Sixth Circuit Permits Individuals to Sue for "Damages" for Fiduciary Breach

Posted on February 1, 2008 by Kathy Krisher

The Sixth Circuit recently decided to allow individual plan participants to sue for damages on their own behalf for breaches of fiduciary duty under ERISA. Until now, ERISA plaintiffs could seek damages for breaches of fiduciary duty only on behalf of the plan – not in their individual capacity as plan participants.

In Tullis v. UMB Bank, No. 06-4632/4633 (6th Cir. January 28, 2008), plaintiffs, two doctors from Toledo, maintained pension funds through the Toledo Clinic Employees’ 401(k) Profit Sharing Plan, an ERISA-governed “defined contribution” pension plan. Plaintiffs chose William Davis of Continental Capital Corporation (“Capital”) as their investment advisor. In October 1999 the U.S. Securities and Exchange Commission entered a Temporary Restraining Order against Capital because two of its brokers were engaged in fraudulent activities. Plaintiffs argued that UMB Bank, which served as trustee of the Plan, knew of the fraud and failed to inform them. In 2001, UMB filed suit for fraudulent activity against Davis and a subsidiary of Capital on behalf of the Plan. Plaintiffs alleged that defendant again failed to inform them of Davis’ and Capital’s fraudulent activities. Continue Reading…

Building a Model for a Defensible Reduction-in-Force

Posted on February 1, 2008 by Mike Underwood

Economic challenges in the current economy may result in business strategies that include reductions-in-force. It is very common after a reduction-in-force for legal claims to be pursued by terminated employees, sometimes as multiple-plaintiff lawsuits. Possible claims include allegations that the reason for selection of a person to be terminated was illegal (i.e., age, race, sex, medical condition, use of FMLA, whistleblower, etc.). A successful defense requires showing not just that there were legitimate reasons to reduce the workforce but also the specific legitimate reason that the complaining employee was selected for termination. Not having a carefully planned and documented approach to the decision-making can result in time-consuming and expensive litigation. Also, a well-planned and documented approach to the reduction-in-force will promote reasoned, careful, and sound business decisions, which support the Company’s overall objective for reducing costs and improving efficiency.

Here is a brief outline of steps that should be included in any plan for implementation of a reduction-in-force: Continue Reading…

President Bush Expands Family and Medical Leave for Families of Servicemembers

Posted on January 30, 2008 by Kathy Krisher

On January 28, 2008, President Bush signed into law the National Defense Authorization Act, which amends and expands the Family Medical Leave Act (FMLA) to provide leave rights to family members of those in the Armed Forces. The new amendment entitles employees to 12 weeks of leave due to any “qualifying exigency” arising out of the fact that an employee’s family member is on active duty or has been notified of an impending call to active duty in the Armed Forces. What constitutes a “qualifying exigency” will be determined when the Department of Labor (DOL) issues its implementing regulations.

The Act also entitles immediate family members to 26 weeks of leave during a 12 month period to care for covered servicemembers. The term “covered servicemember” means a member of the Armed Forces, including a member of the National Guard or Reserves, who is undergoing medical treatment, recuperation, or therapy, is otherwise in outpatient status, or is otherwise on the temporary disability retired list, for a serious injury or illness. Continue Reading…

Ninth Circuit Panel Again Upholds Granting of Class Action Status to Wal-Mart Female Workers; Wal-Mart Again Petitions For En Banc Review

Posted on January 28, 2008 by Caroline Gentry

In an unusual procedural move, a Ninth Circuit panel issued a revised opinion and rejected—for the second time—Wal-Mart’s request to overrule a lower court decision granting class action status to a lawsuit by six women representing a class of more than 1.5 million female workers. Dukes v. Wal-Mart, Inc., Case Nos. 04-16688 and 04-16720, 2007 U.S. App. LEXIS 28551 (9th Cir. Dec. 11, 2007). The class includes all female workers—from part-time, entry-level hourly employees to full-time, salaried managers—at Wal-Mart stores from December 1998 to the present “who have been or may be subjected to Wal-Mart’s challenged pay and management track promotions, policies and practices.” The lawsuit alleges that female employees were paid less than men and given fewer promotions. If the case proceeds, it will be the largest sex discrimination case in U.S. history. The revised opinion addresses some of the criticisms directed toward the earlier opinion and changes some of the reasoning, though not the result, of the court’s earlier decision. Continue Reading…