Whether Section 406(a) of ERISA prohibits employee benefit plans from entering into arms-length service contracts with third-party providers that are necessary for plan administration

No question identified. : TO THE HONORABLE ELENA KAGAN, ASSOCIATE JUSTICE OF THE SUPREME COURT OF THE UNITED STATES, AND CIRCUIT JUSTICE FOR THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT: AT&T Services and AT&T Benefit Plan Investment Committee respectfully request a 30-day extension of time, to and including Thursday, March 7, 2024, in which to file a petition for a writ of certiorari to the U.S. Court of Appeals for the Ninth Circuit.* S. Ct. R. 13.5. The Ninth Circuit entered its judgment reversing the district court in relevant part on August 4, 2023. Bugielski v. AT&T Servs., Inc., 76 F.4th 894 (9th Cir. Aug. 4, 2023) (attached as Exhibit A). On November 8, 2023, the Ninth Circuit denied AT&T’s timely petition for rehearing en banc. Order, Bugielski, No. 21-56196 (9th Cir. Nov. 8, 2023) (attached as Exhibit B). Unless extended, the time in which to file a petition for a writ of certiorari will expire on February 6, 2024. The jurisdiction of this Court would be invoked under 28 U.S.C. § 1254(1). 1. This case involves an important, recurring issue about the proper interpretation of Section 406(a) of the Employee Retirement Income Security Act of 1974 (ERISA)—whether that section bars employee-benefit plans from entering any contract for services, even when those services are necessary to administer the plan and are procured in an arms-length transaction. 2. ERISA requires plan fiduciaries—like employers who sponsor 401(k) plans for their employees—to act prudently, including with respect to fees paid to third-party service providers like recordkeepers or financial advisers. 29 U.S.C. * AT&T Services, Inc., a Delaware corporation, is a wholly owned subsidiary of AT&T Inc. AT&T Inc., a Delaware corporation, is publicly traded on the New York Stock Exchange. No one person or group owns 10% or more of the stock of AT&T Inc. AT&T Benefit Plan Investment Committee is composed of individual employees of AT&T Services, Inc., or its affiliated entities. §1104(a). Section 406(a) of ERISA, codified at 29 U.S.C. § 1106(a)(1), also categorically prohibits (subject to statutory exemptions) certain types of transactions between plans and third parties, including the “furnishing of goods, services, or facilities between the plan and a party in interest.” ERISA defines a “party in interest” to include “a person providing services to such plan.” Jd. § 1002(14)(B). 3. As this Court explained in Lockheed Corp. v. Spink, “Congress enacted § 406 ‘to bar categorically a transaction that [is] likely to injure the pension plan.’” 517 U.S. 882, 888 (1996). But Congress didn’t mean to proscribe literally any transaction for services with plans—only transactions “in the sense that Congress used that term in § 406(a).” Jd. at 893. Congress’s particular concern was with “commercial bargains that present a special risk of plan underfunding because they are struck with plan insiders, presumably not at arm’s length.” Ibid. So the sort of “transactions” Section 406(a) targets “generally involve uses of plan assets that are potentially harmful to the plan.” Ibid. a. AT&T administers a 401(k) plan offered to eligible AT&T employees. Bugielski, 76 F.4th at 897. To administer that plan, AT&T contracts with service providers that furnish services critical to the plan’s operation. Id. at 898. One of those service providers is Fidelity Workplace, which provides recordkeeping services like tracking participant contributions. Jd. at 897-98. Fidelity offers plan participants an additional service called BrokerageLink, which provides further recordkeeping and shareholding services to plan participants in exchange for additional compensation from those participants. Id. at 898. The plan also contracts with an investment adviser called Financial Engines, which participants may opt to pay for additional services. Ibid. Financial Engines, in turn, pays Fidelity a fee for access to participants’ information so that Financial Engines can advise participants a