As the first half of 2026 has passed, plan sponsors should be aware of ongoing significant litigation concerning the Employee Retirement Income Security Act (ERISA). Multiple cases may substantially impact ERISA issues, including pleading standards for fiduciary breach claims, 401(k) plan forfeitures, internal procedures for ESOP disputes, and wellness program structures to comply with nondiscrimination provisions. In these cases, current and former employees continue to challenge plan practices as breaches of ERISA’s fiduciary duties.

Anderson v. Intel Corporation Investment Policy Committee

The U.S. Supreme Court is set to hear arguments this fall in Anderson v. Intel Corporation Investment Policy Committee, which could become a landmark decision on ERISA pleadings. The plaintiffs claim that fiduciaries for Intel’s 401(k) plan violated their fiduciary duties under ERISA by imprudently choosing and retaining underperforming custom target-date funds (TDFs) and other investments. On appeal, the U.S. Court of Appeals for the Ninth Circuit affirmed the dismissal of the plaintiffs’ claims for failure to identify a meaningful benchmark against which to evaluate the investment funds’ performance. The Supreme Court will consider whether allegations of imprudence based on fund underperformance must contain a meaningful benchmark for evaluation to avoid dismissal.

The issue raised in Anderson is consequential because ERISA lawsuits targeting certain investments rely on relevant comparisons, whether regarding underperformance, fee rates, or risks. Typically, plans dismiss comparisons as not meaningful unless they have similar investment objectives, risk levels, asset allocations, and management procedures. If the Supreme Court rules that meaningful benchmarks are required at the pleading stage of these ERISA cases, plans could be more likely to get dismissals. On the other hand, the opposite decision could make it easier for plaintiffs to proceed to discovery, thereby increasing litigation costs. Regardless of the outcome, plans should carefully document how they select, monitor, and evaluate performance of certain investments, especially custom TDFs and alternative investments.

Hutchins v. HP Inc.

This case is one of many cases across multiple jurisdictions challenging the disposition of 401(k) plan forfeitures. These forfeitures occur in defined contribution plans when participants leave their employment before meeting vesting requirements, resulting in the loss of the unvested portion of employer contributions. Typically, plan documents allow forfeitures to be used in various ways, such as reducing employer contributions or paying plan expenses. Plan participants argue that when plans use forfeited funds for the employer’s benefit rather than to offset participants’ plan expenses, they breach their fiduciary duty under ERISA to act in participants’ interests, not their own.

In Hutchins, the plaintiffs contend that HP breached its fiduciary duties under ERISA by using the forfeitures to offset its own contributions instead of using them to defray plan administrative costs that employees pay. The federal district court dismissed the suit, stating that HP’s usage of the forfeitures was permissible under the plan documents and its past practices. The U.S. Department of Labor (DOL) also supported dismissal, arguing that an employer’s selection of how to use the forfeited funds from one among multiple permissible uses does not constitute a breach of fiduciary duty under ERISA.

A favorable outcome for HP before the U.S. Court of Appeals for the Ninth Circuit would give credence to employers who have used plan documents to support applying forfeitures to offset employer contributions. An adverse ruling could cause similar litigation against other employers and may necessitate plan redesign to define forfeiture allocation practices more clearly.

Cain v. Siemens Corp. 

This case addresses a similar forfeiture issue before the U.S. Court of Appeals for the Third Circuit. In Cain, the plaintiff claims that Siemens violated its fiduciary duties under ERISA by using 401(k) plan forfeitures to reduce its contributions rather than paying plan expenses. As in Hutchins, the federal district court dismissed the case for failure to state a viable claim under ERISA. The DOL supported Siemens’ position.

Due to pending cases on the same issue in the Third and Ninth Circuits, appellate courts soon could have more definitive guidance on how to handle these claims. Decisions favoring the plan participants could spawn more litigation over a common forfeiture practice as a breach of fiduciary duty under ERISA. Conversely, decisions favoring the plan sponsors could solidify the practice. If the two courts issue opposing decisions, then the Supreme Court potentially could intervene to resolve a split on the issue.

Bolton v. Inland Fresh Seafood Corporation of America 

In Bolton, the plaintiffs claim that the fiduciaries of Inland’s employee stock ownership plan (ESOP) caused it to overpay for employer stock. The federal district court dismissed the claim for failure to exhaust the plan’s administrative remedies.

On appeal, a three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit affirmed the district court’s decision. Currently, the case is pending en banc review by the full Eleventh Circuit.

Historically, the Eleventh Circuit has broadly applied its administrative exhaustion requirement to a wide range of cases, including those involving statutory breach of fiduciary duty claims under ERISA. Other circuits have limited use of the administrative exhaustion rule, finding it inapplicable in those cases. As a result, the Eleventh Circuit could narrow or abandon the existing rule or keep it intact. The decision could have significant implications for plans, as administrative exhaustion can be an important procedural defense. If the Eleventh Circuit limits exhaustion in these cases, plaintiffs in Georgia, Florida, and Alabama courts may have more direct access to federal courts. Regardless of the outcome, plan sponsors should maintain strong fiduciary records, ensuring a meticulous, individualized process for stock transactions, valuation reviews, and trustee participation. These records are critical in defending ESOP-related suits.

Williams v. Bally’s Management Group 

The plaintiff in this case has alleged that Bally’s wellness program, which contains a tobacco surcharge, violates ERISA’s nondiscrimination rules. The case also involves a claim that the company breached its fiduciary duties by imposing and retaining the surcharge. The federal district court dismissed both claims, finding that the plaintiff’s allegations did not amount to a viable ERISA nondiscrimination claim and that the fiduciary breach claim did not contain sufficient allegations of harm to the plan. The plaintiff has appealed the case, which is now pending before the U.S. Court of Appeals for the First Circuit.

One of the issues raised in Williams includes retroactive reimbursement of the tobacco surcharge to participants who complete a tobacco cessation program or reasonable alternative. Another issue is the adequacy of participant notices that set forth any reasonable alternative standards and wellness program rewards and penalties.

While wellness programs are popular and useful to employers, they implicate HIPAA nondiscrimination rules and ERISA disclosure requirements. As a result, employers must ensure that they clearly inform participants about the tobacco surcharge, how to avoid it, reasonable alternative standards, and how to obtain the full reward offered under the wellness program.

If the First Circuit upholds the dismissal, employers will have support to remove the surcharge without retroactive reimbursement. If the appellate court reverses the district court’s decision, then plan sponsors may need to consider retroactive surcharge reimbursement for compliant plan participants.