Risk Update

Conflicts Allegations in the News — 401(k)s and Medical Docs Driving Disputes

Posted Dan Bressler

“Defendants in DST Systems Lawsuit Say Plaintiffs’ Attorneys Have a Conflict” —

  • “A Memorandum of Law in Support of the DST Defendants’ Motion to Disqualify Conflicted Counsel says the plaintiffs’ counsel concurrently represent approximately 420 participants in the DST Systems Inc. 401(k) Profit Sharing Plan together with three plan fiduciaries whom they allege in these and other actions committed a series of Employee Retirement Income Security Act (ERISA) violations that caused losses to the plan accounts of their other clients.”
  • “‘In other words, plaintiffs’ counsel represent three individuals that they accuse of wrongdoing at the same time as they represent the supposed victims of that very alleged wrongdoing,’ the memo states.”
  • “The memorandum in support of the motion to dismiss plaintiffs’ counsel says they represent three former members of the DST Advisory Committee—the named fiduciary of the plan. And its members owed fiduciary duties to plan participants, including the plaintiffs’ counsel’s other clients, to oversee the plan in the best interests of the participants. The memo points out that all the alleged conduct occurred during the period between 2010 and 2013 when the plaintiffs’ counsel’s clients served on the Advisory Committee.”
  • “However, the plaintiffs’ counsel now assert that their claims are supposedly limited to ‘breaches occurring in or after 2014’ — three months after the last of their three clients ended their service on the Advisory Committee. Yet, the memo says, the complaint obviously alleges ‘misconduct that began and continued prior to 2014 — whether the selection and retention of Ruane, supposedly excessive fees, the investment strategy employed by Ruane or the Valeant investment itself—during the time when plaintiffs’ counsel’s clients were plan fiduciaries.'”

“Ex-United Worker Seeks To DQ Reed Smith Over Medical Docs” —

  • “A former United Airlines flight attendant who contends the company wrongfully terminated him has asked a California federal court to disqualify Reed Smith LLP from the litigation after its attorneys purportedly viewed his confidential medical records without permission.”
  • “Chagas contends that attorneys for both sides had agreed that his lawyer would get the first look at certain medical records before Reed Smith saw them, according to the motion. Yet a process server forwarded the documents to United’s attorneys in early February before Chagas’ lawyer had a chance to redact them, according to the motion.”
  • “Chagas’ attorney, Martin I. Aarons, asked that Reed Smith either destroy or sequester the documents, but United’s attorneys contended that Aarons had missed an agreed-to deadline for performing the redaction work, according to emails attached to Thursday’s motion.”
  • “Chagas contends that Reed Smith violated California’s conduct rules for attorneys, as the firm was aware that the documents had been inadvertently produced and had received a request that it not review them, yet went ahead and purportedly reviewed them anyway, according to the disqualification motion.”