By Jonathan Stempel and Linda Stern
WASHINGTON, Oct 29 (Reuters) - The U.S. Supreme Court
refused on Monday to consider two appeals in a case weighing the
ability of tens of millions of Americans to bring lawsuits over
their retirement plans.
Without comment, the court let stand an April ruling by the
3rd U.S. Circuit Court of Appeals in Philadelphia that revived
part of a case accusing John Hancock Life Insurance Co, a unit
of Canada's Manulife Financial Corp, of charging excessive fees
on annuity insurance contracts in 401(k) plans.
In its appeal, Hancock had warned that letting the lawsuit
go forward could discourage employers from setting up retirement
plans governed by the Employee Retirement Income Security Act of
1974 by driving up costs to account for litigation.
It said plans under that law in recent years have held more
than $5 trillion of assets covering in excess of 86 million
workers.
Gregory Ash, a partner specializing in employee benefits at
Spencer Fane Britt & Browne in Overland Park, Kansas, said the
decision helps 401(k) participants by letting them sue plan
providers directly, rather than be forced to sue individual
employers in many lawsuits.
"It is important - for this case, in particular, because it
makes it a lot harder for John Hancock to make it go away," said
Ash, who is not involved in the John Hancock case. "The
settlement value (can be) a lot higher than if it were just the
employees of one company."
In its decision, the 3rd Circuit partially reversed a lower
court decision in finding that former plan beneficiaries could
pursue ERISA claims without first demanding that fund trustees
take action and adding the trustees as parties.
But it agreed with the lower court that beneficiaries could
not sue under the Investment Company Act of 1940 because they
did not invest in the funds throughout their lawsuit and
therefore could not adequately represent similar plaintiffs.
The plan participants appealed that part of the decision to
the Supreme Court, saying that failing to allow a private cause
of action conflicted with the ICA's provision for "rescission at
the instance of any party" and recovery for "unjust enrichment."
Co-lead plaintiff Danielle Santomenno was an investor in the
relevant funds until June 2010 and co-lead plaintiffs Barbara
Poley and Karen Poley until January 2010. The 3rd Circuit said
they all lacked standing to sue under the ICA because the second
amended complaint was filed in October 2010.
The cases are John Hancock Life Insurance Co et al v.
Santomenno et al, U.S. Supreme Court, No. 12-202; and Santomenno
et al v. John Hancock Life Insurance Co et al, U.S. Supreme
Court, No. 12-208.
Follow us on Twitter @ReutersLegal | Like us on Facebook