On December 23, 2024, the NAM filed an amicus brief urging the full 6th Circuit to rehear this case where the panel’s decision throws ERISA’s pleading standards into disarray. The Parker Retirement Savings Plan allows employees of the Parker-Hannifin Corporation to save for retirement. Five plan participants filed this putative class action alleging that the plan’s fiduciaries violated ERISA by selecting or retaining imprudent investment options. Specifically, they allege 1) an “underperformance claim” (that target-date funds, offered to participants from 2015-19 underperformed other available funds); and 2) a “share-class claim” (that, for certain plan investment options, there were lower-cost share classes that should have been offered to participants). The Northern District of Ohio granted defendants’ motion to dismiss for failure to state a claim. However, in a 2-1 decision, the 6th Circuit reversed, concluding that the plaintiffs pointed to the S&P target date fund as a meaningful benchmark to support their imprudence allegations. The defendants requested that the full 6th Circuit rehear the case.
We argue in our brief that the panel majority improperly inferred imprudence from a performance-based comparison without ensuring that the plaintiffs are comparing two funds that have the same investment goals. Reading the panel majority’s decision with other 6th Circuit precedent will create confusion over what allegations are sufficient to state a plausible fiduciary-breach claim premised on purported excessive fees or underperformance and could lead to forum shopping. Rehearing is necessary to bring the 6th Circuit’s caselaw back in line with Supreme Court precedent and resolve the conflicts created by the majority’s decision.
Unfortunately, on February 12, 2025, the 6th Circuit denied the petition for rehearing en banc.