ERISA Litigation

Many appellate courts have ruled that fiduciaries who allow plan investment in employer stock are entitled to deferential judicial review or a “presumption of prudence” when the plan document requires or encourages the offering of employer stock as an investment option.  But a new Second Circuit decision demonstrates that references to an employer stock fund in the plan document may not sufficiently “encourage” that option to give rise to the presumption.  Taveras v. UBS AG, No. 12-1662 (2d Cir. Feb. 27, 2013).
Continue Reading When Does a Plan Document “Encourage” an Employer Stock Fund Enough to Justify the Presumption of Prudence?

Private equity and other investment fund managers can exhale (at least a little bit) following a recent court ruling that investment funds are not liable for the ERISA obligations of their portfolio companies.  The ruling expressly rejects a 2007 Pension Benefit Guaranty Corporation (“PBGC”) letter ruling and contradicts an earlier court decision that supported the PBGC’s position that a private equity fund could be liable for the pension liabilities of one of its portfolio companies.  While the new ruling by no means settles the issue, investment fund managers should welcome this development.
Continue Reading Investment Funds Not Liable for Pension Plans of Portfolio Companies, Court Rules

Earlier today, a federal district judge rejected an attempt by two Verizon retirees to block the $7.5 billion transfer of pension liabilities to Prudential (Lee v. Verizon, N.D. Tex.).  The court denied plaintiffs’ request for a temporary restraining order or preliminary injunction, finding that the plaintiffs did not establish a substantial likelihood of success on their claims that the transaction would violate ERISA.
Continue Reading Verizon May Proceed with $7.5 Billion Pension Settlement, Court Rules

On Tuesday, November 27th, the Supreme Court will hear oral arguments in U.S. Airways v. McCutchen.  The case will address a medical plan’s ability to recover the cost of medical benefits for injuries caused by a third party.  McCutchen is important to employers, because a ruling against U.S. Airways might significantly increase the cost of providing medical and other benefits.
Continue Reading Supreme Court to Address Plan’s Ability to Recover the Cost of Medical Benefits for Injuries Caused by a Third Party

When an employee benefit plan is amended in a way an employer anticipates could be controversial, an employer might seek a declaratory judgment that the amendment complies with ERISA.  Generally, a declaratory judgment action will preclude later challenges by plan participants.  However, a recent decision by the Third Circuit demonstrates…
Continue Reading Employer’s Declaratory Judgment Action Dismissed in Favor of Later Suit by Union