The ERISA Litigation Newsletter (January 2011)
This month's article takes a look back at some highlights from 2010 and offers some predictions about what's in store for 2011. As the authors discuss below, ERISA cases continue to get the attention of the U.S. Supreme Court. 2010 was a year in which we saw several significant rulings in the area of employer stock fund litigation, and we expect to see more decisions in this area throughout 2011. The coming year also may be the year that significant decisions are issued with respect to the availability and scope of discovery in benefit cases, and the burdens of proof in plan communication claims.
As always, be sure to review the section on Rulings, Filings and Settlements of Interest.
Year-End Reflections for ERISA Plan Sponsors and Fiduciaries: Highlights from 2010 and Thoughts on What's in Store for 20111
By Myron D. Rumeld and Russell L. Hirschhorn
With the year-end upon us, this is as good a time as any to take stock of recent decisions and trends in ERISA litigation and look into our crystal balls to see what it may tell us about what's in store for the year to come. This past year, there were several significant rulings that could conceivably represent the start of a trend toward limiting the risk of liability exposure in some of the principal areas of ERISA litigation, most notably stock-drop litigation. But whether this trend will take hold may depend on the outcome of some of the cases still pending. In other areas, including for example with respect to the availability and scope of discovery in benefit cases, and the burdens of proof in plan communication claims, recent cases have served merely to tee up the issue for future courts to resolve. As a result, while digesting the impact of this past year's decisions, we already wait in anticipation of those rulings that the coming year will bring.
Highlights of 2010
Of the many decisions that we have reviewed in the past year,2 there are a few that are particularly noteworthy because of their potential impact on future litigation trends.
Supreme Court Rulings. ERISA cases continued to occupy the attention of the U.S. Supreme Court, which issued two significant rulings this past year. In Hardt v. Reliance Standard Life Ins. Co., 130 S. Ct. 2149 (2010), the Court resolved a split among the circuits and ruled that a party need not be a "prevailing party" in order to obtain an attorneys' fee award in an ERISA action. Instead, the Court determined that only "some degree of success" is necessary. Hardt will clearly change the law in those circuits that had imposed a prevailing party requirement on parties seeking a fee award in ERISA cases. But whether the decision will substantially broaden the opportunity to recover attorneys' fees will depend on how the lower courts apply the newly enunciated "some success on the merits" standard, and the extent to which they continue to incorporate the "five factor" test that previously had been utilized to evaluate attorneys' fee motions.
In the other Supreme Court decision, Conkright v. Frommert, 130 S. Ct. 1640 (2010), the Court held that the plan administrator should be accorded the discretion to determine the remedy for its statutory failure to articulate clearly how benefits would be calculated for returning employees. In so ruling, the Court expressed a strong disinclination to unduly penalize plans for administrative errors, saying: "People make mistakes. Even administrators of ERISA plans." We will not be surprised to find this statement applied to a broad range of situations in which plaintiffs seek substantial recoveries of benefits not intended by the plan designers, based on clerical errors. This is already evident from the Seventh Circuit's decision in Young v. Verizon, 615 F.3d 808 (7th Cir. 2010), which, quoting this passage, applied the...
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