The Supreme Court’s January 24, 2022 decision in Hughes v. Northwestern University, has caused alarm in some corners, with panicked predictions of a proliferation of ERISA suits alleging that defined contribution plans provided imprudent investment options. However, Hughes should be more properly understood as rejecting an attempt by the U.S. Court of Appeals for the Seventh Circuit to impose a novel limit on excessive fee suits. The Supreme Court instead emphasized the application of its existing precedent in Tibble v. Edison International, 575 U.S. 523 (2015).
The Seventh Circuit had dismissed a class action complaint alleging the trustees of Northwestern Universities’ retirement plans breached their fiduciary duties by including imprudent investments among the investment options offered under the plans. The trustees offered more than 400 various investment options, several of which the plaintiffs asserted were imprudent and many of which were not. The Seventh Circuit held that the plaintiffs’ allegations failed as a matter of law (that is, could be dismissed without discovery or trial) because plaintiff’s preferred investment options were available under the plan (albeit alongside the allegedly imprudent options). Therefore, the Seventh Circuit considered the trustees to be blameless for any fiduciary breaches because the plaintiffs simply could have avoided the allegedly imprudent investments and chosen the prudent ones.
As we previously reported, the American Rescue Plan Act of 2021 (ARPA) was signed into law on March 11, 2021, requiring, among other things, the Pension Benefit Guaranty Corporation (PBGC) to issue its implementing regulations by July 9, 2021. As promised, PBGC issued an interim final rule, 86 Fed. Reg. 36598 (July 12, 2021) (the IFR), on a major element of the rescue plan―the Special Financial Assistance Program (SFA)―intended to provide a one-time payment to the estimated 200 most financially troubled multiemployer pension plans to help them survive and pay pensions through ...
The recent Seventh Circuit decision in Halperin v. Richards provides a reminder to ERISA fiduciaries who are also corporate officers (frequently referred to as “dual-hat officers”) that they can be held liable under both ERISA and state tort law for the same underlying acts.
When paper company Appvion Inc. filed for bankruptcy in 2017, the liquidation plan granted Appvion’s creditors the right to pursue state law tort claims against former Appvion executives. Halperin v. Richards concerned state law claims raised by certain creditors against former Appvion executives ...
On October 30, 2020, the Department of Labor (DOL) adopted the Final Rule amending the Investment Duties DOL Regulation, §2550.404a-1, which governs the obligations of ERISA fiduciaries when selecting investments for ERISA plans. The Final Rule made several changes to the June 2020 Proposed Rule, which proposed to define the duties of fiduciaries when considering investments that promote environmental, social, and corporate governance goals (ESG investments). As reported here, DOL received extensive and largely negative comments to the Proposed Rule and most of the ...
Employers that are fiduciaries of participant-directed individual account plans (such as 401(k) plans) subject to the Employee Retirement Income Security Act of 1974, as amended (‘Plans” and “ERISA”, respectively) should be pleased with the position taken by the Department of Labor (“DOL”) in an information letter dated June 3, 2020 (the “Letter”) addressing the use of private equity investments in designated investment alternatives offered in Plans. The DOL states that, subject to the standards and considerations set forth in the Letter (and summarized ...
In a recent 5-4 decision, the Supreme Court, in Thole v. U.S. Bank N.A., 590 U.S. __ (2020), held that participants in defined benefit pension plans lack standing to sue plan fiduciaries for allegedly imprudent plan investments where the participants continue to receive their full benefits and no imminent risk that they will cease receiving their full benefits appears.
Defined benefit plans—once the staple of employer-sponsored retirement plans but now a diminishing share of that group—guarantee a monthly payment in retirement using a formula based on years of service and ...
In EBSA Disaster Relief Notice 2020-01, “Guidance and Relief for employee Benefit Plans Due to COVID-19 (Novel Coronavirus) Outbreak” ( “Notice”), the DOL provided sponsors of defined contribution plans subject to ERISA relief from DOL enforcement action for failure to timely forward participant contributions and loan repayments to the plan during the period from March 1, 2020, and to the 60th day following the announced end of the National Emergency. This DOL relief, however, appears to be limited to ERISA violations and does not appear to provide protection from the ...
Fiduciaries of employee benefit plans subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) that appoint investment managers (“Appointing Fiduciaries”) will be interested in the opinion of the U.S. District Court for the Western District of Pennsylvania in Scalia v. WPN Corporation, et al (“WPN”) regarding their duty to monitor investment fiduciaries. Given the potential risk related to a breach this fiduciary duty, the WPN opinion is likely to be an important one for Appointing Fiduciaries.
In WPN, the Department of Labor alleged ...
Our colleague Sharon L. Lippett at Epstein Becker Green has a post on the Health Employment and Labor Blog that will be of interest to our readers in the retail industry: “A Reminder from the DOL: Document a Plan’s Procedures for Designating Authorized Representatives.”
Following is an excerpt:
While the Information Letter does not directly respond to the query from counsel to the Entity, the DOL’s response indicates that the Entity could be an authorized representative. The DOL states that, although a plan may establish reasonable procedures for determining ...
Financial institutions and advisers that manage retirement plan assets and are subject to the regulations of the Department of Labor (“DOL”) under the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) regarding fiduciary duties (the “Fiduciary Rule”) may also be subject to state law violations for failure to comply with the Fiduciary Rule. The Enforcement Section of the Massachusetts Division of the Office of the Secretary of the Commonwealth (the “Massachusetts Enforcement Section”) filed an administrative complaint (the ...
On November 2, 2017, three Republican Representatives, Mimi Walters (R-CA), Elise Stefanik (R-NY), and Cathy McMorris Rodgers (R-WA), introduced a federal paid leave bill that would give employers the option of providing their employees a minimum number of paid leave hours per year and instituting a flexible workplace arrangement. The bill would amend the Employee Retirement Income Security Act (“ERISA”) and use the statute’s existing pre-emption mechanism to offer employers a safe harbor from the hodgepodge of state and local paid sick leave laws. Currently eight ...
In Prince v. Sears Holding Corp., the United States Court of Appeals for the Fourth Circuit (the “Fourth Circuit” or the “court”) sets forth a test that should assist sponsors of employee benefit plans covered by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) in identifying when participants’ state law claims may be removed to the federal courts. The Fourth Circuit offers a clear explanation of complete preemption under Section 502(a) of ERISA and the test to determine if Section 502(a) completely preempts a state law claim.
Summary of the ...
Based on recent guidance from the Department of Labor (the “DOL”), many sponsors of employee benefit plans subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA Plans”) should have additional comfort regarding the impact of the conflict of interest rule released by the DOL in April 2016 (the “Rule”) on their plans. Even though it is widely expected that the Trump administration will delay implementation of the Rule, in mid-January 2017, the DOL released its “Conflict of Interest FAQs (Part II – Rule)”, which addresses topics relevant ...
Our colleague Sharon L. Lippett, a Member of the Firm at Epstein Becker Green, has a post on the Financial Services Employment Law blog that will be of interest to many of our readers in the technology industry: “New DOL FAQs Provide Additional Guidance (and Comfort) for Plan Sponsors.”
Following is an excerpt:
Based on recent guidance from the Department of Labor (the “DOL”), many sponsors of employee benefit plans subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA Plans”) should have additional comfort regarding the impact of the ...
Our colleague Sharon L. Lippett, a Member of the Firm at Epstein Becker Green, has a post on the Financial Services Employment Law blog that will be of interest to many of our readers in the retail industry: “New DOL FAQs Provide Additional Guidance (and Comfort) for Plan Sponsors.”
Following is an excerpt:
Based on recent guidance from the Department of Labor (the “DOL”), many sponsors of employee benefit plans subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA Plans”) should have additional comfort regarding the impact of the conflict of ...
Advisers and financial institutions that are compensated based on a fixed percentage of the value of assets under management may want to reconsider that compensation methodology as it could require compliance with a prohibited transaction exemption, such as the Best Interests Contract Exemption (the “BIC Exemption”), which is a component of the fiduciary rule issued by the Department of Labor (the “DOL”) in April 2016 (the “Final Rule”). While stating in the recently published “Conflict of Interest FAQs” (the “FAQs”) that the ongoing receipt of a fixed ...
With the financial crisis and recession behind us, mergers and acquisitions have picked up dramatically over the past several years. In 2015, more than 25,000 M&A deals were announced in the United States, valued at trillions of dollars, primarily involving companies in the hospitality, health care, pharmaceuticals, energy, and technology industries. This year and next, most financial experts foresee an increasing number of these transactions taking place.
In an M&A transaction, the buyer must determine whether it will acquire only the assets of the target company or acquire ...
Epstein Becker Green and The ERISA Industry Committee (ERIC) have released a new issue of the Benefits Litigation Update.
Featured articles include:
Recent Supreme Court Decisions Revise Rules for Stock Drop Cases
By: Debra Davis, The ERISA Industry Committee
Hobby Lobby and the Questions Left Unanswered
By: John Houston Pope
Post-Amara Landscape Continues to Evolve
By: Scott J. Macey, The ERISA Industry Committee
Supreme Court to Decide Whether A Failed Class Action May Extend
Deadline to Bring Follow-on Claims By Individual Plaintiffs
By: John Houston Pope and Debra Davis
Epstein Becker Green and The ERISA Industry Committee (ERIC) have released a new issue of the Benefits Litigation Update.
Featured articles include:
Recent Supreme Court Decisions Revise Rules for Stock Drop Cases
By: Debra Davis, The ERISA Industry Committee
Hobby Lobby and the Questions Left Unanswered
By: John Houston Pope
Post-Amara Landscape Continues to Evolve
By: Scott J. Macey, The ERISA Industry Committee
Supreme Court to Decide Whether A Failed Class Action May Extend
Deadline to Bring Follow-on Claims By Individual Plaintiffs
By: John Houston Pope and Debra Davis
In its Agency Rule List for Spring 2014, the U.S. Department of Labor (DOL) has proposed to amend the Regulations implementing the Family and Medical Leave Act (FMLA) by revising the definition of "spouse" in light of the United States Supreme Court's decision in United States v. Windsor, No. 12-307 (U.S. June 26, 2013). In Windsor, the Supreme Court struck down the provisions of the Defense of Marriage Act (DOMA) that denied federal benefits to legally married, same-sex couples. The FMLA entitles eligible employees of covered employers to take unpaid, job-protected ...
On February 2, 2012, the U.S. Department of Labor (“DOL”) issued final regulations under Section 408(b)(2) of ERISA. As a result, there is a new due date of July 1, 2012 by which certain service providers must make compensation disclosures to responsible plan fiduciaries of defined benefit and defined contribution plans (such as pension and 401(k) plans). This provides an extension of the April 1, 2012 due date issued under prior guidance. The regulations set forth the types of information that must be disclosed so that the plan fiduciaries can assess the reasonableness of the ...
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Recent Updates
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