The ESOP Association Applauds Chairwoman Virginia Foxx Calling for Investigation Into U.S. Department of Labor’s Potential Abuse of Authority With Common Interest Agreements

House Committee on Education & the Workforce discovered DOL secretly sharing confidential information with plaintiffs’ attorneys pursuing class action lawsuits against plan fiduciaries

Washington, DC – The ESOP Association today applauded House Committee on Education & the Workforce Chair Virginia Foxx for calling out potential abuse of authority at the Department of Labor (DOL) and its Employee Benefits Security Administration (EBSA) and calling for an investigation by the DOL’s Inspector General.

In a letter to Inspector General Larry Turner, Chairwoman Foxx writes that DOL “shared confidential information involving at least six employee benefit pension plans with a plaintiffs’ attorney,” and that the Department “appears to be working in concert with plaintiffs’ attorneys to circumvent the discovery protections of the [Federal Rules of Civil Procedure] by conducting a fishing expedition under the guise of an EBSA investigation and then supplying confidential information to plaintiffs’ attorneys for use in private litigation against plan fiduciaries.”

According to a news article by Bloomberg Law reporter Austin Ramsey, this practice only came to light after a “common interest agreement” to share confidential information between the DOL and plaintiffs’ attorneys Cohen Milstein was discovered in a case where the firm was suing Envision Management Holding’s ESOP.

When the common interest agreement surfaced in court, a federal judge struck it down saying it could “set a dangerous precedent. It would allow a government agency to weaponize private litigation against some target before confirming the target should be a target. Moreover, the government could litigate in the shadows, without giving the opposing party an opportunity to adequately probe and defend itself.”

Chairwoman Foxx and the Committee on Education & the Workforce are asking the Inspector General to examine these instances as well as broader DOL practices of sharing confidential information with outside law firms. The Committee also asks for an assessment of reputational risk to DOL as a result of these practices now becoming public.

“This behavior seems to be an egregious violation of due process that serves to undermine the public’s trust in our government, yet appears to be commonplace at the DOL,” said Jim Bonham, CEO of The ESOP Association. “The ESOP Association commends Chairwoman Foxx and the Committee for calling attention to these apparently abusive practices, and asks the Inspector General to conduct a thorough and speedy investigation. The public deserves to know which attorneys at DOL are engaging in this practice, and the plaintiffs’ firms who have been the recipients of confidential data for use against plan fiduciaries.”

The Committee’s full letter to DOL Inspector General Larry Turner may be found here.