U.S. Supreme Court Recognizes Continuing Duty for Limitations Purposes on Breach of Fiduciary Duty Claims

In What's New in ERISA Litigation?, What's New in the Courts by gravierhouseLeave a Comment

In 2007 beneficiaries of the Edison 401(k) Savings Plan sued the plan fiduciaries and others to recover damages for alleged losses suffered by the Plan, as a result of adding three mutual funds in 1999 and another three in 2002. In sum, the beneficiaries argued that the plan fiduciaries acted imprudently by offering these six higher priced retail-class mutual funds when materially identical lower priced institutional-class mutual funds were available. Because ERISA requires a breach of fiduciary duty complaint to be filed no more than six years after “the date of the last action which constitutes a part of the breach or violation” or “in the case of an omission the latest date on which the fiduciary could have cured the breach or violation,” the District Court held that petitioners’ complaint as to the 1999 funds was untimely, and the Ninth Circuit affirmed. The U.S. Supreme Court, however, reversed:

 

“In short, under trust law, a fiduciary normally has a continuing duty of some kind to monitor investments and remove imprudent ones. A plaintiff may allege that a fiduciary breached the duty of prudence by failing to properly monitor investments and remove imprudent ones. In such a case, so long as the alleged breach of the continuing duty occurred within six years of suit, the claim is timely. The Ninth Circuit erred by applying a 6–year statutory bar based solely on the initial selection of the three funds without considering the contours of the alleged breach of fiduciary duty.”

 

Tibble v. Edison International, 135 S.Ct. 1823 (2015).

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