- In Unisys Corp. v. Adair, et al., (U.S. Feb. 22, 2010), the U.S. Supreme Court denied Unisys Corp.’s petition for certiorari, thus leaving intact the Third Circuit’s ruling that Unisys Corp. breached its fiduciary duties by failing to adequately disclose that it could terminate its retiree health plan. A detailed discussion of the Third Circuit’s decision appears in the October 2009 ERISA Litigation Newsletter.
- On February 24, 2010, the Supreme Court issued a notice dismissing the petition in Pollitt v. Health Care Serv. Corp., 558 F.3d 615 (7th Cir. Mar. 10, 2009), certiorari granted (Oct. 13, 2009). The notice stated that the parties agreed to dismiss the case, but did not describe the details of the parties’ agreement. A detailed discussion of the Seventh Circuit’s decision appears in the February 2010 ERISA Litigation Newsletter.
- In Overby v. Nat’l. Assoc. of Letter Carriers, 2010 WL 668852 (D.C. Cir. Feb. 26, 2010), the D.C. Circuit Court of Appeals held that a plan amendment that would have rendered plaintiff ineligible to receive benefits as a surviving spouse was not properly adopted and was therefore inoperative. In so ruling, the court concluded that the trustees did not follow all of the procedures required for adopting a plan amendment, which, in this case, included submitting the amendment to the fund’s actuaries for an evaluation and cost estimate. The court rejected the trustees’ argument that such a “procedural irregularity” did not warrant the amendment’s invalidation unless there was evidence of “bad faith” or “active concealment.”
- In Trustees of the Electrical Workers Local No. 26 Pension Trust Fund v. Trust Fund Advisors, Inc., 2010 WL 558719 (D.D.C. Feb. 12, 2010), a district court held that the attorney-client privilege could apply to communications between the trustees and the fund’s attorney that were made, or shared, in the presence of two of the fund’s unpaid consultants. In order for the communications to be privileged, the court held, the consultants needed to have “specific functions and responsibilities that required hearing the advice of counsel and participating in privileged discussions with the Board and counsel.” The court rejected defendants’ argument that there could be no reasonable expectation of privacy for the communications because the consultants were unpaid, finding that, regardless of the contractual or financial arrangements, there is an expectation of privacy where the person “acts for the [client] and possesses the information needed by attorneys in rendering legal advice.” Accordingly, the court ordered the documents be produced for an in camera review and a ruling on whether they were, in fact, privileged.
- In SEC v. State Street Bank and Trust Co., No. 10-CV-10172 (D. Mass. Feb. 4, 2010), and In re State Street Bank and Trust Co. SEC, Admin. Proc. File No. 3-13776 (Feb. 4, 2010), State Street Bank and Trust Co. agreed to pay over $300 million to settle charges brought by the SEC and state regulators alleging that during the subprime mortgage crisis, State Street sent investors “misleading communications” concerning its exposure to subprime mortgage-backed securities. One of the principal allegations in the SEC’s complaint was that State Street marketed investments as more diversified than ordinary money market portfolios when, in actuality, these investments were invested heavily in subprime mortgage-backed securities. The settlement includes a civil penalty of $50 million, disgorgement in the amount of $7,331,020, pre-judgment interest in the amount of $1,019,161, and compensation to harmed investors in the amount of $250,240,472. According the SEC’s press release, this payment is in addition to the approximately $350 million State Street has paid investors in settlement of private lawsuits.
Plaintiffs filed a motion for preliminary approval of a $13.8 million settlement in Phones Plus, Inc. v. Hartford Life Ins. Co., No 3:06-cv-1835 (D. Conn. Feb. 11, 2010). In this suit a 401(k) plan administrator alleged that the revenue-sharing agreements between Hartford Life and the mutual funds it offered as investment vehicles to its plan administrator clients violated ERISA’s fiduciary duties. In addition to cash, the proposed settlement includes several structural changes to Hartford Life’s business practices, including: (i) removing from plan documents any language restricting a plan’s ability to select investment options; (ii) adding language to plan disclosure documents noting the revenue-sharing agreements; and (iii) providing detailed information regarding the revenue-sharing rates paid by each mutual fund company to each putative class member.