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On September 8, 2026, the US Federal District Court for the District of Massachusetts issued an order in Piercy et al. v. AT&T Inc. et al., an Athene-related pension risk transfer (PRT) case, dismissing claims against AT&T but allowing plaintiffs to proceed with their claims against State Street Global Advisors (SSGA).
The case is interesting for two reasons:
Its holding that, notwithstanding that they were still receiving promised benefits, plaintiffs’ allegation that they “were directly harmed by receiving a riskier and less valuable financial product, an annuity, than they were entitled to,” was sufficient to survive a motion to dismiss.
And as a real-life example of a sponsor avoiding liability for a fiduciary breach by outsourcing fiduciary responsibility to an outside fiduciary (in this case, SSGA).
In this article we briefly review the court’s decision.
The procedural situation of this case is a little complicated.
The case was initially referred to a magistrate who found that plaintiffs had alleged a sufficient injury in fact to satisfy Article III standing requirements, based on the alleged “diminished value” of the Athene annuity (versus the ERISA-covered/employer backed pension). Other courts have disagreed with that conclusion – we discuss this issue in our article Risk transfer litigation: more conflicting court decisions.
The magistrate, however, and without regard to the standing issue, recommended that the case be dismissed for failure to state a viable claim under ERISA, finding that plaintiffs had failed to adequately plead that the defendants had breached ERISA’s fiduciary rules because they had failed to allege that “’a prudent fiduciary in the defendant's position could not have concluded that’ Athene was a suitable annuity provider (citing [the Supreme Court’s decision in Fifth Third Bancorp v. Dudenhoeffer).” We would note that many courts have found Dudenhoeffer a difficult standard for plaintiffs to meet, so this is not to be taken lightly.
The court then, after review, adopted the magistrate’s recommendations.
The plaintiffs then amended their complaint, and on re-consideration the magistrate found that, as to SSGA, plaintiffs had stated a claim, based on a finding that “plaintiffs were directly harmed by receiving a riskier and less valuable financial product, an annuity, than they were entitled to.”
Both parties requested the court reject (different) parts of the magistrate’s recommendations.
The court (in this September 8, 2026, decision) refused to reconsider its decision on Article III standing. But it did review the magistrate’s recommendations with respect to the adequacy (under ERISA) of plaintiffs’ claim that the selection of Athene constituted a fiduciary breach and the dismissal of that claim against AT&T.
In objecting to the magistrate’s finding that plaintiffs stated a valid ERISA claim, defendants “challeng[ed] the insurance comparators chosen by plaintiffs, contending that the risk-based capital ratio ("RBC”) must be used for comparison purposes and assert[ed] that Athene's separate account is not riskier than the accounts of other insurers.”
The court, reviewing the magistrate’s decision, held that these objections were not proper issues for a motion to dismiss and that “comparing those providers to Athene is a factual analysis best resolved at a later stage of the litigation.”
That conclusion is somewhat controversial. In underperformance litigation the validity of the comparators used to establish underperformance has, for some time, been regarded as a valid objection at the motion to dismiss stage (see, e.g., Smith v. CommonSpirit Health, et al.). This court’s decision that plaintiffs can proceed to discovery without those objections being addressed is, as they say, problematic. (It is, of course, generally understood that, where the plaintiffs’ case survives a motion to dismiss, these cases settle so as to avoid expensive discovery.)
The other element of the court’s decision – its dismissal of claims against AT&T – is also interesting. For some time, sponsor’s, uncomfortable with fiduciary decisions that risk litigation, have sought to outsource that liability to an outside fiduciary. That is what happened here.
Plaintiffs, however, contended that “AT&T played an active role in selecting Athene and should be held liable for breaching its fiduciary duty along with SSGA.” The court disagreed, finding that:
Deciding whether to terminate a benefit plan is "a settlor function immune from ERISA's fiduciary obligations" while the process of selecting an annuity provider is an administrator's function with fiduciary obligations under ERISA. … AT&T, the settlor, hired SSGA as its independent fiduciary to choose an annuity provider, effectively delegating the decision-making process to SSGA. AT&T maintained final authority only to purchase the annuity contracts from the recommended annuity provider.
There have been lingering doubts about whether a sponsor (here, AT&T) – the ultimate plan fiduciary, with an ongoing monitoring obligation with respect to all delegations of fiduciary responsibility – can effectively avoid responsibility for fiduciary decisions by its delegate (here, SSGA). For this court, in a pension risk transfer, that delegation “worked.”
We will continue to follow this issue.
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