Tibble v. Edison International
729 F.3d 1110
9th Cir.2013Background
- Edison sponsors a 401(k) plan with about 20,000 participants and $3.8 billion in assets.
- Plan offers a large menu of funds, including retail mutual funds and a unitized Edison stock fund, with revenue sharing to Hewitt as plan service provider.
- Pre-2010 amendments expanded options and revenue-sharing arrangements; a December 2006 amendment clarified costs paid by the Company.
- Beneficiaries (class) allege imprudent investment choices and improper revenue sharing that violated plan documents and fiduciary duties.
- District court granted summary judgment for Edison on most claims and held limitations periods barred others; trial awarded $370,000 for imprudent fund selections; beneficiaries appealed; Edison cross-appealed on class certification and other issues.
- Amended opinion addresses standard of review for plan-interpretation questions and whether Firestone deference applies outside the benefits context.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness under ERISA §413(1)-(A) for plan-design imprudence | Beneficiaries argue ongoing design decisions extend the period. | Edison argues six-year clock starts when design is designated; no continuing violation. | six-year period starts on designation; not a continuing violation. |
| Safe harbor under ERISA §404(c) precluding claims | Beneficiaries contend safe harbor does not shield fiduciaries from imprudent design claims. | Edison argues §404(c) precludes liability when participant directs investments. | §404(c) does not preclude merits; fiduciaries still owe prudence duties. |
| Revenue sharing and conflicts under plan documents and §406(b)(3) | Revenue sharing and offsets violate plan language and fiduciary loyalty. | DOL interpretation allows offsets as reimbursement, not prohibited consideration. | Revenue sharing permissible; not a §406(b)(3) violation under regulation and agency guidance. |
| Prudence review for plan investments (mutual funds, STIF, unitized fund) outside benefits context | Including retail mutual funds and unitized Edison stock was imprudent given alternatives. | Fiduciaries acted prudently; costs and disclosures supported choice; expert reliance appropriate. | Summary-judgment affirmance upheld; Edison failed to show prudence for challenged retail funds. |
Key Cases Cited
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (U.S. 1989) (established deference framework for benefit claims; trust-law basis for standard of review)
- Conkright v. Frommert, 559 U.S. 506 (U.S. 2010) (trust-law-based standard of review; deference to plan interpretations when reasonable)
- Langbecker v. Elec. Data Sys. Corp., 476 F.3d 299 (5th Cir. 2007) (Chevron deference applied to DOL interpretation of §404(c) in context; two-step inquiry)
- Patelco Credit Union v. Sahni, 262 F.3d 897 (9th Cir. 2001) (example of agency interpretation controlling where relevant to §406(b)(3) analysis)
- Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208 (U.S. 2009) (single-step vs two-step Chevron analysis; implications for agency interpretations)
- Mertens v. Hewitt Assocs., 508 U.S. 248 (U.S. 1993) (ERISA liability allocation and trust-law analogy in fiduciary duties)
- John Blair Communications, Inc. Profit Sharing Plan v. Telemundo Group, Inc. Profit Sharing Plan, 26 F.3d 360 (2d Cir. 1994) (discusses Firestone deference limits outside benefits context (cited in opinion))