About Us
The Employee Retirement Income Security Act (ERISA) is a federal law that regulates employee benefit and retirement plans to protect workers’ health and retirement benefits. 29 U.S.C. §§ 1001-1461. ERISA imposes heightened obligations, including the twin duties of loyalty and prudence, on fiduciaries who oversee employee benefit and retirement plans. 29 U.S.C. § 1104(a)(1). Notably, ERISA holds fiduciaries “personally liable” for “any losses to the [covered] plan resulting from each such breach.” 29 U.S.C. § 1109(a). ERISA further empowers beneficiaries, participants, and the Secretary of Labor to sue fiduciaries for losses to covered plans when fiduciaries have breached their duties. 29 U.S.C. § 1132.
ERISA draws heavily upon the common law of trusts in establishing the standards of conduct for fiduciaries. Cunningham v. Cornell Univ., 145 S. Ct. 120, 125 (2025). Thus, the rules and principles that apply to a traditional trustee who manages assets for a beneficiary are mirrored in the obligations of ERISA fiduciaries. Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp., Inc., 472 U.S. 559, 570 (1985). Specifically, ERISA fiduciaries are responsible for acting in the best interest of and for the benefit of beneficiaries; to act with reasonable care, skill, prudence and diligence; and, to diversify investments to minimize the risk of large losses. 29 U.S.C. § 1104(a)(1).
To prevail on a claim that a fiduciary has breached its obligations under ERISA, a plaintiff must prove: (1) a plan fiduciary; (2) breached an ERISA duty; (3) causing a loss to the plan. Mator v. Wesco Distrib., Inc., 102 F.4th 172, 184 (3d Cir. 2024). The third element—sometimes referred to as loss causation—has been the source of disagreement among federal courts, giving rise to a longstanding circuit split on which party bears the burden of proving loss causation once a plaintiff demonstrates a breach has occurred and the plan has suffered a loss. Specifically, the dispute concerns whether it is the plaintiff’s burden to demonstrate the breach caused the loss or the defendant’s burden to prove the breach did not cause the loss.
The Sixth, Tenth, and Eleventh Circuits have held that proof for loss causation rests on the plaintiff, pointing to ERISA’s silence on burden shifting. Willett v. Blue Cross & Blue Shield of Ala., 953 F.2d 1335, 1343 (11th Cir. 1992); Kuper v. Iovenko, 66 F.3d 1447, 1459 (6th Cir. 1995); Pioneer Centres. Holding Co. ESOP & Trust v. Alerus Fin., N.A., 858 F.3d 1324, 1336 (10th Cir. 2017). The Ninth Circuit also appears to have endorsed this position. Wright v. Oregon Metallurgical Corp., 360 F.3d 1090, 1099 (9th Cir. 2004).
In contrast, the First, Second, Fourth, Fifth, and Eighth Circuits have held that, upon a showing of breach of a fiduciary duty and loss by the plan, the burden of proof on loss causation shifts to the fiduciary. Sacerdote v. New York Univ., 9 F.4th 95, 113 (2d Cir. 2021); Brotherson v. Putnam Invs., LLC, 907 F.3d 17, 39 (1st Cir. 2018); Tatum v. RJR Pension Inv. Comm., 761 F.3d 346, 363 (4th Cir. 2014); Martin v. Feilen, 965 F.2d 660, 671 (8th Cir. 1992); McDonald v. Provident Indem. Ins. Co., 60 F.3d 234, 237 (5th Cir. 1995). For example, in Tatum, the Fourth Circuit relied on the law of trusts in shifting the burden of proving loss causation to the fiduciary, finding that the burden shifting framework in trust law comports with the structure and purpose of ERISA, whose primary objective is to protect the interests of participants and beneficiaries in employee benefit plans. 761 F.3d at 363. There, the court held that “the long-recognized trust law principle—that once a fiduciary is shown to have breached his fiduciary duty and a loss is established, he bears the burden of proof on loss causation—applies here.” Id.
However, a recent decision by the Eleventh Circuit has rekindled a decades-old dispute, paving the way for the Supreme Court to resolve the circuit split. In Pizarro v. Home Depot, Inc., a class of former and current employees of Home Depot alleged that the company failed to prudently manage its 401(k) retirement plan, resulting in excessive fees and subpar returns. 111 F.4th 1165 (11th Cir. 2024). The trial court granted summary judgment to defendants, finding, in part, that the plaintiffs failed to show that any plan losses were caused by the alleged breach. The Eleventh Circuit affirmed, holding that “ERISA does not impose a burden-shifting framework; instead, plaintiffs bear the ultimate burden of proof on all elements of their claims, including loss causation.” Id. at 1173. “Requiring a defendant to disprove causation so long as a plaintiff can show a breach and some loss would turn the usual principles of civil liability on their head.” Id. at 1174.
The Supreme Court may soon resolve the circuit split on loss causation in ERISA class actions, which often include older adults at or nearing retirement. The resolution of this issue will make uniform the proof required for a beneficiary to seek damages in an ERISA breach of fiduciary duty action. Should the Court decide that the beneficiary has the burden of proof on loss causation, the pursuit of ERISA class actions seeking damages against retirement plan administrators and managers would become more difficult for plaintiffs who have sustained losses in their retirement plans. On the other hand, adoption of the burden-shifting approach by the Court would be consistent with the purpose of ERISA, which seeks to protect the interest of participants and beneficiaries in employee health and retirement plans.
Stefan Shaibani, SShaibani@aarp.org
View the Full Supreme Court Preview (PDF)