Business Roundtable and six other business associations have filed an amicus brief petitioning the U.S. Supreme Court to grant certiorari in Putnam Investments, LLC v. Brotherston, a case with significant implications for companies that offer employer-sponsored retirement plans.
At issue is who must demonstrate causation of loss and how loss itself can be proven in an ERISA breach of fiduciary duty claim. The First Circuit joined an ongoing split among circuit courts by holding that defendants, not plaintiffs, are required to bear the burden of proving loss causation. The First Circuit also held that with respect to the initial demonstration of loss, index funds were an appropriate comparator against which to measure the performance of an actively managed investment portfolio offered under the ERISA plan.
The brief argues the First Circuit’s standard for measuring loss, along with its decision to place the initial burden of disproving loss causation on defendants, will make it far easier for plaintiffs to bring suit and discourage companies from offering 401(k) retirement plans. Moreover, the decision will also promote forum shopping. Other groups joining the brief at the U.S. Chamber of Commerce, the American Benefits Council, the Securities Industry and Financial Markets Association, the ERISA Industry Committee, the American Retirement Association, and the National Association of Manufacturers.