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Excessive Fee Suit Remand Triggers Review in Fiduciary Breach Case


The successful appeal of an excessive fee suit dismissal has triggered a review of another decision.

The suit, involving the University of Pennsylvania Matching Plan, was given new life following an appellate court’s remand following dismissal by the district court.

In 2015, Investment manager WPN Corp. and Ronald LaBow, plan administrator and former president of Wheeling, Inc., were ordered to pay $15 million to two plans of Severstal Wheeling Inc. for failing to diversify plan assets between November 2008 and May 2009. In the case, brought by the Severstal Wheeling Inc. Retirement Committee, U.S. District Court Judge Laura Taylor Swain of the U.S. District Court for the Southern District of New York cited the defendants’ “near-total dereliction of their duties” under the investment management agreement.

That followed a 2014 suit by the Labor Department against fiduciaries of the plans, claiming that their actions (or lack thereof) “caused the plans to sustain losses and lost earnings in excess of $7 million.” That investigation found that from Nov. 3, 2008, through May 19, 2009, the plans’ assets were imprudently invested by the plans’ fiduciaries, including the Severstal Wheeling Inc. Retirement Committee, specifically committee members Michael DiClemente and Dennis Halpin, and WPN Corp. and its owner Ronald LaBow, who had been hired as the plans’ investment manager. The suit also alleges that the Retirement Committee and its members failed to properly oversee the plans and monitor the actions taken by WPN and LaBow.

Now Bloomberg Law reports that Judge Nora Barry Fischer of the U.S. District Court for the Western District of Pennsylvania has ordered a supplemental briefing after conducting her “own research” and without the parties submitting filings about the University of Pennsylvania decision, ordering the Department of Labor and Severstal Wheeling Inc.'s retirement plan committee to file briefs explaining how the decision affects their pending litigation. 

Fischer previously considered the DOL’s challenge to the Severstal plan when she declined to dismiss the case in 2017. 

The case is Acosta v. WPN Corp., W.D. Pa., No. 2:14-cv-01494, order for supplemental briefing 5/6/19.

The DOL’s brief is due May 13.