Seyfarth Shaw’s Fifth Annual Workplace Class Action Litigation Report (a 665-page report) provides some discouraging news for employers on the ERISA front. The report analyzes the “foremost class action and collective action decisions of 2008 involving claims against employers in federal and state courts” and concludes that there is “an explosion in class action and collective action litigation involving workpace issues.” The report also predicts that the “present downturn in the economic climate is likely to fuel even more lawsuits, and the financial risks in this type of employment litigation can be enormous.”
Regarding ERISA litigation specifically, the report indicates:
The plaintiffs’ bar increased the pace of ERISA class action filings seeking recovery for 401(k) losses; and
The lawsuits resulted in a series of “massive settlements” in ERISA class action resolutions.
The report includes in its analysis a review of the “top ten” class action and collective action settlements during 2008. The report concludes that, “[a]s compared to 2007, settlement totals decreased for the top ten employment discrimination and wage and hour class action settlements, but increased for the top ten ERISA class action settlements”:
For ERISA class actions, the monetary value of top ten private plaintiff settlements entered into or paid in 2008 totaled $17.7 billion. By comparison, the top ten settlements in 2007 totaled $1.8 billion.
The report provides confirmation about what most practitioners know already–that there has been a surge of excessive fee cases involving 401(k) plans as well as “stock drop” suits from the plaintiffs’ bar. The report concludes that “given the enormous financial stakes, pro-active planning and legal compliance programs—to get ahead of class action risks—are of paramount importance to companies in 2009.”
More on what employers can and should be doing in posts to come. . .