A federal appeals court in San Francisco has agreed to rehear — by the full court — a major ERISA fee case, Tibble et al. vs. Edison International Inc. The en banc rehearing was ordered Aug. 5.
In April, a three-judge panel for the 9th U.S. Circuit Court of Appeals ruled in favor of Edison International. Participants had argued that Edison 401(k) plan executives violated their ERISA duties by choosing some retail-priced mutual funds instead of institutional-priced funds.
Participants asked that the case be reheard before the full court.
“Upon the vote of a majority of non-recused active judges, it is ordered that this case be reheard en banc,” said the Aug. 5 order. “The three-judge panel opinion shall not be cited as precedent by or to any court of the Ninth Circuit.”
The court said oral arguments will take place during the week of Sept. 5.
Initially, a U.S. District Court dismissed participants’ claims over fees for three mutual funds because they had been offered in 1999 and the participants’ lawsuit was filed in August 2007 — beyond the six-year limit for claims established by the Employee Retirement Income Security Act.
In 2013, the three-judge panel of the 9th Circuit Court of Appeals upheld the District Court decision.
Participants then appealed to the U.S. Supreme Court, which issued a ruling in May 2015 expanding the responsibilities of all DC plan executives.
In a unanimous decision, the Supreme Court said executives had “an ongoing duty to monitor” investments and an ongoing duty to remove “imprudent” ones.
The Supreme Court vacated the 2013 ruling, and told the appeals court to reconsider the case based on the new guidelines. The appeals court had erred by applying the ERISA time limit “without considering the role of the fiduciary’s duty of prudence under trust law,” the Supreme Court said.
However, in April 2016, the appeals court judges maintained their original position in favor of Edison International. They said plaintiffs failed to argue that the defendants had an “ongoing duty to monitor” investments in their legal petitions prior to the Supreme Court’s ruling.
“Beneficiaries never asserted Edison violated its duty by failing to monitor the retail class mutual funds,” the judges wrote. “Because beneficiaries never presented to us an argument about ongoing duty to monitor, it is ‘elementary’ that beneficiaries should not be allowed a second bite at the apple on remand.”