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Business litigation may include claims of fiduciary violations

In Oregon and elsewhere, claims of fiduciary duty violations are common litigation issues in the field of commercial and business law. These are sometimes brought by consumers against companies for alleged breach of fiduciary duties in providing insurance or investment services. Sometimes, such business litigation actions are brought as class actions on behalf of a group of consumers.

That type of litigation is demonstrated by a federal class action filed against Transamerica Life Insurance Co. and some of its affiliates. The case has been in litigation since 2011 but a federal appeals court recently appears to have put the matter to rest. In the federal trial court, the judge had ruled mostly for the plaintiffs and against Transamerica. Attorneys for the company argued that the defendants were not fiduciaries under the Employee Retirement Income Security Act (ERISA).

Recently, the federal appeals court for the 9th Circuit reversed the district court’s decision and vacated the judge’s certification of a class action suit. The Court of Appeals directed the federal district court in California to dismiss the case. The Court held that when the service provider’s compensation is set forth in a contract with an employer, collection of fees out of the plan funds is not a breach of the provider’s fiduciary duty. The plaintiffs were participants in 401(k) plans administered by Transamerica.

The Court agreed with Transamerica’s argument that it wasn’t a fiduciary regarding the terms of its own compensation. The plaintiffs had alleged other investment irregularities by the administrator, but the Court ruled that those actions were also not subject to a claim of fiduciary responsibility. The three-judge panel issued a unanimous decision. Fiduciary claims are common issues in business litigation cases in the Oregon federal courts under ERISA and other laws.

Source: investmentnews.com, “Appeals court orders fiduciary breach case vs. Transamerica to be dismissed“, Robert Steyer, Feb. 28, 2018

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