District Court Issues Retiree Health Benefits Ruling

The Associated Press is reporting that U.S. District Judge Anita B. Brody for the Eastern District of Pennsylvania has issued a ruling in the case of AARP v. EEOC (discussed in previous posts which you can access here). The court…

The Associated Press is reporting that U.S. District Judge Anita B. Brody for the Eastern District of Pennsylvania has issued a ruling in the case of AARP v. EEOC (discussed in previous posts which you can access here). The court granted AARP’s motion for summary judgment, holding that “[t]he challenged regulation, originally published at 68 Fed. Reg. 41542, is contrary to law and violates the clear intent of Congress in passing and amending the ADEA, as articulated in Erie County, 220 F.3d 193.” The court permanently enjoined EEOC from publishing or otherwise implementing the challenged regulation.

According to the AP, EEOC chairwoman Cari M. Dominguez has said she plans to ask the Justice Department to appeal the ruling.

From the New York Times: “Judge Blocks Rule Allowing Companies to Cut Benefits When Retirees Reach Medicare Age.”

Supreme Court Issues Important ADEA Opinion

From SCOTUSblog this morning: The Supreme Court, in a major legal victory for older workers, ruled 5-3 Wednesday that employees need not show intentional discrimination against them based on age in order to win a case under federal law. They…

From SCOTUSblog this morning:

The Supreme Court, in a major legal victory for older workers, ruled 5-3 Wednesday that employees need not show intentional discrimination against them based on age in order to win a case under federal law. They can prevail on a theory that an employer’s job practice had a more negative impact on older than younger workers.

Resolving a conflict among lower courts on the coverage of the Age Discrimination in Employment Act, the Court said that proof of discriminatory intent is not required. But, it said, the scope of ADEA’s protection in disparate impact cases is narrower than under another anti-discrimination law, Title VII of federal civil rights law.

You can access the syllabus for the opinion here–Smith v. City of Jackson.

Also, the Supreme Court issued another important decision yesterday in a Title IX case which you can read about here. The case is Jackson v. Board of Birmingham Board of Education. More on the case here in an article from the Washington Times.

UPDATE: You can access the principal opinion written by Justice Stevens in the Smith case here. SCOTUSblog reports that Justice Scalia concurred in part and concurred in the judgment, and that Justice O’Connor, joined by Justices Kennedy and Thomas, concurred in the judgment, but in effect dissented on the central disparate-impact question.

Securities Class Action Settlements: Implications for ERISA Fiduciaries

Bruce Carton at the Securities Litigation Watch has been blogging for months about how as many as two-thirds of institutional investors continue to leave millions of dollars on the table by failing to complete the basic tasks of monitoring and…

Bruce Carton at the Securities Litigation Watch has been blogging for months about how as many as two-thirds of institutional investors continue to leave millions of dollars on the table by failing to complete the basic tasks of monitoring and filing claims in securities class action settlements. (Access his posts on the topic here, here, here, and most recently here.) He links to an article here entitled “Leaving Money on the Table: Do Institutional Investors Fail To File Claims in Securities Class Actions?” (by James D. Cox and Randall S. Thomas) which discusses the ERISA fiduciary implications of failing to file claims in securities class action settlements:

The fiduciary duty embodied in ERISA can be traced to the common law of trusts and therefore embodies the obligation to preserve and maintain fund assets. It is on this foundation that Professors Weiss and Beckerman extrapolate an obligation for fund managers to consider initiating suit where necessary to protect, maintain, or reclaim fund property that is the subject of their trust. Pursuit, however, is not mandated if the manager’s decision not to act is reasonably based. . .

. . .(T)o the extent there are nontrivial costs to an institution from petitioning to become a lead plaintiff, not to mention the uncertainty of whether the institution will be selected, these costs may weigh more heavily than the expected benefits to the institution from the suit, not to mention its participation in the suit. Thus, though the private pension fund’s managers may theoretically face liability for imprudently assessing whether to serve as a lead plaintiff for a securities class action claim, there would be many potential justifications for them to assume a posture of rational apathy. However, with respect to failing to submit a claim to an administrator in a settled action for proven losses, we think there would be far fewer instances in which apathy would be a reasonable response to its fiduciary obligations.

Also, Professors Thomas and Cox have written a more recent article which you can access–“Letting Billions Slip Through Your Fingers: Empirical Evidence and Legal Implications of the Failure of Financial Institutions to Participate in Securities Class Action Settlements.” The article presents data which the authors state “provides an inescapable and startling conclusion” that “financial institutions with significant provable losses fail at an alarming rate, approximately 70 percent, to submit their claims in settled securities class actions.” They go on to state that “not only are their losses significant, but the sums of money they likely would share in are both in the aggregate, and on an average individual fund basis, not trivial.”

Read more about the the ERISA implications for fiduciaries settling claims in previous posts:

SEC Guidelines for Valuing Options

The SEC has issued some guidelines providing its views regarding the valuation of share-based payment arrangements for public companies. You can access the press release here as well as Staff Accounting Bulletin No. 107, "Share-Based Payment," (SAB 107) here. A…

The SEC has issued some guidelines providing its views regarding the valuation of share-based payment arrangements for public companies. You can access the press release here as well as Staff Accounting Bulletin No. 107, “Share-Based Payment,” (SAB 107) here.

A Wall Street Journalarticle–“SEC Issues Guidelines For Options Expensing“–reports:

The SEC staff reaffirmed the new rule for stock options issued by the Financial Accounting Standards Board, the private Connecticut-based standard-setter. Industry groups welcomed the SEC’s guidance but called for delaying the new accounting rule, set to take effect starting June 15.

Also, from BusinessWeek Online: “SEC Gives Leeway in Measuring Option Value.”

9th Circuit Decision on Severance Arrangements

Broc Romanek of TheCorporateCounsel.net Blog provides some interesting commentary on the recent case of SEC v. Gemstar-TV Guide International issued last week by the 9th Circuit which "ruled en banc that severance payments – at least those in the 5x…

Broc Romanek of TheCorporateCounsel.net Blog provides some interesting commentary on the recent case of SEC v. Gemstar-TV Guide International issued last week by the 9th Circuit which “ruled en banc that severance payments – at least those in the 5x base salary range – are ‘extraordinary payments’ under the meaning of Section 1103 of Sarbanes-Oxley.”

Deadline for Mandatory Rollover Rules is Here

The deadline for operating in compliance with new mandatory rollover rules applicable to qualified plans has arrived. Read more about it in an article from Faegre.com: "IRS Provides Further Guidance on Mandatory Rollover Rules." Also, if you subscribe to RIA,…

The deadline for operating in compliance with new mandatory rollover rules applicable to qualified plans has arrived. Read more about it in an article from Faegre.com: “IRS Provides Further Guidance on Mandatory Rollover Rules.” Also, if you subscribe to RIA, you can access a great article here–“Automatic Rollovers – March 28th Deadline is Here” by Elizabeth Dold.

UPDATE: You can now access Elizabeth Dold’s article here. (Source: Benefitslink.com.)

Retiree Health Benefits: Ruling Expected Soon

Almost a year has gone by since the EEOC originally announced its approval of a proposal to allow employers to coordinate retiree health benefit plans with eligibility for Medicare or a comparable state health benefit without violating the ADEA. Since…

Almost a year has gone by since the EEOC originally announced its approval of a proposal to allow employers to coordinate retiree health benefit plans with eligibility for Medicare or a comparable state health benefit without violating the ADEA. Since that time, AARP filed suit seeking a preliminary injunction to stop the agency from issuing the proposed rule. The plaintiffs in AARP v. EEOC, No. 2:05-cv-00509, argued that the EEOC had exceeded its statutory authority to implement the exemption. The EEOC had agreed to a 60-day hold on issuing the final rule due to the litigation.

You can access the Defendant’s Opposition to Plaintiff’s Cross-Motion for Summary Judgment in the case from the American Benefits Council website via Benefitslink.com. Defendant argues in part as follows:

Plaintiffs have not demonstrated that the EEOC’s proposed exemption is contrary to law or that the exemption is arbitrary and capricious. Accordingly, their motion for summary judgment should be denied, and for the reasons explained herein and in Defendant’s previous filings, judgment should be entered in favor of the EEOC…

Given that Congress has expressly authorized the EEOC to issue exemptions to permit activity that otherwise would be prohibited by the ADEA, the relevant inquiry for the Court is whether the proposed exemption is “reasonable” and “necessary and proper in the public interest.” 29 U.S.C. § 628. As is evident from the Administrative Record before the Court, the EEOC’s decision to establish an exemption for the practice of coordinating retiree health benefits with Medicare eligibility was reasonable and in the public interest, and therefore satisfied the requirements of Section 9. See Defendant’s Opposition to Plaintiffs’ Motion for Preliminary Injunction at 27-40 (“The EEOC’s Decision to Exempt from the ADEA the Practice of Coordinating Employer-Sponsored Retiree Health Benefits with Medicare Eligibility is Not Arbitrary and Capricious”). Plaintiffs’ claims to the contrary represent nothing other than their disagreement with the considered judgment of the EEOC.

A ruling is expected next week. At the recent SHRM Employment Law & Legislative Conference held two weeks ago, Naomi Churchill Earp, Vice Chair of the EEOC, gave a presentation in which she mentioned the case, but stated that she could not comment on it.

For more background on the case:

Important District Court Ruling Pertaining to Retiree Health

Almost a year has gone by since the EEOC originally announced its approval of a proposal to exempt retiree health plans from the ADEA. Since that time, AARP filed suit seeking a preliminary injunction to stop the agency from issuing…

Almost a year has gone by since the EEOC originally announced its approval of a proposal to exempt retiree health plans from the ADEA. Since that time, AARP filed suit seeking a preliminary injunction to stop the agency from issuing the exemption. The plaintiffs in AARP v. EEOC, No. 2:05-cv-00509, argued that the EEOC had exceeded its statutory authority to implement the exemption. The EEOC had agreed to a 60-day hold on issuing the final rule due to the litigation. The federal district court has now issued a ruling in the case which you can access from the American Benefits Council website via Benefitslink.com. The ruling states in part as follows:

Plaintiffs have not demonstrated that the EEOC’s proposed exemption is contrary to law or that the exemption is arbitrary and capricious. Accordingly, their motion for summary judgment should be denied, and for the reasons explained herein and in Defendant’s previous filings, judgment should be entered in favor of the EEOC. . .

Given that Congress has expressly authorized the EEOC to issue exemptions to permit activity that otherwise would be prohibited by the ADEA, the relevant inquiry for the Court is whether the proposed exemption is “reasonable” and “necessary and proper in the public interest.” 29 U.S.C. § 628. As is evident from the Administrative Record before the Court, the EEOC’s decision to establish an exemption for the practice of coordinating retiree health benefits with Medicare eligibility was reasonable and in the public interest, and therefore satisfied the requirements of Section 9. See Defendant’s Opposition to Plaintiffs’ Motion for Preliminary Injunction at 27-40 (“The EEOC’s Decision to Exempt from the ADEA the Practice of Coordinating Employer-Sponsored Retiree Health Benefits with Medicare Eligibility is Not Arbitrary and Capricious”). Plaintiffs’ claims to the contrary represent nothing other than their disagreement with the considered judgment of the EEOC.

For more background on the case:

Where Have I Been?

Where have I been over the last 10 days? Recovering from the flu . . . Wishing there had been more flu vaccine to go around, but thankful that those who needed it received it because it was bad stuff!…

Where have I been over the last 10 days? Recovering from the flu . . . Wishing there had been more flu vaccine to go around, but thankful that those who needed it received it because it was bad stuff!

More on PA Court Ruling Requiring Employer Legal Representation

In a recent article-"PA Unemployment Authorities Strictly Interpret Court Ruling Requiring Employer Legal Representation "-Jackson Lewis has provided a report on what is happening when employers appear unrepresented by an attorney before the Unemployment Compensation Board of Reivew, pursuant to…

In a recent article–“PA Unemployment Authorities Strictly Interpret Court Ruling Requiring Employer Legal Representation
“–Jackson Lewis has provided a report on what is happening when employers appear unrepresented by an attorney before the Unemployment Compensation Board of Reivew, pursuant to the recent court ruling in Harkness v. Unemployment compensation Board of Review (PA. Cmwlth. 2005). (See previous post here.) The firm reports that the Pennsylvania Department of Labor and Industry is strictly interpreting the Commonwealth Court’s decision to prohibit any self-representation by employers at unemployment compensation proceedings by either “refusing to proceed with a hearing when an attorney is not present and continuing the hearing to a later date, or proceeding with the hearing but prohibiting the employer from offering any evidence other than testimony in direct response to questions by the unemployment compensation referee.”