June 2025 ERISA Litigation Update

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:

• Anderson v. Intel Corporation Investment Policy Committee (dismissed on May 22 by the U.S. Court of Appeals for the Ninth Circuit)
• Byrne v. Teachers Insurance and Annuity Association of America (complaint filed on May 20 in the U.S. District Court for the Southern District of New York)
• Lopez v. Embry-Riddle Aeronautical University, Inc. (procedural ruling issued on May 16 by the U.S. District Court for the Middle District of Florida)
• England v. DENSO International America, Inc. (dismissed on May 6 by the U.S. Court of Appeals for the Sixth Circuit)

Another type of recent ERISA case is as follows:

Schuman v. Microchip Technology, Inc. (ruling issued on June 5 by the U.S. Court of Appeals for the Ninth Circuit):  This case addresses the legal test that courts must apply when evaluating the enforceability of a release of claims under ERISA.

As background, in anticipation of a potential merger, Atmel Corporation (“Atmel”) created an ERISA plan under which employees would receive severance benefits if an acquiring company fired Atmel staff. Soon after the defendant acquired Atmel, the defendant terminated the plaintiffs without cause and offered them significantly lower benefits than promised under the plan, in exchange for a release of all potential claims. The plaintiffs signed the releases, but they subsequently filed this lawsuit to allege breach of fiduciary duty and denial of benefits under ERISA and to challenge the releases’ enforceability.

With respect to the releases, the plaintiffs contend that they were unenforceable because the defendant violated its fiduciary duties, when it obtained releases in exchange for significantly  reduced severance payments. In this connection, the plaintiffs allege that when the releases were executed, the defendant knew or should have known that employees were still entitled to the plan’s stated benefits.

The court began its opinion by stating “courts must decide whether the employee entered into the release knowingly and voluntarily by examining the totality of the circumstances, including enumerated factors. This inquiry requires an assessment of whether any improper fiduciary conduct, such as an employer’s breach of an ERISA-imposed fiduciary duty in the course of obtaining the release, undermines the validity of the release.” The court then opined that when a breach of fiduciary duties is alleged, courts must evaluate releases and waivers of ERISA claims with “special scrutiny designed to prevent potential employer or fiduciary abuse.”

As for how to apply that “special scrutiny” in practice, the court declared that when assessing the totality of the circumstances, several factors may be relevant (e.g., whether an employee’s release was induced by improper conduct by the fiduciary). Applying that rule, the court noted that the trial court found a genuine issue of fact relevant to the issue of the defendant’s breach of fiduciary duty in obtaining the releases. Thus, the court remanded the case to the trial court for further proceedings.