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Civil actions under ERISA.

819. What is the appropriate jurisdiction and venue to bring a civil action under ERISA Section 4070?

Federal district courts have exclusive jurisdiction of civil actions under ERISA Section 4070. Such actions may be brought in the district court located where the plan is administered, where the violation took place, or where the defendant resides or may be found. Service of process for such civil actions may be served in any district where a defendant resides or may be found. Such jurisdiction resides in the federal district courts without regard to the amount in controversy or the citizenship of the parties. (1)

The federal district court hearing any civil action brought under ERISA Section 4070 may, in its discretion, award all or a portion of the costs and expenses incurred in connection with such action, including reasonable attorneys' fees, to any party who prevails or substantially prevails in such action. There is an exemption that prohibits plans from being required to pay any costs and expenses in any action. (2)

820. What is the statute of limitations for any civil action brought under ERISA Section 4070?

Any civil action under ERISA Section 4070 must be brought within six years after the date on which the cause of action arose, or three years after the earliest date on which the plaintiff acquired, or should have acquired, actual knowledge of the existence of such cause of action. (3)

In the case of a fiduciary plaintiff who brings the action in the exercise of his fiduciary duties, the statute of limitations for bringing an action is the date on which the plaintiff became a fiduciary with respect to the plan if such date is later than six years after the date on which the cause of action arose, or three years after the earliest date on which the plaintiff acquired, or should have acquired, actual knowledge of the existence of such cause of action. (4)

In the case of fraud or concealment, the statute of limitations is six years, instead of three years. (5)

821. Who may bring a civil action against the PBGC?

ERISA Section 4003(f)(1) states that, except with respect to withdrawal liability disputes with multiemployer plans, "any person who is a fiduciary, employer, contributing sponsor, member of a contributing sponsor's controlled group, participant or beneficiary, and is adversely affected by any action of the corporation [PBGC] with respect to a plan in which such person has an interest, or who is an employee organization representing such a participant or beneficiary so adversely affected for purposes of collective bargaining with respect to such plan, may bring a civil action against the corporation for appropriate equitable relief in the appropriate form."

The court may award all or a portion of the costs and expenses incurred in connection with a civil action brought against the PBGC to any party who prevails or substantially prevails in such action. (1)

822. What is the appropriate jurisdiction and venue in which to bring a civil action against the PBGC?

The provisions of ERISA Section 4003(f)(1) are the exclusive means for bringing civil actions against the PBGC under the plan termination provisions of ERISA, including actions against the PBGC in its capacity as a trustee. (2)

The district courts of the United States have exclusive jurisdiction over civil actions brought against the PBGC, without regard to the amount in controversy. (3)

The appropriate court for bringing such actions is the federal district court before which the termination proceedings are being conducted. If no such termination proceedings are being conducted, the appropriate court is the federal district court for the judicial district in which the plan has its principal office, or the federal district court for the District of Columbia. (4)

In any suit, action or proceeding in which the PBGC is a party or intervenes in any state action, the PBGC may, without bond or security, remove such suit, action, or proceeding from the state court to the federal court for the district or division in which such suit, action, or proceeding is pending. (5)

823. What is the statute of limitations on civil actions brought against the PBGC?

Civil actions may not be brought against the PBGC after the later of:

1. Six years after the date on which the cause of action arose; or

2. Three years after the date on which the plaintiff acquired, or should have acquired, actual knowledge of the existence of his cause of action. (6)

In the case of a fiduciary plaintiff who brings the action in the exercise of his fiduciary duties, the 3-year statute of limitations begins to run on the date on which the plaintiff became a fiduciary with respect to the plan, if such date is later than the date on which the plaintiff acquired, or should have acquired, actual knowledge of the existence of such cause of action. (7)

In the case of fraud or concealment, the period for the statute of limitations is extended from three years to six years. (8)

824. When may the PBGC bring a civil action?

The PBGC may sue in a federal district court to enforce the termination insurance provisions of ERISA or to seek appropriate equitable or legal relief. (1)

The PBGC may intervene in an action brought for a declaratory judgment that has been instituted by an employee, employer, or plan administrator. (2) The PBGC is also permitted to file a petition for declaratory judgment to appeal an IRS ruling relating to plan qualification, plan amendments, and terminations. (3)

825. What is the appropriate jurisdiction and venue in which the PBGC may bring civil actions?

The district courts of the United States have exclusive jurisdiction over civil actions brought under the multiemployer plan provisions; however, state courts of competent jurisdiction have concurrent jurisdiction over an action brought by a plan fiduciary to collect a withdrawal liability. (4)

ERISA Section 4301(d) establishes jurisdiction in the district court where the plan is administered or where a defendant resides or does business in any civil action under the multiemployer plan provisions. Service of process may be made in any district where a defendant resides, conducts business, or may be found.

The PBGC may remove any state suit, action, or proceeding under the multiemployer plan provisions in which it is a party, or has intervened, to a federal district court. (5)

A copy of the complaint in any civil action under the multiemployer plan provisions must be served upon the PBGC by certified mail. The PBGC may intervene in any such action. (6)

826. What is the statute of limitations for civil actions brought by the PBGC?

The PBGC is held to similar statutes of limitations for civil actions to enforce the termination provisions of ERISA and for other civil actions brought by the PBGC. ERISA Section 4003(e)(6) (A) provides that a civil action brought by the PBGC may not be brought later than:

1. Six years after the date on which the cause of action arose; or

2. Three years after the earliest date on which the PBGC acquired, or should have acquired, actual knowledge of the existence of the cause of action.

If the PBGC brings the action as trustee, the applicable statute of limitations begins to run on the date on which the PBGC became a trustee, if this date is later than the date on which the PBGC acquired, or should have acquired, actual knowledge of the existence of the cause of action. (7)

In the case of fraud or concealment, the statute of limitations on civil actions brought by the PBGC is extended to six years after the earliest date on which the PBGC acquired, or should have acquired, actual knowledge of the existence of the cause of action. (1)

827. Does the PBGC encourage alternative dispute resolution?

In 1999, the PBGC announced the institution of its policy to use alternative dispute resolution for resolving appropriate disputes in a timely and cost-efficient manner. In announcing the new policy, the PBGC stated that "in appropriate circumstances, there may be more effective methods to resolve issues that would otherwise be resolved through adversarial administrative or judicial processes. Although there is never an entitlement to alternative dispute resolution, the voluntary use of alternative dispute resolution, such as mediation, fact-finding, neutral evaluation, and arbitration, often can provide faster, less expensive, and more effective resolution of disputes that arise with employees, contractors, the regulated community, and others with whom the agency does business." (2)

For further information on the PBGC policy regarding alternative dispute resolution, contact:

PBGC Office of the General Counsel

Pension Benefit Guaranty Corporation

1200 K Street, NW

Washington, DC 20005-4026

828. What are the PBGC notice obligations in light of the recent events regarding Bernard L. Madoff Investment Securities, LLC?

According to the PBGC in a notice issued on February 6, 2009 concerning single-employer and multiemployer defined benefit pension plans insured by the Pension PBGC that may have experienced significant investment losses resulting from a customer relationship with Bernard L. Madoff Investment Securities LLC, either directly or through an investment advisor, if the losses of a single-employer plan are sufficient to render the plan unable to pay benefits when due, the plan administrator or sponsor is required by ERISA Section 4043 to notify PBGC of this event within 30 days of knowing or having reason to know that this reportable event has occurred. The plan administrator must notify PBGC of a reportable event by filing PBGC Form 10, which is available at www.pbgc.gov. Questions should be directed to Roger Reiersen of PBGC's Department of Insurance Supervision and Compliance. He may be contacted at (202) 326-4000, extension 3704, or reiersen.roger@pbgc.gov.

Multiemployer plans that are covered by Title IV of ERISA do not have an obligation to notify PBGC when a reportable event under Section 4043 occurs. However, if the trustees believe that benefits cannot be paid when due, or all, or substantially all, employers cease contributing to the plan, the trustees have legal responsibilities, which may include reducing benefits, assessing withdrawal liability, and notifying PBGC. If plan representatives have questions or concerns, they may call the Multiemployer Division at 202-326-4000, ext. 3012, or send an e-mail to Multiemployerprogram@pbgc.gov.

Plan administrators and sponsors of affected single-employer and multiemployer plans should also consult a qualified advisor concerning recovery of funds invested directly or indirectly with Madoff Securities. (1)

(1.) ERISA Sec. 4070(c).

(2.) ERISA Sec. 4070(e).

(3.) ERISA Sec. 4070(f)(1).

(4.) ERISA Sec. 4070(f)(2).

(5.) ERISA Sec. 4070(f)(3).

(1.) ERISA Sec. 4003(f)(3).

(2.) ERISA Sec. 4003(f)(4).

(3.) ERISA Sec. 4003(f)(6).

(4.) ERISA Secs. 4003(f)(2)(A), 4003(f)(2)(B), 4003(f)(2)(C).

(5.) ERISA Sec. 4003(f)(7).

(6.) ERISA Secs. 4003(f)(5)(A), 4003(f)(1)(B).

(7.) ERISA Sec. 4003(f)(5)(B)(ii).

(8.) ERISA Sec. 4003(f)(6).

(1.) ERISA Sec. 4003(e)(1).

(2.) In accordance with IRC Section 7476.

(3.) ERISA Sec. 3001(c); IRC Sec. 7476.

(4.) ERISA Sec. 4301(c).

(5.) ERISA Sec. 4003(f)(7).

(6.) ERISA Sec. 4301(g).

(7.) ERISA Sec. 4003(e)(6)(B).

(1.) ERISA Sec. 4003(e)(6)(C).

(2.) 64 Fed. Reg. 17696 (4-12-99).

(1.) PBGC No. 09-14.
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Title Annotation:CHAPTER XII: CIVIL COMPLIANCE AND ENFORCEMENT ISSUES
Publication:ERISA Facts
Date:Jan 1, 2010
Words:1894
Previous Article:Plan terminations.
Next Article:Chapter XIII: criminal enforcement.

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