Church-plan challenges lead uptick in ERISA class-action settlements in 2017

Class-action lawsuit settlements reached a record $2.7 billion in 2017, with $927.8 million coming from the 10 largest ERISA cases, according to an analysis by law firm Seyfarth Shaw.

In its annual workplace class-action report, the firm found that the largest ERISA class-action settlements involved pension plans claiming church-plan status exempting them from ERISA; breaches of fiduciary duty; failures to make required contributions into retirement funds; and other claims of mismanagement.

The monetary value of the 10 largest private ERISA class-action settlements was a sharp increase from $807.4 million in 2016, but lower than $1.31 billion in 2015, according to the report. The largest ERISA settlement was Providence Health & Services, which paid $352 million to settle a church-plan challenge. Six of the 10 largest settlements in 2017 were related to church-plan challenges.

In 2017, the report noted an increase in settlements of ERISA class actions and governmental enforcement litigation. There was a total of $1.75 billion in class-action settlements in 2016.

Employers were more successful in defending class certifications overall in 2017, but in ERISA cases, plaintiffs were more successful than defendants in litigating certification motions, winning 17 out of 22 certification rulings in 2017, the report said.

The report also found that in recent years, plaintiffs' attorneys have increasingly turned to state courts as a forum for pursuing employment-related class-action litigation. Federal and state courts issued more favorable class certification rulings for the plaintiffs' bar in 2017 than in past years.

"Plaintiffs' lawyers continued to craft refined and more successful class certification theories," said the report.

In 2017, government-initiated litigation "continued to flourish" despite a change in administrations, Seyfarth Shaw partner Gerald Maatman Jr. said in a blog related to the report. "With the federal government in transition, 2017 results were heavily influenced by Obama administration holdover policies and personnel as government enforcement litigation increased. This balloon is expected to burst in 2018 as the Trump administration settles in further, pulling back these policies and positions; yet, at the same time, it is expected that the private plaintiffs' class-action bar will step up their lawsuit filings and 'fill the void,'" he wrote.