Casey Cunningham, et al., Petitioners v. Cornell University, et al.

The Supreme Court ruled unanimously that employees suing over retirement plan mismanagement only need to show that a suspicious transaction occurred to start a lawsuit. They do not have to prove at the very beginning that the transaction failed to meet certain legal exceptions. The Court found that these exceptions are affirmative defenses (arguments the defendant must prove) rather than things the employees must disprove first.

This ruling makes it much easier for workers to bring lawsuits against large employers like Cornell University when they suspect high fees or bad deals are draining their retirement savings. It shifts the legal burden to the employers, who must now prove their financial choices were reasonable and necessary. This could lead to more transparency and lower fees for millions of people with 401(k) or 403(b) plans.

The case centers on ERISA, a federal law meant to protect employee benefits from being mishandled by the people in charge of the money. For years, lower courts were split on how much evidence a worker needed just to get their case into court. This decision clarifies that workers do not need to know every secret detail of a company's business deals before they can file a claim.

Justice Sonia Sotomayor wrote the opinion for a unanimous Court, holding that the law's structure places the burden of proving exemptions on the plan fiduciaries (those in charge of the plan). Justice Samuel Alito filed a concurring opinion, which was joined by Justices Clarence Thomas and Brett Kavanaugh.

“Plan fiduciaries who wish to invoke an exemption bear the burden of pleading and proving it. Plaintiffs, on the other hand, are not obliged to anticipate and refute every possible statutory or regulatory exemption.”

Employees can sue over suspicious retirement plan transactions without first disproving every possible legal excuse the employer might have.

The case will return to the lower courts to proceed under this new standard, likely allowing the employees' claims to move forward. Retirement plan managers across the country will likely review their service contracts to ensure they can prove their fees are reasonable if they are sued.

Employees argued Cornell engaged in prohibited transactions by paying high fees to service providers. They disagreed over whether workers must prove those fees were unreasonable to even start a lawsuit.

It makes it easier for workers to challenge high fees that eat away at their savings. This pressure may encourage companies to negotiate better deals for their employees' benefit.

The Court ruled that ERISA exemptions are affirmative defenses. Plaintiffs only need to allege a transaction occurred between a plan and a barred party to state a valid claim.

The case is reversed and remanded (sent back) to the lower court. The lower court must now apply the Supreme Court's rule to the specific facts of the Cornell dispute.

The ruling removes a major hurdle that some courts used to block employee lawsuits early on. It ensures that federal courts use standard procedural safeguards rather than extra burdens for plaintiffs.