Mark Bieter Outlines Possible Impacts of Upcoming Supreme Court Ruling in Retirement Plan Case

Attorney Mark Bieter contributed an article to Bloomberg Law’s Health & Welfare Benefits, Professional Perspectives titled “Retirement Plan Questions the Supreme Court Might Answer,” published January 20, 2022. (Subscription required.) The article discusses the possible effects on millions of employees and implications for similar cases of a ruling expected later this year from the Supreme Court in Hughes v. Northwestern, No. 19-1401 (U.S. Jun 23, 2020).

Hughes v. Northwestern centers around two retirement plans sponsored by Northwestern University for which plaintiff-petitioners alleged that the university and plan fiduciaries violated ERISA because the plans included investment options and services that are more expensive than others available in the market.

Unlike many similar cases for which courts have tended to deny motions to dismiss, in Northwestern the district court granted the defendants’ motion to dismiss, on the grounds that the plaintiffs failed to state a claim for breach of fiduciary duty and that participants in the plans had lower-cost investment options available to them. The decision was affirmed by the U.S. Court of Appeals for the Seventh Circuit.

In ruling on the question on appeal — whether allegations that a retirement plan caused participants to pay fees for services and investments that were higher than alternative options constitute a violation of fiduciary duty under ERISA — the Supreme Court could address several important questions that were touched on in the briefing and oral argument. Some of those include:

• How much investment responsibility should plan participants be expected to have?
• How many investments should plans offer, and how involved should the courts be in deciding the number?
• Will plan fiduciaries face consequences for “fixing” their investment lineups?

Bieter concludes: “These questions and others may be tempered because they address a case still in the pleading stage. And yet we probably shouldn’t be surprised if there are plenty of citations to Hughes v. Northwestern in the future, no matter the stage of the case or the breadth of the decision.”