Archives: ERISA Litigation

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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

Providing Erroneous Information to Participants May Expose Plan Fiduciaries to Liability for “Make Whole” Relief

Employees and retirees frequently receive information relating to benefits – eligibility to participate, coverage for certain medical treatment, enrollment status, anticipated benefits at retirement, and so forth.  Sometimes that information appears in formal documents published by named plan fiduciaries.  Other times it comes in response to one-off inquiries made to persons working in the HR … Continue Reading

When Does a Plan Document “Encourage” an Employer Stock Fund Enough to Justify the Presumption of Prudence?

Many appellate courts have ruled that fiduciaries who allow plan investment in employer stock are entitled to deferential judicial review or a “presumption of prudence” when the plan document requires or encourages the offering of employer stock as an investment option.  But a new Second Circuit decision demonstrates that references to an employer stock fund … Continue Reading

Investment Funds Not Liable for Pension Plans of Portfolio Companies, Court Rules

Private equity and other investment fund managers can exhale (at least a little bit) following a recent court ruling that investment funds are not liable for the ERISA obligations of their portfolio companies.  The ruling expressly rejects a 2007 Pension Benefit Guaranty Corporation (“PBGC”) letter ruling and contradicts an earlier court decision that supported the … Continue Reading

Verizon May Proceed with $7.5 Billion Pension Settlement, Court Rules

Earlier today, a federal district judge rejected an attempt by two Verizon retirees to block the $7.5 billion transfer of pension liabilities to Prudential (Lee v. Verizon, N.D. Tex.).  The court denied plaintiffs’ request for a temporary restraining order or preliminary injunction, finding that the plaintiffs did not establish a substantial likelihood of success on … Continue Reading

Supreme Court to Address Plan’s Ability to Recover the Cost of Medical Benefits for Injuries Caused by a Third Party

On Tuesday, November 27th, the Supreme Court will hear oral arguments in U.S. Airways v. McCutchen.  The case will address a medical plan’s ability to recover the cost of medical benefits for injuries caused by a third party.  McCutchen is important to employers, because a ruling against U.S. Airways might significantly increase the cost of providing … Continue Reading

Employer’s Declaratory Judgment Action Dismissed in Favor of Later Suit by Union

When an employee benefit plan is amended in a way an employer anticipates could be controversial, an employer might seek a declaratory judgment that the amendment complies with ERISA.  Generally, a declaratory judgment action will preclude later challenges by plan participants.  However, a recent decision by the Third Circuit demonstrates that the presumption in favor … Continue Reading