US Supreme Court Archives - Page 6 of 11

Circuit Split Remains Unresolved After ERISA Case Settles

by J. Christian Nemeth and Krista McDonald | Sep 27, 2018 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Retirement Plans

On September 20, 2018, the US Supreme Court dismissed—pursuant to settlement—an ERISA lawsuit that could have resolved the circuit split over who holds the burden of proof in ERISA breach of fiduciary duty cases. In Pioneer Centres Hold. v. Alerus Fin., Case No. 17-677 (2018), the Pioneer Centres Holding Company Employee Stock Ownership Plan and Trust (the “Plan” or “ESOP”) and its trustees sued Alerus Financial, N.A. (Alerus) for breach of fiduciary duty in connection with the failure of a proposed employee stock purchase. In affirming summary judgment in Alerus’s favor, the Tenth Circuit determined that the Plan carried the burden to prove causation rather than shifting the burden to Alerus to disprove causation once the Plan established a prima facie case. In so holding, the Tenth Circuit agreed with the Sixth, Ninth and Eleventh circuits that beneficiaries, not fiduciaries, must prove causation between the company’s conduct and the plan’s losses due to a fiduciary breach. The Second, Fourth, Fifth and Eighth circuits disagreed, holding that the burden of proof shifts to the fiduciaries to establish the absence of loss causation once the beneficiaries makes a prima facie case by establishing breach of fiduciary duty and loss. Details of the parties’ settlement were not disclosed.

The settlement and dismissal of this case is disappointing for ERISA litigators because the anticipated resolution regarding burden shifting for loss causation will likely not be resolved in the near future. The outstanding burden shifting inquiry is not limited to the ESOP context. These issues have also been considered in other ERISA cases, such as the 401(k) context. See, e.g., Womack v. Orchids Paper Prod. Co. 401(K) Sav. Plan, 769 F. Supp. 2d 1322, 1334–35 (N.D. Okla. 2011) (acknowledging the burden shifting circuit split in the 401(k) context). Moreover, the lack of resolution will necessarily encourage plaintiffs to continue forum shopping tactics. Thus, the industry may see an increase in ERISA cases filed in the Second, Fourth, Fifth and Eighth circuits, which shift the burden to fiduciaries to establish the absence of loss causation once the plaintiffs make a prima facie case.

4 Things to Watch After the High Court’s Body Blow to Labor

by P. Kevin Connelly | Jul 26, 2018 | Employment, Labor

Kevin Connelly said unions will face an adjustment period as they seek to implement more creative methods of trying to retain dues-paying members. “I wouldn’t underestimate the unions. If someone wants to say this is the end of the day for public-sector unions—nope, not true,” he said. “There will be consequences, but I think the unions that operate in that sector will be clever enough to make the appropriate adjustments.”

Access the full article.

Originally published by Law360, June 2018.

SEC Whistleblower Update

by Paul Helms | Mar 13, 2018 | Employment

The Supreme Court recently clarified the scope of SEC whistleblower retaliation provisions. Though the decision limits retaliation actions, employers should continue to avoid conduct that can be interpreted as retaliation under other statutes, and should find ways to encourage internal reporting.

Access the full article.

Supreme Court Rules in Favor of Church-Affiliated Hospitals in Church Plan Litigation

by Joseph K. Urwitz and Mary K. Samsa | Jun 8, 2017 | Employee Benefits, Retirement Plans

In a major victory for church-affiliated hospitals, the US Supreme Court overturned three appellate court rulings and decided unanimously that church-affiliated hospitals can maintain their pension plans as “church plans” exempt from the Employee Retirement Income Security Act of 1974, as amended (ERISA), regardless of whether a church actually established the plan. Impacted health systems, and especially their management, should evaluate how best to document and demonstrate their common religious bonds and convictions with the church.

Read the full article.

Executive Order Regarding Contraceptive Mandate Directed toward Religious Employers

by McDermott Will & Emery | May 11, 2017 | Employee Benefits, Health and Welfare Plans

Late last week, President Donald Trump signed an executive order directing federal agencies to look into exempting religious employers from the Affordable Care Act’s (ACA) contraceptive mandate. Qualifying religious employers (e.g. houses of worship) are already exempt from providing contraceptive coverage under their benefit plans, and an accommodation process is provided for certain non-profit employers and closely held for-profit employers with religious objections to providing contraceptive coverage.

This new executive order is aimed at organizations like universities and charities, including entities such as the plaintiffs in Zubik v. Burwell. Last year, in Zubik, the US Supreme Court failed to decide whether the contraceptive-coverage mandate requirements (Contraception Mandate) and its accommodation violated the Religious Freedom Restoration Act of 1993 (RFRA) by forcing religious non-profits to act in violation of their religious beliefs. Although the ACA regulations included an exemption from contraceptive coverage for the group health plans of religious employers, the exemption did not provide that such services would not be covered. The services are just not covered through a cost-sharing mechanism born by the religious employers. The Contraception Mandate requires these organizations to “facilitate” the provision of insurance coverage for contraceptive services that they oppose on religious grounds. Many religious organizations were opposed to the requirement to facilitate, since they felt the requirement made them complicit in making contraception available, which violates their RFRA rights.