Supreme Court Probes ‘Meaningful Benchmark’ Definition in Intel Oral Arguments

A majority of U.S. Supreme Court justices signaled they believe there is a need to define what constitutes a “meaningful benchmark” when evaluating the performance of retirement plan investments during Tuesday’s oral arguments in Anderson v. Intel Corp. Investment Policy Committee.

The case, which has made its way through the court system for years, hinges on whether participants in a retirement plan governed by the Employee Retirement Income Security Act who allege that a plan investment underperformed must identify a “meaningful benchmark” to use in evaluating the investment’s performance relative to its peers .

The question presented to the Supreme Court was whether—and how—a meaningful benchmark must be alleged by a plaintiff in order to survive a motion to dismiss in a case alleging imprudence against a plan fiduciary for its investment selection. If the court finds that a meaningful benchmark is required, plaintiffs would need to show that a plan investment underperformed relative to a comparable investment with similar aims, risks and strategies.

During the arguments, Matthew Wessler of Gupta Wessler LLP, the attorney for the case’s plaintiffs, argued that plan sponsor Intel’s heavy allocation to hedge fund and private equity investments hurt participants’ investment performance enough to warrant identifying a fund that is a meaningful comparator and to warrant considering other allegations of imprudence. While all parties seemed to agree that the plaintiff must provide a meaningful benchmark to survive a motion to dismiss, they did not agree on the definition of “meaningful.”

Background

The case, filed in 2019, challenged the investment approach of two target-date funds on the Intel plan’s investment menu. It currently centers on the plaintiffs’ identification of a comparable investment fund when alleging mismanagement of a plan’s assets, a requirement the plaintiffs in the Intel case argue is too strict and inconsistent. The U.S. 9th Circuit Court of Appeals upheld a district court ruling for Intel in May 2025, finding that the plaintiffs failed to prove it made imprudent investment choices.

Defendant Intel has stressed that its investment decisions, which included investing some of the Intel 401(k) Savings Plans’ assets in hedge funds and private equity funds, were intended to decrease volatility and reduce risk during market downturns in the wake of the 2008 financial crisis. According to a brief filed on July 2, the fund performed as intended by posting better returns than more equity-heavy funds in down-market years, though those funds “generally performed better” during much of the bull market that followed 2008.

The 9th Circuit held that it was not enough for the plaintiffs to merely claim that fiduciaries could have achieved higher investment returns. In this case, Intel had created its own customized benchmarks for the disputed funds, which were specialized target-date funds that included the alternative assets. The appeals court criticized the plaintiffs for comparing the Intel funds to equity-heavy retail funds, rather than to the relevant custom benchmarks or to other funds with comparable risk-mitigation strategies and objectives.

An earlier complaint, filed in 2015 by former Intel employee Christopher M. Sulyma and later consolidated with the case filed in 2019 by former Intel employee Winston R. Anderson, alleged that, by the end of 2013, up to 36.71% of the Intel Global Diversified Fund was invested in private equity, hedge funds and commodities—riskier asset classes the plaintiffs argued dragged down returns. In addition to countering that these investments were meant to reduce volatility in the wake of the 2008 financial crisis, Intel further argued that the post-crisis bull market in public equities made traditional benchmarks inappropriate for evaluating the plan’s performance.

The case was argued as the ERISA retirement plan industry awaits a final rule from the Department of Labor on prudence by fiduciaries in investment selection. The Department of Labor, in an amicus brief supporting the Intel fiduciaries, urged the Supreme Court to affirm the 9th Circuit’s decision, according to an analysis by George Sepsakos, a principal in Groom Law Group. The DOL’s brief stated that ERISA is a law of process, not results. The DOL argued, Sepsakos wrotre, that underperformance, “particularly measured against investments the plan never offered, does not, by itself, support a plausible inference that the process failed.”

In addition, the DOL’s proposed rule includes a requirement that plan fiduciaries select a meaningful benchmark to which to compare investment performance of plan investments. Sepsakos concluded that in light of the DOL proposal, “fiduciaries should consider designating an appropriate benchmark for each … fund and confirming the investment reflects its benchmark’s stated objectives and strategy.”

Comparing ‘Apples’ to ‘Oranges’

“The 9th Circuit is saying you can’t compare apples to oranges,” Associate Justice Clarence Thomas said to the plaintiffs’ attorney during Tuesday’s arguments. “If you have an equity fund that is designed to produce high returns, but riskier returns, you can’t compare that to a fund that is designed to protect against losses.”

Wessler argued that the appeals court erred by moving beyond a recognition that the performance allegations need to contribute to a theory of imprudence; in his view, the 9th Circuit ruled that the only kind of comparison that will count is one that identified a specific, materially indistinguishable fund that differed only in performance.

Associate Justice Kentaji Brown Jackson asked the plaintiffs’ attorney on what his complaint relies, if not performance allegations.

Wessler claimed that performance and nonperformance allegations—both of which were included in the complaint—must be considered together under a “holistic analysis.” Allegations of underperformance are “just a part of the overall picture,” the plaintiffs’ attorney alleged.

As part of that holistic analysis, Wessler argued the over-allocation to hedge funds was both risky and unprecedented, inconsistent with the way other fiduciaries managing similarly sized plans were constructing their portfolios.

Associate Justice Amy Coney Barrett said it seemed to her that Wessler was agreeing that a meaningful benchmarking standard is appropriate, but “fighting a little about what is meaningful.”

Associate Justice Neil Gorsuch said he thought Wessler’s argument “shifted ground” from a question as to whether when dealing with underperformance, allegations need to be “apples to apples,” to something beyond that.

“Tell me how you define meaningful,” Associate Justice Sonia Sotomayor asked Wessler. “How do you define what kind of apple should be compared?”

“I think it’s entirely context dependent,” Wessler replied.

Defense Argument

During Intel’s allotted time, Barrett asked Charles McCloud of Williams & Connolly LLP, representing Intel, whether he thought the answer to whether the plaintiff must allege a meaningful benchmark was simply “yes, period,” or whether the court would need a “rule statement” to say more about what meaningful means.

McCloud responded that lower courts have “not struggled with that question” and that the case at hand is not one in which it is necessary for the court to provide a definition. The justices seemed to press for a definition of “meaningful.”

Gorsuch suggested the court be careful to “bracket” the question about the “relative underperformance” in an imprudence claim and instead focus on whether pleading underperformance relative to a meaningful benchmark would be sufficient to survive a motion to dismiss.

Next Steps

Charles Field, co-chair of Sanford Heisler Sharp McKnight’s financial mismanagement and ERISA litigation practice group, says he expects the Supreme Court will craft guidance as to what it defines as a “similar” or “meaningful.” He says he expects the court to again remand the case to the 9th Circuit to determine whether the allegations in the complaint showed “meaningful” comparatives, based on the guidance the court crafts. He expects the justices will put forward some kind of requirement that if a plaintiff is going to plead underperformance, they will need to have a meaningful comparative.

Field says the plaintiff’s attorney was trying to steer the conversation with the justices away from performance and more toward an argument that the investment strategies themselves—such as hedge funds—were imprudent.

Field says that in arguing the plaintiff was “shifting ground,” Associate Justice Brett Kavanaugh meant the plaintiffs’ attorney was shifting away from arguing about underperformance and more toward the appropriateness of the investment strategy.

Field says if he were to take anything from the oral arguments, it is that the Supreme Court is going to direct the lower court to “compare apples to apples.”

“You don’t necessarily have to compare Fuji applies to Fuji applies or gala apples to gala apples, but you have to compare apples to apples,” Field says. “The court [may] come up with criteria to determine whether an apples-to-apples comparison has been made.”