While that assessment probably won’t shock our readers, a new study on the subject provides an interesting framework for plan sponsors worried that they might inadvertently find themselves in a litigant’s cross hairs.
Based on over 2,400 ERISA cases filed between January 1, 2005, and August 31, 2008, “ERISA Litigation Study – April 15, 2009” is a statistical overview of pension lawsuits by category, court, and case disposition, compiled by Pension Governance, Incorporated, and its PensionLitigationData.com partner, The Michel-Shaked Group.
According to the study:
- Nearly every case in the PensionLitigationData.com database is categorized as including an allegation of fiduciary breach. Other frequently cited issues include adherence to plan documents, the prudent man standard, remedies, and interference with benefits.
- ERISA litigation volume was highest for the 2 nd (New York, Connecticut, Vermont) – where nearly one-in-five cases were tracked, 3rd (Pennsylvania, Delaware, New Jersey), and 6th (Kentucky, Tennessee, Michigan, Ohio) federal circuit courts. Activity was lowest in the 10 th (Utah, Colorado, Nebraska, Oklahoma) and 11 th circuits (Alabama, Georgia, Florida), where just 4% (each) of the cases were brought.
- A majority of ERISA-related lawsuits settled out of court. More than one in five (22%) never got past the motion to dismiss, and another 28% were tossed at the point of a motion for summary judgment. Just 3% of all ERISA cases are disposed of at trial, according to the report.
- Numerous cases (38%) examined reflect an ERISA Section 502 claim. (ERISA Section 502 relates to civil enforcements.) Claims arising in the 2 nd and 6 th Circuits accounted for 33% of all Section 502 claims.
- Some legal venues favored plaintiffs in terms of the reported outcome. In fact, the study’s authors note that the 11 th circuit “overwhelmingly favored plaintiffs” (86% of the time) for the examined data set. Plaintiffs prevailed only 39% of the time in the 6 th circuit, and just 40% in the 7 th .
PensionLitigationData.com ("PLD") is a subscription searchable database of pension litigation events (see Pension Litigation Database Launched ). Focused on finance and investment issues, PLD includes cases posted since January 1, 2005. New cases are added on an ongoing basis.
The report is online at http://www.pensionriskmatters.com/uploads/file/PLD%20ERISA%20Litigation%20Study%20041509.pdf
PensionLitigationData.com provides litigators, regulators, policy-makers, plan sponsors and their financial advisors and consultants with a user-friendly interface and the wherewithal to gather critical intelligence about litigation activity. Interested parties can email Support@PensionLitigationData.com for more information about customized research projects.
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