The question
Whether a plaintiff suing under ERISA Section 1106(a)(1)(C) must plead that the Section 1108(b)(2)(A) exemption does not apply to an alleged prohibited transaction.
Cunningham v. Cornell Univ.
What the Court decided
Reversed. A plaintiff states a claim under ERISA Section 1106(a)(1)(C) by plausibly alleging only the elements of that provision itself and need not plead that the Section 1108 exemptions do not apply. The Court held that the Section 1108 exemptions are structured as affirmative defenses that defendants must plead and prove, not additional elements of the plaintiff's claim.
How the justices split
UnanimousThe Court's opinion
Sotomayor, joined by Roberts, Thomas, Alito, Kagan, Gorsuch, Kavanaugh, Barrett, Jackson
Section 1106(a)(1)(C) contains three elements, and its bar is categorical, not removing transactions that were necessary or involved reasonable compensation. Under Meacham v. Knolls Atomic Power Laboratory, exemptions laid out apart from the prohibitions and referring to the prohibited conduct are affirmative defenses that defendants must plead and prove. The section headings confirm this, requiring plaintiffs to disprove all 21 statutory and hundreds of regulatory exemptions would be impractical, and the criminal-pleading rule of United States v. Cook does not apply in the civil context.
Concurring in the judgment
Alito, joined by Thomas, Kavanaugh
Alito filed a concurring opinion joined by Thomas and Kavanaugh. The syllabus records its existence but does not state its reasoning.
How we know · 5 sourced claims
The Court held that a plaintiff stating a claim under Section 1106(a)(1)(C) need only plausibly allege the elements of that provision without addressing potential Section 1108 exemptions.
Source: syllabus, Held
Section 1106(a)(1)(C) contains three elements and its bar is categorical, not removing transactions that were necessary or involved reasonable compensation.
Source: syllabus, Held
The Section 1108 exemptions are structured as affirmative defenses that defendants must plead and prove, following Meacham v. Knolls Atomic Power Laboratory.
Source: syllabus, Held
Sotomayor delivered the opinion for a unanimous Court.
Source: syllabus, lineup
Alito filed a concurring opinion, joined by Thomas and Kavanaugh.
Source: syllabus, lineup