Employer Can Act In Its Own Interest When Designing A Pension Plan
LOOMIS v. EXELON CORP. (September 6, 2011)
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Exelon Corp. maintains a defined-contribution pension plan for its employees. It offers its participants 24 no-load mutual funds among its 32 different options. The expense ratios of the 24 funds range from 0.03% to 0.96%, depending on how actively the fund is managed. The expenses are deducted from the fund assets and therefore, in effect, paid for by the participants. Some participants brought suit against the Plan under ERISA, alleging that the Plan violated its fiduciary duties by 1) offering only funds that are available to the general public, and 2) requiring the Plan's participants to pay for the funds’ expenses. Judge Darrah (N.D. Ill.) concluded that the claim was controlled by Hecker and dismissed it. The court also awarded $42,000 in costs. Plaintiffs appeal.
In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Posner and Tinder affirmed. The Court stated that it had resolved the first of the plaintiffs' complaints in Hecker, where the Court held that a plan's menu of 25 mutual funds that were available to the public with expense ratios ranging from 0.07% to 1.00% was acceptable as a matter of law. The Court expressed no interest in overruling Hecker. The plaintiffs' second claim, that the Plan should cover the expenses of the funds, was not presented in Hecker. But if fails also. Although Exelon could have set up its Plan in that way, it was not required to. An employer can act in its own interest when it designs a plan and decides how much to contribute. The Court turned to the costs award. Rule 54(d), on which the district court relied in awarding costs, creates a presumption in favor of the prevailing party unless a statute or rule provides otherwise. ERISA, on the other hand, provides that a court in its discretion may allow costs to either party. Plaintiffs contend that ERISA is therefore a statute that provides otherwise and thus supersedes Rule 54 (D.). They further contend that ERISA requires a finding of bad faith or harassment to award costs. The Court conceded that it had never addressed the question head-on and that it's treatment of the question has not been consistent. It concluded that it did not need to resolve the question, because it disagreed with plaintiffs' premise that ERISA required a finding of bad faith in order to award costs. Both the rule and ERISA give the district court discretion to award costs -- that is what the district court did.
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Richard Kimmell submitted an application for a $500,000 life insurance policy to .jpg)
Michael Mach was a Will County Deputy Sheriff assigned to the traffic division. For years, he maintained a satisfactory performance record. That changed after 2003. Because of budget pressure, the department notified the deputies in the traffic division that they could be temporarily assigned to the patrol division. Mach and other deputies were not happy. He started acting out, failing to follow directives, disregarding instructions, and neglecting his duties. After reprimands and warnings, he was permanently transferred to the patrol division. Mach brought an action pursuant to the Age Discrimination in Employment Act (ADEA). In addition to his transfer, he stated five other grounds for his claim. In response to the defendants’ opening briefing on summary judgment, he abandoned all five of those other grounds. The court granted summary judgment to the Sheriff and also awarded fees of 5/6 of the costs of preparing the summary judgment motion, reflecting effort that went into attacking the "worthless" claims. Mach appeals.