3 Min Read
Dec 16 (Reuters) - A U.S. appeals court on Friday revived a nearly decade-old lawsuit by Edison International employees in California who say the utility favored higher-cost mutual funds over lower-cost ones in its retirement plan.
The 9th U.S. Circuit Court of Appeals in San Francisco said the U.S. Supreme Court in a May 2015 decision in the case ruled that the Employee Retirement Income Security Act of 1974 (ERISA), governing pensions and other employee benefits, created an ongoing duty for fiduciaries like Edison to monitor investments.
The decision by an 11-judge panel of the court overturned an April ruling by a three-judge 9th Circuit panel that had sided with Edison after the Supreme Court revived the case. It showed how the Supreme Court decision could make it easier for 401(k) plan participants to sue employers for choosing investments that impose excessive fees.
In the April decision, the 9th Circuit said Edison employees could not argue in their appeal that the company had an ongoing duty to monitor investments because it had not made that claim in earlier court proceedings.
But the court on Friday said it was Edison that failed to previously raise the argument that the employees had waived the ongoing duty claim, and could not do so now.
The employees filed suit in 2007 against Edison subsidiary Southern California Edison Co. The company in a statement on Friday said it was committed "to providing a wide array of high-quality investment options" for employees.
Lawyers for the plaintiffs did not respond to a request for comment.
The employees said the company breached its fiduciary duty by, among other things, offering higher-cost mutual funds to plan participants despite the fact that identical lower-cost funds were available.
The main legal issue was whether some of the lawsuit's claims were barred by a six-year statute of limitations under ERISA. The Supreme Court said liability is triggered by the fiduciary's ongoing role monitoring the plan's performance, so the six-year clock routinely resets.
In 2010, a federal judge in California said the claims against Edison were time-barred. The 9th Circuit agreed in a 2013 decision that the 2015 Supreme Court decision overturned.
The case is Tibble v. Edison International, 9th U.S. Circuit Court of Appeals, No. 10-56406. (Reporting by Daniel Wiessner in Albany, New York; editing by Alexia Garamfalvi and David Gregorio)