Punitive damages aren't allowed under the Employee Retirement Income Security Act, so whoever came up with "401(k) Fee Lawsuits: The Next Tobacco?" as the title for a workshop at the 2015 NAPA Summit in mid-March was aiming for titillation.
On the other hand, the 10 largest class-action settlements in claims brought under ERISA topped $1.3 billion in 2014, almost 10 times the sum of the biggest settlements from the previous year.
In two of the biggest, a $480 million settlement was reached in August in a class-action filed by retired United Auto Workers member, while a $415 million settlement was announced the following month in a case against ING Life Insurance & Annuity Co.
This year may not match 2014, but it won't be without at least a few more headline-generating settlements. We've already seen Lockheed Martin Corp.'s agreement last month to pay $62 million to end a lawsuit over claims it shortchanged 120,000 workers and retirees who participated in its pension plans.
The plaintiffs in that case accused the defense contractor of subjecting them to excessive management fees and leaving those who invested in the company stock fund with returns that were worse than if they'd bought shares on the open market.
Still, I agree when ERISA lawyer Bradford Campbell suggests that the workshop title is "perhaps a bit hyperbolic." On the other hand, that doesn't mean there haven't been and don't continue to be some pretty significant ERISA cases moving through court dockets.
If you can afford him, Campbell's probably one of the better attorneys to know if you've been hit with ERISA litigation or, better yet, wanting to do all you can to avoid becoming the target of – as NAPA puts it – "a growing and better informed plaintiffs' bar."
A member of the K Street staff of Drinker Biddle & Reath, Campbell headed the Employee Benefits Security Administration during the last couple of years of the George W. Bush administration. From where he now stands, we're in an ERISA litigation lull at the moment, after a wave of cases, many of them brought by St. Louis homeboy Jerry Schlichter.
Looking ahead, it may be that the Tibble case before the U.S. Supreme Court serves as a tipping point, potentially setting off a round of lawsuits based not on excessive fee claims but on whether fiduciaries failed in their duty to monitor investment options in a plan menu.
Whatever happens, this lull won't last long, Campbell thinks. "There's a retrenching now … and the plaintiff's bar is deciding what next to do. I do think it's (the next wave is) coming. There's enough money there to keep them interested."
