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Tibble v. Edison Int'l

Supreme Court of the United States

February 24, 2015, Argued; May 18, 2015, Decided

No. 13-550

Opinion

 [*1826]  Justice Breyer delivered the opinion of the Court.

Under the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829 et seq, as amended, a breach of fiduciary duty complaint is timely if filed no more than six years after “the date of the last action which constituted a part of the breach or violation” or “in the case of an omission the latest date on which the fiduciary could have cured the breach or violation.” 29 U.S.C. §1113. The question before us concerns application of this provision to the timeliness of a fiduciary duty complaint. It requires us to consider whether a fiduciary’s allegedly imprudent [***4]  retention of an investment is an “action” or “omission” that triggers the running of the 6-year limitations period.

In 2007, several individual beneficiaries of the Edison 401(k) Savings Plan (Plan) filed a lawsuit on behalf of the Plan and all similarly situated beneficiaries (collectively, petitioners) against Edison International and others (collectively, respondents). Petitioners sought to recover damages for alleged losses suffered by the Plan, in addition to injunctive and other equitable relief based on alleged breaches of respondents’ fiduciary duties.

The Plan is a defined-contribution plan, meaning that participants’ retirement benefits are limited to the value of their own individual investment accounts, which is determined by the market performance of employee and employer contributions, less expenses. Expenses, such as management or administrative fees,  [**799]  can sometimes significantly reduce the value of an account in a defined-contribution plan.

As relevant here, petitioners argued that respondents violated their fiduciary duties with respect to three mutual funds added to the Plan in 1999 and three mutual funds added to the Plan in 2002. Petitioners argued that respondents [***5]  acted imprudently by offering six higher priced retail-class mutual funds as Plan investments when materially identical lower priced institutional-class mutual funds were available (the lower price reflects lower administrative costs). Specifically, petitioners claimed that a large institutional investor with billions of dollars, like the Plan, can obtain materially identical lower priced institutional-class mutual funds that are not available to a retail investor. Petitioners asked, how could respondents have acted prudently in offering the six higher priced retail-class mutual funds when respondents could have offered them effectively the same six mutual funds at the lower price offered to institutional investors like the Plan?

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135 S. Ct. 1823 *; 191 L. Ed. 2d 795 **; 2015 U.S. LEXIS 3171 ***; 575 U.S. 523; 83 U.S.L.W. 4300; 59 Employee Benefits Cas. (BNA) 2461; 25 Fla. L. Weekly Fed. S 249

GLENN TIBBLE, et al., Petitioners v. EDISON INTERNATIONAL et al.

Notice: The LEXIS pagination of this document is subject to change pending release of the final published version.

Subsequent History: On remand at Tibble v. Edison Int'l, 820 F.3d 1041, 2016 U.S. App. LEXIS 6684 (9th Cir., Apr. 13, 2016)

Prior History:  [***1] ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Tibble v. Edison Int'l, 729 F.3d 1110, 2013 U.S. App. LEXIS 16050 (9th Cir. Cal., 2013)

Disposition: Vacated and remanded.

CORE TERMS

mutual fund, fiduciary, trust law, imprudent, priced, fiduciary duty, circumstances, monitor, diligence, prudent, funds, significant change, continuing duty, six years, institutional-class, retail-class, offering

Pensions & Benefits Law, Civil Litigation, Causes of Action, Breach of Fiduciary Duty, ERISA, Statute of Limitations, Business & Corporate Compliance, Fiduciaries, Fiduciary Responsibilities, Duty of Prudence, Estate, Gift & Trust Law, Trusts, General Overview, Trustees, Duties & Powers, Standards of Care