LaRue and the Coming Avalanche of ERISA Fiduciary Litigation

401k_2 Not so much.

You may recall that after the Supreme Court in LaRue v. DeWolff, Boberg, and Associates found that individuals could bring breach of fiduciary claims against their plans for mismanagement of their 401(k) accounts, there were many who predicted that such 401(k) suits would overwhelm the courts and generally spell disaster for the judiciary of this country (I didn’t predict that, but I thought the principle of the holding was an important one).

Now, that coming avalanche of litigation might still happen in some world where the sky is green, but interestingly I just received word from DeWolff, Boberg’s Supreme Court advocate, Tom Gies of Crowell and Moring, that Mr. LaRue has voluntary dismissed his claim in the action recognizing that he could not meet the applicable statute of limitations.  Yup, that’s right. These claims are now so easy that Mr. LaRue decided he couldn’t proceed.  In short, these types of claims are still extremely difficult for plaintiffs to prevail upon — for one reason, because of the statute of limitation issue that bit Mr. LaRue in the behind — and all the doomsday prognostications to the contrary seem just a tad off.

Cross posted at Workplace Prof Blog.

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Priorities for the Next President: Tax Policy

One of the biggest priorities of the incoming President is to develop an economic plan.  Included in this economic plan will be the next President’s vision of the Internal Revenue Code and tax policy.   As illustrated by the Economic Stimulus Act of 2008, the Internal Revenue Code is frequently relied upon to influence behavior, including stimulation of the economy.  The 2008 Act included tax rebates for low- and middle-income taxpayers and tax benefits for businesses, with a substantial increase in the expensing limits of Internal Revenue Code § 179. Under § 179, taxpayers are allowed to claim a current deduction for the purchase of tangible personal property used in a trade or business instead of recovering the cost over time by claiming a depreciation deduction.  The maximum allowable deduction under § 179 is now $250,000, although that amount will be reduced to $128,000 in 2009.  The 2008 Act also created a new fifty-percent special depreciation allowance for certain property placed in service during 2008.  Unfortunately, the Act has done little to stabilize the economy, and the next President’s economic plan will also need to address the ailing stock and real estate markets and the overall financial crisis. 

In addition, the next President’s economic plan is particularly critical because it must address the fate of the numerous tax provisions that will sunset at the end of 2010. 

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From “Me, My, Mine” to “We, Our, Mine”

Although Peru’s Yanachocha gold mine is one of the largest and most profitable gold mines in the world, the mine owners have been repeatedly stymied by local residents in their efforts to expand production.  In response to environmental problems associated with the mine, protesters (pictured above) have blockaded mine facilities and clashed with security forces on several occasions, costing the mine owners millions of dollars along the way.  So, how can mine owners elsewhere in the developing world avoid such costly conflicts with the communities that host their operations?  This is the question addressed by my colleague Lisa Laplante in a fascinating new article just posted on SSRN, “Out of the Conflict Zone: The Case for Community Consent Processes in the Extractive Sector.”  (The article can also be found at 11 Yale Human Rights & Development L.J. 69 (2008).)

In essence, Lisa and her co-author Suzanne Spears argue that the “extractive industries” should embrace the principle of free prior and informed consent (FPIC): before initiating new projects (and on an on-going basis thereafter) companies should obtain consent for their activities from the communities that will be most affected by them. 

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