Author: jfortenberry@fortenberrylaw.com

Read the story behind the Crowley v. Corning case from this recent article from the New York Times, “All the Nest Eggs in One Company Basket“:

Such stories abound in this company town, where loyalty, self-interest and faith in the company led many to bet their retirement portfolios almost exclusively on the stock of their employer. Economists said what happened here offered a pristine window on the mixed fortunes and stresses that come with retirement accounts based on company stock.

Read the resulting case–Crowley et al. v. Corning–and how the company’s motion to dismiss in that case was granted. Nixon Peabody LLP has a recent article on a later case–Crowley v. Corning Incorporated, 2004 U.S. Dist. LEXIS 758 (W.D.N.Y. 1/14/04)–in which the court addresses plaintiff’s motion to reopen the prior 2002 decision. Plaintiffs had sought to reopen the case by submitting “a handful of new cases, including the Enron decision and a similar decision involving WorldCom.” However, the court distinguished all of these cases and affirmed its prior 2002 decision in this recent 2004 decision.

The 2002 Crowley decision has been cited in numerous cases by defendants in ERISA 401(k) litigation involving company stock, and was cited by the court in the case of In re: Williams Cos. ERISA Litigation as pivotal authority in an unreported decision in which the court declined to adopt the DOL’s interpretation of the law as espoused in the DOL’s Amicus Brief. (See this previous post where this unreported decision is discussed.) However, the DOL strongly notes in its WorldCom Amicus Brief that the Williams decision (which relied on Crowley) was “wrong” and “contrary to the weight of precedent.”

Defendants sought to rely on the Crowley case in the Dynegy case, Constance K. Schied v. Dynegy, Inc., et al. but their motions to dismiss were not granted. (Read the opinion in a recent Order Denying Motion to Dismiss.) Another case where defendants sought to rely on Crowley, but did not prevail, was in the In re Sears, Roebuck & Co. ERISA Litigation. (Read the recent Memorandum Opinion and Order Denying Defendants’ Motion to Dismiss in the Sears case.) Both the Dynegy and Sears opinions were rendered in March of this year.

I had heard that the Treasury and IRS were poised and ready to act quickly once the Pension Funding Equity Act of 2004 was signed into law. Evidently they were, as the Act was only just signed by President Bush on Saturday, and the Treasury and IRS have already issued the interest rate change for pension plan funding as stated in this press release: “Treasury and IRS Issue New Pension Interest Rate For Defined Benefit Plans.” See also Notice 2004-34 and Announcement 2004-38. More on this later . . .

From Reuters via Forbes.com, “Bush signs bill giving pension aid to US companies“:

President Bush signed into law Saturday a measure aimed at saving U.S. companies more than $80 billion in pension contributions over two years, days before many firms make quarterly payments.

From the AP via the Seattle Post-Intelligencer, “Pension bill split Senate Democrats“:

To unionized machinists, autoworkers and airline pilots, an $80 billion pension relief bill making its way through Congress offered badly needed help. To construction unions and the Teamsters, it was a loser. To the quiet satisfaction of Republicans, that left unhappy Senate Democrats in the middle, forced to make a politically painful choice between reliable election-year allies on one side and those on the other.

From Yahoo! News.com, “With Tax Clock Ticking, Congress Clears Pension Plan Funding Relief.”

From CCH, the “CCH Tax Briefing on the Pension Funding Equity Act of 2004.”

Benefitslink.com now has the link to the “Text of IRS General Information Letter to Mark Iwry on Automatic Compensation Reduction Elections (PDF)” (via the American Benefits Council) referred to in this article and mentioned in a previous post.

For those who won’t make the deadline this week for filing their tax returns, RothCPA.com has some helpful info here on filing an extension, including a link to IRS Form 4868.

From CFO.com, “Malfeasance Insurance: How plan sponsors are coping with the mutual fund scandals“:

Of course, discussions about the mutual-fund scandal are occurring at plenty of companies unaffected by any revelations to date. As the scandal expands, says Jean Blackwell, CFO of Cummins Inc. and chairperson of its benefits-policy committee, “people are taking their fiduciary responsibilities much more seriously.” Blackwell—who in the past has served as the Columbus, Indiana, engine maker’s general counsel and as its vice president of HR—has observed that committee members these days “will push back and disagree,” where in the past they were more inclined to go along with the recommendations of the benefits staff.

From the New York Times, “Speaking Out Could Get Investors Sued“:

Annual meetings have long been considered an open forum where company shareholders could speak out and hope to be heard — and not worry about being sued for what they say. Until now. Just as investors are trying to step up their influence over corporate dealings in the wake of all the scandals, a recent lawsuit is raising concerns that they could face litigation when they voice ideas that companies don’t like.

For those interested in the development of the blogosphere, “A crush note to the blogosphere: Newest mode of journalism has tenacity and transparency that major media lacks.”

For those interested in the development of the blogosphere, this is a wonderful article–“A crush note to the blogosphere: Newest mode of journalism has tenacity and transparency that major media lacks“–by Arianna Huffington at WorkingforChange.com. Here’s what she has to say about blogs:

The problem isn’t that the stories I care about aren’t being covered; it’s that they aren’t being covered in the obsessive way that breaks through the din of our 500-channel universe. Because those 500 channels don’t mean we get 500 times the examination and investigation of worthy news stories. It means we get the same narrow conventional-wisdom wrap-ups repeated 500 times. . . Bloggers are armed with a far more effective piece of access than a White House press credential: passion.

She goes on to say that she loves “the open nature of the form — the links, the research made visible, the democratic back and forth, the open archives, the big professorial messiness of it all” stating further:

It reminds me of my schoolgirl days when providing the right answer wasn’t enough for our teachers — they demanded that we “show our work.” Bloggers definitely show their work. It’s why you don’t just read blogs — you experience them.

All of which has made the blogosphere such a vital news source in our country — and has made me besotted with blogs. It’s a crush that I’m betting will quickly progress to going steady.

Law firm articles and newsletters recently published:

Cooley Godward LLP: “Update Regarding Stock Option Accounting: What the Proposed New Rules mean to you and what you can do about it.”

Faegre & Benson LLP: “IRS Issues Additional Guidance on Health Savings Accounts.”

Gardner Carton & Douglas: “Retirement Plan Update.”

Groom Law Group: “IRS Provides Preventive Care Safe Harbor and Helpful Transition Relief for HSAs.”

Hodgson Russ LLP: “Employee Benefits Developments 3/8 to 3/19 2004.”

Ice Miller LLP: “New Health Savings Account Guidance Issued.”

Kilpatrick Stockton LLP: “Health Savings Account Fever: A Blistering Pace for HSA Guidance Continues.”

Kirkpatrick & Lockhart LLP: “Department of Labor Proposes Regulations and Prohibited Transaction Class Exemption Regarding Automatic IRA Rollovers for Cashout Distributions.”

McDermott, Will & Emery: “A Primer on Health Savings Accounts and Recent Guidance.”

Morgan Lewis & Bockius LLP: “IRS Regulations on Retroactive Payment of Pension Benefits.”

Nixon Peabody LLP: “Fiduciaries under attack — An Enron antidote [PDF File].”

Pepper Hamilton LLP: “Withdrawal Liability in Multiemployer Plans: It’s Baaack!”

Seyfarth Shaw LLP: “Additional Guidance on Health Savings Accounts: A Beginning.”

From Reuters, “Congress Gives Companies Pension Break“:

Legislation expected to save U.S. companies over $80 billion in pension contributions over two years was passed on Thursday by the U.S. Congress and now goes to President Bush for his expected signature into law. Final action came with approval by the Senate, 78 to 19.