United States: An Ounce Of Prevention: Top Ten Reasons To Have An ERIDSA Litigator On Speed Dial

Last Updated: February 25 2015
Article by Nancy G. Ross and Brian D. Netter

Nearly every large US company, whether public or private, offers pension and welfare benefits to its employees. In the 40 years since the Employee Retirement Income Security Act (ERISA) was enacted, the courts and the Department of Labor (DOL) have generated a morass of confusing and inconsistent rules that companies, benefit plans and plan fiduciaries must follow. Trying to stay on top of these rules and opinions can be daunting, and failure to do so can be expensive. Here are 10 reasons to regularly consult an ERISA litigator.

1 The Supreme Court's Heightened Interest in ERISA

Over the past five years, the Supreme Court has ramped up its interest in ERISA. It has significantly expanded the remedies available (CIGNA v. Amara), confirmed the right of employers to choose plan terms that place time bars on lawsuits (Heimeshoff), instructed how courts should decide preliminarily whether fiduciary breach lawsuits are valid (Dudenhoeffer) and determined the standards for contract interpretation over the vesting of retiree medical benefits (Tackett). Soon, the Court will be deciding the scope of ERISA's time bar for lawsuits against fiduciaries (Tibble). Companies would be wise to evaluate the relevance of each of these pronouncements in administering their own benefit plans.

2 Increase in DOL Investigations

The number of DOL investigations of pension plans has increased dramatically in recent years. These audits are often unfocused and protracted, with the DOL asserting that its enforcement authority is seemingly unlimited. An experienced ERISA litigator can help expedite the process, decide whether tolling agreements are warranted and identify and address any trouble spots. Equally important, experience has shown that with effective negotiation, the DOL often alters its positions.

3 New Standards of Fiduciary Prudence

What matters most in any plan administration is the process followed, not the decision reached. As the courts have written, ERISA requires fiduciaries "to be prudent, not prescient." The best protection plan fiduciaries can have against a lawsuit is a carefully contemplated and followed process for making plan decisions. Recent court cases have resulted in large settlements, if not judgments, as a result of poor documentation of plan committee deliberations or an inability to show prudent decision-making.

4 De-Risking Your Pension Liabilities

Trying to keep retirement plans adequately funded is a challenge when interest rates are low and capital markets are volatile. An emerging solution is de-risking of pension liabilities. Companies can liquidate uncertain liabilities by purchasing group annuity contracts to pay future benefits. Done correctly, de-risking can be a win-win for employers and employees. But any company considering de-risking must be mindful of the best practices to avoid litigation and enforcement actions.

5 Disclosures Matter

The past decade has shined a light on how plans disclose the fees that participants pay for investments and plan administration. Aggressive class counsel (often plaintiffs' securities firms) have made this area a focal point in recent years, filing nationwide class actions and extracting large settlements. On the heels of the uptick in litigation, the DOL put into effect a new rule requiring plan fiduciaries to obtain detailed fee disclosures from service providers. Those disclosures may well prompt a new wave of litigation.

6 New Definition of "Fiduciary"

Since ERISA was passed, courts have struggled with the threshold question of whether defendants named in a fiduciary breach lawsuit constitute plan fiduciaries. The result of this struggle has left little predictability as to whether boards of directors, CEOs, or other senior officers named as defendants will be dismissed early or have to face the distraction of litigation. Compounding this conundrum is the DOL's recent attempt to broaden ERISA's fiduciary definition through formal rulemaking. While the extent of the DOL's success remains uncertain, this is a good time to review their structure, with an eye toward cordoning off the board and most senior officers from plan investment decisions.

7 Growing "Conflict of Interest" Claims in Benefits Litigation

In Glenn v. Metropolitan Life, the Supreme Court identified the circumstances in which discovery might be appropriate in benefits litigation. Prior to the Court's intervention, these benefits cases were typically handled without any discovery, with a court deciding, based only on the administrative record, whether the plan administrator's decision was reasonable. As a result of Glenn, plaintiffs' counsel routinely plead a conflict of interest by the plan administrator, opening the door to expansive (and expensive) discovery. Plans can reduce the breadth and cost of discovery demands by strengthening the plan language and internal procedures for deciding benefit claims.

8 Expansive Remedies in Litigation

Until the Supreme Court decided CIGNA v. Amara in 2011, relief in ERISA cases was generally limited either to the benefits owed or to equitable, non-monetary remedies. In CIGNA, the Court revisited and reinterpreted its past precedents. Reflecting upon "equitable" remedies, the Court identified three mechanisms that courts of equity traditionally used to exact monetary penalties, including a "surcharge" for harm suffered in unlimited amounts. Nearly every lawsuit since then seeks a surcharge, opening the door for plaintiffs' attorneys to demand a greater settlement or to seek a higher award.

9 The Risk of Attorneys' Fees in Lawsuits

The Supreme Court expanded the ability of participants to recover their attorneys' fees in benefits lawsuits. Prior to the Supreme Court's ruling in Hardt v. Reliance Standard Life, courts typically applied a "bad faith" standard to decide whether a party was entitled to fees under ERISA's discretionary fee provision. As a result of Hardt, courts now must award fees if there has been a reasonable degree of success by the participant. Courts have interpreted Hardt to entitle participants to recover attorneys' fees even when benefit determinations are only remanded to the plan administrator for further review. A prudent, documented, and followed process for handling benefits can go far in achieving success in the courtroom and mitigating this risk.

10 The Dangerous ERISA Fiduciary Exception to the Attorney-Client Privilege

Leaving the most troubling ERISA doctrine for last, this exception is a trap for the unwary. Courts have been slow in issuing applicable rulings, but those opinions that exist might be your most formidable opponent. Essentially, the doctrine holds that when legal advice is given for purposes of plan administration, the participants—and not the fiduciaries—are the beneficiaries of that advice. The result is that a fiduciary who obtains problematic or concerning legal advice may not be able to protect that advice from disclosure in court. Be wary.

This article was authored with the assistance of associate Sam Myler.

Originally published February 19th, 2015.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2015. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions