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An Interactive Seminar Presenting Views
From Both Sides of the Bar on Current
Developments In ERISA Litigation
April 10, 2014
William D. Frumkin
Frumkin & Hunter LLP
914.468.6096
wfrumkin@frumkinhunter.com
Russell L. Hirschhorn
Proskauer Rose LLP
212.969.3286
rhirschhorn@proskauer.com
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TODAY’S AGENDA
• Overview of Relevant Statutory Provisions
• Supreme Court Update
­ DOMA
­ Contraceptive Mandate Cases
­ Subrogation Claims
­ Employer Stock Fund Litigation
­ Statute of Limitations
• ACA Litigation
• Best Practices for Benefit Claims Administration
• Arbitrability of ERISA Claims

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ERISA’s Civil Enforcement Scheme
• Claims for Benefits
• Claims for Breach of Fiduciary Duty
• Claims of Discrimination and Interference
• Claims for Failure to Provide Information
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Section 502(a)(1)(B)
• Section 502(a)(1)(B) authorizes a participant or beneficiary:
­ To recover benefits due under the terms of the plan
­ To enforce rights under the terms of the plan
­ To clarify rights to future benefits under the terms of the plan
• Who can sue and be sued?
• Limitations period generally governed by state law
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Section 502(a)(2)
• Sections 502(a)(2) and 409 authorize the Secretary of
Labor, participant, beneficiary or fiduciary, to bring an action
to redress violations of ERISA’s fiduciary responsibility
provisions.
­ Fiduciaries are personally liable
­ Claims may be brought only on behalf of the plan as a whole
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Section 502(a)(3)
• Section 502(a)(3) authorizes a participant, beneficiary, or
fiduciary to bring a civil action:
­ To obtain injunctive relief
­ To obtain other “appropriate equitable relief”
­ Claims may be brought on behalf of an individual
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• Statute of Limitations, ERISA Section 413, 29 U.S.C. 1113
­ Earlier of 3 years from actual knowledge, or 6 years from the
last act
­ Narrow construction of what constitutes actual knowledge
­ Actual knowledge requires actual knowledge of the essential facts
of the transaction or conduct sufficient to constitute a violation
­ Exception for fraud or concealment -- six years after the date of
discovery of such breach or violation
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Claims of Discrimination & Retaliation
• Prohibited Conduct
­ Prohibits discrimination or retaliation “against a participant or
beneficiary for exercising any right to which he is entitled”
­ Prohibits “interference with the attainment of any right to which
the participant may become entitled”
• Statute of limitations
­ Section 510 claims are most analogous to ‘state employment
discrimination or wrongful termination claims’”
­ Claim accrues when a decision to terminate (or to take other
adverse action) in violation of the statute is made and
communicated to the participant

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Claims For Failure To Provide Information
• ERISA Section 104(b)(4)
­ A plan administrator shall, upon written request of any
participant or beneficiary, furnish a copy of the:
­ latest updated summary plan description
­ latest annual report
­ any terminal report
­ bargaining agreement
­ trust agreement, contract, or other instruments under
which the plan is established or operated
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• ERISA Sections 502(a)(1)(A) and 502(c)
­Allow for discretionary penalties (up to $110 per day)
in the event an administrator fails or refuses to
comply with a written request for information that the
plan is required to furnish within 30 days after such
request
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Defense of Marriage Act

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United States v. Windsor,
133 S. Ct. 2675 (2013)
• Background
­ In 2007 Edith Windsor and Thea Spyer lawfully married in
Ontario, Canada and then returned to their NYC home.
­ Spyer died in 2009, bequeathing her entire estate to Windsor.
­ Windsor claimed a federal estate tax exemption for surviving
spouses.
­ DOMA barred Windsor from the definition of spouse as used in
Federal Tax Statutes.
­ Under then prevailing NYS law, their marriage was deemed
lawful.
­ While the litigation was pending, the USAG served notice that
the US would no longer defend DOMA.
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United States v. Windsor,
133 S. Ct. 2675 (2013) (cont’d)
• USSC Decision
­ NYS first recognized same-sex marriages performed elsewhere;
the state then amended its laws to recognize same-sex marriages
performed in the State of New York.
­ USSC focused on the extent of state police powers to regulate
marriage and concluded that regulation of domestic relations is an
area regarded as a virtually exclusive province of the states.
­ USSC held that DOMA seeks to injure the very class that New
York law seeks to protect.
­ DOMA forced states that recognize same-sex marriages to treat
these unions as second-class marriages.
­ DOMA imposed a legal disability on a class of persons the State
finds to be dignified and proper.
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Contraceptive Mandate Cases
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Contraceptive Mandate Cases (cont’d)
• ACA requires group health plans and insurers to cover,
without cost-sharing, preventative services for women, which
includes contraceptive coverage (all FDA approved
contraceptive methods and sterilization procedures)
• Religious employers exempted from the requirements to
provide contraceptive coverage
• For-profit secular employers claim that the mandated
inclusion of contraceptive coverage in their health plans
infringes on their religious freedoms
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Contraceptive Mandate Cases
• US Supreme Court Review
­ Third and Sixth Circuits ruled that ACA is a neutral statute of
general applicability that regulates public health and welfare,
and that it in no way limits the exercise of religion. Autocam
Corp. v. Sebelius, 730 F.3d 618 (6th Cir. 2013); Conestoga
Wood Specialties Corp., 724 F.3d 377 (3d Cir. 2013).
­ Seventh, Eighth, Tenth, and D.C. Circuits entered preliminary
injunctions blocking enforcement of these regulations. Gilardi
v. U.S. Dept. of Health and Human Servs, 2013 WL 5854246,
at *3-*4 (D.C. Cir. Nov. 1, 2013); Hobby Lobby Stores, Inc. v.
Sebelius, 723 F.3d 1114 (10th Cir. 2013); Grote v. Sebelius,
708 F.3d 850 (7th Cir. 2013).
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Subrogation and Reimbursement
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18. US Airways, Inc. v. McCutchen,
133 S.Ct. 1537 (2013)
• Background
­ McCutchen, a participant in the US Airways health plan, was
seriously injured in an automobile accident.
­ The plan paid $66,866 for McCutchen’s medical expenses.
­ McCutchen recovered $110,000.00 from third parties, $10,000
from the tortfeasor and $100,000 from his own auto insurer.
­ McCutchen’s personal injury counsel had a 40% contingent fee
contract and deducted $44,000 for legal fees, leaving a net
amount of $66,000 – less than the amount paid by the plan.
­ McCutchen’s attorney denied the plan was entitled to
reimbursement, but placed $41,500 in an escrow account (the
full $66,866, minus 40% for attorney’s fees).
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19. US Airways, Inc. v. McCutchen (cont’d)
• Plan Language
­ The SPD stated: “You will be required to reimburse . . . [the
Plan] . . . for amounts paid for claims out of any monies
recovered from [the] third party. . . .”
• The Plan’s Claim
­ The Plan asserted a claim for reimbursement against
McCutchen, seeking other appropriate equitable relief under
the terms of the plan, pursuant to ERISA § 502(a)(3).
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US Airways, Inc. v. McCutchen (cont’d)
• USSC Decision
­ Held that the application of lien by agreement requires the
binding of all parties to their written promises.
­ Unjust enrichment principles cannot defeat the plan’s reliance
on the contract’s clear terms.
­ Because Section 502(a)(3) provides relief to enforce the terms
of the plan, the limitation on equitable defenses promotes
ERISA’s principal function: to protect contractually defined
benefits. Reliance on the written document is critical to
carrying out the goals of ERISA.
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US Airways, Inc. v. McCutchen (cont’d)
­ Where, as here, a plan document is silent as to the allocation
of attorney’s fees, the common-fund doctrine provides the
default rule.
­ Awarded McCutchen’s counsel attorney’s fees incurred for the
recovery to the plan.
­ If it failed to do this, McCutchen would be worse off (-$866)
than had he done nothing.
­ If McCutchen is to act as US Airways collection agent, a result
he would not have foreseen when he signed onto the plan, he
has to be informed by plan language of this fact.
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US Airways, Inc. v. McCutchen (cont’d)
• Implications
­ Include reimbursement provisions in the plan document.
­ If the plan intends to abrogate the common-fund doctrine and
seek reimbursement of all amounts, including amounts paid to
the participant’s tort attorney, the plan must state this
unequivocally and unambiguously.
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Employer Stock Drop Litigation
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Overview
• Plan fiduciaries have a fiduciary duty to ensure compliance
with ERISA’s prudence and disclosure rules relating to
investment options
• In “stock-drop” litigation, plaintiffs typically allege breach of
fiduciary duty:
­ By failing to eliminate/divest the employer stock fund as an
investment option in the plan when fiduciaries knew or should
have known that it was an imprudent investment option
(“Prudence Claim”); and
­ By making material misrepresentations about the company or
omitting information that would have alerted plaintiffs that the
company stock price was overvalued (“Disclosure Claim”)

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Disclosure Claims
• Nondisclosure Claim
­ Plaintiffs argue that there is a duty to disclose financial and
other corporate information about the company to plan
participants
­ Several courts have distinguished between disclosure of
information about plan benefits vs. financial status of plan
investments and concluded that there is no requirement to
provide the latter because that would transform plan fiduciaries
into investment advisors
­ Courts have not been uniform in their decisions concerning
what, if any, obligation plan fiduciaries have with respect to the
disclosure of nonpublic information that may impact the
company stock fund

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Disclosure Claims (cont’d)
­ More recent decisions have trended away from placing an
obligation on a fiduciary to act on insider information.
­ Second Circuit, in Citigroup, “decline[d] to . . . to create a duty to
provide participants with nonpublic information pertaining to
specific investment options.”
­ Ninth Circuit in Quan suggested that only publicly known facts
could trigger a fiduciary’s obligation to investigate the prudence of
maintaining employer stock investment option
­ However, older decisions, particularly those in the “bankruptcy
implosion” cases such as WorldCom and Enron, have
sometimes concluded that special circumstances and extreme
impact of fraud may have triggered duties to disclose.

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Disclosure Claims (cont’d)
• Material Misrepresentation Claim
­ There is general agreement that the preparation of SEC
documents is a corporate, non-fiduciary function.
­ Several courts have held that by incorporating SEC
documents in the SPD, defendants did not intentionally link
that content to statements about benefits.
­ The Sixth Circuit concluded that that SEC filings when
incorporated into plan documents are fiduciary disclosures.

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Prudence Claim (cont’d)
• Moench presumption of prudence
­ Fiduciaries presumed to act prudently when they offer
employees the option to invest in employer stock unless
company’s viability as a going concern is in doubt or other
“dire circumstances” are present

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Prudence Claim (cont’d)
­ Moench presumption is difficult to rebut:
­ Significant stock price declines or fluctuations are not enough
­ Plaintiffs typically must show evidence of “dire circumstances”
­ The company’s viability as an ongoing concern is in jeopardy or
precipitous decline in stock combined with evidence that company
is on brink of collapse or undergoing serious mismanagement
­ Second, Third, Fifth, Seventh and Eleventh Circuits apply
Moench presumption at pleadings stage; claims dismissed if
they do not allege facts sufficient to overcome the
presumption

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Prudence Claim (cont’d)
• Sixth Circuit adopted Moench presumption but rejected
“dire circumstances” test or application at pleadings stage
­ Kuper v. Iovenko, 66 F.3d 1447 (6th Cir. 1995): adopted
presumption but states that to rebut it plaintiff need only prove
that “a prudent fiduciary acting under similar circumstances
would have made a different investment decision.”
­ Pfeil v. State Street Bank & Trust Co., 671 F.3d 585 (6th Cir.
2012): held that the presumption is an evidentiary presumption,
not a pleading requirement.
­ Dudenhoeffer v. Fifth Third Bancorp, 692 F.3d 410 (6th Cir.
2012): the presumption is an additional pleading requirement.
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Fifth Third Bancorp v. Dudenhoeffer
(U.S. No. 12-751)
• USSC granted Fifth Third’s petition for certiorari
• Issue to be considered:
­ “Whether the Sixth Circuit erred by holding that Respondents
were not required to plausibly allege in their complaint that the
fiduciaries of an employee stock ownership plan abused their
discretion by remaining invested in employer stock, in order to
overcome the presumption that their decision to invest in
employer stock was reasonable, as required by the Employee
Retirement Income Security Act of 1974, 29 U.S.C. § 1101, et
seq. (“ERISA”), and every other circuit to address the issue.”
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Possible Outcomes
• Narrow holding – affirms on grounds that there were
sufficient allegations to sustain claim even if presumption
applied
• Moench presumption upheld – Supreme Court follows other
Circuit Court rulings and possibly refines the standard
• Moench presumption overturned – ordinary standards of
prudence govern for reasons stated by plaintiffs and
solicitor general
• Presumption’s application depends on plan language
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33. Statute of Limitations Considerations
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Statute of Limitations and Contractual
Limitations Periods
• ERISA does not contain a statute of limitations period for
suits challenging benefits denials
­ Instead, courts borrow the limitations period from the most
analogous state statute
• Parties may still contract for a shorter limitations period
• Courts generally enforce contractual limitations periods for
benefit claims so long as they are made known to
participants and beneficiaries and are not “manifestly
unreasonable”
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Statute of Limitations and Contractual
Limitations Periods (cont’d)
• Federal common law determines when claim accrues
• Federal courts use the “discovery rule” to determine accrual
date of ERISA benefits claim
­ Statute of limitations begins to run when plaintiff discovers or
should have discovered injury that forms basis for the claim
­ In ERISA context, “discovery rule” is known as “clear
repudiation” rule
­ Benefits claim accrues when fiduciary repudiates claim for
benefits, and repudiation is clear and made known to the
beneficiary
­ Formal denial of claim is not required
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Statute of Limitations and Contractual
Limitations Periods (cont’d)
• Heimeshoff v. Hartford Life & Accident Ins. Co., 134 S.
Ct. 604 (2013)
­ LTD plan required claims be filed within 3 years of the date that
“proof of loss” was required to be submitted and “proof of loss”
due before plan’s administrative process can be completed.
­ Plaintiff filed suit less than 3 years after Hartford’s adverse
determination, but more than 3 years after “proof of loss” due.
­ District Court dismissed; Second Circuit affirmed.
­ USSC affirmed and held that plan-imposed, contractual
statutes of limitations are enforceable under ERISA if the
period is not unreasonable or barred by statute.
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Statute of Limitations and Contractual
Limitations Periods (cont’d)
­ This is true even if the statute of limitations starts to run before
the cause of action accrues
­ Plaintiff contended that plan limitations provision would
“undermine ERISA’s two-tiered remedial scheme,” but Court
disagreed
­ Limitations provisions does not disrupt ERISA’s internal review
process OR diminish the availability of judicial review to
participants
• Steps for employers and plan sponsors:
­ Consider amending plan to include plan-imposed statutes of
limitation
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ACA Litigation
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Workforce Realignment
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• How are employers responding to Employer Mandate?
­ Possible avoidance by reorganizing workforces
­ Employers may reduce employees’ hours below 30 per week to
avoid “full-time” employees under ACA
­ Penalty determined based on “full-time” employees, defined
as working at least 30 hrs. per week
­ Some employers experimenting with reorganization

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Potential Litigation under ERISA § 510
40
It shall be unlawful for any person to discharge, fine, suspend, expel,
discipline, or discriminate against a participant or beneficiary for
exercising any right to which he is entitled under the provisions of an
employee benefit plan, this subchapter, section 1201 of this title, or the
Welfare and Pension Plans Disclosure Act [29 U.S.C. 301 et seq.], or
for the purpose of interfering with the attainment of any right to
which such participant may become entitled under the plan, this
subchapter, or the Welfare and Pension Plans Disclosure Act. It shall be
unlawful for any person to discharge, fine, suspend, expel, or
discriminate against any person because he has given information
or has testified or is about to testify in any inquiry or proceeding
relating to this chapter or the Welfare and Pension Plans Disclosure
Act . . .

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Other Potential Litigation
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­ ADEA and Title VII
­ Does “adverse” employment action (i.e., cutback in hours)
disparately impact protected class?
­ Legitimate business reason other than avoiding penalties?
­ Whistleblower action under ACA
­ Improper motive need only be “contributing factor”

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ACA Whistleblower Protections
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• ACA amended the FLSA to provide significant whistleblower
protections, including a private cause of action, for individuals
reporting violations of the statute
• ACA prohibits adverse action against employees who
­ Received a premium tax credit or subsidy for a health plan
­ Provided information to the employer or the federal or state government
concerning a violation, act or omission the employee reasonably believes to be a
violation relating to Title I of ACA
­ Testified or is about to testify in a proceeding concerning such violation
­ Assisted or participated, or is about to assist or participate, in such a proceeding
­ Objected to, or refused to perform any activity or assigned task the employee
reasonably believes to be such a violation

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ACA Whistleblower Protections (cont’d)
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• Standards of Proof (Burden Shifting)
­ Claimant: must show by preponderance of the evidence that
protected activity was contributing factor to adverse action
­ Defense: employer avoids liability only if it proves by clear
and convincing evidence that same action would have
resulted in the absence of the employee’s protected conduct
• Procedure
­ Administrative Process: employee files complaint with OSHA
within 180 days of retaliatory action. OSHA can order
preliminary relief. Either party can appeal
­ Federal Court: if no final decision within 210 days of
administrative claim, complainant may file suit in federal court
(trial by jury)

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ACA Whistleblower Protections (cont’d)
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• Remedies include:
­ Reinstatement
­ Back pay
­ Special damages (including emotional distress damages)
­ Attorneys’ fees
• Whistleblower protections are in addition to any other rights
under federal or state law or under a collective bargaining
agreement
• Whistleblower protections cannot be waived

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Best Practices for Benefit Claims
Administration

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Standard of Review
• Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (S. Ct. 1989)
­ Deferential review if plan grants deferential power to fiduciary
­ Absent power granting language, de novo review
• Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (2008)
­ When the same entity is responsible for determining benefit eligibility
and paying benefit claims, conflict-of-interest arises
­ Conflict is one factor in deciding whether there was an abuse of
discretion
­ No bright line test; case-by-case basis analysis
• Conkright v. Frommert, 130 S. Ct. 1640 (2010)
­ People – including plan administrators – make mistakes
­ Absent bad faith or multiple errors, Firestone entitles plan
administrator to deferential review

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Best Practice No. 1:
Know Your Plan Documents
• Clear v. ambiguous?
• Delegation and serial delegations addressed?
• Reasonable contractual statute of limitations included?
• Firestone language included?
• Proper amendments?
• Documents are being followed?
• Distribute SPD?
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Best Practice No. 2:
Use the Claims Process
• Require exhaustion
­ Futility
­ Denial of Meaningful Access
­ Irreparable Harm
­ Estoppel
• Know the law
­ Statute on claims 29 U.S.C. §1133
­ Regulation on claims 29 C.F.R. §2560.503-1
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Best Practice No. 2:
Use the Claims Process
• Build the administrative record
• Protect the standard of review
• Watch for pre-litigation signs
­ Letters from lawyers
­ Large claims
• Watch for process failures
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Best Practice No. 3:
Avoiding Structural Conflicts &
Creating A Bullet Proof Administrative Record
• As required by the regulations
­ Provide participants full and fair opportunity to challenge
administrative determination
­ Invoke a deliberative process; full and fair review
­ Consider all evidence submitted
­ Explain basis for decision
­ Provide claimant with relevant documents and information
• Vest an internal benefits committee or an independent body with
the discretion to interpret the plan’s terms and administer benefits
• Provide well-reasoned decisions
• Consider whether there is a need for additional
information/expertise

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Best Practice No. 4:
Discovery Issues
• What is the scope of discovery in benefit claims cases?
­ Is the standard of review deferential or de novo?
­ Is there a conflict of interest?
­ What steps were taken to ameliorate the conflict?
­ Does the plan language govern regardless of any conflict?
­ Is there a robust administrative record?
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52. 52
• Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (2008)
­ Deferential review applies, even when a fiduciary is conflicted
­ Plaintiffs bar have used this case to expand scope of discovery to “weigh”
the conflict as a factor in determining abuse of discretion
• Murphy v. Deloitte & Touche Grp. Ins. Plan, 619 F.3d 1151 (10th
Cir. 2010)
­ Glenn contemplates extra-record discovery
­ Fed. R. Civ. P. 26(b) governs scope of discovery, even in ERISA cases
­ Party seeking discovery has burden of establishing its need
• Helton v. AT&T Inc., 709 F.3d 343 (4th Cir. 2013)
­ “Overwhelming majority of courts” post-Glenn do not absolutely bar
consideration of extrinsic evidence under deferential review
­ Limited discovery allowed under deferential review, in part, to assess
conflict of interest
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53. Arbitrability of ERISA Claims
444
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4 Considerations for Arbitrating ERISA Claims
• Arbitrability of Group Health and Disability Plan Claims
• Arbitrability of Other ERISA Claims
• Arbitrability of ERISA Class Actions
• Best Practices for Arbitration of ERISA Claims
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1. Group Health & Disability Plan Claims
• DOL regulations provide that the claims procedures in
group health and disability plans will not be deemed
“reasonable” if the claims procedures contain a mandatory
arbitration provision, unless the plan provides that:
­ the arbitration is conducted as one of the two appeals a
participant or beneficiary must make prior to filing a civil action;
and
­ the claimant is not precluded from challenging the decision
under Section 502(a) or other applicable law.
29 C.F.R. § 2560.503-1.

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2. Other ERISA Claims
• Mandatory arbitration of other ERISA claims is permitted.
­ Second Circuit: Bird v. Shearson Lehman/American Exp.,
Inc., 926 F.2d 116 (“ERISA’s text and legislative history do not
support a conclusion that Congress intended to preclude
arbitration of claims”).
­ Third Circuit: Pritzker v. Merrill Lynch, 7 F.3d 1110 (“ERISA
claims are subject to compulsory arbitration under the FAA”).
­ Fifth Circuit: Kramer v. Smith Barney, 80 F.3d 1080
(“Congress did not intend to exempt statutory ERISA claims
from the [FAA]”)
­ Eighth Circuit: Sulit v. Dean Witter Reynolds, Inc., 847 F.2d
475 (“agreements to arbitrate ERISA claims are in accord with
the explicit provisions of the Arbitration Act”).
­ Tenth Circuit: Williams v. Imhoff, 203 F.3d 758 (“Congress did
not intend to prohibit arbitration of ERISA claims”).

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3. ERISA Class Actions
• Stolt-Nielsen v. AnimalFeeds, 130 S.Ct. 1758 (2010)
• AT&T v. Concepcion, 131 S. Ct. 1740 (2011)
• Oxford Health Plans LLC v. Sutter, 133 S.Ct. 2064 (2013)
• AMEX v. Italian Colors Restaurant, 133 S.Ct. 2304 (2013)

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Parties Must Mutually Agree to Participate
in Classwide Arbitration – Take 1
• Stolt-Nielsen v. AnimalFeeds, 130 S.Ct. 1758 (2010)
­ Parties agreed that they were required to arbitrate.
­ Parties stipulated that the agreement was silent on the issue of
class arbitration.
­ Parties submitted the question of class arbitration to a panel of
arbitrators who concluded that class arbitration was permissible
because public policy favors arbitration.
­ USSC held that a party may not be compelled to arbitrate class
claims unless it has contractually agreed to do so.
­ Arbitration panel had no proper occasion to ascertain intent.
­ USSC observed that arbitration is a matter of consent and that
private agreements are enforced according to their terms, which
may include with whom parties choose to arbitrate.

59. 42228224_159
FAA Preempts State Rules
Prohibiting Certain Arbitration Contacts
• AT&T v. Concepcion, 131 S.Ct. 1740 (2011)
­ USSC held that the FAA preempted a California state rule
prohibiting arbitration contacts that prevented individuals from
bringing class claims.
­ FAA reflects a liberal approach toward arbitration.
­ Arbitration agreements should only be struck down for reasons
that could nullify other contracts, such as fraud, duress, or
unconscionability.
­ There was nothing that justified striking down the clause at
issue, and the California rule interfered with the FAA’s goal of
promoting arbitration and its expeditious results.
­ The Dissent argued that class proceedings are necessary to
prosecute small dollar claims that might otherwise slip through
the legal system.

60. 42228224_1
Parties Must Mutually Agree to Participate
in Classwide Arbitration – Take 2
• Oxford Health Plans v. Sutter, 133 S.Ct. 2064 (2013)
­ In-network provider filed a complaint on behalf of a class of
health care providers against Oxford and other health insurers
alleging breach of contract and other state law violations.
­ Oxford’s network provider agreement contained a broad
arbitration clause, but it was silent on the issue of class
arbitration: “No civil action concerning any dispute arising
under this Agreement shall be instituted before any court.”
­ Arbitrator determined that the arbitration clause allowed for
class arbitration in light of the clause’s breadth and therefore
issued an award defining the class of claimants and certifying
the class.
­ USSC: “So long as an arbitrator ‘makes a good faith attempt’
to interpret a contract, ‘even serious errors of law or fact will
not subject his award to vacatur.’”60

61. 42228224_161
Class Action Waivers Are Enforceable
• AMEX v. Italian Colors Restaurant, 133 S.Ct. 2304 (2013)
­ A contractual waiver of class arbitration is enforceable even
when plaintiff’s cost of individually arbitrating a federal statutory
claim exceeds the potential recovery.
1.Where a plaintiff seeks to assert a federal statutory claim,
the FAA requires enforcement of an arbitration agreement
unless there is a “contrary congressional command” that
overrides the FAA’s mandate.
2.The judicially-created “effective vindication” doctrine did not
invalidate the agreement in the case at bar.
3.Concepcion “all but resolve[d]” the Amex case.

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4. Best Practices
• Is arbitration the “right” decision?
­ What type of claim is at issue?
­ Considerations include:
­ Arbitrator’s knowledge of ERISA
­ Ability to appeal
­ Confidentiality
­ Cost
­ Speed

63. 42228224_163
Best Practices (cont’d)
• In combination, the USSC rulings appear to permit employers/plan
sponsors to avoid defending ERISA claims in federal court – which
would present the prospects for class litigation – by conditioning
employment on executing arbitration agreements, and avoiding
class-wide arbitration by either making no allowance for such claims
in the arbitration agreement or, even better, specifically providing that
the arbitrations will be limited to individual claims.
• Arbitration agreements should expressly state that claims in
arbitration are limited to individual claims.
• While it is possible that plan sponsors will be able to avoid class
claims altogether, keep in mind that derivative class claims under
Section 502(a)(2) need not be class claims.

64. 42228224_1
ETHICS IN ERISA LITIGATION
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65. 42228224_1
Question 1
• Skyler, a Plan participant and employee of plan
sponsor, Heisenberg Company, Inc., filed a claim for
benefits from the Plan. Gus, the Plan administrator,
contacted Saul, who is outside counsel to the Plan.
Saul provided Gus with an outline showing the dates
that Skyler sent letters to the Plan requesting benefits.
Saul also gave Gus advice on what fiduciary
responsibilities exist under ERISA. Lastly, Saul
advised Gus, in his role as VP of HR, on Heisenberg
Company’s role as Plan sponsor in connection with the
benefit claims process.
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66. 42228224_1
• Saul, outside counsel to the Plan, sent an email to Gus in
an effort to assist Gus in evaluating the merits of Skyler’s
appeal. Gus subsequently denied Skyler’s appeal. Is
Saul’s communication with Gus prior to the denial of
Skyler’s appeal privileged?
A. Yes
B. No
C. Yes, as long as no third parties were copied on the email
D. It depends who was paying Saul
66

67. 42228224_1
ANSWER = B
• ERISA affords plan participants and beneficiaries the right
to obtain information pertaining to their own benefit
entitlements as well as information regarding the operation
of the plans in which they participate.
• Two rationales: duty to disclose and the “real client”
• The fiduciary exception has been recognized by the
Second, Fifth, Sixth, Seventh, Ninth Eleventh and DC
Circuits. It has not been rejected by any Circuit.
67

68. 42228224_1
Timing of the Communication
• Pre-Decisional v. Post-Decisional Communications (Timing)
­ Fiduciary exception applies to communications between
counsel and plan fiduciaries concerning claims for benefits
­ Communications must have occurred prior to the decision on
appeal
­ Post-decisional communications are no longer relevant to the
decision making process and constitute evidence that the
interests of the beneficiary and the plan fiduciary have
diverged
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69. 42228224_1
Question 2
• Tuco, a long-time trustee of the Plan, is sued for
embezzlement from the Plan. Tuco called Pinkman, the
Plan’s lawyer, whom he has known for years. Pinkman
stopped Tuco from telling him anything and instead told
Tuco to hire a separate lawyer. Tuco took Pinkman’s
advice and retained a different lawyer, Saul (who else?).
Tuco had several conversations with Saul about the
embezzlement charges. Does the fiduciary exception apply
to Tuco’s communications with Saul?
A. Yes
B. No
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70. 42228224_1
• They had several conversations, and exchanged several
emails, about the embezzlement charges and Tuco’s
potential liability. Does the fiduciary exception
apply to their communications?
A. Yes
B. Yes, but only if the plan does not pay Pinkman for the advice
C. No
D. No, because the advice relates to Tuco’s personal liability
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71. 42228224_1
ANSWER = B
• Courts have recognized that there are circumstances where
the fiduciary exception is inapplicable. For example, where
the goal of the advice is to advise a fiduciary of his or her
potential personal liability.
• The fiduciary exception also has no application to
conversations about settlor functions, such as the adoption,
amendment or termination of plan.
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72. 42228224_1
Question 3
• During a break at a Plan trustees’ meeting, Pinkman
consulted with Heisenberg executives, who are also
trustees of the Plan, about eliminating the accrual of
benefits prospectively. The investment consultant,
actuaries and accountants to the plan were not involved in
the conversation, but were in the room. Are these
communications privileged?
A. Yes
B. No
C. Yes, but only if the third parties were not listening
D. No, because the executives were at a plan trustees’ meeting,
so they were receiving advice in their trustee capacities.

73. 42228224_1
ANSWER = Pray for C, but it may be B
• Losing the Privilege to Waiver and Exceptions to Waiver
­ Presence of a Third Party
­ Agency Exception to Waiver
­ Common Interest Exception to Waiver
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