The 9th U.S. Circuit Court of Appeals has affirmed a district court opinion that a plan sponsor was imprudent for including retail mutual funds without investigating the possibility of institutional share classes. In Tibble v. Edison, the appeals court rejected the plan sponsor’s claim that it was shielded from liability under ERISA section 404(c) because that provision only protects fiduciaries from losses that are a "direct and necessary result" of a participant's or beneficiary's action.
The appellate court affirmed the lower court’s dismissal of the plaintiff’s claim that revenue between the provider and the mutual fund company was a conflict of interest.
Noted ERISA attorney Jerome Shlichter represented the defendant, and AARP and the ICI submitted briefs. The court declined to determine whether class action status should be applied.
