The U.S. Court of Appeals for the Seventh Circuit has recently decided a case challenging the amount of fees paid by 401(k) plan participants. Leimkuehler v. Am. United Life Ins. Co., _ F.3d _, 2013 WL 1591450 (7th Cir. 2013). This opinion is likely to have vast implications for that type of litigation specifically and the scope of fiduciary status generally. In recent years, a number of lawsuits have been brought accusing 401(k) plan service providers of improperly receiving “revenue sharing” payments from the expense ratios of the mutual funds in which the plan’s assets are invested. The Leimkuehler opinion addresses a threshold issue in such cases – whether financial service providers are fiduciaries under ERISA for purposes of negotiating or receiving revenue sharing payments.
To find out more about the Seventh Circuit's decision, continue reading.
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After multiple cases in which the United States Court of Appeals for the Seventh Circuit had expressed approval for the “Moench presumption,” without formally adopting the presumption, the Court recently took the final step. Indeed, the Seventh Circuit’s take on the presumption may be the hardest to overcome of any circuit. How so? Read on to find out.
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ERISA provides standing to bring an action for breach of fiduciary only to a plan’s participants, beneficiaries, and fiduciaries. However, the United States Court of Appeals for the Second Circuit recently held that an entity had standing to bring an action even though it had ceased being a fiduciary more than 20 years prior to the decision. What led the court to reach this result? Read on to find out.
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The United States Court of Appeals for the Fourth Circuit recently held, over the objections of not only the putative class representatives but amicus briefs filed by the Department of Labor, the Pension Benefit Guaranty Corporation, and the AARP, that participants in a defined benefit pension plan lack standing to challenge the plan’s investments in mutual funds that were affiliated with the plan’s sponsor. Why did the plaintiffs lack standing? Read on to find out.
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On January 4, 2013, federal district court judge Denise Hood of the Eastern District of Michigan certified a class action in Pfeil v. State Street Bank & Trust Co. under Fed. R. Civ. P. 23(a), 23(b)(1)(B) and 23(b)(3). The certified class includes all participants or beneficiaries of the GM retirement plans who suffered losses to their investments in the GM stock fund during the class period of July 15, 2008 to April 24, 2009. This blog post provides a brief recap of the litigation and class certification in Pfeil.
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We all know that a fiduciary must act solely in the interests of the participants and beneficiaries of the plan at all times. This includes, for example, bringing a lawsuit against former fiduciaries or current co-fiduciaries for breaches of their fiduciary duty that caused harm to the plan. But, what happens when Fiduciary No. 1 brings a lawsuit against Fiduciary No. 2, and then Fiduciary No. 2 turns around and seeks contribution and indemnification from Fiduciary No. 1? There is no statutory right to contribution and indemnification under ERISA, but is this permitted under common law? The Supreme Court has not ruled on whether an ERISA fiduciary has the right to seek contribution and indemnity from a co-fiduciary, and several Circuits and district courts are split on this issue. However, a recent decision from the Middle District of Florida relied on trust principles to hold that the rights to contribution and indemnity from co-fiduciaries under ERISA are properly permitted pursuant to federal common law. See Guididas v. Community National Bank Corp., Case No. 8-11-cv-02545-JSM-TBM (M.D. Fla., Nov. 5, 2012).
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On August 27, 2012, in Janese, et al. v. Fay, et al., the Second Circuit held that trustees of a multi-employer pension fund do not act as fiduciaries when they amend the pension plan. Although it may not be a controversial decision, this holding is still significant because it expressly overruled contrary Second Circuit authority, specifically Chambless v. Masters, Mates & Pilots Pension Plan, 772 F.2d 1032 (2d Cir. 1985) and Siskind v. Sperry Ret. Program, Unisys, 47 F.3d 498 (2d Cir. 1995).
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In an opinion covering two cases, the Sixth Circuit recently held that ERISA confers fiduciary status to any entity that controls plan assets. The cases are Guyan International Inc. v. Professional Benefits Administrators Inc., No. 11-3126, 2012 WL 3553281 (6th Cir. Aug. 20, 2012) and Pritchard Mining Co. Inc. v. Professional Benefits Administrators Inc., No. 11-3640 (6th Cir. Aug. 20, 2012).
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On August 3, 2012, the Second Circuit affirmed dismissal of a putative ERISA class action against Xerox Corporation (“Xerox”), because the plaintiffs did not allege sufficient factual content from which to conclude that Xerox (and the other defendants) misrepresented any material matter to plan participants regarding the receipt of their lifetime health care benefits and, in the absence of any other alleged breach of fiduciary duty, the plaintiffs did not state a plausible claim for relief under Sections 1132(a)(2) or (a)(3) of ERISA. See Coriale v. Xerox Corp., et al., Case No. 11-1724-cv (2d Cir. Aug. 3, 2012).
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On May 31, 2012, Magistrate Judge Ann Marie Donio of the United States District Court for the District of New Jersey denied plaintiffs’ motion to compel the production of 54 e-mails on the basis that these documents were protected from disclosure by the work-product doctrine. In doing so, Judge Donio held that these documents did not fall within the “fiduciary exception” commonly applied in the ERISA context so as to mandate their disclosure because the documents were created specifically for use in litigation against the beneficiary requesting the documents. See Goldenberg v. Indel, Inc., et al., Case No. 09-5202, Order dated May 31, 2012 (Doc. No. 205).
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After losing summary judgment before the United States District Court for the Northern District of Ohio, which was affirmed by the United States Court of Appeals for the Sixth Circuit, two doctors have asked the Supreme Court of the United States for a writ of certiroari to review the lower courts’ determination that the trustee of their 401(k) accounts breached its fiduciary duties after the investment advisor selected by the doctors defrauded them.
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