Edison Workers Forfeited Monitoring Claim, 9th Cir. Rules

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By Jacklyn Wille

April 13 — Edison International workers who sued the company over its 401(k) fees forfeited their claim that plan fiduciaries failed to monitor these fees, the U.S. Court of Appeals for the Ninth Circuit held.

The court's April 13 decision puts an end to a nine-year legal battle that culminated in a worker-friendly U.S. Supreme Court ruling making it harder for plan fiduciaries to have lawsuits over mutual fund fees dismissed on statute-of-limitations grounds (96 PBD, 5/19/15).

In the instant decision, the Ninth Circuit concluded that the Edison workers waived their claim of improper plan monitoring by failing to raise it prior to their petition for Supreme Court review.

This long-running lawsuit illustrates a common problem for workers challenging the fees charged by their 401(k) plans: how to hold plan fiduciaries liable for a high-fee investment that's been in the plan for more than six years.

Before the Supreme Court weighed in on this question, three federal appellate courts had protected plan fiduciaries from these challenges by dismissing them as untimely under the Employee Retirement Income Security Act's six-year statute of limitations.

In 2015, the Supreme Court used the Edison workers' lawsuit to reject this approach. The Supreme Court said that courts can't dismiss these lawsuits as untimely without first considering whether plan fiduciaries fulfilled their duty to monitor plan investments during the relevant six-year window.

Despite this victory for the workers, the Ninth Circuit's instant decision declining to consider any duty-to-monitor claims puts an end to the workers' bid to hold Edison plan fiduciaries liable for excessive fees.

Schlichter Bogard & Denton LLP represented the workers. O'Melveny & Myers LLP represented Edison.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com