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:
Huang v. TriNet HR III, Inc. (dismissed on April 26, 2023 by the U.S. District Court for the Middle District of Florida): The court noted:
Jacobs v. Verizon Communications, Inc. (procedural ruling issued on April 20, 2023 by the U.S. District Court for the Southern District of New York): The court denied the defendants’ motion to dismiss the case, which at this stage involves the question of whether the defendants breached their ERISA fiduciary duty of prudence with respect to one of the plan’s investment options. The court based its decision on the fact that the defendants have not provided an explanation as to why they kept the fund at issue in the plan or provided evidence that, during the relevant period, they discussed or considered what to do about the fund’s poor performance.
The court acknowledged, however, that:
Jones v. DISH Network Corporation (dismissed on March 27, 2023 by the U.S. District Court for the District of Colorado): In affirming the magistrate judge’s January 31, 2023 decision in favor of the defendants, the court stated:
Other types of recent ERISA cases are as follows:
Su v. Johnson (decided on May 10, 2023 by the U.S. Court of Appeals for the Seventh Circuit): The defendants are plan fiduciaries of an ERISA-covered retirement plan, and the plaintiff is the Secretary of the U.S. Department of Labor (“DOL”). The DOL alleged that the defendants breached their fiduciary duties under ERISA, by (1) using hundreds of thousands of dollars of plan assets for one defendant’s personal benefit but accounting for those transactions as plan expenses or losses instead of as plan distributions; and (2) one defendant’s receipt of distributions without the plan administrator’s consent, in violation of the plan document.
The trial court granted summary judgment in favor of the DOL and entered a permanent injunction against the defendants that removed them as plan fiduciaries. In affirming that decision, the appeal’s court also noted “given the gravity and frequency of defendants’ breaches of their fiduciary duties, they are fortunate that the relief against them [i.e., the injunction] has thus far been relatively modest.”
Pue v. New Jersey Transit Corporation (decided on April 13, 2023 by the U.S. Court of Appeals for the Third Circuit): The plaintiff alleged that he was a party to an agreement with the defendant that entitled him to payments for a disability pension, and the defendant committed breach of contract by failing to make the required payments.
The court stated that although the plaintiff tried to a make a claim for the collection of benefits under ERISA, the defendant cannot not be sued under ERISA. Specifically, ERISA exempts from its coverage any “governmental plan.” The court explained that ERISA defines that term, in relevant part, as a plan established or maintained by “any State or political subdivision thereof, or by any agency or instrumentality of the foregoing.” Further, the court stated that an entity constitutes a “political subdivision” if it was (1) created directly by the state, constituting departments or administrative arms of the government; or (2) administered by individuals who are responsible to public officials or to the general electorate.
Applying that statutory language to the defendant, the court concluded that the defendant is a “political subdivision.” That is because the defendant is “allocated within the Department of Transportation,” and is “constituted as an instrumentality of the State exercising public and essential governmental functions.” In addition, the defendant is “governed by a board composed of members including the Commissioner of Transportation, the State Treasurer, a member of the Executive Branch selected by the Governor, and additional public members appointed by the Governor.”