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Supreme Court Decision in Tibble a Victory for 401(k) Participants

For Immediate ReleaseContact: Nancy Hwa, 202-296-3776
May 19, 2015www.pensionrights.org

WASHINGTON – On May 18, the U.S. Supreme Court ruled in favor of employees in Tibble v. Edison International, a class-action lawsuit filed by participants in the power company’s 401(k) plan. The plaintiffs argued that plan trustees violated their fiduciary duty by paying more than necessary for certain investments, which negatively impacted their account balances. Lower courts had ruled that the trustees were not liable for imprudent investments that were selected outside of the six-year statute of limitations. Yesterday, the Supreme Court overturned that ruling, stating that the duty to monitor retirement plan investments is an ongoing one, and sent the case back to the lower courts to rule on the prudence of investments made more than six years before the lawsuit was filed. 

“This decision is a victory for participants in 401(k) plans, who can now be assured that plan trustees have a duty to continually monitor investments in those plans,” said Karen Ferguson, director of the Pension Rights Center, which had filed an amicus brief in support of the plaintiffs. “With this ruling, the Supreme Court reaffirms our belief that plans trustees’ responsibility to safeguard the retirement security of workers and retirees is an ongoing one that is not limited to a set timeframe. Given that the Court of Appeals for the Ninth Circuit has already ruled that there was a fiduciary breach for the plan’s investment decisions made within the six-year statute of limitations period, we are optimistic that plan trustees will be held accountable for their earlier imprudent investments.”

 The Center’s amicus brief was filed by Karen Handorf of Cohen Milstein Sellers & Toll, PLLC.

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