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Supreme Court Rejects the Moench Presumption

"The Supreme Court rejected any presumption, effectively disagreeing with every circuit court to decide the issue ... The Supreme Court also addressed Fifth Third's concerns about being between a rock and a hard place in that they can be sued if the price goes down and they keep the stock in the plan or can be sued if the stock price them goes up and they haven't put it back in. The Supreme Court seemed to sympathize but still held that the presumption of prudence was not the solution ... [T]he Supreme Court made clear that the securities laws trump ERISA law.... [T]he Court has now required the lower courts to consider whether a claim to stop purchasing or a claim to inform the public would hurt the participants more than doing nothing." [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (S. Ct. June 25, 2014)]

Fidelity Settles Lawsuit with Own Employees Over 401(k) ERISA Allegations

"[The] settlement agreement provides for $12 million to be paid to the class and for .. affirmative relief [including]: [1] The Plan will make available a wide selection of both Fidelity and non-Fidelity mutual funds.... [2] Fidelity is increasing auto-enrollment for eligible employees from 3% to 7% of eligible compensation, and will default current participants who are currently deferring below 7% to 7% of eligible compensation. Fidelity will apply its match to those increased contributions. [3] The Plan shall provide that revenue sharing attributable to non-Fidelity mutual funds shall be credited to participants in the same way as revenue attributable to Fidelity mutual funds and collective trusts pursuant to the 8th amendment to the 2005 restatement of the Plan is credited to participants."

John Hancock Dodges ERISA Class Action

"The cases are holding with few exceptions that the functional fiduciary test under 3(21)(A)(i) must show that the fiduciary actually exercised their discretion. In decisions in favor of AUL and John Hancock, the plaintiffs were unable to show that. In decisions against Transamerica, MassMutual, and ING, the plaintiffs were able to either show the exercise of discretion or that it was a issue of fact for trial.... The open question from these cases is whether 3(21)(A)(iii) requires the actor to actually exercise their discretion or not, i.e. it's a fiduciary breach to be both malfeasant and nonfeasant."

MassMutual Settles Excessive Fee Lawsuit

"The settlement agreement ... allows for two settlement classes to be approved: [1] the Monetary Relief Class and [2] the Structural Changes Class. The Monetary Relief Class covers current and past retirements plan customers of MassMutual, while the Structural Changes Class covers current and future retirement plan customers of MassMutual.... [T]he lawsuit brought by MassMutual's own employees is not affected by this lawsuit[.]" [Goldenstar, Inc. v. MassMutual Life Ins. Co., No. 11-cv-30235-MGM (D. Mass., settlement agreements part 1 and part 2 filed Oct. 31, 2014)]

Supreme Court Grants Cert in Tibble v. Edison International

"[T]he Supreme Court [had] requested the opinion of the Solicitor General of the United States along with the Department of Labor in asking whether cert should be granted for the two issues that Plaintiffs sought to have heard. The first, regarding the six year statute of limitations found in ERISA was granted after the Solicitor General recommended that the Court take the case[.]"

Federal District Court Grants Summary Judgment to Plaintiffs in Church Plan Case

"In finding for the plaintiffs that the pension plan should be governed by ERISA, the court rejected defendants' argument that it was inequitable or unfair because of the long term reliance on the IRS rulings and that either the ERISA or a California state law statute of limitation applies. The court also found that there was no genuine issue of material fact as to Dignity Health's predecessor Catholic Healthcare West establishing the pension plan, rather than that they were either controlled by a church or that a church co-established the plan." [Rollins v. Dignity Health, No. 13-cv-01450-TEH (N.D. Cal. July 22, 2014)]

Some Additional Thoughts on Fifth Third Bancorp v. Dudenhoeffer

"[It] is important to understand that risk has not been created or destroyed by this decision. The risk was always present. Under Moench, ESOP participants bore most of the risk. But under this decision, ESOP fiduciaries will not bear most of the risk either. Instead, this case was all about shifting a portion of the risk back to ESOP fiduciaries rather than ESOP participants, but leaving it somewhere in the middle.... ESOP fiduciaries should consider treating their company stock investment with the same exacting fiduciary standards they are treating the plan's other investments.... Here are items they should consider[.]"

After 13 Years, Haddock v. Nationwide Settles for $140,000,000

"Originally filed in 2001, the lawsuit concerned the plaintiffs' allegation that Nationwide received undisclosed revenue sharing payments from non-proprietary mutual funds in violation of ERISA.... The settlement also calls for extensive non-monetary relief ... [T]his is the most substantial settlement ever in an ERISA fiduciary breach case involving the receipt of revenue sharing by a service provider."

Supreme Court Declines to Hear Appeal of Tussey v. ABB

"The Supreme Court does not provide a reason why they decline to hear appeals. However in this instance, there are at least a few speculative guesses. First, they have already agreed to hear two ERISA cases this term, with one being Tibble v. Edison... Second, on the issue of deference which was the heart of plaintiffs' appeal, the district court will get to decide that issue for the first time." [Tussey v. ABB, Inc., No. 12-2056 (8th Cir. Mar. 19, 2014; cert. denied Nov. 10, 2014)]

$140 Million Settlement: What It Means to Your Retirement Plan Practice

"Present all products offered by a single-covered service provider (CSP) that your prospect or client qualifies to purchase.... If the CSP offers the same investment option in multiple share classes, present your recommended menu with each share class, ... Identify which investment options are proprietary, non-proprietary, and sub-advised, and identify the cost impact ... Disclose the gross and net operating expense ratio, the 12b-1, and any other indirect fee by fund.... Provide the [retirement plan fiduciary] with an estimate of the revenue sharing expected for each fund at the beginning of the plan year and a final tally of the revenue sharing paid for each fund at the end of the year."