Hughes v. Northwestern Univ.

Hughes v. Northwestern Univ.

Opinion

Justice Sotomayor delivered the opinion of the Court.

] Under the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U. S. C. §1001 et seq., ERISA plan fiduciaries must discharge their duties “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.” §1104(a)(1)(B). This fiduciary duty of prudence governs the conduct of respondents, who administer several retirement plans on behalf of current and former employees of Northwestern University, including petitioners.

In this case, petitioners claim that respondents violated their duty of  [**562]  prudence  [*740]  by, among other things, offering [***5]  needlessly expensive investment options and paying excessive recordkeeping fees. The Court of Appeals for the Seventh Circuit held that petitioners’ allegations fail as a matter of law, in part based on the court’s determination that petitioners’ preferred type of low-cost investments were available as plan options. In the court’s view, this eliminated any concerns that other plan options were imprudent.

That reasoning was flawed. Such a categorical rule is inconsistent with the context-specific inquiry that ERISA requires and fails to take into account respondents’ duty to monitor all plan investments and remove any imprudent ones. See Tibble v. Edison Int’l, 575 U. S. 523, 530, 135 S. Ct. 1823, 191 L. Ed. 2d 795 (2015). Accordingly, we vacate the judgment below and remand the case for reconsideration of petitioners’ allegations.

This case comes to the Court on review of respondents’ motion to dismiss the operative amended complaint. Accepting the allegations in that complaint as true, see Rotkiske v. Klemm, 589 U. S. ___, ___, n. 1, 140 S. Ct. 355, 358-59, 205 L. Ed. 2d 291 (2019), the relevant facts are as follows.

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