401(k) Individual Suits After LaRue v. DeWolff

Minimizing Exposure and Defending Claims Over 401 (k) Fund Management

Supreme Court's Feb. 20 Ruling Removes Barrier to Individual Breach of Fiduciary Duty Lawsuits

Recording of a 90-minute CLE webinar with Q&A

Conducted on Wednesday, April 2, 2008

Program Materials

Description

On February 20th 2008, the U.S. Supreme Court ruled unanimously in LaRue v. DeWolff, Boberg & Associates, Inc. that individual participants in 401(k) plans can sue when their employers or retirement sponsors ignore their investment instructions or otherwise mishandle their investment accounts.

In a separate concurrence, two justices suggested that the remedies available to employees could be limited, making the true impact of the ruling uncertain. Employers’ counsel fear the ruling may result in a flood of individual lawsuits against plan sponsors.

In the wake of this ruling, counsel for plan sponsors should take a critical look at how their clients’ 401(k) plans are managed and advise them of steps to take to reduce the likelihood of ERISA litigation or minimize liability exposure if they are sued.

Listen as our panel of employee benefits attorneys reviews the LaRue decision and its implications and offers best practices for plan sponsors to minimize liability exposure for 401(k) plan administration.

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Outline

  1. Overview and implications of LaRue v. DeWolff, Boberg & Associates, Inc.
    1. Allegations/Theories
    2. Ruling
    3. Concurrences
    4. Interplay with 401(k) fee litigation and ERISA “stock drop” litigation
  2. Broader implications/potential claims post-LaRue
    1. Former participant standing
    2. Boundaries of 502(a)(3)
    3. Application of 502(a)(1)(b)
    4. Damages theories
    5. Welfare plans
  3. Best practices for plan sponsors to reduce liability related to 401(k) fund management
    1. What actions/inactions potentially violate an employer’s legal duty to carefully manage plans?
    2. Provide consistent and careful plan oversight
    3. Provide participants with summary annual reports and Form 5500
    4. Follow the PPA’s Disclosure and Asset Modeling requirements
    5. Formalize procedures for company-sponsored plans
    6. Process claims through ERISA’s claims procedure
    7. Avoid labeling senior executives as fiduciaries

Benefits

The panel reviewed these and other key questions:

  • What is the likely impact of the LaRue decision on plan sponsors?
  • What actions or inactions potentially violate a fiduciary's duty to carefully manage plans?
  • What are some best practices for plan sponsors to avoid litigation for plan mismanagement or reduce liability exposure?

Faculty

Thomas Gies
Thomas Gies
Partner
Crowell & Moring

He is a founding member of the firm's Labor and Employment Law Practice Group. He has over 30 years experience in...  |  Read More

Robert P. Davis
Robert P. Davis
Partner
Mayer Brown

He represents plans, fiduciaries and plan sponsors in ERISA investigations and litigation. He also provides ERISA...  |  Read More

Karen L. Handorf
Karen L. Handorf
Partner
Cohen Milstein Sellers & Toll

She is a member of the firm's Employee Benefits Practice Group. She previously worked for the Office of the...  |  Read More