The U.S. Solicitor General has produced a brief at the request of the U.S. Supreme Court that recommends the justices hear part of the original claims in Tibble v. Edison International.
The Solicitor General's brief was split on the two questions the plaintiffs are asking the court to review.
Originally, the plaintiffs claimed that California-based Edison breached its fiduciary obligations under the Employee Retirement Income Security Act when it offered retail shares of six mutual funds when cheaper, institutional shares of the funds where available.
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A district court said that selection of only three of the mutual funds in question were subject to ERISA's fiduciary standard, because the other three were selected more than six years before the plaintiffs filing their complaint, thereby protecting them under ERISA's statute of limitations.
The 9th Circuit Court of Appeals upheld the district court decision.
The Solicitor General's brief, however, says that "the court of appeals erred in finding such claims time-barred."
"ERISA imposes a continuing duty of prudence on plan fiduciaries," wrote the Solicitor General, adding that Edison breached its fiduciary duty by "continuing to offer higher-cost investment options when identical lower-cost options were available."
The brief says that the 9th Circuit's decision to uphold the district court conflicts with the decisions of other appellate courts.
The plaintiffs also originally claimed that Edison abused its fiduciary discretion by allowing its third-party administrator to share in the plan's profits in exchange for lower fees. On that claim, the lower courts ruled in favor of Edison. The Solicitor General is recommending the Supreme Court deny review of that claim.
Edison's multibillion-dollar defined contribution plan serves more than 20,000 employees.
The Missouri law firm of Schlichter, Denton & Bogard represents the plaintiffs in Tibble v. Edison. The firm recently petitioned the Supreme Court to hear Tussey v. ABB and the Tibble case together.
In Tussey, which is also represented by Schlichter, Denton, the 8th Circuit this spring partially upheld a district court ruling in favor of the plaintiffs, but vacated a lower court's $21.8 million judgment against ABB for mapping of its investment options to another target date fund, allegedly resulting in significant losses.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
