Supreme Court Allows Cornell Employees' ERISA Suit Against University

The U.S. Supreme Court unanimously ruled that Cornell University employees can proceed with a class action lawsuit alleging mismanagement of their retirement plans, reversing lower court decisions that had dismissed the case for insufficient evidence. The justices clarified that, under the Employee Retirement Income Security Act (ERISA), plaintiffs only need to plausibly allege that a plan fiduciary engaged in a prohibited transaction; it is the defendant's responsibility to prove any applicable exemptions. This decision lowers the bar for employees to bring such claims, potentially increasing litigation against retirement plan sponsors by shifting the burden of proof. The case centered on claims that Cornell allowed its retirement service providers to charge excessive fees without seeking competitive bids, allegedly violating the fiduciary duty of loyalty and prudence. The ruling resolves a split among appeals courts regarding the level of detail plaintiffs must provide in their initial complaints about ERISA-prohibited transactions.