With the Supreme Court hearing argument this month in Tibble, I thought I would pass along a link to this article in Pensions & Investments (registration may be required) on the case. Leaving aside (for the moment) the fact that I am quoted in the article, it is worth reading as a primer on the issues before the Court that are raised by the case. As the article makes plain, the case is not simply about the six year statute of limitations under ERISA, or about – as someone else quoted in the article notes – retail versus institutional share classes. Instead, it is a vehicle that could allow the Court to discuss many aspects of fiduciary duty in this context, and how they fit together with the statute of limitations. As such, the Court, if it uses the case in that way, could easily overturn a lot of apple carts, in much the same way that its discussion a few years ago in Amara, arguably in dicta and on an issue that was not expressly before the Court, upset a lot of assumptions about the scope of equitable relief under ERISA.
For my contribution to the article, I noted that:
“We need to clarify how the six-year statute runs,” said Stephen D. Rosenberg, of counsel at the Wagner Law Group, Boston. “The linchpin issue is whether a sponsor has a continuing duty. Do you have a continuing duty after six years?”
If the Supreme Court supports arguments by Edison 401(k) plan participants that fiduciaries can be held responsible beyond the six-year time limit, the ruling could encourage more fiduciary breach lawsuits, he said.
From a practical perspective, the answer to that question will impact plans in a number of ways, running from whether we will see a trickling off of class actions filed over excessive fees, to the costs of running such plans, to the level of diligence that plan sponsors and administrators will need to apply. All of these may vary depending on how the Court answers the question of when does the six year period start and end, and, perhaps more importantly, what events can start the six year period running again.
In some ways, to steal a line from an in-house benefits lawyer I know at a company with plans in place holding very large assets, it is almost like asking if you can sue Don Draper today for sexual harassment thirty years ago at Sterling Cooper. ERISA is no different than any other area of the law: there has to be a starting point and an ending point for the time period during which conduct can give rise to a suit. The multi-million dollar question posed by Tibble for the numerous plans out there is how do you determine those points in the context of investment decisions made by plans, where those investments may be held for many, many years.