Supreme Court to Review Fiduciary Duties of Administrators

One of the things that makes practicing in and blogging about ERISA interesting is the fact that the subject area is never static. Other areas of the law can literally evolve at a near glacial pace (see, for example, this post here, involving the law of malicious prosecution and a change, for the first time in the modern era, to one of the elements of the tort), but not ERISA. And so there is always something new to talk about in a blog, and some new interesting development to keep track of for purposes of cases I am litigating.

Which brings me to today’s ERISA news you can use, courtesy of the estimable Russ Runkel and his LawMemo, Inc., who reports that the Supreme Court will be addressing the question of the scope of fiduciary duties, if any, that attach to the decision to terminate benefit plans. The Supreme Court is taking up a Ninth Circuit decision, in which, borrowing liberally from Russ, a company went into bankruptcy, after which the administrator of its 18 defined benefit pension plans decided to terminate the plans by purchasing annuities, rather than merge the plans with a different existing plan.

To quote Russ, the Ninth Circuit held that: “The decision to terminate the plan was a business decision not subject to ERISA fiduciary obligations[;] the implementation of the decision was discretionary in nature and subject to ERISA fiduciary obligations[; and the administrator] breached its fiduciary duty by failing to adequately investigate” the alternative plan of merging the terminated plan with another plan.

You can find a little bit more information on the appeal to the Supreme Court, along with links to the petition and related filings with the Supreme Court on this case, here at SCOTUSBLOG.