Groups lobby Supreme Court for uniform standard on ERISA violation claims
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
    • H.I.G. raises $1.4 billion for latest credit fund
      James Zelter
      Private credit managers supersizing their loans
      Deborah Pederson and David J. Rothenberg
      Arena hires 3 to boost global marketing of private credit strategies
      BentallGreenOak agrees to acquire Metropolitan Real Estate Equity
    • Kieran Mistry
      Hymans Robertson picks head for new non-traditional risk transfer unit
      Troy Saharic
      NEPC brings on director of new business development
      Bill Foley
      Foley-backed SPAC agrees to $7.3 billion deal with Alight
      Jason Schwarz, chief operating officer of Wilshire,
      New owners have big plans for future of Wilshire
    • An American flag flies at the U.S. Capitol in Washington on March 6, 2021
      House expected to pass COVID-19 relief bill with multiemployer aid
      watch video
      5:39
      The coronavirus pandemic: One year later
      Gary Paulin
      Outsourced trading becoming side effect of virus for managers
      Logistics becomes shining star of investing during virus crisis
    • Michael Madowitz
      Taking a workforce break to raise children hurts retirement savings – economist
      David Blanchett
      Morningstar says women build better DC plans
      Morningstar turns detective to find gender from 5500s
      Desktop with document showing pie chart with investment types along with a calculator
      OECD proposes revision of its DC ‘good design’ roadmap
    • Tool gives investors insight into companies' alignment with U.N. goals
      Preqin: Alts industry showing some progress on gender equality
      The tower of Stockholm City Hall rise above the city's skyline on Aug. 6, 2020
      Swedish funds managing $250 billion get slammed for ESG record
      Vapor rises from a petrochemical plant
      New York State Common inks more climate pacts
    • University of Washington/University of Minnesota
      Parametric creates quantitative fellowships for diverse students
      Roger Ferguson
      Finance museum honors TIAA's Roger Ferguson
      ERISA attorneys are taken to task by federal judge
      Springboard illustration
      LGPS Central execs to mentor U.K. students
    • Robert 'Rob' Shafir listens during a Senate Permanent Subcommittee on Investigations hearing in Washington on Feb. 26, 2014
      Sculptor hedge fund hits sixth straight year of outflows
      The WallStreetBets forum on the Reddit Inc. website on a laptop computer and the GameStop logo on a smartphone in an arranged photo.
      GameStop frenzy has hedge fund managers rethinking next moves
      Gabe Plotkin, chief investment officer and portfolio manager of Melvin Capital Management, speaks during the Sohn Investment Conference in New York on May 6, 2019
      Citadel, Point72 back Melvin with $2.75 billion after losses
      Shanghai skyline
      Global hedge funds struggle even in a more open China market
    • Washington Community Foundation picks SEI as outsourced CIO
      Tool gives investors insight into companies' alignment with U.N. goals
      Dallas-Fort Worth Airport lands $23 million in 3 alts funds
      A logo outside the Greensill Bank offices in Bremen, Germany, on March 3, 2021
      Greensill files for U.K. administration after swift unraveling
    • A J.P. Morgan is displayed on a door in New York on April 14, 2009
      JPMAM lights up Project Spark to invest in diverse alts managers
      Marc Rowan, co-founder of Apollo Global Management, speaks at the annual Milken Institute Global Conference in Beverly Hills, Calif., on April 29, 2014
      Apollo-Athene merger billed as ‘natural progression’
      Andrew Morrison
      Janus Henderson chooses global head of client experience
      Jim Wiant
      Denmark’s Capital Four picks CEO to establish U.S. presence
    • NISA Pension Surplus Risk index inches up in February
      CalSTRS adds alts investments to ESG-themed portfolio
      District of Columbia Retirement Board executive director to retire
      Police car in the city of San Antonio
      San Antonio fund terminates Lazard from emerging markets strategy
    • Andrew Morrison
      Janus Henderson chooses global head of client experience
      Jim Wiant
      Denmark’s Capital Four picks CEO to establish U.S. presence
      Edwina Ho
      Cambridge Associates selects senior director for new Hong Kong office
      District of Columbia Retirement Board executive director to retire
    • The Charging Bull statue is covered in snow near the New York Stock Exchange on Feb. 11, 2021
      Bain: Private equity managers finish 2020 strong
      Carlyle secures $4.1 billion ESG-related credit facility
      Hamilton Lane raises $3.9 billion for fifth secondary fund
      PSG closes first Europe-focused fund at $1.5 billion
    • AEW chooses head of fund operations and debt finance
      Sebastiano Ferrante and Jocelyn de Verdelon
      PGIM Real Estate turns to staff to fill new roles
      European managers key in on specialist strategies
      Ingrid Jacobs
      Jones Lang LaSalle brings on head of diversity and inclusion
    • 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
      Shawn O'Brien
      Annuities coming to target-date funds, but not right away
    • 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
      P&I 1,000 largest retirement plans: 2021
      Retirement in emerging markets
    • 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
    • Washington Community Foundation picks SEI as outsourced CIO
      PennPSERs puts $375 million into 2 alts funds
      Dallas-Fort Worth Airport lands $23 million in 3 alts funds
      Enerpac Tool taps Fidelity as record keeper for 401(k) plan
    • Washington Community Foundation picks SEI as outsourced CIO
      PennPSERs puts $375 million into 2 alts funds
      Dallas-Fort Worth Airport lands $23 million in 3 alts funds
      Enerpac Tool taps Fidelity as record keeper for 401(k) plan
    • Emerging Markets Debt Mandate
      Emerging Markets Equity Mandate
      Investment Consultant
      Independent Investment Consulting Services
    • Taiwan Semiconductor’s No. 1 in the emerging markets book
      U.S. fixed-income returns post another positive year
      Nasdaq delivers an impressive year
      U.S. dollar's recent decline continues
    • 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
    • Vaccination cartoon
      Rallying to meet the ongoing COVID-19 challenge
      Tesla cartoon
      Don’t confuse wealth creation with retirement saving
      Top 1000 cartoon
      Top 1,000 retirement plans weather storm just fine
      Infrastructure cartoon
      You must go big on infrastructure, Mr. President
    • Investment Trends: Looking Ahead Across Equity Sectors
      Rethinking Market and Reference Data Management
      China is embarking on a new stage of growth
      Gold Outlook 2021
    • Sameer Shalaby
      Commentary: Why should investors care about treasury management?
      David Blitzstein
      Commentary: Without a national retirement policy, Americans face a future of pension crises
      Lawrence Cunningham
      Commentary: Gensler should keep Clayton’s pragmatic proxy adviser rules
      My-Linh Ngo
      Commentary: Pension funds and the role of the debt market in the fight against climate change
    • 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
      Emerging Markets: Expanding Investors' View
      P&I Content Solutions
      How will gold react?
      To people shaking hands
      P&I Content Solutions
      Lessons From 2020: Today’s OCIO Model Passes a Major Test of Governance
      Sponsored Content By MassMutual
      Leveraging Data to Manage Risk
    • 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
      5:39
      The coronavirus pandemic: One year later
      watch video
      0:45
      Private funds weathered 2020 turmoil
      watch video
      0:59
      Secure choice and other retirement plans at a state level
      watch video
      3:33
      P&I 1,000 by the numbers 2021
    • Emerging Markets: Expanding Investors’ View
      2021: A Fixed Income Odyssey
      ESG Capabilities and Climate Impact Investing
      Looking Beneath the Headlines – and Below Investment Grade – for Alpha Potential
    • POLL: Working after the pandemic
      POLL: The year ahead for the 1,000 largest U.S. retirement funds
      POLL: The Biden administration’s economic plans
      POLL: Retirement issues in 2021
    • 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
    • Tradewatch for Q4 2020
      Graphic: Is it time for DC plans to embrace private equity?
      By the Numbers for February 2021
      Top Performing Managers of Managed Domestic Broad-Market Fixed Income, 4th Quarter 2020
  • Events
    • Conferences
    • Webinars
    • Defined Contribution Spring Virtual Series
      DC Investment Lineup Virtual Series
      ESG Investing Virtual Series
      Private Markets Virtual Series
    • Emerging Markets: Expanding Investors’ View
      2021: A Fixed Income Odyssey
      ESG Capabilities and Climate Impact Investing
      Looking Beneath the Headlines – and Below Investment Grade – for Alpha Potential
  • Careers
  • Research Center
MENU
Breadcrumb
  1. Home
  2. COURTS
January 27, 2020 12:00 AM

Groups lobby Supreme Court for uniform standard on ERISA violation claims

The Supreme Court is asked to set a uniform standard for courts to determine if ERISA complaints should be dismissed or allowed to proceed.

Robert Steyer
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Getty Images

    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.

    The original case

    Plan participants criticized the university and its fiduciaries in an August 2016 lawsuit, alleging a series of ERISA violations. A U.S. District Court in Philadelphia dismissed all five counts of the complaint in September 2017, saying plaintiffs' arguments failed to meet the "plausibility threshold" established by a U.S. Supreme Court decision in 2007.

    A three-judge panel of the Philadelphia federal appeals court, in May 2018, reversed the dismissal of two counts covering allegedly excessive administrative fees, high investment fees, some poor-performing investments and failure to "comprehensively review" plan management.

    The appeals court, in a 2-1 vote, said the District Court had incorrectly applied the legal pleading standard established by the 2007 Supreme Court ruling.

    However, the university and its supporters contend that the appeals court made the mistake about the pleading standard. They said the appeals court incorrectly ruled the standard applied only to antitrust cases. The 2007 Supreme Court decision and a 2009 Supreme Court ruling said the pleading standard covers other civil cases as well.

    The Philadelphia appeals court "departed from those decisions and erroneously allowed (plan participants') claims against Penn to move past the pleading stage," said the TIAA brief, which was filed Jan. 15. The appeals court ruling means "Penn will be subject to burdensome discovery and enormous settlement pressure." Unless the ruling is reversed, other universities could be affected, the document said.

    The two Supreme Court rulings cited by the university and its supporters didn't involve ERISA cases. The 2007 decision, Bell Atlantic Corp. et al. vs. Twombly, covered a restraint-of-trade complaint by consumers regarding the telecommunications industry. "Factual allegations must be enough to raise a right to relief above the speculative level," said the Supreme Court in its ruling against the consumers.

    The 2009 case, Ashcroft et al. vs. Iqbal et al., addressed a complaint by a Pakistani Muslim that he was arrested and detained by U.S. officials due to his race, religion and national origin. Mr. Iqbal's complaint "fails to plead sufficient facts to state a claim for purposeful and unlawful discrimination," said the court in ruling against him.

    What linked these disparate decisions and their application to ERISA cases is how the Supreme Court said lower courts should interpret federal rules of civil procedure in establishing pleading standards.

    "Our decision in Twombly expounded the pleading standard for 'all civil actions,' and it applies to antitrust and discrimination suits alike," the Supreme Court said in its Iqbal ruling.


    Other cases

    The University of Pennsylvania case represents the second 403(b) ERISA dispute to come before the Supreme Court since 2019.

    In February 2019, the Supreme Court declined to review a petition by the University of Southern California to review lower courts' rulings that rejected its effort to compel arbitration in an ERISA lawsuit filed by participants in two retirement plans.

    In the University of Southern California et al. vs. Munro et al., participants in two 403(b) plans alleged that plan managers had breached their fiduciary duties by, among other things, having too many record keepers and fees that were too high.

    The university said the lawsuit should be dismissed because employees had signed arbitration agreements as a condition of employment. Both a federal district court and a federal appeals court ruled for the participants.

    The participants were represented by Jerome Schlichter, who also represents the plaintiffs in the University of Pennsylvania case. On Dec. 26, 2018, he submitted a notice to the Supreme Court saying he wouldn't file an answer to the University of Pennsylvania's petition. He gave no reason.

    Mr. Schlichter is the founding and managing partner of Schlichter Bogard & Denton LLP. In the last four years, Mr. Schlichter has represented participants in many of the two dozen fiduciary breach cases that have been filed against 403(b) plans of large universities and some medical institutions.

    Eight sponsors have settled — two medical institutions and six universities, including one that offered a 401(k) plan.

    Related Articles
    Fiduciaries look for guidance on unclaimed benefit payouts
    Cerner Corp. 401(k) plan target of fiduciary breach lawsuit
    Supreme Court vacates ruling in IBM ERISA stock-drop suit
    Recommended for You
    Mulitemployer plan suit focuses on fees, fund performance
    Mulitemployer plan suit focuses on fees, fund performance
    Greensill files for U.K. administration after swift unraveling
    Greensill files for U.K. administration after swift unraveling
    American Red Cross suit charges ERISA violations
    American Red Cross suit charges ERISA violations
    How will gold react?
    Sponsored Content: How will gold react?
    sponsored
    Events
     
     
    Sponsored
    White Papers
    Rethinking Market and Reference Data Management
    Investment Trends: Looking Ahead Across Equity Sectors
    China is embarking on a new stage of growth
    Gold Outlook 2021
    Shifting DC Times - Winter 2021
    GP-LED OPPORTUNITIES AT THE SMALLER END OF THE MARKET
    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

    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