in the Southern District
of New York
The Cohen Milstein Benefits Blog
Watch These ERISA Cases in 2019
January 1, 2019
Is My ESOP Account at Risk?
August 30, 2018
T. Rowe Price Must Face 401(k) Participants’ ERISA Suit
August 22, 2018
The Employee Retirement Income Security Act ("ERISA") governs the conduct of private (non-governmental) employers who sponsor employee benefit plans and persons who manage those plans and control their assets. ERISA imposes duties on persons influencing or controlling plan investments, sets minimum standards in the design of certain employee benefit plans, makes enforceable benefit promises made by employers (including those made through the purchase of insurance) and makes enforceable the standards of conduct and plan design imposed by ERISA itself. Persons involved in the management of plans and the control of their assets, often including the employer or designated corporate officers must act in the best interest of the employees covered by the plan and their beneficiaries, not in the interest of the employer, with respect to managing the retirement or other benefit plan. ERISA Plans include traditional pension plans, 401(k) plans, employee stock ownership plans ("ESOPs"), health and other employee benefits.
Cohen Milstein’s Employee Benefits Appellate Practice is dedicated to representing participants, beneficiaries or entities representing the interests of employees, retirees, plan participants or beneficiaries in ERISA cases on appeal. In the appropriate case, Cohen Milstein is willing to engage in appellate representation on a contingency fee basis or engage in representation on a deferred payment arrangement [please follow link for more information].
The following cases are a representative sample of the types of cases litigated by Cohen Milstein's Employee Benefits practice group:
Current Pension Cases
- Franciscan Alliance: Plaintiffs allege that Franciscan Alliance is in violation of numerous provisions of ERISA, while wrongfully claiming that their retirement plan is exempt from ERISA’s protections because it is a “Church Plan.” The parties are awaiting a ruling on Defendants’ motion to dismiss.
- Saint Peter’s Healthcare System: Plaintiffs allege that Saint Peter’s Healthcare System violates numerous provisions of ERISA, while wrongfully claiming that their retirement plan is exempt from ERISA’s protections because it is a “Church Plan.” Defendants have filed a motion to dismiss.
- St. Anthony Medical Center: Plaintiffs allege that St. Anthony’s Medical Center violates numerous provisions of ERISA, while wrongfully claiming that their retirement plan is exempt from ERISA’s protections because it is a “Church Plan.” A ruling on the Motion to Dismiss was received in September 2018, and the Motion was denied on 18 of 19 counts; as such, the plaintiffs are vigorously pursuing their claims.
- U.S. Bank: Plaintiffs allege that administrators of the U.S. Bancorp Pension Plan have violated their fiduciary duty by engaging in imprudent and excessively risky investments, resulting in massive losses for the Plan and its participants. Procedurally, this case is currently up on a petition for certiorari.
Recent Pension Case Successes
- Advocate Health Care Network: Before parties reached a settlement on June 27, 2018, Plaintiffs alleged that Advocate Health Care Network denied their retirement plan participants the protections of ERISA by improperly claiming the exemption status of a “church plan.”
- Bon Secours Health System: Before parties reached a settlement on May 31, 2017, Plaintiffs alleged that seven Bon Secours Health System Inc. pension plans didn’t operate according to ERISA regulations and instead said they were under the “church plan” exemption.
- Holy Cross Hospital: Before parties reached a settlement on March 1, 2017, Plaintiffs alleged that Holy Cross Hospital denied the Plan’s participants and beneficiaries the protections of the Employee Retirement Investment Security Act (“ERISA”) by claiming that the Plan was a “church plan,” and therefore exempt from ERISA.
- Presence Health Care Network: Before parties reached a settlement on June 10, 2018, Plaintiffs alleged that Presence Health Care Network denied their retirement plan participants the protections of ERISA by improperly claiming the exemption status of a “church plan.”
St. Joseph’s Hospital and Medical Center: Before parties reached a settlement on March 6, 2018, Plaintiffs alleged that the St. Joseph’s Plan denied the Plan’s participants and beneficiaries the protections of the ERISA by improperly claiming that the Plan is a “church plan” exempt from ERISA, and violated ERISA several other ways.
- Wheaton Franciscan: Before parties reached a settlement on January 16, 2018, Plaintiffs alleged that Ascension and Wheaton Franciscan were violating numerous provisions of ERISA, while wrongfully claiming that their retirement plan was exempt from ERISA’s protections because it was a “Church Plan.”
401(k) Retirement Plans
Building on Cohen Milstein's extensive experience of the Securities Fraud/Investor Protection practice area, the firm also represents employees who purchased overvalued employer stock through employer-sponsored 401(k) retirement plans. In these cases, the firm represents employees alleging breach of fiduciary duties in order to hold employers and the plan fiduciaries accountable for misrepresentations which artificially inflated the value of the employer stock purchased through their 401(k) plans. While these employees may also have claims under the securities fraud laws, ERISA provides employees with significant additional rights and remedies to recover losses in employer stock lost through a 401(k) retirement plan. Cohen Milstein has litigated or is actively litigating the following cases in involving the acquisition of fraudulently inflated employer stock through the following companies' 401(k) plans:
- BlackRock: Plaintiffs allege that the BlackRock 401(k) plan administrators have engaged in corporate self-dealing—restricting plan options to BlackRock’s own proprietary funds, and in many cases failing to provide the lowest cost versions of those funds. This negligence has led to underperformance and excessive fees. The parties are engaged in discovery.
- SunTrust: Plaintiffs allege that the SunTrust 401(k) plan administrators have violated their fiduciary duty by restricting plan options to only SunTrust-affiliated funds, despite their higher fees and stagnant performance. The parties have completed discovery.
- T. Rowe Price: The lawsuit alleges that T. Rowe Price violated federal law and reaped millions of dollars in illicit fees by offering only T. Rowe Price’s own in-house investment funds in the 401(k) Plan, failing to offer the lowest cost versions of those funds, and failing to even consider any funds from other companies that offered lower fees and better performance. Plaintiffs have received a fully favorable ruling on a motion to dismiss the complaint.
For more information on these or other potential 401(k) cases, please contact Cohen Milstein at 202- 408-4600 or toll-free at 1-888-240-0775.
Employee Stock Ownership Plans (ESOPs)
- Azon: Multimillion dollar settlement reached in a case filed on behalf of approximately 500 Azon ESOP participants and their beneficiaries alleging the ESOP overpaid for Azon Stock in a September 1999, causing Azon to assume more debt than it could service and that by doing so, the transaction destroyed the value of existing shares held by the ESOP, and helped drive Azon into bankruptcy.
- Trachte: Following a settlement in the Plaintiffs’ favor, in which the Court determined that the transfer of pension accounts from the Alliance Holdings, Inc. ESOP to the Trachte ESOP constituted a breach of ERISA, Defendant David Fenkell engaged in fraudulent transactions to withhold funds owed to the Plaintiffs. Parties are currently engaged in settlement enforcement proceedings after winning a multimillion dollar judgment on behalf of the Class.
For more information about identifying potential ESOP cases, contact Cohen Milstein at 202- 408-4600 or toll-free at 1-888-240-0775.
Other Employee Benefits
- LaBow/Severstal: This lawsuit alleges that WPN Corporation and Ronald Labow (the executive officer of WPN Corp), breached their fiduciary duties under ERISA as investment managers of the Severstal Trust by failing to properly diversify the investments. Relief is being sought against WPN Corp. and Ronald LaBow to recover the losses suffered by the Severstal Trust for the failure to diversify the investments of the Trust, and seeks declaratory and injunctive relief as necessary and appropriate.
- United Airlines Pilots Pension: This lawsuit alleged that United Airlines, Inc. failed to make contributions to its pilots’ accounts into the United pension plan for periods of military leave based on each pilot’s 12-month average earnings before the period of military leave, as required by USERRA. A multimillion dollar settlement was reached with United Airlines, Inc. which also included non-monetary prospective relief.
- OregonSaves: Cohen Milstein represented Oregon’s state implemented savings program against a lawsuit brought by the ERISA Industry Committee regarding the program’s employer reporting requirement. The parties negotiated a settlement finalized in 2018.
Amicus and Other ERISA Advice
Cohen Milstein's Employee Benefits practice group has represented entities as amicus and provided advice on ERISA issues. For example, we have represented the following entities in filing amicus briefs:
- On behalf of the National Employment Lawyers Association as amicus before the Second Circuit making the argument that when a contract vests in a service provider the discretion to determine what will be charged to the plans and their participants, then the service provider becomes a fiduciary of the plan.
- On behalf of the Pension Rights Center as amicus before the United States Supreme Court supporting the petitioners on the merits in Tibble v. Edison International, arguing that 401(k) plan fiduciaries must monitor the fees charged by plan investments on a periodic basis, and that participants can sue to require fiduciaries to replace overpriced investment options in 401(k) plans more than six years after the investment options were initially added to the plan.
- On behalf of the National Association of Insurance Commissioners as amicus before the United States Supreme Court in Rush Prudential HMO, Inc. v. Moran, a case involving the scope of the ERISA preemption of state insurance laws.
- On behalf of the Pension Rights Center as amicus before the United States Supreme Court supporting certiorari in Harley v. 3M Company, involving the issue of whether plan participants may sue to recover losses to overfunded defined benefit plans caused by a breach of fiduciary duty.