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.