>The latest US 8 th Circuit Court of Appeals ruling in a legal saga, stretching back to June 1996, asserted that the 3M employees had not convinced the appeals court that it should overturn its March 2002 ruling in favor of the company because of what the employees charged were 3M’s “misrepresentations” about the plan’s funding status.
>Writing for the appeals court, Circuit Judge John Gibson said no “exceptional circumstances” existed that would require the court to throw out its earlier decision, which had agreed with a lower court holding by US District Judge John Tunheim of the US District Court for the District of Minnesota.
>According to the court, the 3M employees first filed their lawsuit in June 1996, alleging that the giantMinnesota company breached its fiduciary duties by investing $20 million of its pension plan’s assets in Granite Corp., a hedge fund that invested primarily in collateralized mortgage obligations.
>Granite declared bankruptcy in 1994 and, as a result, the 3M plan lost its entire investment. However, around this time 3M made voluntary contributions to the plan that exceeded the Employee Retirement Income Security Act’s (ERISA) minimum funding requirements by $683 million, causing an asset surplus, according to the court.
>AMinnesota federal judge threw out the initial employee lawsuits, finding that the employees had no ERISA remedy because the Granite investment had not caused “losses” to the plan. The 8 th Circuit agreed in March 2002. At that point, according to the court history, the employees returned to the lower court with a request to throw out the earlier rulings because of 3M’s alleged misrepresentation about the plan’s funding status.
>Specifically, the employees charged that two weeks before the first 8 th Circuit ruling, 3M began to publicly disclose in its US Securities and Exchange Commission (SEC) 10-K filings that the plan had been underfunded since at least September 30, 2001. The employees also alleged that 3M made misrepresentations to the court as to the plan’s funding status. Tunheim denied the request and the employees returned to the 8 th Circuit for the latest round of appeals.
>In the most recent ruling, the appeals court said the employees were unable to show that 3M engaged in fraud or misrepresentation that prevented the employees from fully and fairly presenting their case.
The latest 8 th Circuit opinion in Harley v. Zoesch, 8th Cir., No. 03-3654, 6/28/05, is here .
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