Tuesday, April 10, 2007
The llibulletin at the Legal Information Institute (LII) at Cornell Law School recently provided this helpful blurb outlining the arguments in the upcoming ERISA fiduciary duties case of Beck v. Pace Int'l Union, 05-1448 (opinion below):
The Employee Retirement Income Security Act of 1974 (ERISA) requires private sector pension plan managers to discharge their management duties solely in the interest of plan participants and beneficiaries. When Crown Vantage, Inc. entered into bankruptcy proceedings, it terminated its existing pension plan by purchasing an annuity, rather than merging the plan into a group of plans administered by PACE International Union (PACE), which represented a number of Crown's employees.
On behalf of those employees, PACE then sued Crown for failure to discharge its ERISA duties by adequately investigating the proposed merger. The Court of Appeals for the Ninth Circuit upheld the lower court's decision that Crown's failure to adequately consider the merger was a violation of its fiduciary duty under ERISA. The Supreme Court's decision in this case will determine whether an employer's adoption, modification, or termination of a pension plan can be based on its own business needs or the best interests of its employees.
A more full summary and analysis by LII can be found here. Oral argument will be on April 24th.