Compliance

SafeWay ERISA Lawsuits Advance in Federal Court

By John Manganaro editors@strategic-i.com | March 20, 2017
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The defense was more successful arguing Lorenz’s prohibited transaction claim is time-barred under the three-year statute of limitations.

“The Safeway Defendants contend that the 2011 Participant Disclosure Notices were distributed to Lorenz and all other plan participants no later than 2012, and Lorenz does not dispute this contention in his briefing,” the decision states. “Unlike a claim for breach of fiduciary duty, which turns on the prudence of a fiduciary’s decisionmaking process, a violation of Section 1106(a)(1)(C) occurs when a fiduciary with respect to a plan causes the plan to engage in a transaction, if he knows or should know that such transaction constitutes a direct or indirect furnishing of goods, services, or facilities between the plan and a party in interest.” According to the court, Lorenz “had actual knowledge that the Safeway defendants had caused the plan to engage in such a transaction for services with its recordkeeper no later than 2012, when the 2011 Participant Disclosure Notice was available to him.”

“That disclosure provides that the recordkeeper will receive fees from the plan for its services, and therefore gave Lorenz actual knowledge of the prohibited transaction alleged here,” the decision states. “This is true regardless of whether Lorenz actually read the Participant Disclosure Notice … Despite having actual knowledge of the alleged prohibited transaction, Lorenz did not file suit until four years later in 2016. Therefore, his prohibited transaction claim is untimely under ERISA’s three-year statute of limitations.”

After significant further consideration of various standards laid out by ERISA, the court “dismisses the prohibited transaction claim against the Safeway Defendants and Great-West with prejudice because it is untimely under the three-year statute of limitations. Because this is the only claim asserted against Great-West, the Court directs the Clerk to terminate Great-West as a defendant in this action. The Court denies the motion to dismiss the claim against the Safeway Defendants for breach of fiduciary duty.”

A similar set of facts and argumentation make up the text of the Terraza vs SafeWay decision—except no claims were time barred in that case.