Skip to main content
MENU
Subscribe
  • Login
  • My Account
  • Logout
  • Register For Free
  • Subscribe
  • Topics
    • Alternatives
    • Artificial Intelligence
    • CIOs
    • Consultants
    • Defined Contribution
    • ESG
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Partner Content
    • Private Credit
    • Pension Funds
    • Private Equity
    • Real Estate
    • Regulation
    • Special Reports
    • Washington
    • White Papers
  • International
    • U.K.
    • Canada
    • Europe
    • Asia
    • Australia - New Zealand
    • Middle East
    • Latin America
    • Africa
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Influential Women in Institutional Investing 2024
    • Eddy Awards
  • Resource Guides
    • Active Thematic Global Equities
    • Retirement Income
    • Fixed Income
    • Pension Risk Transfer
    • Pooled Employer Plans (PEPs)
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • ESG Investing | Industry Brief
    • Innovation in ESG Investing
    • ESG Rated ETFs
    • Divestment Database
  • Defined Contribution
    • Latest DC News
    • The Plan Sponsor's Guide to Retirement Income
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • DC Plan Design: Improving Participant Outcomes
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Research Center
    • The P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
  • Print
Breadcrumb
  1. Home
  2. COURTS
December 13, 2021 03:26 PM

Supreme Court declines to hear 401(k) company stock cases

Robert Steyer
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    The U.S. Supreme Court
    Bloomberg
    The U.S. Supreme Court.

    The U.S. Supreme Court on Monday declined to hear two cases in which 401(k) plan participants accused sponsors of violating ERISA because the plans contained stock of former parent companies in the investment lineups.

    The justices gave no explanation for declining to hear Gannett Co. Inc. et al. vs. Jeffrey Quatrone and Jeffrey Schweitzer et al. vs. The Investment Committee of the Phillips 66 Savings Plan et al.

    Publicly traded Gannett and Phillips 66 are spinoffs of parent companies. They each offer their own company stock in the respective plans, and their plans also contained former parent company stock due to the terms of the spinoffs.

    Participants in both 401(k) plans sued their respective companies and plan fiduciaries, arguing that offering parent-company stock violated ERISA's guidelines on plan menu diversification. An employer's company stock isn't subject to the ERISA diversification rule. The debate in both cases focused on whether a DC plan's lineup as a whole was diversified or whether each option — other than the employer's stock — must be diversified.

    Related Article
    Judge kicks out ERISA lawsuit against Adidas America
    Judge rejects $3.9 million settlement in Mercy Health ERISA case

    The Supreme Court's decision Monday means the rulings of the respective appeals courts remain in effect.

    Mr. Quatrone sued Gannett and plan fiduciaries in March 2018 criticizing the 401(k) plan's holding of stock in Gannett's former parent, TEGNA Inc. Gannett was spun off in 2015.

    His complaint said the TEGNA stock "should have been liquidated on or shortly after the date of separation." The stock was liquidated in 2018, according to court records.

    A U.S. District Court in Alexandria, Va., dismissed the complaint in September 2018. However, in August 2020, a federal appeals court in Richmond, Va., reversed the dismissal and sent it back to the District Court.

    "Because defendants did not monitor the merits of the fund, they did not uncover that it was an imprudent fund," the judges wrote in a 2-1 decision, referring to the TEGNA stock. "As the fund was a single-stock fund with inherent concentration risk, it is plausible that the fund was, in fact, imprudent."

    Gannett petitioned the Supreme Court in October 2020.

    The U.S. Justice Department in November 2021 recommended that the Supreme Court support Mr. Quatrone. "The court of appeals' decision does not warrant further review," wrote Elizabeth Prelogar, the U.S. solicitor general, in an amicus brief requested by the court.

    The Gannett Retirement Plan, McLean, Va., had $1.9 billion in assets as of Dec. 31, 2020, according to the latest Form 5500.

    In 2012, ConocoPhillips Corp. spun off its downstream refining, marketing and transportation operations to a new, independent company, Phillips 66, according to the participants' March 8 petition to the Supreme Court.

    "Although the defendants froze new investments in the single-stock funds, they continued maintaining the funds for years as ConocoPhillips stock fluctuated in value — first rising, then plummeting to less than half its value," the petition stated.

    The Phillips 66 participants sued in 2017. A U.S. District Court judge in Houston dismissed the complaint in May 2018. The U.S. 5th Circuit Court of Appeals, New Orleans, upheld the dismissal in May 2020.

    "By closing the ConocoPhillips funds to new investments immediately after the spinoff, the fiduciaries also ensured that they were not offering participants an imprudent investment option," the appeals court judges wrote. "Plaintiffs were free to sell off their investments at any time and reinvest in other funds. They cannot enjoy their autonomy and now blame the fiduciaries for declining to second guess that judgment."

    The Phillips 66 Savings Plan had $5.8 billion in assets as of Dec. 31, 2020, according to the latest Form 5500.

    Related Article
    Supreme Court hears arguments in Northwestern ERISA case
    DC plan participants file ERISA lawsuit against VCA
    Recommended for You
    Finger hovers over a Intuit TurboTax logo on a smartphone screen.
    Intuit to pay $2 million to settle suit alleging it misused forfeited funds in 401(k) plan
    gavel court justice books 750_i.jpg
    Kaiser Foundation Health Plan wins dismissal of lawsuit over forfeited 401(k) funds
    Outside of Supreme Court building.
    Supreme Court asks for more information about dispute over benchmarks in retirement plan lawsuits
    Sponsored
    White Papers
    The State of Lifetime Income Report
    The Next Wave of LDI Evolution
    Retirement security to future income wins, TIAA brings you the latest financial…
    U.S. Public Funds Top Performers: Q2 2024
    Generative AI Investing: Opportunities at a Key Tech Inflection Point
    Research for Institutional Money Management: Advancing Physical Risk Modelling,…
    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
    October 23, 2023 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.

    About Us

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

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Custom Content
    • 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 © 1996-2025. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Artificial Intelligence
      • CIOs
      • Consultants
      • Defined Contribution
      • ESG
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Partner Content
      • Private Credit
      • Pension Funds
      • Private Equity
      • Real Estate
      • Regulation
      • Special Reports
      • Washington
      • White Papers
    • International
      • U.K.
      • Canada
      • Europe
      • Asia
      • Australia - New Zealand
      • Middle East
      • Latin America
      • Africa
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Influential Women in Institutional Investing 2024
      • Eddy Awards
    • Resource Guides
      • Active Thematic Global Equities
      • Retirement Income
      • Fixed Income
      • Pension Risk Transfer
      • Pooled Employer Plans (PEPs)
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • ESG Investing | Industry Brief
      • Innovation in ESG Investing
      • ESG Rated ETFs
      • Divestment Database
    • Defined Contribution
      • Latest DC News
      • The Plan Sponsor's Guide to Retirement Income
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • DC Plan Design: Improving Participant Outcomes
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Research Center
      • The P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
    • Print