It’s déjà vu all over again, as the famous quote goes.

The great thing about being a lawyer long enough is that eventually, everything that is old becomes new again. Early in my career, I was coverage counsel for an insurer who issued policies to various ancillary defendants in the tobacco litigation brought by states across the country. The current state action by the Commonwealth of Massachusetts against Meta alleging Chapter 93A violations is – from at least a meta level (pun unquestionably intended) – in many ways the same case all over again. This time, it is allegations that product design features in the platform resulted in social media addiction and harm to young users, and which, combined with misleading statements by Meta, violated Massachusetts’ consumer protection statute, Chapter 93A.

A new decision from the Supreme Judicial Court greenlights this theory of liability, finding that it is not barred by Section 230, which imposes certain protections on internet providers related to their content. The Court here lays out its view of the proper scope of Section 230 protection, finding that it provides a limited, although broad, scope of immunity, but not one so broad as to insulate an internet provider, such as Meta, from liability for its own actions, including under state product liability law (at least by inference) and under Massachusetts’ consumer protection law. The conclusion, and the future it opens up, is eerily similar to the way decisions in the tobacco litigation, over time, upended the assumption that numerous barriers either practically or legally barred – or at least made fundamentally unworkable – such litigation.

If you know the path trod by the tobacco litigation brought by states decades ago, then you can map out the future path of this litigation. It may not play out exactly the same way as did the tobacco suits, but from here you can see the roads, the offramps and the different routes it could travel.

I am going with a special edition of the Five Favorites post this week, solely covering five stories about the Department of Labor’s new proposed regulation addressing the issue of adding alternative assets, such as private equity and crypto, to the investments offered in 401(k) plans. For each one, I have included my own questions or comments on the aspect of the regulation covered by that particular article.

This is a totally selfish approach to this week’s post in the series and to my coverage of the regulation, in that every day I find an article that interests me about the reg and I keep finding new angles for thinking about it. So rather than write daily on the subject – thus almost certainly boring both myself and any faithful readers within a few days – I am capturing them all in one fell swoop.

  1. Seems to me the proposed regulation literally (metaphorically speaking, anyway) paints a big red target on the backs of any plan fiduciaries who allow alternative investments into their plans. As this Thompson Hine post nicely explains, the regulation lists six points of analysis that fiduciaries should exhaust before adding any particular alt into a plan. But I find it very unlikely that most fiduciaries will be able to exhaustively analyze these issues at the level of expertise required of a fiduciary. For those who can’t, the list of factors reads like a checklist for a class action complaint, which can be written to target any particular aspect of the list that a plan fiduciary did not nail down.
  2. It’s not just me who doubts whether any plan fiduciary will really be able to hit the mark on each of those six factors. This article focuses on the sheer complexity of the task assigned to fiduciaries by the regulation.
  3. This article addresses the fact that the regulation is focused on reducing breach of fiduciary duty class action litigation against 401(k) plans, particularly with regard to any plans that add alternative investments into their menu of investment options. But breach of fiduciary duty litigation is literally written directly into the statute, and the standard of care for a fiduciary is likewise literally written right into the statute, each time without any reference to the limiting factors that the proposed regulation seeks to have applied to such lawsuits. If the standards of judicial interpretation of statutory authority and agency action set out in Loper are real things to be even handedly applied by the courts, it’s impossible to see how regulatory action imposing these particular terms on breach of fiduciary duty litigation under ERISA can withstand court challenge. The regulation almost literally contradicts the words of the statute itself.
  4. Meanwhile, this article by a Morningstar executive points out that “And never say never, but most of these types of investments, especially private equity and private credit, are unlikely to pop up as stand-alone investment options on 401(k) plan menus. Rather, they would probably appear inside target-date funds or managed retirement accounts that are overseen by investment professionals rather than participants themselves.” The problems with this for plan fiduciaries are two fold, at least. First, this buries the risk exposure within an investment product in a manner that is going to make it still harder for plan fiduciaries to ever satisfy the six factors listed in the regulation. Second, this guarantees there will be massive numbers of plan participants with untold dollars of exposure to alts in their retirement accounts without knowing it. What could possibly go wrong? Especially for plan fiduciaries, who are legally charged with acting on their behalf?
  5. It’s certainly a good proposal for the financial industry, as you can tell from the praise for the regulation from that corner of the ring in this article. There’s nothing per se wrong with that – the entire retirement industry operates on a symbiotic relationship among Wall Street, plan participants, employers and the rest. But remember that the definition of fiduciary duty in the statute literally doesn’t say one word about protecting or even considering the interests of those selling investment products, and the breach of fiduciary duty liability provisions place the risks on fiduciaries, not those who sell investments.

Some weeks are an embarrassment of riches. For the author of a running series like this one, this week was one of them. From insurance for AI risks to alts in 401(k) plans, there were enough excellent articles to fill several of these columns. But here are the five I picked this week.

  1. I started out as a paralegal working on the late stages of the never ending dispute over asbestos coverage and then was a junior associate working on environmental coverage disputes when I started practicing. I learned, as many did, that these types of long tail, long running exposures and liabilities continue as insurance coverage disputes for many, many years. Heck, even after the start of the twenty first century, we were still litigating various tributaries from the environmental coverage disputes, including in one of the cases in my own practice, as an example, what type of discharge was sufficient to fall within an absolute pollution exclusion. As late as around 2000 or so, in fact, I was trying a case in Superior Court in Massachusetts concerning to which year’s tower of coverage an environmental loss should be attributed – and that was a good fifteen or so years after I first touched an environmental coverage file. I bring this up because the interesting back story to the recent high profile plaintiffs’ victories against social media companies seeking recovery for social media addiction is that, like tobacco claims, there is an almost infinite number of similar suits in the queue behind them, with likely decades of insurance coverage fights over them still waiting to be fought. This blog post sheds some light on these issues.
  2. I have written multiple LinkedIn posts (see here and here) and a blog post on a new Chapter 93A decision out of the Massachusetts Appeals Court, which I believe advances the ball on three different issues in Chapter 93A law in the Commonwealth. One of the reasons those developments are important is because insurance and insurance bad faith law in the Commonwealth is overwhelmingly controlled by the manner in which obligations, duties and rights under Chapter 93A are interpreted. As I have discussed before, one of the interesting and important aspects of the new decision is the guidance it provides on how misrepresentation comes into play in this context. This point is focused on in this article on the decision in Massachusetts Lawyers Weekly.
  3. In my feeds, including on LinkedIn and in newsfeeds, stories about a boom in ERISA class action litigation continue to proliferate, and everything from pro-defense court rulings to Department of Labor action indicates that there is an ongoing pushback to that dynamic. It was interesting to see that this trendline didn’t spare the federal courts of New England, with twenty ERISA and securities class action filings in 2025, as this article explains. However, of some interest to me as a committed skeptic on the question of whether the boom in ERISA class action cases is really as egregious as is often said, the same study showed that the total number of class action filings in New England in 2025 was 604. Less than 20 ERISA class action filings out of 604 class action filings in a large region spanning multiple states during the course of an entire year may not really represent a gold rush of claim jumpers.
  4. I like this article on the trend towards carriers and corporate defendants retaining appellate counsel, independent of the trial team, to watch over cases while they work their way through the trial court and through trial. But I am also not totally sold on the idea and think it depends on the case and the trial team. If you have an experienced trial lawyer who is also an experienced appellate lawyer, I am not sure how much is gained by adding an appellate lawyer as some type of embedded observer. I have tried at least one case with separate appellate counsel from a specialist practice having been retained by the client to attend the trial – I am not sure that I or the client gained much from it. On the other hand, I have parachuted in as appellate counsel after judgment was entered and where experienced appellate counsel had not been part of the trial team. I can tell you that when I went to write the appeal brief and also when I went to prepare for argument, there were some issues I wished had been addressed at the trial court when the case was pending there, and which might very well have been addressed at that stage if separate appellate counsel had been present at that stage of the proceedings.
  5. So many things I could have chosen for the coveted number five spot in the batting order this week, many of them being very astute and very fast takes on the Department of Labor’s new proposed regulation on alternative assets in 401(k) plans. But that’s too obvious a choice for this slot and, moreover, there is way too much to say about it – I may have to write a separate, special edition of the five favorites solely covering articles, newsletters and blog posts on this issue. Instead, I like this article comparing the development of the AI insurance market to the prior development of the cyber insurance market. I like it for two reasons. First, it takes me back to one of my favorite stories, which is the time that I was giving a presentation on cyber insurance, by video broadcast, to thousands of claims staff at a major carrier, when the tech driving the PowerPoint deck crashed, which for you young ‘uns who don’t know what the work world was like before Zoom and Teams, was about every speaker’s worst nightmare. I solved it by immediately announcing that “Clarence Darrow used to give multi-day closings without a deck, so I can finish this presentation without one,” and then just kept plowing on, like an old-fashioned speech from before the days of tech. To be honest, I had that line in my back pocket, having used it in the past when tech crashed. Second, though, I like the article’s focus on what brokering and underwriting look like behind the scenes. There is some really good information there for anyone who deals with placing coverage or counseling insureds but doesn’t have a front row seat to how the sausage gets made.

There was a tremendous amount of excellent media to read, watch or listen to this past week concerning insurance and ERISA issues. I am hitting five of my favorite ones in today’s post, starting with one from my favorite newspaper.

  1. A couple of weeks ago, writing about the relationship of insurance to shipping through the Strait of Hormuz, I referenced Lloyd’s of London’s history with risk and with shipping, calling it the Indiana Jones, in popular imagination, of maritime risk. And true enough, as this article explains, even now Lloyd’s will insure shipping risks in the Middle East, but at historically high rates. However, of more significance appears to be the lack of appetite of the insureds themselves for the risk, with or without insurance cover. It’s a good reminder that no matter how important insurance is, it’s not supposed to be the tail that wags the dog, but just the tail. (That last comment is a deliberate insurance pun).
  2. There is absolutely no question that the future will (and to some extent the present already does) involve using AI for claims processing. Insurance, including claims handling, is so innately an information and data intensive business that it is inevitable. But as I have written before, AI in claims handling is going to pose litigation and liability risks for insurers, including potential bad faith exposure. Take Massachusetts law, for instance, where settlement offers have to be both reasonable and based on reasonable investigation, at the risk of potentially significant statutory damages. It’s very easy to see how lawsuits could be constructed that AI usage in determining a settlement offer or investigating a claim violated one or both requirements, simply by demonstrating bias, oversight or errors either built into the software and its algorithms or as part of its application to a specific claim. And we are now, as this article shows, seeing the outlines of a discovery regime that will allow discovery into this exact topic.
  3. In early days, as they say, when it comes to the use of Target Date Funds in 401(k) plans, the question of whether their inclusion in plans might be a fiduciary breach was hotly debated at ERISA litigation conferences. I know, because I was there (in the audience, not as a speaker). The debate was notable just as much for the extent of polarization over the question as for the ferocity of the debate. But time went on, Target Date Funds became central to the operation of many 401(k) plans, and most people appeared to forget about the issue. Part of the plaintiffs’ class action bar clearly did not, however. The debate back then was focused on the glide paths of the funds – and the plaintiffs’ class action bar has now filed numerous ERISA breach of fiduciary duty class actions targeting that exact issue, as discussed in this article.
  4. This is an odd but interesting story from the ABA business section on the intersection of AI with ERISA class action litigation. There is a lot to like about it but also some underlying premises that are just plain wrong, in my opinion. The article, on the plus side, delves into the extent to which litigation against plan sponsors is hobbled and restricted to some extent by the lack of transparency in both public filings and investment products related to retirement plans. And there is some truth to this, which has been countered over the years to a significant degree only by the ever increasing knowledge base and sophistication on these issues of the better lawyers in the ERISA class action space. The article’s pitch is that AI tools can attack that problem by developing detailed evaluation of key issues despite this lack of transparency in the industry. And that may very well be right. But on the negative side of the ledger with regard to this article is its fundamental premise that plaintiff friendly precedents are making it ever easier to bring these types of suits, which I wouldn’t agree with for a second. From class action rulings that make it harder to certify a class, to standing decisions that make it harder to get out of the blocks with a case, to benchmarking disputes, the most important recent decisions are running against the plaintiffs’ class action bar right now. Regardless, the article is a good read.
  5. Well, there is thought leadership and then there is thought leadership writ large. I really like Duane Morris’ ERISA Class Action Review 2026, which was just released. I read a lot of the ERISA publications issued by the large class action defense firms and this one is a cut above almost all of them. What I really like about it isn’t just its comprehensive review of the key decisions to date but that it also discusses in depth where this area of litigation is going from here. Don’t miss the summary and chart discussing the largest settlements of 2025 either – you can draw a lot of conclusions and thoughts on settlement and liability issues if you think carefully about that data.

The first case I tried as a first chair was a Chapter 93A case.

The first big money – north of $20 million – case I ever tried as a first chair was a Chapter 93A case.

The most recent case I tried included a Chapter 93A claim.

In between and mixed among them, I have tried patent infringement, contract, pierce the corporate veil, reinsurance, product liability, construction accident, reinsurance and a number of other types of cases.

But there was always a difficulty in drafting proposed conclusions of law at the close of the case that was unique to the Chapter 93A cases and absent from the others. This was due to the fact that many principles of Chapter 93A liability that are generally accepted by courts and Massachusetts lawyers cannot be cited to a particular leading decision. Instead, they often must be supported by analogy or inference, rather than by directly citing to a controlling decision on the issue.

The Massachusetts Appeals Court’s recent decision in Agnitti v. Philip Morris resolves this problem for at least three principles of Chapter 93A law in Massachusetts.

First, it offers a handy cite to a principle that is clearly the law, which is that all of the underlying common law or statutory causes of action, such as in Agnitti for product liability, can fail and you can still recover for violation of Chapter 93A. The case makes for an easy cite on the proposition that a Chapter 93A claim stands on its own and can allow recovery based solely on its violation, regardless of any other cause of action pled in the action or the outcome of such causes of action. Not exactly a novel principle of law, but certainly one that the case makes easy to establish from here on out – which was not necessarily the case before the decision, as evidenced by the erroneous jury instruction given on this point at the trial.

Second, not too long ago, I was defending a Chapter 93A case premised on alleged misrepresentations. Establishing the exact elements necessary for the plaintiff to actually recover under Chapter 93A in that circumstance required stringing together a series of different cites. The Court’s ruling in Agnitti states quite definitively what has to be proven to prevail on such a case.

And finally in this regard, the Court buried in the footnotes a direct and clear statement of causation in the context of a Chapter 93A claim based on misrepresentations, explaining the exact nature of the causal relationship needed to recover. That quote alone will save a lawyer a half page of cites and explanation when discussing causation in Chapter 93A actions in the future.

I found myself feeling very zen and mellow when writing this week’s Five Favorites for Friday post. That’s not always the case, as often the post covers topics that get me quite agitated, such as articles about poorly reasoned court decisions or about unnecessary risks to plan participants. That wasn’t the case this week and I think I know why – because all five articles are basically educational pieces on complex subjects and basically teach something or another to the reader. That’s not something that gets me worked up but instead is something that gives me great pleasure to write about.

So here’s hoping that on a Friday morning, as we wait for March to go out like a lamb, the articles do the same for you.

  1. Lawyers often have aspects of their practice that act as leading indicators for economic conditions, particularly with regard to shifts in the labor market. For me, one of those is when there is a substantial uptick in clients looking for guidance with regard to issues concerning deferred compensation, 409A issues, company solvency and their interrelationship. This article may be the single best comprehensive, one stop shopping review of these issues I have ever come across – and I have read a lot on these issues. It’s a great overview and high level guide to the subject.
  2. Speaking of guides, Brian Gilmore speaks plain English about the complexities of ERISA compliance as well as anyone and better than almost anyone. His newest publication explains wrap plans and wrap summary plan descriptions for ERISA health and welfare benefit programs in, well, plain English.
  3. I have a number of friends and clients in the medical world who are concerned about the role of private equity in the ownership of medical practices. As this article points out, however, there are legitimate economic barriers to the old fashioned model of younger physicians simply buying practices themselves from retiring physicians as an alternative. Anyone can identify a problem and its causes, but the article goes one step further and proposes a solution – medical practices as ESOPs. If, like me, both ESOPs and the role of private equity in the economy are among your interests, it’s a very good read.
  4. With a few notable exceptions, ERISA class action suits alleging the wrongful use of forfeitures by plan fiduciaries have not gone very well for plaintiffs so far. However, the theory hasn’t been tested yet at the appellate level. That is about to change, and with it possibly the future trajectory of these types of cases, as this article discusses.
  5. I hope this last one for this week is not behind a paywall (I try to limit how many articles I include in this weekly post that may not be readily accessible to loyal readers of this feature) because it is legitimately one of the most fascinating articles I have read in awhile. Granted, my personal interests are a little esoteric, in that I am fascinated by both the logistics and complexities of retirement plan administration as well as the ins and outs of cyber risks and liabilities. I have argued both cyber breach and retirement liability cases to appellate benches, though never in the same case. This article, though, reviews the landscape when both issues overlap.

I have written before that plan sponsors should try more ERISA breach of fiduciary duty cases to verdict if they, and their insurers, really want to dissuade class action lawyers from filing ERISA breach of fiduciary duty class action cases with weak liability theories or worse, as simply a strike suit targeted at getting a quick settlement simply because the costs of defending against it could be so high. The thesis was simple – if plaintiffs’ class action lawyers know they are going to have to try these cases, no one is going to bring weak cases on the expectation that someday, one way or the other, a settlement with a sizable attorney fee award will appear.

It’s sort of a Darwinian approach to thinning the herd – the near certainty of having to litigate through trial will drive down filings of class action ERISA cases, leaving behind only the serious cases brought by firms willing to invest in a long fight to prove they are right. With that, the strike suits and cases against small plans and claims based on dubious theories go by the wayside.

As if on cue, shortly after I wrote that argument in a post, Yale defeated a significant and highly publicized ERISA breach of fiduciary duty case at trial, in front of a jury no less.

But the defense bar, plan sponsors and insurers didn’t take that as a sign to press forward to trial on these types of cases. Part of the problem with doing so is the immense cost of discovery that ends up being incurred before trial can ever be reached. Whether for that reason or others, the defense focus over the past few years has instead been on the development of arguments that can be raised at the outset of cases, in an effort to end them before massive discovery costs can be incurred.

Now there’s a renewed front in that approach that may have far bigger consequences in the long run than may initially be apparent to many observers. In my most recent Five Favorites for Friday post, I discussed a Fourth Circuit decision from last week, Trauernicht v. Genworth Financial Inc., in which the Court overturned class certification in an ERISA breach of fiduciary duty case involving target date funds, ruling that the class had to be certified, if at all, as an opt out class. The Court delved in great depth into the reasons why, in its view, a class could not otherwise be certified.

Viewed from the perspective of a defense lawyer, the decision begs defense attorneys in all circuits to test class certification in ERISA breach of fiduciary duty cases and to litigate whether a class is proper. There are many complex issues buried in Trauernicht on the propriety of certification in different circumstances, which I am not going to address here (doing justice to them calls for a law review article, not a blog post), but it is already clear that it would now be malpractice for any defense lawyer to fail to fully evaluate and likely to fight class certification with real vigor in any ERISA breach of fiduciary duty class action.

But if you consider the decision from the perspective of plaintiffs and their counsel in this area of the law, I have some real questions. I have litigated class certification in ERISA cases in the past from both sides of the aisle, and the decision leaves me wondering as to whether the original problem in this case was actually simply poor line drawing with regard to the class by plaintiffs’ counsel, with that mistake eventually snowballing from there into a very pro-defendant opinion by the Fourth Circuit. Regardless of the answer to that question, the very existence of the opinion in Trauernicht at this point means that, on all issues necessary to establish class certification, plaintiffs’ counsel in ERISA cases are going to have to be very careful as to how they pursue certification and are going to have to confront a number of issues that, at a minimum, they didn’t previously have to take on in the same level of depth to obtain certification.

Trauernicht, barring Supreme Court reversal or other circuits rejecting it, is a big win for the defense in these types of cases and will be as significant a barrier to ERISA class action cases as anything else currently being pressed by the defense bar in cases throughout the country. Indeed, as this post goes to press, the latest news is about a District Court judge in the Fourth Circuit reversing a prior order of class certification in light of the Trauernicht ruling.

This week’s Five Favorites for Friday is truly driven by current events, with stories spanning shipping in the Middle East, the most recent ERISA class action decisions, and rising concerns about including alternative asset classes in 401(k) plans.

  1. Courts tend to course correct over time when it comes to class action litigation, with the goal of finding the right balancing point where potentially meritorious claims can proceed but the gate is sufficiently barred against strike suits intended primarily to generate fees for the lawyers. ERISA is having that moment now, as Congress, regulators and the courts try to find a way to reduce the filing of questionable class action claims without choking off valid claims, after fifteen or so years of steady development (both in numbers and in success) of this type of litigation. The latest approach is to require the plaintiffs to plead that an investment option challenged in a complaint is underperforming relative to a reasonable benchmark, and to dismiss the action if the complaint lacks such a comparison. But as this Bloomberg article on one such dismissal reflects, what is and what is not a reasonable benchmark in this circumstance can be very much in the eye of the beholder. And one solution to that problem, again as the article discusses, can be for a court deciding a motion to dismiss to give the putative class multiple opportunities to find and plead a benchmark that the court considers reasonable. Some might say that giving the putative class multiple bites at the apple on this issue defeats the purpose of using motions to dismiss to cost effectively weed out meritless claims. Others, though, including me, might suggest that it is a reasonable way for the court to use motions to dismiss to bar the gate to the courthouse in appropriate circumstances while examining a case sufficiently to avoid barring potentially meritorious claims.
  2. The central theme of a great deal of commentary and judicial decisions in the area of ERISA class actions concerns the need to keep the courthouse doors open to meritorious cases while still limiting the extent to which dubious claims are allowed to proceed into full blown litigation, with the accompanying costs to plan sponsors and their insurers. Even when not said out loud, this premise is never far from the surface. The Department of Labor has been filing amicus briefs that seek to help draw the line between the two types of claims, and is doing it pretty well so far in my opinion. This is a great post discussing those filings.
  3. Speaking of meritorious claims, I remember when defense lawyers in ERISA class actions would sometimes forego fighting over class certification so that they could get on with the real business at hand, which was litigating the merits of the ERISA claims at issue. Now we have a new decision from the Fourth Circuit decertifying a class in a putative ERISA class action and sending the case back to the District Court to start over, based on highly technical but also factual considerations for class certification. Here’s a good story on it. This type of analysis and approach by a court certainly raises another barrier to the prosecution of ERISA class actions, but I am not convinced it gets anyone any closer to culling the wheat from the chaff when it comes to keeping the courthouse doors open for meritorious ERISA class actions but not for others.
  4. Lloyd’s is the Indiana Jones of insurers. They will go anywhere and insure anything, at least in popular imagination. To me and others who follow the industry, they are more accurately understood as an entity that understands risk, the numbers behind them and what to do about it. As I discussed in a blog post way back when, for instance, Lloyd’s started tackling what climate change meant for insuring risks long before anyone really discussed the issue publicly in any depth. For now, publicly, they are insisting they are still insuring shipping in the Middle East, but for how long and at what price? This is a good article on the subject, but one wonders how long any article on this subject will remain current. Still the issue is about as important as there is in the insurance world at this point. Maybe we should just check back when we get to next Friday’s Five Favorites and see where things stand at that point?
  5. I have written extensively on what plan sponsors and fiduciaries should do to protect themselves when it comes to adding alternative asset classes into the 401(k) plans they run, including here and here. Some of the most experienced people in finance are now also sounding the alarm about the risks of allowing them in.

It’s been a fascinating week in insurance and ERISA news, making it a good week to be the author of an ongoing weekly series on hot topics, articles, posts and the like in these areas of law. Interestingly (to me, anyway), the first three stories directly concern cases and issues I have litigated many times in the past, including at the Massachusetts Supreme Judicial Court and in the First Circuit.

  1. Probably the most interesting news in the insurance world this week was a Delaware court’s decision that Meta is not entitled to insurance coverage for defense costs incurred from social media addiction claims. As Bloomberg reported, Meta’s liability insurers “are off the hook for its defense costs in litigation alleging the tech giant got kids hooked on its platforms,” finding that the “lawsuits didn’t present an ‘occurrence’ that would trigger coverage because they alleged only intentional conduct by Meta.” I have seen a fair number of articles and posts suggesting that this finding reflects some sort of a broader action by the court than just a focus on the terms of the policies and how they apply. However, there is nothing new about a court finding that a complaint alleging harm to minors cannot trigger a defense obligation because the alleged conduct can only be understood as involving some degree of intentional harm. The first case I briefed to (and won at) the Massachusetts Supreme Judicial Court decades ago involved whether an intent to harm precluding a duty to defend could be inferred simply from allegations of sexual misconduct in the complaint.
  2. I don’t usually use one of the five slots in my weekly Five Favorites post to discuss a new judicial decision, but I suppose the rules don’t preclude it. I had expected to write a full-blown blog post on this new decision from the Massachusetts Appeals Court on a dispute over an individual disability policy but time and workload haven’t allowed, so I will talk about it now. The Court reversed a trial court decision to instead find that a limitation on the amount of coverage under an LTD policy was applicable. The decision is interesting for a few reasons. First, the Court decided it as a matter of insurance law principles and not as a matter of ERISA law. As a result, it provides a very nice, step by step summary of what the rules are for interpreting an insurance policy under Massachusetts law. Second, it is interesting because the Court flipped the decision below, ruling in favor of the disability insurer despite applying state law and not the standard of review under ERISA for judging a claim for disability benefits. The federal standard of review under ERISA governing this type of a claim is routinely characterized as overly friendly to defendants, but this case shows that the outcome of a dispute over the meaning of a disability policy may remain the same regardless of whether the ERISA standards or state law insurance tests are applied. That may be a bit of a shock to those who believe that one of the great flaws in ERISA jurisprudence is the establishment by the Supreme Court of a very favorable standard for defendants against these types of claims under ERISA. And finally, I would have liked to have seen the argument, as I know both lawyers, they are among the most experienced benefit litigators in town, and the argument was a bit of clash of titans in that regard. The defense counsel, Joe Hamilton, and I once spoke on a conference panel in Chicago on ethics rules governing ERISA claims, and plaintiff’s counsel, Mala Rafik, was probably the plaintiffs’ counsel on every other LTD claim I defended when I first started handling those types of claims. I have recovered attorneys’ fee awards in more than one ERISA case where I have represented the plaintiffs, but Mala remains the only plaintiff’s counsel in an ERISA action who ever recovered an attorneys’ fee award from my client.
  3. I really – and I mean really – like this story about a plan sponsor suing a service provider for problems with a health care plan and the court concluding that, at least for purposes of deciding a motion to dismiss, it was irrelevant that the contract between the parties expressly declared that the provider is not a fiduciary of the plan. As the article puts it, the court held that the “plan sponsor plaintiff has presented a case sufficient to rebuff arguments that a healthcare brokerage/consulting firm wasn’t acting as a fiduciary, despite a service agreement that asserted it wasn’t.” I have litigated and arbitrated this exact same defense in various contexts, including with regard to self-funded health plans, for decades. It can make for some really entertaining arguments at summary judgment, and very interesting discovery tangents, as the parties try to show that the service provider did, or instead did not, have sufficient discretion to qualify as a fiduciary. Thinking about some of the lines of deposition inquiry that were pursued on this point makes me smile even now as I write this.
  4. I have been arguing for some time that the question of whether plan sponsors and fiduciaries should allow private equity investments into their 401(k) plans is not clearcut, and that fiduciaries will have to consider an awful lot of subtle points – many of which they may not have the expertise to evaluate – to make this decision. This is not a new piece from Vanguard but it reappeared in my feed this week in response to various discussions of the increasing velocity towards the addition to plans of these investment options. It does an excellent job of explaining how many moving pieces there are that have to be considered in allowing such assets into plans. My concern for plan fiduciaries is that, as the article demonstrates, there are too many moving parts that a plan fiduciary will have to get right to be able to safely or prudently include the investment class in their plans. The article may not be that new, but the topic is still one of my favorites of the past week’s business news cycle.
  5. One of the most darkly amusing moments in breach of fiduciary duty litigation is when a corporate officer or company owner discovers – or is told, sometimes by a court – that no matter what they thought, they were actually a fiduciary. Along these lines, I often refer to defendants who find themselves to be fiduciaries without having been named as one in the plan documents and without having meant to take on that role as “accidental fiduciaries,” a term which often more accurately captures their status than their drier and more official title as “deemed” or “functional” fiduciaries. Here’s an excellent article on how they end up in that seat, what kind of conduct can impose that status on them, and what their duties are in that circumstance.

Some weeks the Five Favorites write themselves and this week was one of them. I think it’s because so many of the articles hit right dead center on issues I have litigated or counseled on over the years, including disputes between excess and primary insurers, whether forfeiture under a 401(k) plan is appropriate, withdrawal liability for union pension obligations, fiduciary best practices, and attorney fee awards in ERISA class actions. So here are my five favorites for the last Friday in February.

  1. I don’t think many insureds really or fully grasp the endless friction points between their primary and excess insurers, which can negatively impact the resolution of claims, although that’s usually not the case and the times it occurs are outliers. Still, the clashes in interest between primary and excess carriers can disrupt the handling of claims and lead to litigation. Here’s one good example from my own practice, which I discussed in the context of the attorney client privilege and the current hot topic of the moment, which is when does the use of AI destroy the attorney client privilege. In a similar vein, the Nevada Supreme Court recently decided that an excess carrier can bring a subrogation claim against a primary carrier for failing to settle a claim when the primary carrier should have done so. I have litigated, including trying to verdict, this exact cause of action multiple times (although obviously not in Nevada, given that they just adopted it). While the rule is a good one for many reasons, it doesn’t reduce the possible points of contention between a primary and an excess carrier over a claim and can also have the unintended effect of increasing them, based on my experience litigating that type of a case. All of this is a preview to one of my favorite though short articles of the week, this missive from Wiley on a new Seventh Circuit decision addressing the question of whether an excess carrier should attend a mediation of a claim. It’s a great article and case, partly because, believe it or not, this exact argument happens a lot, with a primary carrier or an insured or a plaintiff demanding the excess carrier attend, and the excess carrier not doing so.
  2. I am an evidence-based skeptic. As a result, I am not always convinced by the rush to judgment on whether new theories of ERISA liability pressed in class action cases are legitimate, credible, viable or something else entirely. For instance, although there are reasons to doubt the ultimate viability of class actions challenging forfeitures under 401(k) plans, I am not close to convinced that the theory has been sufficiently vetted yet to make that call. I think the question of whether this is an appropriate liability theory to press against plan fiduciaries probably requires some factual development in discovery in a few cases before a consensus on the legitimacy of these types of claims can be legitimately formed. Thus, I had no problem whatsoever with Massachusetts federal District Court Judge Young allowing a forfeiture class action to move into discovery, rather than dismissing it outright, which was the point I made in this Massachusetts Lawyers Weekly article on this decision in which I was quoted.
  3. Withdrawal liability, which is the statutorily created funding obligation for union pension plans faced by employers who stop using union labor, can be a lot of fun! At least if you are the lawyer litigating a dispute, but not, given the scale of the potential liability at issue, if you are the former employer of union labor seeking to avoid a large bill for the future pension costs of a union pension plan. I have litigated this issue multiple times and the key for employers seeking to get out from under the exposure is to find a leverage point for pushing back on the amount demanded. I once did it by focusing on a break in the history of the union contracts executed over decades by the employer at issue, but typically it has been by arguing the legal meaning of certain contractual or statutory terms or of certain events. This is a great story of using Loper Bright and the question of whether regulatory action misinterpreted the statutory language as the lever.
  4. More than a few years back, when the excessive fee litigation boom was just getting underway, I used to include a slide in my PowerPoint decks at presentations on fiduciary liability that stole a line from football, namely that the best offense was a good defense. The point I then made when I hit that slide was that the best way to avoid getting sued and the best defense if sued was to have followed a sound fiduciary practice in reviewing and selecting investment options, along with contemporaneously documenting that this had occurred. Over the past few years, class action defense of fiduciaries in ERISA has moved away from this type of a granular fact-based defense to a focus on legal and doctrinal arguments, such as standing and injury. Now, with attention turning to how the plaintiffs’ theories of the 401(k) class action era are being remodeled for use against health plans and other welfare benefits, attention seems to be returning to the old-fashioned fiduciary virtues of “documented process[,] active oversight, prudent benchmarking, and disciplined decision-making.” No matter what new theories come down the road against what types of plans, running a plan using that model is the best preparation for the unknown.
  5. I am as guilty as the next ERISA observer of criticizing class action settlements and recoveries where the lawyers make bank but the average class member recovers just a few bucks. However, I have defended multiple class actions, been personal counsel to a senior executive implicated in a major class action, represented the class in a successful ERISA class action and represented multiple employees through joinder in a 401(k) action that perhaps could alternatively have been structured as a small class. What I can tell you from that experience is that the lawyers on the defense side of an ERISA class action are always good and sometimes very good – and that any class and their lawyers who win big, earned that win the hard way. So I don’t really have a problem with or even a criticism of an award of “$96.28 million in attorneys’ fees, which was 29% of the $332 million common fund” recovered in settlement, and which in turn “represented nearly 98% of the total [losses] claimed by the class.” Give this summary of the case and this article about the fee award a quick read, and I don’t think you will either.