In July 2026, judges from various courts issued six important rulings implicating the Employee Retirement Income Security Act (ERISA) that practitioners should know.
Ninth Circuit Upholds Denial of Arbitration in 401(k) Plan Case
In Pover v. The Capital Group Cos. Inc. et al., Case Number 24-5298, a split panel of the Ninth Circuit affirmed a California trial court’s denial of a motion to compel arbitration in a 401(k) self-dealing class action lawsuit against Capital Group. The court held that the provision in Capital Group’s retirement plan documents requiring dispute resolution outside the courtroom was unenforceable because it would nullify rights under ERISA.
Ex-employee Cathy Pover sued the Los Angeles investment fund manager in November 2023, claiming that expensive and poorly performing in-house fund options adversely affected the employees’ $5 billion 401(k) plan. Pover also accused Capital of generating millions in fees for one of its subsidiaries. Collectively, Pover alleged that Capital violated the fiduciary duties of prudence and loyalty under ERISA. Capital manages more than $3 trillion in assets.
The Ninth Circuit’s decision in Pover follows several other appellate courts that have rejected arbitration at the behest of employers in ERISA class action litigation. Those courts include the Sixth, Second, Third, Tenth, and Seventh Circuits in a series of decisions between September 2021 and August 2024.
Federal Court Denies Dismissal Motion in Wellness Program Tobacco Fee Challenge
A Missouri federal district court judge largely denied a motion to dismiss by auto parts retail giant O’Reilly Automotive, Inc. in a case challenging the company’s wellness program. In Hatfield v. O’Reilly Automotive Inc., Case Number 6:26-cv-03030, former worker John Hatfield filed suit claiming that the company used its wellness program to unlawfully charge him more each year for health insurance because he was a tobacco user.
The judge found that Hatfield has sufficiently alleged a claim for violating ERISA, i.e., that the tobacco surcharge in O’Reilly’s wellness program failed to meet all federal requirements. The decision is at odds with other courts’ rulings granting large employers’ motions to dismiss in similar cases, including Campbell’s Co. and Target Corp.
Federal Court Grants Elevance Dismissal Motion in 401(k) Forfeiture Suit
An Indiana federal district court judge granted a motion to dismiss by insurance company Elevance Health, f/k/a Anthem, in a proposed class action suit alleging misuse of forfeited employee 401(k) plan funds. U.S. Judge Sarah Evans Barker found that Elevance employee retirement plan participant Holly Hendrickson, who filed suit in May 2025, failed to state a claim for violating ERISA. Judge Barker dismissed the suit without prejudice and gave Hendrickson 40 days to amend her complaint.
The judge found that although Hendrickson had stated a legitimate claim that Elevance engaged in a fiduciary act in choosing how to spend forfeited funds, she failed to provide allegations sufficiently detailed to support that claim. According to the judge, Hendrickson’s complaint was short on details showing how Elevance’s use of forfeited funds breached fiduciary duties under ERISA, caused prohibited transactions, or violated anti-inurement provisions. The case is Hendrickson v. Elevance Health Inc. et al., Case Number 1:25-cv-01002, U.S. District Court for the Southern District of Indiana.
Lack of Standing Relieves ATI of ERISA Class Action Over Pension
A Pennsylvania federal district court judge granted the motions to dismiss filed by manufacturer ATI Inc. and investment manager State Street Global Advisors Trust Co. in a proposed class action suit. In Schoen et al. v. ATI Inc. et al., Case Number 2:24-cv-01109, plan participants claimed that ATI’s transfer of 1.5 billion in pension funds to a private equity-backed insurance company unnecessarily put their investments at risk in violation of ERISA.
The ex-workers filed their suit in August 2024, claiming that ATI had violated its fiduciary duties under ERISA when it transferred pension funds to Athene Annuity & Life Co. They also alleged that State Street violated ERISA in its position as ATI’s independent fiduciary who recommended Athene, despite claims that the company was riskier than other available annuity providers.
The judge ruled that the plaintiffs’ depiction of potential harm by ATI and State Street’s actions was insufficient to state a claim. She also found it more likely than not that the retirees would still receive the same pension payments even if Athene failed.
Court Refuses to Dismiss Dish Network TDF 401(k) Suit
In Jones et al. v. Dish Network Corp. et al., Case Number 1:22-cv-00167, U.S. District Court for the District of Colorado, the judge denied Dish Network’s motion for summary judgment in a class action lawsuit attacking underperforming target-date funds in the company’s retirement plan. The ruling comes as large employers are seeing a deluge of new retirement fund investment challenges.
Dish workers filed suit in 2022, claiming that Dish’s choice to retain Fidelity Freedom Funds, a suite of target-date funds, as an investment option, led to investment losses due to poor performance. In 2024, the judge certified a class of former and current Dish employees. The judge’s ruling on the motion for summary judgment stated that the case should proceed to trial on issues of fact, including whether Dish properly monitored its funds and whether its choice of funds satisfied the fiduciary duty of prudence under ERISA. The judge pointed out that Dish also provided little analysis of the fund’s actual performance or quantified the impact of underperformance.
D.C. Circuit Reverse Portion of $13 Million Judgment for IAM
A three-judge panel partially affirmed and partially reversed and remanded a $13 million judgment that IAM National Pension Fund won against multiple truck dealerships in Illinois that ceased their participation in a multiemployer pension plan. The case is Trustees of the IAM National Pension Fund v. M&K Employee Solutions LLC, Case Number 23-7146, U.S. Court of Appeals for the D.C. Circuit.
The suit centers on a dispute over pension withdrawal liability between IAM and M&K Employee Solutions LLC and its affiliates. IAM is affiliated with the International Association of Machinists and Aerospace Workers, AFL-CIO. The fund at issue is a Taft-Hartley multiemployer fund administered by trustees selected by the union and contributing employers.
IAM fund trustees filed suit in February 2020, alleging that M&K and its affiliates owed millions in withdrawal liability after the company acquired entities operating three car dealerships, terminated their collective bargaining agreements, and failed to make fund contributions. The current case relates to the IAM fund and M&K case that the U.S. Supreme Court ruled on earlier this year. However, that case involved a different ERISA dispute filed in 2023 that was consolidated with suits against other withdrawing employers on appeal. The Supreme Court ruled in IAM's favor on disputes over the actuarial assumptions used in withdrawal liability calculations.
In the current case, a D.C. federal district court will review several issues on remand, including principal calculations, the application of partial previous withdrawal payments, interest rates, and liquidated damages related to the withdrawal liability of M&K and its subsidiaries.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
