Business Groups Note Upsurge Of ERISA Lawsuits In SCOTUS Brief

ERISA

In October 2021, the U.S. Chamber of Commerce asked the Supreme Court not to overturn the Seventh Circuit’s dismissal of a lawsuit initially filed by Northwestern University workers. The Chamber said that reviving the lawsuit would increase the recent upsurge of lawsuits under ERISA. In April Hughes v. Northwestern University, Northwestern University retirement plan participants filed a class-action lawsuit charging the school with mismanaging their retirement savings.

The U.S. Chamber of Commerce, American Council of Life Insurers, American Property Casualty Insurance Association, Business Roundtable, ERISA Industry Committee, Professional Liability Underwriting Society, and Securities Industry and Financial Markets Association joined in the amicus curiae brief in the Hughes case.

In the brief, the groups claimed that ERISA suits have substantially increased in the last two decades and that the Supreme Court should only allow class actions under the Employee Retirement Income Security Act (ERISA) to proceed to the discovery phase if they contain credible allegations. "What began as a trickle in the early 2000s (mostly lawsuits against large public companies) has in recent years become a tidal wave," the chamber said.

The brief argued that a significant number of ERISA class actions do not consider the decision-making process equally with the results of the process. Further, it claimed that these class participants believe that courts should conclude that a plan administrator’s decisions were imprudent and subject to liability if the results of the investment were unsatisfactory.

"This court has already established a clear roadmap for evaluating pleading-by-inference complaints: circumstantial allegations must be carefully scrutinized in context, and any inferences of wrongdoing must be plausible in light of that context, not merely conceivable. ERISA cases should be treated no differently." the brief stated.

The seven groups cited two Supreme Court cases, Bell Atlantic Corp. v. Twombly, and Ashcroft v. Iqbal, in their brief, and argued that the pleading standard set forth by these cases is the appropriate standard in ERISA class actions when there is an allegation of a breach of fiduciary duty associated with a retirement plan. The groups stressed that ignoring these standards would cause the law to deem fiduciaries to be in violation of ERISA for any decision they make.

The lawsuit filed by Northwestern workers against the university was filed in 2016 and dismissed by an Illinois District Court in 2018. The dismissal was upheld by the Seventh Circuit in March 2020 based on the Circuit’s agreement with the lower court that the university did not violate ERISA by offering the poorly performing funds since it also offered alternative funds that performed better to workers who were free to invest in such funds.

California employees have the legal right to compensation if their employers violate federal and state employment laws, including tip and gratuity laws. The experienced and knowledgeable employment law attorneys at Moss Bollinger will help ensure that your rights as a California worker are protected if your employer has engaged in any illegal conduct under federal or California law. Contact Moss Bollinger today at 866-942-7974 or reach us online.

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