18th Annual Workplace Class Action Report - 2022 Edition

328 Annual Workplace Class Action Litigation Report: 2022 Edition filed a motion for summary judgment, and the Court granted the motion. The DOL alleged that Puccio authorized and executed withdrawals from several different accounts for millions of dollars. Following Puccio’s death, Defendant "never resigned her position as Trustee to the Plan" and "no successor Trustee was appointed to replace him", thereby leaving Defendant as the sole trustee. Id . at *5. Defendant thereafter authorized and executed wire transfers of funds totaling $1,934,273.61 from the Plan’s investment account, which were "used to pay for expenses unrelated to the Plan and its administration." Id . at *6. None of the withdrawn funds were allocated to Plan participants as payment for pension benefits. The Court found that the DOL presented evidence that Defendant was a fiduciary because she was granted discretionary authority as a named trustee under the Plan. Id . at *11. The Court determined that the DOL also presented evidence that Defendant was a fiduciary of the Plan because she exercised discretionary authority over the management of the Plan by withdrawing assets. Id . at *12. Defendant did not discharge her duties in the interest of the participants because she diverted funds from the Plan for her own personal use, leaving only a negligible balance in the Plan that was incapable of paying the required pension benefits to Plan participants. The Court ruled that the DOL presented unrebutted evidence that Defendant did not ensure that the Plan had the funds to be used on behalf of participants and instead depleted the funds in the Plan so that it lacked financial integrity and the obligations to participants could not be satisfied. The Court held that Defendant failed to offer any evidence to dispute the DOL’s evidence that the Plan’s account balance was depleted from $2,146,836.70 to $5,184.39, an amount insufficient to satisfy Plan participants’ entitlement to $288,385.36 and $196,036.12. Id . at *14. The Court opined that the DOL also submitted evidence that Defendant breached her fiduciary duty under § 406(b)(1) of the ERISA by dealing with the assets of the plan in her own interest. Accordingly, the Court ordered Defendant to pay $484,321.48 to a trust fund for the Plan participants’ benefit, and enjoined Defendant from serving as a fiduciary for any ERISA-covered employee benefit plan. Id . at *16-17. For these reasons, the Court granted the DOL’s motion for summary judgement. U.S. Department Of Labor v. Whitney, Case No. 20-CV-2624 (D. Kan. June 3, 2021). The U.S. Department of Labor filed an ERISA enforcement action for breach of fiduciary duties with respect to management of employee benefits plans against Defendants Medova Healthcare Financial Group and the Plan’s fiduciaries. As an interim measure, the Court appointed Receivership Management to serve as an independent fiduciary to administer the Plans. The Court further determined that in order to avoid unnecessary drain on the plans resulting in litigation against Defendants, and in order to protect the participants and beneficiaries from litigation and collection activities relating to unpaid claims, it was necessary to stay and enjoin all other actions against Defendants pending the final disposition of the action. The Court reasoned that it had inherent authority to issue the stay and enjoin actions, including litigation seeking to collect assets of Plans and collection activities by healthcare providers under the All Writs Act. The Court also noted that the Anti-Injunction Act did not bar it from issuing an injunction as to pending state court proceedings because it was necessary to aid in the Court’s jurisdiction. For these reasons, the Court issued a stay as to any other related pending actions. (ix) ERISA 401(k) Class Actions Albert, et al. v. Oshkosh Corp., 2021 U.S. Dist. LEXIS 166750 (E.D. Wis. Sept. 2, 2021). Plaintiff, a participant in the Oshkosh Corp. and Affiliates Tax Deferred Investment Plan (“the Plan”), filed a class action alleging that Defendants breached their fiduciary duties in managing the Plan in violation of the ERISA. Defendants filed a motion to dismiss pursuant to Rule 12(b)(6), and the Court granted the motion. Plaintiff asserted that the Plan’s fees were excessive when compared with other comparable 401(k) Plans, which led to lower net returns than those returns that participants received in comparable 401(k) Plans. Plaintiff alleged that Defendants: (i) authorized the Plan to pay unreasonably high fees for recordkeeping and administration; (ii) failed to objectively, reasonably, and adequately review the Plan’s investment portfolio with due care to ensure that each investment option was prudent, in terms of cost; and (iii) unreasonably maintained investment advisors and consultants for the Plan despite the known availability of similar service providers with lower costs and/or better performance histories. Id . at *5. As to Plaintiff’s recordkeeping claim, the Court found that Plaintiff failed to identify an alternative record-keeper that would have accepted such a low fee or any fee lower than what was paid to the record-keepers, Fidelity and TIAA, and have failed to explain how a hypothetical lower-cost record- keeper would perform at the level necessary to serve the best interests of the plans’ participants. Id . at *17. Further, the Court noted that Plaintiff did not allege any facts as to what would constitute a reasonable fee or what made it unreasonable. Without plausible allegations about Defendants’ process, the Court ruled that it