Swirling in the lower courts since 2007, the Supreme Court's recent decision on Tibble v. Edison International centered on whether Edison International's financial advisors and investment committee had breached their fiduciary duties by choosing retail share classes instead of institutional shares of specific mutual funds, that in turn, cost the employees by incurring higher fees; and, more significantly. It also focused on whether the ability to claim such a breach exceeded the six-year statue of repose mandated by the Employee Retirement Income Security Act (ERISA).
In mid-May, the high court handed down its unanimous opinion in Tibble v. Edison and said that "a fiduciary normally has a continuing duty of some kind to monitor investments and remove imprudent ones." This was expected and probably brought a widespread "no kidding" response from fiduciaries who have done just that from the get-go.
The eyebrow raiser was that the Court vacated and remanded the lower court's ruling; they went on to rather scathingly note in their opinion that the previous court's ruling had "erred by applying a 6-year statutory bar based solely on the initial selection of the three funds without considering the contours of the alleged breach of fiduciary duty."
Then, just to muddy the waters a bit, the Supreme Court stated that they would express "no view on the scope of Edison's fiduciary duty in this case."
Some are worrying that this may be the beginning of the Supreme Court's interest in delving deeper into the fiduciary duties of those managing employee retirement plans.
Others feel that the Court left just enough vagueness in its opinion to make advisors wonder what will be considered "reasonable" for due diligence and monitoring.
Several media outlets even speculated that the 9-0 decision was rare and spoke volumes about the Court's newfound view of these matters. Though, more than likely, this is indicative of a different trend of more agreement overall by the nine justices. Indeed, the Court ruled unanimously 62% of the time in the previous year's cycle, which is the highest percentage since 1940.
