## Facts

- Edison International sponsored a defined-contribution 401(k) plan administered by plan fiduciaries.
- In 1999 the fiduciaries added three mutual funds to the plan’s investment menu; in 2002 they added three more.
- The six funds were retail-class mutual funds with higher fees, despite the availability of materially identical lower-cost institutional-class shares.
- In 2007 plan participants sued, alleging the fiduciaries breached ERISA’s duty of prudence by offering and retaining the higher-cost retail share classes.
- ERISA’s limitations provision, 29 U.S.C. § 1113, generally bars claims filed more than six years after the last action constituting part of the breach, or (for omissions) the latest date the fiduciary could have cured the breach.

## Issues

1. Whether ERISA fiduciaries have a continuing duty, separate from initial investment selection, to monitor plan investments and remove imprudent ones.
2. Whether a prudence claim based on failure to monitor and remove investments is timely under 29 U.S.C. § 1113 when the investments were first selected more than six years before suit but allegedly imprudently retained within the six-year period.

## Decision

- The Supreme Court unanimously vacated the Ninth Circuit’s judgment and remanded.
- The Court held that ERISA fiduciaries have a continuing duty to monitor plan investments and remove imprudent ones, derived from trust law and separate from the duty at initial selection.
- A claim alleging breach of this continuing duty is timely if filed within six years of the alleged breach (such as a failure to monitor or remove an imprudent investment) even if the initial selection occurred outside the six-year period.
- The Court concluded the Ninth Circuit erred by treating the claim solely as a challenge to the initial selection of the 1999 funds without analyzing whether there was a timely breach based on ongoing monitoring and retention.
- The Court did not decide whether the fiduciaries actually breached the monitoring duty or what review was required on these facts.

## Legal Principles

- ERISA fiduciary duties are informed by the common law of trusts.
- A trustee-style duty of prudence includes a continuing obligation to monitor investments and remove imprudent ones, distinct from the duty to select investments prudently at the outset.
- For purposes of 29 U.S.C. § 1113, an alleged failure to monitor and remove imprudent investments can constitute a separate breach; a suit is timely if brought within six years of that breach.
- Before applying § 1113 to bar a claim, courts must identify the alleged breach’s nature, including whether it concerns ongoing monitoring and retention rather than only initial selection.

## Conclusion

The Court held that ERISA fiduciaries must continue to monitor plan investments and remove imprudent options, and that participants may sue for a breach of that continuing duty so long as the alleged failure occurred within § 1113’s six-year period, even when the investment was initially chosen earlier.


Tibble v. Edison Int'l, 135 S. Ct. 1823 (2015)