More turning to Supreme Court for ERISA relief
Skip to main content
pilogo-NEW
Subscribe
  • Subscribe
  • My Account
  • login
  • NEWS
    • Asset owners and the coronavirus
    • Alternatives
    • Consultants
    • Coronavirus
    • Defined Contribution
    • ESG
    • Frontlines
    • Hedge Funds
    • Investing / Portfolio Strategies
    • Money Management
    • Pension Funds
    • People Moves
    • Private Equity
    • Real Estate
    • Searches & Hires News
    • SECURE Act
    • Special Reports
    • WorldPensionSummit
    • Ron Schmitz
      Pandemic drives faster transition for Virginia to private markets
      Mubadala Investment Co. logo
      Mubadala draws on portfolio in coronavirus fight
      T.J. Carlson
      Texas Muni reduces downside risk during pandemic, finding opportunities now
      Scott Davis
      ‘Triage plan’ at Indiana system helped stem losses
    • Some alternative strategies struggle in first quarter following tough 2020
      Close up of Business people shaking hands, finishing up meeting, business etiquette, congratulation, merger and acquisition concept
      Cathay Innovation Partners takes minority stake in Seaya Ventures
      IACPM: Credit managers see stabilizing effect from stimulus programs
      KKR lifts out 3 to focus on clean energy infrastructure
    • Hub International continues buying spree with IBG acquisition
      Callan brings on 2 executives
      Hub International agrees to buy Plan Sponsor Consultants
      Aon names public markets solution leader
    • The J.P. Morgan Chase logo displayed at a branch bank
      J.P. Morgan sells $13 billion of bonds in largest-ever bank deal
      John Bakarat
      Commentary: COVID-19 and real estate debt – where investors should be looking
      IACPM: Credit managers see stabilizing effect from stimulus programs
      BofA: Most managers bullish on economy, markets
    • Pentegra launches pooled employer plan
      Teresa Hassara
      Ascensus taps MassMutual alum as new FuturePlan president
      Economic Group Pension Services scoops up third-party administrator
      OregonSaves gathers $100 million in assets
    • WTW to cut carbon footprint of OCIO portfolios by half by 2030
      SEC Commissioners Testify Before The House Financial Services Committee
      SEC shouldn’t require ESG metrics – commissioner
      Tracker gives investors insight into progress on social commitments
      Shoppers wear protective masks while visiting an Apple Inc. store at George Street in Sydney, Australia, on June 24, 2020.
      Apple backs SEC mandate on climate disclosure
    • New book culls institutional wisdom from podcast series
      Fearless Girl
      SSGA’s Fearless Girl statue now shattering glass ceiling
      Tangen video
      Norges chief dons chef’s hat to boost employees’ spirits
      Ken Griffin
      Ken Griffin donates $5 million to give Miami students internet
    • Karen Karniol-Tambour
      Bridgewater appoints 2 co-CIOs to oversee new sustainable investing group
      Hedge funds post best first-quarter return since 2000
      Jason Kephart
      Managers see good times ahead in 2021
      Jev Mehmet, CEO of Brevan Howard's Coremont unit
      Brevan Howard runs $50 billion unit like BlackRock’s Aladdin
    • University of New Hampshire endowment allocates $14 million
      Sen. Elizabeth Warren, D-Mass., listens during a Senate Health, Education, Labor, and Pensions confirmation hearing for Marty Walsh, secretary of labor nominee for President Joe Biden, in Washington on Feb. 4, 2021
      Lawmakers reintroduce climate-risk disclosure bill
      The U.S. Capitol and Library of Congress stand in this aerial photograph taken above Washington
      Senate bill seeks to make U.S. climate-change leader
      Brexit pushes 440 financial services firms to move some U.K. business to Europe
    • Morgan Stanley logo
      Morgan Stanley’s record quarter stained by Archegos collapse
      Man Group CEO Luke Ellis
      Man Group AUM up in first quarter on performance
      Michael Zerda
      LaSalle picks head of debt and special situations
      Susan Ford
      Duff & Phelps brings on institutional business development managing director
    • Corporate plan funding gets a boost from higher discount rates – Milliman
      Evan Siddall
      AIMCo lines up next CEO
      A bank customer takes Danish Kroner banknotes from an ATM in Aarhus, Denmark
      Denmark’s PFA Pension achieves 6.3% return in first quarter
      Ontario Municipal promotes from within for new global equities exec
    • Tufts taps interim co-CIO as new investment chief
      Michael Zerda
      LaSalle picks head of debt and special situations
      Evan Siddall
      AIMCo lines up next CEO
      Susan Ford
      Duff & Phelps brings on institutional business development managing director
    • Paul Morrissey
      Blackstone Growth picks managing director to lead European investing
      Bills of euro, dollar and pound currencies, among others
      Ardian closes latest buyout fund at $8.8 billion
      Hand typing on stationary iPhone at an office reception desk
      Private equity’s taste for tech spurs $80 billion deal spree
      Vista Equity promotes 2 to leadership roles on 2 funds
    • CalSTRS indutrial property
      Investors hungry for industrial properties
      Tim Wang
      GLP names co-president of logistics, industrial real estate for China
      Frank Forster
      StepStone Real Estate adds managing director for Europe
      Christine Iacoucci
      BentallGreenOak promotes from within to fill Canadian CIO role
    • Andy Schreiner
      New PEPs targeting firms without retirement plans
      Jackie Walorski
      Contribution catch-up for caregivers gaining favor
      Neal and Brady
      Retirement security could be only issue both sides accept
      Retirement cartoon
      Hopes rising for retirement readiness in 2021
    • Corporate pension contributions
      Eddy Awards 2021
      COVID-19: One year in
      Charging Bull, sometimes referred to as the Wall Street Bull or the Bowling Green Bull, a bronze sculpture that stands on Broadway just north of Bowling Green in the Financial District of New York City
      Top-performing managers Q4 2020
    • U.S. still a key market for investors
      Collected coverage of P&I's 2020 WorldPensionSummit
      Pedestrians pass a large advertisement on the Arndale Center shopping mall reading 'Act now to avoid a local lockdown' in Manchester, England
      COVID-19 puts new opportunities and risks on the agenda - WPS panelists
      Screens display stock price information over the trading floor of the NYSE Euronext exchange in Paris
      Private assets will continue to grow in portfolios – WPS panelists
  • Data
    • Research Center
    • Searches & Hires Database
    • Searches & Hires News
    • RFPs
    • Charts / Infographics
    • Sponsored Research
    • Trackers
    • Q2 2020 searches and hires overview report
      Q2 2020 money manager M&A activity summary
      Q2 2020 legal overview report
      Q1 2020 searches and hires overview report
    • University of New Hampshire endowment allocates $14 million
      Memphis Light, Gas & Water scouting for special situations funds
      Washington State Investment Board earmarks $4.2 billion for 7 funds
      Virginia earmarks $1 billion for 4 managers
    • University of New Hampshire endowment allocates $14 million
      Memphis Light, Gas & Water scouting for special situations funds
      Washington State Investment Board earmarks $4.2 billion for 7 funds
      Virginia earmarks $1 billion for 4 managers
    • Passive Investment Management Services
      Active Extended Global Credit Manager Search
      Actuarial Services
      Investment Management Services
    • Private real estate funds continue rebound
      Managed account adoption stalls in 2020
      U.S. bonds have worst quarterly return since 1981
      Stable value retains edge over money market funds
    • Institutional Investors: Shared Expectations, Divergent Paths
      Global Investor Study 2016
      Workplace Financial Wellness
    • U.S. Endowment Returns Tracker
      Pension Fund Returns Tracker
      Earnings Tracker
      Corporate Pension Contribution Tracker
  • Insights
    • Opinion
    • White Papers
    • Industry Voices
    • Letters to the Editor
    • Partner Content
    • Publisher's Update
    • CalPERS cartoon
      Urgency underscores CalPERS' search for a CIO
      Multiemployer plans cartoon
      Money — but no fixes — for multiemployer plans
      Vaccination cartoon
      Rallying to meet the ongoing COVID-19 challenge
      Tesla cartoon
      Don’t confuse wealth creation with retirement saving
    • Bipsync Client Stories: RMS in Action at Pensions and Superannuation Funds
      COVID-19 Makes LP Portfolio Management More Important Than Ever
      China: the outlook is bright for longer-term investors
      Finding Differentiation in Securitized Assets
    • John Bakarat
      Commentary: COVID-19 and real estate debt – where investors should be looking
      Jake Remley
      Commentary: Inflation expectations vs. reality in the bond market
      Greg Shea and Steven Kindred
      Commentary: The solution for yield-seeking allocators may be hiding in plain sight
      Jim Park
      Commentary: Asian Americans, Pacific Islanders face ‘bamboo ceiling’ in money management
    • Writer using a typewriter
      OCIO industry needs to adopt GIPS
      Writer or journalist workplace. stock illustration
      Even as it assails China, Trump administration emulates it
      Skeptical of Main Street support for proxy adviser proposal
      Focus on manager diversity pushes asset owners’ to walk the talk
    • P&I Content Solutions
      Research for Institutional Money Management
      P&I Content Solutions
      Top questions for institutional investors
      Sponsored Content By Newton Investment Management
      Growth and Innovation in Emerging Markets
      P&I Content Solutions
      Fixed income 2021
    • Help us help you by supporting quality journalism
      You Must Believe in Spring
      Everything Must Change
      Tomatoes & Investments
  • Multimedia
    • Videos
    • Webinars
    • Polls
    • Slideshows
    • Charts / Infographics
    • watch video
      1:23
      The passive fixed-income glut
      watch video
      1:38
      Is it time for DC plans to embrace private equity?
      watch video
      5:39
      The coronavirus pandemic: One year later
      watch video
      0:45
      Private funds weathered 2020 turmoil
    • New Outlook on Income: A Framework for Evaluating DC Retirement Income Solutions
      Understanding the PEP Evolution
      Divest or engage?
      Innovations in DC: Helping supercharge retirement outcomes
    • POLL: The Biden infrastructure plan
      POLL: Retirement income solutions
      POLL: Working after the pandemic
      POLL: The year ahead for the 1,000 largest U.S. retirement funds
    • view gallery
      9 photos
      Coronavirus and the markets
      view gallery
      22 photos
      The 1,000 largest retirement funds: 2020
      view gallery
      10 photos
      Outlook 2020
      view gallery
      10 photos
      2019 as seen through the eyes of Roger
    • Private real estate funds continue rebound
      Managed account adoption stalls in 2020
  • Events
    • Conferences
    • Webinars
    • DC Investment Lineup Virtual Series
      ESG Investing Virtual Series
      Private Markets Virtual Series
    • New Outlook on Income: A Framework for Evaluating DC Retirement Income Solutions
      Understanding the PEP Evolution
      Divest or engage?
      Innovations in DC: Helping supercharge retirement outcomes
  • Careers
  • Research Center
MENU
Breadcrumb
  1. Home
  2. COURTS
April 29, 2019 01:00 AM

More turning to Supreme Court for ERISA relief

Sponsors, participants both increasingly ask justices to rule on suits

Robert Steyer
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Aliya Robinson said the filings create 'uncertainty' for sponsors.

    In what has become a monthly occurrence, sponsors and participants are asking the U.S. Supreme Court to settle ERISA disputes that could have a profound impact on defined contribution plan management.

    In each of the first four months of 2019, separate petitions for court review were filed covering company stock, burden of proof in fiduciary breach claims, communication about investments and standards for convincing judges that claims should go to trial.

    Attorneys who represent sponsors said the influx to the Supreme Court reflects a trend of greater litigation as a variety of ERISA complaints works through the federal court system.

    "The common thread is the proliferation of litigation over retirement and benefits," said Nancy Ross, a Chicago-based partner at Mayer Brown LLP. "In the system of benefits, the regulations are so unclear. There's so much room for challenges."

    Like the other sponsors' attorneys interviewed for this article, Ms. Ross doesn't represent sponsors in the four petitions before the court.

    Acknowledging Supreme Court rulings on key ERISA matters in recent years, Ms. Ross said many issues should be addressed by legislation rather than interpreted by the judiciary. "It's time for an overhaul" of ERISA to clarify ambiguities, she said.

    The steady stream of ERISA lawsuits "creates uncertainty" for sponsors, making it "difficult to know what their duties are," said Aliya Robinson, senior vice president, retirement compensation policy for the ERISA Industry Committee, Washington.

    Attorneys for sponsors and for trade groups supporting sponsors said the most likely reason for a Supreme Court review is a circuit split — clearly defined differences in rulings among federal appeals circuits on fundamental interpretations of ERISA.

    Plaintiffs' attorney Jerome Schlichter agreed that circuit splits are a key factor, adding that issues of "extraordinary importance" play a major role "even if there was no circuit split." Mr. Schlichter is founder and managing partner of Schlichter Bogard & Denton, St. Louis.

    An example of "extraordinary importance" was the 2015 ruling for participants in Tibble et al vs. Edison International Inc., in which the Supreme Court said sponsors' expanded responsibilities include "a continuing duty to monitor trust investments and remove imprudent ones." Mr. Schlichter, who represented the participants, said this guideline represented not only an issue of "extraordinary importance" but also "a common sense obligation" for sponsors.

    Doubtful for this term

    Despite the flow of ERISA cases, very few are taken by the Supreme Court. Research shows the court agrees to review about only about 6% of all petitions in any year, excluding pro se petitions, which are filed by individuals.

    Given the Supreme Court's current calendar, attorneys doubted there would be enough time for oral arguments during the term, which ends June 30, regardless of cases justices might agree to hear.

    The cases are:

    Putnam Investments LLC et al. vs. Brotherston et al., filed Jan. 11. Seeking to overturn an appeals court ruling against its 401(k) plan, Putnam wants the Supreme Court to settle a circuit split on loss causation: Must the plaintiff prove an ERISA breach caused a loss, or must the sponsor disprove an alleged loss was caused by the ERISA breach?

    Intel Corp. Investment Policy Committee et al. vs. Christopher Sulyma, filed Feb. 26. Seeking to overturn an appeals court ruling, Intel has asked the court to clarify ERISA rules for sponsors' duties and participants' responsibilities in understanding investment menu changes and policies.

    Retirement Plans Committee of IBM et al. vs. Larry W. Jander, et al., filed March 8. In appealing an appellate court decision, IBM said the court incorrectly interpreted the standards for stock-drop cases as established by the Supreme Court in a key 2014 ruling.

    Charles E. White Jr. et al. vs. Chevron Corp. et al., filed April 3. Participants in a Chevron 401(k) plan want the Supreme Court to review what they allege is inconsistent rulings by several appeals courts. They say the Supreme Court should clarify the strictness of standards that lower courts use to determine if cases can proceed to trial or be dismissed.

    Establishing loss

    ERISA attorneys said the Putnam case appears most likely to attract high court interest. "There is no dispute that there is a clear split of authority among the circuits," said Marcia Wagner, founder and managing partner of The Wagner Law Group, Boston.

    "The circuit courts have analyzed in detail the arguments in favor of placing the burden of proof to establish loss upon a plaintiff or for placing it upon the defendant fiduciary," she said. "One of the objectives under ERISA was to obtain uniformity in outcome, so this is a ripe area for the Supreme Court to render a final opinion."

    The Supreme Court on April 22 asked the U.S. solicitor general to present views on the case.

    Participants sued Putnam Investments in November 2015, alleging the company's 401(k) plan favored proprietary products without adequately considering cheaper, similar alternatives. A U.S. District judge dismissed some claims in March 2017. After a bench trial, the judge ruled in June 2017 for Putnam on the other complaints, saying plaintiffs failed to prove loss causation.

    However, the 1st U.S. Circuit Court of Appeals sent the case back to the judge in October 2018, telling him to examine his decision in light of the panel's view of loss causation. The appellate judges said Putnam must disprove loss causation.

    Nine business organizations have flocked to support Putnam by filing amicus briefs with the Supreme Court — separately or collaboratively — maintaining that a pro-plaintiff ruling would cause havoc among DC plans.

    Loss and loss causation regarding fiduciaries' duties "are two of the chief bulwarks for stemming the tide of meritless ERISA litigation," said an amicus brief filed by seven organizations including the American Benefits Council, Washington, supporting Putnam. "The First Circuit's decision guts both of these requirements."

    Proving that an alleged breach of fiduciary duties caused a loss "should always" be a plaintiff's responsibility, Jan Jacobson, senior counsel for retirement policy at the American Benefits Council, Washington, said in an interview. "Too often plaintiffs will offer hindsight" to prove a fiduciary breach claim, she said. "Anyone with the benefit of hindsight will do better."

    Time limits scrutinized

    The Intel case features the interplay of an ERISA statute of limitations rule for filing fiduciary breach suits with another statute assessing plaintiffs' knowledge of an alleged breach.

    If courts say a plaintiff had sufficient knowledge, then they would reject a complaint filed after the statute's three-year limit. If courts believed the plaintiff lacked such knowledge, they would rule that time limit doesn't apply.

    A U.S. magistrate judge ruled for Intel in March 2017. The judge rejected a 401(k) plan participant's argument that plan disclosures about investments were inadequate and that the participant lacked enough information about the plan's alternative investments.

    However, the U.S. Circuit Court of Appeals for the 9th Circuit reversed and remanded the decision, saying the participant didn't have sufficient knowledge and that the statute of limitations didn't apply.

    Intel asked for a Supreme Court review because the appeals court's concept of participant knowledge clashed with the ruling of a different appellate court. "All of the relevant information was disclosed to the plaintiff by the defendants more than three years before the plaintiff filed the complaint," Intel said. "The plaintiff chose not to read or could not recall having read the information."

    The 9th Circuit decision "really renders the statute of limitations in ERISA meaningless," said Emily Costin, a Washington-based partner at Alston & Bird LLP.

    The appeals court ruling "puts defendants in a really difficult position," added Sarah Adams, a Washington-based principal for Groom Law Group, referring to the legal definition of knowledge for ERISA purposes. "It's a really tough question that we deal with all of the time from a defense point of view."

    Meeting legal standards

    In the Chevron case, participants in a company 401(k) plan asked the Supreme Court to rule on legal standards that plaintiffs must meet so their complaints can proceed to trial.

    They 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 also said plan managers should have acted faster to remove an allegedly underperforming small-cap value fund and claimed that the plan charged excessive administrative and investment management fees.

    A District Court dismissed the complaint in 2016 and 2017. The 9th Circuit appellate court supported the lower court in 2018.

    Participants told the Supreme Court that other appeals courts have endorsed less rigid standards. "Outside of the Ninth Circuit, petitioners' complaint would have survived dismissal," said the plaintiffs' petition. "In most cases, as in this case, participants do not have access to facts that satisfy the Ninth Circuit's stringent standard."

    Mr. Schlichter's firm represents the participants. He declined to comment on this or the other ERISA cases

    However, sponsors' attorneys backed stricter standards. "The plaintiffs are trying to ask the Supreme Court to lower pleading standards," said Ms. Costin of Alston & Bird. "You have to have enough facts to get (a case) into discovery. Otherwise, anyone could plead without facts."

    Related Articles
    Court dismisses challenge to CalSavers Secure Choice program
    Chevron DC participants petition Supreme Court to rule on fiduciary breach stan…
    BTG International Profit Sharing 401(k) plan sponsor sued for alleged ERISA vio…
    High court asked to revisit company stock fiduciary case
    Anheuser-Busch sued over retirement benefit calculations
    Investors suing J.P. Morgan may redefine the leveraged loan market
    DC plans still slow on moving alts into lineups
    Supreme Court to hear IBM stock-drop fiduciary challenge
    Recommended for You
    Court rules ERISA suit against Barnabas Health can proceed
    Court rules ERISA suit against Barnabas Health can proceed
    Court rejects ERISA claim lodged against Principal Life Insurance
    Court rejects ERISA claim lodged against Principal Life Insurance
    Raytheon latest sponsor to sue AllianzGI over enhanced return strategy
    Raytheon latest sponsor to sue AllianzGI over enhanced return strategy
    Research for Institutional Money Management
    Sponsored Content: Research for Institutional Money Management
    sponsored
    Events
     
     
    Sponsored
    White Papers
    Bipsync Client Stories: RMS in Action at Pensions and Superannuation Funds
    COVID-19 Makes LP Portfolio Management More Important Than Ever
    China: the outlook is bright for longer-term investors
    Finding Differentiation in Securitized Assets
    Green and sustainable bonds in emerging markets
    Portfolio Protection: One Size Fits None
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    April 5, 2021 Page One

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    pilogo-NEW
    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    150 N. Michigan Ave.
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • NEWS
      • Asset owners and the coronavirus
      • Alternatives
      • Consultants
      • Coronavirus
      • Defined Contribution
      • ESG
      • Frontlines
      • Hedge Funds
      • Investing / Portfolio Strategies
      • Money Management
      • Pension Funds
      • People Moves
      • Private Equity
      • Real Estate
      • Searches & Hires News
      • SECURE Act
      • Special Reports
      • WorldPensionSummit
    • Data
      • Research Center
      • Searches & Hires Database
      • Searches & Hires News
      • RFPs
      • Charts / Infographics
      • Sponsored Research
      • Trackers
    • Insights
      • Opinion
      • White Papers
      • Industry Voices
      • Letters to the Editor
      • Partner Content
      • Publisher's Update
    • Multimedia
      • Videos
      • Webinars
      • Polls
      • Slideshows
      • Charts / Infographics
    • Events
      • Conferences
      • Webinars
    • Careers
    • Research Center