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.

Eleven Republican AGs Sue BlackRock, State Street, Vanguard in ESG Case

Eleven states have filed a complaint against BlackRock Inc., State Street Corp., and Vanguard Group Inc. in the U.S. District Court for the Eastern District of Texas. The states accuse these asset managers of anti-competitive practices aimed at constricting coal markets and misleading investors regarding funds that do not prioritize environmental, social, and governance factors. The complaint alleges that these companies held significant stakes in U.S. coal firms and influenced them to shift towards green energy goals. The plaintiffs argue that the asset managers' involvement in initiatives like Climate Action 100+ and the Net Zero Asset Managers Initiative has manipulated coal output, resulting in higher costs for coal-powered electricity.

Source: Planadviser.com, November 2024

Sixth Circuit Clarifies That Plaintiffs Must Plead, Not Prove, Excessive Fees

The article discusses a ruling from the Sixth Circuit Court of Appeals regarding litigation over excessive fees in retirement plans, specifically focusing on the distinction between pleading standards and the burden of proof for plaintiffs in such cases. The court clarified that plaintiffs in cases alleging excessive fees do not need to definitively prove that fees are excessive at the pleading stage. Instead, they must only sufficiently plead that the fees are excessive based on relevant facts. This ruling has implications for how participants can challenge fee structures in retirement plans, emphasizing the importance of the initial pleading stage in these legal matters. Overall, it contributes to the ongoing dialogue regarding fiduciary responsibilities and transparency in retirement plan management.

Source: Yourerisawatch.com, November 2024

DC Plan Sponsors and Forfeiture Lawsuits Webinar: What You Need to Know

In a recent webinar hosted by NEPC's Dan Beaton and Groom Law Group's Jennifer Eller, the discussion focused on the surge of lawsuits involving defined contribution plan forfeiture accounts. They explored the allowed uses of forfeitures and offered strategies for plan sponsors to minimize the risk of litigation in this area. The replay of the webinar is available here.

Source: Nepc.com, November 2024

Capital One Facing 401k Plan Forfeiture Suit

In a recent case, Capital One is facing a lawsuit regarding alleged forfeitures within its 401k plan. The lawsuit, filed by former employees, claims that the company improperly enforced a policy that led to the forfeiture of retirement plan benefits due to insufficient vested service. The plaintiffs argue that they were not adequately informed about the implications of the plan's provisions, which they believe was misleading and harmed their retirement savings. The outcome of this case may have significant implications for how companies manage their 401(k) plans and communicate with employees about their retirement benefits.

Source: Planadviser.com, November 2024

John Hancock, Not 401k Plan, Receives Fruit of Foreign Tax Credits in Pooled Investments

In a certified class action lawsuit, 401k plan trustees accused John Hancock Life Insurance Company of breaching fiduciary duties under ERISA. They claimed that John Hancock did not pass on foreign tax credits to the plans, resulting in a decrease in the plans' asset value, and argued that the company profited from these credits without disclosing this in contract terms. The plaintiffs asserted that this behavior constituted a prohibited transaction since the plans were burdened with double taxation. However, the court ruled that John Hancock was not acting as a fiduciary in managing the separate accounts for the retirement investments or when obtaining the foreign tax credits.

Source: Yourerisawatch.com, November 2024

Clorox Wins First Round in 401k Plan Forfeiture Lawsuit

A class action lawsuit by former Clorox employee James McManus regarding the company's handling of forfeited 401k funds was mostly dismissed by U.S. District Judge Yvonne Gonzalez Rogers. The judge ruled that McManus's breach of fiduciary duty claim under ERISA was too broad and required more specific details. McManus was given until November 12 to revise his complaint, emphasizing the need to demonstrate "special circumstances" affecting fund management, referencing a U.S. Supreme Court standard. McManus argued that Clorox improperly used forfeited contributions to offset the company's expenses, while Clorox maintained that reallocating forfeitures within the plan is permissible under ERISA.

Source: Planadviser.com, November 2024

Coca-Cola Southwest Faces Lawsuit Over Forfeitures, Target-Date Funds

Former participants of the Coca-Cola Southwest Beverages LLC 401k plan have filed a lawsuit alleging that the company breached its fiduciary duties under ERISA. The complaint, known as Ware et al. v. Coca-Cola Southwest Beverages LLC, claims that the company offered "underperforming" target-date funds and mismanaged forfeited 401k funds. Specifically, the plaintiffs allege that the J.P. Morgan TDFs provided by Coca-Cola SW were expensive and underperformed compared to similar funds and benchmarks. The case is being heard in the U.S. District Court for the Northern District of Texas.

Source: Plansponsor.com, November 2024

Pfizer Gets 401k Plan Fee Lawsuit Tossed

The U.S. District Court for the Western District of Michigan dismissed a lawsuit against Pfizer Inc. regarding alleged "unreasonable" recordkeeping and administrative fees. Judge Paul Maloney ruled that plaintiff Matthew Miller, a former employee, did not adequately support his claims and used a flawed methodology. As part of a joint agreement, Miller waived his right to appeal the dismissal, and Pfizer agreed not to pursue legal fees or costs from him.

Source: Planadviser.com, October 2024

ERISA Row Related to How Employers Use 401k Forfeitures Deepens

Since last fall, plaintiffs have initiated over twenty ERISA class actions alleging breaches of fiduciary duties concerning 401k plan forfeitures. Despite existing guidance from the Treasury Department and the Department of Labor, this new legal theory is gaining traction. Two preliminary rulings have permitted these forfeiture claims to advance, further encouraging this trend. However, two recent decisions, one addressing fiduciary discretion and the other exploring the limits of ERISA, provide valuable insights and nuanced discussions on the issue.

Source: Nixonpeabody.com, October 2024

"Flawed" Methodology, Comparisons Doom Excessive Fee Suit

In a recent case (Matthew A. Miller v. Pfizer Inc. et al.), a federal court dismissed an excessive fee lawsuit against a retirement plan, citing flawed methodology in the comparisons used by the plaintiffs. The court found that the plaintiffs failed to adequately demonstrate that the fees in question were excessive by relying on inappropriate benchmarks. The decision underscores the importance of using correct methodologies when challenging fees in retirement plans, as the court emphasized the need for precise and relevant comparisons to support claims of excessive charges. This ruling highlights the challenges plaintiffs face in proving their cases in similar lawsuits.

Source: Napa-net.org, October 2024

Northern Trust Reaches Tentative Settlement in 401k Suit

Northern Trust Co. has reached a tentative settlement regarding a class-action lawsuit related to the use of in-house target-date funds in its company benefit plan. The lawsuit, originating in 2021, involved six participants who alleged that the plan committee did not prudently select or monitor investment options for performance and fees. The plaintiffs specifically criticized the decision to retain 11 Northern Trust Focus Funds from the firm's asset management division. The settlement aims to resolve the long-standing dispute.

Source: Planadviser.com, October 2024

Federal Judge Refuses to Dismiss Intuit Lawsuit as 401k Forfeiture Suits Continue to Proliferate

A federal judge in California has declined to dismiss a lawsuit against Intuit, where retirement plan participants allege the company improperly used forfeited funds from its 401k plan. This ruling upholds key claims in the lawsuit and highlights a growing trend of 401k forfeiture cases under ERISA in federal courts. U.S. District Court Judge P. Casey Pitts allowed claims of breach of fiduciary duties based on the assertion that Intuit used unvested forfeited funds for matching contributions for new employees, rather than reducing overall plan expenses.

Source: Hallbenefitslaw.com, October 2024

Supreme Court to Decide ERISA Prohibited Transaction Dispute

On October 4, 2024, the Supreme Court agreed to hear the appeal in Cunningham v. Cornell University, which addresses discrepancies among U.S. Courts of Appeals regarding the pleading requirements for plaintiffs challenging the relationship between benefit plans and service providers under ERISA. By granting the plaintiff's petition for writ of certiorari, the Court aims to resolve this circuit split, with a decision expected next year as the current term has just begun.

Source: Groom.com, October 2024

Court Says '23 Budget Not Legally Enacted: Could that Affect SECURE 2.0?

A federal district court has determined that the Consolidated Appropriations Act of 2023, which includes SECURE 2.0, was passed in violation of the Constitution’s Quorum Clause. While this ruling currently does not affect SECURE 2.0, Allison Wielobob, Chief Legal Officer of the American Retirement Association, advises monitoring the situation for future implications.

Source: Asppa-net.org, October 2024

Another 401k Excessive Fee Suit Settles for Cash and Change

A $400 million retirement plan has reached a $1.5 million cash settlement in an excessive fee lawsuit. The suit, filed in 2022 against the fiduciaries of the Nova Southeastern University 401k plan, alleged that the plan included underperforming, higher-cost funds, as well as excessive recordkeeping fees, despite the availability of cheaper alternatives. Changes to the plan will also be implemented as part of the settlement.

Source: Napa-net.org, October 2024

Bank of America Faces ERISA Suit Claiming Misuse of Forfeited 401k Funds

Bank of America has been hit with a class action lawsuit claiming it misused forfeited 401k funds, allegedly violating its fiduciary duty under ERISA. Participants in the retirement plan argue that the bank improperly benefited from matching contributions that employees forfeited upon leaving the company. This lawsuit is part of a broader trend, with several major companies facing similar legal challenges across the country.

Source: Hallbenefitslaw.com, October 2024

Supreme Court to Review ERISA Prohibited Transactions

The U.S. Supreme Court will hear a case involving participants of Cornell University's retirement plan focusing on the burden of proof for prohibited transactions under ERISA. Lindsey Camp, an ERISA litigation partner at Holland & Knight, notes that the Court's decision to take the case highlights key issues regarding the pleading requirements for prohibited transaction claims, specifically whether plaintiffs must indicate any imprudent conduct related to the transaction in their complaints.

Source: Planadviser.com, October 2024

Nvidia Strikes a Settlement in Excessive Fee Suit

Despite numerous attempts to quash the suit, the parties in an excessive fee suit say they are close to working out a settlement.

Source: Napa-net.org, October 2024

Circuit Split Deepens With Home Depot's 11th Circuit ERISA Win

A three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit has upheld the dismissal of a 401k-plan mismanagement suit brought by plan participants in favor of Home Depot. The ruling affirmed a Georgia federal court's grant of summary judgment in the suit, in which plan participants claimed that the home improvement retailer violated ERISA in charging excessive fees and maintaining subpar investments.

Source: Hallbenefitslaw.com, October 2024

Recent Developments in Forfeiture Cases: Update

This article is the Wagner Law Group's sixth update reporting on and analyzing the nature of the "forfeiture" litigation claims raised by plaintiffs, the defenses asserted against them and the court opinions deciding the issues raised in these matters. In addition to providing an overview of the recent Thermo Fisher decision, this article also discusses the complaint filed against Knight Smith as well as a similar forfeiture complaint filed by the DOL in 2017.

Source: Wagnerlawgroup.com, October 2024

Why Does the DOL Allow ERISA Regulation Through Litigation By Plaintiff Lawyers

Why would America's plan sponsors continue to offer retirement plans with generous company matches if the trial bar is going to turn these voluntary benefits into liability traps? Just wait for a recession, and smart employers that want to reduce liability risk will eventually eliminate employee benefit plans that are targeted by the plaintiff trial bar. If you think this is an exaggeration, then you have not been watching the latest five trends of the plaintiff ERISA trial bar as they work to create novel fiduciary liability as America's de facto fiduciary liability regulators.

Source: Encorefiduciary.com, October 2024

Bid for Jury Trial Bounced in 403b Excessive Fee Suit

A long-running excessive fee suit involving a university 403b plan -- and is incredibly, still running -- won't have a jury trial, according to a new federal court ruling. The suit was brought by participants in plans of New York University. This case reminds us that litigation frequently involves a series of motions and countermotions, often small procedural victories that contribute little to the merits, but can influence the eventual outcome of the case.

Source: Ntsa-net.org, September 2024

Defendants Secure Another Win on Discretionary Use of 401k Plan Forfeitures

On September 19, 2024, the Southern District of California dismissed claims brought by a 401k plan participant against Thermo Fisher Scientific regarding the use of forfeitures to offset future employer contributions. As summarized in this article, the decision largely tracks a decision in favor of Hewlett Packard earlier this year, furthering a split in rulings on the issue by federal courts in California.

Source: Groom.com, September 2024

DOL vs. IRS Rules: Courts Asked to Decide How 401k Plans Can Use Forfeiture Assets

What started as a small law firm filing a handful of suits against 401k plans' use of forfeited funds has metastasized into a broad attack on sponsors that raises questions about reducing participants' expenses. It's a trend of law firms filing more lawsuits seeking to use DOL regulations regarding fiduciary duty to supersede IRS rules. The eruption of lawsuits has been accompanied in the early stages by divergent federal court decisions that don't give plan sponsors -- and their ERISA attorneys -- a clear picture of how to defend against this type of lawsuit.

Source: Wagnerlawgroup.com, September 2024

Chevron Explained

On June 28, the U.S. Supreme Court issued its decision in Loper Bright Enterprises v. Raimondo. The court overruled its own 1984 holding in Chevron v. Natural Resources Defense Council, in which it stated that the federal courts, in many cases, should defer to agency interpretations of ambiguous federal statutes. Here, ERISA expert David Kaleda unpacks the Supreme Court decision that gives the courts more weight in areas that include employee benefits law.

Source: Planadviser.com, September 2024

Multi-Billion-Dollar 403b Plan Settles Excessive Fee Suit

"After years of hard-fought litigation," a multi-billion-dollar 403b plan has struck a deal in an excessive fee suit. This suit involves plans of the MITRE Corporation Tax Sheltered Annuity Plan and the Qualified Retirement Plan with more than 23,000 participants and more than $8 billion in assets between them.

Source: Ntsa-net.org, September 2024

A Growing Trend: Fiduciary Secures Trial Victory in Excessive Fee Litigation

On August 22, 2024, the Central District of California found in favor of Prime Healthcare after a bench trial on breach of fiduciary duty claims related to the monitoring of recordkeeping expenses and selection of investments. This decision is another example of district courts across the country rejecting excessive recordkeeping fees and imprudent investment claims after trial. It also provides a notable rejection of the testimony from certain experts that the plaintiffs' bar has used in recent years to support these types of claims.

Source: Groom.com, September 2024

DOL Seeks to Keep ERISA Investment Advice Regulations in Place

The DOL recently filed a reply brief in a lawsuit brought by insurance industry groups seeking to block new regulations that expand the definition of fiduciary under ERISA. In its brief, the DOL asked the Court to deny a motion for a preliminary injunction that would prevent the agency from implementing and enforcing the new regulations.

Source: Hallbenefitslaw.com, September 2024

Lawsuit Related to Use of Forfeitures Dismissed

On September 5, 2024, a federal court for the Eastern District of Virginia dismissed claims that a 401k plan participant asserted against BAE Systems regarding the use of forfeitures to reduce future employer contributions. The Court's ruling is a significant victory for defendants in the newest wave of ERISA litigation. The decision underscores that including plan terms that eliminate discretion by directing how forfeitures are to be used can mitigate litigation risk.

Source: Groom.com, September 2024

District Court Permits 403b Plan Fiduciary Breach Claims to Proceed

A federal district court in Massachusetts recently denied a motion to dismiss a complaint filed by plan participants in the Cape Cod Healthcare, Inc. 403b plan, which alleged that the plan's fiduciaries breached their ERISA duty of prudence by permitting the plan to pay excessive recordkeeping fees and remain invested in overpriced, underperforming investment options. Plaintiffs, both former employees of Cape Cod Healthcare, alleged that Cape Cod Healthcare (plan sponsor and named fiduciary) and individual fiduciary defendants breached their fiduciary duty in two ways.

Source: Erisapracticecenter.com, September 2024

Forfeiture Cases Update: BAE Prevails on a Motion to Dismiss

On September 5, 2024, United States District Court Senior Judge Trenga, Eastern District of Virginia, issued the fourth substantive ruling on a motion to dismiss in a forfeiture case, granting BAE Systems' motion. The BAE decision breaks somewhat from other court's line of reasoning. In particular, the BAE Court concluded that the facts before it were distinguishable from the factual predicates underlying the other cases in which other courts have issued rulings on motions to dismiss. In the eyes of the BAE court, the particular language in the BAE plan did not provide plan fiduciaries with the discretion to apply forfeitures to pay plan expenses ahead of employer contributions.

Source: Wagnerlawgroup.com, September 2024

BAE Beats 401k Plan Forfeiture Suit

BAE Systems Inc. has beaten back a class action lawsuit accusing the company of misusing 401k plan forfeitures. U.S. District Judge Anthony Trenga, of the U.S. District Court for the Eastern District of Virginia, granted BAE's motion to dismiss the complaint by a current employee and plan participant seeking class-action status, according to an opinion and order filed Thursday.

Source: Planadviser.com, September 2024

Court Appears Skeptical of Invalidating the DOL's ESG Rule Despite the Fall of Chevron

A U.S. Court of Appeals for the Fifth Circuit panel appeared skeptical during oral arguments in which conservative states and Texas-based energy interests sought to reverse a district judge's order upholding an environmental, governance, and social rule in an Administrative Procedure Act case. The states also have asked the Fifth Circuit to remand the case and vacate the DOL rule as in conflict with ERISA.

Source: Hallbenefitslaw.com, September 2024

Sixth Circuit Sets Limits on Mandatory Arbitration Provisions in ERISA Plans

Plan sponsors often include arbitration provisions in employee benefit plans to resolve plan disputes outside of the courtroom. However, the recent Sixth Circuit Court of Appeals decision in Parker v. Tenneco is a good reminder to plan sponsors to ensure that plan arbitration provisions are not too restrictive and do not otherwise impede or waive a participant's statutory rights and remedies under ERISA to avoid a court finding the arbitration provision unenforceable.

Source: Haynesboone.com, September 2024

Suit Alleges "Scheme" by TIAA and Morningstar to Drive Participants Into TIAA's Most Profitable Funds

Three plaintiffs sued TIAA and Morningstar claiming the defendants engaged in a "scheme to enhance corporate profits" by counseling participants to invest in two of TIAA's most lucrative investment vehicles. Plaintiffs target ERISA and non-ERISA plans. The complaint alleges that TIAA and Morningstar developed an investment advisory tool deliberately inducing participants to transfer account balances into TIAA's Traditional Annuity and/or Real Estate Account, TIAA's two most profitable investment products.

Source: Erisalitigationadvisor.com, September 2024

Salesforce Settles 401k Suits for $1.35M

Salesforce Inc. has settled for $1.35 million a pair of outstanding 401k lawsuits alleging excessive retirement plan fees. The settlement requires court approval. The agreement brings to a close about four years of litigation across two separate lawsuits, according to a motion filed August 23 in U.S. District Court for the Northern District of California.

Source: Planadviser.com, September 2024

What the End of the Chevron Doctrine May Mean for ERISA's Fiduciary Provisions

Loper Bright will have an impact on most executive agencies, and a surge of litigation is expected as parties seek to have courts independently examine regulations interpreting federal laws, especially in new or recent regulations. The overturning of Chevron also raises the question of what other existing regulations may be ripe for challenge in the new landscape.

Source: Morganlewis.com, September 2024

Sixth Circuit Finds Individual Arbitration Provision in 401k Plan Unenforceable

The Sixth Circuit now joins the Second, Third, Seventh, and Tenth Circuits in concluding that an arbitration agreement may not prospectively waive participant rights under ERISA to seek plan-wide relief. Because the individual arbitration provision prohibited participants from recuperating all losses to the plans and restoring profits resulting from the fiduciary breaches, the court concluded that it functioned as a prospective waiver of the participants' substantive statutory remedies and, under the effective vindication doctrine was unenforceable.

Source: Benefitslink.com, September 2024

Forfeiture Cases -- Update

Several class action lawsuits have been filed alleging that plan fiduciaries violated their duties of prudence and loyalty under ERISA by applying forfeitures to reduce employer contributions instead of to reduce administrative expenses borne by plan participants. There is now more to report including (a) another order denying a motion to dismiss issued this week in the Intuit case, (b) an order denying a motion to reconsider or certify the issue for interlocutory appeal in the Qualcomm case, and (c) the filing of two more lawsuits against large plan sponsors alleging misconduct in the use of forfeiture amounts. Here are the details.

Source: Wagnerlawgroup.com, August 2024

401k Forfeiture Lawsuits Continue to Advance

While the use of 401k plan forfeitures to offset employer contributions has been a longstanding practice permitted by U.S regulators, recent litigation scrutinizing plan fiduciaries' use of forfeitures under ERISA continues both to be filed and to progress in courts. In recent weeks, a new class action complaint was filed, and two existing lawsuits survived district court challenges by the defendant companies.

Source: Plansponsor.com, August 2024

How Justices Upended the Administrative Procedure Act

In three cases handed down over the final three days of its last term, the U.S. Supreme Court made fundamental changes to the federal Administrative Procedure Act that undermined Congress and the executive branch by shifting power to the judiciary. By shifting decision-making from administrative agencies to the judiciary, the Loper Bright, Corner Post, and Jakesy troika create great uncertainty and unpredictability, while simultaneously limiting opportunity for clarity regarding duties and obligations.

Source: Hansonbridgett.com, August 2024

Eleventh Circuit Reiterates That Burden of Proving Loss Causation Stays With Plaintiffs

The Eleventh Circuit Court of Appeals recently affirmed a district court's grant of summary judgment in favor of the fiduciaries of the Home Depot 401k plan, who defended against claims that they breached their fiduciary duties by permitting the plan to pay excessive financial advisor fees and retaining underperforming investments. In so ruling, the court brought back to the fore a circuit split over whether the burden of persuasion on loss causation shifts when a plaintiff establishes or raises genuine issues of fact as to breach and loss to the plan.

Source: Erisapracticecenter.com, August 2024

How Employee Benefits Rules May Fare in the Post-Chevron World

The Supreme Court's long-awaited decision overruling its landmark 1984 decision in Chevron USA v. Natural Resources Defense Council, held that a court considering a federal agency's regulatory interpretation of a statute must follow the "best" reading of the statute, not just a "permissible" reading. This raises the bar for federal agencies, including those administering employee benefits laws. The decision has already affected ERISA litigation, as discussed here. This article also identifies some other potential effects.

Source: Wagnerlawgroup.com, August 2024

Judge Dimisses 401k Excessive Fee Allegations Against Tyson Foods

A federal judge in the U.S. District Court for the Western District of Arkansas dismissed a lawsuit filed against Tyson Foods Inc., which had accused the company of overcharging participants for recordkeeping fees and failing to solicit competitive bids.

Source: Planadviser.com, August 2024

Another ERISA Forfeitures Lawsuit Allowed to Proceed

A court hearing a lawsuit against Intuit, Inc., and its benefits committee denied the company's motion to dismiss, finding the plaintiff had sufficiently pled her fiduciary breach, anti-inurement, and prohibited transaction claims and that the plan "as a whole was damaged." In the complaint in this case, the plaintiff faulted Intuit for allegedly failing to use plan forfeitures to eliminate administrative expenses charged to participants' accounts and instead used those funds to reduce the company's contributions to the plan.

Source: Millerchevalier.com, August 2024

District Court Dismisses 401k Forfeited Funds Suit Against HP

A California federal district court judge has dismissed a novel proposed class action suit against HP involving the company's alleged misuse of 401k funds forfeited by former workers. The judge reasoned that nothing in federal benefits law compelled HP to use the funds for plan expenses rather than to reduce its employer contributions.

Source: Hallbenefitslaw.com, August 2024

Lawsuit Alleges TIAA, Morningstar, Pushed Participants Into Proprietary Annuities

Retirement plan participants have filed a class action lawsuit against TIAA and Morningstar for allegedly breaching their fiduciary duty by using a jointly created retirement planning tool to steer participants into TIAA investment products. The plaintiffs alleged that a retirement tool -- known as the Retirement Advisor Field View -- was designed to push participants in college and university retirement plans into TIAA annuity investment offerings.

Source: Planadviser.com, August 2024

"Bad" Comparators Bounce Tyson 401k Excessive Fee Suit

A federal judge has dismissed an excessive fee suit against Tyson Foods' 401k plan, finding that the plaintiffs hadn't provided comparison plans against which to conclude the fees paid were unreasonable. The plaintiffs allege that the defendants, as fiduciaries of the Plan, breached their duty of prudence they owed to the Plan by requiring the Plan to pay excessive recordkeeping and administrative fees, and "by failing to remove their high-cost recordkeeper, Northwest Plan Services, Inc."

Source: Napa-net.org, August 2024

Fifth Circuit Remands ESG Rule in First ERISA Test Case Post-Chevron

The Fifth Circuit did not decide whether the DOL properly promulgated the ESG rule. Instead, the court noted that Loper Bright "upended the legal landscape" by eliminating the Chevron deference and it could not consider the merits of the case because the district court relied on Chevron in deferring to the DOL's rulemaking process. With the removal of the Chevron duty to defer, the Fifth Circuit held that it was required to remand the case to the district court to make an independent determination of whether the rule was within the DOL's authority to pass.

Source: Erisalitigationadvisor.com, August 2024

Appellate Court Backs Home Depot in 401k Excessive Fee Suit

A federal appellate court has backed the decision of the district court -- rejecting claims made in an excessive fee suit, not only finding a prudent process -- but ruling that those bringing suit had to prove that any losses to the plan were the result of imprudent actions.

Source: Napa-net.org, August 2024

Major 401k Litigators Are Back in Action With More Entering the Fray

Just more than halfway through 2024, 401k plan lawsuits based on ERISA show no sign of slowing down. After a dip in the number of lawsuits in 2023, they have picked up pace in 2024, with complaints ranging from excessive fees for recordkeeper services to the use of managed accounts in plans. The most prolific law firms like Walcheske & Luzi and Capozzi Adler are filing a consistent number of cases.

Source: Planadviser.com, August 2024

The Demise of Deference: Podcast

With far-reaching implications -- likely including the Labor Department's fiduciary rule -- the nation's highest court has set aside a long-standing judicial deference to federal regulators in interpreting the law. In this podcast, Nevin Adams and Fred Reish consider the impact.

Source: Nevinandfred.com, August 2024

Multi-Employer Plan Sponsor Settles 401k Fee Suit

CURPA, a Wisconsin-based professional employer organization, provides services to credit unions, such as payroll, employee benefits, and other employee management tasks. One of those benefits is a multi-employer 401k plan with more than 20,000 participants with account balances at the end of 2020, as per the DOL. Former plan participants in the CURPA multi-employer 401k plan have reached a deal to settle an ERISA suit over excessive fees.

Source: Hallbenefitslaw.com, August 2024

Class Action Claims Wells Fargo Misused Forfeited 401k Funds in Violation of ERISA

A former Wells Fargo employee filed a proposed class action lawsuit against the company, alleging that it violated ERISA in using forfeited 401k funds to reduce its contributions to the plan rather than benefit plan participants. According to the suit, the net result was that the company's actions reduced plan assets and caused plan participants to incur expenses that the forfeited funds could have covered.

Source: Hallbenefitslaw.com, July 2024

Fifth Circuit Appeals Court Sends DOL ESG Case Back to Texas Court

A Texas district court will rehear a challenge to the Department of Labor's environmental, social, and governance rule for investing in defined contribution retirement plans after the U.S. 5th Circuit Court of Appeals remanded the case due to a recent Supreme Court decision. In his ruling, U.S. Circuit Judge Don R. Willett cited the Supreme Court overturning of the longstanding Chevron standard, claiming that in initially upholding the DOL's rule, the district court had relied upon the decades-old Chevron deference doctrine.

Source: Planadviser.com, July 2024

Are the Floodgates About to Open After the Demise of Chevron Deference?

In 2021, the DOL adopted a new rule that interpreted ERISA to allow retirement plan managers to consider the ESG factors. The new rule was immediately challenged by a group of states, companies, and trade associations. The district court, following the mandate of Chevron, deferred to the interpretation of the current DOL and rejected the challenge. Plaintiffs appealed. And then SCOTUS overruled Chevron. In a new decision, a three-judge panel of the Fifth Circuit has elected not to answer that weighty question on appeal "Given the upended legal landscape, and our status as a court of review, not first view, we vacate and remand so that the district court can reassess the merits." Are we about to see a slew of these types of decisions revisiting agency regulations after the demise of Chevron?

Source: Cooleypubco.com, July 2024

Qualcomm Bid for Dismissal of 401k Forfeiture Suit Denied

A federal district court judge denied Qualcomm's motion to dismiss a lawsuit filed by a former employee and current company 401k retirement plan participant. Antonio Perez-Cruet alleges in his ERISA suit that Qualcomm violated its duty of prudence when it used forfeited retirement funds to reduce its plan contributions rather than decrease administrative expenses borne by plan participants. The judge ruled that Perez-Cruet met his burden of alleging a plausible cause of action.

Source: Hallbenefitslaw.com, July 2024

Takeaways From Dismissal of Anti-ESG Lawsuit Against New York City Pension Funds

The New York County Supreme Court has dismissed a case that challenged the decision by several New York City Pension Funds to divest billions of dollars of investments in companies involved in the extraction of fossil fuels. The N.Y. court decided dismissal is appropriate because the plaintiffs participate in defined benefit plans that entitle them to fixed benefits each month and therefore face no injury and lack standing to challenge investment decisions that have no impact on the guaranteed retirement benefits they will receive.

Source: Cohenbuckmann.com, July 2024

How to Prevent a Lawsuit Over Retirement Plan Forfeitures

There has been a rash of lawsuits recently challenging how forfeitures are used in retirement plans. The novel theory in these suits -- a purported misuse of discretion in the application of forfeitures -- has recently gained some steam and legitimacy after surviving a motion to dismiss in Perez-Cruet v. Qualcomm. Employers with retirement plans that provide discretion over the use of forfeitures should consider making a simple plan design change to avoid being a litigation target.

Source: Bradley.com, July 2024

First Reasoned ERISA Forfeitures Decision Dismisses Complaint

Since September 2023, ten lawsuits have been filed alleging a novel theory of liability against ERISA plan sponsors for their use of forfeited employer-matching retirement plan contributions. Motions to dismiss have been filed or will be filed in all the lawsuits. After thoughtful deliberation, a federal trial judge in Silicon Valley dismisses the ERISA 401k plan forfeitures suit against HP Inc., albeit with leave to amend.

Source: Nixonpeabody.com, July 2024

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