In his latest Fid Guru Blog, Daniel Aronowitz of Encore Fiduciary, who is President Donald Trump’s nominee to be the Assistant Secretary of Labor for Employee Benefits Security, lays out the case for why he believes ERISA needs a specialized court—just like those for patent, tax, and securities litigation.
“We need judges who will understand the con game of the current ERISA class action litigation racket.”
Daniel Aronowitz in his Fid Guru blog
In the blog, Aronowitz writes that the Employee Retirement Income Security Act of 1974 (ERISA), the federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans, was meant to provide uniform national standards, but says the current system yields inconsistent rulings on the same fiduciary issues.
The legal inconsistency in ERISA cases encourages forum-shopping, where plaintiffs seek favorable venues to bring lawsuits, driving up litigation costs for plan sponsors. Aronowitz argues that plan sponsors deserve consistency, not judicial roulette. A specialized court, he says, would ensure expertise, efficiency, and fairness.
Aronowitz’s blog points out that on Feb. 5, 2025, a Northern District of California judge dismissed a lawsuit against HP Inc., ruling that plan fiduciaries acted within long-settled ERISA law by applying forfeitures to future contributions rather than plan expenses. Less than a month later, another judge in the same district ruled against The Clorox Company on the same issue.
“This is regulation by litigation,” Aronowitz writes. “It shows why we need ERISA reform.”
The goal of predictability, uniformity, and consistency of ERISA law, he says, has not been achieved. “We have over 40 different judges deciding whether it is breach of fiduciary duty for plan fiduciaries to choose between applying unvested plan contributions to future contributions or plan expenses,” he writes.
“And we have seen how federal judges across the country apply a different pleading standard to claims that recordkeeper fees or too high, or the investment performance of a 401(k) plan investment is too low,” the blog continues.
Aronowitz says a higher and consistent pleading standard is needed to “weed out the many meritless cases being filed each month,” and higher standing requirements and a stay of discovery before the motion to dismiss is decided. “But what is needed first is a specialized court that is dedicated to ERISA. Fiduciary law is complex, and we need federal judges who are experienced and have ERISA expertise. We need judges who will understand the con game of the current ERISA class action litigation racket.”
Still awaiting confirmation hearing
Aronowitz’s nomination for Assistant Secretary of Labor for the Employee Benefits Security Administration is currently pending before the Senate Committee on Health, Education, Labor, and Pensions (HELP). Aronowitz, currently serving as president of Encore Fiduciary, a fiduciary liability insurance company, is awaiting the scheduling of his confirmation hearing.
Following the HELP committee hearing, the committee votes on whether to report the nomination favorably to the full Senate. Once that happens, the full Senate debates and votes on the nomination.
If confirmed as EBSA Secretary, Aronowitz would not have the authority to create a specialized court dedicated to ERISA, as creation of specialized federal courts falls under the legislative authority of Congress, not the DOL or the EBSA. But he could use his position to push for ERISA judicial reform by working with Congress and backing bills proposing specialized ERISA courts or higher pleading standards to reduce meritless litigation.
He could also adjust fiduciary rule enforcement or issue new regulatory interpretations that influence how courts view ERISA cases.
Retirement plan advisors interested in learning more about Aronowitz and his views can tune into his guest appearance on this week’s episode of the Retireholics, which will be livestreamed at 4:30 Pacific Time on Thursday, March 20. And you can read the complete Fid Guru blog piece here.
SEE ALSO:
• Trump EBSA Nominee Aronowitz a Stern Critic of Frivolous ERISA Litigation
• 401(k) Forfeiture Lawsuits and SECURE 2.0 Compliance with Richard Clarke
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
