ERISA litigation continues to flourish thanks to veteran plaintiffs' attorneys refining their strategies, newcomers entering the ERISA arena using traditional arguments and lawsuits being filed against smaller plans.
For the veteran plaintiffs' attorneys, their lawsuits "generally are sophisticated and appear to respond to roadblocks from decisions that have gone against plaintiffs," Thomas E. Clark Jr., a St. Louis-based partner and chief operating officer of Wagner Law Group who represents sponsors, wrote in an email. "Additionally, we see some new theories such as going after multiple employer plans or arguing plan participant data is a plan asset."
For the new crop of law firms filing suits, "these complaints appear to generally be cookie cutter and borrow from legal theories from earlier lawsuits," he wrote.
Sponsors' attorney Christopher Boran, a Chicago-based partner at Morgan Lewis & Bockius LLP, added that in some cases "we are seeing complaints that take the kitchen sink approach and typically borrow liberally from complaints filed in other cases to create a sort of Frankenstein complaint."
In contrast to these broad allegations, other complaints are becoming more targeted than "five or certainly 10 years ago," Mr. Boran wrote in an email. Examples include "focusing on fund performance, lower cost investment alternatives or other aspects of the plan's administration," he wrote.
Another source of increased litigation is plaintiffs' attorneys willingness to represent smaller clients. Although early ERISA cases focused on the largest corporate plans, lawsuits against DC plans with less than $750 million or even $500 million in assets are more common. And since 2016, private university 403(b) plans have been sued by participants whose attorneys have used some of the approaches found in 401(k) cases. Regardless of lawyers' experience or strategies, ERISA litigation has been active this year.
Recent defendants include Costco Wholesale Corp., Paychex Inc., KeyCorp, Land O' Lakes Inc., Estee Lauder Inc., Oshkosh Corp., Automatic Data Processing Inc., MedStar Health Inc., Astellas US LLC, Quest Diagnostics Inc., Universal Health Services Inc., Schneider Electric Holdings Inc., CDI Corp., and CommonSpirit Health.
And that's only since Memorial Day.
During the second quarter, Pensions & Investments tracked 43 ERISA actions ranging from new filings and settlements to dismissals and appeals, many of which dealt with fee allegations. There were 31 such legal events during the first quarter.
"The number of fee litigation cases is growing rapidly," Michael Weddell, Southfield, Mich.-based director of retirement for Willis Towers Watson PLC, said.
Fee fights can take many forms, but complaints "typically allege that there are less expensive funds available, there are lower-priced share classes of mutual funds available, and that the fiduciaries should have selected indexed or passive funds instead of active funds," he wrote.