Koresko-Connected Law Firm Dodges ERISA Claims

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By Jacklyn Wille

Dec. 7 — A law firm connected to John Koresko's lawsuit-plagued multiple employer welfare arrangements successfully defeated claims that it violated ERISA, a federal judge ruled.

However, Portland-based Samuels Yoelin Kantor LLP must still defend state-law claims of malpractice and fiduciary breach stemming from its work representing Koresko's arrangements, known commercially as the Regional Employers’ Assurance Leagues Voluntary Employees' Beneficiary Association (REAL VEBA) and Single Employer Welfare Benefit Plan Trust (SEWBPT).

The REAL VEBA and the SEWBPT have been plagued by multiple lawsuits and investigations by the Department of Labor and the Internal Revenue Service, the latter of which labeled the arrangements an abusive tax shelter.

This suit, brought on behalf of a proposed class of employee benefit plans that invested assets in these arrangements, accuses Samuels Yoelin of malpractice, fiduciary breach and violations of the Employee Retirement Income Security Act. According to the complaint, the law firm wrongfully accepted payments from the Koresko arrangements despite knowing that such payments violated Koresko's fiduciary duties.

In a Dec. 3 opinion, Judge Wendy Beetlestone of the U.S. District Court for the Eastern District of Pennsylvania explained that she couldn't determine the viability of the malpractice claims against Samuels Yoelin until the parties submitted briefs regarding which state law to apply.

However, Beetlestone granted Samuels Yoelin's motion to dismiss the claims against it under ERISA, finding no indication that the firm had knowledge that the transfers were wrongful.

Beetlestone is also considering a motion for class certification in a similar lawsuit filed against law firm Montgomery McCracken Walker & Rhodes LLP.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

Text of the court's opinion is at http://www.bloomberglaw.com/public/document/Kalan_v_Farmers__Merchs_Tr_Co_No_151435_2015_BL_398857_ED_Pa_Dec_.