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Directors of Erie Indemnity win dismissal of fiduciary-duty lawsuit challenging its collection of over $3 billion in management fees from related entity

February 2019

Jones Day won a dismissal on behalf of the directors of Erie Indemnity Company ("Indemnity") in a class action and derivative lawsuit brought by subscribers of Erie Insurance Exchange ("Exchange") alleging breaches of fiduciary duty. The subscribers of Exchange, which is a reciprocal insurance exchange managed by Indemnity, claimed that the directors caused Indemnity to collect excessive management fees (over $3 billion) from Exchange. The court granted the defendants' motion to dismiss, finding that the claims were precluded by previous litigation against the directors and Indemnity (in which Jones Day also represented the directors and won a dismissal and affirmance by the Third Circuit). While the previous litigation was not brought by the same plaintiffs, the court concluded that all of Exchange's subscribers were in privity with each other for purposes of res judicata, because they were all parties to the same "subscriber's agreement" with Indemnity.

Ritz v. Erie Indemnity Company, et al., No. 1-17-cv-00340 (W.D. Pa.)

For additional information about this matter, please contact: Geoffrey J. Ritts

Client(s): Independent directors of Erie Indemnity Company
Office(s): Cleveland, Pittsburgh