Document Type

Amicus Brief

Publication Date


Case Name

State of Utah v. Su


DOL’s tie-breaking rule violates ERISA’s duty of loyalty under ERISA § 404(a)(1)(A). ERISA’s duty of loyalty requires ERISA-regulated trustees to invest plan resources for the “exclusive purpose of . . . providing” economic benefits to plan participants and their beneficiaries, “solely in the interest of the participants and beneficiaries.” The tie-breaking rule violates this stringent statutory duty of loyalty because it permits plan trustees investing plan resources to consider “collateral benefits,” i.e., the welfare of third parties or social goals. But ERISA‟s plain text does not permit this result. The words ““solely” and “exclusive purpose” in § 404(a)(1)(A) do not mean “collateral benefits.”

If an ERISA-regulated trustee genuinely confronts equally appropriate investment choices, ERISA § 404(a)(1)(C) tells the trustee what to do: The trustee must diversify, buying or offering some of each investment option. But instead of mandating such diversification, 29 CFR § 2550.404a-1(c)(2) authorizes the pursuit of collateral benefits, benefits which are extraneous to the retirement interests of plans and their participants.

The notion of tie-breaking is an anachronism, originally deployed to defend ERISA‟s duty of loyalty. Today, however, the very notion of tie-breaking (whatever its prior jurisprudential justifications) conflicts with the statutory duty of loyalty to plans and their participants by introducing into the trustee’s deliberations concern for nonparticipants or for social goals. The tie-breaking rule jeopardizes the security of workers retirement assets. Using the euphemism of collateral benefits, the tie-breaking rule allows ideological (often highly political) considerations and the interests of nonparticipants to influence the investment decisions of ERISA-regulated fiduciaries.

The Fifth Circuit Court of Appeals should enforce ERISA’s plain language and reverse the District Court’s judgment below, approving DOL’s tie-breaking rule.