Plain-English summary
Court says ERISA plaintiffs need only plead elements of §1106(a)(1)(C) to state a prohibited-transaction claim
The Supreme Court unanimously reversed the Second Circuit and held that to plead a prohibited-transaction claim under ERISA §1106(a)(1)(C), plaintiffs must plausibly allege only the elements specified in that statutory provision. Plaintiffs do not need to anticipate and negate possible statutory exemptions at the pleading stage.
Why this matters
The decision lowers the bar for bringing ERISA prohibited-transaction claims past the pleading stage. Plaintiffs can survive early dismissal by alleging the statutory elements without having to litigate exemptions or defenses at the complaint stage. That makes it easier to hold plan fiduciaries accountable early in litigation and affects how defendants and courts handle motions to dismiss in ERISA suits.
Who may feel it
- Employees and beneficiaries who sue over retirement or welfare plan transactions
- Plan administrators and fiduciaries for employer-sponsored benefit plans
- Employers that sponsor ERISA-covered plans (including universities and corporations)
- ERISA litigation attorneys and courts handling motions to dismiss
Key questions
- What must a plaintiff plead to state a prohibited-transaction claim under ERISA §1106(a)(1)(C)?