18th Annual Workplace Class Action Report - 2022 Edition

28 Annual Workplace Class Action Litigation Report: 2022 Edition win would make it even harder for plaintiffs to plead viable fee and investment litigation claims, while a plaintiff win might open the courthouse door even wider. In contrast to four Supreme Court rulings in 2020 in this space, 2021 saw none. Lower federal courts, however, have continued to grapple with the Supreme Court’s recent rulings, most notably in the area of standing. In Thole v. US Bank, N.A. , 140 S. Ct. 1615 (2020), the Supreme Court largely eviscerated the ability of a plaintiff to challenge defined benefit plan investments. Following the ruling in Thole , lower federal courts have evaluated whether the decision has any application in the context of defined contribution plans and have applied the decision in challenges to medical plan administration where the participants face no risk of out-of-pocket expense. Finally, arbitration was a continued subject of ERISA litigation, with the Seventh Circuit issuing a significant decision in Smith v. Board of Directors of Triad Manufacturing, Inc. , No. 20-2708, 2021 WL 4129456 (7th Cir. Sept. 10, 2021). In Smith , the Seventh Circuit refused to enforce a plan’s arbitration provision that would have deprived the plaintiff of the ability to pursue plan-wide relief. If adopted by other circuits, the ruling has the potential to foreclose employers’ attempts to avoid arbitration of plan-wide claims. What can we expect in 2022 in the ERISA litigation arena? First, as noted, the Supreme Court may clarify pleading standards for ERISA class actions, with the potential to shut down a significant number of cases or to further embolden plaintiffs. Either way, 2022 will be sure to bring more attention to the reasonableness of 401(k) and 403(b) plan fees and expenses, plan investments, and financial disclosures. Second, employers can expect to see continued litigation about the effectiveness of arbitration agreements in ERISA plans and the ability of employers to effectively preclude not just class actions, but actions seeking other forms of plan-wide relief. Depending on whether the Seventh Circuit’s view prevails, employers will have to evaluate whether the potential class-stopping benefits of arbitration are worth the risks associated with arbitral decisions affording class-wide remedies. Third, companies can expect to see more litigation about the scope of ERISA preemption. The Supreme Court is considering a petition for review of Howard Jarvis Taxpayers Association v. California Secure Choice Retirement Savings Program , 2021 WL 1805758 (9th Cir. May 6, 2021), in which the plaintiffs made an ERISA preemption challenge to California’s mandate that employers facilitate payroll deduction contribution to a retirement savings program for employees not covered by an employer’s retirement plan. Similar litigation has been filed in Oregon challenging the states’ creation of a mandatory long-term care program funded by payroll deductions. These cases are likely to decide the extent to which states (and local governments) can skirt ERISA preemption in creating mandatory benefit regimes. Finally, employers may see some summary judgment or trial rulings regarding the ability of participants to challenge the mortality assumptions embedded into retirement plans. A number of cases have been filed on this question, but to date no court has reached the merits in those lawsuits. Depending on the outcome of this first wave of cases, corporate America may see significant future litigation in this area. Employment Discrimination Class Action Litigation – In terms of private plaintiff employment discrimination class action litigation, employers can expect this area to remain an area of focus by the private plaintiffs’ bar in 2022. Publicity from the Black Lives Matter movement likely will continue to drive litigation, as well as settlements on this front as companies strive to avoid publicity associated with allegations of discrimination and to avoid incurring the ire of social media.