The U.S. Supreme Court has agreed to hear a closely-watched ERISA case, Tibble v. Edison International. The court has limited its grant to the question:
[w]hether a claim that ERISA plan fiduciaries breached their duty of prudence by offering higher-cost retail-class mutual funds to plan participants, even though identical lower-cost institution-class mutual funds were available, is barred by 29 U. S. C. §1113(1) when fiduciaries initially chose the higher-cost mutual funds as plan investments more than six years before the claim was filed.
The court will consider whether to affirm the Ninth Circuit’s decision that plaintiffs could no longer challenge ERISA fiduciaries’ initial selection of funds following the expiration of the six year statute of limitations, rejecting the plaintiffs’ argument that maintaining allegedly imprudent funds as investment options is a “continuing violation.” The Second and Seventh Circuits have disagreed. An order affirming the Ninth Circuit approach should eliminate claims against ERISA fiduciaries who are alleged merely to have made errors in plan design many years ago.