent source of errors. As most plan administrators are aware, what elements of pay are counted as compensation for various purposes of the plan can vary and change from time to time, particularly when payroll systems or vendors change or employers adopt different compensation designs. In this case, the plaintiff has asserted that the plan sponsor should have treated certain post-termination bonuses as benefitable compensation under the terms of the plan.

Source: Groom.com, January 2019

Nearly $100 Million in 401k Litigation Settlements Last Year

Abstract: While there were fewer 401k claims in 2018 than in prior years, settlements are up, amounting to approximately $90 million in the aggregate. There appears to be less appetite to incur substantial defense costs, driving the settlement rate up.

Source: Fiduciarygovernanceblog.com, January 2019

Transamerica Sued Over 401k Plan Investment Options

Abstract: Current and former participants in the Transamerica's 401k plan have sued the company and plan fiduciaries, alleging they breached their duties under ERISA by failing to remove underperforming proprietary investments. The defendants "saddled the plan's participants with substandard investment portfolios that were managed by a Transamerica affiliate," said the complaint.

Source: Pionline.com, January 2019

Watch These ERISA Cases in 2019

Abstract: A number of vexing issues facing ERISA practitioners came to a head in 2018 and are primed to be resolved in the coming year. This article examines the cases raising these issues, and the impact their resolution in the coming year will have on retirees and the retirement industry.

Source: Cohenmilstein.com, January 2019


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