Archives: ERISA Litigation

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What Employers Need to Know About the Fiduciary Conflict Rule

Our colleague Jason Levy recently published an article in The Actuary Magazine on the Department of Labor’s fiduciary conflict rule.  More than six years in the making, this rule represents perhaps the most significant regulation from the DOL during the Obama Administration. The fiduciary conflict rule expands the definition of fiduciary to cover, with certain … Continue Reading

What Every ERISA Fiduciary Should Consider About Float Income

A recent Massachusetts district court decision in In Re Fidelity ERISA Float Litigation highlights the need for ERISA fiduciaries to evaluate the treatment of a particular type of interest called “float income” to ensure compliance with ERISA. The Department of Labor has long taken the position that retention of float income without sufficient disclosures can … Continue Reading

ERISA Liability Insurance: Know What’s Covered . . . And What Isn’t

For sponsors and fiduciaries of employee benefit plans, the Amara case has presented many interesting and important issues that have been discussed at length in this blog and elsewhere. However, the most recent chapter in this long-running dispute has not garnered nearly as much attention as either the Supreme Court or Second Circuit decisions that … Continue Reading

Risk Management Lessons from a Multi-Million-Dollar Class Action Award

Not all benefits claims are created equal. At least, not from a risk management perspective. Benefits claims that reach issues applicable to a broad class of participants have the potential to exponentially increase liabilities. Kifafi v. Hilton illustrates this risk. A recent court order quantified the cost of a judgment that Hilton Hotels and its … Continue Reading

Oral Misrepresentation Could Support Fiduciary Breach Claim, District Court Holds

In Lees v. Munich Reinsurance America, Inc., a federal district court in New Jersey recently held that an oral misrepresentation could serve as the basis for a fiduciary breach claim. The plaintiff in Lees worked for American Re-Insurance Company (a predecessor of the defendant), but was being paid by a related entity. Several years into … Continue Reading

Two Recent Cases Offer Cautionary Tale to Plan Sponsors Relying on IRS Guidance

Two cases decided in January—one by the Sixth Circuit and another by the District Court for the District of Columbia—offer a cautionary tale to plan sponsors who rely on a statute or regulation that allows retroactive amendments to tax-qualified plans. Both cases involved a change to the interest and mortality assumptions that pension plans use … Continue Reading

Lawsuit by Surviving Same-Sex Spouse Raises Windsor Retroactivity Question

A complaint filed this month against FedEx Corporation and its pension plan asks a court to apply the Supreme Court’s decision in Windsor v. United States retroactively.  The case is Schuett v. FedEx Corporation.  The plaintiff is the surviving same-sex spouse of a FedEx pension plan participant who died six days before the Court issued … Continue Reading

Supreme Court Overturns Inference of Vesting of Bargained Retiree Benefits

Earlier this week, the Supreme Court issued its opinion in M&G Polymers USA v. Tackett, addressing the question whether a collective bargaining agreement is presumed to provide vested retiree medical benefits.  Unlike pension benefits, welfare benefits, such as retiree medical coverage, are not subject to statutory vesting rules under ERISA.  Accordingly, whether an employer may … Continue Reading

District Court Opens Door to Suits by Defined Benefit Plan Participants

In the wake of investment losses from the 2008 market downturn, many fiduciaries of employee benefit plans faced lawsuits brought by plan participants.  Most cases involved defined contribution plans, in which participants sought to recover investment losses that had directly reduced their individual benefits.  In contrast, fewer cases were brought against fiduciaries of defined benefit … Continue Reading

Key Component of Affordable Care Act Might Be Invalid

Yesterday two federal courts of appeal reached opposite conclusions on the question whether individuals in 34 states are eligible for federal subsidies when they purchase health insurance coverage.  Depending on how this issue is resolved, it could have a significant impact on the future of the Affordable Care Act, including the employer mandate scheduled to … Continue Reading

Stock-Drop Decision Helpful to ESOP Fiduciaries

Yesterday, the Supreme Court issued its much anticipated decision in the stock-drop case, Fifth Third Bancorp v. Dudenhoeffer.  The Court vacated the lower court decision that was adverse to the employer, Fifth Third Bancorp, and remanded the case to the lower courts for further proceedings. Fiduciaries of employee stock ownership plans (ESOPs) had hoped that … Continue Reading

Judges Disagree on Remedies for Pension Mistake

A recent Ninth Circuit decision, Gabriel v. Alaska Elec. Pension Fund, offers useful insight for deciding how to fix a pension overpayment. Virtually every employer that administers a pension plan has experienced (or will experience) discovering a calculation error after incorrect payments have been made for several years–resulting in thousands of dollars of overpayments.  Fixing … Continue Reading

Verizon Prevails (Again) on Motion to Dismiss Challenge to $7.5 Billion Pension Settlement

Seems like we’ve written this before, but this time we (actually a federal district court) really means it:  the court in Lee v. Verizon granted last Friday Verizon’s motion to dismiss a class action lawsuit challenging its transfer in late 2012 of $7.5 billion of pension liabilities to Prudential (Lee v. Verizon, N.D. Tex.).  The … Continue Reading

Appellate Court Affirms Fiduciaries’ Liability for Failure to Monitor Revenue Sharing Paid to Recordkeeper

On March 19, the Eighth Circuit addressed a long-running case involving alleged fiduciary duty breaches in the administration of 401(k) plans. (Tussey v. ABB, Inc.)  Although the Eighth Circuit emphasized that courts owe deference to choices entrusted by plan documents to fiduciary discretion – and reversed one finding of liability partly on that basis – … Continue Reading

Supreme Court Confirms Plan Sponsor’s Right to Set Deadline for Filing Lawsuits

On Monday, the Supreme Court unanimously ruled that a reasonable deadline for filing a lawsuit for benefits was enforceable.  (Heimeshoff v. Hartford Life & Accident Insurance Co.) The decision is important because it confirms that the clock may start before a claim is filed under the plan’s mandatory administrative process.  Plan sponsors who have not … Continue Reading

Plan Documents Should Not Be Rewritten When an SPD Does Not Disclose Wear-Away, Industry Groups Say

In an amicus brief filed last week, the ERISA Industry Committee and Chamber of Commerce of the United States of America stated that a court should not rewrite a plan document, or penalize the administrator who follows the plan document, merely because a summary plan description does not disclose wear-away in pension accruals (although it did summarize … Continue Reading

Private Investment Funds Face Potential Liability for Portfolio Companies’ Employee Benefits

A federal appeals court recently ruled that a private equity fund might be responsible for the unfunded pension liabilities of its bankrupt portfolio company.  This ruling could have broader repercussions for private investment funds and the companies they own.  If the companies are considered to be related employers under the rules that govern employee benefits, … Continue Reading

Federal Courts Decide Rights of Same-Sex Spouses After DOMA

More than a month after the Supreme Court struck down section 3 of the Defense of Marriage Act (“DOMA”) in United States v. Windsor, employers are still waiting for the federal government to answer fundamental questions about the rights of same-sex spouses in the post-DOMA world.  In the meantime, however, lower federal courts have begun … Continue Reading

Verizon Prevails on Motion To Dismiss Challenge to $7.5 Billion Pension Settlement

Earlier today, a federal district court granted Verizon’s motion to dismiss a class action lawsuit challenging its recent transfer of $7.5 billion of pension liabilities to Prudential (Lee v. Verizon, N.D. Tex.).  The court concluded that plaintiffs had failed to state a claim that the transaction violated ERISA’s disclosure and fiduciary obligations.  The court granted … Continue Reading

Second Circuit Reinforces Plan Drafting Opportunity for Employers

We recently observed that ERISA gives employers considerable leeway to design plan rules that fill in gaps in ERISA.  A recent Second Circuit case, Thurber v. Aetna Life Ins. Co., illustrates two important ways that plan drafting can meaningfully affect the outcome of litigation involving the plan: First, a plan may specify the standard of … Continue Reading

Supreme Court’s McCutchen Decision Highlights Plan Drafting Opportunity

In its recent decision in U.S. Airways v. McCutchen, all nine justices of the Supreme Court agreed that equitable principles do not override the clear terms of an ERISA plan.  Although a majority of the Court went on to find that the plan at issue was ambiguous, the decision makes clear that plan documents—when clear—may … Continue Reading
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