No Surprises in Tibble v. Edison: Fiduciaries Have a Continuing Duty to Monitor Plan Investments

Chris Allesee

Recently, I read an article that referenced a computer study about U.S. Supreme Court opinions.  Apparently, the Court’s written opinions may be trending longer and “grumpier” than they used to, even if they are now easier to read.  Always the optimist, I assume that the Court read this study, and in a monumental showing of self-realization and improvement, issued a short (barely 8 pages), sweet, simple, and unanimous opinion in Tibble v. Edison holding that plan fiduciaries have a continuing duty to monitor a plan’s investment options.  

As a quick background, the Ninth Circuit had previously held that an ERISA fiduciary’s duty to evaluate the investment options for a participant-directed plan was tied to the initial selection of a fund, or a showing that a significant change compelled a new due diligence review of a fund.  As a result, the plaintiffs’ claim that certain investment options were inappropriate for the plan was time-barred because it was not raised within six years of the fiduciary’s selection of the funds, and the plaintiffs did not show any change in circumstances that would trigger a new review.  Citing various sources of trust law, the Court promptly reversed the Ninth Circuit and warned fiduciaries that they must always act in a prudent manner, including regularly monitoring the appropriateness of a plan’s investment options.  However, Edison had effectively agreed on this issue in its brief, and the more interesting question was whether the Court would use the opportunity to comment on the facts of the case regarding the extent of a fiduciary’s continuing duty to monitor.  The Court emphatically declined to address the issue, and remanded the case to the Ninth Circuit to determine whether Edison acted in a prudent manner under the circumstances and whether plaintiffs properly raised a continuing duty to monitor claim.   

Maybe I was hasty in my optimism, as the Court’s succinct opinion seizes on an issue of minimal dispute, and offers little besides confirming what most already suspected.  That being said, the simplicity of the unanimous opinion may energize the plaintiff’s bar, so now would be a good time to make sure you have procedures in place to regularly monitor the appropriateness of your plan’s investment options and document your actions.