New Trends in ERISA Litigation in 2016
ERISA lawsuits against retirement plans in 2016 have included new allegations not seen before and have spread to target different types of plans and plan sponsors, and experts predict more of the same in 2017.
Key Points and Trends:
“I see something I haven’t seen in a great volume before– a probing at quality of fiduciary process” (Charles G. Humphrey, Employee Benefits and ERISA counsel at Fiduciary Plan Governance LLC)
“2016 saw an expanding panoply of theories for attacking investment options and other aspects of the administration of 401(k) plans, and more of the same can be expected going forward” (Stephen Rosenberg, Esq., partner at The Wagner Law Group).
“Cases filed in 2016 have also targeted fee disclosures and arrangements between plans and service providers” (Nancy Ross, partner and head of ERISA litigation practice at Meyer Brown LLP)
Targets of litigation have changed. Ross notes that “not only corporate plan sponsors, but university and college retirement plan sponsors were hit with excessive fee suits.”
Church plans have faced lawsuits challenging their non-ERISA status. A split in the circuits has let to cases being taken up by the U.S. Supreme Court.
Tibble v. Edison concluded that fiduciaries have an ongoing duty to monitor investments. “Plaintiffs are tacking on claims of failure to monitor investments over the years” (Ross).
New standards set for stock-drop cases: “the need for plan participants to prove, for their stock drop claims to proceed, that plan fiduciaries could have taken action during, or before, the collapse in value of company stock that would have made the situation better, and not worse” (Rosenberg).
Opportunity for dollars for plaintiff’s bar, and settlements are fueling the fire. “Attorneys want in on the action… they are not just putting ads in local newspapers, they are trolling for business on Facebook” (Ross).
“My advice to plan sponsors is complete disclosure” (Ross).
More cases will focus on the quality of decisionmaking… those bringing them are kind of experimenting” (Humphrey).
“The “DOL rule is a bit of a wild card because there is no assurance that it will continue under the Trump Administration as is scheduled to take place on April 10, 2017″ (Salkin).