- In Golden Gate Restaurant Assoc. v. City and County of San Francisco, No. 08-1515 (U.S.), the U.S. Solicitor General requested that the Supreme Court deny certiorari in light of the recent enactment of the Patient Protection and Affordable Care Act (PPACA). The Solicitor General argued that the question presented — whether ERISA preempts the provisions of San Francisco's Health Care Security Ordinance mandating that covered employers spend a specified amount for health care benefits for their covered employees — was less important now because the PPACA “significantly changed the legal landscape governing health care spending requirements” and “reduce[d] substantially the likelihood that state and local governments will choose to enact new employer spending requirements like those contained in San Francisco’s HCSO.” A detailed description of the Ninth Circuit’s ruling in this case and the San Francisco ordinance at issue is available in the November 2008 Newsletter.
- The U.S. Supreme Court denied a petition for certiorari in Standard Insurance Co. v. Lindeen, U.S. No 09-885, cert denied, May 17, 2010. As reported in the November 2009 Newsletter, the Ninth Circuit had held that a Montana statute banning discretionary clauses from certain plans was saved from preemption. The May 2008, April 2009, June 2009, August 2009, and January 2010 Newsletters discuss other similar rulings.
- In In re JDS Uniphase Corp. ERISA Litig., No. 03 Civ. 4743 (N.D. Cal. Oct. 15, 2009), the court approved a $3 million settlement of plaintiffs’ stock-drop claims.
- In Figas v. Wells Fargo & Co., et al., 08-cv-4546 (D. Minn. Apr. 6, 2010), a participant in Wells Fargo’s 401(k) plan filed a class action complaint alleging, among other things, that the plan’s investment in Wells Fargo Funds Management constituted a prohibited transaction under ERISA § 406. The court determined that the claim was time-barred under ERISA § 413, because plaintiff knew of the alleged ERISA violation more than three years prior to the lawsuit. In so ruling, the court rejected plaintiff’s continuing violation theory and found it irrelevant that other transactions had allegedly occurred more recently.
- In Central States v. Waste Management of Michigan, Inc., 2010 WL 2035709 (N.D. Ill. May 19, 2010), the Central States, Southeast and Southwest Areas Pension Fund and its trustees brought an ERISA lawsuit against a contributing employer, claiming that the employer failed to contribute to the fund pursuant to the collective bargaining agreement and trust agreement. In response to the fund’s motion for summary judgment, the employer sought discovery regarding the trustees’ potential conflict of interest against contributing employers and the fund’s “historical” interpretations of similar trust agreements. The court first determined that it would review the fund’s decision under an arbitrary and capricious standard of review, reasoning that, even though the principles that underlie Firestone were not applicable in this case, Waste Management agreed to be bound by the terms of the trust agreement and that agreement authorized the trustees to resolve disputes arising from the agreement. Next, the court determined whether to allow Waste Management the discovery it sought. Relying on the Supreme Court’s decision in MetLife v. Glenn to employ a relaxed version of the standard set forth the Seventh Circuit had set forth several years ago in Semien v. Life Ins. Co. of America, 436 F.3d 805 (7th Cir. 2006) (allowing discovery into a conflict of interest only in “exceptional circumstances”), the court required the trustees to produce information regarding steps it took to address any conflicts of interest. It reasoned that after Glenn decision-makers are “learning to incorporate in administrative records some evidence of their “active steps to reduce potential bias and to promote accuracy” and that “this information is probably readily available.” However, the court determined that Waste Management did not satisfy its prima facie showing that limited discovery would have revealed a procedural defect in the trustees’ interpretation of the agreement necessary to entitle it to broader discovery even though it had identified a conflict of interest (i.e., the Fund’s inherent bias in collecting contributions).
In Johnson v. Radian Group, Inc., No 08-2007 (E.D. Pa. May 26, 2010), the court granted defendants’ motion to dismiss plaintiff’s stock-drop claims. In so ruling, the court applied the Moench presumption of prudence and determined that plaintiff failed to show that the company had experienced a “monumental liquidity crisis” and, even if it had, the alleged problems only affected a small part of the company. With respect to plaintiff’s disclosure claim, the court found, among other things, that participants were adequately warned of the riskiness of the stock fund.