Employee Benefits & Executive Compensation Blog

The View from Proskauer on Developments in the World of Employee Benefits, Executive Compensation & ERISA Litigation

Tag Archives: Breach of Fiduciary Duty

Claims Against Investment Adviser in ERISA Fee Litigation Case Dismissed

A federal district court in North Carolina dismissed claims by BB&T Corp.’s 401(k) plan participants that Cardinal Investment Advisors, LLC, the plan’s outside investment advisor, breached its ERISA fiduciary duties by allowing the plan to invest in BB&T proprietary funds. The proprietary funds, according to plaintiffs, charged excessive fees and underperformed non-proprietary funds. The court dismissed the … Continue Reading

District Court Dismisses Allegations That Stable Value Fund is Too Conservative

A district court in Rhode Island dismissed claims by participants in the CVS Employee Stock Ownership Plan that plan fiduciaries imprudently invested plan assets in the plan’s stable value fund. Plaintiffs argued that the stable value fund had an excessive concentration of investments with ultra-short durations and excessive liquidity, both of which caused the fund … Continue Reading

Sixth Circuit Dismisses ERISA Stock Drop Action Against Cliffs Natural Resources

The Sixth Circuit affirmed the dismissal of ERISA stock drop claims by participants in the Cliffs Natural Resources’ 401(k) Plan. The participants alleged fiduciary breach claims based on public and non-public information arising out of the collapse in iron ore prices that caused the company’s stock price to decline 95%. With respect to the public information claim, … Continue Reading

Pension Consultant Found Not to be an ERISA Fiduciary

The Tenth Circuit held that a pension plan consultant, who misstated the amount of monthly pension payments that a pension plan participant would receive in retirement, was not a fiduciary under ERISA. Plaintiffs Trent and Wendy Lebahn, who were participants in the National Farmers Union Uniform Pension Plan, claimed that the Plan, its Pension Committee … Continue Reading

On Remand, District Court Rules for the Fiduciaries in Tatum v. R.J. Reynolds

The R.J. Reynolds defendants have again prevailed against allegations that they breached their fiduciary duties by divesting the RJR 401(k) plan of funds invested in Nabisco stock.  Following remand by the Fourth Circuit, the district court held that a hypothetical fiduciary “would” have divested the plan of the Nabisco investments in the same time and … Continue Reading

Eleventh Circuit Again Affirms Dismissal of Stock Drop Claim Against Delta Air Lines

The Eleventh Circuit affirmed dismissal of ERISA breach of fiduciary claims against Delta Air Lines and other alleged plan fiduciaries in connection with a defined contribution plan’s investments in Delta Air Lines stock.   In so ruling, the Court joined a growing number of decisions following Dudenhoeffer that have dismissed claims based on public information.… Continue Reading

Supreme Court Denies Review of Fourth Circuit Loss Causation Case

The U.S. Supreme Court recently declined to grant certiorari to review the Fourth Circuit’s decision in RJR Pension Investment, et al. v. Tatum, 761 F.3d 363 (4th Cir. 2014).  As we previously reported here, a divided panel of the Fourth Circuit held that, because the plaintiff proved that the plan fiduciaries acted imprudently by liquidating … Continue Reading

Second Circuit Affirms Dismissal of ERISA Stock Drop Claims

The Second Circuit recently affirmed the dismissal of an ERISA stock drop class action because, like the district court, it held that Named Plaintiff Debra Taveras lacked constitutional standing to pursue her claims.  Taveras alleged that defendants, which included UBS and a number of individuals, breached their fiduciary duties by maintaining the company stock fund … Continue Reading

Settlement Reached in Stock-Drop Case

A class of former LandAmerica Financial Group employees agreed to a $5 million settlement of stock-drop claims arising from LandAmerica’s 2008 bankruptcy, and have submitted the agreement for court approval.  LandAmerica filed for bankruptcy following the 2008 collapse of its title insurance subsidiary. … Continue Reading

Fiduciary Breach Claim Based On Oral Representation Can Proceed

A federal district court in New Jersey held that oral misrepresentations may support a breach of fiduciary duty claim under ERISA.  Plaintiff Richard Lees was hired by American Re–Insurance Company, although he was paid by another entity called SMS.  When American sought to transfer Lees to its payroll, Lees allegedly agreed to the transfer only … Continue Reading

401(k) Plan Participant Waived ERISA Stock-Drop Claim

The D.C. Circuit affirmed the decision of a district court that Plaintiff Patrick Russell, a 401(k) plan participant, had knowingly waived his right to assert an ERISA stock-drop claim based on, among other things, the alleged imprudence of maintaining an employer stock fund as an investment option.  Russell argued that the district court erred by … Continue Reading

How to Settle an ERISA Breach of Fiduciary Duty Case and Sleep at Night: A Checklist for Plan Trustees to Consider

Plan trustees often look to settle ERISA fiduciary breach claims brought against them as a way to put the past behind them.  Assuming there is enough fiduciary liability insurance coverage available to pay the proposed settlement sum, the trustees may be prepared to put aside their desire to vindicate themselves for a challenged course of … Continue Reading

Yet Another Decision On The Availability of Equitable Surcharge

A district court in Pennsylvania concluded that a decedent’s life insurance plan beneficiaries were entitled to equitable surcharge where the plan administrator failed to, among other things, inform the decedent about the need to convert her group policy to an individual policy. Weaver Brothers Insurance Associates, Inc. v. Braunstein, 2014 WL 2599929 (E.D. Pa. June … Continue Reading

Equitable Surcharge Awarded to Life Insurance Plan Beneficiary

A federal district court in California awarded relief in the form of surcharge to a life insurance plan beneficiary who claimed that a plan administrator failed to provide complete and accurate information in response to inquiries about how to prevent coverage from lapsing. In so ruling, the court stated that the plan administrator’s response to … Continue Reading

District Court Finds Fiduciaries Have No Duty to Investigate False Sale Allegations for ESOP Investment

In Malcolm v. Trilithic, Inc., 2014 WL 1324082, No. 1:13-cv-00073 (S.D. Ind. Mar. 31, 2014), the Southern District of Indiana held that plan fiduciaries were under no duty to investigate allegations that a false sale had been included in the company’s records as a way of “puff[ing] up [its] receivables account and profitability” to present … Continue Reading

Fiduciary Breach Claims Barred by ERISA’s Six-Year Statute of Limitations

The Eleventh Circuit recently dismissed a participant’s fiduciary breach claims against SunTrust’s 401(k) plan fiduciary committee members on the ground that the claims for imprudently selecting certain investment options was time barred by ERISA’s six-year statute of limitations. Fuller v. Suntrust Banks, Inc., 2014 WL 718309 (11th Cir. Feb. 26, 2014). Plaintiff Barbara Fuller argued … Continue Reading

Third Circuit Concludes That Insurer Did Not Breach its Fiduciary Duties in Paying Benefits Through A Retained Asset Account

The Third Circuit recently found that while a life insurance company acts as a fiduciary in choosing to use a retained asset account to distribute benefits, it did not breach its fiduciary duties in making that choice. When an insurer creates a retained asset account as the method by which it will distribute benefits, it … Continue Reading

Sixth Circuit: Plan Fiduciary Reasonably Relied On Benefit Calculations In Communicating To Participant

The Sixth Circuit recently rejected a participant’s claim that a benefit estimate should override the specific benefit promised under the terms of the plan. In Stark v. Mars Inc., No. 12-3956, 2013 WL 1908889 (6th Cir. May 9, 2013) (unpublished), the Sixth Circuit affirmed summary judgment in favor of the plan’s fiduciary committee. The plaintiff, … Continue Reading

Ninth Circuit Rules on Breach of Fiduciary Duty Claim in Investment Options Case

In Tibble v. Edison Int’l, 10-cv-56406, 2013 WL 1174167 (9th Cir. Mar. 21, 2013), the Ninth Circuit Court of Appeals ruled that 401(k) plan fiduciaries breached their duty of prudence in selecting investment options for the plan and unreasonably relied on a consultant’s advice because they could not prove that either they– or the consultant … Continue Reading
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