2025 ERISA Trends & Litigation Landscape

Nate Moody, CPFA – RETIREMENT ADVISOR, PARTNER
Matt Arey, Esq. — Retirement Advisor, Partner*
August 2025

The fiduciary environment for retirement plan sponsors continues to evolve rapidly. In 2025, we’re seeing regulatory changes, court decisions, and litigation trends that impact not just retirement plans but also health and welfare benefits.

For plan committees, the message is clear: understanding your fiduciary duties and maintaining a strong, well-documented governance process is more important than ever.

The Four Core Fiduciary Duties Under ERISA

ERISA imposes four key duties on anyone with discretion over a retirement plan. These are the standards by which courts and regulators evaluate fiduciary conduct:

  1. Duty of Loyalty – Act solely in the interest of participants and beneficiaries, with the exclusive purpose of providing benefits and paying reasonable plan expenses.
  2. Duty of Prudence – Make decisions with the care, skill, prudence, and diligence that a prudent expert would use in similar circumstances.
  3. Duty to Diversify – Spread investments to minimize the risk of large losses, unless clearly imprudent to do so.
  4. Duty to Follow Plan Documents – Operate the plan according to its written terms, unless they conflict with ERISA requirements.

Consistently applying these duties—and documenting how you meet them—is the foundation of fiduciary compliance and risk mitigation.

1) Motions to Dismiss Are Harder to Win

In Cunningham v. Cornell University (2025), the Supreme Court ruled that plaintiffs in prohibited-transaction cases don’t have to prove the absence of an exemption when filing suit. That burden now falls on defendants later in the case. This is a procedural but important shift. In the past, many excessive-fee suits were tossed early because plaintiffs didn’t adequately allege why exemptions didn’t apply. Now, more claims will clear the motion-to-dismiss stage. That doesn’t mean they’ll all succeed, but it does mean longer litigation timelines, higher discovery costs, and more pressure to settle.
Why it matters: More cases are likely to survive early dismissal and move into costly discovery.
Action step: Maintain detailed documentation of fee reasonableness determinations—RFP results, benchmarking reports, vendor selection rationale, and complete committee minutes.

2) The Rise of “Quadfecta” Fee Suits

Plaintiffs are increasingly combining multiple allegations in one case: excessive recordkeeping fees, high managed-account fees, underperforming stable value funds, and misuse of participant forfeitures.
Why it matters: These bundled claims are harder to defend and resolve early, and forfeiture-related claims are growing fast.
Action step: Benchmark managed-account pricing, monitor stable value funds, and adopt a documented forfeiture policy that aligns with plan terms.

3) Fiduciary Risk Extends to Health Benefits

While ultimately dismissed, cases like Lewandowski v. Johnson & Johnson highlight that ERISA fiduciary scrutiny is increasingly being applied to pharmacy benefit manager (PBM) contracts and other health plan arrangements. This is part of a larger convergence trend: retirement-style fiduciary scrutiny is coming to health and welfare benefits. Employers who assumed their PBM or carrier “had it covered” are now being named directly. Given escalating drug costs, plaintiffs are positioning opaque PBM pricing as a fiduciary breach. The CAA and No Surprises Act are giving plaintiffs statutory hooks to bolster their claims.
Why it matters: Employers are being sued over opaque pricing, spread pricing, and retention of manufacturer rebates.
Action step: Apply retirement-plan governance principles to health benefits—issue regular RFPs, demand full pricing transparency, audit PBM contracts, and document compliance with CAA and No Surprises Act requirements.

4) ESG Investments Under the Microscope

In Spence v. American Airlines (2024), the Fifth Circuit allowed claims to proceed alleging that ESG-themed investments prioritized non-financial goals over participant returns.
Why it matters: Courts are signaling that ESG options must be selected and monitored solely for their economic benefit to participants.
Action step: If offering ESG options, document the financial rationale, benchmark against non-ESG peers, and record the analysis in meeting minutes.

5) Private Markets and Crypto on the Horizon

An August 2025 Executive Order directs regulators to study whether private market assets and digital assets should be permitted in 401(k) menus. This is an area of policy experimentation. Private markets can offer diversification and higher return potential but come with illiquidity, opaque valuation, and high fees. Crypto brings volatility and regulatory uncertainty. Even if regulators eventually permit these, plaintiffs’ lawyers are poised to challenge their inclusion, especially if performance disappoints. This will be a high-risk, high-scrutiny area.
Why it matters: These asset types present unfamiliar risks—valuation challenges, illiquidity, and higher fees—and will draw close scrutiny if added.
Action step: Conduct thorough due diligence, document IPS changes, set allocation limits, and clearly communicate risks before adding these investments.

6) Process Still Protects Fiduciaries

Recent court decisions reaffirm that a well-documented fiduciary process remains the strongest defense against breach claims.
Why it matters: Even as early dismissals become harder, committees that can demonstrate consistent monitoring, competitive bidding, and prudent decision-making fare better in court.
Action step: Keep detailed minutes showing the rationale behind each major decision, supported by current, relevant data.

7) Artificial Intelligence and Fiduciary Oversight

Analysts predict the first ERISA cases involving AI tools in plan administration and investment management. Potential claims could allege that reliance on flawed or biased algorithms breached the duty of prudence.
Why it matters: There is little regulatory guidance, and litigation could set new standards for technology governance.
Action step: Vet AI tools thoroughly, validate outputs, maintain human oversight, and document your review process.

Key Takeaways for Plan Sponsors

  • Document everything—your process, rationale, and the data behind decisions.
  • Benchmark regularly—fees, investments, and vendor services.
  • Apply fiduciary principles broadly—not just to retirement plans, but to health and welfare benefits.
  • Be forward-looking—anticipate emerging risks like AI, ESG scrutiny, and new asset classes.
  • Keep your committee trained—regular fiduciary education reduces the risk of procedural missteps.

In 2025, the fiduciary landscape for plan sponsors is more complex and demanding than ever. Litigation trends, regulatory shifts, and emerging risks such as ESG scrutiny, artificial intelligence, and alternative investments are reshaping expectations. To navigate this environment successfully, plan committees must focus on maintaining a clear and consistent governance process. This includes documenting decisions thoroughly, benchmarking fees and services, applying fiduciary principles across all benefit plans, and staying ahead of new developments. A strong process supported by current data and thoughtful oversight remains the most effective defense against fiduciary challenges.

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Securities Disclosure: Securities offered through Valmark Securities, Inc. Member FINRA, SIPC. Investment Advisory Services offered through Valmark Advisers, Inc. a SEC Registered Investment Advisor. | 130 Springside Drive, Suite 300, Akron, OH 44333–2431 | Telephone: (800) 765‑5201 | Lebel & Harriman, LLP and Lebel & Harriman Retirement Advisors are separate entities from Valmark Securities, Inc. and Valmark Advisers, Inc.

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