Supreme Court delays Cornell ERISA case

The U.S. Supreme Court has postponed further deliberations on Cunningham v. Cornell University until February 21, 2025. The case involves allegations that Cornell University violated the Employee Retirement Income Security Act (ERISA) by engaging in prohibited transactions with two major retirement service providers. Cornell University contended that the plaintiffs lacked sufficient evidence to justify their claims. The plaintiffs argued that placing the burden of proof on employees undermines the protections intended by ERISA. The plaintiffs filed the lawsuit in 2016, asserting that Cornell’s arrangements with the service providers violated ERISA’s provisions against certain financial transactions with “parties-in-interest.” They are seeking to hold Cornell accountable for these alleged breaches of contract in their employee retirement and health plans. Nicole Saharsky of Mayer Brown, representing Cornell, emphasized that the plaintiffs did not meet the legal requirements to advance their claims, insisting that ERISA demands conclusive evidence of harm or misconduct. The petitioners’ attorneys argued that the burden of proof should lie with the fiduciary, referencing Section 406 of ERISA, which forbids specified financial interactions unless exceptions are met.

Deliberation on Cornell ERISA allegations

“It makes perfect sense to put the burden on the fiduciary. The fiduciary is the one who enters into the transaction,” argued Yaira Dubin, one of the petitioners’ attorneys and U.S. assistant to the solicitor general. Cornell’s legal team warned that allowing such cases to proceed based on mere allegations could lead to “frivolous lawsuits,” consuming resources that would otherwise go to legitimate employee benefits. Chief Justice John Roberts and Associate Justice Brett Kavanaugh expressed concerns regarding the potential cost and burden this could place on employers. Associate Justice Ketanji Brown Jackson underscored the necessity of employee protections and questioned whether the current legal standards excessively disadvantage workers trying to hold fiduciaries accountable. The Supreme Court adjourned the session to allow more time for deliberation and plans to reconvene on February 21. Final opinions are typically issued in late June. This ruling will significantly impact how ERISA-related cases are prosecuted and the balance of responsibilities between employees and fiduciaries.