Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Voya Retirement Insurance and Annuity Co. beat a lawsuit accusing it of earning undisclosed profits by setting the crediting rate for its stable value funds in retirement plans for its own benefit ( Dezelan v. Voya Ret. Ins. & Annuity Co. , 2017 BL 234003, D. Conn., No. 3:16-cv-01251, 7/6/17 ).
A plan participant lacked standing to bring a claim of fiduciary breach under the Employee Retirement Income Security Act concerning Voya’s general account stable value funds because Voya didn’t offer that product to her retirement plan, the Cedars-Sinai Medical Center 403(b) Retirement Plan, federal District Judge Victor A. Bolden held July 6. In addition, the participant lacked class standing to bring fiduciary breach claims on behalf of other plans because she didn’t own any of the products referred to in the claim and provided no information to suggest that the products were similar to the ones she actually did own, Bolden said in dismissing the lawsuit.
ERISA legal challenges related to stable value funds—one of the most popular investment strategies for pension plans because of their low risk—have increased recently. Retirement plan sponsors, including Anthem Inc., Chevron Corp., and Insperity Inc., have been sued—unsuccessfully—for failing to include stable value funds in their investment lineups. Other lawsuits have targeted the companies that offer and manage stable value funds, with cases pending against Massachusetts Mutual Life Insurance Co. and Prudential Retirement Insurance & Annuity Co. Two companies— CVS Health Corp. and Fidelity Management Trust Co.—recently defeated lawsuits challenging their stable value practices, and a magistrate judge recommended dismissing a similar case against a subsidiary of Principal Financial Group Inc.
Bolden’s decision is an early win for Voya, which provides retirement services to more than 47,000 institutional clients and nearly 4.5 million investors.
At issue in the case were two types of stable value funds offered by Voya: the separate account stable value fund, which uses a separate account established by the company for the sole purpose of holding invested assets, and the general account stable value funds, in which the underlying assets are held alongside the company’s other assets.
Because the participant didn’t own any general account stable value funds, she couldn’t show that any of Voya’s alleged misdeeds concerning those funds caused her to suffer a distinct and palpable injury, Bolden said. As a result, the participant lacked standing to bring claims related to those products, he said.
As to the participant’s lack of standing to bring claims on behalf of purported class members who invested in general account products, Bolden agreed with Voya’s argument. The participant’s claims concerning the general account products didn’t involve the same set of concerns as her claims concerning separate account assets, the judge said. Her claims are distinct and require different proof from those she brings on her own, Bolden concluded.
Bolden, of the U.S. District Court for the District of Connecticut, granted the participant leave to amend her allegations.
Izard Kindall & Raabe LLP represents the participant. Morgan Lewis & Bockius LLP represents Voya.
To contact the reporter on this story: Carmen Castro-Pagan in Washington at email@example.com
To contact the editor responsible for this story: Jo-el J. Meyer at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)