So, Kevin O’Keefe of LexBlog has long preached that the key to effective blogging and other social media professional marketing is to provide actual information that people can use, rather than putting out, under the guise of blogging, marketing materials. In my own blogging and in my own practice, I routinely prefer to, and do in fact chose to, work with legal and other professionals who follow this same mantra: they simply think the way I do, and the knowledge they share is useful to both me and my clients.

Continue Reading CapTrust and Target Date Funds

All men, who after all are all just overgrown 12 year olds, admire Johnny Depp to some degree – a grown man who becomes fabulously wealthy by playing pirate??? Sign me up! But what’s not to emulate, as this article in the New York Times points out, is his sheer malfeasance in handling his own finances. Depp is now involved in litigation with his management company over who is responsible for the financial disaster he finds himself in, and it looks clear that there is more than enough blame to go around for all parties involved.

Continue Reading What Happens When the Pirates of the Caribbean Go Looking for a Financial Advisor to Help Invest Their Treasure?

So the Supreme Court, for the second time, has now taken a pass on ruling on whether ERISA plans can contain forum selection clauses. As this article notes, a number of courts have enforced forum selection clauses in ERISA-governed plans, essentially treating them the same in that context as they would be treated in an action involving a typical private contract, where parties are generally free to select a forum for their disputes.

Continue Reading Are Forum Selection Clauses Valid Under ERISA?

Several years ago, when the first of the class actions were filed alleging that medical institutions were improperly claiming church plan status under ERISA, I was speaking on a panel at one of the American Conference Institute’s ERISA Litigation conferences, where I found myself eating lunch with two of the lead lawyers on those class action cases. I raised for them – and someone else would eventually ask the same question during their presentation on the church plan class actions – the question of damages. In particular, I wondered what they would ask for, and whether the defendants could afford it. I assumed that part of the relief would be to have the plans made compliant with the full panoply of ERISA’s procedural, notice, plan communication, claims processing, funding and other requirements. But that, I noted, was the easy part; it would only require the defendants to essentially hire really good ERISA lawyers and administrators and fix the plans. But what about the money? Could the defendants fund the massive shortfalls that the plaintiffs were claiming existed in the plans?

Continue Reading The Church Plan Cases at the Supreme Court: A Billion Here, A Billion There and Soon You Are Talking Real Money

2016 was the year that church plans went to the Supreme Court, excessive fee claims came to elite universities and the Department of Labor’s authority to alter its regulation of fiduciary conduct was challenged in multiple courts. Of course, stock drop litigation, excessive fee cases, and other assaults on the make up of 401(k) plans continued apace, even if they yielded the spotlight to flashier, more novel types of cases.

Continue Reading The Year in Review: Looking Back at ERISA Litigation In 2016

I, and a cast of other ERISA Nostradamus[es], claim to foretell the future of ERISA litigation – by gazing back at the past year – in this new article in Planadvisor, titled “Expect More Varied ERISA Litigation in 2017.” I am quoted in the article on the trend line of stock drop litigation, but also point out more generally that “the year 2016 saw an expanding panoply of theories for attacking investment options and other aspects of the administration of 401(k) plans, and more of the same can be expected going forward.” The article is worth a read, especially if, like me, you need to fill the quiet hours of the last day before the holiday week.

So this is interesting, from a couple of perspectives. The First Circuit Court of Appeals has issued a fairly comprehensive opinion addressing a number of issues in insurance coverage law in Massachusetts. The facts are a little salacious, and read more like a John Grisham plot than real life, but unfortunately, odd facts often underlie key decisions in insurance law. I say unfortunately because it means that many decisions concerning insurance coverage are often so unique to their unusual facts that they can easily be distinguished away by litigants in other cases, leaving parties with less guidance for future conduct than one would expect to glean from the case law. This case is a perfect example: I will bet this fact pattern will never, ever repeat itself in an insurance coverage dispute.

Nonetheless, this case has some discussions that apply broadly enough that the ruling can easily be expanded to other cases. For instance, the Court answers the question of whether Chapter 93A demand letters – which Massachusetts law requires a party to send to a business before suing it for unfair trade practices – can trigger a duty to defend. The Court held that it cannot, and distinguished away a key, longstanding Massachusetts decision that many lawyers have used for years to argue to the contrary. Still, I have to say that even on this point, I am not totally convinced that the issue is settled after this decision; I think there will be room to argue to the contrary in other cases that involve other fact patterns and, more importantly, somewhat different policy language. Personally, I am skeptical that, although the decision suggests that it should be or is the rule, no Chapter 93A demand letter, no matter what relief it seeks or the details of the claim, can ever trigger coverage under any policy language.

I would also highlight the Court’s analysis of the issue of whether an assignment of rights to the claimant from the insured gave rise to a viable claim for recovery against the insurer. The Court found that policy language governing when the insurer agreed to be sued precluded such a claim. It would be beyond the scope of a relatively short blog post to explain why that ruling has some wobbly legs underneath it, but suffice it to say, as I do in this article in Massachusetts Lawyers Weekly on the case, that, after this ruling, lawyers who are considering assigning insurance rights as part of a settlement need to carefully consider whether there is any value to doing so in Massachusetts.

The decision is Sanders v. The Phoenix Insurance Company, which you can find here.
 

Well now, I wrote a few substantial posts on the multiple lawsuits challenging the Department of Labor’s new regulations governing fiduciary status at the time they were filed, a couple of which you can find here and here. One of my key points was that it is a mistake to get lost in the meta story made in the complaints in those actions, which are effectively – using the term in its broadest form – political documents making the case that the regulatory changes are just plain bad. In a way, the complaints in those actions read almost like old fashioned political pamphlets with regard to the big picture criticisms made in them, while having technical legal arguments buried beneath. That is not a criticism, not to me anyway. Hitting all of those notes in the same complaint is a tough job, and it was done well. But as I suggested in this post, if you looked past the polemics and focused on the administrative law challenges to the promulgation of the rules that are the actual technical heart of the complaints filed against the Department, it was right to be skeptical of the complaints and the claims against the Department seeking to set aside the new regulations. The scope of a challenge to this type of administrative and regulatory action is highly specific and its grounds narrow; skepticism about the various plaintiffs’ abilities to prove their claims was warranted, given the massive effort by the Department in promulgating the regulations and the history of what occurred when they did so.

That skepticism is borne out in the first substantive ruling by one of the courts with a challenge to the Department’s new regulations pending before it. The United States District Court for the District of Columbia has roundly rejected the plaintiff’s arguments in that case, firmly upholding the Department’s actions. The decision is 92 pages long and I doubt that many people spent their weekend reading it, and while I did, I don’t want to spend my whole morning summarizing it. And why should I? Nevin Adams at NAPA has done a great job of that already, right here in this story.

One of the things I like about his summary is that he really drives home the extent to which the court found that the Department acted within its regulatory authority and power. That, as I noted above, is the real central point in all of the lawsuits filed over the new fiduciary regulation, as opposed to the question of whether the financial and insurance industries should be put in the position of having to comply with the accompanying changes to industry practice, which is more properly a question for the political – and not the judicial – process.
 

I had fun speaking on ERISA litigation remedies with Eric Serron of Steptoe and Joe Barton of Cohen Milstein this past Thursday at the American Conference Institute’s 13th National Forum on ERISA Litigation. Since Eric’s exclusively a defense lawyer and Joe’s exclusively a plaintiff’s lawyer, Michael Prame of Groom Law Group, when introducing the panel, pointed out that it was up to me to keep them at bay, since I represent both plaintiffs and defendants in ERISA litigation. I felt a little like the moderator of the McLaughlin Group by the time our hour was up (well, really 55 minutes, but I am the son of two psychologists, so I consider that an “hour”), but I thought the structure really drove home how diametrically opposed the views of the defense bar and the plaintiff bar are on many ERISA issues.

On Wednesday, November 2, I will switch gears though, and present a much more collaborative webinar with Susan Mangiero – who knows more about the financial side of retirement plans than most of us have forgotten – on the current risk and operational environment faced by pension plans. The webinar is offered by PRMIA, and the title tells you what its about: “Retirement Plan Risk Management: An Overview.” As the program’s overview explains:

According to estimates, global retirement assets are huge at $500 trillion. Improper decision-making about plan design, investment and risk mitigation could have an adverse impact on millions of individuals to include employees, retirees, taxpayers and shareholders. Service providers such as asset managers, banks and insurance companies are likewise impacted by bad governance and unchecked risk-taking. Everyone has a stake in the financial health of the worldwide retirement system and whether uncertainty is being adequately identified, measured, managed and monitored, especially now. New regulations, a flurry of fiduciary breach lawsuits, low interest rates, the complexity of modeling longevity, increased risk-taking, need for liquidity, cost of capital and worker mobility are just a few of the challenges that keep retirement plan executives, participants and their advisors up at night.

I think that’s a pretty fair view from 30,000 feet of the world of retirement plans, and I am looking forward to discussing it, along with Susan, at the webinar.

You can find registration material for the webinar here.
 

Wow, this is fascinating. The “this” in question is an interesting little twist in litigation over an attorney fee award to plaintiff’s counsel in the long running ERISA litigation, Frommert v. Conkright. Attorney fee awards in ERISA litigation are a fascinating sub-issue in and of itself, for a number of reasons. First, it is one of the few areas of American law in which the American rule – all parties pay their own legal fees – is overridden in favor of a modified system of loser pays. While there are various statutes that allow such an award, few, if any, actually give rise to such awards on the frequency that they are granted in ERISA cases. Second, ERISA provides a great deal of flexibility and discretion to courts in making such awards, and the manner in which courts handle them suggests why tort reform advocates of a loser pays system across the board are likely barking up the wrong tree: 40 years of experience with a modified form of loser pays in ERISA litigation suggests that all sorts of exemptions, exclusions and rules of thumbs arise in such systems that are intended to enforce equity, even in the face of a loser pays regime. For instance, even though a court could theoretically grant attorneys fees to a prevailing plan sponsor that defends a case, when is the last time you saw that happen? And if you have, can you count on the fingers of one hand the number of times you have seen it happen?

Moreover, litigation over attorneys fee awards is often resolved without anyone wanting to look too closely under the hood of fee requests, for fear of what people might find. This article on fee litigation in Frommert is the perfect example. The defendant challenged the rates requested by the prevailing attorneys, claiming that a much lower rate would be reasonable. This is a common argument, and, when made by a losing party in motion practice over fees in an ERISA case, most often just leads to the judge declaring and then applying some particular rate that seems fair to the judge. In my experience, it is usually some discount off of what prevailing counsel wanted to have applied, but nothing like the haircut counsel for the losing party sought. In Frommert though, the Court has apparently responded to that argument by the defendant by ordering disclosure of the rates charged by the defendant’s counsel, on the thesis that it represents the best proxy for determining what a reasonable rate for plaintiff’s counsel should be in the case. I can guarantee you, by the way, that it is much higher than the relatively low rate that defense counsel argued, on the fee request, would be the reasonable rate to use in calculating a fee award (and I am sure the judge knows this as well).

I am sure the defendant has no desire to disclose this information. There is a more important point here, however, which is the lesson that you always have to be careful what you argue for in motion practice over fee awards in ERISA case, because otherwise you risk the court or the opposing party opening doors that you might have preferred stayed closed.