Second Circuit Affirms Dismissal of Fiduciary-Breach Claims Over High-Risk Investment Strategy

In Carlisle v. The Board of Trustees of The American Federation of The New York State Teamsters Conference Pension and Retirement Fund, et al., No. 25-511-CV, 2025 WL 3251154 (2d Cir. Nov. 21, 2025), the Second Circuit affirmed the dismissal of a putative class action alleging that the Plan’s trustees, investment advisor Meketa, and actuary Horizon breached ERISA fiduciary duties by “gambling” on high-risk private-market investments in a bid to improve the Plan’s deteriorating financial condition.

Plaintiff, a participant in the multiemployer defined-benefit plan, alleged that the fiduciaries imprudently shifted assets into volatile, illiquid private-market investments and that the Plan’s actuary, Horizon, enabled this strategy. He further alleged that Meketa operated under a conflict of interest by simultaneously advising the Plan and managing its private-market allocations. The district court dismissed the complaint under Rule 12(b)(6).

The Second Circuit first rejected defendants’ jurisdictional arguments. The plaintiff adequately alleged injury in fact because his benefits had been suspended due to the Plan’s poor funding status. The court also held the claims were not mooted by the subsequent restoration of benefits following federal financial assistance under the American Rescue Plan Act; under the collateral-source rule, third-party benefit payments do not extinguish a plaintiff’s personal stake.

The court agreed that Horizon was not an ERISA fiduciary. Although its actuarial work may have facilitated the fiduciaries’ chosen investment strategy, the complaint did not plausibly allege that Horizon exercised discretionary authority, controlled plan assets, or provided investment advice for a fee.

The court held that the allegations against the trustees and Meketa failed to plausibly state a breach of ERISA’s duty of prudence. While the complaint criticized the Plan’s substantial allocation to private-market investments and highlighted the asset class’s risk, volatility, and illiquidity, it did not show that the decisions were imprudent based on the information available at the time.

The court emphasized that fiduciaries may choose among a “range of reasonable judgments” and that weighing tradeoffs between risk and return does not in itself constitute imprudence. Further, the plaintiff failed to show that the Plan’s strategy was an extreme outlier among similar multiemployer plans.

The dual role of Meketa—as both nondiscretionary advisor and private-markets manager—did not, without more, establish a plausible conflict-driven breach of loyalty. The complaint lacked facts showing that Meketa or the trustees acted to benefit anyone other than the Plan. General allegations that Meketa might profit from larger private-market allocations were insufficient without details suggesting self-dealing or improper influence.

The court also rejected the claim that the trustees breached loyalty duties by retaining Horizon; nothing suggested the actuary’s work served anyone other than the Plan. Finding no plausible allegations of imprudence, disloyalty, or fiduciary status for Horizon, the Second Circuit affirmed dismissal of the complaint in full.