Today, March 24, 2014, the Supreme Court announced the results of their Friday conference where the plaintiffs’ cert petition from the Tibble v. Edison International case was considered. In a surprise move, the Supreme Court has asked the Solicitor General of the United States, working in conjunction with the Secretary of the Department of Labor, to file a brief offering their view on the issues. We have previously discussed the 9th Circuit opinion that plaintiffs are seeking to have heard, the rehearing opinion issued by the 9th Circuit panel, and the plaintiffs’ petition to the Supreme Court.
Many might remember that this is exactly what happened in Fifth Third Bancorp v. Dudenhoeffer, the case set for oral argument before the Supreme Court on April 2 concerning stock stop cases and the so called Moench Presumption. There, the Supreme Court requested the DOL’s views and shortly thereafter granted the petition to hear the case. (to read the briefs from the Fifth Third case, head over to the SCOTUSBlog website which is the preeminent source for information related to the Supreme Court)
As a reminder to our readers, the plaintiffs in Tibble are seeking to have the following issues heard by the Supreme Court:
1. Notwithstanding the ongoing nature of ERISA’s fiduciary duties, does the statute of limitations under 29 U.S.C. §1113(1) immunize 401(k) plan fiduciaries for retaining imprudent investments that continue to cause the plan losses if the funds were first included in the plan more than six years ago?
2. Does Firestone deference apply to fiduciary breach actions under 29 U.S.C. §1132(a)(2), where the fiduciary allegedly violated the terms of the governing plan document in a manner that favors the financial interests of the plan sponsor at the expense of plan participants?
In our opinion, these issues are ripe for decision by the Supreme Court. Defining exactly how the 6 year statute of limitation should be interpreted would provide needed clarity to both plan participants and plan sponsors. Additionally, as we mentioned last week, the issue of deference to ERISA fiduciaries could not be more timely, as the 8th Circuit in the Tussey v. ABB appeal found that the district court should have viewed the action of the ABB defendants with regard to investment decisions at issue in the case through a lens of deference. The idea of deference as to the interpretation of a fiduciary’s own duties under ERISA is not something that appears in the plain text of the statute and is a relatively new court created doctrine. There is much disagreement in the legal and scholarly community so to whether deference is appropriate and we should expect to hear those opinions voiced in the coming weeks.
As to what the DOL will say, we can be reasonably sure they will agree with the plaintiffs as to the statute of limitations issue, as they are on record many many times in filed amicus briefs supporting an interpretation that is favorable to plan participants. As to the issue of deference, I am not aware of any previously filed positions by the DOL but I wouldn’t be surprised to see them agree with the plaintiffs again on this issue.
If that is the case, then the question becomes, what will the Supreme Court do? Will they agree to hear the case? In the last go around with the Fifth Third petition, many legal observers made the argument that when the Supreme Court asks for the Solicitor General’s opinion, it greatly increases the chances the case will be heard. (for the truly interested, this law review article does a very good job of empirically analyzing the success of petitions when a response is requested and when the solicitor general’s opinion is requested, both of which happened here)
We here on this blog are not in the business of tea leaf reading and we will not make a prediction. Instead, the only thing we can promise is that when the DOL files their brief and when the Supreme Court makes their decision, you will hear about it here expeditiously.