ERISA Fiduciary Litigation for Plan Sponsors and Administrators: Recent Cases, Standing, Excessive Fees, Remedies

Description

Fiduciary responsibilities of sponsors and administrators for defined benefit plans require a duty of prudence under ERISA. Failure to follow best practices for defined benefit plans can result in litigation and millions in legal fees and settlements.

Most cases where retirement plan participants have sued plan sponsors for mismanaging their retirement plan under Section 502(a)(2) of ERISA have involved 401(k) and other defined contribution plans. These claims generally assert that employers acting as plan administrators engage in self-dealing and/or other practices that violate ERISA's fiduciary standards. Claims include imprudently selecting investment options and administrative services or funds that earn high fees for the plan sponsor while performing worse than other competitors.

Recently, in Chavez v. Plan Benefit Services Inc., employees of a single employer sued the service providers of their health and welfare benefit plan for allegedly charging excessive fees in connection with the services they provided in violation of ERISA. The plaintiffs in this case moved for class certification, which was certified by the district court and later affirmed by the Fifth Circuit. This resulted in the defendants filing a petition for a writ of certiorari to the U.S. Supreme Court arguing that the Fifth Circuit violated the principles of standing under Article III because the plaintiffs failed to show they suffered the same harm as the participants in unrelated plans that the plaintiffs did not participate. The U.S. Supreme Court has refused to review the case.

In light of the Fifth Circuit ruling, ERISA counsel must understand key issues regarding standing, class certification, and other challenges to effectively advise clients and minimize claims.

Listen as our panel provides an in-depth analysis of key substantive and procedural issues addressed in recent court rulings, standing in excessive fee cases and other issues, remedies, plan investments, and monitoring fee structures, as well as outlines effective strategies for defending and avoiding fiduciary duty claims.