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As employee benefits issues become increasingly litigious, and class action lawsuits spring up with every downward tick in the stock market or slight dip in employees’ retirement funds—a comprehensive guide to the fast-paced world of ERISA becomes a real asset. The ERISAinBrief blog is a service of Alston & Bird’s ERISA Litigation Practice Group, through which you can review and absorb, at a glance, the latest hot topics related to employee benefit plans, running the gamut from compliance concerns, recent opinions and litigation trends. The attorneys in Alston & Bird’s ERISA Litigation Practice Group are dedicated professionals who are experienced and well-credentialed, and we are focused on keeping you briefed on all of ERISA’s exigent issues.

Living on a Prayer? Recent Challenges to the Church Plan Exemption (published with Benefits Law Journal)

In 2013 alone, at least five lawsuits were filed challenging the application of the church plan exemption to pension plans sponsored by major nonprofit hospital systems that are connected with the Roman Catholic Church. This article addresses the issues raised by those lawsuits, recent decisions in those cases, and the potential impact of these lawsuits on the controversial church plan exemption.

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ADVISORY: Supreme Court Rejects "Presumption of Prudence" for ESOP Fiduciaries, but Nonetheless Sets a High Bar for the Plausibility of Employer Stock Drop Claims

July 8, 2014 | Posted by Richard Siegel | Topic(s): Employer Stock Litigation, ESOPs

On June 25, 2014, the Supreme Court issued its decision in Fifth Third Bancorp v. Dudenhoeffer. In a unanimous decision, the Court overruled the Sixth Circuit and every other circuit to address the issue, by holding that fiduciaries of employee stock ownership plans (ESOPs) are not entitled to a  presumption of prudence with regard to investments in employer securities. However, notwithstanding the rejection of the presumption of prudence, the Supreme Court provided clear guidance to the lower courts, instructing them to carefully consider the plausibility of claims alleging breach of the fiduciary duty of prudence under ERISA based upon publicly traded employer stock drop allegations. What is the likely impact of the Fifth Third decision? Read on to find out.

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Supreme Court Agrees To Consider Yet Another “Presumption” Out Of The Sixth Circuit: That Retiree Health Care Benefits Are Intended To Be Vested For Life, Absent Clear Plan Or Bargaining Agreement Language To The Contrary

In the ERISA world, the Supreme Court has already granted a petition for certiorari of a Sixth Circuit case in order to consider one significant “presumption” this term – when it agreed to evaluate whether the Moench “presumption of prudence” regarding employer stock is a proper legal standard for evaluating breach of fiduciary duty claims. However, on May 5, the high court granted a petition for certiorari of yet another Sixth Circuit case regarding yet another significant presumption – this time, the judicially-crafted presumption that retiree health benefits are intended to vest for life, when the plan and collective bargaining agreement are silent on the issue. For more information on the Circuit split that led to the high court’s review, please read the full blog entry.

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Pat DiCarlo Honored by Georgia Justice Project with Grass Roots Justice Award

April 25, 2014 | Posted by Elizabeth Wilson Vaughan

On April 24, 2014, Pat DiCarlo was honored by the Georgia Justice Project with its Grass Roots Justice Award, in recognition of his groundbreaking, ongoing work in reducing collateral consequences of criminal records and providing quality counsel to veterans and others in need.

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Second Federal Judge Rejects Hospital’s Blind Faith on ERISA’s “Church Plan” Exemption

A second court has denied a motion to dismiss challenging the application of ERISA’s church plan exemption to a non-profit hospital system affiliated with the Roman Catholic Church. In Laurence Kaplan v. Saint Peter’s Healthcare System et. al, No. 3:13-cv-02941-MAS-TJB (D.N.J.) (ECF No. 68), Judge Shipp found the prior decision in Starla Rollins v. Dignity Health, et al., No. 3:13-cv-01450-THE (N.D. Cal.) “persuasive” and agreed that a church plan must actually be established by a church to qualify for the church plan exemption from ERISA. Thus, according to these courts, it is not enough to be affiliated or associated with a church. These decisions conflict with IRS private letter rulings and DOL agency opinions, in addition to a 2011 district court decision from the District of Minnesota. Given the conflicting authority on this issue, we anticipate that this is not the last word on the scope of ERISA’s church plan exemption.

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Hope Floats: Eighth Circuit Reverses First Verdict Against Service Provider Based On Handling Of Float Income

In 2012, the Western District of Missouri entered one of the first verdicts against plan fiduciaries based upon the fees paid by a plan. That same ruling also imposed the very first verdict against a service provider based upon its handling of “float” income. On March 19, the United States Court of Appeals for the Eighth Circuit reversed the float ruling, as well other aspects of the case, while affirming the decision against the fiduciaries based upon the fees paid. What led the Court to the split decision? Read on to find out.

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Controversial Sixth Circuit Panel’s Decision on Disgorgement of Profits in ERISA Disability Benefits Case Set for Oral Argument in Rehearing En Banc

In Rochow v. Life Ins. Co. of Am., 737 F.3d 415 (6th Cir. 2013), a panel of judges for the Sixth Circuit awarded an ERISA disability benefits claimant’s estate not only the amount of benefits that the participant was owed, but also a disgorgement award under ERISA § 502(a)(3). Dissenting, the Hon. David McKeague remarked that the Sixth Circuit panel took “an unprecedented and extraordinary step to expand the scope of ERISA coverage. The disgorgement of profits undermines ERISA's remedial scheme and grants the plaintiff an astonishing $3,797,867.92 windfall under the catchall provision in § 502(a)(3).” Id. at 431 (McKeague, J. dissenting).

On March 7, 2014, the case was slated for oral argument, in a rehearing en banc, on June 18, 2014.

For more on the decision and the highly anticipated rehearing en banc, keep reading here.

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Labor Department Disclosure Compliance Is Key to Turning Off Plan Fee Litigation (published with Bloomberg BNA)

The fees charged to ERISA plans by various service providers have been controversial over the past several years. The Department of Labor has issued multiple regulations addressing disclosure of such fees. Several lawsuits have also been filed alleging that such fees are excessive and not properly disclosed. In a recent article published with Bloomberg BNA, Patrick DiCarlo and Emily Hootkins discuss the legal issues that have been most prominent in fee litigation, including: (1) what is a reasonable fee and how is that determination made?, (2) are various service providers plan fiduciaries?, (3) are fiduciaries required to look beyond mutual funds or engage in frequent rebidding to drive fees down?, (4) can the Section 404(c) safe harbor rules be used as a defense against a fee claim? and (5) is compliance with the new fee regulations sufficient to preclude a fee disclosure claim?

To read the complete article, please click here.

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Jonathan Rose and Richard Siegel Published in Law360 - "City And State Pensions Need To Bend Before They Break"

March 4, 2014 | Posted by Richard Siegel | Topic(s): Other Interesting Cases & Issues

The defined benefit pension plans sponsored by state and municipal governments are underfunded by trillions of dollars. Yet, in a number of states, courts have blocked efforts to reform these pension systems, even where doing so would protect the benefits that have already been earned and only change what would be earned for future service. As explained in this article, this creates a scenario in which state and municipal governments will have no choice but to cut services for all citizens to fund pensions and further encourages municipal bankruptcies.

To read the article by Jonathan Rose and Richard Siegel, click here.

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Unresolved Claim For Attorney’s Fees Does Not Prevent Judgment From Becoming “Final”

In a recent ERISA case, the Supreme Court clarified that an outstanding claim for attorney’s fees does not prevent a judgment from becoming “final” for the purposes of filing a timely appeal. Ray Haluch Gravel Co. v. Cent. Pension Fund of Int'l Union of Operating Engineers & Participating Employers, 134 S. Ct. 773 (2014). The decision provides clarity for meeting appeal deadlines for both ERISA and non-ERISA cases and abrogates prior decisions from the Third, Fourth, Eighth, and Eleventh Circuits.

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To What Extent Can An ERISA Fiduciary Rely on Legal Advice?

ERISA fiduciaries often rely on the advice of experts like investment advisors and actuaries when executing their fiduciary responsibilities. But, can fiduciaries rely on the advice of counsel? The D.C. Circuit recently said “yes,” and joined four sister Circuits in holding that an ERISA fiduciary may rely on the advice of counsel in “appropriate circumstances.” See Clark v. Feder Semo and Bard, P.C., No. 12-7092, 2014 WL 42976 (D.C. Cir. Jan. 7, 2014).

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Doug Hinson to Serve as Co-Chair and to Speak at ACI National Forum on ERISA Litigation

January 21, 2014 | Posted by Elizabeth Wilson Vaughan

Doug Hinson, leader of Alston & Bird’s ERISA Litigation practice group, is slated to speak at the American Conference Institute’s Seventh Annual National Forum on ERISA Litigation. The forum will be held in Chicago, Illinois, at the Omni Chicago Hotel, from April 28-29, 2014. Mr. Hinson is also one of three chairs for the ACI ERISA Litigation Forum.

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District Court Checks Out of Proposed Marriott Class Certification in ERISA Lawsuit

January 9, 2014 | Posted by Elizabeth Wilson Vaughan | Topic(s): Class Actions , Top Hat Plans

On January 7, 2014, Judge Roger W. Titus of the United States District for the District of Maryland rejected a request for class certification by former Marriott International, Inc. employees. The plaintiffs sued Marriott, alleging that the company failed to comply with the terms of a Retired Deferred Stock Bonus Awards program. The decision to nix class certification comes two years after Judge Titus allowed the lawsuit to survive Marriott’s motion to dismiss. The case is Bond v. Marriott International, Inc., No. 10-CV-1256-RWT (D. Md.).

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Sixth Circuit Upholds Injunction Preventing City From Altering Retiree Health Benefits

The financial issues facing a number of cities in Michigan have been widely reported. Perhaps no city has been harder hit than Flint. Facing declining revenues and a requirement to balance its budget, the City of Flint sought to modify its health care benefits for retired former City employees. The United States Court of Appeals for the Sixth Circuit upheld a preliminary injunction prohibiting the City from imposing those changes. Why? Read on to find out.

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Doug Hinson to Bloomberg BNA – "ERISA Litigation Will Grow in the Foreseeable Future"

December 27, 2013 | Posted by Elizabeth Wilson Vaughan

Doug Hinson, the leader of Alston & Bird’s ERISA Litigation practice group, recently gave an interview for Bloomberg BNA regarding his thoughts on the future of ERISA litigation. Doug has litigated ERISA cases for almost 25 years, and he believes that ERISA litigation will continue to grow, as “baby boomers” retire in large numbers.

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Federal Judge Holds Dignity Health Plan is Not a "Church Plan" Exempt from ERISA

Last Thursday, Judge Thelton Henderson of the United States District Court for the Northern District of California denied Dignity Health’s motion to dismiss in a case challenging the application of ERISA’s church plan exemption. In doing so, Judge Henderson determined Dignity Health’s plan is not a church plan exempt from ERISA. Thus, the plaintiff will be permitted to proceed with a putative class action alleging various violations of ERISA, including $1.2 billion in underfunding. This is the first order considering a motion to dismiss from a flurry of five similar lawsuits filed in recent months.

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Supreme Court Upholds Plan's Limitation Period That Begins To Run Before A Final Denial

ERISA plans frequently provide a contractual limitations period which defines when a claimant may file a lawsuit if they are denied benefits.  Courts have typically upheld those limitations periods.  However, in order to bring a lawsuit in the first place, the claimant must have received a final denial on his/her claim.  What happens when the plan’s limitations period begins to run before that final denial is even issued?  The Supreme Court just answered that question.

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Supreme Court Will Consider The “Presumption of Prudence” in 2014

December 16, 2013 | Posted by Emily Seymour Costin | Topic(s): Breach of Fiduciary Duty , Employer Stock Litigation

On Friday, December 13, the Supreme Court granted the petition for certiorari in Dudenhoefer v. Fifth Third Bancorp, 692 F.3d 410 (6th Cir. 2012) and agreed to evaluate whether the “presumption of prudence” regarding employer stock is a proper legal standard for evaluating breach of fiduciary duty claims.

Last December, Fifth Third filed a petition for writ of certiorari to the Supreme Court on the following two issues: “(1) Whether the Sixth Circuit erred by holding that [participants] were not required to plausibly allege in their complaint that the fiduciaries of an employee stock ownership plan abused their discretion by remaining invested in employer stock, in order to overcome the presumption that their decision to invest in employer stock was reasonable, as required by [ERISA] and every other circuit to address the issue; and (2) whether the Sixth Circuit erred by refusing to follow [Supreme Court] precedent [] (and the holdings of every other circuit to address the issue) by holding that filings with the [SEC] become actionable ERISA fiduciary communications merely by virtue of their incorporation by reference into plan documents.”

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'Presumption Of Prudence' In ERISA Cases At Risk?

December 4, 2013 | Posted by Doug Hinson & Emily Costin | Topic(s): Breach of Fiduciary Duty , Employer Stock Litigation

Extracted from Law360:

The U.S. Supreme Court must soon decide whether to grant Fifth Third Bancorp’s petition for writ of certiorari, and review the Sixth Circuit’s 2012 decision in Dudenhoefer v. Fifth Third Bancorp.[1] The petition presents two significant issues in the realm of ERISA litigation: (1) whether the “presumption of prudence” regarding employer stock is a proper legal standard for evaluating breach of fiduciary duty claims (and at what stage of the proceedings); and (2) whether U.S. Securities and Exchange Commission filings become actionable Employee Retirement Income Security Act fiduciary communications merely by incorporating them by reference into plan documents.

The Supreme Court invited Solicitor General Donald B. Verrilli Jr. to express the views of the United States on the petition and, on Nov. 12, the solicitor general weighed in, opining that only the first issue presented, not the second, warrants the high court’s review. Although presumably the Supreme Court will show deference to the solicitor general’s opinion, in our view, the high court should do just the opposite.

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Say What? District Court Grants Jury Trial To Stock Drop Plaintiff

One of the fundamental principles understood in litigating ERISA cases is that there is no right to a jury trial. So what led the United States District Court for the Eastern District of Missouri to hold on August 20, 2013, that a stock drop putative class action created a right to a trial-by-jury? Read on to find out . . .

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