Third Circuit considers ERISA s. 404(c) as fiduciary defense where plan invested in Executive Life GICs

Article Abstract:

The US Court of Appeals for the Third Circuit's decision in Meinhardt v. Unisys Corp. reversed the trial court's summary judgment for the employer and considered the applicability of ERISA section 404(c) for the first time. The summary judgment was overturned regarding a number of plan fiduciary issues because of inadequate demonstrations of fact by Unisys regarding investments in Executive Life Insurance Co. guaranteed investment contracts. The section 404(c) fiduciary duty exception for plans that give participants investment control was interpreted to exempt employers from ERISA fiduciary provisions when the plan is amended to provide for section 404(c) exemption.

Guaranteed investment contracts

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ERISA does not preempt retirees' state fraud and misrepresentation claims against employer for incomplete advice on taxation of plan distributions

Article Abstract:

The US Court of Appeals for the Ninth Circuit ruled in Farr v. U.S. West, Inc. that state claims of fraud and misrepresentation in tax advice given by an employer were not preempted by the Employee Retirement Income Security Act. The Court also agreed with the lower court that fiduciary claims would not stand because breach must harm the plan as a whole. In finding no preemption, the Court noted that the alleged misrepresentations did not relate to benefits promised or other terms of the plan, but to tax implications wholly outside the plan.

Fraud

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Claims against ERISA plan service providers

Article Abstract:

Federal preemption of state law claims under the Employee Retirement Income Security Act (ERISA) can make bringing claims against nonfiduciary plan service providers more difficult for plan administrators or participants. Nonfiduciaries can avoid federal claims by arguing that they are not fiduciaries and can avoid state claims for malpractice or fraud by citing ERISA preemption. The Supreme Court's Mertens v. Hewitt Associates ruling should not be read, however, to preclude all state claims that relate to qualified benefit plans.

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