Supreme Court Rules Unanimously in Favor of Employee & Retiree ERISA Litigation Rights 

The Supreme Court of the United States issued a unanimous decision in favor of employees and retirees claiming illegal transactions involving employee benefit plans. The Court said that ERISA’s prohibited transaction rules must be enforced as written and courts shouldn’t attempt to alter the plain language to make it harder for employees to sue. The Court also ruled that various exemptions to prohibited transactions are affirmative defenses, meaning defendants have the burden to prove them and plaintiffs don’t need to make allegations in their complaints. The Court reversed the U.S. Court of Appeals for the Second Circuit, which had adopted a much more employer-friendly rule in favor of fiduciaries to the 403(b) plan for Cornell University employees.

Prohibited transaction claims are an important subset of available claims for employees and retirees seeking to protect their retirement savings and other assets in ERISA plans. This includes not only 403(b) and 401(k) plan litigation, but also ESOPs, pensions, and certain health plans. This means employees will only need to allege facts that a transaction between a plan involving some related party occurred to satisfy the pleading requirements.

Bailey Glasser’s ERISA Practice Group leader Gregory Porter and ERISA partner Mark Boyko represented 14 law professors who filed an amicus brief in the case requesting the Court to reverse the dismissal.

The case is Casey Cunningham et al. v. Cornell University et al., case number 23-1007.

Read more from Law360 about this decision.