Yes… yet another post on the Lewandowski v Johnson & Johnson case, this time diving into the named defendants.
Of course, there’s J&J, and the J&J Pension and Benefits Committee, but then there is this: “Peter Fasolo, Warren Luther, Lisa Blair Davis and Does 1-20”… Who are these people?
Well, we have an Executive VP and Chief Human Resource Officer, and two VPs of HR respectively, among others who are employees and assigned to be on the Pension and Benefits Committee.
Paragraph 20 of the pleading states that J&J had a fiduciary duty to monitor its appointed fiduciaries, evaluate their performance, and had the responsibility to remove them if they failed to perform. Further it is stated that J&J is liable for their fiduciary breaches because they were acting within the course and scope of their employment.
If J&J is responsible for the acts of the members of the Pension and Benefits Committee, (including Fasolo, Luther and Davis), why are these employees added to the list of named defendants?
We don’t really know for sure, but here are some thoughts:
- “Acting within the course and scope of their employment”… were they?
- If not, is it reasonable to expect that J&J should have discovered this?
- Would Lewandowski know this prior to the discovery process, and that is the reason for making them named defendants?
- Will the Court dismiss the individual defendants?
- Were there written and signed indemnification agreements in place between the Committee members and J&J?
- Is the threshold of liability different for a non-employee Committee member?
These are questions that the Court will have to sort out but make no mistake about it… The liability threshold for Board/Committee members who have a fiduciary responsibility is murky at best.
Plan sponsors should select members very carefully and monitor their activity closely. Those chosen to fulfill a fiduciary role must understand the risk, and take steps to protect themselves, knowing full well that they may not be able to fully insulate themselves from responsibility for damages that result of from a breach of fiduciary duty.
