Cunningham v. Cornell University

Summary

The Supreme Court held that a plaintiff stating a claim under ERISA § 1106(a)(1)(C) need only plausibly allege the elements contained in that provision and need not plead that the exemptions in § 1108 do not apply. The Court concluded that § 1108 exemptions operate as affirmative defenses that defendants must plead and prove. The Court reversed and remanded the Second Circuit's decision in favor of Cornell University and other plan fiduciaries.

Holdings

1. To state a claim under 29 U.S.C. § 1106(a)(1)(C), a plaintiff need only plausibly allege that a fiduciary caused a plan to engage in a transaction, knew or should have known that the transaction involved furnishing goods, services, or facilities, and that the transaction was between the plan and a party in interest. The plaintiff need not plead that a § 1108 exemption does not apply.
2. The phrase '[e]xcept as provided in section 1108' in § 1106(a) does not incorporate the § 1108 exemptions as elements of every § 1106(a) claim.

Questions Presented

1. Whether a plaintiff asserting an ERISA prohibited-transaction claim under 29 U.S.C. § 1106(a)(1)(C) must plead and prove that the exemptions in § 1108, particularly § 1108(b)(2)(A), do not apply.
2. Whether the § 1108 exemptions are elements of a § 1106(a)(1)(C) claim or affirmative defenses that defendants must plead and prove.

Disposition

reversed_and_remanded