The alleged theft of more than $400,000 from a Pennsylvania lawyer’s 401(k) account by cyber criminals spawned a new front in a legal battle between the lawyer’s firm and two companies involved in managing the plan.
Judge Mitchell S. Goldberg of the U.S. District Court for the Eastern District of Pennsylvania allowed the companies, MandMarblestone Group LLC and Nationwide Trust Co., to bring counterclaims alleging that the lawyer and his firm are partly responsible for the theft. But Goldberg blocked the companies from pressing other legal theories, and he rejected the third-party complaint that Nationwide filed against the alleged cyber criminals.
The dispute began in 2018, when Jess Leventhal and his firm, Leventhal, Sutton & Gornstein, filed a lawsuit seeking to hold the companies liable for the alleged theft of his entire 401(k) account. Leventhal says MandMarblestone, the plan’s third-party administrator, and plan custodian Nationwide can be liable under the Employee Retirement Income Security Act for facilitating fraudulent withdrawals from his 401(k) account by criminals who posed as the office administrator of his law firm.
Goldberg allowed Leventhal to move forward with ERISA claims in 2019, but he dismissed the lawyer’s negligence and breach of contract claims.
In his most recent ruling, Goldberg declined to dismiss MandMarblestone’s counterclaims alleging that the plaintiffs are ultimately responsible for the alleged theft. According to MandMarblestone, which sought contribution and indemnification, it was the plaintiffs’ “own carelessness” with respect to their computer systems and policies surrounding remote work that allowed the cyber theft to occur.
Goldberg noted that there’s a circuit split over whether ERISA allows claims for indemnification or contribution against co-fiduciaries of benefit plans, but he allowed it to move forward in this case after reasoning that “nothing within the ERISA statute forecloses these types of claims.”
Goldberg also dismissed the companies’ affirmative defenses, but he gave Nationwide permission to file an amended answer raising counterclaims similar to MandMarblestone’s.
Clayton Commercial Litigation LLC represents the plaintiffs. Dilworth Paxson LLP represents MandMarblestone. Faegre, Drinker, Biddle & Reath LLP represents Nationwide.
The case is Leventhal v. MandMarblestone Grp., LLC, E.D. Pa., No. 2:18-cv-02727, 5/27/20.