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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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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

Full 9th Circuit Panel Asked to Review Chevron ERISA Case

Abstract: Plaintiffs in the case say the appellate court held them to stricter pleading standards than it did plaintiffs in other Employee Retirement Income Security Act lawsuits.

Source: Planadviser.com, December 2018

401k Suits Point to Need for Litigation Risk Prevention

Abstract: A series of recent settlements in ERISA lawsuits illustrates to defined contribution sponsors why an ounce of prevention is worth a pound of cure. These settlements cover financial institutions that have filled their 401k plans with proprietary investments, provoking allegations of self-dealing that violate their fiduciary responsibilities under ERISA.

Source: Pionline.com, December 2018

Under ERISA, Ignorance Is Bliss in the Ninth Circuit

Abstract: In Sulyma v. Intel Corporation Investment Policy Committee, the Ninth Circuit Court of Appeals recently held that having access to documents disclosing an alleged breach of fiduciary duty is not sufficient to trigger the three-year statute of limitations under ERISA if the plaintiff does not have actual knowledge of the alleged breach.

Source: Ogletree.com, December 2018

Nineth Circuit Sets New "Actual Knowledge" Standard in 401k Suit

Abstract: A plan sponsor who had been sued for allegedly breaching its ERISA fiduciary duties in shifting allocations in a plan's custom target-date portfolios to "risky and high-cost" investments will have to go back to court.

Source: Napa-net.org, December 2018

Second Circuit Revives Dismissed ERISA Stock-Drop Suit

Abstract: The Second Circuit reinstated a claim for breach of fiduciary duty under ERISA brought by participants in IBM's 401k plan who suffered losses from their investment in IBM stock. This article briefly reviews the Supreme Court and Circuit Court precedent leading up to the Second Circuit's IBM decision, the IBM decision itself, and its potential implications going forward.

Source: Erisapracticecenter.com, December 2018

Second Circuit Gives New Life to Stock Drop Claim

Abstract: The Second Circuit reversed dismissal of an ERISA stock drop class action finding plaintiff alleged enough to plausibly show that disclosure of alleged corporate problems would not have done more harm than good and sketching a treasure map for ERISA plaintiffs seeking to recover for 401k plan losses.

Source: Erisa-employeebenefitslitigationblog.com, December 2018

Edward Jones Settles 401k Lawsuit for $3.2 Million

Abstract: Edward Jones will pay $3.2 million to settle a lawsuit alleging the firm enriched itself at the expense of employees through mismanagement of its company 401k plan.

Source: Investmentnews.com (registration may be required), December 2018

ERISA Suit Against "Small" 401k Settled for $500k

Abstract: A $500,000 settlement has been reached in a lawsuit alleging that fiduciaries to the $500 million 401k program offered by Pioneer Natural Resources USA breached their ERISA duties regarding investments and investment fees.

Source: Planadviser.com, December 2018

Ninth Circuit Upholds Dismissal of Chevron Fiduciary Breach Lawsuit

Abstract: The appellate court found that the allegations showed only that Chevron could have chosen different vehicles for investment that performed better during the relevant period, or sought lower fees for administration of the fund, not that any breach of ERISA duties had occurred.

Source: Planadviser.com, December 2018

Settlement Reached in Franklin Templeton Self-Dealing Lawsuit

Abstract: In a case alleging self-dealing in Franklin Templeton's 401k plan, the parties have reached an agreement in principle to settle the case. No details of the settlement agreement have been revealed since, according to a notice in the case's docket, "Plaintiffs anticipate needing 60 days to file a motion for preliminary approval." The trial in the case was set to begin January 14, 2019.

Source: Planadviser.com, December 2018

Ten Litigation Lessons for 401k and 403b Fiduciaries

Abstract: 401k and 403b plan litigation is not going away. If you are a plan fiduciary looking to avoid (or win) future lawsuits over fees and investments, there are lessons to be learned from recent decisions and settlements about the best ways to protect yourself in 2019. Here are some important takeaways from recent litigation activity.

Source: Cohenbuckmann.com, December 2018

401k Lawsuits Deserve Attention From Plan Sponsor

Abstract: 401k lawsuits are on the rise. However, the legal responsibilities associated with 401k lawsuits are not always crystal clear. Plan fiduciaries who manage and administer 401k and 403b plans struggle with knowing how to perform. There are many grey areas, and so questions persist about fiduciary duties and 401k lawsuits. A 2018 paper from the Center for Retirement Research at Boston College explores the reasons behind these lawsuits, as well as their implications for plan sponsors and the retirement industry.

Source: 401ktv.com, December 2018

Ninth Circuit Upholds Dismissal of 401k Fee Case in White v. Chevron

Abstract: In an unpublished 3-page opinion, a three-judge panel of the Ninth Circuit Court of Appeals upheld the dismissal of plaintiffs' claims in the White v. Chevron 401k fee litigation. The court sided with defendants on one of the critical issues in current 401k fee litigation: whether a plaintiff may state a claim for breach of the ERISA duty of prudence merely by alleging that there was a less expensive, "identical" alternative to the service/fund provider selected by plan fiduciaries.

Source: Octoberthree.com, December 2018

Is 401k Chaos Coming?

Abstract: The author writes that, "The 1st Circuit just handed down what in my opinion is one of the best well-reasoned and well-written opinions I have read in my 36 years of practicing law. If you practice in the 401k/403b arena, you should do yourself a favor and read it. It’s long, 50 pages, but if SCOTUS upholds the decision, it will result in significant changes in ERISA pension plans."

Source: Iainsight.wordpress.com, December 2018

Can ERISA Plans Require That Fiduciary Claims Be Arbitrated? Should They?

Abstract: Despite ERISA's endorsement of arbitration for certain issues, breach of fiduciary duty claims, which tend to involve greater damages and tend to attract the most media attention, are not arbitrated. One possible reason is that it has not been clear that courts would require parties to arbitrate such disputes, but that may change. Another possible answer is that arbitration is not all it is chalked up to be. For sophisticated fiduciary disputes, arbitration may in fact be just as time consuming, just as expensive, and less likely to lead to a just outcome.

Source: Steptoe.com, December 2018

Fiduciary Breach Suit Against Caterpillar Recordkeeper Comes to an End

Abstract: Plaintiffs and defendants agreed to drop litigation in a lawsuit by Caterpillar 401k participants alleging the plan's recordkeeper and an affiliate violated their fiduciary duties when they subcontracted a financial advice service to Financial Engines.

Source: Pionline.com, December 2018

Edison Wants Denial of 401k Expert Fees to Stand

Abstract: Edison International is urging a federal appeals court to uphold a ruling denying a request to recover nearly $1 million for expert witnesses used during an 11-year litigation.

Source: Bna.com, December 2018

Federal District Court Dismisses Fiduciary Breach Lawsuit Against Washington University 403b Plans

Abstract: The defendants moved to dismiss under a procedural rule which required the federal district court to accept as true the facts alleged in the complaint, and to draw reasonable inferences in favor of plaintiffs. Over plaintiffs' objections, the court took "judicial notice" of investment fund prospectuses and fact sheets as materials "necessarily embraced by the pleadings." The judge granted defendants' motion to dismiss all counts, finding that the university satisfied its duty to offer an acceptable array of investment funds with reasonable fees, and that no facts indicated that the fiduciaries failed to use a prudent process in selecting plan investment options.

Source: Hodgsonruss.com, December 2018

A Simple Recipe for Minimizing 401k Lawsuits

Abstract: Here is a simple recipe for minimizing the likelihood that a 401k plan will be the subject to a lawsuit. Advisors can use this recipe to help their 401k plan clients avoid trouble, or to open the door with 401k plan prospects that may appreciate a review of their current practices.

Source: 401kspecialistmag.com, November 2018

Plaintiffs Drop Claims Against Matrix in TPA Suit

Abstract: The two plaintiffs, who are Texas A&M University retirees, voluntarily dismissed their complaint against Matrix on Nov. 16 in the U.S. District Court for the District of Colorado "without prejudice, with each party to bear its own costs, attorneys' fees, and expenses."

Source: Ntsa-net.org, November 2018

Waddell & Reed Settles 401k Lawsuit for $4.9 Million

Abstract: Waddell & Reed Financial Inc. is settling a lawsuit that alleges it loaded its company 401k plan with costly in-house investments by agreeing to pay nearly $5 million.

Source: Investmentnews.com (registration may be required), November 2018

Recordkeeping Fee Charge Against Franklin Dropped; Other Parts of Suit to Continue

Abstract: A federal judge in San Francisco delivered a mixed ruling in preliminary judgments on a lawsuit filed against Franklin Resources Inc. by former participants in the company's $1.4 billion 401k plan. In an order issued Nov. 16, Judge Claudia Wilken in the District Court for the Northern District of California, granted Franklin's request for summary judgment on the claim that the firm failed to monitor the plan's administrative arrangements, which allegedly led to excessive recordkeeping fees.

Source: Pionline.com, November 2018

Fiduciary Liability Claim Trends

Abstract: While insurers have not reacted in a unified way, the claim environment has become much more active and severe during the past 24- 36 months, highlighted by well-publicized excessive fee litigation under ERISA. This 10-page fiduciary liability claim trends report discusses, among other items, the many excessive fee cases brought against universities, why proprietary funds are more challenging risks, and recent results from a Boston College study examining the causes and consequences of 401k lawsuits.

Source: Lockton.com, November 2018

Cuomo Forced to Court in 401k Financial Farce

Abstract: New York Gov. Andrew Cuomo had, through the Department of Financial Services, ordered state regulators to suggest to 401k and similar financial firms they "review any relationships they may have with the National Rifle Association and other similar organizations. Upon this review, the companies are encouraged to consider whether such ties harm their corporate reputations and jeopardize public safety."

Source: 401kspecialistmag.com, November 2018

Jackson National to Settle 401k Self-Dealing Lawsuit for $4.5 Million

Abstract: Jackson National Life Insurance Co. has reached a $4.5 million settlement in a self-dealing lawsuit that alleged the company profited at the expense of its employees by adding high-cost proprietary investment funds to its 401k plan.

Source: Investmentnews.com (registration may be required), November 2018

Stock Drop Claims Based on Public Information Fail to Overcome Deference to Market Prices

Abstract: Two more courts have disallowed claims of imprudence against 401k plan fiduciaries that permitted investments in employer stock as those companies headed toward bankruptcy.

Source: Thomsonreuters.com, November 2018

Indictments Handed Down in TPA Embezzlement Case

Abstract: A federal grand jury in Texas has indicted Jeffrey and Wendy Richie on claims that they stole $14.5 million from at least 1,000 plan participants in at least 20 retirement plans. The Richies -- Jeffrey, the President and CEO of Vantage Benefits Administrators Inc., and Wendy, VP of Administration for the firm, and wife of Jeffrey -- were charged with aggravated identity theft, wire fraud and theft from an employee benefit plan.

Source: Napa-net.org, October 2018

Fund Companies Got Sued by Their Own Employees Over Pricey 401k Plans

Abstract: Big fund companies make hundreds of millions of dollars in fees every year from mutual funds and other products they sell to the public, that's the business. But should they be allowed to profit at the expense of their own employees? Several 401k plan lawsuits assert that the answer is no.

Source: Barrons.com, October 2018

Appellate Panel Finds Retirement Assets Acquired in Divorce Not Protected in Bankruptcy

Abstract: A three-judge panel of the United States Bankruptcy Appellate Court for the Eighth Circuit has ruled that 401k plan and IRA assets acquired by a former spouse in a divorce proceeding are not retirement funds that qualify as exempt under federal law.

Source: Ascensus.com, October 2018

Kaleida Health Faces 403b, 401k Plan Fee Lawsuit

Abstract: The complaint specifically calls out the 11 T. Rowe Price target-date funds offered by the plans, saying they are all adviser or retail class funds, as opposed to investor or institutional class funds.

Source: Planadviser.com, October 2018

Putnam 401k Row Sent Back to Trial Court

Abstract: Investors in Putnam Investments LLC's 401k plan will get another chance to show the company profited at the expense of their retirement savings by putting Putnam-affiliated mutual funds in the plan.

Source: Bna.com, October 2018

Fidelity Sued Again for 401k Plan Mismanagement

Abstract: Fidelity Investments Inc. has been sued by participants in its company 401k plan for alleged self-dealing that caused the firm to profit at the expense of its employees saving for retirement. The lawsuit filed against Fidelity is similar to a separate case filed against the firm about five years ago, which was settled for $12 million in 2014.

Source: Investmentnews.com (registration may be required), October 2018

ERISA University Excessive Fee Cases Take Another Hit

Abstract: Excessive fee complaint dismissed because the diverse selection of funds available to plan participants negates any claim that Defendants breached their duties of prudence simply because cheaper funds were available.

Source: Erisa-employeebenefitslitigationblog.com, October 2018

Court Deems Principal Not a Fiduciary in Lawsuit Over GICs

Abstract: The U.S. District Court for the Southern District of Iowa has ruled against plaintiffs in an ERISA lawsuit. The court granted the Principal defendants' motion for summary judgment on all counts in a case questioning guaranteed investment contract arrangements.

Source: Plansponsor.com, October 2018

Judge Dismisses 401k Fiduciary Breach Lawsuit Against Gannett

Abstract: A U.S. District Court judge in Alexandria, Va., dismissed a 401k plan participant lawsuit against Gannett Co. and plan executives alleging they violated their fiduciary duties for holding too much stock in Gannett's former parent company in the 401k plan.

Source: Pionline.com, October 2018

Another 403b Plan Sponsor Beats Back Fee Lawsuit

Abstract: Washington University in St. Louis has won the dismissal of a lawsuit alleging it caused employees participating in the school's 403b plan to pay excessive fees for recordkeeping and investment management. Judge Ronnie L. White dismissed the lawsuit with prejudice, meaning it can't be brought back at the district-court level.

Source: Investmentnews.com (registration may be required), October 2018

Circuit Split Remains Unresolved After ERISA Case Settles

Abstract: The US Supreme Court dismissed -- pursuant to settlement -- an ERISA lawsuit that could have resolved the circuit split over who holds the burden of proof in ERISA breach of fiduciary duty cases. The settlement and dismissal of this case is disappointing for ERISA litigators because the anticipated resolution regarding burden shifting for loss causation will likely not be resolved soon.

Source: Natlawreview.com, September 2018

Federal Court Orders Prison Term After Benefit Plan Theft

Abstract: A Maryland business owner will serve one year and one day of imprisonment and pay more than $350,000 in restitution for violations of the Employee Retirement Income Security Act.

Source: Planadviser.com, September 2018

Excessive Fee Suit Defendants Now Seek Sanctions Against Schlichter

Abstract: Having won their case in court, the targets of a 403b university excessive fee suit are pressing for a federal judge to impose monetary sanctions against the six employee-plaintiffs and the law firm of Schlichter Bogard & Denton LLP that represented them.

Source: Napa-net.org, September 2018

Frontier Communications 401k Plan Participant Sues Over Verizon Stock Fund

Abstract: Frontier Communications Corp. is the target of a fiduciary lawsuit by a 401k plan representative alleging the telecommunications company violated its fiduciary duty by offering a Verizon Communications Inc. company stock fund.

Source: Pionline.com, September 2018

Podcast: Steps to Reduce Risk of Claims Associated With 401K Plans

Abstract: This 12-minute podcast discusses participant directed defined contribution plans and the lawsuits against the fiduciaries and service providers which are responsible for administering them. Also examines the best practices that can achieve favorable results for plan participants and the practices that can avert litigation or enable plan fiduciaries to effectively defend themselves if there is litigation.

Source: Erisapracticecenter.com, September 2018

NYU v. Sacerdote -- Thoughts for Plan Fiduciaries

Abstract: Since 2016, participants have filed 19 lawsuits against universities over the fees charged to the universities' 403b plans. In the first of these cases to reach trial, New York University secured a complete victory when the court found that NYU did not breach its ERISA fiduciary duty of prudence. The court's decision provides some important takeaways for plan sponsors and the retirement committees that act as plan fiduciaries.

Source: Drinkerbiddle.com, September 2018

Fiduciary Best Practices Helped NYU Win ERISA Class Action

Abstract: District Judge Katherine B. Forrest's opinion in Sacerdote highlights the various fiduciary governance practices the NYU fiduciaries followed in making the decisions at issue in the case. This article summarizes the fiduciary practices and explains how they helped the NYU fiduciaries prevail at the trial level.

Source: Barclaydamon.com, September 2018

How to Keep Your 401k Clients Out of Court

Abstract: While 401k lawsuits show no sign of letting up, the man at the forefront of class-action retirement plan litigation foresees a day when this will change. "Ultimately, it may be that 401k cases end because [retirement plan] sponsors change their practices."

Source: Investmentnews.com (registration may be required), September 2018

Court of Appeals Affirms "Paternalistic" Breach of Fiduciary Duties

Abstract: In holding that the former employee failed to state a claim, the court in Meiners v. Wells Fargo & Co. reasoned that the plaintiff failed to plead facts showing the Wells Fargo investment funds were an imprudent choice. Specifically, the court found that the plaintiff's allegations that an allegedly comparable fund performed better was not sufficient, especially given the other fund's differing investment strategy.

Source: Employeebenefitsblog.com, September 2018

Prudent Practices for Assessing Bundled Services in This Era of 401k Plan Fee Litigation

Abstract: Given the prevalence of ERISA fee litigation, 401k plan sponsors are very concerned about identifying and implementing best fee practices to insulate themselves from liability against such claims. Over 50 so-called "fee cases" have been filed to date, with the majority pursued as class actions. Like most fiduciary benefit claims, however, the liability risk can be substantially mitigated through preventive practices.

Source: Bna.com, September 2018

5th Circuit Sides With Whole Foods in Stock Drop Litigation

Abstract: The case ascended on appeal from the U.S. District Court for the Western District of Texas, where it also flatly failed to meet the high hurdles for proving standing established in Fifth-Third Bank vs. Dudenhoeffer.

Source: Planadviser.com, September 2018

No Quick Exit on 401k Class Action Alleging Imprudent Proprietary Fund Offerings

Abstract: A district court recently denied a motion to dismiss a 401k proprietary fund class action, continuing an overwhelming trend of allowing these cases to survive pleading challenges. On the bright side, however, the Eighth Circuit recently affirmed a dismissal of such a case, and the first of these cases to be tried resulted in a defense victory, which is on appeal with the First Circuit.

Source: Erisa-employeebenefitslitigationblog.com, September 2018

403b Sponsors Finding Success Beating Back Lawsuits

Abstract: Beginning in August 2016, law firms took aim at the ERISA 403b market. Many observers expected an even less favorable outcome for 403b sponsors, particularly given their seemingly ad hoc or patchwork plan design and largely unexamined practices of both sponsors and service providers. The early results, however, have been markedly less successful for the 403b plaintiffs.

Source: Investmentnews.com (registration may be required), September 2018

Court Finds All Claims Plausible in T. Rowe Price Self-Dealing Suit

Abstract: The original complaint accuses T. Rowe Price 401k plan trustees of breaching their fiduciary duties under ERISA by either failing to remedy their predecessors' breaches, or, in a few cases of offering expensive retail class versions of proprietary mutual funds, waiting too long to act to shift into lower cost versions of the funds.

Source: Plansponsor.com, August 2018

Second Lawsuit Over Duke University 403b Plan Filed

Abstract: The new lawsuit alleges the university engaged in prohibited transactions when it used revenue sharing from plan investments to pay for HR staff salaries and fringe benefits.

Source: Planadviser.com, August 2018

Federal Judge Sends Scottrade Case Back

Abstract: Scottrade's attempt to make a federal case of an administrative proceeding filed by Massachusetts alleging violations of internal policies adopted in anticipation of the Labor Department's fiduciary rule has been rebuffed by a federal judge.

Source: Napa-net.org, August 2018

Duty of Loyalty in Stock Drop Cases

Abstract: The United States District Court for the District of Minnesota has, for a second time, dismissed claims by participants in the Wells Fargo 401k plan. This second decision focused on the issue of the fiduciary duty of loyalty, the court's discussion of which is thorough and interesting both in its specific application to stock drop cases and to fiduciary litigation more generally. In this article we discuss the court's opinion in detail.

Source: Octoberthree.com, August 2018

The ERISA Industry Committee Files Lawsuit Against City of Seattle

Abstract: The ERISA Industry Committee filed a complaint in the U.S. District Court for the Western District of Washington against the City of Seattle for obstructing the federal law that enables large employers to administer health and retirement benefits uniformly across the country.

Source: Eric.org, August 2018

SPD vs. Plan Document? Plan Wins, Unless...

Abstract: It is not uncommon for conflicts to exist between the provisions of a plan document and the plan's summary plan description. In a recent case, the provisions of a conflicting SPD may prevail. The case was sent back to the lower court because the error in the SPD was so significant that it could be found to be constructive fraud.

Source: Captrustadvisors.com, August 2018

8th Circuit Sets High Bar for Labeling Retirement Plan Investments "Imprudent"

Abstract: In Meiners v. Wells Fargo & Company, the U.S. Court of Appeals for the Eighth Circuit clarified the burden plaintiffs must meet to state a claim for breach of fiduciary duty under ERISA based on the inclusion of allegedly underperforming and expensive investment funds. Because plaintiffs often lack detailed information about the process plan fiduciaries followed to make investment choices, pleading a plausible claim that those fiduciaries have acted imprudently can pose a significant challenge.

Source: Kslaw.com, August 2018

The Recent NYU ERISA Decision and Best Practices for ERISA Fiduciaries

Abstract: The decision in favor of NYU, and the recent dismissal of two other similar lawsuits against Northwestern University and the University of Pennsylvania, should give some comfort to fiduciaries of ERISA retirement plans, especially those sponsored by higher education institutions. The NYU decision suggests that 403b plans do not necessarily violate ERISA simply because they have a very large number of investment funds, including actively managed funds, or because they do not promptly remove underperforming funds from the plan.

Source: Bsk.com, August 2018

What Makes a 401k Plan Sponsor a "Mark" for Litigation

Abstract: Certain 401k plan sponsors can be targets for litigation because they're showing something glaring that shows that they are not exercising their fiduciary duty in a prudent manner. To avoid being a "mark" for 401k litigation, the plan sponsor should avoid the items noted in this article.

Source: Jdsupra.com, August 2018

Fiduciary Litigation: Best Practices for DC Plan Fiduciaries

Abstract: When employees allege the employer or plan sponsor has not acted in the sole interest of the participants or followed the plan requirements, the plan sponsor may be liable for losses and damages which result. However, by following the best practices for defined contribution plan fiduciaries, plan sponsors can avoid litigation and limit potential losses.

Source: Bsllp.com, August 2018

Court Orders Business Owner to Prison for Embezzling 401k Funds

Abstract: The court-ordered restitution includes $69,000 in employee and matching employer contributions, as well as lost earnings due to the 401k plan, and approximately $4.3 million for fraudulent loans and identity theft.

Source: Planadviser.com, August 2018

Appeals Court Upholds Dismissal of Wells Fargo 401k Lawsuit

Abstract: A federal appeals court in St. Louis upheld a U.S. District Court judge's dismissal of an ERISA breach claim against Wells Fargo & Co. by a participant in the company's 401k plan, who alleged fiduciaries could have offered a better-performing nonproprietary investment choice.

Source: Investmentnews.com (registration may be required), August 2018

Citigroup Reaches $6.9 Million Settlement in 401k Lawsuit

Abstract: Citigroup has reached a $6.9 million settlement with plaintiffs in a more than decade old lawsuit alleging the financial services firm stuffed its retirement plan with expensive in-house investments, thereby enriching the company at the expense of its employees.

Source: Investmentnews.com (registration may be required), August 2018

Statute of Limitations Bars Claim That High Fees Made Plan's Investments Imprudent

Abstract: This case highlights the importance of "actual knowledge" under ERISA's statute of limitations for fiduciary violations. Not only does actual knowledge shorten the limitation period from six to three years, but it may also effectively prevent the use of a continuing violation theory of liability.

Source: Thomsonreuters.com, August 2018

Court Finds in Favor of NYU in 403b Plans Lawsuit

Abstract: A federal district court judge found that "while there were deficiencies in the Committee's processes -- including that several members displayed a concerning lack of knowledge relevant to the Committee's mandate -- ;plaintiffs have not proven that the Committee acted imprudently or that the Plans suffered losses as a result."

Source: Planadviser.com, August 2018

Benefit Plan Sponsors Must Be Given Deference in Plan Interpretation

Abstract: A recent federal appeals court decision has vacated the lower court's decision and remanded the case back to the court. The decision found the district court had used the wrong standard of review and the ambiguous terms of the plan should have been reviewed using the deferential arbitrary and capricious standard.

Source: Bsllp.com, July 2018

General Cable Snaps Plaintiffs' ERISA Stock Drop Claims

Abstract: In this case, the alleged knowledge of an artificially high stock price was rooted in the fact that the company had not disclosed that employees of its foreign subsidiaries had violated the Foreign Corrupt Practices Act of 1997 by paying bribes to foreign government officials.

Source: Planadviser.com, July 2018

Ninth Circuit Holds Collective Claims Made on Behalf of ERISA Plans Survive Motion to Compel Arbitration

Abstract: The U.S. Court of Appeals for the Ninth Circuit held that collective claims for alleged breaches of fiduciary duty under ERISA were not subject to the arbitration agreements in plaintiff employees’ employment contracts. Instead, since those claims were brought for the benefit of the ERISA plans in which the plaintiffs participated, they were outside the scope of the employees’ individual arbitration agreements and could be litigated in court on a collective basis.

Source: Classactioncountermeasures.com, July 2018

Ninth Circuit Rejects Bid to Arbitrate ERISA Plans' Claims

Abstract: The Ninth Circuit held that employees' agreements to arbitrate all claims the employees may have did not extend to claims brought on behalf of two ERISA plans under ERISA Section 502(a)(2). In so ruling, the Court explained that the employees could not agree to arbitrate claims on behalf of the plans in individual employment contracts because those employees cannot waive the plans' rights.

Source: Erisapracticecenter.com, July 2018

Brown University Only Partially Successful in 403b Lawsuit

Abstract: A federal judge in Rhode Island recently permitted several claims against Brown University to proceed in a lawsuit alleging that the university and its fiduciaries breached their fiduciary duties under ERISA by mismanaging Brown's defined contribution plans. This decision follows the recent decision in a similar class action lawsuit against Northwestern University in which a federal judge granted Northwestern a complete victory in its motion to dismiss.

Source: Employeebenefitsblog.com, July 2018

Internal Statutes of Limitation Under ERISA

Abstract: Considering the heightened frequency of 401k plan litigation, it is appropriate for plan fiduciaries to include favorable procedural rules as part of their claims procedures. One such rule is an internal statute of limitations, which the Supreme Court has held is permissible in an ERISA plan so long as it is reasonable and there is no controlling statute to the contrary. As a best practice, notice of any internal statute of limitations should be provided.

Source: Wagnerlawgroup.com, July 2018

ERISA Litigation Surging -- Focus on Fees

Abstract: After a few years of decline, litigation involving 401k plans "has surged again recently," according to a study published by the Center for Retirement Research at Boston College. This is likely not news to 401k sponsors and service providers, who are confronted with this reality on a near daily basis. The authors of the study point to some consequences -- good, bad, and mixed -- of the 401k litigation trends they've identified.

Source: Insidecompensation.com, July 2018

Checksmart Wins Dismissal of 401k Excessive Fee Lawsuit

Abstract: Checksmart Financial LLC defeated a lawsuit accusing it of violating federal benefits law by offering high-fee, poorly performing investment funds in its $25 million 401k plan.

Source: Bna.com, July 2018

Judge dismisses Stock-Drop Suit Against Allergan

Abstract: A federal judge has dismissed a complaint by participants in an Allergan defined-contribution plan, rejecting allegations that company and plan executives violated their fiduciary duties by offering company stock in the plan menu.

Source: Investmentnews.com (registration may be required), July 2018

Is This the Most Absurd 401k Fraud Case Yet?

Abstract: According to a Matrix Trust representative, "Matrix Trust Company did not manage these investment accounts or serve as a trustee or fiduciary for them. This lawsuit involves accounts that were opened and managed by Vantage Benefits Administrators. Matrix's actions were consistent with its custodial agreements and intends to vigorously defend itself against these baseless claims."

Source: 401kspecialistmag.com, July 2018

Recordkeeper Defeats Second Round of Robo-Adviser Fee Litigation

Abstract: The court rejected the argument that constraining the plan's service provider choices amounted to de facto control since the plan had other alternatives to choose from (such as not using an investment adviser or changing recordkeepers) and dismissed the claim without leave to amend, ending the case at the district court.

Source: Erisapracticecenter.com, July 2018

Matrix Trust Company Accused of Making Unauthorized Transfers of 403b Plan Assets

Abstract: Plan participants have filed a lawsuit against Matrix Trust Company for making several transfers to an unauthorized account held by recordkeeper Vantage Benefits Administrators.

Source: Planadviser.com, July 2018


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