U.S. Supreme Court reviews time limits on filing Breach of Fiduciary Duty lawsuits
The U.S. Supreme Court recently heard oral arguments in the case of Tibble v. Edison International which involves the application of ERISA’s six-year statute of limitation for plan participant lawsuits for breach of fiduciary duty.
ERISA provides a six-year period within which a participant or beneficiary may sue based on allegations of a breach of ERISA fiduciary duties. In general, the ERISA statute of limitation period begins to run on the date of the last act that constitutes a fiduciary breach owed to the beneficiaries. Once a statute of limitation period has passed, the claim in question is usually no longer timely and a lawsuit cannot usually be pursued.
The question before the Supreme Court in this case is whether the Ninth Circuit correctly held that a challenge to a fiduciary investment decision made more than six years before a lawsuit is filed, is time-barred absent changed circumstances within the limitations period.
In Tibble, a group of employee beneficiaries argued that plan fiduciaries had an “ongoing” duty to monitor 401(k) investment options. They also argued that, as part of that monitoring process, the plan fiduciaries should have discovered that the plan could have offered lower-cost institutional shares, instead of the more expensive option previously selected. The employee beneficiaries argued that plan fiduciaries have an “ongoing” duty of prudence under ERISA and the failure to remove an imprudent investment gives rise to a new six-year period.
The resolution of this case could have implications concerning the future cost of ERISA governed benefits plan, and the scope of fiduciary duties. The Court is expected to rule on this case by June 2015. We will continue to keep you updated.
For more information about the this case, please contact your Trust Fund counsel.
By Patricia Davis | March 5, 2015