An updated docket sheet on
the U.S. Supreme Court website showsTibble v. Edison will be argued
on February 25, 2015.
The case is considered by industry observers to be the first
“excessive fee” litigation to reach the country’s top court. In a 2014 interview with PLANSPONSOR,
the plaintiffs’ attorney in the case said Tibble v. Edison is
tremendously important for the future of the retirement planning industry.
“The question before the Supreme Court is whether plan
sponsors can get permanent immunity on an imprudent investment decision, for
all time, based on the limitations period [in ERISA],” says Jerry Schlichter,
of the law firm Schlichter Bogard and Denton, who will argue for plaintiffs in
the class action. “The lower courts have decided that, even if a plan has been
shown to include a fund that is known to be imprudent, as is the case here, it
can be protected from liability by the ERISA six-year limitations period.
That’s the question the court has to decide whether to overturn—whether it’s
appropriate to give sponsors permanent immunity from liability once the
investment that is being challenged has been on the plan menu for six years.”
According to the Supreme Court’s website, justices will
limit their review of Tibble to the following question:
“Whether a claim that ERISA [Employee Retirement Income Security Act] plan
fiduciaries breached their duty of prudence by offering higher-cost
retail-class mutual funds to plan participants, even though identical lower-cost
institution-class mutual funds were available, is barred by 29 U. S. C.
§1113(1) when fiduciaries initially chose the higher-cost mutual funds as plan
investments more than six years before the claim was filed.”
part of that question, the Supreme Court must also decide if the so-called
“Firestone deference” (as established in the high court's 1989 decision in Firestone
Tire & Rubber Co. v. Bruch) applies to fiduciary breach actions under
29 U.S.C. §1132(a)(2), where the fiduciary allegedly violated the terms of the
governing plan document in a manner that favors the financial interests of the
plan sponsor at the expense of plan participants.