As currently drafted, following the transition period, the Exemptions will be unavailable to any fiduciary whose contract with a retirement investor includes a waiver or qualification of the investor’s right to bring or participate in a class action or other representative action in court. In FAB 2017-03, the DOL announced a policy limiting enforcement of this provision in the Exemptions. Specifically, the DOL announced that it will not pursue a claim against any fiduciary or treat any fiduciary as being in violation of the Exemptions solely because the contract between the fiduciary and the investor includes an arbitration agreement that prevents the investor from participating in class action litigation. FAB 2017-03 is available here.
Seventh Circuit Denies Refund of Contributions to Multiemployer Plan for Mistakenly Covered Participant and Denies Arbitration Under the PBGC’s Default Rules for Withdrawal Liability
In Central States, Southeast and Southwest Areas Pension Fund v. Bulk Transport Corp., the U.S. Court of Appeals for the Seventh Circuit held that the employer could not seek a refund of contributions made to a multiemployer plan on behalf of an employee that the employer mistakenly believed was covered under the collective bargaining agreement because the employer had certified that the employee was eligible to participate in the plan and later explicitly covered the employee by name in subsequent collective bargaining agreements, and further, the pension fund had no duty to inquire as to the employee’s eligibility. The court also held that, in seeking arbitration for a dispute of withdrawal liability, the employer and the pension fund must use the American Arbitration Association’s (“AAA”) Multi-Employer Pension Plan Arbitration Rules that were approved by the PBGC instead of the PBGC’s default rules, notwithstanding the fact that the AAA had significantly… Continue Reading
Creating Uniformity Among Primary And Excess Policies: Using Contract Principles To Bind Excess Carriers To Arbitrate
Arbitration is often thought of as a procedure favored by carriers to the disadvantage of the corporate insured, because the insured usually prefers to have its coverage claims heard by a jury. There may also be remedies sought by the policyholder, which may not be available in arbitration. Alternatively, in certain circumstances, arbitration can be a powerful tool for the insured. For example, for parties seeking coverage under a Commercial General Liability (CGL) policy, a speedy resolution of any coverage disputes in arbitration (while the underlying litigation is pending) may encourage insurers to defend and settle claims promptly, reducing the risk of a judgment against the insured. This particular strategy may have limited value, however, if the primary policy provides for arbitration, but the applicable excess liability policies do not. Unless the insured can also require the excess carrier(s) to arbitrate, even a successful arbitration may leave the insured without… Continue Reading