Supreme Court to Hear Tibble Plan Fee Case

By Craig Hoffman • October 03, 2014 • 0 Comments

The U.S. Supreme Court has agreed to review the Tibble v. Edison Int’l case, it was announced Oct. 2. One of the many “excessive fee” cases being pursued through the federal court system, Tibble arose in California and was the subject of a 9th Circuit Court of Appeals decision last year. 

The outcomes of the case at the district court and appellate levels were somewhat mixed. On one hand, the appellate court affirmed the lower court’s ruling with regard to ERISA’s six-year statute of limitations barring claims that occurred prior to that time. On the other hand, the lower court found that certain mutual funds that were selected by the plan fiduciaries within the six-year window were imprudently selected in violation of ERISA’s fiduciary standards.

With respect to the statute of limitations issue, the lower court had ruled that the key to the determination was the date on which the fiduciaries selected the specific mutual funds that were alleged to be imprudent investments. Since three of the funds at issue were selected more than six years before the suit was filed, the trial court barred those claims from being considered. The 9th Circuit Court of Appeals agreed, noting in its opinion, “[W]e hold that the act of designating an investment for inclusion starts the six-year period under section 413(1)(A) for claims asserting imprudence in the design of the plan menu.”

Now the case has found its way to the Supreme Court. In an order issued Oct. 2, the Court granted certiorari, which means it is willing to take the case for review. 

The plaintiff had earlier petitioned for review of the 9th Circuit Court’s rulings on two issues. However, the high court chose to only consider the statute of limitations issue. Specifically, it will be considering whether the lower courts ruled correctly in finding that it is the act of initially designating an investment that must be within the six-year window. The alternative argument is that there is a “continuing violation” that should not be barred because the plan fiduciaries continued to make the allegedly imprudent funds available within the six-year period. It is possible that a decision could be forthcoming at the end of the Court’s current term next June.

Craig P. Hoffman, APM, is ASPPA’s General Counsel and Director of Regulatory Affairs.