Supreme Court Rules In Favor of Employees in ERISA Class Action

Washington, DCThe Supreme Court has ruled in favor of employees who participated in their company’s retirement savings plans and who objected to the investment decisions made on their behalf, as decisions were deemed to negatively impact their savings, can move ahead with their ERISA (Employee Retirement Income Security Act) lawsuit.

The lawsuit was brought by employees of Edison International who argued that the company chose mutual funds with excessive fees. The unanimous ruling makes it easier for employees to sue over investment decisions affecting their 401(k) retirement plans.

The Edison lawsuit involves some 40 mutual funds that are managed at a higher cost and open to public investment. The employees allege that Edison could have chosen to invest in the same funds through a lower cost, institutional investment program. Therefore, the employees claim that the company did not act in their best interests by choosing the more expensive funds.

ERISA regulates employee benefit and pension plans, both of which can be tied into stock options. Employees and retired employees can file a lawsuit against a company and/or its officers for breaching fiduciary responsibilities and putting stock options and pension plans at risk.

The case is Tibble v. Edison International, 13-550.