Edison to Cough Up Another $5.6 Million in Tibble Excessive Fee Suit

The parties in Tibble v. Edison have reached agreement on the remaining piece of the damages calculation in the long-running suit.

The issue here involved 17 mutual funds that were chosen as investment options for the plan in March 1999. For each of those funds, the Edison plan fiduciaries initially selected the retail shares instead of the institutional shares, or failed to switch to institutional share classes once one became available. Here the plaintiffs contend that the fiduciary defendants breached their duty of prudence by not switching the retail shares of the 17 funds at issue to institutional shares. The funds at issue remained in the plan beyond Aug. 16, 2001 (the relevant date for the statute of limitations), and many remained in the Plan until Feb. 1, 2011, when the plan fiduciaries removed all mutual funds from the plan.

Last month, having found that a prudent fiduciary would have invested in the institutional-class shares for each mutual fund, Judge Stephen Wilson in the U.S. District Court for the Central District of California turned his attention to when the breach actually occurred, and applying guidance from the Supreme Court in Tibble I, the court held that the defendants were liable for breaching the duty to monitor from Aug. 16, 2001, onward. He then noted that the parties had stipulated that damages up until January 2011 was appropriately calculated by determining the profits that the plan would have accrued if it invested in the available institutional share classes instead of retail share classes, and that that was $7,524,424.

However, as regards the period from 2011-present, after discussing four alternative means of calculating it, Judge Wilson concluded that the plan’s overall returns – including the brokerage window – would be used to calculate damages, and directed the parties to come to an agreement as to that total.

Well, that’s been done (Tibble v. Edison Int’l, C.D. Cal., No. 2:07-cv-05359-SVW-AGRX, joint stipulation regarding methodology for plan return calculations 9/5/17) – and applying these returns, the plan’s losses have been calculated to be $13,161,491 as of July 31, 2017. Net of the $7,524,424, that means that – should the court accept the joint stipulation – Edison International will pay $5.6 million in additional damages to a class of current and former employees.

One other matter to be determined: Plaintiffs’ attorneys will file their motion seeking fees and costs in the next few weeks. Schlichter Bogard & Denton have represented the participants in the case which has gone all the way up to the United States Supreme Court and back.

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