We have devoted a few posts to LaRue v. DeWolff, Boberg & Assoc. Inc., No. 06-856 (Feb. 20, 2008), including a look at LaRue from an ESOP Perspective. We have also discussed immediate concerns and recommendations and LaRue's Impact on Fiduciaries and Sponsors. Here are links to two additional articles that discuss some action items:

Employee Benefits Law: Recent Supreme Court Case Should Prompt Review Of Fiduciary Practices discusses some steps that plan sponsors and fiduciaries should consider:

• reviewing fiduciary and administration practices to ensure compliance with all ERISA Section 404(c) requirements (see summary below), including timely implementation of participant investment directions;
  
• adopting and following a plan investment policy statement that describes the process to be followed in selecting plan investment alternatives and that provides for regular monitoring of the performance of investment alternatives (and, if applicable, investment managers);
  
• educating plan fiduciaries about the increased fiduciary liability exposure arising out of this case, and the steps they should take to minimize that exposure;
  
• ensuring appropriate due diligence and detailed documentation of fiduciary decisions, which always must be made in the best interest of plan participants;
  
• retaining investment professionals to assist in the selection and monitoring of investment alternatives;
  
• reviewing all plan administration practices to ensure that the plan is administered in accordance with its terms; and
  
• reviewing insurance policies to ensure adequate insurance coverage for all plan fiduciaries (coverage generally should be "non-wasting" to ensure that litigation expenses are not charged against the coverage amount).

Supreme Court Addresses the Remedies Available for Fiduciary Breach Under ERISA discusses the action that plan sponsors should take to protect themselves:

First, the allocation of responsibility between the plan sponsor and the administrative service providers should be clearly stated in the administrative services agreement. Then, to the extent the employer has a role in the receipt and execution of participant investment directions, safeguards should be put in place to assure that participants' investment directions are promptly and accurately carried out. However, there probably is no way for a 401(k) sponsor to completely insulate itself from LaRue actions, since the very act of choosing an outside service provider is arguably a fiduciary act that might be alleged at some point to have been a contributing cause of a loss to a participant's account, and because mistakes in handling participant investment directions probably are inevitable given the large volume of such directives handled every day.

Employers may also wish to review the administrative services agreement, which will often include a provision stating that the provider will be liable only for intentional errors or gross negligence. While this language will not protect the service provider from participant lawsuits, it may prevent the plan sponsor from bringing the service provider into litigation as a third-party defendant. In addition, the administrative services agreement should address the degree to which the service provider is willing to indemnify or defend the plan sponsor in any litigation brought by a participant where the failure to implement an investment directive was the fault (in whole or in part) of the service provider rather than the plan sponsor.