July 2025 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 involves 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:

• Waldner v. Natixis Investment Managers, L.P. (dismissed on June 26 by the U.S. District Court for the District of Massachusetts)
• Mullins v. National Rural Electric Cooperative Association (complaint filed on June 11 in the U.S. District Court for the Eastern District of Virginia)

Other types of recent ERISA cases are as follows:

Wright v. JPMorgan Chase & Co. (dismissed on June 13 by the U.S. District Court for the Central District of California):  This case is part of a recent wave of cases in which the plaintiff (a retirement plan participant) alleges that plan fiduciaries violated ERISA via their use of plan forfeitures. Specifically, the plaintiff alleges that the defendants breached their ERISA duties by using forfeitures solely to help fund employer contributions rather than to pay plan expenses.

The plan document in this case provided that forfeited amounts must be used to either “reduce future contributions of the Participating Company” or pay “such Participating Company’s share of Plan expenses not paid directly by the Plan.” The court ruled as follows:

• First, the only reasonable interpretation of that second provision is that it allows the defendants to use forfeited amounts to pay the defendant’s share, not participants’ share, of plan expenses. The court also stated that the plan could have been drafted to allow forfeitures to pay for only participants’ share of plan expenses or to pay “Plan expenses” generally, but it was not drafted that way.
• Second, even if the plan did allow the defendants to use forfeitures to pay participants’ share of expenses, the plaintiff’s position “contravenes ERISA and years of settled precedent.” Specifically, the defendants did not violate the plan’s terms by using  forfeitures to offset their own contributions, and ERISA does not require fiduciaries to “resolve every issue of interpretation in favor of plan beneficiaries.” The court noted as well that, for decades,  federal regulations have suggested that “using forfeitures to reduce employer contributions is entirely permissible” if the plan document permits.

Roche v. Teco Energy, Inc. (dismissed on May 20 by the U.S. District Court for the Middle District of Florida):  This case involves the plaintiff plan participant’s allegation that the defendant plan sponsor breached its ERISA fiduciary duty by failing to disclose material information related to the pension plan’s lump sum benefits. The main facts are as follows:

• On September 26, 2022, the plaintiff submitted a retirement application in which he selected December 2, 2022 as his last day of work.
• Shortly thereafter, the defendant sent three letters to him, estimating his lump sum benefits for three different payment dates: December 1, 2022 ($482,970.55), January 1, 2023 ($396,600.67), and February 1, 2023 ($395,997.89).
• Once he received the letters, he requested that his retirement date be re-set to December 1, 2022. In denying that request, the defendant complied with a policy in the summary plan description. Per that policy, a participant’s retirement application must be received at least 90 days before a benefit payment occurs. As a result of that policy and applicable interest rate changes, in January 2023 the plaintiff received a lump sum payment that was approximately $82,000 lower than it would have been if he had received it in December of 2022.
• The plaintiff then contended that if he had known that his lump sum payable in January 2023 would be substantially lower than if it were payable in December 2022, he would have submitted his retirement application sooner to ensure it was calculated at the higher amount. In this connection, his claim of breach of fiduciary duty alleges that the defendant had a duty to “notify participants of information they need[ed] to know to protect their interests,” and that the defendant breached that duty by failing to warn the plaintiff in 2022 that, because of rising interest rates, if he retired and took a lump sum in 2023 rather than 2022, it would be significantly less.

The court explained that “absent a specific participant-initiated inquiry, a plan administrator does not have a fiduciary duty to determine whether confusion about a plan term or condition exists.” In this regard, although the plaintiff indicated to the defendant that he was unclear about how his lump sum would be calculated, he only alerted the defendant about that confusion after it was too late for him to choose a 2022 retirement date. In addition, the court ruled that ERISA fiduciaries are not required to “proactively warn participants about any circumstances that might reduce their benefits,” such as rising interest rates involved in this case.