Frustrated by what they say is an onslaught of "frivolous" and "nuisance" ERISA lawsuits, retirement industry trade groups are using an aggressive and unusual strategy to convince federal judges to dismiss the complaints.
Typically, the industry — and other interest groups — file friend-of-the-court briefs supporting defendants or plaintiffs in appeals to the U.S. Supreme Court and to federal appeals courts. However, in recent months, and especially in recent weeks, they have been filing amicus briefs at the District Court level. They need a court's OK to file these briefs, and requests can be rejected.
Decrying the "cookie-cutter" nature of ERISA complaints about fees and investment selection, Chantel Sheaks, vice president of retirement policy for the U.S. Chamber of Commerce, Washington, said her organization wants to "educate the District Court judges" about the industrywide impact of chronic litigation.
The Chamber has been the retirement industry's most aggressive filer of amicus briefs at the District Court level, and it has been doing so for about 18 months.
The Chamber and other retirement industry members are concerned that District Court judges won't dismiss ERISA complaints because the judges may believe the litigation is too complicated for a quick rejection, Ms. Sheaks said.
Once a District Court rejects a motion to dismiss, sponsors and record keepers face expanded costs of the legal discovery process — the data-gathering and data-sharing by the dueling parties — that could be a precursor to holding a trial. ERISA cases that survive a motion to dismiss at the District Court level often lead to settlements.
Research by Callan LLC shows 165 new ERISA lawsuits were filed against DC plans between 2019 and mid-August 2022. Callan's research covered plans with assets of $175 million or more. Among 77 motions to dismiss filed by defendants, judges granted 55% of them. Forty-six lawsuits were settled.
"The issues used to be questions of law at the appeals courts and Supreme Court," said Annette Guarisco Fildes, CEO of the ERISA Industry Committee, Washington.
The proliferation of ERISA complaints "has caused us to act earlier" in filing amicus briefs, she said. "The strategy of plaintiffs' lawyers is to drive settlements as early as possible. We have to do something to push back."