The U.S. Supreme Court granted certiorari on October 2, 2014 in the case of Tibble v. Edison International,1 for the narrow purpose of reviewing the holding by the Ninth Circuit Court of Appeals that the statute of limitations under the Employee Retirement Income Security Act of 1974 (“ERISA”) barred the plaintiffs’ claims. Tibble is one of a number of cases in which plaintiffs have alleged that fiduciaries of 401(k) and similar plans imprudently or otherwise improperly permitted excessive fees or fee structures to be imposed under mutual funds offered as investment alternatives under plans.
In Tibble, the plaintiffs argued in the district court that, among other things, the responsible plan fiduciaries violated ERISA by imprudently choosing and continuing to offer investment alternatives under the plan with excessively high investment fees.2 As to claims regarding certain aspects of the fiduciaries’ fund-selection process, the district court held that the fiduciaries indeed breached their fiduciary duties, but limited recovery so as to be with respect only to funds selected for inclusion under the plan during the six years immediately preceding the lawsuit. The court held that claims with respect to funds selected before that time were barred by ERISA’s six-year statute of limitations.3 The district court also reached a number of other procedural and substantive issues.
The Ninth Circuit agreed with the district court regarding its holding that, as to certain aspects of the fiduciaries’ fund-selection process, the plan fiduciaries breached their fiduciary duties, and agreed as well that claims regarding funds selected outside of the six-year statute of limitations were time-barred. In particular, the Ninth Circuit, agreeing with the Fourth Circuit,4 held that the continuing maintenance of an imprudent investment option is not the act that triggers liability, and that, therefore, the plaintiffs could allege a fiduciary breach only with respect to the initial selection of investment alternatives occurring within the applicable six-year period. Like the district court, the Ninth Circuit also reached a number of other procedural and substantive issues.
The claims in Tibble are not unlike the claims made in numerous cases involving 401(k) plans in which plaintiffs have alleged fiduciary breaches in connection with purportedly excessive or otherwise improper fees. In addition, plan sponsors may indirectly be liable for any such breaches by...
