January 01, 2020

2020 is shaping up to be a banner year for benefits law, with three ERISA cases already on the U.S. Supreme Court’s docket and a number of other high-profile lawsuits at the circuit court level that could attract the justices’ attention. 

The conservative-leaning Supreme Court could use the cases to limit workers’ ability to pursue Employee Retirement Income Security Act class actions, but that’s far from a sure bet. The U.S. Department of Labor supports the workers’ position in two of the three cases, one against U.S. Bank and the other against Intel Corp.'s retirement plan committee.

Attorneys say they are looking forward to the clarity these rulings could bring in areas that have long troubled ERISA litigators. 

Here, Law360 looks at what 2020 may hold for benefits litigation.

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Intel v. Sulyma

A month after oral arguments in the IBM case, the high court watched Intel’s retirement committee spar with a proposed class of Intel employees and retirees over whether workers should get three or six years to file fiduciary-breach suits.

ERISA gives workers six years from the date of a fiduciary breach to sue, unless employers can point to the exact day the worker received “actual knowledge” of the breach, in which case a three-year deadline applies.

Intel’s retirement committee argued that the three-year statute of limitations should be triggered on the date a worker receives financial disclosures from the retirement plan. Attorneys say that if the high court agreed with the committee, the three-year deadline would become standard.

The high court didn’t seem to be leaning that way during oral arguments, though.

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Plaintiffs attorneys were pleased with this development, saying Congress intended to give workers six years to sue under ERISA in most cases. Avoiding such litigation shouldn't be as easy as sending out disclosures to trigger the shorter statute of limitations, plaintiffs attorneys said. 

"It was refreshing to see the justices agree that there is no wiggle room in the statute," said Michelle Yau, a Cohen Milstein Sellers & Toll PLLC partner. "As a lawyer, it gives you faith in the system. Judges aren’t just saying: Where do my political leanings land me? They’re actually following the law."

The case is Intel Corp. Investment Policy Committee et al. v. Christopher M. Sulyma, case number 18-1116, in the U.S. Supreme Court.

Thole v. U.S. Bank 

The last ERISA case on the high court’s docket will take its next step toward a conclusion in January, when oral arguments are set to take place. Attorneys say they have been keeping an especially close eye on this case, which Boyko said is “going to have huge implications.” 

Thole v. U.S. Bank asks the high court to decide whether employees can sue over pension plan mismanagement when their plan is fully funded. Because the case raises Article III standing issues, its outcome could affect other types of ERISA suits as well, although that's not a guarantee, attorneys say.

At issue is whether individual workers need to show they've been financially harmed by a fiduciary's actions in order to sue a pension plan.

Defense attorneys argue that the Eighth Circuit was right to rule the workers needed to point to concrete, particularized harm in order to sue, while plaintiffs attorneys argue they only need to show the actions harmed the plan because fiduciary-breach suits are brought on behalf of plans. 

"Injury to the plan is injury in fact for Article III purposes," said Jerry Schlichter, founding partner of Schlichter Bogard & Denton LLP.

The federal government filed a brief that, although neutral on its face, supported the workers' stance. 

Yau, who is on the legal team representing U.S. Bank’s pension plan participants, said she is “cautiously optimistic” that the Supreme Court will rule in her clients’ favor.

Oral arguments in the case are set for Jan. 13. 

The case is James J. Thole et al. v. U.S. Bank NA et al., case number 17-1712, in the U.S. Supreme Court.

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Putnam Investments LLC v. John Brotherston

The burden-of-proof case Francisco addressed, Putnam Investments LLC v. John Brotherston, has been on benefits attorneys’ radar for a while because the underlying issue caused a 5-4 circuit split.

Plaintiffs attorneys were happy to see the solicitor general recommend against reviewing the worker-friendly First Circuit decision in the case. That ruling held that after workers show that misconduct occurred and the plan suffered a loss, the burden of proof shifts to companies, which must prove their investments were good. The Second, Fourth, Fifth and Eighth circuits reached the same conclusion.

“I personally think the First Circuit was right,” Yau said. “The Department of Labor’s long-standing view, which is the plaintiff’s view, is that if the plaintiff makes a prima facie showing of loss causation, it’s the defendant’s duty to rebut that.”

Defense attorneys say they still hope the high court picks up the case, overturning the First Circuit decision and bringing case law in line with the Sixth, Ninth, Tenth and Eleventh circuits. Those courts have ruled that after workers show there has been misconduct and a loss, the burden of proof stays with them, and they must connect the misconduct and the loss or their case will be dismissed.

“The government really downplayed the circuit split that exists. They suggested it wasn’t that much of a split,” Merten said. “It seems to me this is a good opportunity, given the 5-4 split, to resolve this issue.”

The case is Putnam Investments LLC et al. v. John Brotherston et al., case number 18-926, in the U.S. Supreme Court.

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