The Seventh Circuit has issued in the last few years a series of noteworthy ERISA decisions. Its decision in Howell v Motorola, Inc. — F.3d –, 2011 WL 183966 (Jan. 21, 2011) is another important decision with potentially broad implications.
As discussed in greater detail in the attached memo, the Seventh Circuit ruled in Howell that a release executed by one plaintiff barred his ERISA–based stock drop claims, even though claims for benefits under the Motorola plan were expressly carved out from the release. The Court also held that ERISA § 404(c) precluded plaintiffs from proceeding with claims that (a) the plan fiduciaries did not disclose sufficient information to participants regarding Motorola’s financial condition; and (b) those who appointed the plan fiduciaries did not sufficiently monitor their appointees. But the Court adopted the position long taken by the DOL that § 404(c) does not apply to claims based on the plan fiduciaries’ selection of imprudent investment options. The Court nevertheless granted summary judgment to defendants on the prudence claim, concluding that there was no evidence that Motorola faced an imminent financial collapse.
