Amid a recent wave of class actions targeting the performance of target-date funds in retirement plans, WilmerHale partner Lori Martin, special counsel Brad Konstandt and counsel Charles Bridge are helping plan fiduciaries understand a significant appellate decision that puts process, not investment results, at the center of ERISA prudence claims.
In “ERISA Requires a Fiduciary to Employ a Prudent Process in the Selection of Investment Options, Not Investment Success,” featured in the November-December 2026 issue of Employee Benefit Plan Review, Martin, Konstandt and Bridge analyze the US Court of Appeals for the Third Circuit’s unanimous decision affirming summary judgment for plan sponsor Quest Diagnostics. Drawing on their experience representing clients in ERISA fiduciary-duty litigation, the authors offer practical guidance for plan fiduciaries. The article originally appeared as a WilmerHale client alert in July.
The plaintiffs argued that Quest’s fiduciaries should have dropped a suite of actively managed target-date funds and a real estate fund that had underperformed. The authors walk through how the court tested the fiduciaries’ process and why it found that short-term underperformance and comparisons to passively managed funds could not sustain the claim.
“Plan fiduciaries should be heartened by this decision, a full-throated defense of process over prescience,” the authors write. They urge fiduciaries to engage actively with outside investment advisers, understand the reasoning behind each recommendation and keep a well-documented record of their deliberations, noting that ERISA claims may not reach summary judgment or trial until a decade after the events at issue.
Read the full article here.
