The most important one is a case that has been looking at what to do about fiduciaries who don't do the required "procedural" job of investigating alternatives and making a reasoned decision, but who may have gotten the answer correct anyway. The decision just issued was from the appellate court, in the Fourth Circuit. The decision is very adverse to fiduciaries who aren't observing the required procedural obligations.
In Tatum v. RJR, the trial court had concluded that, because a fiduciary who had undertaken the necessary amount of procedural prudence "could have" reached the same conclusion that the RJR fiduciaries reached, there was no liability for the lack of prudence. The Fourth Circuit, in a decision issued August 4th, disagreed. In the court's view, the fiduciary escapes liability only if a fiduciary who engaged in procedural prudence "would have" reached the same conclusion.
The case involved the elimination of RJR and Nabisco stock funds from the RJR plan. The fiduciaries decided to sell off the stock after both funds lost significant value, at least in part due to adverse decisions in tobacco-related litigation. Their decision followed a very brief discussion of the point and the courts had no problem concluding that the process employed by the fiduciaries was a breach of fiduciary duty. The courts have been wrestling with the question "if the fiduciaries did it the wrong way but came up with the right answer anyway, are they liable?"
This is a very interesting question and, as usual, I'll skip the competing analyses of the majority and dissenting opinions. I'd rather focus on whether the decision and the debate teach us anything that we can use when administering our plans.
There is a simple lesson--get the process right--and a greater reason to do that--the possibility that a court will follow the "would have" approach. The court recognized that, if a fiduciary complies with the procedural prudence obligation, it won't be liable even if the decision that it makes works out badly. In the court's view, there is no breach of fiduciary duty in that case, as ERISA requires only that the fiduciary develop the necessary basis for a decision, including alternatives, and then makes the decision in the sole interests of participants and beneficiaries. But, if procedural prudence is not used, then the fiduciary has to show that a prudent fiduciary would have made the same decision. This shifts the burden in a way that will make it extremely difficult for a noncomplying fiduciary to win a lawsuit.
For me, the lesson is "approach the decision correctly and you won't face liability; approach it incorrectly and the burden can shift in a way that makes it extremely difficult to win." In other words, "do it the right way when you control the situation and you won't lose control later." Seems like an easy and valuable lesson to me.