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.