Representatives of employee benefits trade groups and record keepers have asked the Supreme Court to establish a uniform standard for determining if federal courts should dismiss ERISA complaints or allow them to go to trial.
The requests from the American Benefits Council, the U.S. Chamber of Commerce and TIAA-CREF were filed in January.
These friend-of-the-court briefs support a petition by the University of Pennsylvania, which asked the Supreme Court to overturn an adverse ruling by a federal appeals court in Philadelphia in a fiduciary breach case involving its 403(b) plan.
The university argued that the appeals court ignored or misunderstood legal precedents, including two Supreme Court rulings, that established legal standards for plaintiffs pleading their allegations.
The appeals court's "conclusion conflicts with decisions from (the Supreme Court) and many circuits," said the university's Dec. 19 petition, filed by five attorneys at Morgan Lewis & Bockius LLP.
"ERISA's promise of 'uniform standards of primary conduct' cannot be fulfilled when courts treat identical allegations differently under inconsistent pleading standards," the petition said. Because this ruling creates a "circuit split," the Supreme Court should make sure all courts interpret the law consistently, the petition said.
"This inconsistency undermines ERISA's promise of predictability and uniformity," said the American Benefits Council and the U.S. Chamber of Commerce in a Jan. 17 friend-of-the-court brief filed jointly.
The Supreme Court "has provided similar guidance to lower courts on numerous occasions in the ERISA stock-drop context," they wrote. "And those cases arise less frequently than cases, like this one, challenging the investment options in a plan lineup or a fiduciary's choice of service providers."
The justices are scheduled to review the case at a weekly conference on Feb. 21 to determine if they want to hear it.
The initial lawsuit covered in the petition to the Supreme Court, University of Pennsylvania et al. vs. Sweda et al., contained some common features of other ERISA lawsuits brought by participants against 403(b) plans, such as allegations of poor-performing investments, excessive investment fees and high record-keeping fees. The University of Pennsylvania Matching Plan had $4.4 billion in assets of as of Dec. 31, 2018, according to the latest Form 5500 filing.
However, the university and its supporters said the appeals court ruling could have a greater impact beyond just the university because it addresses the gatekeeper policy that courts use when deciding if plaintiffs' arguments are legally sufficient to go to trial. Sponsors seek dismissals, knowing that any case that clears this hurdle will lead to an expensive discovery process.