<nobr>May 12, 2008</nobr>

ERIC Urges Seventh Circuit to Uphold District Court Dismissal of 401(k) Excessive Fee Case

ERIC on May 9 filed with the U.S. Court of Appeals for the Seventh Circuit an amicus brief urging the court to uphold the dismissal of a suit claiming that a plan sponsor and its service providers violated their fiduciary duties under ERISA by subjecting 401(k) plan participants to excessive fees and expenses (Hecker et al. v. Deere & Co.). The National Association of Manufacturers and the American Benefits Council joined ERIC on the brief.

The brief urges the appeals court to consider the standards established by the Supreme Court in Bell Atlantic Corp. v. Twombly, which requires a pleading to allege facts giving rise to a plausible entitlement to relief rather than mere boilerplate. The brief points out how this case is one of fifteen lawsuits filed by a single law firm making virtually identical allegations of widespread fiduciary breaches in the administration of defined contribution plans, and how the Twombly pleading standard should be applied to ERISA fiduciary breach claims, especially to boilerplate lawsuits.

The brief also discusses how the plaintiffs complain that the defendants violated ERISA by failing to disclose revenue sharing, yet neither ERISA's specific disclosure requirements, ERISA's general standards of fiduciary responsibility, nor the securities laws governing mutual funds require fiduciaries or fund managers to disclose to participants such revenue sharing payments. Moreover, the brief argues that congressional and regulatory proposals confirm that current law does not require disclosure of the amounts paid to service providers pursuant to revenue sharing arrangements.

Websites:

ERIC Brief

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