Case: Bacon v. Portico

February 19, 2016—Church Alliance Files Amicus Curiae Brief

On February 19, 2016, the Church Alliance filed an amicus curiae (friend of the court) brief with the Minnesota Court of Appeals in the case of Bacon et al v. Portico Benefits Services. That case involves a class of plaintiffs alleging that the Board of Pensions of the ELCA (“Portico”) breached its fiduciary duties in selecting plan investments with fees that plaintiffs claim are excessive.

Background on Bacon v. Portico

In March of 2015, the plaintiffs, a class of retirement plan participants, filed suit in Minnesota district court against Portico. The plaintiffs allege that Portico breached fiduciary duties owed to the retirement plan participants by selecting and retaining ELCA funds as retirement plan investments, and that such funds charged unreasonable fees and had a history of poor performance relative to other available investments. This type of “excessive fee” litigation has been brought by plaintiffs in numerous cases against large for-profit companies that sponsor 401(k) retirement plans. Many of these corporate plan class actions have resulted in multi-million dollar settlements. The suit filed against Portico is the retirement plan fee case brought against a church pension board.

Portico filed a motion to dismiss the case, arguing that the plaintiffs’ claims were barred by the Establishment and Free Exercise Clauses of the First Amendment of the U.S. Constitution. Portico argued that a secular court’s review of the plan investments and pension board operating costs would require unconstitutional government entanglement with religion. Portico’s motion to dismiss also argued that plaintiffs’ claims were barred by the Freedom of Conscience Clause of the Minnesota Constitution. The Minnesota district court agreed with Portico’s arguments, and granted Portico’s motion to dismiss the case. The plaintiffs appealed to the Minnesota Court of Appeals.

Amicus Curiae Brief

The Church Alliance filed an amicus curiae brief to support Portico’s position. The brief provides the court not only with legal arguments supporting Portico’s position, but illustrative examples of how church polities, doctrines and practices, which vary greatly among denominations, impact church retirement plan investments, administration and operations and therefore affect related fees. As a result, a court’s review of the reasonableness of a particular denomination’s retirement plan investments and related fees cannot be completed without the court’s review of that denomination’s structure and beliefs – and such a review would entangle the court in religious questions in violation of the First Amendment.