Several industry groups in Washington, D.C., are urging the Supreme Court to rule in a case addressing required disclosures for retirement plans covered by ERISA, the Employee Retirement Income Security Act. Several organizations, including the National Association of Manufacturers, the U.S. Chamber of Commerce, the American Benefits Council and the American Retirement Association, submitted a joint friend-of-the-court brief calling on the nation’s highest court to overturn a decision by the Ninth U.S. Circuit Court of Appeals. In that decision, the court allowed a lawsuit over an alleged breach of fiduciary duties by a plan manager to move forward.
A member of a retirement plan filed suit against Intel’s retirement plan administrators over its practice of investing participants’ funds in alternative investments that significantly underperformed in comparison to competitors. According to the lawsuit, over 66% of participants were having their funds invested in these custom funds rather than in standard index funds performing equal to or better than the market. The company attempted to have the suit dismissed, claiming that the lawsuit had come too late due to a three-year statute of limitations. The district court agreed that the plan disclosures sent to participants were sufficient to provide actual knowledge to participants.
However, the appeals court reversed that decision, allowing the case to move forward. The court said that actual knowledge of a breach is different than simply knowing that investments were being made. It said that the company would need to show that the plaintiffs actually knew about the funds’ underperformance in order to toss out the case.
Plan administrators and manufacturers want the Supreme Court to say that plan disclosures are sufficient to block ERISA benefits claims litigation after three years. People concerned that their own investment funds are being mishandled may consult with a benefits attorney about their options to take action.