Supreme Court Justices Weigh Investment Comparisons in Retirement Fund Case

Why it matters locally: The Supreme Court's decision in *Anderson v. Intel Corp. Investment Policy Committee* could influence how fiduciaries for retirement plans, including those offered by major Illinois employers, evaluate and manage investment choices, potentially affecting the retirement savings of thousands of workers across the state.

WASHINGTON – Supreme Court justices on Tuesday heard arguments in the case of *Anderson v. Intel Corp. Investment Policy Committee*, which addresses the standards for evaluating investment choices in employee retirement funds. The core issue before the court involves claims that Intel's fiduciaries invested employee retirement funds largely in hedge funds and private equity, allegedly resulting in lackluster returns. Under the Employee Retirement Income Security Act (ERISA), fiduciaries are obligated to act prudently. The lawsuit against Intel's fiduciaries argues that their investment decisions violated this duty. The justices considered whether such lawsuits require evidence of better performance from other funds employing similar investment strategies. Justice Clarence Thomas initiated a discussion centered on the concept of comparing similar investments. He suggested that comparing a fund designed for high, riskier returns with a fund intended to protect against losses constituted an "apples and oranges" comparison. Other justices echoed this sentiment. Justice Elena Kagan stated that a necessary element in such cases is "another apple," implying the need for a comparable investment. Justice Samuel Alito challenged the employees' attorney, Matthew Wessler, on whether a claim could proceed by comparing dissimilar investments. Justice Neil Gorsuch asked Wessler to agree that underperformance claims require a "meaningful benchmark of some kind." Justice Amy Coney Barrett questioned the criteria for determining if investments are comparable, asking, "Don't you have to say, well, it has to be round [and] it has to come from a certain kind of tree?" Wessler, representing the employees, argued that the allegations should be viewed "holistically" rather than focusing solely on underperformance. However, the justices appeared to emphasize the absence of a direct benchmark – a comparison with other funds employing similar strategies that performed better. The complaint did not allege the performance of other hedge fund-based strategies, but rather questioned the general prudence of using hedge funds. Luke McCloud, representing the Intel fiduciaries, responded to questions that often sought his agreement with the lower court's decisions. Aimee Brown, representing the government, also supported the Intel fiduciaries. During her appearance, justices discussed potential language for an opinion affirming the U.S. Court of Appeals for the 9th Circuit, particularly concerning the usefulness of defining specific "benchmarks" for comparison.