US Supreme Court Declines to Shut Door on Public Company ESOP Stock-Drop Claims – More Litigation to Follow
Many public companies offer their employees the option to own company stock in their 401(k) plans. But what happens when a company is aware of an issue that will cause the company's stock price to drop, like the need to issue an accounting restatement? Can the company face not only a securities lawsuit from public investors, but also breach of fiduciary duty claims by participants in the 401(k) under ERISA against the company and company insiders who also act as ERISA fiduciaries over the 401(k) plan?
Gobeille v. Liberty Mutual Ins. Co. – U.S. Supreme Court Restores ERISA Express Preemption’s Superpower
On March 1, 2016, in Gobeille v. Liberty Mutual Insurance Company, the U.S. Supreme Court gave ERISA’s express preemption provision back its superpower that had been stolen in a series of decisions starting in 1995. The Court held that ERISA preempts Vermont’s health care reporting requirement as to ERISA plans. This is great news not only for the sponsors and participants of ERISA self-insured health care plans, but for the sponsors and participants of all ERISA benefit plans.
On November 11, Scott Stitt was quoted in “Justices Hear ERISA Reimbursement Case,” published in SHRM Online. The article explores a United State Supreme Court review of an ERISA case “asking whether a man injured by a drunk driver, who received a settlement from that driver, is required to reimburse his health plan administrator for medical expenses.” (Montanile v. Bd. of Trs. of Nat’l Elevator Industry Health Benefit Plan, U.S., No. 14-723)