Excerpted from the August 10, 2020 issue of Bloomberg Law News
On behalf of Pierce Atwood client Behan Bros, Inc., Pierce Atwood attorneys Brooks Magratten and Matthew O’Connor have asked a federal judge to dismiss “an unusual lawsuit” that claimed Behan Bros. violated ERISA by adopting a “special valuation” date for its 401(k) plan that allegedly forced employees to lock in losses from the COVID-19 market downturn.
The lawsuit stems from three former Behan employees who requested withdrawals from their 401(k) accounts earlier this year. They claimed that Behan violated ERISA by using the “special valuation” date of 4/30/2020 instead of 12/31/2019, the valuation date according to their plan. By using the later date, the value of their retirement accounts decreased by “between $7,000 and $25,000.”
According to Behan, when there are periods of market volatility, “permitting Plan participants to withdraw post-market decline based on a premarket decline valuation magnifies the loss to be incurred by the remaining Plan participants,” Behan said.
The case is currently pending in United States District Court for the District of Rhode Island.
Brooks Magratten is a firm partner with more than 30 years of experience in insurance, product liability, and commercial litigation. He is a frequent author, instructor, and lecturer on ERISA issues and trial skills.
Matthew O'Connor is an associate in Pierce Atwood’s Litigation and Business Practice Groups, handling complex commercial litigation, ERISA matters, corporate restructuring, and state and federal insolvency proceedings.