The Supreme Court has unanimously ruled in favor of the plaintiffs in this case, who claimed that Edison International 401(k) Plan fiduciaries violated their fiduciary duty under ERISA to monitor three retail class mutual funds offered within the Plan, overturning the ruling of the 9th Circuit Court of Appeals, which upheld a previous ruling of U.S. District Court for the Central District of California in favor of Edison.
At issue was whether the plaintiffs’ claim contending that three retail mutual funds that Edison added to the Plan’s investment menu in 1999 constituted a fiduciary breach, as less expensive institutional and “materially equivalent” shares existed. Further, the District and Appellate courts dismissed the claims against the three funds added in 1999 as they were not timely given the statute of limitation requiring that claims be brought within six years of the alleged fiduciary breech. Edison participants brought their claim forth in 2007, eight years after Edison fiduciaries added the first three retail-class funds in 1999.
Plaintiffs’ counsel has argued that ERISA’s statute of limitation requires fiduciaries to prudently and consistently monitor their investment selections, and that the six-year limit to make a claim begins “at the last point fiduciaries proved to have not prudently monitored the investments”, verses the time the investments were first introduced. Considering this argument, the plaintiffs’ claim was filed well before the six-year limit expiration. The Supreme Court agreed with this argument and has remanded the case back to the 9th Circuit Court, which has been instructed to reconsider the plaintiffs’ claims.
benefitspro.com; May 18, 2015.