The Takeaway from Conclusion of Long-running California ERISA Lawsuit

Los Angeles, CA: A California ERISA lawsuit that began life in the Golden State only to wind up in the highest court in the land was finally resolved this past August with a decision favoring the plaintiffs.

There is also a lingering message for retirement plan fiduciaries.

The lawsuit is Glen Tibble, et al v. Edison International, et al., Case No. 2:07-cv-05359-SVW-AGR, originally filed in the US District Court for the Central District of California. According to documents associated with the lawsuit the class action dates back to August 16, 2007 and took various twists and turns before finally achieving resolution.

Writing in Forbes (12/12/17), contributor Brian Menickella noted that the lawsuit grew from allegations made by former employees of Midwest Generation LLC – a subsidiary of Southern California Edison Company (SCE). The plaintiffs claimed that the basket of named defendants in the class action mishandled management of the employee 401(k) retirement plan, resulting in losses amounting to more than $7 million.

Under statutes observed by the Employee Retirement Income Security Act (ERISA, as amended 1974), those tasked with managing an employee 401(k) plan are mandated to make all investment decisions with the best interests of Plan members first and foremost. Plaintiffs in the ERISA lawsuit alleged the Plan managers failed to do this, resulting in losses to the Plan.

Plaintiffs alleged Plan fiduciaries purchased the wrong type of shares

Specifically, Plan administrators were accused of purchasing retail shares of product in March of 1999 rather than institutional shares – the latter incurring lower fees than retail shares. Tibble et al also accused Edison et al of utilizing the monies from the retail shares to offset Plan management costs, which plaintiffs deemed was not in the best interests of Plan members – and thus a violation of ERISA.

While the district court duly ruled that three of the funds invested post-2001 should, indeed have been purchased as institutional shares rather than retail shares, at the same time some of the plaintiff’s claims were not allowed as they were time-barred by the statute of limitations as outlined in ERISA Section 1113.

Plaintiffs appealed the time-bar ruling to the Ninth Circuit. The case eventually was heard by the Supreme Court of the United States, which subsequently found that the district court got it wrong by failing to consider the nature of the fiduciary duty required to have been followed by the defendants. The case was sent back to the district court, and the entire matter was finally resolved this past August.

Fiduciaries can no longer lean on time-barring as insurance against past errors

According to PLANSPONSOR (08/17/17), a respected newsletter serving the investment industry, the takeaway message for those tasked with fiduciary duties of 401(k) retirement plans can no longer operate against the cushion of time-barring for previous investment decisions that may have gone off the ERISA rails.

The California district court is described as taking the rulings from both the Ninth Circuit and the US Supreme Court to arrive at the determination that Plan fiduciaries had actually breached their obligations towards fiduciary prudence in the selection of all 17 funds at issue in the ERISA lawsuit.

Damages are to be calculated from 2011 to present day, “based not on the statutory rate, but by the 401(k) plan’s overall returns in this time period,” the Court said.

Defendants in the ERISA lawsuit were Edison International, Southern California Edison Company, the Southern California Edison Company Benefits Committee, the Edison International Trust Investment Committee, the Secretary of the SCE Benefits Committee, SCE’s Vice President of Human Resources, and the Manager of SCE’s Human Resources Service Center.

Health Care Provider Faces ERISA Lawsuit, Plaintiffs Allege Standard of Care Not Met

San Francisco, CA: A class action ERISA lawsuit that combines two separate cases is claiming that a provider of group health insurance is in violation of the Employee Retirement Income Security Act (ERISA, as amended 1974) as well as California state laws in denying coverage for mental health and substance abuse treatments.

The assertion is that a subsidiary of UnitedHealth Group is in breach of its fiduciary duties under ERISA by denying coverage according to hundreds of internal guidelines that are alleged to be in violation of ERISA and state laws.

According to Law360 (10/16/17), the ERISA lawsuits are two consolidated class actions that were filed in 2014 and are focused upon a subsidiary of UnitedHealth Group, United Behavioral Health (UBH). Named plaintiff Gary Alexander asserts claims in one of the ERISA lawsuits that pertain to outpatient treatment. In the other class action, named plaintiffs David and Natasha Wit have put forward claims related to residential treatment and stays in hospital.

In both cases, plaintiffs assert that UBH guidelines do not meet generally accepted levels of care and don’t measure up to industry standards. The defendants were denied in their motions to have the two cases dismissed outright, with US Magistrate Judge Joseph C. Spero later certifying the ERISA lawsuits for class action status. Certification was granted in September of last year.

Plaintiffs assert that UBH was motivated primarily by economics, rather than its fiduciary duties under the Employment Retirement Income Security Act when it crafted a series of internal guidelines – described as no fewer than 222 in number – for granting, and denying coverage.

UBH countered in opening arguments that guidelines were crafted with the help of comments from physicians, and that guidelines were revisited on a regular basis. UBH also asserted that the guidelines under dispute duly met the terms of all the health plans, and thus there could be no finding of an ERISA violation, according to defendant counsel.

An expert testifying for the plaintiffs noted that UBH guidelines did not reflect guidance and criteria observed by the American Society of Addiction Medicine, which psychiatrist Marc Fishman helped to craft. Those guidelines are considered the industry standard, the witness said. Fishman went on to say that UBH tended to “undermatch” patients with facilities or treatment that afforded less benefit than that required by the patient. A live-in rehabilitation facility, which is more costly, was only recommended when safety was deemed a factor, as opposed to the efficacy of treatment.

“Perhaps the best analogy is for a chronic medical condition,” Fishman said. “You still need to get treatment for chronic diabetes even if it’s under control right now, precisely because it is that treatment that’s keeping it in control.”

Upon cross examination, counsel for UBH noted that the Plan’s regulations specifically spelled out that “enrollees’ specific benefit documents supersede these guidelines.”

In a statement to Law360, UBH said the company tailored its coverage to individual needs. “Each person seeking treatment for mental health or substance use is unique,” said spokeswoman Tracey Lempner, in the statement. “We provide access to evidence-based care in the appropriate setting, based on the patient’s specific needs and health benefits plan.”

Judge Spero, in a moment of levity, noted that he was putting a great deal of value on expert testimony as he was not prepared to go through the 222 internal guidelines line by line, looking for violations to ERISA throughout thousands of pages worth of documentation.

“I certainly have my opinions, but I’m just some dumb judge. I’m going to rely on the expert. I’m not going to try to figure it out on my own,” Judge Spero said.

The cases are David Wit et al. v. United Behavioral Health, Case No. 3:14-cv-02346, and Gary Alexander et al. v. United Behavioral Health, Case No. 3:14-cv-05337, in the US District Court for the Northern District of California.

Edison International ERISA Lawsuit Finally Settles for $7.5 Million in California

Riverside, CA: Administrators of a retirement plan that invested in higher-cost funds than less-expensive funds on behalf of plan participants breached their fiduciary duties under the Employment Retirement Income Security Act (ERISA, as amended 1974), or so it was alleged. Primary defendant Edison International will pay $7.5 million in damages in a settlement agreement that received judicial acceptance this past August 17.

Defined retirement plans under ERISA require that those tasked with managing, and administering retirement plans on behalf of plan participants do so with the best interests of plan members first and foremost in every decision made on their behalf.

According to an ERISA lawsuit brought by disgruntled members of the plan, administrators failed to do so.

Court documents revealed that administrators of the retirement plan were tasked with undertaking investments according to their fiduciary duties to employees of Midwest Generation LLC, a subsidiary of Edison Mission Group Inc. – all of which fall under the umbrella of Edison International.

Court heard that fiduciaries purchased shares in no fewer than 17 mutual funds on behalf of plan members for their 401(k) retirement plans. However, it was revealed that of two classes of shares available to be purchased by fiduciaries on behalf of plan members, the more expensive retail class of funds were purchased, rather than shares rated under an institutional class that also come at a reduced cost.

Thus, the costs were higher and not in the best interest of plan members, or so it was alleged by class participants in the class action ERISA lawsuit against Edison.

Edison countered that buying retail class shares afforded an opportunity for revenue sharing, which in turn afforded Edison the means to offset administrative fees. The defendant also declared that the act of notifying plan participants that revenue sharing was available translated to implied permission to purchase the more expensive shares.

The Court however would have none of it. “The court finds that no prudent fiduciary would purposefully invest in higher cost retail shares out of an unsubstantiated and speculative fear that if the plan settlor were to pay more administrative costs it may reallocate all such costs to plan participants,” wrote US District Judge Stephen V. Wilson, who found that defendant Edison International had breached its fiduciary duties under ERISA and as such were liable for the actual loss in excessive fees.

The agreed damages of $7.5 million represent the period between 2001 and January 2011. Damages from 2011 to present day would be calculated according to the overall returns of the retirement plan.

The complex ERISA lawsuit was originally filed ten years ago, in 2007. The named plaintiff in the ERISA lawsuit is Glenn Tibble.

Edison and co-defendant Southern California Edison said in a statement that “the funds in question have not been part of the offerings for employees since 2011 and the litigation has not raised any questions regarding the appropriateness of the current portfolio of funds,” the statement said. “Edison International and Southern California Edison understand the importance of their 401(k) plan to employees’ retirement goals. We have consistently provided a wide array of high-quality investment options in the 401(k) plan.”

The case is Glenn Tibble et al. v. Edison International et al., Case No. 2:07-cv-05359, in the US District Court for the Central District of California.

California Class Action Alleges ERISA Violations

San Francisco, CA: A former employee of Franklin Resources Inc. (FRI), which is more commonly known as Franklin Templeton, has blown the whistle on his former employer by launching a California class action lawsuit alleging ERISA violations. To that end, late last month a federal judge certified the class after finding there were sufficiently common issues of law to warrant the class action.

The allegation is that Franklin Templeton violated tenets of the Employee Income Retirement Security Act (ERISA, as amended 1974) by favoring its own funds than better-performing funds from other providers. It is also alleged those better-performing funds were cheaper to acquire and maintain, as well.

ERISA holds that those responsible for managing funds have a fiduciary duty to place the best interests of clients ahead of their own and all others. In other words, all investment decisions must have the very best interests of fund participants at heart.

According to Court documents, lead plaintiff Marlon H. Cryer worked for Franklin Templeton until his employment was terminated in February of last year. Six months later, in July of 2016 Cryer filed an ERISA lawsuit alleging that his former employer, on behalf of plan participants, placed investments in funds that resided in-house. Additionally, it is alleged that said funds carried fees that were higher than comparable funds that were available.

The ERISA lawsuit claims that at the time of filing – a year ago July – fund managers had invested on behalf of their clients nearly $1 billion in various investment options that are alleged to have been imprudent, and unlikely to outperform their benchmarks. In so doing, fund managers are alleged to have violated their fiduciary duties to plan participants as required under the Employee Income Security Act.

In certifying the class, US District Judge Claudia Ann Wilken ruled that “Plaintiff and unnamed class members have allegedly been injured by FRI’s management of the plan; that conduct is not unique to plaintiff; and the unnamed class members were allegedly injured by the same conduct,” Judge Wilken wrote. “FRI does not identify any defenses unique to plaintiff.”

In response to the class certification, FRI issued the following statement: “Franklin Templeton takes pride in its 401(k) plan, which offers a generous matching program and provides employees with a diversified lineup of investment choices, including proprietary and nonproprietary funds.”

The class consists of those who participated in the 401(k) plan between July 28, 2010 and the date of any eventual judgment.

With employees changing jobs more often than workers of a previous generation – and with employers evolving away from provision of retirement pension plans, it behooves the employee to fund much of their own retirement through participation in various investments and retirement plans funded by those investments. As employees near retirement, their peak earning years are behind them and there is less time to make up any shortfall that may originate from misguided, improper or illegal investment decisions.

The California ERISA lawsuit is Cryer v. Franklin Resources Inc. et al., Case No. 4:16-cv-04265, in the US District Court for the Northern District of California.

Long-Running California ERISA Lawsuit Settles

Los Angeles, CA: An ERISA lawsuit based in California that had been waged for 10 years quietly settled back in March following the third day of a bench trial (In Re Northrop Grumman Corp. ERISA Litigation, Case No. 2:06-cv-06213, in US District Court for the Central District of California). Weekend negotiations prior to the resumption of the trial succeeded in bringing both sides together, with a confidential settlement reached in the decade-long case.

The ERISA lawsuit extends back to September, 2006 when five class representatives filed suit against Northrup Grumman Corp. and a collection of executives and fiduciary committees tasked with administering 401(k) plans maintained by Northrup Grumman. A related action was later filed and combined with the first ERISA lawsuit.

The lawsuits alleged violations to the Employee Retirement Income Security Act (as amended, 1974), guidance related to the administration of retirement plans. To wit, ERISA outlines various fiduciary duties required of administrators and their committees with regard to 401(k) plans and the management of same on behalf of plan members. Administrators have a fiduciary duty to put the interests of plan members ahead of those of the sponsoring corporation or, for that matter, their own.

It was alleged the 401(k) plans suffered when Northrup Grumman was unlawfully reimbursed in excess of $10.5 million in administrative expenses by executives and fiduciary operatives of the plans. Plaintiffs alleged the $10.5 million-plus in questionable administrative expenses reduced the plans’ value, and diminished its growth potential.

The settlement remains confidential.

Northrup Grumman is a defense contractor. The lawsuits centered upon two 401(k) plans managed by the corporation on behalf of its plan members. Class plaintiffs claim that between 2000 and 2009 a fiduciary committee together with three Northrup Grumman executives allowed the re-imbursement of about $10.5 million in administrative fees that were paid to the benefits department of Northrup Grumman over a period of about 9 years.

Plaintiffs held that in so doing, those tasked with a fiduciary duty to manage the two 401(k) plans in the absolute best interests of plan members violated their fiduciary duties as required by the Employee Retirement Income Security Act.

The ERISA lawsuit has navigated a rocky road since it was launched in 2006. US District Judge Margaret M. Morrow, originally assigned to the case, had previously dismissed Northrop, one of the committees and all but thee individual defendants, from the lawsuit.

Judge Morrow would eventually certify two putative class actions related to the case, but limited the proceedings to the claim that Northrup Grumman was reimbursed to excess for administrative services alleged to have been in violation of ERISA.

Things got more interesting in early fall last year when a related action dubbed ‘Marshall’ was filed, seeking damages from Northrup Grumman from September, 2010 to the time of judgement. Northrup Grumman responded with a motion to either decertify the instant class or disqualify class counsel from the Marshall claim.

“Defendants’ attempt to disqualify plaintiffs’ attorneys or decertify this class on the eve of trial is the epitome of a Hail Mary attempt to avoid trial,” the plaintiffs stated in their opposition filing.

In the end the bench trial went ahead before US District Judge Andre Birotte Jr. with the settlement reached following the third day of proceedings.

The Employee Retirement Income Security Act outlines specific fiduciary duties required of 401(k) managers in order to administer, and grow retirement plans to the best of their abilities with complete fairness, without hurting the plans by putting the interests of the sponsoring corporation ahead of those of plan members and retirees. Should any failure of fiduciary duty under ERISA come to light, an ERISA lawsuit is a common recourse in an attempt to reverse any damage to growth potential and value contained in an ERISA 401(k) plan.

US Supreme Court Rules for Church-Affiliated Hospitals in ERISA Dispute

Washington, DC: It’s an ERISA win for church-affiliated hospitals and health care facilities attempting to escape from the rigors and fiduciary requirements of the Employee Retirement Income Security Act, following a ruling earlier this month by the US Supreme Court that affirms the extension of the ERISA religious exemption.

Amongst the health care providers petitioning the Supreme Court to extend the ERISA religious exemption is California’s Dignity Health. Dignity joined Advocate Health Care Network (Illinois) and Saint Peter’s Healthcare System (New Jersey) in arguing that the religious exemption – first introduced in 1980 – allowed for a church-affiliated organization to be excused from the primary responsibilities of ERISA.

For some time now, the debate has raged over an interpretation as to what the 1980 amendment to ERISA actually meant: to wit, does affiliation with a church group (such as the Catholic Church, for example), or affiliation with an actual bricks-and-mortar church represent the prerequisite for exemption?

The Supreme Court, in its ruling, opined that church affiliation is all that is required and held that such interpretation was the original intent of the 1980 amendment.

The win for the hospitals, translates to a loss for employees – including those of Dignity Health in California – who fronted an ERISA lawsuit against their employers over the health and vitality of their pension plans. Employees argued that church affiliation was insufficient for ERISA religious exemption, and thus their employers should be made to abide by the full extent of ERISA protections and benefits, including requirements for funding minimums, insurance and disclosure.

According to the opinion, Justice Sonia Sotomayor agreed with her learned colleagues as to the interpretation of the statutory text, but nonetheless questioned how the US Congress of today (v. the Congress of 37 years ago) might view the evolution of the healthcare industry during that time.

To wit, even with the Supreme Court’s backing for the ERISA religious exemption, the hospitals bringing the petition operate various subsidiaries that are for-profit capable of earning billions of dollars in revenue. As such, they “compete in the secular market with companies that must bear the cost of complying with ERISA,” Justice Sotomayor wrote.

“These organizations thus bear little resemblance to those Congress considered when enacting the 1980 amendment to the church plan definition. This current reality might prompt Congress to take a different path,” Justice Sotomayor said.

The ERISA cases are Advocate Health Care Network et al. v. Maria Stapleton et al. , Case No. 16-74; Saint Peter’s Healthcare System et. al. v. Laurence Kaplan, Case No. 16-86; and Dignity Health et. al. v. Starla Rollins, Case No. 16-258, in the Supreme Court of the United States.

ERISA Exemption Debate Goes to the US Supreme Court

Washington, DC: The ongoing debate over whether, or not an exemption under the Employee Retirement Security Act (ERISA, as amended 1974) applies to non-profit hospitals reached a pivotal juncture in late March when arguments were made before the justices of the US Supreme Court. At stake is the current practice of not-for-profit hospitals with a church affiliation, applying the ERISA exemption according to a long-standing position in the accounting and actuarial world that a church affiliation meets the criteria for the ERISA exemption.

However, employees who have been fighting an ERISA lawsuit against the hospitals and their affiliates, hold that the ERISA exemption only applies if the pension plan was established by an actual church, rather than by association through a church affiliation. After recent federal circuit court rulings went against Advocate Health Care Network, Saint Peter’s Health Care System and Dignity Health, the cases were appealed to the US Supreme Court.

Dignity Health operates a handful of hospitals and healthcare facilities in the state of California.

ERISA sets out various standards with regard to the management of pension and benefits plans, with established funding minimums, insurance protection and disclosure requirements. Congress allowed an exemption from the rigors of ERISA for not-for-profits. However the language of the exemption and the various interpretations of the original intent of Congress have been debated for some time.

Not-for-profit hospitals and health care facilities with a church affiliation have long interpreted the ERISA exemption as continuing to be available to them so long as a church affiliation is maintained. Employees of those facilities however are not happy with the status quo that their benefit plans are not shielded by ERISA protection, and have been arguing that a church affiliation is not what Congress originally intended.

Employees maintain an ERISA exemption is only available if a benefits plan is established and maintained by a church.

In sum, the issue comes down to an argument by the hospitals – including those run by Dignity Health in California – that the principal purpose organization running their benefit plans have “common religious bonds and convictions” required to qualify for the religious exemption.

This, in deference to arguments by their employees that Congress intended for a strict separation between church and state, and only a church qualified for the exemption.

The hospitals have some expert advocates for their cause, including the deputy solicitor general for the US Department of Justice. The DOJ is supporting the hospitals’ cause as amicus curiae. Were the Supreme Court justices to find for the employees and interpret the ERISA exemption as only available to a benefits plan established and maintained by a church, hospitals would have to completely revise accounting practices and management of the plans in order to comply with ERISA – a costly, and labor-intensive shift.

The latter was the view of the Third Circuit in October 2015 and the Seventh Circuit in March of last year – both ruling that the ERISA exemption is only available to church-established benefits plans. The hospitals argue that in their view, such a qualifier was not the original intent of Congress going forward. What’s more, the hospitals suggest that such a restrictive qualifier contravenes previous rulings by the Fourth and Eighth Circuits which determined a church association was sufficient to qualify for the exemption.

The hospitals, in the ERISA lawsuit also contend that such a position is also supported – and has been for some time – by the DOJ and the Internal Revenue Service (IRS), which hold that church affiliation or association is sufficient.

Their employees argue otherwise.

The cases are Advocate Health Care Network et al. v. Maria Stapleton et al., Case No. 16-74; Saint Peter’s Healthcare System et. al.  v. Laurence Kaplan, Case No. 16-86; and Dignity Health et. al. v. Starla Rollins, Case No. 16-258, in the Supreme Court of the United States.

California Health Provider, Others Can’t Sue Under ERISA Claims

San Francisco, CA: Two lawsuits aimed at defeating a request for reimbursement of funds under ERISA were struck down by the Ninth Circuit on grounds that plaintiff actions did not qualify under ERISA. A lower court came to the same conclusion over claims made in the two ERISA lawsuits.

ERISA is the acronym for the Employee Retirement Income Security Act (as amended, 1974). ERISA maintains a broad jurisdiction with guidance over retirement investing, employee rights and fiduciary duty.

The two ERISA lawsuits had little to do with retirement investments, however. Rather the disputes were founded upon various tests a collection of health care providers undertook on behalf of their clients and patients, in two states in 2010 and 2011. The tests involved patients who were plan members with Blue Cross Blue Shield of Arizona Inc. (BCBS) and Anthem Blue Cross Life and Health Insurance Co. (Anthem) of California. Two jurisdictions were involved.

The providers proceeded to submit the bills and receipts for such testing, to the plans.

In California, a women’s health care center was found by Anthem to have used faulty practices and protocols while billing for the tests, and thus was not entitled to payment, in its view. Meanwhile, in Arizona BCBS determined that tests undertaken by health care providers in that state were investigational in nature and therefore not covered by Anthem.

There were twelve health care providers and related nurse practitioners involved with the ERISA lawsuit against BCBS in Arizona, while the California-based women’s health center sued Anthem Blue Cross Life and Health Insurance Co.

The trouble began when BCBS and Anthem, having duly reimbursed the health care providers as requested, conducted post-payment analysis and found the providers were not, in their view, entitled for reimbursement.

BCBS and Anthem sought repayment. However the health care providers pushed back, suggesting that patients had assigned their rights to the health care providers under ERISA. The health care providers asserted further that any collection efforts on the part of Anthem and BCBS were in violation of claims procedures observed by ERISA.

However a lower court hearing the ERISA lawsuits determined the health care providers were not true beneficiaries under the terms of ERISA enforcement provisions, and therefore had no grounds to undertake an ERISA lawsuit.

The Ninth Circuit agreed with that finding: “Here, the employee benefit plans or the plan subscribers, or both, designate providers to receive direct payment from Anthem or Blue Cross,” the panel wrote. “This remuneration for medical services rendered is not a ‘benefit’ under ERISA.”

The value attached to the claims represented a combined total of $533,000.

The case is DB Healthcare LLC et al. v. Blue Cross Blue Shield of Arizona Inc., Case No. 14-16518, in the US Court of Appeals for the Ninth Circuit.

California ERISA Lawsuit Settled for $2.75 Million

Thousand Oaks, CA: As we move ever closer to tax time, which is also a time when investors review their investments to maximize returns, a look back in the rear view mirror reminds us of a multi-million dollar ERISA settlement announced late last year that hinged on the fiduciary duties of those entrusted with growing, and managing retirement funds according to tenets of the Employee Retirement Income Security Act (as amended, 1974).

In was ten years ago, in 2007 that current and former employees of pharmaceutical giant Amgen Inc. filed an ERISA lawsuit in US District Court for the Central District of California over accusations that the corporation and its agents breached their fiduciary duties under ERISA by offering Amgen stock as an option for investment. Plaintiffs held that Amgen and its representatives knew, or should have known that safety concerns swirling around two anemia drugs within the Amgen banner posed a risk to the company’s stock value.

To that end, the plaintiffs asserted that Amgen stock was overvalued for the purposes of their investment, and subsequent returns. The stock price for Amgen did, indeed fall in 2007 when Amgen went public with regard to off-label marketing efforts associated with the two drugs.

Off-label marketing of drugs for indications outside the boundaries of FDA approvals is illegal activity for manufacturers. Doctors and other qualifying healthcare professionals have the medical and legal authority to step outside the bounds of the US Food and Drug Administration should they feel a particular drug would be of benefit to a patient, regardless of whether, or not the FDA has sanctioned the drug for that particular purpose.

It was alleged by plaintiffs in the ERISA lawsuit that revelations concerning the off-label marketing devalued Amgen stock, as did news about safety concerns.

ERISA fiduciaries are required, under law, to act according to the best interests of investors and employees enrolled in retirement savings plans, rather than those of the sponsoring company. Investors in retirement plans have a relatively short window within which to raise capital to fund retirement, and rarely can afford unnecessary losses.

The Employee Retirement Income Security Act lawsuit ran a tumultuous path, landing at the US Supreme Court following original appeals considered by the Ninth Circuit. On two occasions the Supreme Court remanded the case back to the Ninth Circuit. The most recent remand occurred a year ago January, when the Supreme Court ordered the Ninth Circuit to reconsider a ruling reviving the case, saying the appellate court failed to consider whether the complaint plausibly alleged that a prudent fiduciary in the same position could have taken an alternative action that would not have done “more harm than good.”

In the midst of all that, in September of last year the two parties reached a settlement deal. On November 26, US District Judge Philip S. Gutierrez gave preliminary approval to the $2.75 million ERISA settlement, ending a protracted legal journey for all parties concerned.

The California ERISA lawsuit is Steve Harris et al v. Amgen, Inc. et al, Case No. 2:07-cv-05442, in the US District Court for the Central District of California. Amgen maintains its headquarters at Thousand Oaks, California.

California ERISA Lawsuit Drags on for a Decade, Remains Unresolved

Los Angeles, CA: In the latest salvo of an ERISA lawsuit that’s been ongoing for a decade now, employees of Northrop Grumman Corp. (plaintiffs in the ERISA complaint) this week made a request to a federal judge in California asking that certain witnesses for the defense should be blocked from testifying, together with various audits performed by the US Department of Labor (DOL). The plaintiffs hold that audit documents, and the testimony from the named witnesses, should be deemed as inadmissible.

It was in September of 2006 that four class representatives launched a putative class action lawsuit against defense giant Northrup Grumman – together with three committees and a handful of executives – over the alleged mismanagement of two 401(k) plans under ERISA.

The Employee Retirement Income Security Act (ERISA, as amended 1974) is designed to protect investors and members of group retirement plans. Plan managers have various fiduciary duties to the plans, and to plan members, and are required to conduct investments and management related to ERISA plans with the best interests of the members at the forefront, rather than for any perceived benefit of the employer or any other parties.

The ERISA lawsuit was originally filed in US District Court for the Central District of California. In addition to the lawsuit filed in 2006, another employee of Northrup Grumman with an ERISA lawyer in tow filed a similar class action, in the same court, in 2007. Four years later, in 2011 US District Court Judge Margaret M. Morrow, the original justice assigned to the case, certified two consolidated putative class action lawsuits – but not before an appellate court became involved, deeming the relief appropriate in the two cases.

Judge Morrow was later petitioned, in December of 2015, to reconsider a partial order of summary judgement. The plaintiffs had since petitioned US District Court Judge Andre Birotte Jr., who was reassigned to the case and took over from Judge Morrow, to consider the possibility that Judge Morrow had failed to consider a precedent previously rendered under the US Court of Appeals for the Ninth Circuit, regarding if receipt of retirement account statements constituted “actual knowledge” of an underlying violation subject to a three-year statute of limitations, rather than depending upon what the plaintiffs referenced as a mistaken reading of a decision by the US Supreme Court.

Judge Birotte Jr. determined that the district court, under Judge Morrow, had committed “no clear error in ruling that the plaintiffs’ receipt of communications disclosing the selection of the high-fee funds was sufficient to give plaintiffs actual knowledge of their investment fees claim.”

Judge Birotte Jr. rendered his decision on that matter in March of last year. Next month, a bench trial is scheduled for March 14. The plaintiffs involved in the two consolidated ERISA class actions, made their overtures to Judge Birotte Jr. ahead of that bench trial starting.

The specifics of the allegations involved in the alleged mismanagement of 401(k) funds under ERISA, were not spelled out.

The ERISA lawsuit is In Re Northrop Grumman Corp. ERISA Litigation, Case No. 06-cv-06213 in US District Court for the Central District of California.