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Supremes Pass on Stable Value Suit

Practice Management

It’s often said that “if at first you don’t succeed, try, try again.” But that didn’t work for the plaintiffs in a suit challenging the use of a money market fund, rather than a stable value option.

The plaintiffs here have been “trying” since February 2016, when they, represented by the St. Louis-based litigation powerhouse Schlichter, Bogard & Denton, first challenged the $19 billion Chevron plan’s decision to offer the Vanguard Prime Money Market Fund, rather than a lower-cost and better-performing stable value fund. As other, similar lawsuits have alleged, they also claimed that the plan used more expensive retail share class funds, rather than institutional shares or collective trusts. 

In January, they had (unsuccessfully) asked the full (en banc) Ninth Circuit to consider their case, arguing that the three-judge panel improperly held their claims to a strict pleading standard that conflicted with other decisions from the Ninth Circuit and other appeals courts.

The plaintiffs had argued that their case “…presents a question of exceptional importance over a rule of national application for which there is an overriding need for national uniformity, namely, the proper pleading standards to apply to a fiduciary breach claim under the Employee Retirement Income Security Act (ERISA),” specifically, is it sufficient for an ERISA plaintiff to allege indirectly that a fiduciary process was tainted by lack of effort, competence, or loyalty? The plaintiffs argue that the Seventh and Eighth Circuits hold it is, and that the Fifth Circuit and the Ninth “agree with the principles underlying those decisions” – and thus that the previous Chevron decision is in conflict, not only with those decisions, but with decisions in the Ninth Circuit itself. “The panel imposed the wrong standard, an impermissibly strict standard, which the Court en banc should correct,” they argued. 

However, that argument proved to be unpersuasive – and so, they appealed to the U.S. Supreme Court – claiming that the Ninth Circuit’s decision was at odds with decisions of the Second, Fifth, Seventh, and Eighth circuits, not to mention position of the Labor Department.

However, the nation’s high court announced May 28 that they wouldn’t be reviewing the case.

All of which means, of course, that the Ninth Circuit’s rejection of the plaintiffs’ case stands – basically a finding that the participants’ assertion that Chevron acted in its own interests and Vanguard’s interests rather than the participants’ interests was “entirely speculative” and “unsupported by any facts.”

The case is White v. Chevron Corp., U.S., No. 18-1271, certiorari denied 5/28/19.