Court Rules in Enron ERISA Litigation: A Cautionary Tale for 401(k) Plan Sponsors, Boards of Directors
By ERISA/Employee Benefits and Compensation Practice Groups
On September 30, a federal district court in Texas denied motions to dismiss the ERISA claims in the Tittle v. Enron class action. This lawsuit was brought by former Enron employees who held the company’s stock through Enron’s 401(k) and ESOP plans at the time the company filed for bankruptcy in November, 2001. The employees suffered massive losses to their retirement plan savings. The defendants in the ERISA claims included Enron, members of its Board, a number of former executives and employees (including former CEO Ken Lay), as well as institutional trustee Northern Trust Company and Enron’s accountants, Arthur Andersen. This ruling follows a string of recent high profile decisions – retirement plan investments in employer stock. The Enron case is the latest such decision refusing to dismiss claims against plan fiduciaries.