820 F.3d 1041
9th Cir.2016Background
- Edison International offered a 401(k) Plan that included retail-class mutual funds (added in 1999 and later) that charged higher fees than available institutional-class share classes. The Plan had ~ $3.8 billion in assets and ~20,000 participants.
- Beneficiaries (including Tibble) sued under ERISA §502(a) in 2007 claiming fiduciary breaches for selecting and retaining higher-fee retail share classes and for failing to monitor investment options.
- The district court granted summary judgment as to funds added in 1999 as time-barred under ERISA §413’s six-year limitation, allowed trial on some 2002 additions and on a Money Market Fund monitoring claim, and ultimately ruled for Edison on most claims.
- On appeal, the Ninth Circuit initially held the 1999 claims time-barred and rejected a continuing-violation reading of §413, concluding the six-year clock began when investments were designated for inclusion.
- The Supreme Court vacated that decision, holding ERISA fiduciaries have a continuing duty to monitor investments and that breaches of that ongoing duty are timely if occurring within six years of suit; it remanded for the Ninth Circuit to consider whether beneficiaries had forfeited a duty-to-monitor argument by not raising it below.
- On remand the Ninth Circuit held beneficiaries forfeited the continuing-duty-to-monitor theory because they did not present that argument to the district court or raise it on initial appeal; the district court had not precluded the argument and beneficiaries had previously advanced an alternative "changed circumstances" theory instead.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ERISA §413’s six-year limitation can be avoided by alleging a fiduciary’s ongoing duty to monitor investments | Tibble: fiduciaries have an ongoing duty to monitor; claims are timely if breaches of monitoring occurred within six years | Edison: six-year period starts when investment was designated; plaintiffs cannot relabel pre-limit breaches as continuing violations | For statute interpretation, SCOTUS said ongoing monitoring duty exists; Ninth Circuit on remand focused on forfeiture, not reinterpreting §413 further |
| Whether beneficiaries preserved an ongoing-duty-to-monitor argument for appeal/remand | Tibble: their pleadings and appellate brief implicitly raised continuing duties to ensure options remained prudent | Edison: plaintiffs failed to present a duty-to-monitor claim below or in the initial appeal | Held: beneficiaries forfeited the argument because they never raised it at trial or on initial appeal and were not prevented from doing so by the district court |
| Whether the district court’s summary-judgment order barred a duty-to-monitor theory at trial | Tibble: district court’s language precluded any continuing-duty theory | Edison: district court barred only disguised time-barred claims, not a distinct monitoring claim | Held: district court did not bar a monitoring claim; plaintiffs chose a different theory at trial and therefore forfeited monitoring theory |
| Whether an exception (change in law, purely legal issue, miscarriage of justice) allows consideration of the forfeited argument now | Tibble: remand from Supreme Court permits consideration; factual record may be inadequate so remand appropriate | Edison: plaintiffs had ample opportunity earlier; no intervening change forced forfeiture | Held: no exception applies; forfeit stands and Ninth Circuit affirmed judgment |
Key Cases Cited
- Phillips v. Alaska Hotel & Rest. Emps. Pension Fund, 944 F.2d 509 (9th Cir. 1991) (actual-knowledge limitations cannot be evaded by relabeling an earlier-known breach as a later identical breach)
- Tibble v. Edison Int’l, 135 S. Ct. 1823 (U.S. 2015) (fiduciaries have a continuing duty to monitor investments; claims timely if breach of monitoring occurred within six years)
- Tibble v. Edison Int’l, 729 F.3d 1110 (9th Cir. 2013) (initial Ninth Circuit panel decision holding six-year period began when investments were designated)
- Visendi v. Bank of Am., 733 F.3d 863 (9th Cir. 2013) (general rule against entertaining arguments not presented below)
- In re Mercury Interactive Corp. Sec. Litig., 618 F.3d 988 (9th Cir. 2010) (issue is waived on appeal if not presented sufficiently for the trial court to rule)