March 2024 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 seventeen years 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:

• Krohnengold v. New York Life Insurance Company (settlement agreement submitted on February 26, 2024 to the U.S. District Court for the Southern District of New York)
• Lauderdale v. NFP Retirement, Inc. (dismissed on February 23, 2024 by the U.S. District Court for the Central District of California)
• Spence v. American Airlines, Inc. (procedural ruling issued on February 21, 2024 by the U.S. District Court for the Northern District of Texas)
• Falberg v. The Goldman Sachs Group, Inc. (dismissed on February 14, 2024 by the U.S. Court of Appeals for the Second Circuit)
• Coppel v. SeaWorld Parks and Entertainment, Inc. (procedural ruling issued on January 31, 2024 by the U.S. District Court for the Southern District of California)
• Cotter v. Matthews International Corporation (dismissed on January 19, 2024 by the U.S. District Court for the Eastern District of Wisconsin)
• Guyes v. Nestle USA Inc. (dismissed on January 19, 2024 by the U.S. District Court for the Eastern District of Wisconsin)
• Laabs v. Faith Techs., Inc. (dismissed on January 19, 2024 by the U.S. District Court for the Eastern District of Wisconsin)  

Other types of recent ERISA cases are as follows:
Su v. Elmhurst Academy of Early Learning, Inc. (decided on February 28, 2024 by the U.S. District Court for the Northern District of Illinois):  In this lawsuit, the DOL alleged that the fiduciary defendants failed to remit $22,758 in employees’ salary contributions to the defendant plan sponsor’s Simple IRA plan from September 26, 2016 to October 15, 2021. The court has ordered the defendants to remit that amount to the plan, plus $9,735.84 in lost earnings, within fourteen days.

Barragan v. Honeywell International, Inc. (complaint filed on February 13, 2024 in the U.S. District Court for the Southern District of California):  In this latest barrage of cases filed by the same law firm, the complaint first notes that participants pay for the plan’s administrative expenses via direct charges to their accounts. The complaint then alleges that the defendants “have consistently failed to use the forfeited funds to pay Plan administrative expenses, and thereby reduce or eliminate the amounts charged to the participants’ individual accounts to cover such expenses. Instead, Defendants have consistently utilized the forfeited funds in the Plan exclusively for the Company’s own benefit, to the detriment of the Plan and its participants, by using these Plan assets solely to reduce Company contributions to the Plan.”

The plaintiffs mainly contend that such conduct violated ERISA’s duty of loyalty. Under that duty, fiduciaries must discharge their duties to the plan “solely in the interest of the participants and beneficiaries.” As a result, they seek a court order requiring the defendants to “make good to the Plan all losses to the Plan” allegedly caused by the alleged conduct and to pay for the plaintiff’s attorneys’ fees and court costs.

Interestingly, the complaint does not discuss whether the governing plan documents permit forfeitures to be used to defray the cost of employer contributions. Plan document language in these cases will likely be an important factor to courts when deciding to dismiss these cases or deciding that they have merit.