ERISA Lawyers Likely to Seek More Fiduciary Breach Clarification

Those were some of the predictions made Tuesday during a PLANSPONSOR “Plugged In” Webinar about the High Court’s recent landmark LaRue v. DeWolff decision regarding individuals’ rights under the Employee Retirement Income Security Act (ERISA) to sue over wrongdoing allegations (See Justices OK Individual ERISA Suits in Landmark Ruling).

Washington-based ERISA attorney Mike Prame of the Groom Law Group said lawyers will also try to get clarity on exactly what constitutes “equitable relief” under 502(a)(3) as well as the effect on potential litigation of a participant decision to take a plan distribution.

In LaRue , justices declared that the continuing transition from defined benefit pensions to defined contribution programs made it appropriate to lift the prohibition against individual recoveries under 502(a)(2) imposed in a 1985 case.

Prame asserted that the flood of ERISA lawsuits many predicted after the ruling have yet to materialize and predicted some ERISA defense lawyers would try to argue that a participant's claim is actually a claim for benefits and not for other forms of relief. Under that scenario, participants might have to first go through an employer's administrative remedies before turning to the courts, the lawyers said.

The lawyers reminded Webinar participants that Chief Justice John Roberts had raised the issue of whether participants' proper legal theory should be to recoup lost benefits and encouraged lower courts to flesh out that issue further.

Veteran Los Angeles-based ERISA lawyer Fred Reish, of the   Reish Luftman Reicher & Cohen firm, reminded Webinar attendees that the LaRue case was decided on a purely procedural basis and that the it has yet to be tried on its merits. "There's no finding that the employer did anything wrong," Reish said.

The Supreme Court's LaRue  decision overturned a 4 ^th  Circuit decision and sent it back for additional proceedings. A recent ruling by another federal appellate court disagreed with the 4 ^th Circuit's holding (See Appellate Court Splits with Sister Court on 401(k) Breach Remedies ).

The ruling in LaRue v. DeWolff, 06-856, is here .

A recording of the Plugged In webcast is online  HERE

A copy of the slides that accompanied the Plugged in web cast is  HERE

You can check out the recordings of previous 'Plugged In" Web casts at https://plansponsor.webex.com