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ERISA Litigation - Home

2017.01.10  Top Hat Forfeiture Enforced for Executive's Refusal to Sign Non-Compete (WD Penn).  As a general matter, employers win when they seek to enforce the unambiguous terms -- and forfeiture provisions - of their top hat and other executive-only ERISA plans.  Good faith administration by the employer is ordinarily sufficient.  Case in point: a Penn. district court upheld forfeiture of top hat benefits where an executive refused to sign a non-competition agreement that the underlying plan required as a condition for benefits.  The court's decisions are worth review because they dig into . . . continued at Vesting and Forfeiture


2016.08.25  ESOP Participants Avoid Dismissal of Claims vs Independent Trustee. In Misty v. GreatBanc, the 7th Circuit found viable ERISA claims by ESOP participants, with this paragraph giving a good sense of the litigation:

  • The ink was hardly dry on the acquisition papers when the value of Personal‐Touch’s stock began to tank. Twenty‐ two days later, the complaint asserts and GreatBanc accepts for present purposes, the Plan’s stock was estimated to be worth some $13 million (almost 22%) less than what the Plan paid for it. By late 2011, the estimated value of the stock had declined by almost 50%, and by December 31, 2013, the Plan’s shares were worth only around $26.6 million. The selling shareholders, however, were relatively untouched by these developments. Rather than holding a rapidly depreciating asset in the form of the stock, they had become creditors of the Plan (and thus indirectly the employees) and the recipients of a secure flow of principal and interest payments on the original $60 million loan. The plaintiffs felt that they had drawn the short straw: they sued GreatBanc, alleging that it violated its fiduciary responsibilities under ERISA by approving a purchase of stock at too high a price and by facilitating two prohibited transactions: (1) the Plan’s purchase of stock from the company, and (2) the loan to the Plan that funded the purchase. See 29 U.S.C. § 1106(a) and (b).

2016.07.21  ESOP Investor Held Liable as Functional Fiduciary.  In Chesemore c. Fenkell, the Seventh Circuit described the fiduciary breach as involving "a complicated leveraged buyout to off-load the company onto Tranche's employees" [at the desired price for which the investor's sale efforts had come up "empty-handed"].  As an equitable ERISA remedy, the court ordered the investor, who was owner and president of the parent company, to indemnify the ESOP trustees because they were mere musicians, and "Fenkell was the unquestioned conductor."


2016.06.16  Pension Plan Participant Held a Fiduciary re Mistaken Payment. In Alcatel-Lucent v. Borlabi, a New Jersey District Court entered a default judgement in favor of a pension plan, reasoning that "Defendant became a plan fiduciary because she retained control over plan assets that she was not entitled to.  The [pension plan] mistakenly transferred $233,691.92 of its assets to Defendant's personal money market account, and she refused to return the assets after the [pension plan' informed her of the erroneous transfer and requested repayment of the funds.

2016.06.16 Document Retention Duty of Employers under ERISA. See Estate of Barton (9th Cir.).