The Supreme Court agreed Thursday to decide whether 401(k) plan fiduciaries can be sued for more expensive investment choices made years earlier.
The court agreed to review Tibble et al. vs. Edison International et al. to settle lower court splits on how to interpret the Employee Retirement Income Security Act's statute of limitations on fiduciary-breach lawsuits.
Edison International is the parent of Southern California Edison, Rosemead, Calif., the sponsor of the $4 billion Edison 401(k) plan. Some participants who are the plaintiffs in the case complained that fiduciaries breached their duty by purchasing and continuing to offer higher-cost retail mutual funds when institutional class funds were available.
In an opinion requested by the Supreme Court, U.S. Solicitor General Donald Verrilli Jr. said the lower courts “erred in finding such claims time-barred” because “ERISA imposes a continuing duty of prudence on plan fiduciaries.”
The petition for the Supreme Court to hear the case was filed last October by the plaintiffs' lead attorney, Jerome J. Schlichter, the founding and managing partner of law firm Schlichter Bogard & Denton.
“We are pleased that we will be able to present the case to the Supreme Court that 401(k) plan fiduciaries should not get a permanent free pass to keep known imprudent investments in a 401(k) plan,” Mr. Schlichter said in an e-mail.
Calls to Southern California Edison were not returned at press time.