August 2022 ERISA Litigation Update:

Given the continuing wave of ERISA litigation, this article has become a mainstay of The Speed Reader. A sample of recent cases is provided below. 

The most common type of ERISA case for approximately the past sixteen years has involved retirement plan participants’ allegations that plan fiduciaries caused participants to pay excessive recordkeeping and investment fees and included one or more poorly-performing investment options in the plan. Recent cases in this category include the following:

  • Forman v. TriHealth, Inc. (procedural ruling issued on July 13, 2022 by the U.S. Court of Appeals for the Sixth Circuit)
  • Loomis v. Nextep, Inc. (settlement agreement submitted on July 8, 2022 to the U.S. District Court for the Western District of Oklahoma)

Other types of recent ERISA cases are as follows:

Walsh v. Preece (complaint filed on July 13, 2022 in the U.S. District Court for the Eastern District of Kentucky):  The DOL has sued the defendant, who was the CFO of a company that participated in a multiple employer 401(k) plan and who was also a plan fiduciary. The DOL alleges that the defendant was responsible for causing participants’ salary deferral contributions to be remitted to the plan. However, from January 5, 2018, to April 10, 2020, the DOL contends that the defendant failed to remit $1,944,208.42 in salary deferral contributions to the plan in a timely manner and that in some instances the remittances occurred as much as 482 days late. During that period, the defendant’s company allegedly commingled those assets with the assets in its corporate bank account until they were remitted to the plan.

The DOL seeks a court order requiring the defendant to “make good” to the plan all losses, including interest, resulting from the fiduciary breaches, ordering the defendant to correct the prohibited transactions, and requiring the defendant to pay the DOL’s court costs.

This case is a strong reminder that, although the company that sponsors a multiple employer plan is a plan fiduciary, participating employers also have fiduciary duties with respect to the plan’s document and operations.

Disberry v. Employee Relations Committee of the Colgate-Palmolive Company (complaint filed on July 7, 2022 in the U.S. District Court for the Southern District of New York):  The plaintiff, who participates in the defendant’s 401(k) plan, was informed by the defendants (the plan sponsor, the plan’s administrator, and the plan’s trustee) that the entire balance of her plan account, totaling $751,430.53, had been distributed from the plan via a lump sum payment. However, the plaintiff asserts that she never authorized or received that distribution. Instead, the distribution was paid to an individual with an address and bank account in Las Vegas, which was not where the plaintiff lived. The plaintiff contends that the plan did not have reasonable procedures in place to prevent the unauthorized distribution.

The plaintiff seeks to have the improperly-distributed funds (plus any applicable investment earnings) restored to her plan account, as well as payment of her reasonable attorneys’ fees and other costs of this lawsuit.