• In In re Mercury Interactive Corp. Sec. Litig., 2010 WL 3239460 (9th Cir. Aug. 18, 2010), the Ninth Circuit held that in the settlement of a putative class action district courts must set the deadline for class counsel to file their fee application before the deadline for class members to object to the proposed settlement. Because the district court had not done so in this securities action, the Court vacated the district court’s ruling approving plaintiffs’ fee application. The ruling, if adopted elsewhere, should similarly impact ERISA class actions.  
  • Following the U.S. Supreme Court’s denial of certiorari in Golden Gate Restaurant Assoc. v. City and County of San Francisco, litigation surrounding San Francisco’s “pay or play” statute was brought to an end when the district court granted the city’s motion for summary judgment in a one paragraph order. The Ninth Circuit’s opinion, which held that the San Francisco ordinance was not preempted by ERISA is discussed at http://www.proskauer.com/publications/newsletters/erisalitigationnewsletternovember2008/.  
  • In Zang v. Paychex, Inc., 2010 WL 3021909 (W.D.N.Y. Aug. 2, 2010), the court dismissed plaintiff’s allegations that Paychex breached its fiduciary duties by collecting revenuesharing payments from mutual funds that Paychex selected to be included in its prototype plans that are sold to various employers. Relying on Hecker v. Deere, the court concluded that “playing a role in the selection of investment options or furnishing professional advice is not enough to transform a company into a fiduciary . . . . Even if Paychex could be said to have ‘played a role’ in plaintiff’s decision (by presenting him with a set of options), in the end, that decision was plaintiff’s to make.”  
  • In American Federation of Television & Radio Artists v. JP Morgan Chase Bank NA, 2010 WL 3063067 (S.D.N.Y. Aug. 5, 2010), a district court certified a class in three consolidated suits alleging that JP Morgan Chase (“JPMC”) breached its fiduciary duties by mismanaging billions of dollars of retirements plans’ assets. The certified class consists of all plans that had securities lending agreements with JPMC and on whose behalf JPMC held notes from Sigma as of September 30, 2008. The suits maintain that, pursuant to the securities lending arrangements, JPMC purchased and held notes from Sigma Finance Inc. even after financial analysts warned of Sigma’s severe lack of liquidity, which led to the notes’ decline in value.  
  • In Taylor v. KeyCorp, No. 08 Civ. 1927 (N.D. Ohio Aug. 12, 2010), the court granted KeyCorp’s motion to dismiss plaintiff’s claims that defendants breached their fiduciary duties by continuing to invest in KeyCorp stock while the stock was allegedly artificially inflated. In so ruling, the court held that plaintiff lacked standing to assert such claims because plaintiff profited on her investment in KeyCorp stock during the putative class period and thus did not suffer a cognizable injury. In so ruling, the court rejected plaintiff’s contention that the court should employ an “alternative investment” damages model “which measures losses to a plan from breaches of the duty of prudence by comparing the performance of the imprudent investments with the performance of a prudently invested portfolio.” The court concluded that because the “gravamen” of plaintiff’s claim was that KeyCorp stock was artificially inflated, the proper measure of damages is “‘outofpocket’ damages, i.e., the difference between what the plaintiff paid for the stock and what it was really worth.” Because plaintiff not only bought, but also sold, his/her shares at inflated prices, the court determined that there were no “out of pocket” losses.
  • In In re Constellation Energy Group Inc. ERISA Litig., No. 08 Civ. 2662 (D. Md. Aug. 13, 2010), the district court granted Constellation Energy Group, Inc.’s motion to dismiss plaintiffs’ claims that defendants breached their fiduciary duties by failing to divest the plans of Constellation stock after Constellation’s stock price declined by 74% during the putative class period. The court determined that it need not consider whether the plan fiduciaries had the discretion to divest the plans of the company stock fund, or whether the Moench presumption of prudence applied, because plaintiffs failed to allege that “the defendants acted imprudently by retaining employees’ investments in Constellation stock during the Class Period.” The court stated that “[a] company’s decision to adopt a riskier business model is not in itself a fiduciary decision governed by ERISA, nor does that decision automatically trigger a duty to divest.” The court also concluded that plaintiffs failed to allege sufficient facts to support a finding that the defendants’ communications to plan participants contained material misrepresentations.  
  • On August 9, 2010, the court in Will v. Gen. Dynamics Corp., No. 06698 (S.D. Ill.) granted preliminary approval of a $15.5 million settlement of plaintiffs’ claims that defendants breached their fiduciary duties under ERISA by paying excessive and unreasonable fees for the plans’ 401(k) investments.  
  • On August 12, 2010, the court in Martin v. Caterpillar, Inc., No. (C.D. Ill.) granted final approval of a $16.5 million settlement of plaintiffs’ claims that defendants breached their fiduciary duties under ERISA by paying excessive and unreasonable fees for the plans’ 401(k) investments.  
  • In Hochstadt v. Boston Scientific Corp., No. 08 Civ. 12139 (D. Mass. Aug. 11, 2010), the court approved a settlement of plaintiffs’ stockdrop claims. The settlement requires the company to pay $8.2 million for distribution to approximately 12,000 participants in the company’s 401(k) plan. Plaintiffs’ counsel was awarded approximately $2.7 million in fees.  
  • In In re Washington Mutual Inc. ERISA Litig., No. 08 md 01919 (W.D. Wash. Aug. 6, 2010), the court granted preliminary approval of plaintiffs’ stockdrop claims. The settlement requires the company to pay $49 million to all participants whose plan accounts held investments in WaMu stock from October 15, 2005 to September 26, 2008.  
  • In Beazer Homes USA Inc. ERISA Litig., No. 07 Civ. 0952 (N.D. Ga. Aug. 12, 2010), the court granted preliminary approval to a settlement of plaintiffs’ stockdrop claims against Beazer Homes USA. The settlement requires the company to pay $5.5 million to all participants and beneficiaries who were invested in the Beazer stock fund from July 28, 2005 to May 12, 2008.  
  • In In re Ford Motor Co. ERISA Litig., No. 06 Civ. 11718 (E.D. Mich. Aug. 2, 2010), the parties reached an agreement to settle plaintiffs’ stockdrop claims. The settlement does not call for any monetary relief to the plaintiffs, but does require Ford to: (i) provide participants with online investment advice tools; (ii) hire a third party to conduct fiduciary training once a year for the people overseeing plan investments for the following four years; (iii) provide information to participants regarding the diversification of their accounts; (iv) notify participants if their holdings in Ford stock exceed 20 percent of their total plan holdings; (v) make any employer contributions over the next three years in cash; and (vi) make available to the trustees of the plan, upon request, all current and historical information about the company and the plans.