DOL Cements Pro-Employer Shift in Supreme Court ERISA Briefs (2)

The US solicitor general advised the US Supreme Court to hear two pending ERISA disputes and rule in favor of the defendant employers, Parker-Hannifin Corp. and Home Depot Inc.

The Tuesday briefs were filed along with attorneys from the US Labor Department, and they mark a clear shift from prior DOL briefs in Employee Retirement Income Security Act cases, which typically voiced support for plaintiff employees.

In urging the justices to hear the case against Home Depot, the government acknowledged that it’s taken the opposite position in prior briefs, including a 2023 brief supporting the plaintiff Home Depot employees in the US Court of Appeals for the Eleventh Circuit.

“It’s remarkable to see such a dramatic change in position on the part of the government,” Brock Specht, a partner with Nichols Kaster PLLP in Minneapolis, said. “Even while acknowledging the departure from its past positions, the government makes little effort to explain what has changed—other than explicitly noting the change in administrations.”

In its brief backing Parker-Hannifin, the solicitor argued for a robust pleading standard for claims of 401(k) investment underperformance. This standard requires a “meaningful benchmark for comparison” and can’t be based on conclusory comparisons to market index composites, the government said.

Industry-Friendly Shift

The department first signaled this pro-employer shift in its amicus brief activity in July, when it advised the Ninth Circuit to tamp down on lawsuits challenging how employers handle forfeitures in their 401(k) plans. It also recently indicated that it may support employers that have been sued over attempts to de-risk their pension plans by buying annuities from a controversial insurance company.

These latest briefs follow that trend and provide a “very powerful indication that this DOL continues to be friendly to industry in a way that’s reasonable and common-sense,” Alex Lakatos, a partner with Mayer Brown LLP in Washington, said.

The government’s arguments in the Home Depot case come as somewhat of a surprise, because they have the potential to make it harder for the Labor Department to win the ERISA cases it litigates as a plaintiff, said Jaime Santos, co-chair of Goodwin Procter LLP’s appellate and Supreme Court litigation practice.

According to Santos, prior DOL leaders—including those appointed by Republican administrations—seemed more inclined to see the government’s position as aligned with that of ERISA plaintiffs.

“That’s clearly changed,” she said.

Meaningful Benchmark

The Parker-Hannifin case centers on the meaningful benchmark standard that several courts, including the Sixth, Seventh, Eighth, Ninth, and Tenth circuits, have used to assess whether retirement plan investors have identified a better alternative that’s sufficiently similar to the fund or fee structure they challenge.

Attorneys said the Sixth Circuit’s decision to treat an S&P fund index as a proper benchmark for passively managed target date funds represented a liberal take on the standard that may be out of sync with how other courts have juggled the hundreds of recent lawsuits challenging 401(k) fees and investment options under ERISA.

The government raised similar arguments in its brief, saying the Sixth Circuit’s opinion “dilutes the pleading standard” and conflicts with “other pertinent authorities.” It’s also “doubtful” that a market composite could ever qualify as a meaningful benchmark for an ERISA fiduciary breach claim, the government said.

The brief included little discussion of ERISA’s overarching goal of protecting the retirement security of American workers, which Sprecht highlighted as “unusual.”

“In past submissions by the solicitor general, this concern has typically been front-and-center, while here it feels more like an afterthought,” he said.

The pleading standard for challenging retirement plan fees and investment options is a topic that could benefit from clear guidance, Santos said.

“There’s really not consistency in the lower courts on this issue, and it has to be frustrating for everyone involved,” she said. “Having some kind of objective measure for courts to follow is important.”

Loss Causation

The Home Depot case asks the justices to resolve a circuit split over which party in an ERISA lawsuit must prove that alleged losses to a retirement plan were caused by a plan fiduciary’s breach of duty.

The First, Fourth, Fifth, and Eighth circuits—with consistent support from the Labor Department—have held that once an ERISA plaintiff has proven a breach of fiduciary duty and a related loss to the plan, the burden shifts to the fiduciary to prove that the loss wasn’t caused by the breach. The Tenth and Eleventh circuits have rejected this burden-shifting rule.

“Where the burden falls can end up making a big difference at every stage of the case,” Lakatos said. “It’s an important question that’s bedeviled the circuits.”

Reversing its prior position, the government now backs the “ordinary default rule” that plaintiffs have the burden of proving every element of their claims.

In explaining this shift, the government cited a “six-fold” increase in ERISA lawsuits challenging retirement plan fees between 2016 and 2022.

“As this case illustrates, burden shifting could make it all too easy for plaintiffs to survive motions practice and press weak claims to trial or settlement,” it said in the brief.

Sprecht pushed back on this logic.

“The government notes an increase in ERISA excessive fee suits since 2016 and appears to accept the assertion that these suits have increased plan costs,” he said. “Most of the empirical research that I’ve seen has concluded that the increased focus on plan fees prompted by this litigation has led to a marked decline in retirement plan costs, to the benefit of plan participants.”

The cases are Parker-Hannifin Corp. v. Johnson, U.S., No. 24-1030, solicitor’s brief 12/9/25; Pizarro v. Home Depot Inc., U.S., No. 24-620, solicitor’s brief 12/9/25.