Casey has 19 years of experience delivering retirement plan
consulting services to corporate and not-for-profit plan sponsors, the firm
says. In her new role as retirement plan consultant with SageView, Casey will
be a lead contact for new clients choosing to work with the firm. She will also
drive vendor requests for proposals (RFPs) and focus on strategic plan design and
tactical delivery of retirement benefits for plan sponsor clients.
Casey
will also participate on the firm’s investment
committee. Stephen R. Popper, the managing director of SageView’s Boston
office, says Casey “brings a wealth of knowledge and experience …
that will enable our client’s retirement
plan committees to make knowledgeable, sound decisions that can stand
the test
of time.”
Casey’s background includes recordkeeping, employee
education, implementation, compliance and consulting at Fidelity, Tofias,
Sentinel Benefits and MMA-New England, formerly the Bostonian Group. She earned
a bachelor’s of science in finance from Bentley College and a master’s in arts
from UMass Boston. She holds multiple securities registrations, is a qualified
401(k) administrator and an accredited investment
fiduciary.
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Supreme Court Reaches Decision in Tibble v. Edison
A decision from the Supreme Court of the United States seems to solidify the “ongoing duty to monitor” investments as a fiduciary duty that is separate and distinct from the duty to exercise prudence in selecting investments for use on a defined contribution plan investment menu.
The decision is the latest chapter in the long-running
dispute between utility company Edison International and participants/beneficiaries
in the Edison 401(k) Savings Plan. The initial suit was filed in 2007, when petitioners
argued that Edison International had violated its fiduciary duties with
respect to three mutual funds added to the plan in 1999 and three mutual funds
added to the plan in 2002. In short, the investments in question were offered
to the plan participants as higher-priced retail share classes when cheaper institutional
share classes could easily have been obtained.
In subsequent years the case climbed all the way to the
Supreme Court. The plaintiffs argued with success that Edison fiduciaries acted imprudently by offering higher
priced retail-class mutual funds as plan investments when materially identical
but lower priced institutional-class mutual funds were available. But because the
Employee Retirement Income Security Act (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 (29 U. S. C. §1113),” the district court hearing the case held
that the petitioners’ complaint as to the three 1999 funds was untimely because
they were included in the plan more than six years before the complaint was filed.
According to the district court, “the circumstances had not changed enough
within the six-year statutory period to place respondents under an obligation
to review the mutual funds and to convert them to lower priced institutional-class
funds.” The 9th U.S. Circuit Court of Appeals subsequently affirmed, concluding that
petitioners had not established a change in circumstances that might trigger
an obligation to conduct a full due diligence review of the 1999 funds within
the six-year statutory period.
Now, the Supreme Court has determined the 9th Circuit erred
“by applying §1113’s statutory bar to a breach of fiduciary duty claim based on
the initial selection of the investments without considering the contours of
the alleged breach of fiduciary duty.” This resulted in the Supreme Court remanding
the case back to the appellate court, “to consider petitioners’ claims that
respondents breached their duties within the relevant six-year statutory period
under §1113, recognizing the importance of analogous trust law.”
As explained in the text of the Supreme Court decision, ERISA’s
fiduciary duty is “derived from the common law of trusts,” especially as found
in a previous case known as Central States, Southeast & Southwest Areas
Pension Fund v. Central
Transport, Inc. (472 U. S. 559, 570), which provided that an investment
trustee has a continuing duty—separate and apart from the duty to exercise
prudence in selecting investments at the outset—to monitor and remove imprudent
trust investments.
The Supreme Court says its decision “expresses no view on
the scope of respondents’ fiduciary duty in this case, e.g., whether a
review of the contested mutual funds is required, and, if so, just what kind of
review.” The court does hold, however, that a fiduciary “must discharge his responsibilities
‘with the care, skill, prudence, and diligence’ that a prudent person ‘acting
in a like capacity and familiar with such matters’ would use,” as defined in ERISA §1104(a)(1).
It’s now up to the 9th Circuit to reconsider the case and decide how the fiduciary
duty of prudence should be applied in the context of ongoing investment menu
reviews.
Discussing the text of the Supreme Court decision with
PLANSPONSOR, Jamie Fleckner, a partner in Goodwin Procter's litigation department
and chair of its ERISA litigation practice, said it remains to be seen
exactly what the outcome of Tibble v. Edison will mean, either for the parties
in the case or for the retirement planning industry more generally.
“This is not really a surprising decision given the discussion
that day and how the oral arguments unfolded,” Fleckner observed. “Both parties had basically agreed—the
plaintiffs and the defendants—that there is indeed a distinct duty to monitor.
This decision is consistent with what the parties agreed to.”
Fleckner went on to observe that this decision “pretty
clearly takes no position on exactly what that duty to monitor should look like.”
Instead, the decision remands this critical question back to the lower courts
to formulate what the duty to monitor should be.
“Even that aspect of the decision isn’t terribly surprising,”
Fleckner added. “I remember Justice Sotomayor had said almost precisely that. I’m
paraphrasing, but she said, ‘At the Supreme Court we are not triers of fact,
and this case should be left up to a trier of fact to determine what the duty
to monitor should have been in this case.’ In many ways this decision is
consistent with the statement from her.”
Looking forward, the industry is still going to have to wait to see what the 9th Circuit says before practitioners can really
determine how this decision will apply more widely, Fleckner said. “They’re
really not staking out the outlines of what this duty to monitor might turn out
to be—they’re saying, just like in the relevant trust law, this is a separate duty
and we’re going to remand it to the 9th Circuit to really figure out what that is.”
“Reading into the fact that the Supreme Court didn’t go down the alternative
route is also informative,” Fleckner said. “We can try to imagine what they would
have been like, and they could have come down and said there really isn’t an
independent duty to monitor and this six-year limitations period under ERISA
speaks for itself. The fact that they didn’t go down that road is a strengthening
of the independence of the duty to monitor investments under ERISA—I think it’s
fair to say that.”
Fleckner said one other important thing to note at this
point is that Tibble v. Edison could still actually be decided by the 9th Circuit without
bringing any more insight or a more specific definition of the duty to monitor
investments under ERISA as a distinct duty from the initial duty to select.
“I would further observe that at the very end of the
decision, right in the last paragraph, the court addresses a procedural point
that the defendant has raised—namely that the plan participants had from the outset waived the
argument about the differences between the two duties, to select and monitor,”
Fleckner said. “The Supreme Court rightly observes that it could have rendered
its decision based on that procedural issue alone—whether the question had been
waived. They decided not to decide this case on the procedural question, but they
also left the procedural question open for the 9th Circuit to reconsider.”
This means the appellate court could still make its decision
based on this procedural point—without actually getting into what the shape and
scope of the duty to monitor actually entails.
“There is still a lot that is going to be needed to be
sorted out from this decision,” Fleckner concluded. “The Supreme Court
has said the duty to monitor is something separate from the duty of initial
selection, but now the case is back to lower courts to decide what that looks
like, and they could end up deciding something else entirely—deciding this on
procedural grounds.”
Another ERISA expert, Nancy Ross, a partner in the
Employment and ERISA Litigation practice at Mayer Brown, tells PLANSPONOSOR the
Supreme Court has “recognized the obvious point that fiduciaries have a duty to
monitor all investments in their plan lineup regardless of how long they have
been in the plan.”
She says the decision, on its face, may appear to give the
plaintiffs a route to challenge decades-old investment decisions, “but as a
practical matter, the court’s opinion says no more than that the duty to
monitor survives the passage of time.”
“Since most fiduciaries already review existing investments
in their ongoing reviews, this decision is not a game-changer,” Ross suggests. “It just offers
another reminder of the importance of having a prudent, established process in
place for each element of plan administration.”