In Su v. Fensler, No. 22-cv-01030, 2023 WL 5152640 (N.D. Ill. Aug. 10, 2023), the court granted the Department of Labor’s motion for a preliminary injunction to replace with an independent fiduciary the trustees of the United Employee Benefit Fund, who are accused of breaching their fiduciary duties by using Fund assets to engage in prohibited transactions. The Fund purchases life insurance policies that pay death benefits to participants’ beneficiaries. The Fund’s assets declined almost 75% over a four-year period, which DOL alleged was due in large part to the trustees’ approval of substantial and unreasonable legal and administrative expenses, including millions of dollars in legal fees in this and other litigations relating to the same underlying conduct. While the Court reserved judgment on whether the challenged expenses were unreasonable, it held that the Fund and its participants would be irreparably harmed if the trustees were not replaced. The DOL could seek only equitable relief, and as a result, if the trustees continued to pay the Fund’s substantial legal and administrative expenses, there may be no assets left to pay benefits, and DOL might lack any legal recourse. Furthermore, the Court concluded that DOL had shown a likelihood of succeeding on the merits of its claims that the trustees breached their fiduciary duties in approving the transactions at issue, which included a seven-figure loan to buy a former trustee’s home out of foreclosure and allegedly unreasonable compensation to that same former trustee. Finally, the Court held that an independent fiduciary could better scrutinize the Fund’s assets and expenses and “chart a path that is in the best interest of the Fund and its participants, and not solely in the interests of the Fund’s Trustees or lawyers.” The Court concluded that any disruption caused by the appointment of an independent fiduciary was far outweighed by the potential harm to the Fund and its participants if the trustees were permitted to continue exercising control over the Fund’s assets.

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Photo of Joseph Clark Joseph Clark

Joseph E. Clark is a senior counsel in the Labor & Employment Law Department and a member of the Employee Benefits & Executive Compensation Group where he focuses on complex employee benefits litigation.

Joe represents a diverse range of clients from the time…

Joseph E. Clark is a senior counsel in the Labor & Employment Law Department and a member of the Employee Benefits & Executive Compensation Group where he focuses on complex employee benefits litigation.

Joe represents a diverse range of clients from the time a claim is asserted through trial or arbitration, whether it is defending plan fiduciaries against class action claims of fiduciary breach or prohibited transactions or in connection with government investigations, or defending employers against multiemployer pension plan claims for withdrawal liability.  These clients include financial service providers, investment managers, Fortune 500 corporations, and benefit plan committees.

Outside of the context of litigation, Joe also advises fiduciary clients regarding their fiduciary responsibilities and employers regarding various withdrawal liability issues.

A co-editor of Proskauer’s Employee Benefits & Executive Compensation blog, Joe has authored pieces on employee stock ownership plans, excessive fee claims, fiduciary breach, investigation and determination of benefits claims, and best practices for plan drafting. He has also published several articles regarding these issues in BNA Insights.

Photo of Neil V. Shah Neil V. Shah

Neil V. Shah is an associate in the Labor & Employment Law Department and a member of the Employee Benefits & Executive Compensation Group, where he focuses on ERISA litigation.

Neil represents plan sponsors, trustees, and other fiduciaries in ERISA class actions for…

Neil V. Shah is an associate in the Labor & Employment Law Department and a member of the Employee Benefits & Executive Compensation Group, where he focuses on ERISA litigation.

Neil represents plan sponsors, trustees, and other fiduciaries in ERISA class actions for breach of fiduciary duty arising out of investment losses and prohibited transactions, as well as Department of Labor and other governmental and internal investigations.  Neil also counsels both employers and multiemployer funds regarding the assessment and collection of delinquent contributions and withdrawal liability.

Prior to joining Proskauer, Neil was an associate at a large regional firm, where he litigated individual and class actions involving challenges to insurer claims adjudication procedures under ERISA, fraud recoveries against healthcare providers, and claims for benefits.

Neil has authored several articles, including those published in the New Jersey Law Journal and Bloomberg National Affairs. He is also a frequent contributor to Proskauer’s Employee Benefits & Executive Compensation Blog.