• In Brown v. Owens Corning Investment Review Committee, 2010 WL 3730918 (6th Cir. Sept. 27, 2010), the Sixth Circuit affirmed dismissal, on statute of limitations grounds, of plaintiffs' claims against plan fiduciaries arising from employer stock holdings in two Owens Corning retirement plans. In October 2000, Owens Corning entered bankruptcy in the face of mounting asbestos liabilities. A group of participants brought a class action in September 2006, asserting that the plan fiduciaries violated ERISA by failing to protect participants from the decline in the plans’ company stock holdings prior to bankruptcy. In December 2006, the plaintiffs added the plans’ directed trustee as a defendant, asserting that the trustee breached its fiduciary duties to protect the plan when it failed to assert ERISA claims against the fiduciaries responsible for plan investments. The district court, on reconsideration of a motion it had previously denied, granted summary judgment, finding that the claims against the directed trustee were time-barred. In so ruling, the court determined that the pleadings and evidence established that the plan participants had actual knowledge of potential ERISA claims from information provided to them in the summary plan description and plan-related announcements. Plaintiffs appealed, arguing that the district court erred in finding that they had actual knowledge of the identities of the potentially responsible fiduciaries. The Sixth Circuit disagreed, stating that the materials distributed to the plan participants adequately informed participants which fiduciaries were involved in the management and administration of the plans’ employer stock holdings.
  • In Jensen v. Solvay Chemicals, Inc., 2010 WL 3472945 (10th Cir. Sept. 7, 2010), the Tenth Circuit reversed in part the dismissal of a suit by participants challenging their retirement plan’s conversion to a cash balance formula, and found that the plan's ERISA § 204(h) notice was insufficient because it failed to adequately disclose how participants' early retirement benefits were calculated under the old and new plan formulas. The Court also held, however, that the notices provided sufficient information about future benefit accruals and that ERISA § 204 does not require disclosure about whether participants would be subject to "wear-away" periods or the possible duration of those periods. The Court remanded the case for a determination on whether participants were entitled to relief, which, it stated, "depend[ed] on whether there was an 'egregious failure' in compliance." The Court affirmed the dismissal of the participants' age discrimination claim, finding that ADEA § 4(i) creates a safe harbor for defined benefits that cease employees’ benefit accruals because of age.
  • In Temme v. Bemis Co., 2010 WL 3528846 (7th Cir. Sept. 13, 2010), retirees who were employed by a company that was acquired by Bemis Company brought suit against Bemis claiming that it violated ERISA when it increased retirees' health care deductibles and cancelled the retirees' prescription drug benefits. Plaintiffs argued that a plant-closing agreement provided that the retirees would be provided with lifetime health benefits. The district court granted Bemis' motion for summary judgment, holding that the plant-closing agreement did not make a promise of lifetime health benefits to retirees. The Seventh Circuit reversed, ruling that district court failed to read the 1985 plant-closing agreement in conjunction with the relevant collective bargaining agreement. The Court reasoned that when the two documents were read together "there [were] straightforward indications of the parties' intent to create lifetime benefits," including: (i) a description of retiree benefits that contained no ending date; and (ii) a provision of the CBA that provided that, in the event a retiree dies, the dependent spouse would retain coverage until the spouse qualifies for other coverage, which, according to the Court, "strongly impl[ied] that retired employees (and their spouses) are covered until death." The case was remanded for a determination as to whether Bemis's health insurance reductions resulted in health benefits that were less than what the parties expected under the plant-closing agreement and the CBA.
  • In Curtis v. Merrill Lynch Pierce Fenner & Smith, Inc., 2010 WL 3609598 (M.D.N.C. Sept. 9, 2010), a magistrate judge issued a Report and Recommendation recommending the denial of Merrill Lynch's motion to dismiss a participant's putative class action that contended that Merrill Lynch breached its fiduciary duties by imprudently investing plan assets too heavily in technology stocks. Merrill Lynch's motion to dismiss contended that the participant's claims were barred by the six-year statute of limitations. The magistrate judge rejected this argument, reasoning that although plaintiff may have had knowledge of the plan's losses more than six years before filing her complaint, there was no evidence she had actual knowledge that Merrill Lynch had disregarded the plan's investment guidelines with respect to the concentration of plan investments in technology stocks.
  • In In re Visteon Corp., No. 09-11786 (D. Del. Bankr. Sept. 17, 2010), the court approved a settlement between Visteon and The Industrial Division of the Communications Workers of America (the "Union"), resolving the Union retirees' claim that the company violated ERISA by terminating their non-vested benefits during the pendency of the company's bankruptcy. The settlement requires Visteon to pay $11.5 million to the Union retirees. Another group of retirees who are members of the United Auto Workers union are continuing to litigate their claims. The Third Circuit’s recent decision in this action was discussed in the September Newsletter.
  • In In re SLM Corp. ERISA Litig., 2010 WL 3783749 (S.D.N.Y. Sept. 24, 2010), the court granted SLM Corp.’s motion to dismiss plaintiffs' stock-drop claims. In dismissing plaintiffs' prudence claim, the court found that plaintiffs failed to rebut the Moench presumption of prudence, which required plaintiffs to allege a "precipitous decline in [the company's] stock price" and that fiduciaries had "knowledge of [the company's] impending collapse." Although there was an 85% decline in Sallie Mae's stock price, plaintiffs did not allege that "Sallie Mae's viability as a going concern was threatened or that its stock was at risk of becoming worthless." In dismissing plaintiffs' disclosure claim, the court concluded that plaintiffs did not allege that the plan fiduciaries acted in a fiduciary capacity when making the allegedly false and misleading statements to participants. It explained that "those who prepare SEC filings do not become ERISA fiduciaries through those acts," and that there is "no affirmative duty under ERISA to disclose information about the company's financial condition to plan participants."
  • In In re Guidant Corp. ERISA Litig., No. 05 Civ. 1009 (S.D. Ind. Sept. 10, 2010), the court approved a settlement between Guidant and participants of the Guidant Employee Savings and Ownership Plan, resolving the participants' stock-drop claims. The settlement requires the company to pay $7 million for distribution to class members. Plaintiffs' counsel was awarded approximately $3 million of the settlement amount in attorneys' fees and costs.
  • In Bagley v. KB Home, No. 07 Civ. 01754 (C.D. Cal. Sept. 7, 2010), the court approved a settlement between KB Home and participants of the KB Home 401(k) Savings Plan, resolving the participants' stock-drop claims. The settlement requires the company to pay $3 million to the settlement class. Plaintiffs’ counsel was awarded approximately $750,000 of the settlement amount in attorneys' fees and costs.
  • In In re General Growth Properties, Inc. ERISA Litig., No. 08 Civ. 6680 (N.D. Ill. Sept. 3, 2010), General Growth Properties, Inc. filed a motion for authorization and approval of a $5.75 million class action settlement of participants' stock-drop claims. The settlement proposal must receive final approval from both the bankruptcy court in the Southern District of New York (where General Growth's bankruptcy petition is pending) and the Northern District of Illinois (where the ERISA litigation is pending).