1. Mary Komornicka, JD, CEBS Larkin, Hoffman, Daly & Lindgren LLP

2. Major Supreme Court Decisions LaRue v DeWolff MetLife v Glenn

3. Standard of Review Question: When the courts are reviewing the decision by a plan fiduciary, how much weight do they give to that decision ? None (de novo) Considerable amount (abuse of discretion)

4. Prior Standard Courts apply “abuse of discretion” if the plan document provided the plan administer with “discretionary authority,” Otherwise de novo. Firestone

5. ERISA Rights Question: on what basis can a participant sue? For his own benefit due § 502(a)(1) For damages due to benefits denied § 502(a)(2) For a breach of fiduciary duty § 502(a)(3)

6. Suing for Plan Benefits § 502(a)(1) A plan participant must exhaust all administrative and appeal remedies available under the terms of the plan document before filing action in federal court. Firestone

7. For damages due to benefits denied Participant cannot sue for compensatory or punitive damages resulting from benefit denial or delay Russell “We are reluctant to tamper with an enforcement scheme crafted with such evident care as the one in ERISA.”

8. For a breach of fiduciary duty § 502(a)(2) Can sue for losses to the plan arising from breaches of fiduciary duty but not compensatory or punitive damages to an individual. Russell

9. For a breach of fiduciary duty § 502(a)(3) Equitable Remedies Conflicting decisions Restricted traditional “equitable" remedies Mertens and Knudson Policy and “appropriate” remedies Variety Justices Scalia and Thomas consistently hold for “traditional” equitable remedies Justices Breyer, Ginsburg, Stevens and Souter commonly look at policy and “appropriate”

10. LaRue v DeWolff Background Twice submitted change in investments Didn’t happen Loss of $150,000 Sued fiduciaries

11. LaRue v DeWolff Three Decisions – all saying LaRue can sue 1. Stevens (majority) – Retirement Plans are now DC, need to recognize the new reality. 2. Chief Justice Roberts – This is a benefit claim 3. Thomas and Scalia – A loss to one account is a loss to the plan as a whole

12. Majority Opinion Defined contribution plans are different, and a “fiduciary misconduct need not threaten the solvency of the entire plan to reduce benefits below the amount that participants would otherwise receive.” It is sufficient that the fiduciary breach “impair[ed] the value of plan assets in a participant’s individual account” for it to be deemed a plan injury.

13. Roberts Opinion The claim is subject to all the administrative rules regarding filing for a claim and exhausting any administrative remedies (appeals) prior to filing any federal action. § 502(a)(1)

14. Thomas & Scalia “When a defined contribution plan sustains losses, those losses are reflected in the balances in the plan accounts of the affected participants, and a recovery of those losses would be allocated to one or more individual accounts” Merely bookkeeping difference between DB and DC

15. What’s the Difference? Roberts – Benefits claim Must follow all internal claims & appeals procedures Creates record that the court can rely upon Source of funds – plan assets How can an active employee file claim for benefits?

16. What’s the Difference? Thomas & Scalia – Plan is the sum of its parts Fiduciary breach for the loss Fiduciary must make plan whole What if the trade was executed in wrong account? Differences between DB and DC are more than just the existence of individual accounts

17. What’s the Difference? Steven’s (majority) – Fiduciary breach for the loss Fiduciary must make plan whole Recognizes that the rules set for DB plans may not work for DC plans

18. Impact of LaRue Individual participants can sue based on fiduciary breach that impacted only one or a few participants 7 th Circuit has used LaRue as basis for “stock-drop” cases to continue May be basis for excessive fee cases

19. MetLife v Glenn LTD Claim Granted disability benefits “own occ” basis MetLife encouraged Glenn to file for SSA SSA found Glenn total & permanent disabled MetLife took 80% of back SS benefits Attorneys took other 20% MetLife found Glenn not disabled, ended benefits

20. MetLife v Glenn Question: Since MetLife was both plan administrator and payor of benefits, does this conflict of interest change the standard of review?

21. Conflict of Interest Majority Opinion – Still apply deferential standard of review Judge should take into account the conflict of interest when determining if fiduciary abused his discretionary powers Totality of circumstances When there is a structural separation, then importance of conflict of interest is minimized

22. Roberts & Scalia Different opinions, and different results but have similar basis Courts should only consider conflict of interest when it impacts the motive for the decision Think the majority’s opinion is muddy

23. Impact of MetLife Recognize where there is a conflict of interest Separate functions Document decision making process

24. Questions Discussion