Given the continuing wave of ERISA litigation, this article has become a mainstay of The Speed Reader. Cases that were filed or resolved, or for which courts issued interim procedural rulings, recently are outlined below. Please note that this list is not exhaustive, however.
- Bell v. Pension Committee of ATH Holding Company (procedural ruling issued on June 14, 2018 by the U.S. District Court for the Southern District of Indiana): The plaintiffs in this case are current and former participants in the defendant plan sponsor’s (and the defendant plan committee’s) 401(k) plan. The participants allege that the defendants breached their ERISA fiduciary duties by causing the plan to pay excessive investment management and administrative fees and providing an imprudent money market fund, which the plaintiffs contend resulted in tens of millions of dollars of losses to the plan. In the most recent proceedings, the court ruled on the defendants’ Motion to Compel Production of Certain Documents. In that motion, the defendants asked the court to order one plaintiff to produce, among other documents, a Facebook private message string between her and another plaintiff. That message allegedly addressed those two plaintiff’s depositions. After concluding that the defendants did not unduly delay filing their motion, the court ruled that the plaintiff must provide the Facebook message at issue because the “particular need for these Facebook communications justifies the burden of [their] preservation and retrieval.”
- Krolikowski v. San Diego City Employees Retirement System (decided on June 14, 2018 by the California 4th District Appellate Court, Division One): The plaintiffs, former employees of an employer that participates in the defendant’s retirement plan, receive monthly pension payments. However, several years after the plaintiffs’ monthly payments began, the defendant discovered that it had applied the wrong retirement factor when calculating those payments. Specifically, the defendant did not use the retirement factor that corresponded with the dates on which the plaintiffs’ employment terminated. After the defendant discovered the error, the defendant took action to recoup the many years of overpayments that were made to the plaintiffs, in the amount of $18,739.88 for one plaintiff and $17,049.48 for the other (without accrued interest). In particular, the defendant gave the plaintiffs the option of making the repayment of the past overpayments by either (1) having a specific amount deducted from their monthly pension payments over time, while incurring interest on the unpaid balance; or (2) making a lump sum payment to the plan, which would stop the accrual of interest on the amount owed. In upholding the lower court’s judgment in favor of the defendant’s right to recoup the overpayments, the appeals court first stated that the defendant has immunity from this lawsuit. That is because under the governing statute, the defendant’s employees who made the calculation errors are not liable for an injury resulting from their act or omission where the act or omission was the result of the exercise of the discretion vested in them; and, therefore, the defendant is not liable for those employees’ error. In the court’s second main conclusion, it stated that nothing in the City’s laws establishing the scope of the defendant’s authority to administer the pension plan prevents the defendant from seeking recoupment of overpayments. Thus, although the plaintiffs are not at fault for the overpayments, they owe the amount of their overpayments (plus interest) to the defendant’s pension plan.
- Youngblood v. Matrix Trust Company (filed on June 27, 2018 in the U.S. District Court for the District of Colorado): The defendant in this case allegedly made several funds transfers to an account held by a 403(b) plan recordkeeper, after that recordkeeper engaged the defendant to serve as custodian of certain non-ERISA 403(b) plans’ assets for which the recordkeeper provided services. (The plaintiffs in this proposed class action case are respective participants in two of the 403(b) plans that were allegedly involved in the defendant’s conduct.) The plaintiffs contend that the defendant made those transfers (in the amount of “at least three million dollars) per the recordkeeper’s directions but without direction or authorization from the 403(b) plan administrators or accountholders. As a result of that purported breach of fiduciary duty under Colorado law, the plaintiffs seek a court order compelling the defendant to (1) return the improperly-transferred funds; and (2) reimburse the class members for lost earnings suffered as a result of the transfers, among other damages (e.g., treble damages under Colorado law, which permit a court to triple the amount of the plaintiffs’ actual damages).
- Bernaola v. Checksmart Financial LLC (decided on July 12, 2018 by the U.S. District Court for the Southern District of Ohio): When this case was filed in July of 2016, it garnered significant attention because it was the second time that year that a relatively small 401(k) plan was targeted in litigation for its allegedly high administrative fees and imprudent investment options. (The plan in this case has approximately $25 million in assets, which is a much smaller plan than most plans involved in this type of ERISA litigation over approximately the past ten years.) The plaintiff is a participant in the defendant plan sponsor’s 401(k) plan, and the other defendants include the plan’s committee and the plan’s investment advisor. In the case’s latest proceedings, the court addressed the issue of whether the plaintiff’s claims are barred by ERISA’s statute of limitations. The court noted that under the applicable part of that statute, a plaintiff must file his or her lawsuit no later than three years after the earliest date on which he or she had actual knowledge of the alleged fiduciary breach. Applying that rule here, the court stated that the plan disclosed to the plaintiff the expense ratios for all the plan’s investment options by August 28, 2012. The court concluded that, at that time, the plaintiff had actual knowledge of the underlying conduct that gave rise to the alleged fiduciary breaches (i.e. certain plan investment options were imprudently included in the plan in that they were too costly and they under-performed). Therefore, although the three-year statute of limitations for the plaintiff’s claims ran by August 28, 2015, he did not file this lawsuit until July 14, 2016 and his lawsuit is foreclosed by the statute of limitations.