Class Action Liability for Trustees After Banks v. Northern Trust
Since 1998, federal law has barred class action lawsuits for claims shown to have a connection with an investment activity. Most trustee activities could be construed to have a connection with an investment activity. Accordingly, trustees have felt relatively safe from class action claims brought by aggrieved beneficiaries. However, courts are increasingly recognizing a theory that abrogates federal law preemption of class action certification for cases involving investment-related actions against trustees. This trend in court decisions exposes trustees to increased risk of class action liability for a wide range of activities.
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