Participants in a Chevron Corp. 401(k) plan have asked the U.S. Supreme Court to review their allegations of ERISA fiduciary breaches, arguing that adverse federal district and appeals court rulings conflict with legal standards established by other federal appeals courts.
The participants maintain that standards established by a U.S. District Court in Oakland, Calif. — which dismissed the participants' complaints twice — and a federal appeals court in San Francisco that upheld the dismissals are too rigid compared to those set by other appeals courts.
The petition asked the Supreme Court to resolve a circuit split — disagreement among federal appeals courts — about the standards for allowing ERISA complaints to proceed to trial. "Outside of the Ninth Circuit, petitioners' complaint would have survived dismissal," said the petition filed Wednesday to the Supreme Court, referring to the 9th Circuit Court of Appeals in San Francisco.
"In most circuits, a participants can plead (a fiduciary) breach indirectly, by alleging facts known to the participant that plausibly suggest a deficient fiduciary process," said the petition in the case of White et al. vs. Chevron Corp. et al.
"In the Ninth Circuit, however, that is not enough," the petition said. "A participant must plead directly how that process was deficient. In most cases, as in this case, participants do not have access to the facts to satisfy the Ninth Circuit's stringent standard."
The participants sued Chevron and its retirement plan investment committee in February 2016, saying the 401(k) plan should have offered a stable value fund instead of a money market fund. They said plan managers should have acted faster to remove an allegedly underperforming small-cap value fund (it was removed in 2014 after four years on the investment menu). They also contended that the plan charged excessive administrative and investment management fees.
U.S. District Court Judge Phyllis J. Hamilton in Oakland, Calif., dismissed the case in August 2016 and again in June 2017. A three-judge panel of the 9th Circuit Court of Appeals in November 2018 supported the District Court judge's ruling. Plaintiffs asked that the full appeals court hear the case, a request that was denied.
Plaintiffs maintained that four other appeals courts have adopted less stringent standards for allowing ERISA fiduciary breach claims to go to trial. The Supreme Court "should prevent that disparate treatment of participants and the ability to enforce ERISA by establishing a standard for pleading a fiduciary breach that applies to all circuits," the petition said.
The Chevron Employee Savings Investment Plan, San Ramon, Calif., had $20 billion in assets as of Dec. 31, 2017, according to the latest Form 5500.