ERISA Litigation

Trends & Insights

A New York district court judge earlier this month disqualified a firm representing hundreds of 401(k) plan participants based on a conflict of interest.  The judge called the risks posed “endless,” and requested additional briefing on whether the firm would be allowed to remain as counsel in related arbitration proceedings in Missouri.  The ruling spotlights the sometimes-thorny conflict issues that can arise in ERISA litigation. Litigation in the Empire State; arbitration in the Show-Me State…
Retirement plans may have thousands of participants and billions of dollars in plan assets. Unfortunately, these large sums of money are attractive to bad actors who look to prey on unknowing victims by fraudulently accessing funds. Plan administrators, as fiduciaries of retirement plans, are wise to understand their legal obligations and best practices related to the security measures they must implement and maintain to protect these funds from cybercrimes. Recent Cyber Attacks Against Retirement Plans…
The Seventh Circuit has issued its decision in the much-anticipated case of Divane v. Northwestern.  The district court below had refused to allow plaintiffs to proceed with breach of fiduciary duty and prohibited transaction claims based on the recordkeeper’s use of participant data for purposes of “cross-marketing” non-plan services to plan participants.  The issue arose in a unique procedural posture, a motion for leave to amend the complaint near the close of discovery. The…
In a prior post, we commented on the growing trend of fiduciaries making non-monetary concessions to settle ERISA fee litigation cases. We observed that certain “onerus” non-monetary settlement features – such as obligating fiduciaries to provide plaintiffs’ counsel with customized reports on plan operations and performance during a years-long “monitoring” period — are significant and intrusive and that they are sowing the seeds of potential future disputes. Well, the trend continues. In recent months…
As the bellwether cases in the ERISA actuarial assumptions litigation approach the end of the motion to dismiss stage, this is a good time to step back and assess how they are proceeding. Test cases of this sort tend to unfold in phases. In the first phase, plaintiffs file a series of test cases, floating new legal theories and challenging relatively wide-spread behavior on a selective basis. Defendants respond by filing motions to dismiss, testing…
Many Americans use prescription drugs on a daily basis to control or prevent a wide variety of illnesses. However, the increasing costs of prescription drugs make it hard for many Americans to obtain the medications they require. One way to combat this is through the use of manufacturer coupons. The process is simple. A manufacturer sells a high-priced prescription drug and pairs it with a coupon to allow an individual to obtain the drug at…
There always seem to be enough open important questions to keep ERISA practitioners operating in some uncertainty. When new legislation or regulatory guidance is not forthcoming, ERISA practitioners only have the Supreme Court and the lower federal courts to look to for assistance. Although the Supreme Court usually takes either zero or one ERISA cases per year, beginning earlier in 2019, the Supreme Court has shown a renewed interest in ERISA. At least four ERISA-related…
Part 2: Partial Plan Terminations Workforce reductions seem to be an inescapable consequence of economic downturns. Whether this occurs through the sale of a business, layoffs or plant closures, employers too often overlook the potential impact on their employer-sponsored retirement plans. Unfortunately, failure to recognize and timely address the retirement plan implications of a reduction in force can jeopardize the plan’s tax qualified status and lead to costly and time-consuming corrections. Earlier this month, we…
Part 1: Introduction Some economists are now predicting a global economic downturn as soon as 2020, as indicators from bonds, interest rates, currencies, and commodities signal declining growth, including the recent inversion of the yield curve. While there is not a consensus on this point (as George Bernard Shaw once said, “if all economists were laid end to end, they would still not reach a conclusion”), it’s hard to ignore the growing chorus. There…
Employee stock ownership plans (“ESOPs”) are a valuable tool for businesses to create a succession plan and provide retirement benefits to employees by having employees purchase employer stock. Although self-interested transactions are generally prohibited under the Employee Retirement Income Security Act of 1974 (“ERISA”), ESOPs are encouraged under ERISA despite the fact that the plans can only invest in the employer stock through related party transactions. This Congressional encouragement has even been noted by the…