Latest / Bloomberg Law / Trump Can't Carve Name Into Building & ERISA at SCOTUS

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Trump Can't Carve Name Into Building & ERISA at SCOTUS · Bloomberg Law

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  Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio.
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  Speaker 2: In December of last year, the State Department announced that
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  Speaker 2: it was renaming the U.S. Institute of Peace, calling it
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  Speaker 2: the Donald J. Trump Institute of Peace to, quote, reflect
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  Speaker 2: the greatest dealmaker in our nation's history. Of course, Trump's
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  Speaker 2: name was affixed in large silver letters on the building
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  Speaker 2: in D.C., just in time for his welcoming African leaders
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  Speaker 2: there for a peace agreement signing between the Democratic Republic
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  Speaker 2: of Congo and Rwanda.
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  Speaker 3: I want to thank the leaders.
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  Speaker 4: I want to thank you very much. It means maybe
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  Speaker 4: more because we are here together for the first time
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  Speaker 4: ever in this building.
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  Speaker 3: Brand new, beautiful building.
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  Speaker 4: I don't want to tell you how much it costs
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  Speaker 4: because I hear it's a lot. They don't build inexpensively here.
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  Speaker 2: The irony is the renaming came after the Trump administration
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  Speaker 2: dismantled the Institute of Peace, including removing its president, Senate-confirmed
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  Speaker 2: board members, and staff. That's led to a legal challenge
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  Speaker 2: which hasn't been resolved yet. And apparently, the large silver
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  Speaker 2: letters of his name affixed to the building are not enough.
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  Speaker 2: Trump wants his name actually carved into the building's facade.
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  Speaker 2: Joining me is Bloomberg Law reporter Suzanne Moniak, who's been
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  Speaker 2: covering all the cases involving Trump's attempts to put his
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  Speaker 2: stamp on Washington, D.C. Suzanne, tell us about this case
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  Speaker 2: where Trump wants to actually have his name carved into
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  Speaker 2: the building.
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  Speaker 3: The U.S.
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  Speaker 5: Institute of Peace had come to a federal appeals court
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  Speaker 5: and told them that they had essentially received information that
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  Speaker 5: that was in the works, that a contractor had been
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  Speaker 5: selected and that Trump was looking to carve his name
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  Speaker 5: on the outside of the building. Of course, his name
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  Speaker 5: is already on the building and external lettering. This is
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  Speaker 5: an institution that's, you know, separately, somewhat in the broader case,
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  Speaker 5: been fighting for its life against this administration's attempt at dismantling.
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  Speaker 5: This latest issue came to the court recently, and the
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  Speaker 5: appeals court told the administration, no, you cannot carve your
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  Speaker 5: name on the building. For what it's worth, the administration
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  Speaker 5: claimed there were no current plans to do so, but
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  Speaker 5: it did admit that it had explored the option.
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  Speaker 2: It's stunning that he wants to carve his name into
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  Speaker 2: a building when he's been trying to dismantle the Institute
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  Speaker 2: of Peace since, what, the beginning of his administration? Tell
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  Speaker 2: us what he has done to the Institute of Peace.
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  Speaker 3: That's right.
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  Speaker 5: There have been widespread federal worker firings at the Institute,
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  Speaker 5: and that's a lot of what's been at stake in
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  Speaker 5: the broader case. Some of those were led by DOGE,
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  Speaker 5: the Elon Musk-led unit of government efficiency that resulted in
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  Speaker 5: federal workforce cuts really across the government.
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  Speaker 3: So a lot of that is still an issue in
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  Speaker 3: the Institute of Peace.
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  Speaker 5: We almost saw a little bit of a side issue
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  Speaker 5: that came up in that case that was brought actually
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  Speaker 5: at the appeals court level, where we saw the Institute
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  Speaker 5: come to the appeals court and say, hey, I know
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  Speaker 5: this case is already pending. The appeals court has lifted
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  Speaker 5: lower court orders that had blocked the cuts. So those
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  Speaker 5: cuts have been allowed to continue. But the Institute said, hey,
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  Speaker 5: the status quo has actually changed a little bit. I
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  Speaker 5: know you said the lower court order blocking the dismantling
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  Speaker 5: was going to be lifted while litigation progresses, but The
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  Speaker 5: administration's taken this a step further and they're going to
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  Speaker 5: do something permanent that we won't be able to undo
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  Speaker 5: if it's allowed to happen. So in that case, we
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  Speaker 5: actually saw a split panel for the appeals court agree
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  Speaker 5: with the Institute of Peace there and say, no, you can't.
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  Speaker 3: Carve your name. So essentially, they unlifted part of a.
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  Speaker 5: Lower court order that blocked the administration from making that
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  Speaker 5: kind of change.
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  Speaker 2: Maybe I shouldn't be, but I'm surprised that it was
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  Speaker 2: a two to one decision. You had a Barack Obama
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  Speaker 2: appointee and a Jimmy Carter appointee in the majority and
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  Speaker 2: a George H.W. Bush appointee in the minority. So one
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  Speaker 2: judge would actually have let him carve his name into
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  Speaker 2: the building.
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  Speaker 3: Apparently so.
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  Speaker 5: As you mentioned, it was an ideological split to Democratic
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  Speaker 5: appointees comprised the majority that blocked the potential effort. It's
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  Speaker 5: obviously somewhat disputed as to how likely it was to happen.
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  Speaker 5: And yes, a Republican appointee dissented. There was no dissent
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  Speaker 5: attached to the order. It was just a one-page order
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  Speaker 5: with the outcome.
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  Speaker 3: So we won't know.
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  Speaker 5: That was Judge Karen Henderson who said that she would
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  Speaker 5: have ruled otherwise. We don't know her reasoning because she
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  Speaker 5: didn't write separately on it.
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  Speaker 2: Did a district court judge ever rule on this or
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  Speaker 2: was it straight to the appeals court?
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  Speaker 3: Somewhat straight to the appeals court. It was a little
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  Speaker 3: bit wonky procedurally.
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  Speaker 5: The lower court judge had ruled on broader dismantling of
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  Speaker 5: the U.S. Institute of Peace when it came to workforce
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  Speaker 5: cuts and those types of issues. Then at the appellate stage,
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  Speaker 5: they said, hey, something new has come up. So that's
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  Speaker 5: a little bit different procedurally than we see a lot
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  Speaker 5: of the time. And in this case, the appeals court
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  Speaker 5: did decide to block it. It was a little bit
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  Speaker 5: of a weird stage in the case to have something
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  Speaker 5: like this come up.
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  Speaker 3: But that's where it came up here.
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  Speaker 2: I mean, this sort of went under the radar.
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  Speaker 3: Perhaps the U.S. Institute of Peace is just a smaller,
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  Speaker 3: more under-the-radar institution.
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  Speaker 5: They're an independent entity created by Congress in the 80s
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  Speaker 5: to help the government resolve or mitigate violent conflict abroad.
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  Speaker 3: So perhaps that is just a more narrow mission.
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  Speaker 5: All eyes have really a bit more, as you alluded,
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  Speaker 5: been on the Kennedy Center, which is the other building
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  Speaker 5: that Trump is trying to put his name on.
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  Speaker 3: I think that one's been capturing more headlines.
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  Speaker 2: Just to clarify, his name is on the Institute of Peace,
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  Speaker 2: but it's lettering on the Institute of Peace rather than
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  Speaker 2: carving into the building.
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  Speaker 5: Yes, as per latest court filings, that was the latest,
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  Speaker 5: that his name was an external lettering and The Institute
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  Speaker 5: even made a point of saying to the court, hey,
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  Speaker 5: we didn't come to you when it was just external lettering.
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  Speaker 3: But now we're hearing that it might be carving. So
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  Speaker 3: we're asking for you to step in.
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  Speaker 2: Let's go over some of the other disputes over Trump
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  Speaker 2: trying to put his name on things or change Washington landmarks.
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  Speaker 2: So let's go to the most famous example right now
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  Speaker 2: is the Kennedy Center. Where does that stand?
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  Speaker 5: So that case has been moving almost in parallel in
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  Speaker 5: both the lower court and appeals courts. Essentially, at its base,
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  Speaker 5: the Kennedy Center's Board of Trustees, which is chaired by
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  Speaker 5: Donald Trump, has been blocked by federal courts from putting
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  Speaker 5: Trump's name on the building, either by fully renaming it
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  Speaker 5: for him or by somehow acknowledging his contributions to the center.
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  Speaker 5: They've also been blocked from renaming the plaza, the Donald J.
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  Speaker 5: Trump Plaza, like the grounds of the institution. So just
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  Speaker 5: a couple of different attempts that the board tried to make.
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  Speaker 5: to get Trump's name on there somehow, all have been blocked.
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  Speaker 5: The lower court judge in that case, Judge Casey Cooper,
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  Speaker 5: has also temporarily blocked the center from closing for a
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  Speaker 5: two-year renovation until the board considers more information. The board
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  Speaker 5: has voted again, claiming that they did consider more information
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  Speaker 5: to close it, and those proceedings are still ongoing. But
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  Speaker 5: what's a little weird in this case is that the
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  Speaker 5: Kennedy Center is nonetheless closed. under what its executive director
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  Speaker 5: has said is a temporary week-by-week closure that is separate
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  Speaker 5: from the board-voted two-year closure out of stated safety concerns
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  Speaker 5: for the building. So at the lower court, we're seeing
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  Speaker 5: regular status reports from the Kennedy Center's executive director about
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  Speaker 5: whether that weekly closure is getting renewed. Meanwhile, the federal government,
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  Speaker 5: the Justice Department, is appealing the order that had blocked
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  Speaker 5: the renaming. They're arguing at the appeals court that the
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  Speaker 5: Kennedy Center's building will physically or financially, or both collapse
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  Speaker 5: unless the board is able to recognize Trump's name on
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  Speaker 5: the building.
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  Speaker 3: They're touting him as a, you know, renowned.
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  Speaker 5: Real estate developer whose contributions are absolutely needed to save
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  Speaker 5: this center from decline.
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  Speaker 2: The decline in the Kennedy Center started, didn't it, when
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  Speaker 2: Donald Trump took over and threw out all the members
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  Speaker 2: of the board of directors and became what the head
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  Speaker 2: of the Kennedy Center? I mean, that's when the decline started.
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  Speaker 5: Some of the financials of the Kennedy Center have been
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  Speaker 5: coming out and other reporting by other news outlets who
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  Speaker 5: cover the center more broadly. And so, yes, I think
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  Speaker 5: that's fair to say that a lot of critics of
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  Speaker 5: the president would say that it's his fault that the
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  Speaker 5: center is declining the way that it is. Trump took
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  Speaker 5: over the board after taking office. Now he's chairing it.
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  Speaker 5: He replaced its members with his own handpicked loyalists. And
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  Speaker 5: that's why we're seeing the board, you know, repeatedly voting
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  Speaker 5: to do what the president would like done.
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  Speaker 3: As a result of.
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  Speaker 5: That, um, we saw artists, performers pull out of the
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  Speaker 5: Kennedy Center, not want to do their shows anymore under
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  Speaker 5: what they saw as like a Trump-run arts institution. Of course,
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  Speaker 5: the Kennedy Center, as a reminder for listeners, has been
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  Speaker 5: here for decades. It was created by Congress following the
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  Speaker 5: assassination of the late President JFK as a living memorial
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  Speaker 5: in his honor. So yes, we have seen a precipitous decline,
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  Speaker 5: of course, in attendance because they're not doing shows anymore.
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  Speaker 5: So that certainly indisputably contributes to their finances.
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  Speaker 3: And yes, it may be related to Trump. I mean, D.C.
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  Speaker 5: Residents who attend the venue, you know, not a high
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  Speaker 5: share of D.C. residents voted for President Donald Trump in
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  Speaker 5: the election.
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  Speaker 2: Trump has talked about the Kennedy Center being demolished, but
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  Speaker 2: the context isn't clear to me. Is he talking about
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  Speaker 2: it being demolished because they're not putting his name on
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  Speaker 2: the building or being demolished because it's allegedly in such disrepair?
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  Speaker 2: I mean, it just wasn't clear from the statements that
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  Speaker 2: I heard.
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  Speaker 3: Perhaps the confusion's deliberate.
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  Speaker 5: Many, you know, lovers of the Kennedy Center have been
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  Speaker 5: concerned by some of the allusions made by this administration
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  Speaker 5: to the prospect of demolishing the Kennedy Center. We saw
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  Speaker 5: that in a court filing where they suggested, oh, if
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  Speaker 5: this were, you know, to go under, if we can't
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  Speaker 5: put his name on the building, and thus they've essentially
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  Speaker 5: suggested that President Donald Trump would not step in to
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  Speaker 5: help the Kennedy Center, though he is chair of the board,
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  Speaker 5: unless he can be properly recognized. So they're saying, oh, well,
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  Speaker 5: if that's the case, then this is going to go
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  Speaker 5: under financially and perhaps we would demolish it and replace
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  Speaker 5: it with an amphitheater. That was a suggestion in a
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  Speaker 5: court filing. It was also a bit of public consternation
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  Speaker 5: after a photograph appeared on news wires of President Donald
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  Speaker 5: Trump holding what appeared to be like a newspaper that
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  Speaker 5: said Kennedy Center demolished or something similar to that. And
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  Speaker 5: that had created some public concern like, oh, is this
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  Speaker 5: something he's considering actually doing and is thinking about what
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  Speaker 5: that headline would look like? And yes, we saw in
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  Speaker 5: the most recent opening brief at the appeals court, the
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  Speaker 5: government straight up said that the center, you know, is facing,
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  Speaker 5: you know, physical and fiscal demise, absent Trump's contributions and
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  Speaker 5: necessary recognition for that. We will certainly have to see,
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  Speaker 5: I think, what happened in the ballroom case where the
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  Speaker 5: administration destroyed the White House's historic East Wing to build
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  Speaker 5: a ballroom looms large over this Kennedy case and many
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  Speaker 5: of the cases we're seeing to Trump's efforts to make
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  Speaker 5: changes to D.C.
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  Speaker 1: Landmarks.
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  Speaker 2: So, Suzanne, one of these cases has already made it
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  Speaker 2: to the Supreme Court, and that's the building of the
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  Speaker 2: White House ballroom. And the problem there, according to the
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  Speaker 2: six conservatives on the court, was that the National Trust
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  Speaker 2: for Historic Preservation didn't have standing to bring the suit.
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  Speaker 2: Is it the same group that's challenging the Kennedy Center
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  Speaker 2: plus some others?
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  Speaker 3: So there are two Kennedy Center cases.
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  Speaker 5: The one I'm mostly talking about is one brought by
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  Speaker 5: Representative Joyce Beatty. She's a Democrat from Ohio, and she's
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  Speaker 5: brought it under a little bit of a different type
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  Speaker 5: of legal argument in that at least a legal argument
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  Speaker 5: for standing, which is what's required in order to bring
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  Speaker 5: a lawsuit. which is that she's claiming fiduciary duty. She's
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  Speaker 5: an ex officio member of the board of the Kennedy
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  Speaker 5: Center as a member of Congress. And so it's been
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  Speaker 5: in a little bit of a different position. And that's
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  Speaker 5: the case where we've seen some of these big orders.
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  Speaker 5: There was a separate challenge filed by historic preservationists, a
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  Speaker 5: little bit of an overlapping group with those who filed
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  Speaker 5: for the White House ballroom. But that judge in the
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  Speaker 5: other separate Kennedy Center case didn't block repairs from happening
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  Speaker 5: to the building. So we're seeing some ongoing litigation and
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  Speaker 5: that that case isn't over. But the main case to
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  Speaker 5: watch at this point has been the one brought by
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  Speaker 5: Representative Beatty.
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  Speaker 2: I saw that a couple of weeks ago there was
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  Speaker 2: protest or a vigil at the Kennedy Center. I mean,
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  Speaker 2: are people watching to see if anything's happening there?
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  Speaker 3: It does seem like there's quite a bit of interest.
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  Speaker 5: At hearings I've gone to in court, very often you
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  Speaker 5: see people who come from groups about defending the arts.
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  Speaker 5: They come in matching red T-shirts to show their support
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  Speaker 5: for the Kennedy Center to cheer on Representative Beatty. Those
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  Speaker 5: are court hearings you've got to get to early because
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  Speaker 5: a lot of members of the public seem interested.
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  Speaker 2: So what about the plans to build a triumphal arch
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  Speaker 2: at Washington's Memorial Circle? Because the congressman who represents the
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  Speaker 2: area that includes Arlington Memorial Cemetery has said that he's
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  Speaker 2: seen heavy equipment there and the workers said that they're
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  Speaker 2: taking soil samples. But who knows?
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  Speaker 3: Exactly. Who knows?
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  Speaker 5: In that case, it's like some of these other cases,
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  Speaker 5: the posture is that the case is ongoing and the
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  Speaker 5: government in this case is supposed to give the court
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  Speaker 5: 48 hours notice before conducting any ARCH-related activities on Memorial Circle.
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  Speaker 5: This sort of came up a few weeks ago when, yes,
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  Speaker 5: there were reports of potentially equipment being cited. And so
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  Speaker 5: in that case, the judge, Tanya Chutkin, in that case
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  Speaker 5: did order the government to give that 48 hours notice.
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  Speaker 5: They are filing status updates in that case as well.
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  Speaker 5: It's one of several that is pending. where the judge
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  Speaker 5: maybe didn't feel it was the right time to block work,
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  Speaker 5: but is saying, please keep me posted, essentially. Because some
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  Speaker 5: of this has been people see what happened to the ballroom,
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  Speaker 5: and then they get wind that another project may be underway,
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  Speaker 5: they run to court because they don't want to see
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  Speaker 5: their beloved landmark or whatever it may be be destroyed
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  Speaker 5: before they've had a chance to bring it to the judge.
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  Speaker 5: So we're seeing that in a couple of these cases
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  Speaker 5: where they're coming to court ahead of the fact, and
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  Speaker 5: the judge says, I don't think I can do anything
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  Speaker 5: about this right now, but keep me posted because maybe
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  Speaker 5: that will change.
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  Speaker 2: And in that lawsuit, like many others, the plaintiffs, Vietnam
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  Speaker 2: veterans in that case, are saying only Congress can erect
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  Speaker 2: monuments in Washington, D.C. What's the Trump administration's response to that?
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  Speaker 5: Essentially, the government has been relying on a federal law
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  Speaker 5: from about 100 years ago where Congress had looked to
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  Speaker 5: put two columns on that site. And they're claiming that
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  Speaker 5: that authorizes them to build the giant, maybe up to
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  Speaker 5: 250 foot arch.
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  Speaker 3: So that's been their argument in court.
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  Speaker 5: Certainly in that case, the challenges are Vietnam War veterans
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  Speaker 5: who say they'd like to be buried in Arlington Cemetery
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  Speaker 5: and have concerns about the way the arch would obstruct
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  Speaker 5: views from the cemetery.
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  Speaker 2: So finally, we have these all seem so random. He
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  Speaker 2: wants to paint the granite exterior of the White House
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  Speaker 2: office building. I mean, does that include putting his name
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  Speaker 2: on it? I don't get that one.
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  Speaker 5: I certainly can't speculate in the mind of Donald Trump
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  Speaker 5: and what he wants to do, what he wants to
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  Speaker 5: do to these buildings aesthetically. But yes, in that case,
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  Speaker 5: there has yet to be an attempt to put his
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  Speaker 5: name on the building. What they're interested in doing is
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  Speaker 5: painting the granite exterior white. This is a hundreds-year-old building,
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  Speaker 5: centuries-old building. And in that case, we have historic preservationists
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  Speaker 5: who've sought to block the effort.
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  Speaker 3: The federal judge has not so far blocked it.
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  Speaker 5: That judge, Daphne Friedrich, is a Trump appointee who has
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  Speaker 5: at this point not been willing to stop work for
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  Speaker 5: the administration. But again, the case is still on her
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  Speaker 5: docket should circumstances change. The latest was that she has
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  Speaker 5: allowed the government to move forward with testing paint on
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  Speaker 5: parts of the granite exterior, perhaps ones that are less visible,
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  Speaker 5: underside of rock kind of thing. to see how the
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  Speaker 5: stone responds. So that, yes, that's another example. And I
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  Speaker 5: think it's really just part of Trump's efforts to kind
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  Speaker 5: of just leave his aesthetic mark on the district. And yes,
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  Speaker 5: that includes putting his name. It includes painting things that
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  Speaker 5: were white gold, painting things that were gold white. I
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  Speaker 5: just think that's maybe part of his aesthetic.
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  Speaker 3: And we've seen it some in how he's.
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  Speaker 5: Redecorated the Oval Office with a lot more gold and
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  Speaker 5: kind of a gilded look at So while I won't
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  Speaker 5: speculate on his aesthetic preferences, I think we've seen some
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  Speaker 5: of it and it all seems pretty consistent.
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  Speaker 2: And in that interview with Time magazine, Trump said that
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  Speaker 2: he's been asking his White House chief of staff for
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  Speaker 2: about six months whether the Oval Office can be designated
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  Speaker 2: as a federal landmark so that future presidents can't change
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  Speaker 2: how he's decorated it with the extensive gold leaf accents
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  Speaker 2: and the heavy gilded frames, etc. Who knows, you may
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  Speaker 2: be covering that next, Suzanne. Thanks so much. That's Bloomberg
• 16:24
  Speaker 2: Law Reporter Suzanne Moniak. So when can an employee sue
• 16:29
  Speaker 2: an employer for putting risky investments in the company's retirement plan?
• 16:34
  Speaker 2: At the Supreme Court on Tuesday, employees of Intel asked
• 16:39
  Speaker 2: the justices to reject the meaningful benchmark standard that multiple
• 16:44
  Speaker 2: federal appeals courts have used to assess claims of retirement
• 16:48
  Speaker 2: plan mismanagement. It's an employer-friendly standard that asks whether workers
• 16:53
  Speaker 2: alleging fiduciary imprudence in their 401k plans have identified a
• 16:59
  Speaker 2: better-performing fund that's sufficiently similar to the one being challenged.
• 17:04
  Speaker 2: The Ninth Circuit Court of Appeals ruled against the workers,
• 17:08
  Speaker 2: saying they didn't compare the disputed investments to better-performing funds
• 17:13
  Speaker 2: with similar goals. And judging from the oral arguments... it
• 17:17
  Speaker 2: appears that the result will be the same in the
• 17:19
  Speaker 2: Supreme Court. Here are Justices Amy Coney Barrett and Neil Gorsuch,
• 17:24
  Speaker 2: who both went with the fruit metaphors that were popular
• 17:28
  Speaker 2: during the arguments.
• 17:29
  Speaker 6: But don't you have to do that to decide if
• 17:32
  Speaker 6: an apple is an apple? Don't you have to say, well,
• 17:33
  Speaker 6: it has to be round? You know, it has to
• 17:35
  Speaker 6: come from a certain kind of tree. I mean, it
• 17:37
  Speaker 6: seems to me that really you are agreeing that a
• 17:40
  Speaker 6: meaningful benchmark standard is appropriate. You're fighting a little bit
• 17:44
  Speaker 6: about what is meaningful.
• 17:45
  Speaker 2: Right?
• 17:46
  Speaker 6: But there has to be some criteria. But do you
• 17:50
  Speaker 6: agree with the general principle that when we're limited to
• 17:53
  Speaker 6: underperformance claims, a benchmark of some kind, a meaningful benchmark
• 17:58
  Speaker 6: of some kind is required? Apples, not oranges.
• 18:01
  Speaker 2: The only question appeared to be how much guidance the
• 18:04
  Speaker 2: justices should give lower courts on the topic of meaningful
• 18:08
  Speaker 2: comparisons in 401k investment performance lawsuits. During oral arguments, they
• 18:14
  Speaker 2: seemed torn between writing a narrow opinion addressing only the
• 18:18
  Speaker 2: case at hand or crafting guidance that could help lower
• 18:22
  Speaker 2: courts work through the issues. Justice Elena Kagan appeared to
• 18:26
  Speaker 2: favor helping out the lower courts.
• 18:29
  Speaker 4: I think that there is a range of ways in
• 18:31
  Speaker 4: which the circuit courts have approached this. And some of
• 18:34
  Speaker 4: them have suggested you sort of need the same asset allocations. So,
• 18:39
  Speaker 4: you know, unless you invest... the same percentage in international
• 18:43
  Speaker 4: funds were going to strike your comparators. And that seems
• 18:47
  Speaker 4: to me to be going too far. So we could
• 18:50
  Speaker 4: do something useful here, couldn't we, by saying, yeah, it
• 18:54
  Speaker 4: needs to be meaningfully similar. That doesn't mean identical. Here
• 18:57
  Speaker 4: are the kinds of things that you look to.
• 18:59
  Speaker 2: Joining me is Erica Rozo, a partner at Simpson Thatcher,
• 19:03
  Speaker 2: whose work focuses on ERISA fiduciary matters. Erica, tell us
• 19:08
  Speaker 2: about the case.
• 19:09
  Speaker 4: Sure.
• 19:09
  Speaker 1: I think when we talk about the case, I think
• 19:12
  Speaker 1: it's first important to talk about how we got here.
• 19:15
  Speaker 1: So historically, Americans have saved for retirement through defined benefit
• 19:19
  Speaker 1: pension plans, and these pension plans invested a material portion
• 19:22
  Speaker 1: of their assets in the private markets. Today, however, most
• 19:26
  Speaker 1: Americans save for retirement through 401k plans. 401k plan participants
• 19:31
  Speaker 1: have not to date had material access to private markets.
• 19:35
  Speaker 1: One of the reasons for that is that 401k plan
• 19:38
  Speaker 1: fiduciaries are often sued when they select an investment option
• 19:42
  Speaker 1: other than a traditional target date fund that invests primarily
• 19:44
  Speaker 1: in public markets. So while this case is one piece
• 19:49
  Speaker 1: of a larger movement to provide equal access to the U.S. economy,
• 19:52
  Speaker 1: it is narrow. The case is not importantly about whether
• 19:57
  Speaker 1: alternative assets or private markets are appropriate for 401k plans generally.
• 20:02
  Speaker 1: The Supreme Court in this case is very focused on
• 20:05
  Speaker 1: the particular issue asked. which is whether a plaintiff must
• 20:10
  Speaker 1: show a meaningful benchmark when alleging imprudence premised on underperformance.
• 20:16
  Speaker 1: That means when a 401k plan fiduciary chooses an investment
• 20:21
  Speaker 1: option and puts it on the 401k plan menu, and
• 20:24
  Speaker 1: they are sued for doing so, and the suit alleges
• 20:28
  Speaker 1: that that investment option was imprudent because it underperforms, can
• 20:33
  Speaker 1: they show a traditional target date fund that happened to
• 20:36
  Speaker 1: perform better or must they show a similar benchmark.
• 20:41
  Speaker 2: So the plaintiffs here, the Intel employees, are they asking
• 20:45
  Speaker 2: the court to reject completely the meaningful benchmark standard?
• 20:50
  Speaker 3: That's right.
• 20:50
  Speaker 1: Yes. So the plaintiff's argument is that ERISA requires a
• 20:57
  Speaker 1: holistic review of an investment decision. So they think that
• 21:02
  Speaker 1: by having a meaningful benchmark standard, that it takes away
• 21:05
  Speaker 1: from the holistic view of prudence that ERISA has decided
• 21:09
  Speaker 1: to protect.
• 21:09
  Speaker 2: So the Intel employees are accusing the company of violating
• 21:14
  Speaker 2: its fiduciary duty. How so? What do they say it
• 21:17
  Speaker 2: did or didn't do?
• 21:18
  Speaker 1: Yeah, so what they are alleging is that it was
• 21:21
  Speaker 1: an imprudent to put this investment option on the 401k
• 21:24
  Speaker 1: plan lineup. What we know under ERISA is that prudence is...
• 21:30
  Speaker 1: a process-based requirement. So what it requires is that a
• 21:33
  Speaker 1: planned fiduciary follow a prudent process when making an investment
• 21:37
  Speaker 1: decision or when selecting an investment option for a 401k
• 21:40
  Speaker 1: plan menu. It does not require a planned fiduciary to
• 21:43
  Speaker 1: have a crystal ball. So the courts are very clear
• 21:47
  Speaker 1: that a prudence is not judged by the performance of
• 21:51
  Speaker 1: an investment option, but rather the prudent process. Here, however,
• 21:55
  Speaker 1: the plaintiff's are premising their claim on the fact that
• 21:59
  Speaker 1: the investment option did underperform during the relevant period.
• 22:04
  Speaker 2: Did it seem like there wasn't much disagreement among the
• 22:07
  Speaker 2: justices about whether to require meaningful benchmarks?
• 22:12
  Speaker 1: You know, the justices seem to be very focused on
• 22:16
  Speaker 1: when to apply a meaningful benchmark standard rather than if
• 22:20
  Speaker 1: to apply a meaningful benchmark standard. It seemed that there
• 22:24
  Speaker 1: was agreement that not all claims of imprudence would require
• 22:29
  Speaker 1: a meaningful benchmark. That is, when, for instance, there was
• 22:34
  Speaker 1: a claim of imprudence because the strategy of an investment
• 22:37
  Speaker 1: option was imprudent, that would not require a meaningful benchmark.
• 22:42
  Speaker 1: But rather, when there was a claim that an investment
• 22:46
  Speaker 1: option was imprudent and that premise was based on performance,
• 22:50
  Speaker 1: as it was in this case, then that may be
• 22:54
  Speaker 1: a situation where a meaningful benchmark is required. And then
• 22:58
  Speaker 1: there was also discussion of the extent to which a
• 23:01
  Speaker 1: Supreme Court should opine on what a meaningful benchmark looks like.
• 23:07
  Speaker 4: Yeah.
• 23:07
  Speaker 2: So, I mean, you had Justice Gorsuch saying, you know,
• 23:10
  Speaker 2: here's the question that we're supposed to answer. You had
• 23:13
  Speaker 2: Justice Elena Kagan, who said, The lower court's dismissal of
• 23:17
  Speaker 2: the suit seemed like a pretty reasonable decision, saying we
• 23:20
  Speaker 2: could do something useful here, couldn't we? By saying, yeah,
• 23:24
  Speaker 2: it needs to be meaningfully similar. That doesn't mean identical.
• 23:28
  Speaker 2: Here are the kinds of things that you look to.
• 23:31
  Speaker 2: Can you tell which of the justices seem to agree
• 23:33
  Speaker 2: with Kagan?
• 23:34
  Speaker 1: You know, I couldn't tell exactly where all the justices
• 23:38
  Speaker 1: fell on that point, but it did seem that most
• 23:41
  Speaker 1: of the discussion was focused on the extent to which
• 23:45
  Speaker 1: the Supreme Court should opine on what meaningful is in
• 23:47
  Speaker 1: this context.
• 23:49
  Speaker 2: So is it the only question really whether they're going
• 23:51
  Speaker 2: to issue a narrow opinion or one that crafts guidance
• 23:56
  Speaker 2: that could help the lower courts?
• 23:58
  Speaker 1: I think that it was very clear that the Supreme
• 24:00
  Speaker 1: Court intends for this to be a narrowly focused decision.
• 24:04
  Speaker 1: You saw several times where the justices dismissed the attempt
• 24:09
  Speaker 1: to make this a broader case about whether alternative assets
• 24:12
  Speaker 1: are appropriate or whether the private markets are appropriate for
• 24:15
  Speaker 1: 401k plans generally. And they were really focused on whether
• 24:19
  Speaker 1: a meaningful benchmark was required in cases alleging imprudence based
• 24:24
  Speaker 1: on performance. So I do think it will be a
• 24:27
  Speaker 1: narrow case. I think something to watch is whether the
• 24:30
  Speaker 1: Supreme Court decides to opine on what meaningful means in
• 24:35
  Speaker 1: this context or whether they defer to the lower courts.
• 24:38
  Speaker 2: Tell us about the Ninth Circuit's decision.
• 24:42
  Speaker 1: In the lower courts, the intel prevailed on the merits,
• 24:45
  Speaker 1: and the Ninth Circuit held that they must pledge a
• 24:48
  Speaker 1: meaningful benchmark when alleging a claim of imprudence based on performance.
• 24:55
  Speaker 2: And it appears that the other appellate courts have overwhelmingly
• 24:58
  Speaker 2: agreed with the Ninth Circuit. The 2nd, 7th, 8th, 9th,
• 25:03
  Speaker 2: and 10th circuits have adopted some form of the meaningful
• 25:07
  Speaker 2: benchmark standard. Well, it appears the 6th circuit stands alone,
• 25:12
  Speaker 2: finding no such requirement. How difficult does it make these
• 25:16
  Speaker 2: class action lawsuits if they have to allege a meaningful benchmark?
• 25:21
  Speaker 1: I think it is not a question of whether or
• 25:26
  Speaker 1: not it will be more difficult. It's a question of
• 25:30
  Speaker 1: how similar a meaningful benchmark might be. For instance, what
• 25:35
  Speaker 1: factors do they have to hold constant when suggesting a
• 25:40
  Speaker 1: meaningful benchmark? It may make sense to hold the strategy
• 25:44
  Speaker 1: constant when suggesting a meaningful benchmark, but the court could
• 25:49
  Speaker 1: opine that other factors are relevant as well.
• 25:51
  Speaker 2: So if they don't answer this question, how much will
• 25:54
  Speaker 2: this decision help? Will the case or a similar case
• 25:58
  Speaker 2: end up coming back to the Supreme Court for more guidance?
• 26:02
  Speaker 1: Regardless of how the court comes out, I think the
• 26:05
  Speaker 1: case will be helpful just, again, to protect fiduciaries who
• 26:11
  Speaker 1: are deciding to select an investment option that may be
• 26:14
  Speaker 1: a little less traditional than your off-the-shelf target date funds
• 26:18
  Speaker 1: that invest primarily in public markets.
• 26:21
  Speaker 3: It will be helpful in... giving those.
• 26:23
  Speaker 1: Plan fiduciaries confidence that they are able to defend meritless
• 26:28
  Speaker 1: claims of imprudence.
• 26:30
  Speaker 2: How important will this decision be as far as efforts
• 26:35
  Speaker 2: to put alternative assets, such as private equity and hedge funds,
• 26:40
  Speaker 2: into defined contribution retirement plans?
• 26:45
  Speaker 3: Well, I think that's a great point.
• 26:47
  Speaker 1: I think regardless of how the Supreme Court rules on
• 26:50
  Speaker 1: this case, the initiative to democratize access to private markets
• 26:53
  Speaker 1: for 401k plans.
• 26:55
  Speaker 3: Has significant momentum. At this point, it's.
• 26:58
  Speaker 1: Really not whether 401k plan participants will have access to
• 27:02
  Speaker 1: private markets, but when and how. If the Supreme Court
• 27:05
  Speaker 1: rules in favor of Intel, that will happen. be an
• 27:10
  Speaker 1: added piece of momentum to the movement. If the Supreme
• 27:13
  Speaker 1: Court does not rule in favor of Intel, that will
• 27:16
  Speaker 1: be maybe a bump in the road. But as I said,
• 27:20
  Speaker 1: the movement has significant momentum, and I don't see it stopping.
• 27:24
  Speaker 2: So looking at the groups that lined up, the amici,
• 27:27
  Speaker 2: you had Wall Street industry groups and the Trump administration
• 27:32
  Speaker 2: lining up in favor of Intel, right?
• 27:34
  Speaker 3: So you had.
• 27:36
  Speaker 1: At the end, you had the Assistant to the Solicitor General,
• 27:38
  Speaker 1: Amy Brown, who argued for the United States in support
• 27:41
  Speaker 1: of Intel.
• 27:42
  Speaker 2: And on the other side, lining up in favor of
• 27:45
  Speaker 2: the employees were nonprofits, AARP, the Pension Rights Center, and
• 27:51
  Speaker 2: Better Markets. And I read that class actions under ERISA
• 27:57
  Speaker 2: are up markedly this year.
• 28:00
  Speaker 1: I don't know the exact numbers for 2026, but what
• 28:03
  Speaker 1: I do know is that the perception by planned fiduciaries
• 28:08
  Speaker 1: is that there is a real fear of being sued
• 28:12
  Speaker 1: when they pick an investment option that is something other
• 28:16
  Speaker 1: than the traditional off-the-shelf target date fund that invests primarily
• 28:19
  Speaker 1: in public markets. Whether or not the numbers actually show
• 28:23
  Speaker 1: that in 2026, I'm not sure, but I do know
• 28:25
  Speaker 1: that that perception remains very strong.
• 28:29
  Speaker 2: And what kind of lawsuits do 401k fiduciaries face in general?
• 28:35
  Speaker 1: 401k plan fiduciaries are sued quite often for a variety
• 28:41
  Speaker 1: of reasons, but it is often based on underperformance of
• 28:45
  Speaker 1: a particular investment option or a claim that the fees
• 28:50
  Speaker 1: were higher than they should have been for a particular
• 28:52
  Speaker 1: investment option.
• 28:54
  Speaker 3: Those are very common lawsuits.
• 28:56
  Speaker 2: And what are the implications, the broad implications of a
• 28:59
  Speaker 2: decision in this case?
• 29:01
  Speaker 3: The outcome of this.
• 29:02
  Speaker 1: Case is not going to impact a plan fiduciary's duty
• 29:05
  Speaker 1: of prudence when selecting investment options for 401k plans. And
• 29:09
  Speaker 1: ERISA plan fiduciary's duties are widely described by the courts
• 29:12
  Speaker 1: as the highest known to law, and that is not
• 29:14
  Speaker 1: going to change. What the outcome of this case may
• 29:17
  Speaker 1: impact is the ability of a prudent fiduciary to defend
• 29:21
  Speaker 1: itself against meritless claims.
• 29:23
  Speaker 2: Thanks for joining me today. That's Erica Rozo of Simpson Thatcher.
• 29:28
  Speaker 2: And that's it for this edition of the Bloomberg Law Show. Remember,
• 29:31
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• 29:33
  Speaker 2: Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify,
• 29:38
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• 29:44
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• 29:47
  Speaker 2: Wall Street time. I'm June Grosso, and you're listening to Bloomberg.