PLANSPONSOR - October/November 2020 - 2

INSIGHTS
Is the Case News?
L
itigation alleging that plan sponsors, and sometimes
other plan fiduciaries, have breached their fiduciary
duties is sadly nothing new, though, speaking
as someone who has reported about such litigation for 17
years, it has changed over time. I now find myself questioning
how we've been covering the space and how can we add
more value for our readers.
The goal of all initial filings in a lawsuit is to survive
the first step in litigation-proceeding past a motion to
dismiss filed by the defendant-and advance the plaintiffs into the discovery phase.
Here, experts note, plan sponsors often begin a very expensive process and court
battle, plus make information available that could expand the original allegations.
Nancy G. Ross, a partner in Mayer Brown's Chicago office and also co-chair
of its ERISA [Employee Retirement Income Security Act] litigation practice, said,
last year, " ... there has actually been little direction or guidance published in these
cases by the courts. This is because the majority of these cases have settled, while
others are dismissed very early on for pleading deficiencies. That's the general
pattern we have seen. "
Ross noted that, while a positive side effect of litigation is that plan fiduciaries
are more aware of their risks and responsibilities, one negative is that
plan sponsors, fearing litigation, decide not to embrace innovative plan designs
or investment options.
We have covered these cases repeatedly, as it's important on one hand for plan
sponsors and advisers to see what's happening in the world as it relates to their
retirement plan and know what may lie ahead for them. But what does that mean?
It means people read about settlements but often give them the same weight as
if reading about judgments. Should plan sponsors be making fiduciary or plan
design decisions based merely on cases that are filed or reported settlements?
After all, a settlement makes no legal argument for or against an allegation's
merits. The outcome contains no final conclusions being drawn by judges or juries.
Expert ERISA attorneys say this has resulted in a confusing, and at times
contradictory, compliance landscape for retirement plan fiduciaries.
As an example, I'll cite Tom Clark, chief operating officer (COO) and partner
in The Wagner Law Group, in St. Louis, speaking at one of our virtual conferences
this fall. He noted the recent allegation that it's a breach of one's fiduciary duty to
let plan providers use participant data for marketing and solicitation. Litigation
hasn't necessarily accomplished anything in the courts, he noted, though parties
in some lawsuit " snuck in to some settlement agreements " that the practice would
stop. However, " that doesn't make participant information a plan asset, " he said.
Yet, what do plan sponsors reading about that settlement think?
Ultimately, we live in a pretty litigious society, with a pretty low bar to file
a lawsuit. Expert attorneys agree that there are no precise paths to avoid ERISA
litigation. It's not going to end anytime soon, because these attorneys are making
money. As an editorial team, we will continue to evaluate the merits of covering
individual lawsuits as they are filed and provide context and content relevant to
your plan sponsor role. I welcome your thoughts about our litigation coverage and
whatever else might help you do your jobs better. -Alison Cooke Mintzer, Publisher
2 PLANSPONSOR.COM October - November 2020
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