Schlichter Bogard & Denton achieves unanimous victory in United States Supreme Court on behalf of 401(k) investors
On May 18, 2015, the Supreme Court issued a unanimous 9-0 decision in Tibble v. Edison International, the first Supreme Court case to consider fees in 401(k) plans. In the decision, authored by Justice Stephen G. Breyer, the Court ruled that companies that offer 401(k) plans to their employees have a “continuing duty to monitor” the plan’s fees and investments.
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According to Jerome J. Schlichter, founding partner of Schlichter, Bogard & Denton, lead counsel for the Edison workers and retirees who brought the suit, the decision represents an important victory for American workers’ ability to save for retirement. “On behalf of Edison employees and all Americans who rely on 401(k) plans for their retirement, we are very pleased with this landmark decision by the Supreme Court. This decision will be of great significance for American workers and retirees for generations to come, as the 401(k) plan has become America’s retirement system,” said Mr. Schlichter.
Schlichter, Bogard & Denton filed the case in August 2007 on behalf of Glenn Tibble and other Edison employees and retirees, who alleged that the company violated the federal retirement law, commonly known as ERISA, by offering “retail class mutual funds” with high fees in their 401(k) plan instead of lower-cost “institutional” funds designed for large retirement plans. After a trial in 2010, the court agreed that the company should have used the lower-cost institutional options, but denied the claim in part because the six-year time limit to challenge some of the funds had expired, based on the date that the funds were first included in the 401(k) plan. The Supreme Court reversed that ruling, finding that employers have a continuing obligation to monitor funds as long as they remain in the plan and to remove any improper investments. “This is a very clear statement by the Supreme Court that fiduciaries can’t put the plan on auto-pilot,” added Mr. Schlichter.
The case will now return to the federal courts in California for further proceedings based on the Supreme Court’s decision.