First Dog Fighting, Now Pensions

In to the glamorous world of ERISA and pensions, former star quarterback Michael Vick now finds himself (via ESPN.com):

The federal Department of Labor is accusing imprisoned NFL star Michael Vick of illegally withdrawing more than $1.3 million from a pension plan . . . .

The department says Vick made a series of prohibited transfers from a pension plan sponsored by MV7, a celebrity marketing company owned by the former Atlanta Falcons quarterback. The department alleges that Vick violated his duties as trustee of a pension plan that covered nine current or former MV7 employees . . . .

The department says the plan assets were partially used to help pay the criminal restitution imposed on Vick after his federal dogfighting conspiracy conviction.

You see, my friends, ERISA is all about relevancy, and if Vick’s financial advisors had bothered to contact an ERISA attorney, they would have been told about such things as fiduciary duties and prohibited transactions by fiduciaries under Part 4 of Title I of ERISA.  My thought is this further mess for Vick could have been easily avoided if an attorney just recognized the potential legal consequences of Vick delving into his company’s pension plan.

Not only will Vick be required to make the pension plan whole, but he will also face penalties and interest. Ouch.

Not exactly how Vick wants to start off his new life after prison.  And did I mention Vick has already filed for bankruptcy?

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That Must Have Been Some Presentation

The NFL Players Association new executive director, DeMaurice Smith (left), “wowed . . . player representatives with an hour long presentation,” but prior to his election was “a relative unknown quantity in NFL circles,” according to a report by Sports Illustrated‘s Don Banks. Prior to his election, Smith was a “trial and litigation partner at Patton Boggs who concentrat[ed] in white-collar criminal defense and ‘bet the company’ tort liability trials.”

So, a white-collar defense attorney who was a relative unknown in NFL circles is now leading the NFLPA into an uncertain future that features a collective bargaining agreement that expires in 2011, a year without a salary cap in 2010 (under the terms of the current CBA), and an uncertain (at best) worldwide economic climate.

I don’t know that Smith wasn’t the best choice, but I do know that the other candidates — former players Trace Armstrong and Troy Vincent and sports attorney David Cornwell — had strong ties to the NFL. Armstrong and Vincent both are former NFLPA presidents. Cornwell represented several NFL players in a federal lawsuit against the NFL seeking an injunction preventing the NFL from suspending the players for violating the NFL’s drug policy.

I’m skeptical that this is the right time for the NFLPA to bring in an outsider. The NFLPA is only looking for a new executive director because of the unexpected death of Gene Upshaw, who led the NFLPA for twenty-five years. Smith is seemingly taking a hard line with the NFL on the upcoming negotiations and is already talking of “prepar[ing] for war” and “not go[ing] back” to a salary cap if the 2010 season is played without one. Hopefully, Smith’s presentation went beyond hard-line rhetoric and laid out a plan that will ensure the labor peace and economic prosperity that are Upshaw’s legacies. As a fan of the NFL (the Packers, not the Steelers, sorry Professor Schneider), I hope the players made the correct choice for their executive director.

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Law Professor Amicus Brief Filed in 7th Circuit ERISA Case

Today, as part of a group of law professors around the country with interests in the mutual funds and employee benefits area, I helped to draft and signed on to an amicus brief which asked for the Seventh Circuit Court of Appeals to grant rehearing en banc in the ERISA case of Hecker v. Deere & Company.  The case concerns an issue of tremendous importance for American workers’ retirements: the appropriate scope of a fiduciary duty under ERISA in the context of personal savings and mutual fund fees.

In Hecker, a 7th Circuit panel affirmed the decision of the district court of the Western District of Wisconsin, which found a group of employee-plaintiffs did not state a claim for relief under ERISA when their employer, Deere, allegedly did not provide a sufficient menu of mutual fund options for their 401(k) retirement plan accounts.  Although the brief argued in part that the panel inappropriately adopted a remarkably narrow interpretation of fiduciary duty that relied crucially upon an assumption that the underlying market for mutual funds is vibrant and competitive, my part of the brief involved the proper fiduciary standard for employers who run 401(k) accounts under so-called 404(c) plans.

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