At the end of last year, the DOL filed amicus (friend of the court) briefs in two ERISA breach of fiduciary duty cases. In both instances, the DOL supported the defendant’s position.
In one case, Pizarro v. Home Depot, the DOL supported a more stringent pleading standard, requiring plaintiffs to not only show a breach of fiduciary duty and loss to the plan, but also to show the loss was caused by the breach.
The second, Parker-Hannifin Corp. v. Johnson, supported the defendant’s position that plaintiffs had not selected a ‘meaningful benchmark’ in showing that the plan's investments had underperformed. See our blog from December for more information.
Since our last blog on this topic, the Pizarro case has likely come to an end. Both parties requested a dismissal, just days before the Supreme Court was set to decide whether to hear the case. The DOL issued a statement welcoming this decision and pointing to the amicus brief as a reason the plaintiffs chose not to pursue Supreme Court review. .
Daniel Aranowitz, head of the EBSA, has stressed the DOL’s desire to end ‘regulation by litigation’, stating “this result reflects a victory for common sense, sound legal doctrine, and the millions of American workers who rely on employer-sponsored retirement plans.”
In a similar case, Vellali v. Yale University, the DOL has asked the court to disregard a 2023 pro-plaintiff amicus brief filed by the DOL during the previous administration. In its request, the DOL pointed to the amicus brief filed in the Pizarro case as the more appropriate pleading standard that should be applied. The 2023 brief argued that Yale, not the plaintiffs, should have to prove that a prudent fiduciary would have made the same investment decisions.
The DOL has also filed an amicus brief in a case related to an employer’s use of forfeitures. Several of these cookie-cutter cases have been filed, asserting that employers should use forfeitures to reduce plan expenses rather than reducing employer contributions. These cases continue to be filed, even though it is a permitted practice that has been allowed for decades.
In Wright v. JP Morgan, the DOL sides with JP Morgan, noting that the plan expressly allows forfeitures to be used to reduce employer contributions. This position supports the argument that an employer’s decision related to the use of forfeitures is a settlor decision rather than a fiduciary decision. The DOL filed a similar amicus brief in July in another forfeiture case, you can read our blog post on that amicus brief here.
Multnomah Group is a registered investment adviser registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice.