FOR IMMEDIATE RELEASE
December 2, 2025
Contact:
Demetrios Karoutsos
dkaroutsos@esopassociation.org
House Education and Workforce Subcommittee Holds Hearing on Legislation to End Class Action Abuse Against Employer-Sponsored Retirement Plans
Washington, D.C. – The House Education & Workforce Committee’s Health, Education, Labor, and Pensions (HELP) Subcommittee today held a hearing on protecting employee retirement savings from predatory class action lawsuits being filed against plans, like ESOPs, that fall under ERISA.
Subcommittee Chair Rick Allen (GA), in his opening statement, said “The Employee Retirement Income Security Act (ERISA) helps protect retirement, health, and other benefits for more than 155 million workers, retirees, and their family members. Altogether these plans hold more than $14 trillion, helping millions of Americans save for the future and stay financially secure…But make no mistake, such a large pool of assets is attracting predatory lawyers who are targeting employee benefit plans for easy, quick-money, sue-and-settle lawsuits.”
The hearing discussed legislation introduced by Rep. Randy Fine (FL), The ERISA Litigation Reform Act (HR 6084), which would strengthen the pleading standards for certain plaintiffs’ claims and reduce frivolous and nuisance lawsuits on ESOPs. These reforms will help protect employee owners, encourage more businesses to consider employee ownership, and ultimately expand access to the proven retirement security benefits of ESOPs. Click here to read the full text of The ESOP Association’s endorsement of HR 6084.
“Unfortunately, current pleading standards under ERISA incentivize plaintiffs’ firms to sue with the intent of extracting a large settlement regardless of whether their claim has merit,” said James Bonham, President and CEO of The ESOP Association. “Reforming pleading standards will allow legitimate claims to proceed while curtailing predatory lawsuits against ESOPs and service providers, and we strongly support HR 6084. We thank Chairman Tim Walberg, Subcommittee Chair Rick Allen, and Rep. Randy Fine for their leadership in pursuing common-sense solutions to stop this growing practice of baseless class action lawsuits.”
HR 6084 contains three important provisions that address core issues with current pleading standards, mainly that ESOPs and service providers are required to prove their innocence to defend against any allegation of impropriety, rather than a plaintiff who is making an allegation proving an ESOP’s or service provider’s guilt. The bill’s main provisions would:
- Change the standard of proof for adequate consideration, meaning that instead of an accused ESOP proving it paid fairly for the business, the burden of proof will now fall on the plaintiffs to prove the price was unfair.
- Change the current burden of proof to require the plaintiffs to prove that service provider fees were not reasonable and not necessary.
- Ensure that the expensive and time-consuming process of discovery does not occur until a court has decided a claim may move forward.
Importantly, HR 6084 does not prevent meritorious lawsuits, nor does it provide any sort of blanket relief for ESOPs or service providers. Instead, the bill restores balance to the current legal framework that heavily favors nuisance plaintiffs at the expense of workers and their retirement savings.
Andrew Salek-Raham, Principal at Groom Law Group, testified before the committee on the need to reform pleading standards for ERISA retirement plans like ESOPs. In his testimony, Mr. Salek-Raham said “Once past the pleadings stage, the parties know that ERISA class action defendants are likely to spend upwards of seven figures just to reach summary judgment, which is defendants’ first opportunity to argue the merits of their case… Private plaintiffs’ attorneys have taken advantage of the low pleading bar and high defense costs through trial to extract settlements in the millions of dollars—regardless of whether plan sponsors, fiduciaries, and service providers did anything wrong.”
In summarizing a key change in the bill that benefits ESOPs in the current legal environment, Mr. Salek-Raham’s testimony states the bill “would require a plaintiff to plead and prove that an ESOP paid more than fair market value for employer stock in a stock purchase transaction—not just that the transaction occurred.”
