Howell v. Motorola, Inc.
633 F.3d 552
| 7th Cir. | 2011Background
- Consolidated ERISA cases against Motorola entities over the Motorola 401(k) Plan and a stock fund investment; class period May 16, 2000–May 14, 2001.
- Plan offered Motorola Stock Fund among several options; participants could transfer daily, with a cap removed in 2000 allowing up to 100% in stock.
- Plaintiffs allege fiduciary breaches: imprudence by continuing to offer the Stock Fund; misrepresentation/omission of information; and failure to monitor/appoint competent fiduciaries.
- Telsim/Turkish financing transaction disclosed to SEC filings; non-public problems allegedly affected stock but were not fully disclosed to Plan participants.
- District court granted summary judgment for defendants on all ERISA claims, invoking 404(c) safe harbor; Howell signed a broad general release diverging the Langis class from relief.
- Seventh Circuit affirms: safe harbor available for disclosure and monitoring theories but not for imprudence; Howell’s release bars most ERISA claims except vested benefits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the release bar ERISA fiduciary claims? | Howell contends release does not foreclose fiduciary claims under ERISA. | Release covers all ERISA claims except vested plan benefits; waives claims broadly. | Release valid; barred except for vested benefits; district court proper. |
| Is imprudence a viable theory after LaRue? | Imprudence theory survives pending facts; Stock Fund was an imprudent option. | Imprudence lacks sufficient evidence; not supported as a matter of law. | Imprudence claim fails on the merits; not saved by LaRue. |
| Does 404(c) safe harbor apply to disclosure/monitoring theories? | Disclosures and monitoring failures fall within fiduciary duties; safe harbor is not available. | Safe harbor applies to participant-directed decisions; disclosure/monitoring acts are not within its scope. | Safe harbor applies to disclosure and monitoring; summary judgment for defendants on these theories. |
| Are the individual defendants liable for fiduciary breaches? | Several defendants breached by imprudence/monitoring failures. | No breach by individuals established; safe harbor applies; inadequate evidence of breach. | No triable issues; no liability against individuals; summary judgment affirmed. |
Key Cases Cited
- LaRue v. DeWolff, Boberg & Associates, Inc., 552 U.S. 248 (U.S. 2008) (defines 502(a)(2) vs 502(a)(1)(B) interplay in defined-contribution plans)
- Pierce v. Atchison, Topeka and Santa Fe Ry. Co., 65 F.3d 562 (7th Cir.1995) (voluntariness factors for waivers of rights)
- Leigh v. Engle, 727 F.2d 113 (7th Cir.1984) (board-appointed fiduciaries and monitoring duties)
- Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 (U.S. 1989) (ERISA fiduciary duties and trust-law foundations)
- Kamler v. H/N Telecommunication Services, Inc., 305 F.3d 672 (7th Cir.2002) (duty to disclose material information under ERISA)
- Brosted v. Unum Life Ins. Co. of America, 421 F.3d 459 (7th Cir.2005) (ERISA disclosure duties and material omissions)
- Anweiler v. American Electric Power Serv. Corp., 3 F.3d 986 (7th Cir.1993) (deliberate misrepresentation requirement for disclosure claims)