The largest class-action settlements in claims brought under the Employee Income Retirement Security Act topped $1.3 billion in 2014, almost 10 times the sum of the biggest settlements from the previous year.
No other area of employment workplace law saw that kind of explosive growth last year. In fact, settlement numbers in other areas of workplace class-action claims were down, according to the 2015 Workplace Class Action Litigation Report, published by Seyfarth Shaw, a Chicago-based law firm.
The settlement figures for the biggest ERISA cases were higher in 2014 than at any other time in recent history. In 2011, sponsors settled nearly $900 million in the largest cases, the only time since 2009 when the figures were remotely close to last year's record numbers.
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Settlement figures for other areas of labor law paled in comparison: $215 million was settled in wage and hour class-actions, and about $228 million in employee discrimination cases.
By the close of 2014, ERISA lawsuits totaled 7,163, down marginally from 2013. Several "mega-settlements" pushed the ERISA tab for the 10 largest settlements beyond the billion-dollar mark. Among them:
In August 2014, a $480 million settlement was reached in Meyers vs. Daimier Trucks North America LLC, in a class-action filed by retired UAW workers alleging the truck manufacturer illegally cut benefits.
The next month, a $415 million settlement was approved in Healthcare Strategies Inc. vs. ING Life Insurance & Annuity Co.
And in December, a tentative $140 million settlement was reached in Haddock vs. Nationwide after 13 years of litigation. It's believed to be the largest ever in a service-provider revenue-sharing case.
Also read: Plenty to keep the ERISA lawyers busy
Several trends dominated the ERISA class-action space, some potentially troubling for plan sponsors, and others not, according to the report.
The Supreme Court ruling in Fifth Third Bancorp vs. Dudenhoeffer last June, which effectively reversed a long-standing presumption of prudence enjoyed by sponsors in "stock drop" cases, is expected to "revitalize" ERISA claims, according to the report.
"Employers can expect such reversals to continue, as well as more class-actions to survive motion to dismiss challenges" in stock drop cases, according to the report.
"Undoubtedly, this will increase litigation costs, and may increase risks for ERISA fiduciaries who oversee plans offering employer stock investments."
The trend last year was in part fueled by plaintiffs' attorneys who sought higher damages, based on the Supreme Court's decision in Cigna vs. Amara in 2011, which opened the door for claims beyond the benefits that may be due, or were lost, because of a sponsor's mismanagement of a retirement plan.
The report suggests that the Supreme Court's ruling this year in Tibble vs. Edison International, which may set a new precedent in how ERISA's statue of limitations is interpreted, could open the door to even more class-action cases.
Whatever the future holds, sponsors should be prepared for increasingly creative and sophisticated strategies from plaintiffs' attorneys, said the report.
"A certitude of the modern American workplace is that class-action and collective action litigation is a magnet that attracts skilled members of the plaintiffs' bar," it said.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
