No. 14-656

In the Supreme Court of the United States

RJR PENSION INVESTMENT COMMITTEE, ET AL., PETITIONERS

v.

RICHARD G. TATUM, INDIVIDUALLY AND 

ON BEHALF OF ALL OTHERS SIMILARLY SITUATED

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

M. PATRICIA SMITH

Solicitor of Labor

G. WILLIAM SCOTT

Associate Solicitor

EDWARD D. SIEGER

Senior Attorney

MICHAEL R. HARTMAN

Attorney

Department of Labor

Washington, D.C. 20210

DONALD B. VERRILLI, JR.

Solicitor General

Counsel of Record

EDWIN S. KNEEDLER

Deputy Solicitor General

NICOLE A. SAHARSKY

Assistant to the Solicitor 

General

Department of Justice

Washington, D.C. 20530-0001

SupremeCtBriefs@usdoj.gov

(202) 514-2217
(I)

QUESTIONS PRESENTED

The Employee Retirement Income Security Act of 

1974, 29 U.S.C. 1001 et seq., requires a fiduciary to 

discharge his duties with respect to an employee benefit plan “with the care, skill, prudence, and diligence 

under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with 

such matters would use in the conduct of an enterprise 

of a like character and with like aims.” 29 U.S.C. 

1104(a). Fiduciaries who breach their statutory duties 

“shall be personally liable to make good to such plan 

any losses to the plan resulting from each such 

breach.” 29 U.S.C. 1109(a).

The questions presented are:

1. Whether, in an action for fiduciary breach under 

29 U.S.C. 1109(a), a fiduciary bears the burden of 

proving that a loss is not attributable to the fiduciary’s 

breach once the plaintiff establishes that the fiduciary 

breached his duties and a prima facie case of related 

plan losses.

2. Whether the standard for proving that a fiduciary’s failure to conduct an adequate investigation 

caused losses to the plan depends on whether a fiduciary who had conducted an adequate investigation 

would have made the same decision, or whether a 

fiduciary who had conducted an adequate investigation could have made the same decision. 
(III) 

TABLE OF CONTENTS

Page

Interest of the United States....................................................... 1

Statement ...................................................................................... 1

Discussion...................................................................................... 7

A. The first question presented does not warrant 

this Court’s review ............................................................ 8

B. The second question presented does not warrant 

this Court’s review .......................................................... 14

Conclusion ................................................................................... 22

TABLE OF AUTHORITIES

Cases:

Branch v. White, 239 A.2d 665 (N.J. Super. Ct. App. 

Div. 1968)............................................................................. 16

Bussian v. RJR Nabisco, Inc., 223 F.3d 286 

(5th Cir. 2000)...................................................................... 18

Chao v. Hall Holding Co., 285 F.3d 415 (6th Cir. 

2002), cert. denied, 537 U.S. 1168 (2003).......................... 15

Conkright v. Frommert, 559 U.S. 506 (2010)........................ 8

Donovan v. Bierwirth, 754 F.2d 1049 (2d Cir. 1985) ......... 11

Estate of Stetson, 345 A.2d 679 (Pa. 1975) .................... 10, 15

Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459 

(2014)................................................................................ 1, 14

Fink v. National Sav. & Trust Co., 772 F.2d 951 

(D.C. Cir. 1985) ............................................................. 19, 20

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101

(1989) ...................................................................................... 8

Geddes v. Anaconda Copper Mining Co., 254 U.S. 

590 (1921)............................................................................. 10

Kim v. Fujikawa, 871 F.2d 1427 (9th Cir. 1989)................ 11

Kuper v. Iovenko, 66 F.3d 1447 (6th Cir. 1995)............ 14, 19

Leigh v. Engle, 727 F.2d 113 (7th Cir. 1984)....................... 11
IV

Cases—Continued: Page

McDonald v. Provident Indem. Life Ins. Co., 

60 F.3d 234 (5th Cir. 1995), cert. denied, 

516 U.S. 1174 (1996)............................................................ 11

Moench v. Robertson, 62 F.3d 553 (3d Cir. 1995), 

cert. denied, 516 U.S. 1115 (1996), abrogated by 

Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 

2459 (2014)........................................................................... 14

Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 

429 U.S. 274 (1977).............................................................. 10

Nedd v. United Mine Workers of Am., 556 F.2d 190 

(3d Cir. 1977)....................................................................... 10

New York State Teamsters Council Health & Hosp. 

Fund v. Estate of DePerno, 18 F.3d 179 (2d Cir. 

1994)............................................................................... 11, 12

Peabody v. Davis, 636 F.3d 368 (7th Cir. 2011)............ 13, 14

Renfro v. Unisys Corp., 671 F.3d 314 (3d Cir. 2011) ......... 19

Richardson’s Will, In re, 266 N.Y.S. 388 (N.Y. Sur. 

Ct. 1928)............................................................................... 10

Rinehart v. Akers, 722 F.3d 137 (2d Cir. 2013), 

vacated on other grounds, 134 S. Ct. 2900 (2014)............ 19

Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915 

(8th Cir. 1994)................................................................ 11, 18

Salovaara v. Eckert: 

No. 94-CV-03430, 1998 WL 276186 (S.D.N.Y. 

May 28, 1998), aff’d, 182 F.3d 901 (2d Cir. 

1999)............................................................................ 13

No. 98-7892, 182 F.3d 901, 1999 WL 461820 (2d 

Cir. June 24, 1999)..................................................... 13

Schaffer ex rel. Schaffer v. Weast, 546 U.S. 49 (2005).......... 9

Secretary of U.S. Dep’t of Labor v. Gilley, 

290 F.3d 827 (6th Cir. 2002)............................................... 11
V

Cases—Continued: Page

Silverman v. Mutual Benefit Life Ins. Co., 

138 F.3d 98 (2d Cir.), cert. denied, 525 U.S. 876 

(1998).................................................................................... 12

Tibble v. Edison Int’l, No. 13-550, 2015 WL 2340845 

(May 18, 2015) ....................................................................... 8

Unisys Sav. Plan Litig., In re, 173 F.3d 145 

(3d Cir.), cert. denied, 528 U.S. 950 (1999)....................... 18

University of Tex. Sw. Med. Ctr. v. Nassar, 

133 S. Ct. 2517 (2013) ......................................................... 16

Varity Corp. v. Howe, 516 U.S. 489 (1996)............................ 8

Whitfield v. Lindemann, 853 F.2d 1298 (5th Cir. 

1988), cert. denied, 490 U.S. 1089 (1989).......................... 18

Willett v. Blue Cross & Blue Shield of Ala., 953 F.2d 

1335 (11th Cir. 1992)..................................................... 13, 14

Wright v. Oregon Metallurgical Corp., 360 F.3d 1090 

(9th Cir. 2004)...................................................................... 14

Statutes:

Employee Retirement Income Security Act of 1974, 

29 U.S.C. 1001 et seq............................................................. 1

29 U.S.C. 1001(b)......................................................... 1, 10

29 U.S.C. 1104(a) ............................................................. 18

29 U.S.C. 1104(a)(1)........................................................... 1

29 U.S.C. 1104(a)(1)(B) ..................................................... 8

29 U.S.C. 1104(a)(1)(D)................................................... 21

29 U.S.C. 1105(a)(3)......................................................... 12

29 U.S.C. 1109(a) ........................................... 2, 4, 8, 12, 14

29 U.S.C. 1132(a)(2)........................................................... 2

Miscellaneous:

George Gleason Bogert & George Taylor Bogert, 

The Law of Trusts and Trustees (rev. 2d ed. 1995) .......... 9
VI

Miscellaneous—Continued: Page

1 Restatement (Second) of Trusts (1959)........................ 9, 15

4 Restatement (Third) of Trusts (2012) ................ 6, 9, 15, 18

4 Austin Wakeman Scott et al., Scott and Ascher on 

Trusts (5th ed. 2007)........................................................... 15
(1)

In the Supreme Court of the United States

No. 14-656

RJR PENSION INVESTMENT COMMITTEE, ET AL., PETITIONERS

v.

RICHARD G. TATUM, INDIVIDUALLY AND 

ON BEHALF OF ALL OTHERS SIMILARLY SITUATED

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

INTEREST OF THE UNITED STATES

This brief is submitted in response to the Court’s 

order inviting the Solicitor General to express the 

views of the United States. In the view of the United 

States, the petition for a writ of certiorari should be 

denied.

STATEMENT

1. The Employee Retirement Income Security Act 

of 1974 (ERISA), 29 U.S.C. 1001 et seq., “protect[s] 

* * * the interests of participants in employee 

benefit plans and their beneficiaries,” 29 U.S.C. 

1001(b), by imposing trust-law duties of loyalty, prudence, and diligence on plan fiduciaries. 29 U.S.C. 

1104(a)(1); see Fifth Third Bancorp v. Dudenhoeffer, 

134 S. Ct. 2459, 2463, 2467 (2014). A plan participant, 
2 

beneficiary, or fiduciary, or the Secretary of Labor, 

may sue on behalf of the plan to remedy a breach of 

fiduciary duty. 29 U.S.C. 1132(a)(2). A fiduciary is 

“personally liable to make good to [the] plan any losses to the plan” resulting from the breach and “to restore to [the] plan any profits” the fiduciary made 

through use of plan assets. 29 U.S.C. 1109(a). 

2. This case concerns a breach of the duty of prudence in the administration of the R.J. Reynolds Tobacco 401(k) plan (the Plan). Respondent is a former 

employee of R.J. Reynolds Tobacco and a participant 

in the Plan. Pet. App. 9, 78. Petitioners RJR Pension 

Investment Committee (Investment Committee) and 

RJR Employee Benefits Committee (Benefits Committee) are named fiduciaries under the Plan and are 

responsible for plan administration and investment 

decisions. Id. at 4-5, 84-86.

1

 All agree that the Plan is 

governed by ERISA. Id. at 125 n.17. 

In 1999, RJR Nabisco separated its tobacco business (R.J. Reynolds) from its food business (Nabisco). 

Pet. App. 3. As part of that separation, RJR 

Nabisco’s existing 401(k) plan was divided into two 

new plans—one for the food company and one for the 

tobacco company. Id. at 82-83. The tobacco company 

plan is at issue here. That plan expressly provided 

that tobacco company employees (like respondent) 

who were holding Nabisco stock could continue to hold 

the stock but could not purchase additional shares. 

Id. at 4, 90 n.5; see id. at 92 (quoting Plan language).2 

 

1

 Petitioners also include the company itself and related corporate entities. See Pet. App. 78, 126 n.18. 2

 After the spin-off, the Plan contained two funds containing 

Nabisco stock: the Nabisco Group Holdings Common Stock Fund, 

which was created by the division of the existing RJR Nabisco 
3

Despite the Plan’s express language requiring that 

Nabisco stock continue to be offered as a plan investment, petitioners decided to eliminate that stock from 

the Plan. Pet. App. 5. A working group of company 

employees who had “no authority or responsibility” to 

administer the Plan met for an hour or less and decided that all Nabisco stock would be sold six months

after the spin-off. Ibid. There is no testimony “as to 

why six months was determined to be an appropriate 

timeframe.” Id. at 5-6. 

Without any meeting or discussion of the issue, the 

Benefits Committee “agreed with the working group’s 

recommendation” and communicated that decision to 

plan participants. Pet. App. 6, 90-91. Plan participants began “questioning the timing of the elimination 

given the Nabisco stocks’ continued decline in value.” 

Id. at 145. In response, RJR human resources managers, corporate executives, and in-house counsel met 

to discuss whether to reverse the decision to sell the 

Nabisco stock. Id. at 7. That group, like the earlier 

working group, had no authority to administer the 

Plan. Id. at 5, 7. Without consulting any financial

advisor, outside counsel, or independent fiduciary, the 

group decided to go ahead with the sale. Id. at 8; see

id. at 140, 144. Around the same time, one member of 

the Benefits Committee attempted to amend the Plan 

to remove the Nabisco stock from the list of plan investments, but that amendment was not valid because 

it was not approved by a majority of the Benefits 

Committee. Id. at 6 n.2. 

The company then sent a letter to plan participants 

stating that the Nabisco stock must be eliminated 

 

stock fund into two parts, and the Nabisco Common Stock Fund, 

which existed before the spin-off. Pet. App. 4 & n.1. 
4 

from the Plan to comply with governing regulations. 

Pet. App. 8. That statement was wrong; the person 

who prepared the letter knew it was wrong; no lawyer 

ever reviewed the letter; and the statement was never 

corrected, even after company officials were told it 

was wrong. Id. at 8-9. Instead, a few months later, 

company officials sent another letter repeating that 

incorrect information. Id. at 9, 107. 

Respondent asked plan fiduciaries not to go 

through with the forced sale of Nabisco stock because 

it would decrease the value of his 401(k) account by 

60%. Pet. App. 9. Company officials rebuffed respondent’s request and sold the stock as planned, even 

though several corporate officers retained their personal holdings of Nabisco stock. Id. at 9-10, 110-111. 

A few months after the Nabisco stock was removed 

from the Plan, that stock rose significantly in value. 

Pet. App. 10-11, 112 (by December 2000, the Nabisco 

Funds rebounded, one by 82% and the other by 247%). 

3. In this suit, respondent alleges that petitioners 

breached their fiduciary duties by divesting the Plan 

of all Nabisco stock on an arbitrary timeline and without a thorough investigation. Pet. App. 11; see 29 

U.S.C. 1109(a). The district court certified a class of 

all plan participants who held Nabisco stock in their 

401(k) accounts before the forced sale. Pet. App. 11,

77, 119-120.

3

 

 

3

 Petitioners originally argued that the decision to sell the stock 

was not a fiduciary action; the district court agreed, but the court 

of appeals reversed and remanded. Pet. App. 11. Petitioners then 

argued that the Benefits Committee and Investment Committee 

were not proper defendants; the district court agreed, id. at 119, 

but the court of appeals reversed, id. at 45-46. Petitioners do not 

renew either argument before this Court. 
5

After a bench trial, the district court concluded 

that petitioners breached their fiduciary duties but 

ultimately entered a judgment in their favor. Pet. 

App. 76-166. The court first explained that, under 

ERISA, a fiduciary making an investment decision 

must “engage[] in a reasoned decision-making process, consistent with that of a prudent man acting in 

like capacity.” Id. at 131 (citation and internal quotation marks omitted; alteration in original). Based on 

the evidence presented at trial (including expert testimony), the court concluded that “[t]he process used 

by the decision-makers in this case fell far below what 

ERISA would require of a fiduciary.” Id. at 138. The 

court noted that the working group’s decision “was 

made with virtually no discussion or analysis,” no 

“research or investigation,” and no consideration of 

the “large and unnecessary losses” to the Plan that 

could result from the sale of Nabisco stock. Id. at 138-

139. The court also found that the six-month timeline 

for divestment “was chosen arbitrarily.” Id. at 139. 

The court determined that, once a plaintiff proves a 

breach of fiduciary duty and a prima facie case of 

related plan losses, the defendant fiduciary has the 

burden to establish that the losses were not caused by 

the fiduciary’s breach. Pet. App. 149-150. But the 

court decided that petitioners met that burden here,

concluding that “a hypothetical prudent fiduciary 

could have decided not to add [to] or maintain the 

Nabisco Funds as either frozen or active funds in the

Plan on January 31, 2000.” Id. at 165.

4. The court of appeals affirmed in part, reversed 

in part, vacated the judgment of the district court, and 

remanded. Pet. App. 1-48. The court first agreed 

with the district court that petitioners had breached 
6

their fiduciary duties. Id. at 22-25. The court explained that the fiduciaries acted imprudently in 

“forc[ing] the sale” of Nabisco stock “within an arbitrary timeframe,” “without consulting any experts” 

and with no consideration of the “immediate and permanent losses” that the forced sale would cause to the 

Plan. Id. at 24-25. The court also concluded that the 

fiduciaries “failed to act solely in the interests of participants and beneficiaries,” instead making decisions 

based on the company’s “own potential liability.” Id.

at 42 (internal quotation marks omitted). 

The court of appeals also agreed with the district 

court that, once a plaintiff establishes a fiduciary 

breach and a prima facie case of plan losses, the defendant fiduciary has the burden to show that the 

fiduciary breach did not cause those losses. Pet. App. 

25-30. The court explained that, although the “default 

rule” in civil litigation is that “the burden of proof 

rests with the plaintiff,” the common law of trusts (on 

which ERISA is based) embodies a different rule: 

“when a beneficiary has succeeded in proving that the 

trustee has committed a breach of trust and that a 

related loss has occurred, the burden shifts to the 

trustee to prove that the loss would have occurred in 

the absence of the breach.” Id. at 26 (quoting 4 Restatement (Third) of Trusts § 100 cmt. f, at 69 (2012)). 

The court also explained that the trust-law rule is 

consistent with ERISA’s purpose of protecting the 

interests of plan participants and beneficiaries. Id. at 

29. 

The court of appeals concluded, however, that the 

district court used the wrong legal standard for assessing causation. Pet. App. 30-44. The court held 

that, once a plaintiff shows that a fiduciary breached 
7

its duty of prudence by using an inadequate decisionmaking process and further shows losses to the Plan, 

the plaintiff prevails unless the fiduciary can show 

“that a prudent fiduciary would have made the same 

decision”—or, put another way, that the fiduciary 

“would have reached the same decision had it undertaken a proper investigation.” Id. at 30. The court 

rejected the district court’s standard—whether a 

hypothetical prudent fiduciary “could” have chosen 

not to maintain investment in the Nabisco Funds, id.

at 165—because “‘could’ describes what is merely 

possible, while ‘would’ describes what is probable.” 

Id. at 33. The court then concluded that the district 

court’s use of the “could” standard was not harmless

and remanded on the issue of causation. Id. at 36-40. 

Judge Wilkinson dissented, taking the view that an 

ERISA plaintiff has the burden of proof on causation, 

even when a fiduciary breach and related loss have

been established, and that petitioners cannot be liable 

for plan losses because their decision was “objectively 

prudent.” Pet. App. 49, 54-55. 

DISCUSSION

Petitioners contend (Pet. 14-35) that review is warranted to address which party has the burden of proof 

on the issue of causation once a plaintiff has established a breach of fiduciary duty under ERISA and a 

prima facie case of related plan losses, and to address 

what standard should be used to assess causation

when the fiduciary breach is a failure of process. The 

court of appeals correctly decided both issues, and 

contrary to petitioners’ contentions (Pet. 14-22, 33-35), 

there is no clear circuit split on either question. This 

case would in any event be a poor vehicle for consideration of the questions presented, because resolution of 
8

those questions may not affect the outcome on the 

causation question. Further review is therefore unwarranted. 

A. The First Question Presented Does Not Warrant This 

Court’s Review

1. The court of appeals correctly concluded that

petitioners bore the burden of proving that their failure to conduct an adequate investigation before deciding to divest the Plan of the Nabisco Funds did not 

cause the Plan’s losses. ERISA imposes a number of 

duties on those acting as fiduciaries of ERISA plans, 

including the trust-law duties of loyalty and prudence. 

See 29 U.S.C. 1104(a)(1)(B). When a fiduciary 

breaches one of those duties, he “shall be personally 

liable to make good to [the] plan any losses to the plan 

resulting from [the] breach.” 29 U.S.C. 1109(a). 

ERISA provides that a fiduciary shall be liable for 

losses “resulting from” a breach of fiduciary duty, but 

it does not specify who bears the burden of proof on 

the issue of causation of the loss. That question is 

answered, however, by the law of trusts. ERISA’s 

fiduciary duties are “derived from the common law of 

trusts.” Tibble v. Edison Int’l, No. 13-550, 2015 WL 

2340845, at *4 (May 18, 2015); see Varity Corp. v.

Howe, 516 U.S. 489, 496-497 (1996). This Court therefore “look[s] to principles of trust law for guidance” to 

interpret ERISA’s fiduciary-duty provisions. 

Conkright v. Frommert, 559 U.S. 506, 512 (2010) (citation and internal quotation marks omitted); see Tibble, 

2015 WL 2340845, at *4; see also Firestone Tire & 

Rubber Co. v. Bruch, 489 U.S. 101, 111 (1989) (applying trust-law principles to determine the appropriate 

standard of judicial review). Although the “default 

rule” in ordinary civil litigation when a statute is si-
9 

lent is “that the burden of proof rests with the plaintiff,” Pet. App. 26 (citing Schaffer ex rel. Schaffer v. 

Weast, 546 U.S. 49, 56 (2005)), trust law has long contained an important qualification to that principle in a 

case such as this. 

Under the common law of trusts, “when a beneficiary has succeeded in proving that the trustee has 

committed a breach of trust and that a related loss has 

occurred, the burden shifts to the trustee to prove 

that the loss would have occurred in the absence of the 

breach.” 4 Restatement (Third) of Trusts § 100 cmt. f, 

at 69 (2012); see, e.g., George Gleason Bogert & 

George Taylor Bogert, The Law of Trusts and Trustees § 871, at 156-157 (rev. 2d ed. 1995) (“If the beneficiary makes a prima facie case, the burden of contradicting it or showing a defense will shift to the 

trustee.”). Put another way, when a trustee has 

breached the trust and there has been a loss, “he has a 

defense to the extent that a loss would have occurred 

even though he had complied with the terms of the 

trust.” 1 Restatement (Second) of Trusts § 212(4), at 

484 (1959).

4

 

This longstanding trust-law principle rests on the 

view that “as between innocent beneficiaries and a 

defaulting fiduciary, the latter should bear the risk of 

 

4

 Petitioners assert (Pet. 26) that the court of appeals erred in 

relying on the Third Restatement because the First or Second 

Restatements are “the only versions Congress could have consulted before enacting ERISA.” But as noted in the text, both the 

Second and Third Restatements recognize that, once a plaintiff 

establishes a fiduciary breach and related loss, the trustee has the 

burden of showing that the loss would have occurred in the absence of the breach. This principle also is reflected in case law 

predating ERISA’s enactment. See p. 9-10, infra; see also Br. in 

Opp. 19-20. 
10

uncertainty as to the consequences of its breach of 

duty.” Estate of Stetson, 345 A.2d 679, 690 (Pa. 1975); 

see, e.g., Nedd v. United Mine Workers of Am., 556 

F.2d 190, 211 (3d Cir. 1977) (same). In the face of a 

breach of fiduciary duty and a related loss, trustees 

are “under the burden of showing facts and circumstances to establish they are without fault in the matter.” In re Richardson’s Will, 266 N.Y.S. 388, 390 

(N.Y. Sur. Ct. 1928); cf. Geddes v. Anaconda Copper 

Mining Co., 254 U.S. 590, 599 (1921) (applying same 

rule in the context of a breach of a “fiduciary nature” 

occasioned by transactions between corporate boards 

having common members). 

This trust-law burden-shifting rule furthers 

ERISA’s purposes. ERISA “protect[s] * * * the 

interests of participants in employee benefit plans and 

their beneficiaries,” 29 U.S.C. 1001(b), by imposing 

trust-law fiduciary duties and authorizing accompanying remedies. These provisions ensure that plan assets are managed prudently and for the benefit of plan 

participants and beneficiaries. Once the plaintiff 

proves that there has been a fiduciary breach and a 

related loss to the plan, it is appropriate to impose on 

ERISA fiduciaries the burden of showing that the loss

would have occurred even in the absence of their

breach. Cf. Mt. Healthy City Sch. Dist. Bd. of Educ. 

v. Doyle, 429 U.S. 274, 286-287 (1977). A contrary rule 

would insufficiently deter ERISA fiduciaries from 

engaging in wrongful conduct and insufficiently protect beneficiaries’ interests, and it would create significant barriers to recovery for conceded fiduciary 

breaches. See Pet. App. 29.

In this case, “[o]verwhelming evidence” established 

that petitioners breached ERISA’s duty of prudence 
11

by failing to undertake any “investigation, analysis, or 

review” before divesting the Plan of the Nabisco 

Funds, that petitioners failed to act solely in the interests of plan participants and beneficiaries, and that 

there was a “prima facie showing of loss to the Plan.” 

Pet. App. 22, 29, 42. The courts below therefore appropriately required petitioners to bear the burden of 

proving that the Nabisco Funds would have been sold 

even if there had been an investigation satisfying 

ERISA’s requirements. 

2. Like the court of appeals, the Fifth and Eighth 

Circuits have held that when a plaintiff establishes 

that an ERISA fiduciary has breached his fiduciary 

duties and a prima facie case of related plan losses, 

the fiduciary has the burden to prove that his breach 

did not cause those losses. See Pet. App. 26-29; 

McDonald v. Provident Indem. Life Ins. Co., 60 F.3d 

234, 237 (5th Cir. 1995), cert. denied, 516 U.S. 1174 

(1996); Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 

915, 917, 920 (8th Cir. 1994); see also Pet. App. 27 

(recognizing this agreement).

5

 

The Second Circuit has issued potentially inconsistent decisions on this issue. In New York State 

Teamsters Council Health & Hospital Fund v. Estate 

of DePerno, 18 F.3d 179, 182-183 (2d Cir. 1994), the 

court recognized and applied the longstanding trustlaw burden-shifting rule, holding that when the plain-

 

5

 Those decisions are consistent with the accepted rule that any 

uncertainty in measuring losses caused by a fiduciary breach is 

resolved against the fiduciary. See, e.g., Secretary of U.S. Dep’t of 

Labor v. Gilley, 290 F.3d 827, 830 (6th Cir. 2002); Kim v. Fujikawa, 871 F.2d 1427, 1430-1431 (9th Cir. 1989); Donovan v. Bierwirth, 754 F.2d 1049, 1056 (2d Cir. 1985); Leigh v. Engle, 727 F.2d 

113, 138-139 (7th Cir. 1984).
12

tiffs “show[ed] that the defendants breached a fiduciary duty to the [plan]” and cost the plan over $45,000,

it “was sufficient to shift to the defendants the burden 

to show that the [challenged action] was fair and reasonable under all of the circumstances.” Id. at 183 

(internal quotation marks omitted). But then in Silverman v. Mutual Benefit Life Insurance Co., 138 

F.3d 98 (2d Cir.), cert. denied, 525 U.S. 876 (1998), the

court declined to apply that burden-shifting rule in 

determining whether a successor investment manager 

could be held liable as a co-fiduciary under 29 U.S.C. 

1105(a)(3). See 138 F.3d at 105-107 (Jacobs & Meskill, 

JJ., concurring). 

The fact that the Second Circuit rejected burdenshifting in Silverman does not mean it would do so in 

a case like this. Silverman arose in the unique situation of a new fiduciary’s liability for failing to take 

action to remedy a breach (embezzlement) by a prior 

fiduciary, and the court noted that in those circumstances, requiring the plaintiff to bear the burden of 

proof on causation served as a check on the “broadly 

sweeping liability” of co-fiduciaries under 29 U.S.C. 

1105(a)(3). 138 F.3d at 106 (Jacobs & Meskill, JJ., 

concurring). This case, by contrast, concerns fiduciaries’ liability for their own actions under 29 U.S.C. 

1109(a). Also, the Silverman court relied in its disposition on the fact that the plaintiff “declined to offer 

any evidence to support the fact or amount of damages, other than the underlying theft.” 138 F.3d at 106-

107 (Jacobs & Meskill, JJ., concurring). This case, by 

contrast, involves whether burden-shifting is appropriate when the plaintiff has established a fiduciary 

breach and related plan losses. For these reasons, 

this case is more like DePerno than Silverman, and so 
13

the Second Circuit may well apply the trust-law burden-shifting rule here.6

 At a minimum, any uncertainty about the state of the law in the Second Circuit 

counsels in favor of forgoing further review of the 

question at this time.

The other decisions petitioners cite (Pet. 18-21) are 

inapposite because none of them addressed the question whether a breaching fiduciary bears the burden 

of proof on causation after a plaintiff establishes a 

breach of fiduciary duty and plan losses. Willett v.

Blue Cross & Blue Shield of Alabama, 953 F.2d 1335, 

1343 (11th Cir. 1992), concerned whether an insurance 

company was liable for failing to inform plan participants that their coverage ended because their employer had not paid the premiums. The court of appeals found a genuine issue of material fact about 

whether the insurer (as opposed to the employer) had 

caused the plaintiffs’ losses and then stated that “the 

burden of proof on the issue of causation will rest on 

the beneficiaries” on remand. Id. at 1343-1344. But 

the court did not consider any issue of burdenshifting. The decision in Peabody v. Davis, 636 F.3d 

368, 375 (7th Cir. 2011), is similar: the court held that 

 

6

 Silverman did not attempt to reconcile its rejection of burdenshifting with DePerno; it did not even mention DePerno. But in 

Salovaara v. Eckert, No. 98-7892, 1999 WL 461820, 182 F.3d 901

(2d Cir. June 24, 1999), the Second Circuit affirmed a district court 

decision reconciling the two decisions as follows: under DePerno, 

burden-shifting applies when the plaintiff shows a prima facie case 

of breach and plan losses, but under Silverman, the “burden on 

causation does not shift to defendant if plaintiff has demonstrated 

only breach of fiduciary duty.” Salovaara v. Eckert, No. 94-CV03430, 1998 WL 276186, at *4 (S.D.N.Y. May 28, 1998); see 

Salovaara, 1999 WL 461820, at *1 (affirming “substantially for the 

reasons stated by the district court”).
14

a fiduciary’s investment decision was imprudent and 

then remanded for a calculation of damages. Although 

the court remarked that “the plaintiff must show a 

breach of fiduciary duty, and its causation of an injury” to prevail, id. at 373, there was no causation issue 

before the court, and the court did not consider any 

burden-shifting argument. 

The other cited decisions addressed the so-called

Moench presumption, stating that to overcome that

unique presumption, which some courts of appeals had 

applied in assessing whether a plan’s continued investment in employer stock was prudent, “a plaintiff 

must show a causal link between the failure to investigate and the harm suffered by the plan.” Kuper v.

Iovenko, 66 F.3d 1447, 1459 (6th Cir. 1995); Wright v.

Oregon Metallurgical Corp., 360 F.3d 1090, 1099 (9th 

Cir. 2004); see Moench v. Robertson, 62 F.3d 553, 571

(3d Cir. 1995), cert. denied, 516 U.S. 1115 (1996). But 

those decisions did not consider whether burdenshifting on causation is appropriate in ordinary 

breach-of-trust cases under ERISA when the plaintiff 

establishes a fiduciary breach and related plan losses. 

See Pet. App. 27 n.10. And, in any event, this Court 

rejected the Moench presumption in Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459, 2467 (2014), 

thereby abrogating the cited decisions. 

B. The Second Question Presented Does Not Warrant 

This Court’s Review

1. As with the first question presented, ERISA’s 

fiduciary-duty provisions do not expressly address the 

applicable standard for determining whether the fiduciary’s breach caused the plan’s losses in a case like 

this. See 29 U.S.C. 1109(a) (establishing liability for 

losses “resulting from” the fiduciary’s breach). But 
15

the law of trusts provides the answer: under trust 

law, “[i]f a trustee commits the breach and a loss is 

incurred, the trustee ordinarily is not chargeable with 

the amount of the loss if the same loss would have 

occurred in the absence of a breach of trust.” 4 Restatement (Third) of Trusts § 100 cmt. e, at 67-68. 

“It is generally the rule that a trustee who breaches a fiduciary duty will not be surcharged for a loss 

sustained by the trust if there is no causal connection 

between the breach of duty and the loss,” and whether 

there is such a causal connection depends on whether 

“the loss would have occurred in the absence of a 

breach of duty.” Estate of Stetson, 345 A.2d at 690

(emphasis added); see 4 Restatement (Third) of 

Trusts § 100 cmt. e, at 67-68 (“would have” is the 

standard for establishing “the causal connection between the breach of trust and the loss”). Stated differently, a trustee who has “failed to comply with the 

terms of the trust and has incurred a loss” “has a 

defense to the extent that a loss would have occurred

even though he had complied with the terms of the

trust.” 1 Restatement (Second) of Trusts § 212(4), at 

484 (emphasis added); see id. § 205 cmt. f, at 460 

(question is whether the loss “would have occurred in 

the absence of a breach of trust”).7

 

 

7 Some courts have held that a fiduciary who has engaged in a 

prohibited transaction may not escape liability under this standard. See, e.g., Chao v. Hall Holding Co., 285 F.3d 415, 436 (6th 

Cir. 2002), cert. denied, 537 U.S. 1168 (2003); see also 4 Austin 

Wakeman Scott et al., Scott and Ascher on Trusts § 24.9.1, at 1699 

(5th ed. 2007) (proof of causal connection may not be required 

when “it is necessary to impose absolute liability to deter other 

trustees from committing similar breaches of trust,” such as in 

cases of self-dealing). That approach would not aid petitioners 
16

The trust-law causation standard is appropriate for 

assessing whether a fiduciary’s failure to conduct a 

prudent investigation caused losses to an ERISA plan. 

The key question in a case of procedural imprudence 

is whether the fiduciary’s failure to conduct an adequate investigation mattered, and whether it mattered 

depends on what likely would have happened in the 

absence of the fiduciary breach. Pet. App. 35 (standard asks “whether the loss would have occurred regardless of the fiduciary’s imprudence”). The “would 

have” standard seeks to determine what is probable, 

consistent with the preponderance-of-the-evidence 

standard generally applicable in civil litigation. See 

Branch v. White, 239 A.2d 665, 674 (N.J. Super. Ct. 

App. Div. 1968) (“[E]scape of a trustee from liability 

by reason of breach of trust can be defeated if the loss 

probably occurred by reason of the breach. A showing 

of certainty is not required.”). It is a standard commonly used in assessing causation. See, e.g., University of Tex. Sw. Med. Ctr. v. Nassar, 133 S. Ct. 2517, 

2525 (2013) (“It is thus textbook tort law that an action is not regarded as a cause of an event if the particular event would have occurred without it.” (citation 

and internal quotation marks omitted)). By contrast, 

a standard that permitted a fiduciary who has 

breached his duties to escape liability based on a mere 

possibility that a fiduciary could have made the same 

decision would fail to protect the interests of plan 

participants and beneficiaries because it would allow a 

breaching fiduciary to escape liability even if the most 

likely outcome of an adequate investigation was a 

different course of action.

 

because it is more plaintiff-friendly than the approach adopted by 

the court of appeals.
17

Petitioners contend (Pet. 29-33) that the court of 

appeals’ standard requires proof that a prudent fiduciary would have made the “exact same” decision in 

the absence of the fiduciary breach. But the court of 

appeals did not require such proof. The court of appeals rejected the argument that a breaching fiduciary could “escape liability by showing nothing more 

than the mere possibility that a prudent fiduciary 

could have made the same decision,” Pet. App. 34 

(internal quotation marks omitted), then remanded to 

the district court to address “whether the loss would 

have occurred regardless of the fiduciary’s imprudence,” id. at 35; see id. at 48 (remanding “for further 

proceedings consistent with this opinion”). 

Contrary to petitioners’ suggestion (Pet. 28-29), the 

“would have” standard does not foreclose consideration of a range of decisions; it depends on the facts on 

the case. In some cases, there may be several alternatives that would have been prudent. For example, 

there may be a range of mutual funds that are prudent 

investments for a 401(k) plan. In other cases, there is 

only one course that would have been prudent and 

that would have been taken by the fiduciary absent 

the breach. In this case, for example, the terms of the 

Plan required the fiduciaries to continue offering the 

Nabisco Funds. See pp. 20-21, infra. 

Until other courts of appeals have considered 

whether there is a difference between a “would have” 

standard and a “could have” standard, it would be 

premature to assume that the former standard is as 

strict as petitioners claim. 

2. There is no disagreement in the circuits on the 

second question presented. The Third, Fourth, Fifth, 

and Eighth Circuits have stated that liability for a 
18

fiduciary who has breached his fiduciary duties by 

failing to conduct an adequate investigation depends 

on whether the same decision would have been made 

after an investigation that satisfied ERISA’s standard 

of prudence. See Pet. App. 33-40; Bussian v. RJR 

Nabisco, Inc., 223 F.3d 286, 300 (5th Cir. 2000) (no 

liability “if the provider selected would have been 

chosen had the fiduciary conducted a proper investigation”); In re Unisys Sav. Plan Litig., 173 F.3d 145, 

154 (3d Cir.) (no liability if a “hypothetical prudent 

fiduciary would have made the same investments”), 

cert. denied, 528 U.S. 950 (1999); Roth, 16 F.3d at 919 

(“Even if a trustee failed to conduct an investigation 

before making a decision, he is insulated from liability 

if a hypothetical prudent fiduciary would have made 

the same decision anyway.”); see also Whitfield v. 

Lindemann, 853 F.2d 1298, 1304-1305 (5th Cir. 1988)

(there is “no causal relation between [the fiduciary’s] 

breach and the loss” if “the loss would have occurred 

regardless of the breach”), cert. denied, 490 U.S. 1089 

(1989).

8

 

 

8 As the parenthetical quotations indicate, some courts have 

framed the inquiry in terms of what a “hypothetical prudent fiduciary” would have done, while others ask what the fiduciary in that 

case would have done. There is force to the proposition that on the 

question of causation, as distinguished from the substantive standard of prudence (which by statute turns on what a reasonable 

person in like circumstances would do, see 29 U.S.C. 1104(a)), the 

inquiry in a case such as this should focus on what the actual 

fiduciary would have done if he had not committed the breach. 

See, e.g., 4 Restatement (Third) of Trusts § 100 cmt. e, at 67-68. 

The parties in this case did not raise any issue as to whether there 

is a difference between those two inquiries and if so, what the 

appropriate inquiry would be. The decisions cited in the text also 
19

Moreover, of the courts of appeals that have used 

the “would have” formulation, only the Fourth Circuit

in this case has considered whether there is a difference between a “would have” standard and a “could 

have” standard; the other courts simply used the 

trust-law “would have” standard without addressing a 

“could have” standard. The fact that only one court of 

appeals has actually considered (but rejected) a “could 

have” causation standard counsels strongly against 

this Court’s review of the issue at this time. 

Petitioners contend (Pet. 34-35) that “most courts” 

ask whether an investment chosen after an inadequate 

process is “objectively prudent” and that that standard is different than the “would have” standard. But 

it is not clear that the “objectively prudent” standard 

is different from the “would have” standard in practice. In fact, the decision below viewed the “would 

have” standard as consistent with “objective prudence,” see Pet. App. 33, and the other decisions petitioners cite explain that a fiduciary action is “objectively prudent” when an adequate investigation 

“would have” led the imprudent fiduciary to the same 

result. Rinehart v. Akers, 722 F.3d 137, 151 (2d Cir. 

2013), vacated on other grounds, 134 S. Ct. 2900 

(2014); Renfro v. Unisys Corp., 671 F.3d 314, 322 (3d 

Cir. 2011); Kuper, 66 F.3d at 1460.

9

 

Petitioners also note (Pet. 28) that then-Judge 

Scalia’s separate opinion in Fink v. National Savings

& Trust Co., 772 F.2d 951 (D.C. Cir. 1985), used an 

 

did not address whether there is any difference between the two 

inquiries. 

9

 These decisions also all involved the Moench presumption, 

which this Court abrogated in Dudenhoeffer. See Rinehart, 722 

F.3d at 145; Renfro, 671 F.3d at 323; Kuper, 66 F.3d at 1459. 
20

“objectively prudent” standard, stating that a trustee 

who has “fail[ed] to investigate and evaluate” an investment should not be liable for damages if the investment was an “objectively prudent investment[].” 

Id. at 962 (Scalia, J., concurring in part and dissenting 

in part). That opinion was simply distinguishing between two questions—whether there was a procedural 

deficiency and whether that deficiency actually 

harmed the plan. And, in explaining what “objectively 

prudent” meant, the opinion used a “would have” 

formulation. Ibid. (Scalia, J., concurring in part and 

dissenting in part) (“[T]he determination of whether 

an investment was objectively imprudent is made on 

the basis of what the trustee knew or should have 

known; and the latter necessarily involves consideration of what facts would have come to his attention if 

he had fully complied with his duty to investigate and 

evaluate.” (emphasis omitted)). Because it is not clear 

that a “would have” standard is different in practice 

than an “objectively prudent” standard, and because

most courts have not considered the differences between a “would have” standard and a “could have” 

standard, this Court’s review of the causation standard would be premature at this time. 

3. This case would in any event be a poor vehicle 

for consideration of the second question presented 

because the Plan at issue required the petitioners not 

to sell the Nabisco stock, and the district court may 

rely on that fact on remand to decide this case. The 

Plan provided that “[t]he Trustee shall maintain” the 

Nabisco Funds as investment options, and it specifically “froze[]” those funds so that participants could 

maintain their current shares but could not buy additional shares. Pet. App. 92 (quoting Plan § 4.03). As 
21

the court of appeals explained (id. at 37-39), the fact 

that the “governing Plan document required the 

Nabisco Funds to remain as frozen funds in the Plan” 

is “highly relevant” to assessing causation, because 

ERISA requires fiduciaries to act in accordance with 

plan documents so long as they are consistent with 

ERISA. See 29 U.S.C. 1104(a)(1)(D). The court of 

appeals held (and petitioners do not now challenge) 

that retention of the Nabisco Funds was not prohibited by ERISA. See Pet. App. 23 (explaining that offering non-employer single stock funds is not per se imprudent). Accordingly, the district court could find on 

remand that petitioners were required to follow the 

plan document and therefore would have retained the 

stock if it was not imprudent to do so. If the district 

court decided the case that way, any differences between a “would have” standard and a “could have” 

standard would not matter. And, more specifically, 

the fact that the Plan precluded sale of the Nabisco 

Funds means this is not a good case to consider 

whether the “would have” standard embraces a range 

of prudent options (because under such a standard on 

remand a prudent fiduciary would not have violated 

the Plan’s express terms). 

More broadly, review of the second question presented is not warranted at this time because courts 

have applied a “would have” standard over the years 

without it leading to any of the practical consequences 

petitioners predict. One reason may be that it is rare 

for imprudent conduct in making an investment decision to lead to a result that may be viewed as objectively reasonable. See Pet. App. 35 (“[I]ntuition suggests, and a review of the case law confirms, that 

while such ‘blind luck’ is possible, it is rare.”); Br. in 
22

Opp. 25-28. Because only one court has considered 

the differences between a “would have” standard and 

a “could have” standard, and because the real-world 

impact of the court of appeals’ decision may be limited, further review of the second question presented 

is unwarranted at this time. 

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted. 

M. PATRICIA SMITH

Solicitor of Labor

G. WILLIAM SCOTT

Associate Solicitor

EDWARD D. SIEGER

Senior Attorney

MICHAEL R. HARTMAN

Attorney

Department of Labor

DONALD B. VERRILLI, JR.

Solicitor General

EDWIN S. KNEEDLER

Deputy Solicitor General

NICOLE A. SAHARSKY

Assistant to the Solicitor 

General

MAY 2015