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Tax-Exempt/Governmental Plans Guidebook

Excerpt: [The website is] devoted to following legal developments related to retirement and benefit plans maintained by tax-exempt organizations and governmental entities[.]

In ESOP Setting, ERISA Fiduciary Law May Apply to Decisions Related to Corporate Salaries, According to Ninth Circuit

Excerpt: A recent Ninth Circuit case highlights the conflicts that can occur where an ESOP is involved. For instance, are decisions relating to corporate salaries, when made by directors and officers who are also fiduciaries of the company's ESOP, subject to ERISA fiduciary law such that the decisions must be made in the best interest of participants and beneficiaries? The Ninth Circuit in Johnson v. Couturier held that such decisions should be subject to ERISA fiduciary law where the fiduciaries stand to 'directly profit' from such decisions[.]

Links to Surveys Relating to ERISA Fiduciary Performance and Litigation

Excerpt: The following surveys contain some great information about how fiduciaries are doing and the risks that they are facing: ...

The Role of ERISA Counsel in the Fiduciary Process

Excerpt: The recent case of In Re: Delphi Corporation Securities, Derivative & ERISA Litigation represents another victory for fiduciaries in a company stock case. As in most of the recent cases holding for fiduciaries, prudent practices and processes won the day and this recent case is no exception. However, what stands out in the case is the illustration that the case provides of the various roles that ERISA counsel can play in the fiduciary process and how utilizing counsel at critical junctures in the process can contribute towards a positive outcome for fiduciaries.

Fiduciary Duty to 'Assess and Protect' Plan Interests

Excerpt: It has been reported that there were many ERISA-covered retirement plans impacted by the Madoff-Ponzi scheme. As a result, the DOL issued a notice back in February ... indicating that fiduciaries of ERISA plans should take 'appropriate steps' to 'assess and protect the interests of the plan and its participants and beneficiaries.' The DOL then went on to include in the notice a list of 'appropriate steps' for fiduciaries to take in fulfilling their duty to 'assess and protect' the interests of plan participants. One of those steps included filing and asserting claims against the bankruptcy estate.

A Win for Fiduciaries in a Stock Drop Case

Excerpt: District Judge Otero for the Central District of California has granted the fiduciaries' Motion for Summary Judgment in the following case: In re: Computer Science Corporation ERISA Litigation.

Sixth Circuit Opines on ERISA 'Safe Harbor' Exemption

Excerpt: In general, in order to fall under this safe harbor (and fall out of ERISA), one of the requirements of the safe harbor is that no contributions be made by the employer, i.e. if the employer is making contributions to the plan, then it is an ERISA-covered plan. Thus, because many disability plans are funded either partially or fully by the employer, they are covered by ERISA. In the recent Sixth Circuit case of Helfman v. GE Group Life Assurance Company, et al., a participant had challenged the district court's decision that the plan was covered by ERISA because the participant sought to get out from under the ERISA banner of deference afforded the plan administrator's decision. The district court had ruled that the plan administrator had not abused its discretion and upheld the insurer's termination of the participant's benefits.

Seventh Circuit Comments on Denial of Petition for Rehearing in case of Hecker v. Deere

Excerpt: The Seventh Circuit has denied a rehearing in the Hecker v. Deere case.... Plaintiffs, the Department of Labor and other interest groups had called for a rehearing. You can access a couple of the amicus briefs filed in the petition for rehearing on the Guidebook's 404(c) webpage. The Seventh Circuit made [several] points in response to the Amicus Brief filed by the DOL[.]

Second Circuit Upholds Three-Year Limitation Period in Plan Document

Excerpt: In an era when lawsuits appear to be targeting fiduciaries, one of the areas that is becoming more important for fiduciaries is the practice of implementing steps to reduce litigation risk. One such practice which has been challenged and upheld in the courts is the inclusion of a limitation period in the documents governing the plan. The limitation period provision limits the period of time during which a participant or beneficiary can bring suit. The idea behind such limitation periods is to protect fiduciaries so that they are not subjected to a risk of lawsuit any longer than they have to be under the law.

Madoff-Related Liability Insurance Litigation

Excerpt: [A recent case has been] filed in connection with a profit sharing plan where 100% of the assets ($12,000,000) was invested with Bernard L. Madoff Securities LLC.... The Complaint filed by the plan sponsor against the insurer provides an indication as to the allegations being made by the DOL in requiring the plan sponsor to restore losses. According to the Complaint, the DOL is claiming 'errors' on the part of fiduciaries: In failing to obtain a signed statement from Madoff acknowledging he was a fiduciary and registered as an investment advisor under The Investment Advisors Act of 1940. In failing to provide the DOL with copies of quarterly performance reports, written quarterly investment reviews, information on costs associated with the Plan, and an Investment Policy Statement.