It was a procedural ruling that nonetheless caused pandemonium upon its release. On May 18, the U.S. Supreme Court overturned a lower court ruling and reinstated claims made by Edison International employees. The company’s retirement plan participants accused the utility of favoring higher-cost retail mutual fund shares over lower-cost institutional shares for which the employees were qualified.
In a vote that wasn’t even close, justices agreed nine to zero to toss an appeals court ruling that limited the number of claims that could be made in the case involving Edison’s retirement plan management, Reuters reports.
According to the news service, the decision could make it easier for 401(k) plan participants to sue their employers for putting investments that impose excessive fees into their plans.
“The justices, in a ruling written by Justice Stephen Breyer, said the lawsuit had been filed in a timely fashion. The case will now return to lower courts for further litigation on the scope of Edison’s fiduciary duty to monitor the investments.”
The case concerned exactly when the role of a fiduciary like Edison in monitoring a plan’s performance can trigger liability under the Employee Retirement Income Security Act, known as ERISA, Reuters adds.
The plaintiffs and Edison both agreed that there is a duty to monitor, but they disagreed over what that entails. The plaintiffs contended the company breached its fiduciary duty by, among other things, offering higher-cost mutual funds to those participating in the plan despite the fact that identical lower-cost mutual funds were available.
The main legal issue is whether some of the claims in the lawsuit were barred by a six-year statute of limitations under the ERISA law. In July 2010, a federal judge in California said they were barred. The San Francisco-based appeals court agreed in an August 2013 decision that the high court has now thrown out.