Glenn Tibble v. Edison International

Summary

On remand from the Supreme Court and rehearing en banc, the Ninth Circuit vacated the district court’s judgment concerning certain mutual funds in an ERISA-governed 401(k) plan. The court held that plan fiduciaries have a continuing duty to monitor investments and that claims under 29 U.S.C. § 1113(1) may be timely based on a failure to conduct required reviews or remove imprudent investments, even absent a significant change in circumstances. The court remanded for trial regarding whether Edison should have replaced retail-class mutual fund shares with materially identical, lower-cost institutional-class shares and directed reconsideration of fees and costs.

Holdings

1. The beneficiaries did not forfeit their failure-to-monitor argument in either the district court or on appeal, and Edison forfeited any forfeiture argument by failing to raise it in the initial appeal.
2. Phillips does not bar the continuing-duty claims governed by 29 U.S.C. § 1113(1). Under § 1113(1), only a breach or violation, such as a fiduciary's failure to conduct a required regular review of plan investments, must occur within the six-year limitations period; the initial investment decision need not occur within that period.
3. An ERISA fiduciary has a continuing duty to monitor plan investments and remove imprudent ones, separate from the duty to exercise prudence when initially selecting investments; the duty is not limited to situations involving a significant change in circumstances.
4. In fulfilling the continuing duty to monitor investments, an ERISA fiduciary cannot ignore the plan's ability to obtain favorable investment products, particularly when substantially identical products are available at lower cost.

Questions Presented

1. Whether the beneficiaries forfeited their continuing-duty-to-monitor theory in the district court or on appeal.
2. Whether Phillips v. Alaska Hotel & Restaurant Employees Pension Fund barred the beneficiaries' continuing-duty claims under 29 U.S.C. § 1113(1).
3. Whether ERISA fiduciaries have a continuing duty to monitor plan investments and remove or replace imprudent investments without a significant change in circumstances.
4. What scope of fiduciary duty applies to Edison's monitoring of retail-class and institutional-class mutual-fund shares.
5. Whether the district court's rulings concerning funds added before 2001 and its attorneys' fee determination should be vacated and reconsidered.

Disposition

vacated