Supreme Court Weighs Benchmark Standard in Employer-Retirement Fund Case

The Court is hearing *Anderson v. Intel*, a dispute over whether Intel’s management of its employees’ retirement investments violated the Employee Retirement Income Security Act (ERISA). Plaintiffs claim the company’s heavy exposure to hedge funds and private-equity vehicles caused the fund to underperform relative to other options, reducing workers’ retirement savings. Intel contends that lower returns alone do not prove imprudence, arguing that differing investment strategies can justify performance gaps.

Newsweek

ERISA governs the fiduciary duties of private-sector retirement-plan sponsors, emphasizing the processes used to select and monitor investments rather than the ultimate results. The central legal question is what constitutes a “meaningful benchmark” for comparing a plan’s performance to determine if a fiduciary acted imprudently. The outcome could shape the ease with which employees challenge investment decisions that manage trillions of dollars in employer-sponsored accounts.

Newsweek

During oral arguments, Justice Neil Gorsuch warned the Court against deciding the broader issue of whether underperformance alone establishes imprudence, urging focus on the appropriate benchmark. Justice Clarence Thomas asked the plaintiff’s counsel to define “apples and oranges” in the comparison, highlighting the difficulty of selecting comparable funds. Justice Amy Coney Barrett pressed attorneys on whether a comparator is required to sustain an underperformance claim. Justice Elena Kagan echoed the analogy, noting that while the “apple” need not be identical in every characteristic, it must still be comparable.

Newsweek

If the justices adopt a low threshold for what qualifies as a meaningful benchmark, more employees may be able to pursue lawsuits alleging imprudent investment choices. Conversely, a higher standard could enable employers to dismiss such claims early, limiting discovery and reducing litigation risk for plan sponsors.

Newsweek

• “We should take care to bracket that question about the relative importance of underperformance in a prudence, imprudence claim. We're not going to answer that question,” — Justice Neil Gorsuch

Newsweek