Why the Results of Tibble V Edison Should Not Concern the “Well-Educated Plan Fiduciary”

Last Updated: April 28, 2015

There has been a lot of national press over the recent Supreme Court Case Tibble V Edison, which involves the question as to whether a plan fiduciary has an ongoing duty to monitor a plan’s investments. The basic facts of the case are as follows:
  • The plaintiff’s claim that Edison, the plan sponsor, provided plan participants a menu of forty investment funds to choose from.
  • Of those funds offered, six funds were retail share classes, despite there being an institutional share class available with lower investment expenses.
  • The US District Court for the Central District of California granted a judgment of $370,732 in damages for the excessive fees related to three of the six funds.
  • The litigation over the remaining three funds moved to the 9thS. Circuit Court of Appeals and then the United States Supreme Court. The Defendants are claiming that the six-year statute of limitations has expired because the funds were added to the plan more than six years ago.   Therefore, there is not a continual fiduciary duty to monitor the investments.
  • Plaintiffs are claiming there is an ongoing duty to monitor the plan’s investments and the statute of limitations does not apply.
Many experts are stating that this case could change the landscape for how plan fiduciaries are required to monitor their plan investments and open the flood gates for future lawsuits.  They believe this because:
  1. It would now be clear that plan fiduciaries have an ongoing duty monitor the plan investments and the 6-year statute of limitations doesn’t apply.
  2. Plan fiduciaries would now have a responsibility to monitor the investment share classes that are in the plan. And they will need to understand the revenue sharing related to the particular share class to ensure that plan participants are not paying excessive fees.
To a well-educated plan fiduciary, the result of this case should not be worrisome or force them to change their current practices.  A well-educated fiduciary understands that they have a duty to monitor the plan’s fees for reasonableness and services to ensure they are necessary.  A well-educated fiduciary also knows that all decisions must be made in the best interest of plan participants and beneficiaries. Therefore, a well-educated fiduciary already has prudent process in place to monitor the plan’s investments on a regular and ongoing basis.  And this investment monitoring is based on an objective criteria taking into consideration criteria such as: short term return, long term return, risk, management turnover, and investment expenses.  A well-educated fiduciary has outlined this criteria and process in the plan’s investment policy statement, which is reviewed at least annually. A well-educated fiduciary also understands the different share classes available for the plan’s investments.  For any non-institutional share class being used in the plan, a well-educated fiduciary has a process in place to rebate the revenue sharing back to the affected plan participants or use the revenue sharing to offset the plan’s administrative expenses.  A well-educated fiduciary also has a process for monitoring all the plan’s services providers and benchmarks them on a regular basis to ensure the plan’s fees for all services are reasonable. However, if the result of this case is a concern to you as a plan fiduciary, it may be time to become better educated. To learn more about our fiduciary training, contact our ERISA Services Team or call 800-234-9584.  
PCI’s archived blog entries are dated, the rules and statutes referenced may have changed. The analysis or guidance within these blog entries may have become stale, dated, or no longer accurate. PCI will not update or change these entries to reflect the latest analysis or development.


Pension Consultants, Inc.



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