In a unanimous decision, the U.S. Supreme Court ruled in Cunningham v. Cornell University that plaintiffs can satisfy the requirements for pleading prohibited party-in interest transactions under ERISA section 406(a) without alleging facts disproving the availability of a statutory exemption for such transactions, such as where no more than reasonable compensation is paid for necessary services. No. 23-1007 (U.S. Apr. 17, 2025). As a result, plaintiffs may be able to withstand motions to dismiss such claims even where the underlying pleadings are found insufficient to sustain a fiduciary breach claim based on the same conduct. Recognizing the risks posed by potentially frivolous claims proceeding into discovery, the Supreme Court coupled its ruling with specific advice as to how district courts can mitigate these risks.

Starting March 17, 2025, the Employee Benefits Security Administration’s Voluntary Fiduciary Correction Program (“VFCP”) will have a “self-correction” option.  Although the new option eliminates the need to wait for formal approval of a correction submission, participating fiduciaries will still need to satisfy a notice requirement and submit information to the Department of Labor.  The applicable

The Sixth Circuit recently reversed a district court’s dismissal, and order requiring arbitration of, a proposed class action alleging fiduciary breaches in connection with the Kellogg Company 401(k) plan.  Fleming v. Kellogg Co., 2024 WL 4534677 (6th Cir. Oct. 21, 2024).  In so ruling, the Sixth Circuit added to the list of recent decisions

A federal district court in Massachusetts recently denied a motion to dismiss a complaint filed by plan participants in the Cape Cod Healthcare, Inc. 403(b) plan, which alleged that the plan’s fiduciaries breached their ERISA duty of prudence by permitting the plan to pay excessive recordkeeping fees and remain invested in overpriced, underperforming investment options.