DOL Keeps Fighting for Plan Participants in Its 2016 Amicus Briefs


Employee benefit plan sponsors can learn a lot about which issues the Department of Labor is thinking about pursuing from the amicus briefs filed by the Office of the Solicitor. 

The Office of the Solicitor has filed three amicus curiae briefs in the first half of 2016 concerning the responsibility of plan fiduciaries to plan participants. This division submits amicus curiae briefs to courts in cases of private litigation to provide comment on legal issues applicable to the case. 

The courts don’t always rule on the side that DOL supports. The DOL’s amicus briefs support the administration’s views and can show where the DOL feels its compliance priorities are. 

What has the DOL put its sights on in 2016? This year, the DOL has submitted an amicus curiae brief concerning a class action in a case alleging misrepresentation, what is required to allege breach of fiduciary duty in a case of fraud, and what circumstances are required to prove fiduciary breach in a privately-held corporation as opposed to a publicly held one. 

In Osberg v. Foot Locker, Inc., 2d Cir., No. 15-03602, amicus brief filed 5/24/16, the DOL asked the U.S. Court of Appeals for the Second Circuit to rule that a group of Foot Locker Inc. workers could bring a class action against the company without having to prove that each individual worker relied on Foot Locker’s misrepresentations about the effects of a 1996 pension plan change. If the Second Circuit agrees with the DOL, the ruling would make it easier for workers to file class actions under ERISA. In February, three industry groups had filed a brief urging the Second Circuit to require each Foot Locker worker to individually demonstrate detrimental reliance on the company's misrepresentations. See related story,Labor Department Backs Foot Locker Workers in Pension Spat

In Whitley v. BP, P.L.C., 5th Cir., No. 15-20282, amicus briefs filed 3/11/16, the DOL, in a coordinated effort with the SEC, filed a brief to articulate how ESOP investors can hold plan fiduciaries liable for investing their retirement savings in company stock when an ongoing fraud threatens the stock’s value. The agency briefs attempted to answer the question raised in Dudenhoeffer, which is “What plausible factual allegations are required to meet the ‘more harm than good to the fund' pleading standard articulated by the Supreme Court?” In particular, the DOL brief identifies alternative actions unlikely to do more harm than good to the fund, while the SEC brief explains how the DOL's suggested actions can be accomplished without running afoul of federal securities laws. See related story, DOL, SEC File Coordinated Briefs in BP Stock Plan Suit

In another case about ESOPs, Allen v. GreatBanc Tr. Co., 7th Cir., No. 15-03569, amicus brief filed 2/16/16, the DOL asked the U.S. Court of Appeals for the Seventh Circuit to reverse a decision letting GreatBanc Trust Co. off the hook for its role in a $60 million stock purchase by the ESOP for Personal-Touch Home Care Inc. The DOL said the district court erroneously held the workers of Personal-Touch—which is a private company with no stock on a publicly traded market—to the “special circumstances” standard adopted by the U.S. Supreme Court in 2014. See related story,DOL Urges Seventh Circuit to Undo Ruling for GreatBanc.  

Last year, the DOL submitted briefs asserting that ERISA’s “in trust” requirement mandates the use of a written trust instrument (Barboza v. Cal. Ass’n. of Prof’l Firefighters); discussing what types of employees can participate in top-hat plans (Bond v. Marriott Int’l, Inc.); arguing that a service provider of a 401(k) plan is a fiduciary in an excessive fees case (McCaffree Fin. Corp. v. Principal Life Ins. Co.); that ERISA doesn’t preempt Vermont’s reporting requirement for state health-care databases (Gobeille v. Liberty Mut. Ins. Co.); that an insurance company can’t recover money from a third-party tort recovery if the money has already been spent (Montanile v. Bd. of Trs. of Nat’l Elevator Industry Health Benefit Plan); asking the Supreme Court not to hear a case holding that plan fiduciaries have the burden of proving that their misconduct didn’t cause plan losses (RJR Pension Inv. Comm. v. Tatum); arguing that  fiduciaries’ breached their fiduciary duties by retaining float income (Kelly v. Fidelity Management Trust Co.); and arguing that ERISA doesn’t preempt a doctor’s state law promissory estoppel claim (McCulloch Orthopaedic Surgical Servs., PLLC v. United Healthcare Ins. Co. of N.Y.).

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