A bombshell ruling from a U.S. appeals court on Wednesday dismissed a lawsuit by Edison International employees in California who accused the utility of favoring higher-cost mutual funds over lower-cost ones in its retirement plan, despite a U.S. Supreme Court ruling backing the workers.
The ruling comes one week to the day after the Department of Labor released details of its final fiduciary rule with defines how financial advisors must engage and interact with clients.
Reuters reports the 9th U.S. Circuit Court of Appeals in San Francisco said “that while the Supreme Court in May 2015 ruled that federal law imposes an ongoing duty to monitor investments on fiduciaries like Edison, the workers failed to raise that argument in lower courts.”
The news service notes that the Supreme Court decision, which revived the Edison case and sent it back to the 9th Circuit, will likely make it easier for 401(k) plan participants to sue their employers for choosing investments that impose excessive fees, especially when those decisions were made years before lawsuits are filed.
“But the 9th Circuit on Wednesday said that before reaching the Supreme Court, Edison employees argued merely that changes to their plan triggered a duty to monitor, and not that the obligation was ongoing, so they could not make that claim now.”