This article was originally published by Law360 on Feb. 16, 2021.

The status of alternative investments as viable options on 401(k) plan menus received a significant boost on Jan. 21, as a California federal judge granted defendants’ motion to dismiss in the latest development in the closely watched Anderson v. Intel Corp. Investment Policy Committee case.¹

In a strongly worded opinion, U.S. District Judge Lucy Koh of the U.S. District Court for the Northern District of California rejected claims that the defendants breached their Employee Retirement Income Security Act, or ERISA, fiduciary duties by including certain alternative assets — such as hedge funds and private equity — in Intel’s defined contribution plans.

This decision marks the first time that a court has substantively addressed the question of whether a sponsor of a retirement plan can be held liable for a breach of fiduciary duty for including nontraditional investment strategies on a plan’s investment lineup.

For plan sponsors who have watched the recent 401(k) litigation wave progress with no sign of relenting in recent months, this decision comes as a welcome development as it should help raise the bar for plaintiffs looking to challenge these types of plan investment options.

In addition, the court’s opinion may provide a road map for changes to fiduciary decision-making processes that could limit the ability of plaintiffs to bring these types of cases with regard to any investment.

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