Fiduciary Imprudence : The Evolving Dynamics of the ERISA Battlefield

Attorneys representing business clients with 401(k) plans or colleges and universities with 403(b) plans should pay close attention to the growing number of successful lawsuits involving plan sponsors and trustees, particularly two U.S. Supreme Court cases that unanimously ruled in favor of plan participant plaintiffs: Tibble v. Edison and the recently decided Hughes v. Northwestern University. Based on the holdings in those cases, not only plan sponsors and trustees, as well as the investment advisors on whose advice they have been relying, but also ERISA practitioners and corporate counsel advising plan sponsors may all be potentially at risk.Part I of this article will first examine those cases and their discussion of liability for “fiduciary imprudence.” Part II examines the exponential rise of similar class action cases and their focus not only plan costs, but also the recent flurry of class-action litigation focused on investment choice performance. Part III of this article contains some recommendations for protecting plan sponsor and trustee clients as well as the attorneys that advise them. The article concludes by posing some as-yet unanswered questions