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NEW YORKA federal judge has granted part of and denied part of Marsh & McLennan Cos. Inc.'s motions to dismiss an ERISA class action suit brought against the brokerage in June 2005.
The plaintiffs in the casea class of MMC retirement plan participantsfiled suit against MMC and several of its directors and officers in the U.S. District Court for the Southern District of New York. The suit alleged the defendants breached their fiduciary duties by imprudently permitting MMC's retirement plan to hold and acquire hundreds of millions of dollars in MMC stock. They did so, the suit alleged, even though they knew or should have known that MMC was engaging in bid rigging and price fixing, which artificially inflated the value of its stock.
New York-based MMC agreed to pay $850 million and reform its business practices to settle fraud and bid-rigging charges leveled by New York Attorney General Eliot Spitzer in January 2005.
MMC and other defendants in the retiree suit filed motions to dismiss several claims in their entirety and others against particular classes of defendants.
On Dec. 14, New York District Court Judge Shirley Wohl Kram denied MMC's motions on most of the counts, but did dismiss all counts seeking monetary relief under section 502(a)(3) of the Employee Retirement Income Security Act that provides "appropriate equitable relief," which the judge said did not extend to legal damages.
Judge Kram also dismissed claims that MMC was liable for equitable relief even if it were found not to be a fiduciary because it knowingly participated in the breaches of those defendants who were fiduciaries.
The judge noted that the U.S. Supreme Court has clearly stated that any ERISA claims brought against non-fiduciaries are limited to appropriate equitable relief, and since the plaintiffs were seeking relief that "is simply legal damages in the guise of equitable relief," she dismissed the claims.
A spokesman for MMC declined to comment on pending litigation.