Doug Hinson, Partner and Group Leader of Alston & Bird's ERISA Litigation Group, Co-Chaired and participated in a panel presentation at this conference hosted by American Conference Institute (ACI). The event was devoted entirely to the defense of claims and led by a faculty of 28 in-house counsel, 21 federal judges and top outside counsel defense litigators and firms. Complex ERISA litigation cases have increased and the stakes involved for defendants are exceptionally high. There are huge variations in the types of cases that arise under ERISA, as well as substantive differences involved in defending against the various claims. Plaintiff attorneys are getting into these cases because, among other things, they can recover attorney fees. As a result, the defense bar is seeing more and more class actions with the top ten settlements for ERISA-related class action cases topping $17 billion in 2008.
Doug's panel presented "Employer Stock in Light of the Economic Downturn: Defending Against Stock Drop Suits, 401(k) Fee Cases and Other Defined Contribution Plan Claims" on October 19, 1:50pm - 2:50pm. The following topicwere addressed during the discussion.
The Stock Drop Case
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Demonstrating procedural prudence
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Getting unfounded cases dismissed at the pleading stage by showing plan interpretations that support a presumption of prudence (such as a requirement or expectation that the plan will invest in company stock), properly characterizing the financial prospects and performance of the company and demonstrating that the disclosure claims are foreclosed under ERISA
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Conflicts of interest, particularly where a member of the fiduciary committee was also involved in alleged misconduct at the company
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Whether plan sponsors are entitled to a presumption that company stock investments in defined contribution plans were prudent (even when the plan documents appear to provide some discretion over whether such a fund should be offered) and whether that presumption may be asserted on 12(b)(6)
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Establishing the prudence of investments in company stock in the absence of the Moench presumption
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Can a “failure to disclose” count in a “stock drop” case be certified as a class action claim? How do you prevent certification of misrepresentation and non-disclosure claims?
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ERISA and Parallel Securities Cases – carefully managing the cases together, including the legal claims and the factual predicate, minimizing duplicative discovery (including end-runs around PSLRA stay) and intelligently allocating legal fees/costs for insurance purposes
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Drafting plan documents and structuring fiduciary procedures to minimize the risk of successful lawsuit
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Effective use of fiduciary and financial experts
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Attacking the plaintiff - do they have standing and are they adequate class reps?
401(k) Fee Litigation
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The explosion of litigation challenging the fees in individual account 401(k) plans, including the evolving theories of liability and the recent decisions
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Establishing procedural prudence by the plan’s investment/administrative committees
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What is the limit of plan sponsors’ responsibilities for service provider fee arrangements in defined contribution plans?
- The 404(c) defense
- When may a service provider qualify as an ERISA fiduciary
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When do fees stop being plan assets for purposes of the prohibited transaction rules?
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Class certification issues in the service provider fee cases
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Drafting plan documents and structuring fiduciary procedures to minimize the risk of successful lawsuit
Other Defined Contribution Plan Claims
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Non-stock drop claims involving defined contribution plans relating to declining asset value, including risk/diversification cases, private company ESOPs and securities lending and collateral pool litigation
- Madoff and other “ponzi scheme” matters, including “clawback” issues
October 19-20, 2009
The Helmsley Park Lane Hotel / New York, NY