Glenn Tibble v. Edison International
843 F.3d 1187
9th Cir.2016Background
- Edison sponsored a 401(k) Savings Plan offering mutual funds; some retail-class shares charged materially higher fees than available institutional-class shares.
- Plaintiffs (plan participants) sued under ERISA claiming fiduciary breach for selecting/retaining higher-priced retail-class funds when cheaper, substantially identical institutional-class shares were available.
- The district court granted summary judgment for defendants on claims tied to funds added before the 6-year limitations period, allowing plaintiffs only to pursue claims based on "triggering events" within six years; it found liability for some funds added within six years.
- The Ninth Circuit initially affirmed the statute-of-limitations ruling, but the U.S. Supreme Court reversed, holding fiduciaries have an ongoing duty to monitor investments and each imprudent retention can trigger a new limitations period (Tibble IV).
- On remand en banc, the Ninth Circuit held plaintiffs did not forfeit their continuing-duty-to-monitor theory, rejected application of Phillips to § 1113(1), and remanded for trial on claims concerning funds added before 2001 and for reconsideration of fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fiduciaries owe an ongoing duty to monitor and that each failure to remove an imprudent investment restarts the 6-year limitations period under 29 U.S.C. § 1113(1) | Tibble: ERISA imposes a continuing duty to monitor; each year the plan paid retail fees constituted a new breach within six years | Edison: Duty exists only to monitor for significant changes rendering an investment imprudent; absent such changes, earlier selections outside the limitations period are time-barred | Court: Fiduciary duty to monitor is continuing; each imprudent retention can start a new § 1113(1) six-year period; remand for trial on pre-2001 funds |
| Whether plaintiffs forfeited the continuing-duty theory by not raising it below or on initial appeal | Tibble: Preserved the continuing-duty argument on appeal and reasonably understood district court had precluded that theory at summary judgment | Edison: Plaintiffs failed to raise the pure continuing-duty theory below or on appeal, so it is forfeited | Court: Plaintiffs did not forfeit; Edison forfeited its forfeiture argument by not raising it in the initial appeal |
| Applicability of Phillips (continuing violation doctrine under § 1113(2)) to this case governed by § 1113(1) | Tibble: Phillips does not control § 1113(1); different statutory text/standard applies | Edison: Phillips bars treating repeated retainments as separate claims; earliest breach should start limitations | Court: Phillips applies to § 1113(2) (actual-knowledge rule) and is inapplicable to § 1113(1); repeated retainments can each trigger § 1113(1) |
| Proper scope of fiduciary duty (use of trust-law analogues, cost-consciousness) | Tibble: Trust law requires periodic reevaluation and cost-conscious management; fiduciaries must consider switching to lower-cost institutional shares when available | Edison: No materially imprudent conduct absent changed circumstances; selection/retention decisions were reasonable | Court: ERISA fiduciary duties derive from trust law; duty includes regular review, cost-conscious management, and attention to materially identical lower-cost alternatives; remand for factfinding |
Key Cases Cited
- Phillips v. Alaska Hotel & Rest. Emps. Pension Fund, 944 F.2d 509 (9th Cir. 1991) (held § 1113(2) limitations period runs from earliest actual knowledge of breach; limits continuing-violation tolling under § 1113(2))
- Tibble v. Edison International, 135 S. Ct. 1823 (2015) (Supreme Court: ERISA fiduciary has ongoing duty to monitor investments; each imprudent retention can trigger a new limitations period)
- Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) (describes ERISA as a comprehensive statute protecting employee benefit plan interests)
- Howard v. Shay, 100 F.3d 1484 (9th Cir. 1996) (ERISA fiduciary duties are the highest known to the law; courts examine both transaction merits and thoroughness of investigation)
- Lam v. University of Hawaii, 40 F.3d 1551 (9th Cir. 1994) (remand for trial appropriate when summary judgment was based on incorrect legal standard)