Plaintiffs say that their employer violated ERISA by imprudently investing in and retaining certain mutual funds in their retirement plan. The district court dismissed most of these claims as beyond the relevant statute of limitations, the plaintiffs appealed, and in 2013, the Ninth Circuit affirmed.
But in 2015, the Supreme Court reversed. The Court unanimously held that the Ninth Circuit erred by failing to recognize that an ERISA trustee has a continuing duty to monitor trust investments and remove imprudent one. So back to the Ninth Circuit the case goes.
So things are looking good for the plaintiffs, having secured a unanimous victory in the Supreme Court.
Not so fast.
Today, on remand, the Ninth Circuit holds that the plaintiffs waived this "continuing duty" theory by failing to previously raise it. So case dismissed. Again.
The Ninth Circuit's decision seems overly parsimonious to me.
Plaintiffs first say that they raised a "continuing violation" theory below, which should be good enough to preserve the issue. The Ninth Circuit disagrees. But in my view, if these two theories are not the same thing, they're certainly darn close. Waiver is a matter of discretion. Having won in the Supreme Court on the exact same theory they're now asserting, it seems a little harsh to me to parse out the briefs below incredibly carefully to try to find a meritorious assertion waived.
Plaintiffs also say that if they didn't raise this theory, that's because the law was against them, and they're under no obligation to raise below arguments that are legally barred. Judge O'Scannlain's opinion responds that this "change of law" exception to waiver doesn't apply because there was no change in the law. But that's a tough thing to say since the Ninth Circuit's opinion expressly says that the law was X in 2013, and then the Supreme Court unanimously says in 2015 that the law is not X, and is instead Y.
Plaintiffs have a wide variety of other waiver arguments as well. But my basic point is this. The lower courts didn't rely on any waiver argument. They reached the merits. The resulting legal issue was then squarely presented to the Supreme Court, which resolved the merits. I understand that we generally want people to have presented arguments below in order to get the informed judgment of the lower courts. But here, the Supreme Court was just fine to resolve the issue without any such prior adjudications. In such circumstances, it doesn't make sense to me to find waiver. If the Court doesn't need prior assertions of the argument -- and it didn't -- neither should we. Especially when we're dealing with what we should do after the Court has already decided the issue. We now know what the law is. We should apply it. It serves utterly no purpose to find waiver. Or at least no real purpose other than finding a way to hose a party that got us reversed, and to find a way to dismiss what we now know may well be a meritorious claim.
Those don't seem like sufficient reasons to me to find waiver.
I understand that the Supreme Court said in the last paragraph of its opinion that it was up to the lower courts to resolve the waiver issue. But I'd decide that issue with a finding of nonwaiver.
So here's my purported rule. The Court of Appeal shouldn't retroactively apply the discretionary doctrine of waiver when the Supreme Court has already addressed the substantive issue on the merits. If the Supreme Court didn't need the lower courts to chime in, neither do we.
Especially at this point,
