Nearly a decade after papers were first filed in a Los Angelesfederal court, the end may finally be in sight for litigants inTibble v. Edison, the landmark 401(k) excessive fee lawsuit famousfor making it to the Supreme Court.

A decision last week by the full Court of Appeals for the NinthCircuit is sending the case back to the District Court, the nextstop in a meandering legal odyssey that seems to have survived theextent of procedural options available to both the plaintiffs anddefendants in the case.

Some industry watchers say the case set the table for a newgeneration of lawsuits against defined contribution plans.

Others have said it will forever change how sponsors of 401(k)plans must interpret the Employee Retirement Income Security Act.

In May of 2015, the Supreme Court issued a unanimous opinion infavor of plan participants when it overturned two lowercourt rulings that broke for the defendants in the case, EdisonInternational, the California-based utility company.

At issue were the allegedly excessive fees of retail shareclasses of three mutual funds. Identical funds in the form ofcheaper institutional shares were available but not offered. At thetime of the case’s original filing in 2007, Edison’s 401(k) planheld roughly $3.8 billion in assets for about 20,000participants.

The case also examined ERISA’s six-year statute of limitationsprovision.

In 2009, the U.S. District Court for the Central District ofCalifornia issued a partial summary judgment. Fiduciaries toEdison’s plan were found in breach of ERISA with respect to theretail shares of mutual funds offered in the plan after 2001, orwithin ERISA’s six-year statute of limitation.

But the excessive fee claims against mutual funds offered toparticipants before the six-year statute of limitation weredismissed.

On appeal, that decision was upheld in the 9^thCircuit in March of 2013.

After agreeing to hear the plaintiffs’ appeal, the Supreme Courtissued a forceful decision that was widely viewed as a victory forthe plaintiffs in the 401(k) plan. The decision also created a newprecedent for interpreting ERISA’s statute of limitation.

In effect, the Supreme Court said ERISA’s fiduciary obligationsrequire plan sponsors to continually monitor the prudence of aninvestment, and to remove imprudent investments even if they wereoffered outside the six-year statute of limitation.

The ongoing duty to monitor investments in 401(k)s is “separateand apart” from plan fiduciaries’ duty to exercise prudence inselecting investment options, wrote Justice Stephen Breyer in thecourt’s opinion.

“So long as a plaintiff’s claim alleging breach of thecontinuing duty of prudence occurred within six years of suit, theclaim is timely,” Justice Breyer wrote.

Breyer said that when the 9^th Circuit originallyruled in favor of Edison, the appellate court failed to recognizethe principals of trust law, from which ERISA is based.

A trustee must “systematically consider all the investments ofthe trust at regular intervals” to meet its fiduciary obligations,wrote Breyer for the high court, which remanded the case back forthe 9^th Circuit to re-consider.

9^th Circuit to SCOTUS: we were right

In April of 2016, the 9^th Circuit issued a decisionon remand, upholding its original decision in favor of Edison.

The three-judge panel ruled that the plaintiffs could not makethe ongoing-duty-to-monitor argument so late in the game, becausethey failed to make the argument at the district court level orduring their original appeal.

In effect, the 9^th Circuit said the plaintiffs hadchanged their argument along the road to the Supreme Court. “Werecognize a general rule against entertaining arguments on appealthat were not presented or developed before the districtcourt.”

En banc petition

Upon that setback, the plaintiffs petitioned the 9^thCircuit for “en banc” review, requesting the 11 sitting appellatejudges of the 9^th Circuit to review the merits of thepanel decision issued in favor of Edison last spring.

The full circuit ruled in favor of the participants, and orderedthe district court to rehear the case to determine whether Edisonshould have switched its retail-class fund shares to institutionalshares to fulfill its duty to monitor investments in the plan.

The district court has also been ordered to re-examine theattorneys’ fees owed for plaintiffs’ representation. Plaintiffsoriginally requested $2.5 million in attorneys’ fees.

Schlichter preparing to go back to trial

The latest turn in the saga of Tibble v. Edison begs thequestion as to whether the slog will continue.

Edison could reposition its defense. Or the company couldfinally settle the suit.

“Edison International and Southern California Edison understandthe importance of their 401(k) plan to employees’ retirement goals.The companies are committed to providing a wide array ofhigh-quality investment options in the plan. The companies’ andplan fiduciaries’ efforts to act in the best interests of planparticipants are reflected in the numerous rulings in our favor inthe class-action challenge to our 401(k) plan,” the company said ina statement. Rosemead, CA-based Edison International had over $11.5billion in revenue in 2015.

Jerry Schlichter, founding partner of St. Louis-basedSchlichter, Bogard & Denton, the firm that has been leadrepresentation for the plaintiffs throughout the case, is preparingto re-try the case in the lower court.

“I can’t speak for the Defendant, but we are planning on goingto trial,” said Schlichter by email.

“When we committed to bringing this case, as with every case,that commitment was to do whatever it takes, no matter how long orhow costly, to obtain compensation for the employees and retireesfor the loss of their retirement assets, and that is what we willcontinue to do until completion,” he added.

The District Court for the District of Central California willnow have to determine the losses employees suffered from theexcessive fees in the three mutual funds in question, the earningsthose losses would have made over the past decade, as well as theamount attorneys will have to be reimbursed, said Schlichter.