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Supreme Court to decide if retirees can sue US Bank over pension plan

Key Points
  • The plaintiffs, retirees of US Bank, allege that those running a defined benefit plan failed to properly diversify investments and introduced unnecessary risk.
  • The plaintiffs say FAF Advisors, a US Bank subsidiary at the time, invested all of the plan in equities despite it being overfunded at the time.
  • The case will be heard in the court's next term, which begins in October.
A man walks up the steps of the U.S. Supreme Court on January 31, 2017 in Washington, DC.
Mark Wilson | Getty Images News | Getty Images

The Supreme Court said Friday that it will hear a case between retirees and US Bank concerning whether members of a pension plan can sue the fund manager even if the plan is overfunded.

The plaintiffs, retirees of US Bank, allege that those running a defined benefit failed to properly diversify investments and introduced unnecessary risk, leading to $748 million loss for the plan from September 2007 to December 2010. The plaintiffs say FAF Advisors, a US Bank subsidiary at the time, invested all of the plan in the stock market despite the plan being overfunded, taking on risk and increasing the chances of insolvency.

As the case worked its way through the courts, the pension plan became overfunded once again in 2014, leading a district court to dismiss the case. The Eighth Circuit Court of Appeals later affirmed the decision.

The federal government recommended a grant in this case on June 5. The case involves the Employee Retirement Income Security Act of 1974, where funding status is based on several different factors, including actuarial tables and inflation.

"Given normal fluctuations in those bases and assumptions, it is easy to imagine a plan toggling somewhat frequently between overfunded and underfunded," the government's amicus brief said. "It would be bizarre to tether a plaintiff's standing — and thus a federal court's power to hear a case — to such a volatile and arbitrary metric."

The case will be heard in the court's next term, which begins in October.

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Politics

Supreme Court to decide whether Trump can terminate Obama-era DACA program

Key Points
  • The Supreme Court says it will hear arguments over the legality of the Trump administration's decision to terminate the Obama-era immigration program.
  • DACA shields certain young migrants brought to the United States illegally from deportation and allows them to receive work permits.
  • The justices announce in an order that they will review three cases on the matter in their next term, beginning in October. A decision is expected by next June, in the thick of the 2020 presidential campaign.