After three quiet years with no major ERISA cases, the U.S. Supreme Court starts its 2019 term on Oct. 1 with three significant cases scheduled and more waiting in the wings.
Also this fall, the justices will tackle the constitutionality of Puerto Rico's federally appointed oversight board as it seeks to reform its public pension funds and restructure bondholder debt. Another case will revisit legal precedents on the SEC's ability to go after foreign entities or seek disgorgement of gains related to fraud.
The high court cases involving the Employee Retirement Income Security Act address very different issues — stock drop claims, determining actual knowledge of fiduciary breaches and potential losses even when a plan is overfunded.
"They all will have a huge impact on plan administration and the types of benefits and plan designs that employers choose to offer," said Aliya Robinson, senior vice president of retirement and compensation policy at the ERISA Industry Committee in Washington.
ERIC and other employee benefit groups including the American Benefits Council "are encouraging the Supreme Court to support the plan sponsors in these cases to ensure that employers can continue to offer retirement benefits without fear of unwarranted legal action," said Ms. Robinson.
On Nov. 6, the first ERISA case is sched-uled to be heard. Retirement Plans Committee of IBM et al. vs. Larry Jander et al. asks the Supreme Court to revisit its unanimous 2014 ruling in Fifth Third Bancorp et al. vs. Dudenhoeffer et al., which established guidelines for lower courts dealing with stock-drop complaints. Another aspect of the IBM case will decide whether ERISA plaintiffs can overcome a motion to dismiss when alleged costs of undisclosed fraud grow over time.
Lower courts ruled that IBM fiduciaries failed to protect retirement accounts when the company's stock fell after IBM tried to sell a business unit in 2014. That decision "reopens the door to lawyer-driven class actions that spring up after every stock drop," IBM plan officials said in their Supreme Court brief.
On Dec. 4, the Supreme Court will hear arguments in an ERISA breach lawsuit, Intel Corp. Investment Policy Committee et al. vs. Sulyma, which questions how much defined contribution sponsors are responsible for communicating investment lineup features, participants' responsibilities for understanding them and how much time they have to raise challenges. Managers of the Intel Corp. 401(k) plan and other Intel units hope to overturn a ruling by the 9th U.S. Circuit Court of Appeals that held the sponsor liable for fiduciary breaches because the participant lacked sufficient knowledge of the investments, partly because he did not look at documents Intel provided.