Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this quick-hit series of updates, Fred and Brad offer a high-level view of current trends and recent ERISA developments. See the newest episode, ERISA Moments: What Will be in the New DOL Fiduciary Proposal: Our Thoughts, below.
Continue reading “ERISA Moments: What Will be in the New DOL Fiduciary Proposal: Our Thoughts”
Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this quick-hit series of updates, Fred and Brad offer a high-level view of current trends and recent ERISA developments. See the newest episode, The DOL’s New Fiduciary Proposal is at the OMB: What’s Next?, below.
Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this quick-hit series of updates, Fred and Brad offer a high-level view of current trends and recent ERISA developments. See the first episode, A Federal Court Decides on the DOL’s ESG Regulation, below.
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Following a bench trial in a Pennsylvania federal district court in Nunez v. B. Braun Medical, Inc., 401(k) plan fiduciaries defeated a lawsuit alleging that the fiduciaries imprudently managed and paid excessive recordkeeping and investment management fees. The B. Braun Medical fiduciaries’ win follows on the heels of a jury trial win by fiduciaries of Yale University’s 403(b) plan. The court opinions in both of these cases serve as a good reminder that offense is the best defense, and ERISA plan fiduciaries best protect themselves against ERISA breach of duty of prudence claims by proactively implementing strong fiduciary governance practices, such as keeping thorough committee meeting minutes. Consistently creating and maintaining detailed records regarding the initial selection and ongoing monitoring of vendors and investment options will help the committee defend those decisions later.
In Nunez, the court found that both the processes and the outcomes with respect to the plan’s recordkeeping and investments were objectively prudent—the opposite of which the plaintiffs would be required to prove to win their case.
Continue reading “Another 401(k) Plan Fiduciary Defeats Breach of Fiduciary Duty Claims at Trial”
A series of cases against fiduciaries of 401(k) plans that offer BlackRock Target Date Funds (TDFs) have been dismissed by district courts in recent months. In three recent cases, the district courts held that plaintiffs failed to allege any facts about the plan fiduciaries’ process for selecting and monitoring the BlackRock TDFs and that plaintiffs’ reliance on the BlackRock TDFs’ alleged underperformance alone was insufficient to state a claim for breach of fiduciary duty.
Continue reading “Plan Fiduciaries Continue to Defeat BlackRock Target Date Fund Class Actions”
The Seventh Circuit revived two previously dismissed ERISA breach of fiduciary duty claims in its latest decision in Hughes v. Northwestern, which had been remanded from the Supreme Court. In doing so, the Seventh Circuit issued its own pleading standard for deciding ERISA duty of prudence claims alleging mismanagement of defined contribution plans. The standard does not affect how plan fiduciaries review, choose, and monitor investment choices and recordkeeping fees, but makes it easier to second-guess those decisions without fully understanding the “circumstances prevailing” at the time the fiduciary acts.
In an unusual decision, a federal judge last month refused to strike a plaintiff class’ demand for a jury trial in an ERISA 401(k) class action.
In Garthwait v. Eversource Energy Co., a class of former and current participants in the Eversource 401(k) Plan (the Plan) filed an action against Eversource Energy Company and Plan fiduciaries seeking to recover plan losses caused by alleged breaches of fiduciary duty and requesting other equitable or remedial relief.
Earlier this year we reported on the “Employee and Retiree Access to Justice Act,” which sought to render arbitration and class action waiver provisions, and discretionary authority for plan administrators, in ERISA plans unenforceable. On September 29, 2022, the U.S. House of Representatives passed the Mental Health Matters Act (the Act) — which encompasses the Employee and Retiree Access to Justice Act.
A string of ERISA lawsuits has emerged in recent weeks against companies who offer BlackRock Target-Date Funds (“TDFs”) as 401k investment options to their employees. The lawsuits allege the companies, in their capacities as plan sponsors, breached their fiduciary duty by choosing the low fee investment options offered by BlackRock Inc., despite their funds’ underperformance. This new litigation sparks concern amongst 401k plan sponsors who may now have to worry about lawsuits involving investment fees from all sides-for choosing the high fee options and for choosing the low fee options.
The lawsuits focus on the LifePath Index Funds of BlackRock, a suite of 10 target-date funds. TDFs have increased in popularity over the past couple of years because they offer participants a lower fee but managed investment option based on target retirement years. Although BlackRock isn’t a party to the litigation, these lawsuits shine a spotlight on the performance of these funds.
Continue reading “ERISA Litigation Roundup: Damned if You Do, Damned if You Don’t”
ESG & ERISA: Plan sponsors and investment professionals have been waiting for final rules on the permissible use of environmental, social, and governance (“ESG”) considerations under ERISA when selecting plan investments and exercising shareholder rights with respect to plan assets. Based on the updated regulatory agenda, the DOL is planning to issue final ESG rules in December 2022.
Fiduciary Rule: Plan advisors and investment professionals have also been awaiting guidance on the DOL’s fiduciary rule re-write. The Trump era “fiduciary rule” is currently in effect and is a combination of a new and expansive definition of fiduciary advice and an exemption – PTE 2020-02 – from the prohibitions of ERISA and the Internal Revenue Code for certain conflicts of interest arising from nondiscretionary fiduciary recommendations. However, last year, the Biden administration announced that it is revisiting the definition of fiduciary investment advice and the requirements of various prohibited transaction exemptions. Based on the Agenda, we can expect a new proposed fiduciary rule in December 2022.
