Years ago I moved from reading fiction for fun to mostly reading non-fiction, not long after reading The Corrections and spending the whole time hearing, in style, tone and manner, echoes in the back of my head of writers as recent as Martin Amis, as old as Norman Mailer, and as somewhere in-between as Don DeLillo. Even more though, I had begun to be struck by the fact that, with a few exceptions, most of what anyone had to say had long since been better said by William Shakespeare.
I thought of this as I reread the Supreme Court’s opinion in Tibble. After all of the years of litigation, the high profile appeals, the articles and panels discussing the case, the decision, from a practical perspective, can be best summed up by Shakespeare: its simply sound and fury, signifying nothing, at least not from either a practical or an academic perspective when it comes to either the law of ERISA or its practical application.
The Court was confronted with, in essence, this issue: when does ERISA’s statute of limitations begin running in the context of investment decisions made many years ago, where the investments continued to be held in a plan. ERISA’s statute of limitations for breaches of fiduciary duty is an odd little duck, in many ways unique to itself: its six year limit runs from the last act in a breach, and its three year limit runs from the plaintiff’s actual knowledge of a breach (I know, this is a summary). You can see the problem though, from the practical perspective of either a litigator or a plan fiduciary, or even as part of the completely academic exercise of developing a jurisprudence for this statute of limitations. It is essentially dependent on defining the date of fiduciary breach, establishing what constitutes knowledge of that breach and on defining the last act of the breach. The Supreme Court’s opinion in Tibble in no manner expanded upon our understanding of those issues or of how to apply that statute of limitations in that context. It instead, at least implicitly, continued to uphold the unremarkable, and effectively undisputed, proposition that the statute’s running cannot occur before the breach, but without telling us anything, really, about how to determine the relevant date of breach.
Instead, the Court declared what was, again, an essentially unremarkable proposition, which is that fiduciary duties don’t simply end with the selection by fiduciaries of plan investments, but instead continue throughout the life of the plan with regard to such investments. But as the Court’s unanimity and its broad citations of standard trust rules reflect, did anyone ever really think otherwise? As the Court noted in its opinion, even the parties had agreed on that point by the time the briefing and argument before the Supreme Court was concluded.
The Court then, from there, failed to take anyone the one step further and fill in what that continuing duty with regard to plan investments looks like, and wisely so. This is an issue best filled in on a detailed factual record, not in the abstract by an appellate panel. What type of continued monitoring is needed, what type of events should trigger a revision of investment choices by a fiduciary, what level of review is needed once those events occur, are all complex questions that can vary from case to case, particularly given the wide range of plan types that exist and the fact that different types of plans may be affected in different ways by different events. For instance, certainly employer stock of a publicly traded corporation is affected in different ways by the collapse of a Wall Street bank than are index funds in a 401(k) plan. Likewise, negative events in a particular and narrow industry might require revisiting the employee ownership held in the ESOP of a private company in that industry, but would be unlikely to raise any concerns with regard to a diversified pension plan.
So when all is said and done, what do years of litigation, a Ninth Circuit opinion and a Supreme Court opinion in Tibble leave us knowing? That there is a continuing duty to monitor plan investments, the breach of which can give rise to fiduciary liability, and that ERISA’s statute of limitations runs from the date of whatever breach is identified and proven. I am not sure any experienced ERISA litigator or academic didn’t already know that already, before the Supreme Court issued its opinion in Tibble.