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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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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, September 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, September 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

Arbitration of ERISA Claims Under the Microscope: Where are the Courts and Congress Headed?

We still have no final word from the courts on the enforceability of ERISA mandatory arbitration provisions, but plan sponsors can increase the chances that their mandatory arbitration policies will be upheld by reviewing the reasoning in recent cases. That's assuming that Congress doesn't act.

Source: Cohenbuckmann.com, August 2022

Participant Data Claims Dismissed in Excessive Fee Suit

ADP got something of a split decision in an excessive fee case with a federal judge allowing claims regarding high record-keeping fees and expensive investments to proceed but culling claims about the use of participant data. The suit was filed in mid-May 2020 in the U.S. District Court of the District of New Jersey against the fiduciaries of the $4.4 billion ADP TotalSource Retirement Savings Plan (including third-party investment consultant NFP Retirement) on behalf of participants in the MEP.

Source: Napa-net.org, August 2022

DOL Cybersecurity Investigations: The Trap Door to Endless Document Requests?

Parties involved in a DOL investigation often ask a simple question: how much information am I obligated to provide the DOL in response to an administrative subpoena? A recent decision, in the United States Court of Appeals for the Seventh Circuit, Walsh v. Alight Solutions, LLC, provides some guidance.

Source: Groom.com, August 2022

Second Circuit: Participant's 401k Plan Accounts Were Subject to Garnishment

In a dispute involving garnishment of funds in 401k plan accounts, the Court of Appeals for the Second Circuit held that the participant's accounts were subject to garnishment to enforce a restitution order resulting from the participant's criminal convictions.

Source: Westlaw.com, August 2022

Second Circuit Holds Government Can Garnish ERISA-Protected 401k Accounts

The Second Circuit first determined that the MVRA permits garnishment of funds otherwise protected by ERISA's anti-alienation provision. The Government may enforce restitution orders from criminal convictions using the practices and procedures for enforcement of a civil judgment under federal or state law as set forth in the Federal Debt Collection Procedures Act. While ERISA broadly protects retirement benefits from dissipation through payment to third parties -- its anti-alienation provision -- the MVRA permits courts to consider ERISA-protected assets when imposing criminal fines.

Source: Robertsdisability.com, August 2022

CUNA's 401k Latest Targeted in BlackRock TDF Suit

The law firm of Miller Shah LLP has targeted another plan they claim "appear[s] to have chased the low fees charged by the BlackRock TDFs without any consideration of their ability to generate return." This time it's the fiduciaries of the $865 million CUNA Mutual 401k Plan for Non-Represented Employees.

Source: Napa-net.org, August 2022

Appellate Court Backs DOL in Cybersecurity Subpoena

A federal appellate court says that the Labor Department is allowed to pursue its inquiry into the cybersecurity practices at a large recordkeeper.

Source: Asppa.org, August 2022

Schlichter Slammed (Again) in Empower's Win

"Having already limited Defendants' total recovery to fees and expenses after the start of trial and having further restricted that recovery to no more than $ 1.5 million, the Court finds no basis to further reduce the fee award." And with that, the United States District Court in Colorado affirmed the judgment against high-profile attorney Jerry Schlichter for $1.5 million for "reckless" fiduciary claims.

Source: 401kspecialistmag.com, August 2022

When Should Sanctions Be Imposed in ERISA Class Actions?

Sanctions are a rarely utilized tool to combat abusive litigation. This is because most high-profile defense firms rarely seek sanctions, as well as the fact that modern courts tolerate most lawsuits. But if you apply the sanctions standard of the Great-West case to many of the skyrocketing numbers of ERISA class actions being filed today, it is clear, says the author of this article, "that sanctions should be imposed in many of the recently filed cases."

Source: Euclidspecialty.com, August 2022

Judge Slams Plaintiffs' Attorneys With $1.5 Million Judgement for "Reckless" Suit

A federal judge has affirmed a $1.5 million judgment against Schlichter Bogard & Denton LLP and Schneider Wallace Cottrell Konecky LLP for their role in bringing a "reckless" excessive fee suit.

Source: Napa-net.org, August 2022

More TDF Underperformance ERISA Lawsuits Filed

This summer, plaintiffs represented by the increasingly active law firm Miller Shah LLP have filed a cluster of new ERISA lawsuits. The defendants in the cases include well-known national employers across the U.S., including Citigroup, Stanley Black & Decker, Booz Allen, Capital One, Wintrust, Cisco, and Genworth. The lawsuits all include nearly identical ERISA fiduciary breach allegations against the defendants, but these allegations stand in sharp contrast to the broader landscape of ERISA litigation.

Source: Planadviser.com, August 2022

Excessive Fee Suit Targets RK, Managed Account Fees

Another large 401k plan has been sued for a breach of fiduciary duty involving excessive recordkeeping fees and managed account services it says were worth nothing. This one has been filed in the US District Court for the Northern District of Illinois individually and as representative of a Class of Participants and Beneficiaries of the $1.5 billion Dover Corporation Retirement Savings Plan which, according to the suit, has some 18,331 participants.

Source: Napa-net.org, August 2022

Appellate Court Backs DOL in Cybersecurity Subpoena

A federal appellate court says that the DOL is allowed to pursue its inquiry into the cybersecurity practices at a large recordkeeper. Alight argued on appeal that the subpoena is unenforceable because the DOL lacks authority to investigate the company, or cybersecurity incidents generally. Alight also argued that the subpoena's demands were too indefinite and unduly burdensome and that the district court abused its discretion by denying Alight's request for a protective order to limit the production of certain sensitive information.

Source: Napa-net.org, August 2022

Lawsuit Against Northern Trust Over TDFs Will Proceed

A federal judge has refused to dismiss a lawsuit against fiduciaries of the Northern Trust Company Thrift-Incentive Plan that alleges that because the defendants failed to remove underperforming funds from the plan or negotiate lower, reasonable fees, participants' account balances have suffered.

Source: Planadviser.com, August 2022

BlackRock 401k Investment Suits Send Message "Nobody's Safe"

A flurry of new 401k lawsuits challenging companies that offer their workers conservative, low-cost target-date funds has enraged retirement industry insiders who say the complaints mean no retirement plan is safe from litigation. The class actions are leveled at major companies defaulting employee investments into a suite of BlackRock index funds that automatically de-risk investments according to a specific date, usually when investors are expected to retire.

Source: Bloomberglaw.com, August 2022

CommonSpirit Inspires Another Motion for Reconsideration in Excessive Fee Suit

In today's labor markets, much is said about offering competitive benefits. As employers compete for talent, retirement benefits have come more to the forefront as a way employers can offer an enhanced compensation package to potential employees or retain existing ones. However, some retirement plans have been left to languish in recent years. Since an employee's savings is generally the biggest driver of retirement benefits, there's a tendency to just leave it at that, thinking that as long as you are offering something to your employees and that your plan is meeting all the legal requirements, you're good. But if you are in a competitive hiring environment, that mindset may not cut it anymore.

Source: Napa-net.org, August 2022

Seventh Circuit Affirms Dismissal of ERISA Stock-Drop Case

Since the Supreme Court's ruling in Fifth Third Bancorp v. Dudenhoeffer, courts around the country have overwhelmingly rejected ERISA fiduciary-breach claims by 401k plan participants seeking relief related to investments in company stock funds. The Seventh Circuit recently continued that trend by affirming the dismissal of claims brought by participants in the Boeing 401k plan but did so on grounds that the fiduciary responsibilities associated with the company stock fund had been delegated to an independent fiduciary, and the insider fiduciaries had no duty to disclose corporate inside information to the plan participants or the independent fiduciary.

Source: Erisapracticecenter.com, August 2022

Lawsuit Accuses Fiduciaries of Chasing Low Fees Without Regard to Performance

Microsoft Corporation is the target of a new complaint in a series of lawsuits claiming that the BlackRock LifePath Index Funds suite of 10 target-date funds was an imprudent investment choice for defined contribution plans. The lawsuits accuse the defendants of selecting and retaining "poorly-performing investments instead of offering more prudent alternative investments that were readily available at the time."

Source: Planadviser.com, August 2022

Booz Allen Hamilton, Others Face Passive TDF Performance Lawsuits

Unlike many other ERISA lawsuits, the complaints suggest the plan fiduciaries in question should have considered more expensive target-date funds that might have performed better. The lawsuit was filed in the U.S. District Court for the Eastern District of Virginia, naming as defendants Booz Allen Hamilton Inc., the company's board of trustees, and various committees tasked with operating the management and technology consulting firm's defined contribution retirement plan.

Source: Planadviser.com, August 2022

The Most "Outrageous" ERISA Complaints Yet Filed?

One fiduciary insurance expert who has long been tracking ERISA litigation says a spate of new complaints filed in recent weeks are the "most outrageous" the industry has ever seen.

Source: Planadviser.com, August 2022

Swift Settlement for Excessive Fee Suit

Capozzi Adler and Miller Shah have wrested another settlement in an excessive fee suit in record time. This time it's the $1.2 billion Rush University Medical Center 403b plan (which was sued by four former workers just a few months ago) that has agreed to settle for $2.95 million as well as "meaningful non-monetary relief related to the ongoing management and administration of the Plan."

Source: Napa-net.org, August 2022

BlackRock TDF Targeted in Another Suit

Claiming that the plan fiduciaries "...employed a fundamentally irrational decision-making process (i.e., inconsistent with their duty of prudence) contrary to basic economics and established investment theory," a new suit involving the BlackRock LifePath target-date funds has been filed.

Source: Napa-net.org, August 2022

Sixth Circuit Holds That Retail vs. Institutional Share Class Claim Cannot Be Dismissed on Motion

This article discusses a July 22, 2022, decision by the Sixth Circuit, in favor of the plaintiffs and denying the defendant's motion to dismiss, holding that a claim based on the use of a retail share class, rather than a less-expensive institutional share class, was sufficient to survive a motion to dismiss.

Source: Octoberthree.com, July 2022

Crypto in 401k Plans: a Plaintiff Lawyer's Dream?

The prospect of 401k plans adding cryptocurrency to their plan menu is like waiting for "fruit to ripen," according to a plaintiff's lawyer who spoke as part of a July 26 "Lessons from Litigation" panel at the 2022 NAPA D.C. Fly-In Forum. Attorney Mark Bokyo, a Partner with Bailey Glasser LLP, explained that anything which exposes participants to that level of risk, particularly when there's no real way to measure expected return moving forward, is not something that he would put in his plan. "I think the DOL's publicly stated position was carefully worded to just say, 'Hey, do your jobs if you're going to consider adding this.' The fact that participants want it is not a reason to do so any more than adding a lottery ticket fund would be," he noted.

Source: Napa-net.org, July 2022

Sixth Circuit Tosses ERISA Fiduciary Breach Claims

On June 21, 2022, CommonSpirit Health defeated a putative class action brought by former employees who alleged that the company mismanaged their 401k plan by offering higher-cost, actively managed investment options when lower-cost index funds with better returns were available. The plaintiffs also alleged that the plan's recordkeeping and investment management fees were excessive when compared to industry averages.

Source: Erisalitigationadvisor.com, July 2022

Fiduciaries Press for a Redo in Excessive Fee Case

The suit in question was filed by a group of participant-plaintiffs in the $5.354 billion Humana Retirement Savings Plan (represented by the law firm of Capozzi Adler). The plan in question may have been large, but the suit filed back in May 2021 was a mere 27 pages long, relying on all-too-familiar claims, specifically that the plan fiduciaries breached the duties they owed to the plan, to plaintiffs, and to the other participants of the plan.

Source: Asppa.org, July 2022

Sixth Circuit Ruling Revives Parts of TriHealth ERISA Lawsuit

The Sixth U.S. Circuit Court of Appeals has reversed parts of a prior ruling in an excessive fee lawsuit against TriHealth Inc and remanded the case for further litigation. The new appellate ruling comes less than a year after the U.S. District Court for the Southern District of Ohio, Western Division issued its order granting dismissal of the amended class action complaint, which was initially filed against TriHealth Inc in August of 2019.

Source: Planadviser.com, July 2022

401k Legal Battles Set to Surge in Second Half of Year

The wheels of justice may turn slowly, but the action in retirement plan lawsuits should ramp up in the second half of 2022 after a pair of big court decisions. There have been 42 Employee Retirement Income Security Act class-action suits filed since the start of this year that allege the mismanagement of 401k and 403b defined-contribution retirement plans. If the rate ticks up slightly, the industry may eclipse 100 lawsuits in 2022, making it the highest year ever. In 2021 there were 54 cases, a nearly 45% drop from 2020's record tally of 97.

Source: Investmentnews.com, July 2022

Sixth Circuit Issues a Mixed Opinion in 401k Plan Investment Litigation

The Sixth Circuit recently issued a mixed opinion in a 401k plan investment litigation. The Court upheld the dismissal of the plaintiffs' fiduciary-breach claims relating to the investment management fees and performance of several of the plan's investment options but reinstated a claim for breach of fiduciary duty based solely on the plan fiduciaries' alleged failure to offer less expensive institutional share classes of mutual funds.

Source: Erisapracticecenter.com, July 2022

Appellate Court Finds "Plausible" Fiduciary Claim in Share Class Choice

Noting that "precedent has overtaken some of the debates in the case," a federal appellate court has weighed in on an excessive fee case, affirming the rejection of most, but not all, of the plaintiffs' claims. The defendants, in this case, are the fiduciaries of the Cincinnati-based TriHealth retirement plan -- a relatively small plan ($457 million) -- and the suit filed on behalf of participant plaintiffs by a law firm relatively new to these types of actions.

Source: Napa-net.org, July 2022

A Minnesota Hospital System Targeted in Excessive Fee Suit

Another excessive fee suit -- heavy on definitions and allegations, including a couple of potshots at the providers involved -- has been filed in the U.S. District Court for the District of Minnesota. Minnesota hospital system North Memorial Health Care has been charged by participant-plaintiffs with having breached the duties they owed to the plan, to plaintiffs, and the other participants of the plan.

Source: Napa-net.org, July 2022

Another Cybertheft Lawsuit Spotlights 401k Recordkeeper Procedures

Several lawsuits have been filed against plan sponsors and their recordkeepers, including Estee Lauder, Abbott Laboratories, and recordkeeper Alight, as a result of the theft of plan participant assets. Those cases have not resulted in final decisions clearly defining the responsibilities of fiduciaries and service providers, but a newly filed lawsuit against Colgate-Palmolive and Alight provides another opportunity to do so.

Source: Cohenbuckmann.com, July 2022

Nextep Settles 401k ERISA lawsuit for $1.1 million

Nextep Inc. will pay $1.1 million to settle an ERISA lawsuit filed by former participants in a company 401k plan, according to an agreement filed July 8 with a U.S. District Court in Norman, Okla. The parties announced an agreement in principle in May 2022 but didn't disclose the terms then. The settlement requires court approval.

Source: Pionline.com, July 2022

Appellate Court Backs Freedom Funds Fee Suit Dismissal

A federal appellate court has backed the dismissal of an excessive fee suit, rejecting the notion that offering actively managed funds -- even those with disappointing performance -- by itself doesn't support allegations of a fiduciary breach.

Source: Ntsa-net.org, July 2022

ERISA Plan Arbitration Clauses Likely Headed to U.S. Supreme Court

Various federal appellate courts have considered cases in which employers attempt to prevent ERISA class action lawsuits by including mandatory arbitration requirements in their plan documents. Due to the varying outcomes of these cases, this issue is likely headed to the U.S. Supreme Court for resolution.

Source: Hallbenefitslaw.com, July 2022

Hughes v. Northwestern University: A Message to Fiduciaries From the Supreme Court

"That reasoning was flawed." With those four words, the Supreme Court of the United States reaffirmed that retirement plan fiduciaries' responsibilities apply independently to each investment option. Offering a lot of investment options does not eliminate the responsibility related to each of them. Offering some cheap investment options does not excuse expensive ones. Offering some stronger performers does not excuse poor performers. The bad stuff is not okay simply because there's also some good stuff. This 12-page paper underscores why plan fiduciaries must take notice of this ruling.

Source: Qualifiedplanadvisors.com, July 2022

University 403b Plan Faces ERISA Breach Lawsuit

Northeastern University is the latest plan sponsor to confront a lawsuit alleging breach of fiduciary duty to participants. The plaintiff has alleged excessive fees for recordkeeping, administrative services, and investment management in a new fiduciary breach lawsuit.

Source: Planadviser.com, July 2022

Sixth Circuit Provides Guidance on Excessive Fee Claims

On June 21, 2022, the Sixth Circuit in Smith v. CommonSpirit Health provided updated guidance for plan sponsors in excessive 401k fee complaint cases. In their opinion, which affirmed a September 2021 decision from the Eastern District of Kentucky, the court held that whether an ERISA excessive fee claim is plausible "depends on a host of considerations, including common sense and the strength of competing explanations for the defendant's conduct." The Courts decision provides a win for plan fiduciaries, in a growing list of excessive 401k fee lawsuits.

Source: Graydon.law, July 2022

Defendants Secure Motion to Dismiss Victories in Three Post-Hughes Decisions

In April it was noted that there was a discouraging trend of opinions allowing commonly asserted breach of fiduciary duty claims in 401k and 403b plan investment litigation to survive motions to dismiss. While it may be too soon to declare a reversal of that trend, three recent decisions dismissing these types of claims present some hope for plan sponsors and fiduciaries that in appropriate cases they may be able to avoid the costs and burdens of class action discovery. In particular, the Sixth Circuit became the first Court of Appeals to affirm the dismissal of a 401k fee litigation since the Supreme Court's decision in Hughes v. Northwestern University and two district courts dismissed similar claims.

Source: Erisapracticecenter.com, July 2022

Kellogg Faces ERISA Managed Account Fee Complaint

The main allegation leveled in the complaint is that the defendants breached their fiduciary duty of prudence by requiring the plan to pay excessive recordkeeping fees and managed account fees, and by failing to timely remove their allegedly high-cost recordkeepers. According to the complaint, the plan contracted with Transamerica Retirement Solutions between 2016 and 2020 before transitioning to Fidelity Investments in 2021. Neither recordkeeper is named as a defendant in the lawsuit.

Source: Planadviser.com, July 2022

Excessive Fee ERISA Complaint Targets Cook Group

The plaintiffs allege that, instead of using the plan's bargaining power to benefit participants and beneficiaries, the Cook Group defendants selected and retained high-cost investments and agreed to excessively high compensation for recordkeeping, administration, and other fees compared to available alternatives.

Source: Planadviser.com, June 2022

Sixth Circuit Addresses Key Issues in Excessive Fee Lawsuits

The Sixth Circuit's published decision is a major development in the landscape of litigation challenging the investment options and recordkeeping fees in 401k plans. Smith is the first published Court of Appeals decision to articulate the governing standards for evaluating ERISA imprudence claims at the pleading stage after the Supreme Court's recent decision in Hughes v. Northwestern University.

Source: Groom.com, June 2022

A 'Win' for Plan Sponsors, Fiduciaries as Excessive Fee Case Dismissal Is Upheld

Some heartening news for 401k plan sponsors and fiduciaries came down in the form of a recent decision from the U.S. Court of Appeals for the Sixth Circuit in an excessive fee case. In the case of Smith v. CommonSpirit Health, the court upheld a district court decision to dismiss the case.

Source: 401kspecialistmag.com, June 2022

Olin Corp. Soundly Defeats ERISA Lawsuit

The U.S. District Court for the Eastern District of Missouri has ruled in favor of the defendants in an ERISA lawsuit filed against the Olin Corp. The plaintiffs in the case put forward substantially similar allegations to numerous other lawsuits filed against employers for alleged fiduciary breaches in the operation of their defined contribution retirement plans. The judge's opinion sides firmly against the arguments made by the plaintiffs in the case, who are among the many litigants currently represented by the law firm Capozzi Adler.

Source: Planadviser.com, June 2022

MITRE Corp. Faces Familiar ERISA Fiduciary Breach Allegations

Another group of plaintiffs represented by the law firm Capozzi Adler has filed a proposed class-action lawsuit -- in this case, against their employer, the MITRE Corp., and various related defendants, such as the company's board of directors -- for alleged fiduciary breaches in the provision of retirement plan benefits.

Source: Planadviser.com, June 2022

More Excessive Fee Cases Revived After High Court's Northwestern Decision

The 9th US Circuit Court of Appeals recently revived two ERISA lawsuits by participants and beneficiaries in separate 401k plans challenging plan fiduciaries' decisions to offer retail share class mutual funds instead of cheaper -- but otherwise identical -- institutional share classes. In both cases, district courts dismissed the claims after finding the plaintiffs needed to allege more than the mere availability of similar lower-fee funds. However, two different three-judge panels of the 9th Circuit disagreed with the lower courts, finding the plaintiffs' barebones allegations sufficed to survive a motion to dismiss.

Source: Mercer.com, June 2022

Sixth Circuit Issues First Published Appellate Opinion Applying Supreme Court's ERISA Ruling in Hughes

The U.S. Court of Appeals for the Sixth Circuit this week decided Smith v. CommonSpirit Health, becoming the first court of appeals to issue a published opinion applying Hughes v. Northwestern University. The court made clear that whether an ERISA fee-and-expense claim is plausible "depends on a host of considerations, including common sense and the strength of competing explanations for the defendant's conduct."

Source: Sidley.com, June 2022

6th Circuit Backs Defense in Fidelity Freedom Funds ERISA Suit

One expert who works on the fiduciary insurance side of the retirement plan industry calls the appellate ruling 'the best decision ever written in an excessive fee case,' and one which could dissuade other plaintiffs in similar cases.

Source: Planadviser.com, June 2022

Which Retirement Plan Participants Can Sue?

Several recent lawsuits brought under ERISA have addressed the issue of which retirement plan participants have "standing" to bring an ERISA action against their plan's fiduciaries. These cases generally focus on the issue of whether the participant-plaintiffs who brought the suit have a "concrete stake" in the dispute, as in two recent cases involving participant-plaintiffs in 401k-type defined contribution plans who did not invest in all the funds for which they are suing. Fiduciaries should consider who would have a stake in litigation.

Source: Shrm.org, June 2022

Sixth Circuit Rules Derivative ERISA Claims Not Arbitrable Without Plan Consent

On April 22, 2022, the U.S. Court of Appeals for the Sixth Circuit issued its decision in Hawkins v. Cintas Corporation holding that ERISA claims for breach of fiduciary duty belong to the plan. As a result, plan members alleging harm to their individual retirement accounts in defined contribution plans, cannot be forced to arbitrate their claims without the plan's consent.

Source: Hallbenefitslaw.com, June 2022

Universal Health Loses Appeal to Undo 60,000-Person Class in Excessive Fee Case

The Third Circuit Court of Appeals recently held that as the plan fiduciary of Universal's defined contribution plan, Universal Health Services Inc. and its plan investment committee must face a class-action claiming its retirement plan included imprudent investment options charging excessive fees to more than 60,000 participants, even though the three named plaintiffs only invested in seven of the 37 plan investment options challenged by their lawsuit.

Source: Erisalitigationadvisor.com, June 2022

Lack of Standing Trips Up (Another) Excessive Fee Suit

A federal judge has dismissed an excessive fee suit involving a $7.8 billion 401k plan, accepting the argument that the participant-plaintiff wasn't even invested in the funds in question.

Source: Napa-net.org, June 2022

401ks With Bitcoin Should Expect Lawsuits

Bitcoin in 401ks would test the prudence standard of the Employee Retirement Income Security Act, a lawyer said. Plan sponsors that allow cryptocurrency in their 401ks could be exposing themselves to a "very serious risk of a fiduciary breach."

Source: Wagnerlawgroup.com, June 2022

Missing 401k Contributions Must Be Restored, Court Rules

A federal court in Maryland has entered a consent judgment that requires a Baltimore logistics, engineering, and management support company and its owner to restore more than $150,000 in missing contributions and interest to the firm's 401k plan. The consent judgment is the result of an investigation by the DOL which found that Bicallis LLC and its owner Bryan Hill did not forward employees' pay deductions for plan contributions and failed to collect matching and safe harbor contributions the company owed the plan from October 2017 through December 2019.

Source: Plansponsor.com, June 2022

Suit: DOL Overstepped Its Authority in Warning Against Cryptocurrency in 401ks

Retirement plan provider ForUsAll alleged in a lawsuit Thursday that the federal government overstepped its authority in cautioning employers against offering cryptocurrency investment options. The suit asserts that the DOL's warning was an "arbitrary and capricious attempt to restrict the use of cryptocurrency in defined contribution retirement plans, in excess of its authority under the Employee Retirement Income Security Act."

Source: Hrdive.com, June 2022

Wells Fargo Settles ERISA Breach of Fiduciary Duty Suit for $32.5M

After a Minnesota federal district court judge denied its motion to dismiss a proposed ERISA class-action suit in May, Wells Fargo & Co. has agreed to settle the case by paying $32.5 million. The employees claimed that Wells Fargo had violated ERISA by mismanaging their 401k plan. More specifically, the workers alleged that Wells Fargo had breached its fiduciary duty by offering expensive proprietary investment options despite better performing and lower-cost options.

Source: Hallbenefitslaw.com, June 2022

Arbitration of ERISA Claims Under the Microscope. Where are the Courts and Congress Headed?

Due to the lack of Supreme Court guidance on these issues, it is still not clear the extent to which particular arbitration provisions may apply to ERISA fiduciary breach claims. However, several Circuit Courts of Appeal have now weighed in and a bill called the Employee and Retiree Access to Justice Act has been introduced in the House and Senate (H.R. 7740 and S. 4219) with the express purpose of making predispute and nonconsensual post-dispute arbitration clauses unenforceable. What is a plan sponsor favoring arbitration to do?

Source: Cohenbuckmann.com, June 2022

DENSO International America Faces Multi-Pronged ERISA Suit

Plaintiffs have filed a new Employee Retirement Income Security Act lawsuit in the U.S. District Court for the Eastern District of Michigan against DENSO International America Inc., the U.S. division of the global manufacturer of automotive components and technologies. The complaint includes not just allegations of excessive fees, but also a charge that fiduciaries offered an underperforming stable value fund.

Source: Planadviser.com, May 2022

Sixth Circuit Finds Participants Don't Have to Arbitrate Excessive Fee Claims

A DC plan sponsor can't require participants to resolve their ERISA excessive fee claims through binding arbitration, despite arbitration provisions in the participants' employment agreements, the 6th US Circuit Court of Appeals recently ruled. The court found that the participants brought these fiduciary breach claims not as individuals but as representatives of the plan, which didn't include an arbitration provision and hadn't otherwise agreed to arbitrate.

Source: Mercer.com, May 2022

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


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