Although defendants don't admit wrongdoing in settlements, ERISA attorneys say these agreements help peers see if their policies are similar to those cited in the settlements and how plaintiffs' lawyers prepare strategies.
Mr. Clark, who is based in St. Louis, said he discusses settlements as part of the context of the ERISA litigation environment. The greatest value to the rest of the industry, he added, lies in settlements' illustrating the procedural process that led to the lawsuits and their resolution.
“I tell them: Look at the cost. Look at the relief,” said Mr. Clark. “Here is the way they settled.”
Although high-profile and high-award cases capture more headlines, attorneys say settlements involving the Department of Labor can be the most instructive. “These agreements give you an idea of what's on the department's radar screen,” said Jennifer E. Eller, a principal in Groom Law Group, Washington.
As an example, she cited the February 2013 settlement with ING Life Insurance and Annuity Co., a unit of ING U.S. (now Voya Financial). The DOL had accused the company of failing to make timely disclosures and corrections of processing errors involving about 1,400 DC plans. The settlement called for the company to provide a more thorough explanation to clients about its policy and practice of disclosing transaction-processing errors; pay $5.25 million to participants due to its previous practices; and pay a civil penalty of $524,509.
The settlement was notable because “there was no DOL guidance before the settlement,” Ms. Eller said. “This gives you an idea of what the department is thinking.”
Another example is GreatBancTrust Co., Lisle, Ill. The DOL had sued GreatBanc, trustee for the employee stock ownership plan of Sierra Aluminum Co, Riverside, Calif. The DOL alleged that GreatBanc had allowed the ESOP to buy stock from Sierra's top executives and co-founders at above-market value. The June 2014 settlement required GreatBanc and its insurers to pay $4.77 million to the ESOP and $477,273 in civil penalties. It contained 10 pages of guidelines on fiduciary responsibilities regarding ESOPs.
“The settlement provided very substantial provisions on disclosure,” said James P. McElligott Jr., a Richmond, Va.-based partner at McGuireWoods LLP. “Lawyers will look at this to gauge the Department of Labor's approach.”