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Supreme Court Endorses Governing Standard for Mutual Fund Fees Cases Under Investment Company Act: An ERISA Perspective (PDF)

5 pages. Excerpt: On March 30, in Jones v. Harris Associates L.P., No. 08-586, __ U.S. __, 2010 WL 1189560 (Mar. 30, 2010), the U.S. Supreme Court unanimously affirmed the Second Circuit's analysis in Gartenberg v.Merrill Lynch Asset Management, Inc., 694 F.2d 923 (2d Cir. 1982), as the standard by which the fees mutual funds pay to their investment advisers should be evaluated under Section 36(b) of the Investment Company Act of 1940 (the ICA). On March 31, Morgan Lewis's Investment Management Practice issued an analysis of the case from a fund management perspective, 'Supreme Court Affirms Gartenberg Standard in Unanimous Decision in Jones v. Harris Associates L.P.' This LawFlash focuses instead on the implications the Jones case may have under the Employee Retirement Income Security Act (ERISA).

Solicitor General Weighs in on ERISA Preemption Battle Over State PBM Statutes

"At issue ... is whether an Arkansas statute that regulates the rates charged by Pharmacy Benefit Managers (PBMs), is preempted by [ERISA].... The Eighth Circuit Court of Appeals ... held that the Arkansas law included PBMs that cover ERISA plans, so the law 'relate[d] to and has a connection with employee benefit plans,' and was therefore preempted, declaring the law unenforceable as applied to PBMs in their administration and management of an ERISA plan.... The Solicitor General's brief argues that the [Eighth Circuit] erred in holding ERISA preemption under both the 'reference to' and 'connection with' theories of preemption." [Pharmaceutical Care Mgmt. Assoc. v. Rutledge, Nos. 17-1609 and 17-1629 (8th Cir. June 8, 2018; cert. pet. filed Oct. 22, 2018)]

Seventh Circuit Endorses Employer Stock Fiduciary Discretion, But Muddies the Water on ERISA Section 404(c) Safe Harbor

[T]he Seventh Circuit indicated in its opinion that it agreed with [DOL's] position-which is devoid of support in the statutory text-that the selection of plan investment options and the decision to continue offering a particular investment vehicle are acts to which fiduciary duties attach, and that the safe harbor is not available for such acts.