The U.S. Supreme Court has agreed to review the pleading standards that plaintiffs must satisfy in Employee Retirement Income Security Act (ERISA) prohibited transactions cases. The case, Cunningham v. Cornell University, involves a challenge of Cornell’s allegedly excessive recordkeeping fees in its retirement plans. We’ve gathered articles on the news from SHRM and other outlets.
At least two federal appeals courts have ruled that plaintiffs alleging prohibited transactions under ERISA only have to allege that such a transaction took place to survive a defendant’s motion to dismiss. But the 2nd Circuit and three other appeals courts have said those lawsuits must also allege that a plan engaged in a prohibited transaction with the intent to benefit a third party, such as a recordkeeper. The Cornell plaintiffs told the Supreme Court that the 2nd Circuit had gone further and misconstrued ERISA “by placing the onus on plaintiffs to negate, rather than on defendants to prove, exemptions to liability.”
Cornell did not immediately respond to a request for comment.
(Reuters)
The Cornell employees asked the justices to review the 2nd Circuit’s decision addressing what benefit plan participants must allege to show that an arrangement between a plan and its service provider violates ERISA’s prohibited transaction rules. According to the 2nd Circuit, a prohibited transaction claim based on money paid to a retirement plan...
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