Key Takeaways
- • Supreme Court justices signaled during oral arguments in *Anderson v. Intel Corp.* that a "meaningful benchmark" standard is necessary for ERISA plaintiffs alleging investment underperformance, but the Court has not yet settled on a precise definition of what constitutes "meaningful."
- • The case, filed in 2019 and argued on Tuesday, challenges Intel's allocation strategy in two target-date funds within its 401(k) plan, specifically the heavy weighting to hedge funds and private equity investments relative to comparable alternatives.
- • Plaintiffs' counsel argued that Intel's alternative investment allocation materially hurt participant performance sufficiently to warrant benchmark comparison, while Intel defended its investment strategy by emphasizing the need for "apples-to-apples" comparisons when assessing alleged underperformance.
- • The Supreme Court's ruling will determine the pleading standard for ERISA imprudence claims: whether plaintiffs must identify a meaningful benchmark to survive motions to dismiss and, if so, how strictly courts should define comparability based on investment aims, risks, and strategies.
- • The decision carries broad implications for retirement plan litigation, as it will clarify whether fiduciaries face heightened evidentiary burdens when defending alternative asset allocations and how plaintiffs must structure future ERISA imprudence complaints.
Summary
During oral arguments on Tuesday, a majority of U.S. Supreme Court justices indicated that establishing a "meaningful benchmark" standard is essential when evaluating whether retirement plan investments have underperformed their appropriate comparators in ERISA imprudence cases. The question before the Court in *Anderson v. Intel Corp. Investment Policy Committee* is whether—and how—plaintiffs must allege a meaningful benchmark in order to proceed past a motion to dismiss when claiming a plan fiduciary acted imprudently in selecting or retaining an investment.
The case, which originated in 2019, specifically targets Intel's investment approach within two target-date funds offered in the company's 401(k) plan. Matthew Wessler, representing the plaintiffs (a putative class of Intel plan participants), argued that Intel's substantial allocation to hedge funds and private equity investments reduced participant returns enough to warrant comparison against a meaningful alternative with similar objectives, risks, and strategies. Intel countered that its investment strategy reflects sound fiduciary judgment and that any assessment of alleged underperformance must use appropriate "apples-to-apples" comparisons—a position the Department of Labor supported.
While all parties acknowledged during arguments that plaintiffs must provide a meaningful benchmark to survive dismissal, they diverged significantly on the definition of "meaningful" itself. This doctrinal gap is central to the case's significance for retirement plan fiduciaries and litigants alike. The Supreme Court's resolution will establish whether the meaningful benchmark requirement constitutes a heightened pleading standard and clarify how strictly courts must scrutinize fund comparability based on investment characteristics. The ruling is expected to reshape ERISA imprudence litigation by determining the evidentiary bar plaintiffs must clear and the defenses available to plan fiduciaries defending alternative asset allocations.
The case, which originated in 2019, specifically targets Intel's investment approach within two target-date funds offered in the company's 401(k) plan. Matthew Wessler, representing the plaintiffs (a putative class of Intel plan participants), argued that Intel's substantial allocation to hedge funds and private equity investments reduced participant returns enough to warrant comparison against a meaningful alternative with similar objectives, risks, and strategies. Intel countered that its investment strategy reflects sound fiduciary judgment and that any assessment of alleged underperformance must use appropriate "apples-to-apples" comparisons—a position the Department of Labor supported.
While all parties acknowledged during arguments that plaintiffs must provide a meaningful benchmark to survive dismissal, they diverged significantly on the definition of "meaningful" itself. This doctrinal gap is central to the case's significance for retirement plan fiduciaries and litigants alike. The Supreme Court's resolution will establish whether the meaningful benchmark requirement constitutes a heightened pleading standard and clarify how strictly courts must scrutinize fund comparability based on investment characteristics. The ruling is expected to reshape ERISA imprudence litigation by determining the evidentiary bar plaintiffs must clear and the defenses available to plan fiduciaries defending alternative asset allocations.
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