Admittedly, the title may be a bit misleading – there is no foolproof way to shield yourself from pension errors.  Pensions and other retirement benefits are complicated beasts, often tracking 30+ years of an employee’s career history across multiple positions, companies, plan amendments and, typically, through at least one merger or acquisition.

Fortunately, there are a few ‘best practices’ which, if followed, may allow you to document the promises made to you along the way, so that any unwelcome surprise waiting for you when it is time to finally ‘cash in the chips’ may be resolved as expeditiously as possible – and in your favor.

Print out your pension statements and summaries quarterly.

These documents are generally updated on a quarterly basis – if not, you have the right to request updated statements at any time.  Statements and accounts summaries can help you track accruals throughout the years and diagnose if, and when, an issue may have first arisen.  They can also serve as valuable evidence should an appeal or lawsuit become necessary.

Save and/or scan every piece of correspondence you receive from either your employer or the plan.

A seemingly innocuous letter informing you of a ‘minor’ modification to the pension calculation formula today may be worth tens of thousands of dollars to you a decade from now – it is simply impossible to predict.  While employers and pension administrators are required, by ERISA, to turn over all correspondence sent to pension participants upon request, generally the only way to verify compliance, and thereby ensure all relevant communications are accessible, is to keep your own file.

Ask for everything in writing.

While your regional manager may have an excellent memory and reputation for honesty, obtaining written confirmation in some form of every message delivered to you from either your employer or an agent of the pension administrator in relation to your pension is the only way to ensure those characteristics endure.  Do not settle for handshake promises or announcements at the end of weekly meetings – ERISA requires all material modifications to your pension plan to be communicated either electronically or via mail.

When calling on your pension, document the first and last name of every individual you speak with, as well as an employee identification number and call number, if possible.

While the electronic recording at the beginning of your call may kindly inform you that your call is being recorded, it does not guarantee you access to that recording.  Corporations’ data retention policies regarding recordings of calls are hardly transparent and rarely available, so if a call recording ever holds the key to evidencing your entitlement to a larger pension amount, do not be surprised if it has ‘unfortunately’ been purged under a ‘regular or routine’ data-deletion schedule.  Even if the call recordings are available, administrators are typically unwilling to release those prior to litigation.  Documenting names and any form of identification numbers is a best practice which can lend credence to a claim of explanations or promises made verbally, in the event the actual recordings are unobtainable.

Digitally preserve any unusual activity.

Modern technology enables you to prepare for the worst case scenario in real-time.  If you notice unusual activity on your online pension portal, take screenshots and/or recordings of the abnormality.  Document the URLs, export a PDF version of the webpage causing you concern.  Any form of digital evidence is exponentially more persuasive, and valuable, than personal testimony.

Document each and every employment or financial decision you make which is predicated on your current understanding of your future pension entitlement.

From purchasing a new home to extending employment for another year, innumerable day to day decisions are based upon a basic understanding of the size of one’s pension – and rough calculations of where it should be at come retirement.  Keep a journal in some form of these decisions, dating the point in time the decision was made and, ideally, what your current expected pension cash-out is.  In the event issues later arise, a written record of your reliance upon calculations provided to you through past years is critical to maximizing your likelihood of recovering all that was promised to you.

 

While these ‘best practices’ may seem tedious, or even unnecessary, in light of your plan’s ‘superb’ funding status, the amounts potentially at stake justify surplus precaution.  Creating your own paper-trail should give you peace of mind that you are preparing yourself for a worst-case scenario which could rob you of the satisfaction of reaching retirement.

On January 22nd, 2019, a federal district judge certified a class of at least 28,000 participants and beneficiaries of the Cornell University Retirement Plan, consisting of the Employees of the Endowed Colleges at Ithaca Plan and the Cornell University Tax Deferred Annuity Plan, in Cunningham et al. v. Cornell University et al., No. 1:16-cv-06525 (S.D.N.Y., Jan. 22, 2019).

Consistent with a number of suits for underfunded and poorly performing university pension plans, the plaintiffs’ complaint asserts the fiduciaries did not manage the plans prudently, underperformed, and accrued excessive administrative fees in violation of ERISA Sections 404 and 406, 29 U.S.C. §§ 1104, 1106.

Each plan holds more than a billion dollars in assets, a fact which the plaintiffs claim affords the plans and their fiduciaries “tremendous bargaining power in the market for retirement plan services.”  While participants are allowed to designate which of the available investment options to invest their individual accounts, the Plans’ fiduciaries choose the investment option offerings, which as of December 2014 averaged 300 separate investment options between the two plans.

The defendant fiduciaries, including Cornell University, the Retirement Plan Oversight Committee, the plan recordkeepers – TIAA-CREF (Teachers Insurance and Annuity Association of America) and the College Retirement Equities Fund) and Fidelity, and CAPTRUST Financial Advisors, had previously filed a motion to dismiss which was denied in part.

In denying the defendants’ motion to dismiss, the federal court held that the plaintiffs’ amended complaint plausibly alleged:

  • All defendants, other than CAPTRUST, failed to monitor and control the plans’ recordkeeping fees and failed to solicit bids from competing recordkeeping providers on a flat per-participant fee basis, and failed to determine, in a timely manner, whether the plans would benefit from moving to a single recordkeeper; and
  • All defendants unreasonably continued to offer as a fund option the CREF Stock Account and TIAA Real Estate Account, despite high fees and poor performance, selected and retained funds with high fees and poor performance relative to other available options, and selected and retained high-cost mutual funds instead of identical lower-cost funds.

In ruling on the motion to dismiss, the court also held that the plaintiffs had plausibly alleged that Cornell University and Mary G. Opperman, the head of the Oversight Committee, failed to monitor the performance of their appointees to the Committee and failed to remove appointees whose performance was inadequate as related to selecting and retaining funds.

In certifying the class, the court defined the class as “All participants and beneficiaries of the Plans from August 17, 2010, through the date of judgment, excluding the Defendants and any participant who is a fiduciary to the Plans.”

The court held that the plaintiffs had demonstrated individualized losses for each count which survived the motion to dismiss, noting that the Second Circuit has previously held that plaintiffs who assert claims in a derivative capacity on behalf of a retirement plan establish sufficient injury-in-fact by alleging injuries to the plan itself, regardless of whether the plan is a defined benefit or defined contribution plan.  Nor was standing predicated on a plaintiffs actual purchase of a financial instrument – as long as the defendant’s conduct in question implicates the same set of concerns, a plaintiff can bring claims on behalf of the absent class members who had purchased said instruments. (“Personalized injury-in-fact requires named plaintiffs to demonstrate individualized losses in the form of some amount of financial damage; it does not require harm to be shown from investment in each fund that makes up an overall plan.”).

In adjudging commonality, the court noted that the common contention of the classes’ action was that “the investment lineup made available to all participants violated ERISA… [and that] the centralized administration of [the plans] is common to all class members.”  This commonality holds regardless of the number of individual funds available in each plan, as the allegations go to the defendants’ prudential oversight and failure to take actions that would result in lower costs.

Also of note, the court refused to credit defendants’ argument that individualized statute of limitation calculations negated the “many other common issues in this case.”

Regarding typicality, the court held that “[e]ach plaintiff’s claim and each class member’s claim is based on the same legal theory and underlying events, namely, that CAPTRUST and the Cornell Defendants breached their duty of prudence by imprudently selecting, administering, and reviewing the Retirement and TDA Plans’ investments, recordkeeping fees, and the Committee’s delegates.”

A full copy of the court’s opinion and order is available here.

The Litigation Section of State Bar of Michigan has published an article authored by J.J. Conway, Esq. discussing the importance of developing a theory of the case early in the litigation process.  The article, published in the The Litigation Journal, discusses ways that litigators should formulate a theory of the case early in the pretrial process in order to litigate more effectively. The article is entitled, “A Strong Theory of the Case: The Faster It Is Developed, The Better The Results” (Fall 2017). The article is available here, The Litigation Journal (Fall 2017) – A Strong Theory of the Case

J.J. Conway was a featured speaker at the State Bar of Michigan’s Annual Meeting and NEXT lawyer development conference held in the Cobo Convention Center in Detroit, Michigan on Friday, September 29, 2017. Conway made presentation to new attorneys and those interested in self-employment in a presentation entitled, Hanging Out Your Shingle in 2017.  Conway has presented similar lectures to the State Bar Annual Meeting’s attendees in Grand Rapids, Lansing, and Detroit at prior annual meetings. He has also written on the topic for various legal publications.

The Michigan Court of Appeals has held that, for the purposes of a claim under the Court of Claims Act, the statute of limitations may begin to run prior to any actual deprivation of financial benefit.

In Bauserman v. Unemployment Insurance Agency, No. 333181 (Mich. Ct. App. Jul. 18, 2017), the Michigan Unemployment Insurance Agency (defendant) appealed a trial court’s decision denying the defendant’s motion for summary disposition.  The Court of Appeals held that a violation of the Court of Claims Act did exist, reversing the trial court’s decision.

The dispute centered on the defendant’s use of an automated decision-making system to both “detect and adjudicate suspected instances of employment benefit fraud.”  Id. at 1.  Once the system ‘detected’ an instance of benefit fraud, it would issue a notice and questionnaire in regards, either to the employee’s home address or an online unemployment portal which was rarely, if ever, accessed by employees.  Following the notice, defendant would routinely “intercept” tax refunds, garnish wages and initiate collection activity through a court of law.  Id. at 2.

Plaintiffs alleged that the Unemployment Insurance Agency’s use of “an automated decision-making system for the detection and determination of fraud cases, whereby the computer code in the automated decision-making process contains the rules that are used to determine a claimant’s guilt, and those rules change the substantive standard for guilt or are otherwise inconsistent with the requirements of due process.”  Id. at 8.

The Court of Claims Act, MCL 600.6431(1), provides, in relevant part, that “[n]o claim may be maintained against the state unless the claimant, within 1 year after such claim has accrued, files in the office of the clerk of the court of claims either a written claim or a written notice of intention to file a claim against the state or any of its departments….”  In actions for property damage or personal injuries, the claimant only has “6 months following the happening of the event giving rise to the cause of action” to file a written claim.  MCL 600.6431(3).

The court identified the determinative question as “what event gave rise to [the plaintiffs’] cause of action.”  Bauserman at 5.  The triggering event was either when the defendant issued notices informing the plaintiffs they were disqualified from receiving unemployment benefits or when the defendant actually seized the plaintiffs’ property.  Id.

In McCahan v. Brennan, the court held that MCL 600.6431 is to be “understood as a cohesive whole.  Subsection (1) sets forth the general rule, for which subsection (2) sets forth additional requirements and which subsection (3) modifies for particular classes of cases that would otherwise fall under the provisions of subsection (1).”  492 Mich. 730, 742 (2012).  Thus, while subsection (1) of MCL 600.6431 may provide a longer time frame to file a notice with the Court of Claims, subsection (3) shortens the time period for applicable claims to six months after the plaintiff’s cause of action accrues, or “when the wrong on which they base their claims was done.”  Bauserman at 7.

The Bauserman plaintiffs alleged a violation of the Michigan Constitution, Article 1, § 17, which provides that “[n]o person shall be… deprived of life, liberty or property, without due process of law….”  Specifically, the plaintiffs alleged that the defendant failed to “follow the minimum due process standards required under federal law with respect to the collection of unemployment debts, including overpayment and penalties.”  Id. at 8.

The court held that while the plaintiffs claimed “the wrong on which their claims are based took place when defendant intercepted federal and state tax refunds, garnished their wages and forced repayment of unemployment benefits[,]” the alleged wrong actually took place “when defendant issued notices informing plaintiffs of its determination that plaintiffs had engaged in fraudulent conduct, and they were not given the requisite notice and opportunity to be heard.”  Id. at 9.  Therefore, the “economic deprivation” encountered by the plaintiffs was a secondary result of the original deprivation of due process, and not the proper point to adjudge the applicable statute of limitations.  Id.  Therefore, it was the notification of the deprivation of unemployment benefits, not the actual seizure of said benefits, which constituted the statutory point of claim accrual.

The Bauserman court cited Frank v. Linkner, a 2017 Sixth Circuit decision, which held in part that a plaintiff’s claims could accrue prior to a plaintiff incurring “calculable financial injury….”  894 NW2d 574 (2017) (Docket No. 151888), slip op at 14.

Following this decision, it is clear that a plaintiff’s pre-suit inquiry into the possible statute of limitations for claims arising against the State of Michigan must not be limited simply to the date the actual harm accrued, but should also account for any conduct preceding the harm which may have actually triggered the statutory cause of action.

J.J. Conway was a featured speaker before the practice management class of the University of Detroit Mercy School of Law on Friday, February 17, 2017.  Conway is a 1996 UDM law graduate and was invited along with other self-employed attorneys to discuss the advantages of representing clients by owning one’s own law firm.  Conway has previously presented lectures to the State Bar of Michigan’s Practice Management Section and the Institute of Continuing Legal Education (ICLE) and has written on the topic for various legal publications.

J.J. Conway has been named a 2017 “Top Lawyer” by dbusiness magazine in its annual Top Lawyers Issue.  According to dbusiness magazine, “For our 2017 Top Lawyers peer review survey, we polled 19,000 attorneys in Wayne, Oakland, Macomb, Washtenaw, and Livingston counties. Each attorney was asked to nominate lawyers among 48 legal specialties.  More information about the peer reviewing rating process may be found by visiting the magazine’s website, dbusiness.

J.J. Conway Law is an employee benefits law firm representing clients in the matters involving ERISA, pension, long-term disability insurance, healthcare, life insurance, as well as other benefits matters. Based on Royal Oak, Michigan, the firm represents clients throughout the United States in ERISA and employee benefits matters, including complex benefit class action cases.

J.J. Conway has been named a 2016 SuperLawyer by Thomson Reuters.  J.J. has been listed as SuperLawyer or SuperLawyer Rising Star on nine occasions. SuperLawyers is a “rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer-recognition and professional achievement.” The selection process “includes independent research, peer nominations, and peer evaluations.” www.superlawyers.com.

For more information and to view J.J.’s Superlawyer profile, please visit:
J.J. Conway’s SuperLawyer Profile.

J.J. Conway Law is an employee benefits law firm representing clients in the matters involving ERISA, pension, long-term disability insurance, healthcare, life insurance, as well as other benefits matters. Based on Royal Oak, Michigan, the firm represents clients throughout the United States in ERISA and employee benefits matters, including complex benefit class action cases.

On October 28, 2014, Mary Williams Walsh, a New York Times journalist who has been chronicling the nation’s public pension crisis, reported on a case in which JJ Conway Law is one of the law firms representing the plaintiffs.  Appearing on the front page of the New York Times Business Section, the paper published an in-depth account of two cases pending in Detroit, Michigan against the plans’ actuaries.  (http://dealbook.nytimes.com/2014/10/28/lawsuit-contends-consultant-misled-detroit-pension-plan/?_r=0).

The article entitled, Lawsuit Contends Consultant Misled Detroit Pension Plan, states:

The lawsuit seeks to have the pension plan made whole, in an amount to be determined at trial, and to have Gabriel Roeder enjoined “from perpetrating similar wrongs on others.”  Lawsuits like the one [the Plaintiff] has filed have also been brought against Gabriel Roeder by members of Detroit’s pension fund for police and firefighters, and the fund for the employees of surrounding Wayne County. The plaintiffs cite damage growing out of Detroit’s financial collapse, but the litigation may have implications far beyond southeastern Michigan because of Gabriel Roeder’s status and influence in the world of public pensions. Its method for scheduling pension contributions is exceptionally popular and widely used by governments, although federal law does not permit companies to use it.

Serving together with the law firm of Mantese Honigman, JJ Conway Law is representing municipal retirees in litigation involving the City of Detroit General Retirement Systems, the City of Detroit Police & Fire Retirement System, and the Wayne County Employees Retirement System.  The claims assert that funds’ actuaries did not adequately account for changing economic conditions facing the municipalities and did not account for the massive losses incurred in the administration of funds when making actuarial assumptions and making funding recommendations. The firms successfully resolved claims against the Trustees of the two City of Detroit pension systems for losses associated with the widespread use of alternative and unregulated investments.