Hughes v. Northwestern University

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Supreme Court of the United States
Hughes v. Northwestern University
Term: 2021
Important Dates
Argued: December 6, 2021
Decided: January 24, 2022
Outcome
Vacated and remanded
Vote
8-0
Majority
Sonia Sotomayor • Chief Justice John Roberts • Clarence Thomas • Stephen Breyer • Samuel Alito • Elena Kagan • Neil Gorsuch • Brett Kavanaugh

Hughes v. Northwestern University is a case argued before the Supreme Court of the United States on December 6, 2021, during the court's October 2021-2022 term. Justice Amy Coney Barrett recused herself from participating in this case.[1]

In an 8-0 ruling, the court vacated and remanded the decision of the United States Court of Appeals for the 7th Circuit, holding that the lower courts erred in dismissing the ERISA plan participants' suit and failing to take into account an ERISA fiduciary's continuing duty to monitor plan investments as set out in Tibble v. Edison International (2015). Justice Sonia Sotomayor delivered the opinion for the unanimous court.[2]

HIGHLIGHTS
  • The issue: The case concerned Employee Retirement Income Security Act of 1974 (ERISA) defined-contribution retirement plans. Click here to learn more about the case's background.
  • The questions presented: "Whether allegations that a defined-contribution retirement plan paid or charged its participants fees that substantially exceeded fees for alternative available investment products or services are sufficient to state a claim against plan fiduciaries for breach of the duty of prudence under ERISA, 29 U.S.C.§ 1104(a)(1)(B)."[3]
  • The outcome: The court vacated the ruling of the U.S. Court of Appeals for the 7th Circuit, and remanded the case for further proceedings.[2]


    • The case came on a writ of certiorari to the United States Court of Appeals for the 7th Circuit.[4] To review the lower court's opinion, click here.

    Timeline

    The following timeline details key events in this case:

    • January 24, 2022: The U.S. Supreme Court vacated and remanded the U.S. Court of Appeals for the 7th Circuit's ruling.
    • December 6, 2021: The U.S. Supreme Court heard oral argument.
    • July 2, 2021: The U.S. Supreme Court agreed to hear the case.
    • June 19, 2020: April Hughes, Katherine Lancaster, and Jasmine Walker collectively appealed to the U.S. Supreme Court.
    • March 25, 2020: The United States Court of Appeals for the 7th Circuit affirmed the district court's ruling.

    Background

    There were two Employee Retirement Income Security Act of 1974 (ERISA) defined-contribution retirement plans at issue in the case: the Northwestern University Retirement Plan and the Northwestern University Voluntary Savings Plan. Both plans allowed participants to select the investments into which their money was invested and to select an investment option assembled by the plans’ fiduciaries. Northwestern was the administrator and designated fiduciary of both plans. Each plaintiff in the case participated in one or both plans.[1][4]

    The plaintiffs, collectively known as Hughes, filed a lawsuit in U.S. district court against Northwestern, alleging that the plan administrators violated their duty under ERISA to make prudent decisions, citing adjustments to the number of investment offerings by the fiduciaries from 429 total to 40 in 2016, alleging poor-performing investment options, and alleging excessive fees. Hughes sought monetary and injunctive relief and requested a jury trial. Hughes also sought permission to file a proposed second amended complaint, which included four new counts for breach of fiduciary duty. Northwestern moved to dismiss, to deny Hughes from filing the second amended complaint, and to strike Hughes’ request for a jury trial. The district court granted each of Northwestern's motions.[4]

    On appeal, the U.S. Court of Appeals for the 7th Circuit affirmed the district court's ruling.[4] On June 19, 2020, April Hughes, Katherine Lancaster, and Jasmine Walker collectively appealed to the U.S. Supreme Court for review. On July 2, 2021, SCOTUS accepted the case to its merits docket for the October 2021 term. Justice Amy Coney Barrett recused herself from participating in this case.[1]

    Questions presented

    The petitioner presented the following questions to the court:[3]

    Questions presented:
    “ Whether allegations that a defined-contribution retirement plan paid or charged its participants fees that substantially exceeded fees for alternative available investment products or services are sufficient to state a claim against plan fiduciaries for breach of the duty of prudence under ERISA, 29 U.S.C.§ 1104(a)(1)(B).[5] ”

    Oral argument

    The U.S. Supreme Court heard oral argument on December 6, 2021.

    Audio

    Audio of oral argument:[6]



    Transcript

    Transcript of oral argument:[7]

    Outcome

    In an 8-0 ruling, the court vacated and remanded the decision of the United States Court of Appeals for the 7th Circuit, holding that the lower courts erred in dismissing the ERISA plan participants' suit and failing to take into account an ERISA fiduciary's continuing duty to monitor plan investments as set out in Tibble v. Edison International (2015). Justice Sonia Sotomayor delivered the opinion for the unanimous court.[2]

    Opinion

    In the court's majority opinion, Justice Sotomayor wrote:[2]

    “

    Under the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U. S. C. §1001 et seq., ERISA plan fiduciaries must discharge their duties “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.” §1104(a)(1)(B). This fiduciary duty of prudence governs the conduct of respondents, who administer several retirement plans on behalf of current and former employees of Northwestern University, including petitioners.

    In this case, petitioners claim that respondents violated their duty of prudence by, among other things, offering needlessly expensive investment options and paying excessive recordkeeping fees. The Court of Appeals for the Seventh Circuit held that petitioners’ allegations fail as a matter of law, in part based on the court’s determination that petitioners’ preferred type of low-cost investments were available as plan options. In the court’s view, this eliminated any concerns that other plan options were imprudent.

    That reasoning was flawed. Such a categorical rule is inconsistent with the context-specific inquiry that ERISA requires and fails to take into account respondents’ duty to monitor all plan investments and remove any imprudent ones. See Tibble v. Edison Int’l, 575 U. S. 523, 530 (2015). Accordingly, we vacate the judgment below and remand the case for reconsideration of petitioners’ allegations. [5]

    		”
    —Justice Sonia Sotomayor

    Text of the opinion

    Read the full opinion here.

    October term 2021-2022

    See also: Supreme Court cases, October term 2021-2022

    The Supreme Court began hearing cases for the term on October 4, 2021. The court's yearly term begins on the first Monday in October and lasts until the first Monday in October the following year. The court generally releases the majority of its decisions in mid-June.[8]

    The court agreed to hear 68 cases during its 2021-2022 term.[9] Four cases were dismissed and one case was removed from the argument calendar.[10]

    The court issued decisions in 66 cases during its 2021-2022 term. Three cases were decided without argument. Between 2007 and 2021, SCOTUS released opinions in 1,128 cases, averaging 75 cases per year.


    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 SCOTUSblog, "Justices add one religious-rights case to docket but turn down another," July 2, 2021
    2. ↑ 2.0 2.1 2.2 2.3 U.S. Supreme Court, Hughes v. Northwestern University, decided January 24, 2022
    3. ↑ 3.0 3.1 U.S. Supreme Court, "19-1401 HUGHES V. NORTHWESTERN UNIVERSITY, QUESTION PRESENTED:," July 2, 2021
    4. ↑ 4.0 4.1 4.2 4.3 United States Court of Appeals for the 7th Circuit, Divane v. Nw. Univ., decided March 25, 2020
    5. ↑ 5.0 5.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    6. ↑ Supreme Court of the United States, "Oral Argument - Audio," argued December 6, 2021
    7. ↑ Supreme Court of the United States, "Oral Argument - Transcript," argued December 6, 2021
    8. ↑ SupremeCourt.gov, "The Supreme Court at Work: The Term and Caseload," accessed February 4, 2021
    9. ↑ Consolidated cases are counted as one case for purposes of this number.
    10. ↑ U.S. Supreme Court, "Order List: 593 U.S.," May 17, 2021
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