I don’t think there’s a better sportswriter working regularly right now than Sally Jenkins, whose sportswriter father, Dan Jenkins, is personally responsible for my decision, more than a quarter century ago, to attend law school: his sportswriting was so strong, so funny, that it made it obvious that I would have been out of my league if I had instead followed my interest in sports and gone into sports journalism. In this piece here, Jenkins – Sally, not Dan – thoroughly reviews the question of medical care for seriously injured football players, when the care is required decades after they stop playing professional football. What is most interesting to me is that the NFL is defending claims – using statute of limitations and other arguments – that threaten to force the costs of such medical care into the great empty space that lies in between disability coverage on the one hand, employer provided health insurance on the other hand, and workers compensation benefits on the third hand (I know that’s a weird, three-handed person, but if you think about it, the whole idea of a hugely profitable industry like the NFL leaving its employees to bear their own health care costs, when they stem from employment, is at least as bizarre and odd as that image). As Jenkins explains, the NFL denies the vast majority of disability benefit claims under its disability plan, and team owners and the NFL itself are aggressively disputing workers compensation claims filed by former players (i.e., former employees) alleging serious physical injuries from their playing days and accompanying massive medical bills. As Jenkins also explains, if there is no coverage for these medical bills through either of those systems, the only other place for those former employees to turn is Social Security disability or Medicare. And this isn’t just Jenkins talking, or the sales pitch of lawyers for the former players: “a 2008 congressional research report on NFL disability” backs up her reporting on this issue.

Whether people generally understand it or not, and whether the NFL and team lawyers and other representatives quoted in Jenkins’ article know it or not, most lawyers are aware of the general, historical basis for workers compensation schemes, and of the underlying tradeoff on which they are based: in exchange for abandoning the tort system as a means of remedying employment related injuries, employees are given an essentially assured, but limited, recovery for injuries caused by their employment. The NFL players discussed in Jenkins’ article thus either are entitled to workers compensation benefits (or should be, absent gamesmanship by the NFL of the type depicted in her article) for their injuries, or their injuries must be deemed to fall outside of the scope of the workers compensation system, with the former players allowed to seek recovery in the court system from the NFL and their former teams for the injuries from which they suffer. There really is no other appropriate understanding of the proper operation of the intersection of the judicial and workers compensation systems in this context, unless the NFL is going to step up to the plate (I know I am mixing my sports metaphors here) and accept responsibility for the medical care under its disability plan.
 

There have been many nice benefits to writing this blog for several years, ranging from the fun of writing it to the pleasure of meeting others with similar interests. For me professionally, though, probably the most important benefit has been the constant flow across my desk of key court decisions, articles and thought pieces on developments in ERISA law, which has helped (and sometimes forced) me to stay constantly up to date on the latest developments in my area of expertise. However, that benefit has come with a complication, which is that the steady stream of information on ERISA that crosses my desk each day includes far more useful information and material than I could ever hope to discuss, and pass along, on this blog. This is particularly the case because I have never been willing to use this blog as a place simply to post other people’s work, but instead typically only post when I believe I have something independently useful to say about someone else’s article or blog post, or about a court decision, or the like.

This has meant, however, that for years, large amounts of quality work discussing ERISA issues has sat on my desk, reviewed only by me and not passed along, despite the value of much of that work. It has always bothered me when an article or decision worth passing along has come in front of me, but that I would not be able to discuss in a blog post, either because I was posting on a different issue, or because of the crush of my real job (which is litigating these and other types of disputes).

Eventually, though, light dawned on Marblehead, and I realized I could solve the problem by using Twitter for one of its originally expressed purposes, as a microblogging tool, and tweet articles, comments, decisions and the like that I believed to be of value, but which I did not expect to discuss in a full blown blog post. I have been doing so for awhile now, and have taken to regularly passing along relevant ERISA news that will not make it onto the blog. You can follow me, and my running list of interesting ERISA information, at @SDRosenbergEsq.
 

For years, in speeches and articles, I have preached the gospel of what I have come to call “defensive plan building,” which is the process of systemically building out plan documents, procedures and operations in manners that will limit the likelihood of a plan sponsor or fiduciary being sued while increasing the likelihood that, if sued, they will win the case in the end. Over the past couple of years, doctrinal shifts related to remedies available to participants under ERISA have made defensive plan building even more important, for at least two reasons. First, these shifts have expanded the range of potential liabilities and exposure in offering, and running, a benefit plan. Second, these developments have, to a significant degree, given rise to an increased focus in ERISA litigation on the actual facts concerning the plan’s activities, as the lynchpin of the liability determination. The combination of expanding liability risks with an increased focus on plan actions makes it more important than ever to focus on the steps of defensive plan building, including by focusing on operational competence in running a benefit plan.

I discussed this concept in much greater detail in my recent article in the Journal of Pension Benefits, “Looking Closely at Operational Competence: ERISA Litigation Moves Away from Doctrine and Towards a Careful Review of Plan Performance.” The article discusses how the last several years of ERISA litigation, including in particular the Supreme Court’s recent activism in this realm, has created this phenomenon. You can find a much more fully realized presentation of these points in the article.
 

I have often joked that, to seem intelligent at social events, a person really just has to have two things handy – the first, a Noam Chomsky reference, and the second, a Shakespeare quote, preferably from a lesser play. If you are good, you can find a way to fit one or the other into any subject of conversation. Personally, I rely on “there are more things in heaven and earth than are dreamt of in your philosophy” (which I also find is often an especially good rejoinder in court to legal arguments proffered by opposing counsel), and Chomsky’s media coverage study, when I am trapped in a conversation with no way out, but to each his own.

I was thinking of this when I read the Workplace Prof’s excellent and extensive blog post on the two latest developments at the Supreme Court concerning ERISA law, the first being the very recent decision in US Airways v. McCutchen, which I suspect will soon be reduced to the defense assertion that courts must always apply the plan terms as written, and the Court’s grant of cert in Heimeshoff v. Hartford, on the application of statute of limitations to benefit claims under ERISA. You don’t have to really study the source material on either of these cases to hold forth on them at this point, because you can just read the Prof’s post, and be all set to pontificate on them without a problem. Less tongue in cheek, it really is worth reading, if you want to understand, with a limited investment of time, what these two cases are about and why they matter.

I would also throw in, with regard to the opinion in McCutchen, two additional comments that you can borrow, if you really want to look erudite without doing any homework on your own first. One, it really is a well-written piece of work, taken simply as an example of the written form in the legal context, without regard to how one may feel about the merits of the decision. I would suggest it to connoisseurs of the form for a read, under any circumstances. Second, the case, although an ERISA decision, has an easy transition to the doctrines of insurance law, where subrogation and the impact of the common fund doctrine are in play on a routine basis; it adds additional support for any argument that the common fund doctrine should always apply in that circumstance. In this regard, feel free to drop a knowing reference to footnote 8, if you really want to appear in the know.
 

A few more thoughts to round out my run of posts (you can find them here and here) on the Ninth Circuit’s opinion in Tibble. First of all, where does revenue sharing go as a theory of liability at this point? The Ninth Circuit essentially eviscerated that theory, and I doubt it has much staying power anymore, at least as a central claim in class action litigation. Revenue sharing hasn’t, generally speaking, had much traction in court, and I think it is because, at some level, judges understand that someone has to pay for the plan’s operations. That said, you should still expect to see it as a claim in cases against DC plans and their vendors, even if only as a tag along, with liability only likely to follow in cases where someone comes up with a smoking gun showing that the plan sponsor acted in ways harmful to participants specifically because of a desire to save money for the plan sponsor through its revenue sharing decisions. But revenue sharing in and of itself as an improper act or a fiduciary breach that can warrant damages? Probably not much of a future for such claims.

Second, there is a lot of talk about the expansion of litigation against DC plans and their providers, and has been for sometime now. How does that fit with the minimal recovery by the class in Tibble? To some extent, Tibble, although affirming a trial court award to the class, is not much of a victory, given that the class only recovered a few hundred thousand dollars. In fact, to call it a victory for the plaintiffs, while correct , reminds me of nothing so much as the comment of British General Henry Clinton after the Battle of Bunker Hill, when he noted, given the extent of British casualties, that “"a few more such victories would have surely put an end to British dominion in America." Likewise, a few more victories similar to this one for class plaintiffs in excessive fee cases will put an end to this area of litigation quicker than anything else could, as these types of cases simply would no longer be worth the costs and risks to the class action plaintiffs’ bar. However, it is important to remember that the dollar value of the recovery in Tibble was likely driven down substantially by the statute of limitations ruling, which took much of the time period of potential overcharging out of the case and with it, presumably much of the recovery. If participants bring suit over fees closer to the time that the investment menu that included the excessive fees was created, they will not face that barrier to recovery and the likely recovery could easily be high enough to justify the risks and costs of suit. This, interestingly, is where fee disclosure should come into play – participants, and thus the plaintiffs’ bar, should have enough information about fees to bring suit early enough to avoid the statute of limitations problem that impacted the plaintiffs in Tibble. As a result, there should be more than enough potential recovery in many possible excessive fee cases to motivate plaintiffs’ lawyers to pursue the claims.
 

Do they still teach administrative law in law school? I don’t know if they need to bother anymore, because the Ninth Circuit’s exposition of Chevron deference in Tibble, when discussing the 404(c) defense, pretty much sums up everything a practicing litigator needs to know about the subject. It is a first class explanation of the law of administrative deference, as well as a pitch perfect explanation of how one analyzes the issue.

Of import to ERISA, however, is a much narrower and more specific point, which is the Court’s cabining of the scope of the 404(c) defense so as to only encompass participant decisions that take place after the selection of the investment menu, on the basis that this reading matches the Department of Labor’s interpretation of 404(c). Based on this reasoning, the Ninth Circuit concluded that a fiduciary’s selection of investment options is not protected by 404(c). This is, at the end of the day, perhaps the most important aspect of the Court’s opinion, although in the immediate aftermath of the ruling it may well not be the aspect that garners the most comment and attention. However, it is really the one key part of the ruling that expands the scope of fiduciary liability and that adds to the arsenal for lawyers who represent plan participants, in that it clearly demarcates the selection of plan investments as an issue that falls outside of a 404(c) defense. Not only that, but the opinion does so in an articulate, well-reasoned manner, making it likely to have significant persuasive force when the issue is considered by other courts.
 

This is a great story on long running copyright litigation between the Baltimore Ravens football club and a security guard and doodler, over the rights to the Ravens’ emblem. The court bifurcated the case, with liability being tried first. The jury in the liability portion of the case found infringement, but the next jury, in the damages portion of the case, awarded nothing in damages, finding that the plaintiff was not injured by the infringement. I bring this story up for three reasons. The first is that it is a just plain, good old fashioned read, even if you don’t care one bit about copyright law or, perhaps even more unforgivably, the Ravens.

The second though, is the more important one. I have done a fair bit of patent and copyright litigation (especially the latter) over the years, almost exclusively for defendants, and it is a lot harder to actually win and recover significant money on copyright infringement claims than many people – including most lawyers – believe. The headline stories of massive awards in patent infringement cases lead people to extrapolate across the board to other types of intellectual property cases, but those cases don’t actually extrapolate well. The various defenses available to defense counsel in copyright infringement cases makes for a tough road in that area for plaintiffs (much to my happiness, I admit, when I am representing copyright defendants).

And finally, the third point the article drives home is this one. When representing plaintiffs in intellectual property cases, always think twice before deciding to accept bifurcation without a vigorous battle. Its hard enough to convince a jury to find infringement, but once having done so, it is better to move onto damages in front of that same jury, with whom you have presumably already established credibility. Bifurcation forces the plaintiff to reestablish that credibility, and any sympathy, all over again in front of a new jury, and causes the plaintiff to lose whatever momentum led to the liability verdict in the first place. All trial lawyers have their own pet theories; that is one of mine.
 

Well, the United States Court of Appeals for the Ninth Circuit has affirmed the District Court’s well-crafted opinion in Tibble v. Edison. I discussed the District Court’s opinion in detail in my article on excessive fee claims, Retreat From the High Water Mark. From a precedential perspective, as well as from the point of view of what the opinion foretells about the future course of breach of fiduciary duty litigation in the defined contribution context, there is a lot to consider in the opinion. There is too much, in fact, for a single blog post to cover, or at least without the post turning into the length of a published paper. I try to avoid that with blog posts because otherwise, to misquote a poet, what’s a journal or law review for?

I plan instead, however, to run a series of posts, each tackling, in turn, a separate point that is worth taking away from the Ninth Circuit’s opinion. The first one, which I will discuss today, concerns ERISA’s six year statute of limitations for breach of fiduciary duty claims. The Court held that, in this context, ERISA’s six year statute of limitations starts running when a fiduciary breach is committed by choosing and including a particular imprudent plan investment. The Court held that the fact that it stayed in the investment mix did not mean that the breach continued, and the statute of limitations therefore did not start running, for so long as the investment remained in the plan.

Beware future arguments over this holding. You can expect defendants to regularly argue that this case stands for the proposition that the six years always runs from the day an investment option was first introduced, and that any breach of fiduciary duty claims involving that investment that are filed later than six years after that date are untimely. You can also expect defendants to argue to expand this idea into other contexts, and to ask courts to rule that anytime the first part of a breach began more then six years before suit was filed, the statute of limitations has passed. This would not be correct. The opinion only finds this to be the case where there were no further, later in time events that, as a factual matter, should have caused the fiduciaries to act, or which, under the circumstances of those events, constituted a breach of fiduciary duty in its own right; if there were, then those are independent breaches of fiduciary duty from which an additional six year period will run. Those independent, later in time breaches would presumably be their own piece of litigation, evaluated independent (to some extent) of the original breach.
 

I joked in a tweet the other day that I could be busy for the rest of my professional career if I could just represent all the company officers and officials out there who don’t know they are ERISA fiduciaries until after they are sued for breach of fiduciary duty. The joke was in response to a comment by Chris Carosa of the highly valuable Fiduciary News website about the expanding liability exposure of these officers, whom he dubbed “accidental fiduciaries.”

And it is true that company officers who play roles in company benefit plans – often simply as an adjunct to their usual list of job responsibilities – are sitting ducks for fiduciary exposure. I have spent years extracting company officers, whose real job focus was elsewhere (marketing, or sales, or operations, or the like) from suits against them for breach of fiduciary duty related to company benefit plans that they were involved with simply as a sideline to their “real” responsibilities. At the end of the day, though, what such officers have to understand is that they face potentially significant, and substantial, personal liability under ERISA for problems in the operations of such plans and therefore, if for no other reason than self-preservation, they need to treat this part of their responsibilities as also part of their “real” responsibilities. It can cost them too much money if they don’t.

I was prompted to write about this today by this interview with Samuel Rosenthal, the author of a deskbook on the potential legal liabilities of directors and officers. There isn’t much doubt that the significant risk of ERISA exposure, and the details of how to avoid that risk, need to be in any such book. There are standards of conduct that officers can follow that will avoid liability in this area; actions in contemporaneously documenting that conduct that can mean the difference between winning and losing lawsuits against them over company benefit plans; and issues with insulating themselves prospectively from potential liability for breach of fiduciary duty under ERISA, such as through insurance or indemnification agreements.
 

Longtime readers of this blog know that I don’t comment on my own on-going cases, but that I will pass along interesting decisions from my cases, without much comment or analysis, when I think they provide some value to readers. In that vein, attached is a recent 22 page opinion in favor of one of my clients dismissing seven of eight claims in an ERISA case. I think it provides a very comprehensive examination of the current law of preemption in the First Circuit, including concerning state law claims of misrepresentation, which is a very hot topic right now.