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Davis & Harman Changes; Hybrid Plan Litigation Developments

June 28, 2011

We wanted to update you on a couple of developments.

Davis & Harman Changes

First, we wanted to let you know that Jamey Delaplane will be departing Davis & Harman LLP to pursue a new professional opportunity. He will be joining The Vanguard Group to run its Washington, DC federal affairs office. Jamey has worked with the Coalition since its founding in 2003 and we wish him all the best in his new endeavors.

Davis & Harman will continue in its role working with and for the Coalition, and stepping into Jamey’s shoes will be Derek Dorn, a new partner who joined Davis & Harman at the beginning of June, and Kent Mason, an existing Davis & Harman partner and hybrid plan expert, who has already been active on Coalition matters. (Kent has been involved in preparation of Coalition comment letters and testified for the Coalition at the January Treasury/IRS hearing on the proposed hybrid plan regulations.) Derek is a retirement and tax policy expert who joined Davis & Harman from the U.S. Senate, where he has served in senior roles for Senators Jeff Bingaman of New Mexico and Joe Lieberman of Connecticut. He previously ran the Washington practice of an investment research firm and practiced law in New York. Jamey, Derek, Kent and those of us here at Towers Watson have been working on the transition and we are confident that the Coalition will continue to be well-served going forward.

Hybrid Plan Litigation Developments

Second, we wanted to alert you to some litigation developments in the hybrid plan area:

  • First, we wanted to report on a recent positive decision from the U.S. Court of Appeals for the Third Circuit, which upheld dismissal of all claims against AT&T stemming from its 1997 cash balance conversion. The June 22, 2011 opinion in Engers v. AT&T (attached) affirmed the lower court’s judgment that the conversion complied with the Age Discrimination in Employment Act and ERISA. The plaintiffs charged age discrimination, disclosure, anti-cutback and backloading violations, many of them related to wear-away periods experienced by plan participants. Like the lower court, the Third Circuit rejected all these claims.
  • Second, we wanted to alert you to some activity by a Seattle-based plaintiffs’ firm, Hagens Berman LLP. The firm believes that the Supreme Court decision in CIGNA v. Amara, which was decided on May 16, 2011 (and is attached), provides some new litigation opportunities against cash balance plan sponsors. The Supreme Court suggested in the Amara opinion that, in certain circumstances, the failure of a plan fiduciary to provide proper disclosure in conjunction with a conversion to a hybrid plan would permit a court to provide equitable remedies to participants. This includes “reformation” of the plan and the award of additional plan benefits. Hagens Berman has issued several press releases in the wake of the Supreme Court decision, which are available on the firm’s website, indicating that it is “investigating” five large hybrid plan sponsors for possible disclosure failures and asking interested employees and former employees to contact the firm.
    Department of Labor officials also believe the Amara opinion breaks new ground by allowing courts to provide equitable remedies against ERISA plan fiduciaries for the first time. The Department has filed a number of amicus briefs in appeals courts making this argument since the Amara opinion was handed down. There will clearly be ongoing debate in the courts about the meaning of the Amara decision but we wanted to alert you to these developments. We will be following the situation closely and will be back in touch as events warrant.

For more information or with any questions, please contact Jamey Delaplane (jmdelaplane@davis-harman.com; 202-662-2294) or Derek Dorn (dbdorn@davis-harman.com; 202-662-2290) at Davis & Harman.