The Trend Lines in ERISA Litigation

I like when you sort of hit the zeitgeist in things you write and talk about. I mentioned in a post last week that I would be presenting a seminar to the ASPPA Benefits Council of New England on current trends in ERISA litigation, and I presented the seminar yesterday. As I gave the talk, a theme unfolded: namely, that the confluence of economic problems and the unsettling of many apple carts when it comes to the rules governing ERISA related litigation (a perfect case in point being the majority’s suggestion in LaRue that litigants and lower courts should feel free to reconsider precedents established in defined benefit cases when confronting disputes over defined contribution plans such as 401(k) plans) means we are looking at an expansion of litigation, perhaps in the overall number of suits and, if not, at least in the complexity, dollar value and expense of the suits that are brought. I noted this to be a particular issue with regard to stock drop and excessive fee cases, particularly in the current stock market meltdown.

Well, lo and behold, today here comes this report, from Seyfarth Shaw by means of Global Pension:

The Seyfarth Shaw Workplace Class Action Litigation Report showed last year, the top ten settlements for Employee Retirement Income Security Act-related (ERISA) class action cases topped US$17.7bn, a dramatic increase from the $1.8bn paid out in 2007 . . .“There is an explosion in class action and collective action litigation involving workplace issues. The present downturn in the economic climate is likely to fuel even more lawsuits, and the financial risks in this type of employment litigation can be enormous . . .” The firm said this trend was likely to continue, with particular reference to cases being brought over “stock drop” complaints – in which ERISA plan members brought action over the availability of employer’s equities as an investment option and “plan administration” cases, whereby participants brought action over ‘excessive’ advisory fees and other elements of plan administration.