When the US Supreme Court ruled this week that a case alleging Edison International had breached its fiduciary duty could move forward, it unanimously held that companies have a continuing duty to monitor retirement plan investments.
The decision could unleash a wave of similar filings, according to the co-chair of Seyfarth Shaw’s ERISA & Employee Benefits Litigation Practice Group.
“It matters,” Ian Morrison told Advisen ahead of the Supreme Court decision, because the administrators of retirement plans “make a fiduciary decision to go down a certain path at a point in time. This case could result in longer liability.”
The 2007 class action suit, Tibble v. Edison Int’l, was remanded to the Ninth Circuit for consideration of plaintiffs’ claims that defendants had breached their duties within the six-year statutory period when it added more costly fund options to the company’s 401(k) plan, even though some of the funds were added more than six years earlier.
“A trustee has a continuing duty–separate and apart from the duty to exercise prudence in selecting investments at the outset–to monitor, and remove imprudent, trust investments,” the high court said in its opinion Monday. “So long as a plaintiff’s claim alleging breach of the continuing duty of prudence occurred within six years of suit, the claim is timely.”
While arguing that the statute of limitations did not apply in cases where continuous monitoring is required, the high court expressed no opinion as to the merits of the claim.
“This Court expresses no view on the scope of respondents’ fiduciary duty in this case,” it wrote.
