DOL Urges Supreme Court to Clarify ERISA Pleading Standard

On December 9, 2025, the U.S. Solicitor General and U.S. Department of Labor (DOL) filed an amicus brief in Parker-Hannifin Corporation, et al. v. Johnson, et al., No 24-1030, urging the Supreme Court to grant Parker-Hannifin's petition for a writ of certiorari. Parker-Hannifin's petition seeks review of the Sixth Circuit's decision holding that a meaningful benchmark is not required to plead an ERISA fiduciary breach claim based on alleged underperforming, high-fee investments in a 401(k) plan. 

In its brief, the government asserted that the Sixth Circuit's ruling is incorrect and identifies two principal errors. The first error is the Sixth Circuit's conclusion that a plaintiff need not allege a meaningful benchmark to state a plausible claim of imprudence based on relative underperformance. According to the Sixth Circuit, "[a] meaningful benchmark may sometimes be one part of an imprudence pleading, but it is not required." The government argued that "[w]hen allegations of relative underperformance are used to support an inference that a fiduciary imprudently retained an investment, the alleged underperformance must be established in relation to one or more meaningful benchmarks." In other words, to plead a plausible claim of imprudence, a plaintiff must compare the performance of the plan's investments with "'alternative investment options [that] have similar investment strategies, similar investment objectives, [and] similar risk profiles to the plan's funds.'"

The second error asserted is the Sixth Circuit's acceptance that the plaintiffs below had pled a meaningful benchmark when asserting that the S&P Target Date Fund (TDF) was an appropriate comparator to the challenged funds. According to the government, the plaintiffs' complaint is devoid of details about the funds' investment strategies or objectives or risk profiles. The government asserted that plaintiffs cannot rely on "conclusory allegations" of an alleged failure to match a market composite to avoid pleading facts necessary to demonstrate a meaningful benchmark. The brief also referenced the district court's observation that "it is doubtful that a market composite like the S&P TDF benchmark could ever qualify as a meaningful benchmark in these circumstances." According to the brief, "[c]ourts that have considered allegations pegged to the S&P TDF benchmark have determined that it is not an apt comparator to an actual fund with a defined investment strategy because it reflects an 'amalgamation of the different characteristics of TDF strategies: TDFs with actively and passively managed underlying funds, TDFs with different risk profiles, and * * *  those with different asset allocations.'"

The government's brief further states:

Although Congress enacted ERISA to ensure that employees would receive the benefits they had earned, it did not require employers to establish benefit plans in the first place. Rather, ERISA induces employers to offer benefits by assuring a predictable set of liabilities, under uniform standards of primary conduct. Permitting such liabilities to become unpredictable because the standards are no longer uniform, would jeopardize Congress's careful balancing between ensuring fair and prompt enforcement of rights under a plan and the encouragement of the creation of such plans. And in preserving that careful balancing, this Court has identified the motion to dismiss as an important mechanism for weeding out meritless ERISA claims. (internal citations and quotations omitted)."

For these reasons, the government asks the Supreme Court to grant Parker-Hannifin's petition to resolve the circuit split over the appropriate ERISA pleading standards in investment underperformance cases.

DOL Files Amicus Brief Supporting Supreme Court Review of ERISA Loss Causation Burden 

On December 9, 2025, the U.S. Solicitor General and DOL filed an amicus brief in Pizarro, et al. v. The Home Depot, Inc., et al., No. 24-620, that requests that the Supreme Court grant the plaintiffs' petition for certiorari and resolve a circuit split on the issue of which party has the burden to prove loss causation in ERISA cases. The government's brief advocates for affirmance of the Eleventh Circuit's decision in favor of Home Depot, which held that plaintiffs bear the burden of proof on all elements of their ERISA claims, including loss causation, and that the plaintiffs below failed to meet their burden of proving the defendants' alleged imprudence caused a financial loss. Home Depot filed a brief asking the court to deny the petition. The case involves ERISA breach of fiduciary duty claims against Home Depot and its 401(k) plan committees for alleged investment underperformance and excessive fees.

In a notable shift from its position under the previous administration, the government now urges the court to adopt the default rule that plaintiffs must establish all elements of their claims. The government argues that ERISA does not incorporate trust-law burden-shifting principles adopted by the First, Second, Fourth, Fifth, and Eighth Circuits, which place the burden on fiduciaries to disprove causation. It argues instead that the Eleventh Circuit's approach – shared by the Tenth Circuit – reflects ERISA's text and structural design. 

The government's brief emphasizes that ERISA's disclosure requirements reduce alleged informational asymmetries between fiduciaries and participants cited by petitioners and warns that burden-shifting could "make it all too easy for plaintiffs to survive motions practice and press weak claims to trial or settlement," undermining ERISA's goals of "efficiency and predictability." Highlighting the circuit split, the government concludes that Supreme Court review is warranted.

Executive Order Directs Review of Proxy Advisor Rules

On December 11, 2025, President Trump issued an executive order (E.O.), "Protecting American Investors from Foreign-Owned and Politically Motivated Proxy Advisors," "to end the outsized influence of proxy advisors that prioritize radical political agendas over investor returns." The E.O. specifically points to "foreign-owned proxy giants" and their use of "Americans' 401(k)s, IRAs, and pensions to force leftist policies on U.S. companies," such as diversity, equity, and inclusion (DEI) and environmental, social, and governance (ESG) factors. 

The E.O. directs the Secretary of Labor to "strengthen ERISA fiduciary rules and increase fiduciaries' transparency regarding their use of proxy advisors." The E.O. comes in the wake of a May 2025 announcement that the Trump administration is reconsidering the Biden-era rule, "Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights" (ESG Rule), which was upheld by a federal court in February 2025. The DOL included the ESG Rule in its Spring 2025 regulatory agenda as part of the administration's deregulatory initiative. 

The E.O. directs the Securities and Exchange Commission (SEC) "to review, and, as appropriate, rescind or revise all rules and regulations related to proxy-advisors that implicate [DEI] and [ESG] priorities..." and to enforce anti-fraud provisions against proxy advisors. The order asks the SEC to consider whether proxy advisors must register as investment advisors, for increased transparency on conflicts of interest, and to assess whether investment advisers breach their fiduciary duties by following proxy advisor guidance on DEI and ESG. The E.O. also tasks the Federal Trade Commission (FTC) with reviewing antitrust laws and monitoring antitrust investigations. 

The president issued an E.O. in August 2025, "Democratizing Access to Alternative Assets for 401(k) Investors," which also addresses retirement plan investments and directs the DOL to reexamine its guidance regarding asset allocation funds that include alternative investments. The August 2025 E.O. requires the Secretary to "propose rules, regulations, or guidance... that clarify the duties that a fiduciary owes to plan participants under ERISA when deciding whether to make available to plan participants an asset allocation fund that includes investments in alternative assets," which may include "appropriately calibrated safe harbors." In response to that E.O., the DOL's Employee Benefits Security Administration (EBSA) rescinded a December 21, 2021, supplemental statement that discouraged fiduciaries from considering alternative assets in 401(k)s. 

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