Supreme Court Declines Case on Tolling Agreements and ERISA Rules

In Preston v. Acosta, No. 17-1238 (U.S. June 25, 2018), the Supreme Court refused to hear a challenge to an 11th Circuit decision (Preston v. Acosta, Oct. 12, 2017) that ruled that the CEO and trustee of the ESOP at TPP Holdings could not invoke a tolling agreement to halt a DOL lawsuit alleging that he had caused the ESOP at the company to overpay for the purchase of his shares in 2006 and again in 2008. Before filing suit, the DOL and Preston tried to reach a settlement and entered into a series "tolling agreements" that provided the DOL would delay any litigation while the efforts were pending. No settlement was reached, and the DOL sued in 2014, one day before the expiration of the agreed-upon tolling period. Despite their agreement not to assert a time bar to litigation, the defendants moved to dismiss on the ground that all alleged violations occurred before December 30, 2008, six years prior to the filing, and thus were not permitted under ERISA's limitation-of-actions provision. The court ruled that the agreements took precedence, and the Supreme Court let that ruling stand.