Washington, D.C., January 7, 2025 – The ERISA Industry Committee (ERIC) and a coalition of employee benefit industry groups on Friday urged the U.S. Supreme Court (the Court) to uphold a previous decision issued by the United States Court of Appeals for the Second Circuit in Cunningham v. Cornell University. In their amicus brief, ERIC and its coalition partners (the Amici) asked the Supreme Court to affirm the ruling, explaining that the actions under review in the case support the dual purposes of the Employee Retirement Income Security Act (ERISA) to both protect plan participants and support the creation and orderly administration of employee benefit plans.
In Cunningham, the Court is expected to address the pleading standard necessary to advance a complaint that a benefit plan transaction was a “prohibited transaction” under ERISA. Consistent with similar decisions in other circuit courts, the Second Circuit determined that alleging that an act was a “prohibited transaction” is not sufficient to advance a complaint, and that the plaintiff must also allege that statutory exemptions to those rules do not apply.
“Most ERISA benefit plans obtain services like recordkeeping that are executed by professionals who help keep the trains of plan administration on track. But in a world where merely hiring these experts opens the door to litigation, plan sponsors would become targets of meritless lawsuits,” said Tom Christina, Executive Director of the ERIC Legal Center. “If every transaction can be the subject of a suit, then plans will be mired in litigation, which harms participants. And if plans are less likely to engage the expertise of service providers, that could also harm participants. Nobody profits from this type of system—except the lawyers, of course.”
Christina added, “The Second Circuit’s interpretation of ERISA’s rules acknowledges what any plan sponsor already knows – you cannot effectively administer a plan for your workforce without obtaining any services for it. Importantly, it reads ERISA’s prohibited transaction provisions in a manner that is faithful not only to the statutory text, but also to Congress’s core aims in enacting ERISA. Affirming the ruling of the Second Circuit is critical to preserving the foundation of ERISA.”
In addition to ERIC, allied groups filing the amicus brief include the American Benefits Council and the SPARK Institute.
The amicus brief was prepared by O’Melveny & Myers LLP and is available here.