Cunningham v. Cornell Univ.

Summary

To state a prohibited-transactions claim under the Employee Retirement Income Security Act of 1974, see 29 U. S. C. §1106(a)(1)(C), a plaintiff need only plausibly allege the elements contained in that provision itself, without addressing potential §1108 exemptions.

Text

PRELIMINARY PRINT 
Volume 604 U. S. Part 2 
Pages 693–711 
OFFICIAL REPORTS 
OF 
THE SUPREME COURT 
April 17, 2025 
REBECCA A. WOMELDORF 
reporter of decisions 
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OCTOBER TERM, 2024 693 
Syllabus 
CUNNINGHAM et al. v. CORNELL UNIVERSITY 
et al. 
certiorari to the united states court of appeals for 
the second circuit 
No. 23–1007. Argued January 22, 2025—Decided April 17, 2025 
The Employee Retirement Income Security Act of 1974 (ERISA) prohibits 
plan fduciaries from causing a plan to engage in certain transactions 
with parties in interest. 29 U. S. C. § 1106. A separate provision, 
§ 1108(b)(2)(A), exempts from these prohibitions any transaction that 
involves “[c]ontracting or making reasonable arrangements with a party 
in interest for offce space, or legal, accounting, or other services neces-
sary for the establishment or operation of the plan, if no more than 
reasonable compensation is paid therefor.” The question presented is 
whether, to state a claim under § 1106, a plaintiff must plead that 
§ 1108(b)(2)(A) does not apply to an alleged prohibited transaction. 
Petitioners represent a class of current and former Cornell University 
employees who participated in two defned-contribution retirement 
plans from 2010 to 2016. In 2017, they sued Cornell and other plan 
fduciaries for allegedly causing the plans to engage in prohibited trans-
actions for recordkeeping services with the Teachers Insurance and An-
nuity Association of America-College Retirement Equities Fund and 
Fidelity Investments Inc., in violation of § 1106(a)(1)(C). Petitioners 
claimed the plans paid these service providers substantially more than 
reasonable recordkeeping fees. The District Court dismissed the 
prohibited-transaction claim, and the Second Circuit affrmed. The 
Second Circuit held that § 1108(b)(2)(A) is incorporated into § 1106(a)'s 
prohibitions, requiring plaintiffs to plead that a transaction was “unnec-
essary or involved unreasonable compensation” to survive a motion to 
dismiss. 86 F. 4th 961, 975. 
Held: To state a claim under § 1106(a)(1)(C), a plaintiff need only plausibly 
allege the elements contained in that provision itself, without address-
ing potential § 1108 exemptions. Pp. 700–709. 
(a) Section 1106(a)(1)(C) contains three elements: It prohibits fduci-
aries from (1) “caus[ing a] plan to engage in a transaction” (2) that the 
fduciary “knows or should know . . . constitutes a direct or indirect . . . 
furnishing of goods, services, or facilities” (3) “between the plan and a 
party in interest.” Its bar is categorical and does not remove from its 
scope transactions that were necessary or involved reasonable compen-
sation. The exemptions in § 1108 do not impose additional pleading re-

694 CUNNINGHAM v. CORNELL UNIV . 
Syllabus 
quirements for § 1106(a)(1) claims. When a statute has “exemptions 
laid out apart from the prohibitions,” and the exemptions “expressly 
refe[r] to the prohibited conduct as such,” the exemptions ordinarily 
constitute “affrmative defense[s]” that are “entirely the responsibility 
of the party raising” them. Meacham v. Knolls Atomic Power Labora-
tory, 554 U. S. 84, 91, 95. Like the exemptions at issue in Meacham, 
the § 1108 exemptions are structured as affrmative defenses that must 
be pleaded and proved by defendants who seek to beneft from them. 
Pp. 700–702. 
(b) Respondents' contrary arguments are unpersuasive. First, the 
“[e]xcept as provided in section 1108” language in § 1106(a) does not 
incorporate § 1108 exemptions as elements of § 1106(a) violations. That 
reading ignores that Congress wrote the § 1108 exemptions “in the or-
thodox format of an affrmative defense” separate from the prohibitions. 
Meacham, 554 U. S., at 102. The headings of the sections, “Prohibited 
transactions” for § 1106 and “Exemptions from prohibited transactions” 
for § 1108, confrm this understanding. Respondents also fail to explain 
why some but not all § 1108 exemptions should be treated as elements 
of § 1106(a) claims. Yet requiring plaintiffs to plead and disprove all 
potentially relevant § 1108 exemptions would be impractical, given that 
there are 21 statutory exemptions and hundreds of regulatory exemp-
tions. Pp. 703–706. 
(c) Respondents' reliance on United States v. Cook, 17 Wall. 168, is 
misplaced. Cook established a “rule of criminal pleading” based on con-
stitutional considerations not present in the civil context. United 
States v. Reese, 92 U. S. 214, 232. Even in criminal cases, it remains 
settled that “ `an indictment or other pleading . . . need not negative the 
matter of an exception made by a proviso or other distinct clause.' ” 
Dixon v. United States, 548 U. S. 1, 13. Pp. 706–707. 
(d) Finally, respondents' practical concerns about meritless litigation 
cannot overcome the statutory text and structure. District courts have 
various tools at their disposal to screen out meritless claims, including 
requiring plaintiffs to fle a reply addressing exemptions under Federal 
Rule of Civil Procedure 7(a), dismissing claims that fail to identify a 
concrete injury under Article III, limiting discovery, imposing Rule 11 
sanctions, and ordering cost shifting under § 1132(g)(1). Pp. 707–709. 
86 F. 4th 961, reversed and remanded. 
Sotomayor, J., delivered the opinion for a unanimous Court. Alito, J., 
fled a concurring opinion, in which Thomas and Kavanaugh, JJ., joined, 
post, p. 709. 
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Cite as: 604 U. S. 693 (2025) 695 
Opinion of the Court 
Xiao Wang argued the cause for petitioners. With him 
on the briefs were Jerome J. Schlichter and Sean E. Soyars. 
Yaira Dubin argued the cause for the United States as 
amicus curiae urging reversal. With her on the brief were 
Solicitor General Prelogar, Deputy Solicitor General 
Kneedler, Wayne R. Berry , and Jeffrey M. Hahn. 
Nicole A. Saharsky argued the cause for respondents. 
With her on the brief were Minh Nguyen-Dang, Carmen 
Longoria-Green, Nancy G. Ross, and Michael A. Scodro.* 
Justice Sotomayor delivered the opinion of the Court. 
The Employee Retirement Income Security Act of 1974 
(ERISA), 88 Stat. 829, as amended, 29 U. S. C. § 1001 et seq., 
prohibits ERISA plan fduciaries from causing a plan to 
enter into certain transactions with parties in interest. 
§ 1106. A separate part of the statute, § 1108(b)(2)(A), ex-
empts from § 1106's prohibitions any transaction that in-
volves “[c]ontracting or making reasonable arrangements 
with a party in interest for offce space, or legal, accounting, 
or other services necessary for the establishment or opera-
tion of the plan, if no more than reasonable compensation 
is paid therefor.” The question presented is whether, to 
state a claim under § 1106, a plaintiff must plead that 
*Briefs of amici curiae urging reversal were fled for AARP et al. by 
Louis Lopez and William Alvarado Rivera; for the American Association 
for Justice by Robert S. Peck and Jeffrey R. White; for the Pension Rights 
Center by John Nestico; and for Quinn Curtis et al. by Gregory Y . Porter 
and Mark G. Boyko. 
Briefs of amici curiae urging affrmance were fled for AT&T Services, 
Inc., et al. by Allyson N. Ho, Ashley E. Johnson, Stephen J. Hammer, 
David W. Casazza, and Robert A. Batista; for the American Benefts Coun-
cil et al. by Meaghan VerGow and Deanna M. Rice; for the American 
Council on Education et al. by Jessica L. Ellsworth; for the Chamber of 
Commerce of the United States of America et al. by Jaime A. Santos, 
James O. Fleckner, Jordan Bock, Erica T. Klenicki, and Michael A. Tilgh-
man II; and for Encore Fiduciary by Jed W. Glickstein. 
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696 CUNNINGHAM v. CORNELL UNIV . 
Opinion of the Court 
§ 1108(b)(2)(A) does not apply to an alleged transaction be-
tween a plan and a party in interest. The answer is no. 
The Court holds that § 1108 sets out affrmative defenses, so 
it is defendant fduciaries who bear the burden of pleading 
and proving that a § 1108 exemption applies to an otherwise 
prohibited transaction under § 1106. 
I 
A 
Congress enacted ERISA to “protect . . . the interests of 
participants in employee beneft plans and their benefciar-
ies.” § 1001(b). It did so by “establishing standards of con-
duct, responsibility, and obligation for fduciaries of employee 
beneft plans, and by providing for appropriate remedies, 
sanctions, and ready access to the Federal courts.” Ibid. 
To that end, every ERISA plan must have at least one named 
fduciary with authority to control and manage the operation 
and administration of the plan. See § 1102(a)(1); see also 
§ 1002(21)(A) (“[A] person is a fduciary with respect to a plan 
to the extent . . . he exercises any discretionary authority or 
discretionary control respecting management of such plan or 
exercises any authority or control respecting management or 
disposition of its assets”). 
ERISA subjects plan fduciaries to certain fduciary duties 
derived from the common law of trusts. See § 1104(a); Cen-
tral States, Southeast & Southwest Areas Pension Fund v. 
Central Transport, Inc., 472 U. S. 559, 570 (1985). One is 
the duty of loyalty, which requires plan fduciaries to act 
“solely in the interest of the [plan's] participants and benef-
ciaries.” § 1104(a)(1)(A). Among other things, the duty of 
loyalty requires the fduciary to “deal fairly and honestly 
with benefciaries,” Varity Corp. v. Howe, 516 U. S. 489, 506 
(1996) (citing G. Bogert & G. Bogert, Law of Trusts and 
Trustees § 543, pp. 218–219 (rev. 2d ed. 1992)), so as “to en-
sure that a plan receives all funds to which it is entitled,” 
Central Transport, 472 U. S., at 571. 
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Cite as: 604 U. S. 693 (2025) 697 
Opinion of the Court 
Section 1106 “supplements the fduciary's general duty of 
loyalty to the plan's benefciaries . . . by categorically barring 
certain transactions deemed `likely to injure the pension 
plan.' ” Harris Trust and Sav. Bank v. Salomon Smith 
Barney Inc., 530 U. S. 238, 241–242 (2000) (quoting Commis-
sioner v. Keystone Consol. Industries, Inc., 508 U. S. 152, 
160 (1993)). Specifcally, § 1106(a)(1) states that, “[e]xcept as 
provided in section 1108,” a fduciary “shall not cause the 
plan to engage” in certain transactions with a “party in in-
terest.” 
1 The Act, in turn, defnes “ `party in interest' ” to 
include various plan insiders, including the plan's administra-
tor, sponsor, and its offcers, as well as entities “providing 
services to [the] plan.” § 1002(14). This case concerns the 
prohibited transaction set out in § 1106(a)(1)(C), which bars 
a fduciary from “caus[ing] the plan to engage in a transac-
tion, if he knows or should know that such transaction consti-
tutes a direct or indirect . . . furnishing of goods, services, or 
facilities between the plan and a party in interest.” 
Section 1108 separately enumerates 21 exemptions to 
those prohibited transactions. Relevant here is § 1108(b) 
(2)(A), which exempts from § 1106(a)(1)(C) any transaction 
that involves “[c]ontracting or making reasonable arrange-
ments with a party in interest for offce space, or legal, ac-
counting, or other services necessary for the establishment 
or operation of the plan, if no more than reasonable compen-
sation is paid therefor.” § 1108(b)(2)(A). 
B 
Respondent Cornell University is the named administrator 
for two defned-contribution retirement plans.
2 Cornell em-
1 Section 1106 also prohibits certain transactions between plans and the 
fduciaries who manage them. See § 1106(b). 
2 The facts that follow are from petitioners' operative complaint. Be-
cause this case comes to the Court on review of respondents' motion to 
dismiss that complaint, the Court accepts petitioners' allegations as true. 
See Hughes v. Northwestern Univ., 595 U. S. 170, 173 (2022). 
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698 CUNNINGHAM v. CORNELL UNIV . 
Opinion of the Court 
ployees maintain individual investment accounts within 
those plans, the value of which “is determined by the market 
performance of employee and employer contributions, less 
expenses.” Tibble v. Edison Int'l, 575 U. S. 523, 525 (2015). 
Those expenses include fees paid to service providers. 
In 2011, Cornell retained the Teachers Insurance and An-
nuity Association of America-College Retirement Equities 
Fund (TIAA) and Fidelity Investments Inc. (Fidelity). 
TIAA and Fidelity offered investment options to plan partic-
ipants and served as recordkeepers for the retirement plans 
by tracking account balances and providing account state-
ments. Cornell compensated TIAA and Fidelity with fees 
from a set portion of plan assets. 
Petitioners represent a class of current and former Cornell 
employees who participated in the plans from 2010 to 2016. 
In 2017, they sued Cornell and other plan fduciaries alleging, 
as relevant here, that respondents violated § 1106(a)(1)(C) by 
causing the plans to engage in prohibited transactions for 
recordkeeping services. “[B]ecause TIAA and Fidelity are 
service providers and hence parties in interest,” petitioners 
argued, “their furnishing of recordkeeping and administra-
tive services to the [p]lans is a prohibited transaction unless 
Cornell proves an exemption.” 86 F. 4th 961, 978 (CA2 
2023) (internal quotation marks and alterations omitted). 
The plans, according to petitioners, also paid TIAA and Fi-
delity more than a reasonable recordkeeping fee. A reason-
able fee (petitioners allege) would be approximately $35 per 
participant per year, but instead the plans paid between $115 
to $183 per participant for one plan and $145 to $200 per 
participant for the other. Ibid. 
Respondents moved to dismiss the prohibited-transaction 
claim, and the District Court granted their motion. The 
court held that a plaintiff, in addition to pleading the 
prohibited-transaction elements contained within § 1106(a) 
(1)(C), must also allege “some evidence of self-dealing or 
other disloyal conduct.” 2017 WL 4358769, *10 (SDNY, 
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Cite as: 604 U. S. 693 (2025) 699 
Opinion of the Court 
Sept. 29, 2017). Finding that petitioners failed to do so, the 
District Court dismissed their § 1106(a)(1)(C) claim. 
The Second Circuit affrmed, but did so on a different 
ground. It concluded that “the language of § 1106(a)(1) can-
not be read to demand explicit allegations of `self-dealing or 
disloyal conduct.' ” 86 F. 4th, at 975. The Court of Appeals 
further observed, however, that § 1106(a)(1)(C), if read “in 
isolation,” “would appear to prohibit payments by a plan to 
any entity providing it with any services.” Id., at 973. 
Other Courts of Appeals determined that such a reading 
would lead to “ `absurd results,' ” the Second Circuit noted, 
because it would seemingly “ `prohibit fduciaries from pay-
ing third parties to perform essential services in support of 
a plan.' ” Ibid. 
Thus, to limit the reach of § 1106(a)(1)(C), the Second Cir-
cuit held the exemptions to § 1106(a)'s prohibited transac-
tions contained in § 1108 imposed additional pleading re-
quirements. The § 1108 exemptions, the court reasoned, 
cannot “be understood merely as affrmative defenses to the 
conduct proscribed in § 1106(a).” Id., at 975. Rather, in the 
Second Circuit's view, “at least some of those exemptions— 
particularly, the exemption for reasonable and necessary 
transactions codifed by § 1108(b)(2)(A)—are incorporated 
into § 1106(a)'s prohibitions,” meaning a plaintiff must af-
frmatively plead them to survive a motion to dismiss. Ibid. 
In other words, a plaintiff alleging a prohibited transaction 
under § 1106(a)(1)(C) must also allege “that [the] transaction 
was unnecessary or involved unreasonable compensation.” 
Id., at 975 (citing §§ 1106(a)(1)(C), 1108(b)(2)(A); emphasis 
deleted). Concluding that petitioners had not done so, 
the Court of Appeals affrmed the dismissal of their 
§ 1106(a)(1)(C) claim.
3 In reaching that conclusion, the Sec-
3 Although petitioners alleged that respondents paid more than a “reason-
able” fee for TIAA and Fidelity's recordkeeping services, see supra, at 698, 
the Second Circuit rejected that allegation as insuffcient, reasoning that “it 
is not enough to allege that the fees were higher than some theoretical 
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700 CUNNINGHAM v. CORNELL UNIV . 
Opinion of the Court 
ond Circuit split from the Eighth Circuit, which has held that 
no additional pleading requirements beyond § 1106(a)(1) 
apply to prohibited-transaction claims. See Braden v. Wal-
Mart Stores, Inc., 588 F. 3d 585, 600–602 (CA8 2009). 
This Court granted certiorari to decide whether a plaintiff 
can state a claim for relief by simply alleging that a plan 
fduciary engaged in a transaction proscribed by § 1106(a) 
(1)(C), or whether a plaintiff must plead allegations that dis-
prove the applicability of the § 1108(b)(2)(A) exemption. 603 
U. S. 948 (2024). The Court concludes that plaintiffs need 
do no more than plead a violation of § 1106(a)(1)(C), and we 
therefore reverse. 
II 
Section 1106(a)(1)(C) contains three elements. It prohib-
its fduciaries from (1) “caus[ing a] plan to engage in a trans-
action” (2) that the fduciary “knows or should know . . . 
constitutes a direct or indirect . . . furnishing of goods, serv-
ices, or facilities” (3) “between the plan and a party in inter-
est.” Section 1106(a)(1)(C)'s bar is categorical: Any transac-
tion that satisfes its three elements is presumptively 
unlawful. Nothing in that section removes from its categor-
ical bar transactions that were necessary for the plan or 
involved reasonable compensation. Accordingly, under 
§ 1106(a)(1)(C), plaintiffs need only plausibly allege each of 
those elements of a prohibited-transaction claim. 
alternative service.” 86 F. 4th, at 978. Whether respondents paid an 
unreasonable fee, the court explained, turned on the nature of the services 
TIAA and Fidelity provided, as “it is not unreasonable to pay more for 
superior services.” Ibid. The Court of Appeals thus affrmed the dis-
missal of petitioners' § 1106(a)(1)(C) claim because (in its view) petitioners 
“failed to allege any facts going to the relative quality of the recordkeep-
ing services provided, let alone facts that would suggest the fees were `so 
disproportionately large' that they `could not have been the product of 
arm's-length bargaining.' ” Id., at 978–979 (quoting Jones v. Harris Asso-
ciates L. P ., 559 U. S. 335, 346 (2010)). 
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Opinion of the Court 
The exemptions set forth in a different part of the statute, 
§ 1108, do not impose additional pleading requirements to 
make out a § 1106(a)(1) claim. See § 1106(a) (prohibiting cer-
tain transactions between the plan and a party in interest 
“[e]xcept as provided in section 1108”). There is a well-
settled “general rule of statutory construction that the bur-
den of proving justifcation or exemption under a special ex-
ception to the prohibitions of a statute generally rests on one 
who claims its benefts.” FTC v. Morton Salt Co., 334 U. S. 
37, 44–45 (1948). In particular, when a statute has “exemp-
tions laid out apart from the prohibitions,” and the exemp-
tions “expressly refe[r] to the prohibited conduct as such,” 
the exemptions ordinarily constitute “affrmative defense[s]” 
that are “entirely the responsibility of the party raising” 
them. Meacham v. Knolls Atomic Power Laboratory , 554 
U. S. 84, 91, 95 (2008). That describes exactly how ERISA 
is structured: The exemptions to § 1106(a) prohibited trans-
actions are enumerated separately in § 1108, and § 1108 rec-
ognizes that the substantive “prohibitions” are “provided in 
section 1106” of the statute. § 1108(b). 
This Court's decision in Meacham is instructive. At issue 
there were the Age Discrimination in Employment Act's 
general prohibitions on age discrimination, §§ 623(a)–(c), (e), 
which “are subject to a separate provision, § 623(f), [that] cre-
at[es] exemptions for employer practices `otherwise prohib-
ited under subsectio[n] (a), (b), (c), or (e).' ” 554 U. S., at 91. 
Like § 1108(b)(2)(A), the § 621(f) exemption in Meacham 
shielded defendants from liability if the challenged conduct 
was “reasonable.” Compare § 1108(b)(2)(A) with § 623(f)(1). 
Given Congress's structural choice to place the prohibited 
conduct and the relevant exemptions in different statutory 
provisions, this Court deemed it “no surprise” that the ex-
emptions presented “ `affrmative defenses.' ” Id., at 91. 
Accordingly, Meacham held that the ADEA assigned to de-
fendants both the burden to “produce evidence raising the 
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702 CUNNINGHAM v. CORNELL UNIV . 
Opinion of the Court 
defense” of reasonableness and the burden to “persuade the 
factfnder of its merit.” Id., at 87. 
The same is true of ERISA. Like the exemptions at issue 
in Meacham, the § 1108 exemptions are “writ[ten] in the or-
thodox format of an affrmative defense.” Id., at 102. Un-
derstood as affrmative defenses, the § 1108 exemptions must 
be pleaded and proved by the defendant who seeks to beneft 
from them. See Taylor v. Sturgell, 553 U. S. 880, 907 (2008) 
(“Ordinarily, it is incumbent on the defendant to plead and 
prove [an affrmative] defense”). A plaintiff need only allege 
the three elements within § 1106(a)(1)(C), notwithstanding 
the potential applicability of a § 1108 exemption, because an 
“affrmative defense” is “not something the plaintiff must an-
ticipate and negate in her pleading.” Perry v. Merit Sys-
tems Protection Bd., 582 U. S. 420, 435, n. 9 (2017); see also 
Fed. Rule Civ. Proc. 8(c) (requiring defendants, “[i]n respond-
ing to a pleading,” to “affrmatively state any . . . affrma-
tive defense”). 
Of course, a plaintiff will not prevail by simply pleading, 
and later proving, the § 1106(a) elements. If a defendant es-
tablishes that a § 1108 exemption applies, the § 1106(a)(1)(C) 
claim will ultimately fail. As relevant here, this means that 
if respondents establish that a transaction prohibited under 
§ 1106(a)(1)(C) was for “services necessary for the . . . opera-
tion of the plan” and “no more than reasonable compensation 
[was] paid therefor,” § 1108(b)(2)(A), they cannot be held lia-
ble for causing the plan to enter into the transaction. At the 
pleading stage, however, it suffces for a plaintiff plausibly to 
allege the three elements set forth in § 1106(a)(1)(C).
4 
4 In some circumstances, principles from the common law of trusts can 
help inform this Court's interpretation of ERISA. See Varity Corp. v. 
Howe, 516 U. S. 489, 496 (1996); accord, LaRue v. DeWolff, Boberg & Asso-
ciates, Inc., 552 U. S. 248, 254, n. 4 (2008) (“[T]he common law of trusts 
. . . informs our interpretation of ERISA's fduciary duties”). Here, those 
principles would have been consistent with the Court's holding, insofar as 
trustees were “under a duty to the benefciary not to delegate to others 
the doing of acts which the trustee can reasonably be required personally 
to perform.” Restatement (Second) of Trusts § 171, p. 373 (1957) (bold-
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Opinion of the Court 
III 
A 
Against this backdrop, respondents nevertheless insist 
that § 1106(a)(1)(C) is best read to incorporate as an element 
the exception set out in § 1108(b)(2)(A) and that ERISA 
plaintiffs must therefore plead and prove the exemption's in-
applicability. To support that construction, they highlight 
that § 1106(a) begins by stating that its prohibitions apply 
“[e]xcept as provided in section 1108.” That proviso, they 
contend, shows that § 1106(a)(1)(C) and § 1108(b)(2)(A) to-
gether defne a prohibited transaction, such that plaintiffs 
bear the burden of pleading and proving the elements in 
both provisions. 
This alternative reading of the statute suffers from several 
faws. For one, it ignores that Congress wrote the § 1108 
exemptions “in the orthodox format of an affrmative de-
fense,” with the exemptions “laid out apart” from the prohi-
bitions in separate statutory provisions. Meacham, 554 
U. S., at 91, 102. As discussed above, supra, at 700–702, that 
structural decision forecloses respondents' argument. 
face deleted). A trustee could nonetheless delegate certain duties to an 
agency only upon a showing that “the agent's employment was necessary, 
that the trustee entered into a reasonable contract of employment with 
the agent, and that the agent rendered services to the trust.” A. Hess, 
G. Bogert, & G. Bogert, Law of Trusts and Trustees § 555, p. 48 (3d ed. 
2024). Critically, the common law of trusts “placed the burden squarely 
on the trustee” to make that showing. Ibid. The Court's opinion does 
not rest on the common law of trusts, however. First, ERISA plans are 
suffciently complex so that a question would arise as to whether fduciar-
ies can perform all necessary tasks themselves without plans incurring 
greater costs. Second, ERISA allows fduciaries to delegate certain du-
ties, see, e. g., 29 U. S. C. § 1105(c) (describing a mechanism “for named 
fduciaries to designate persons other than named fduciaries to carry out 
fduciary responsibilities”), and requires engaging the services of outside 
third parties in certain contexts, see, e. g., § 1023(a)(3) (providing that an 
administrator of a plan “shall engage . . . an independent qualifed public 
accountant” to conduct examinations of fnancial statements and records). 
Third, the text and structure of ERISA establish that fduciaries bear the 
burden of pleading and proving § 1108's exemptions. 
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704 CUNNINGHAM v. CORNELL UNIV . 
Opinion of the Court 
If there were any remaining doubt, the headings of § 1106 
and § 1108 confrm that it is the former, on its own, that de-
fnes the offense. See Yates v. United States, 574 U. S. 528, 
540 (2015) (plurality opinion) (“ `[T]he title of a statute and 
the heading of a section are tools available for the resolution 
of a doubt about the meaning of a statute' ”). Section 1106's 
heading is plain: “Prohibited transactions.” (Boldface de-
leted.) Section 1108, meanwhile, reads: “Exemptions from 
prohibited transactions.” (Boldface deleted.) That Con-
gress chose to label § 1108 as “exemptions” suggests that, 
even if § 1108(b)(2)(A) were best understood as an element of 
a § 1106(a)(1)(C) claim (and not an affrmative defense), the 
statute should still be read to place on ERISA defendants 
the burden of proving the exemption's applicability. That is 
because this Court has held that “the burden of persuasion 
as to certain elements of a plaintiff's claim may be shifted to 
defendants, when such elements can fairly be characterized 
as affrmative defenses or exemptions.” Schaffer v. Weast, 
546 U. S. 49, 57 (2005) (emphasis added). 
Structural considerations also weigh against respondents' 
reading of § 1106(a)(1)(C) and § 1108(b)(2)(A). Respondents' 
interpretation of the “except as provided” language would 
imply that all of the § 1108 exemptions are incorporated as 
elements of every § 1106(a) violation. After all, each of the 
exemptions is set forth in § 1108, and the “[e]xcept as pro-
vided in section 1108” language applies to § 1106(a) in its en-
tirety. § 1106(a); cf. Cyan, Inc. v. Beaver County Employees 
Retirement Fund, 583 U. S. 416, 428 (2018) (rejecting an in-
terpretation that “cherry pick[ed] from the material covered 
by the statutory cross-reference,” since “the except clause 
points to `section 77p' as a whole—not to paragraph 
77p(f)(2)”). Respondents fail to offer a principled basis for 
treating some, but not all, of the § 1108 exemptions as ele-
ments incorporated into § 1106(a)'s prohibitions. Yet Con-
gress intended for § 1106(a) to create “per se prohibitions on 
transacting with a party in interest.” Harris Trust, 530 
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Opinion of the Court 
U. S., at 252; see id., at 241–242. Incorporating all 21 § 1108 
exemptions as elements into the otherwise straightforward 
prohibitions in § 1106(a) would plainly frustrate Congress's 
intent to create a “categorica[l]” bar. Keystone, 508 U. S., 
at 160. 
Indeed, because § 1106(a), by its terms, sets out per se pro-
hibitions, it would make little sense to put the onus on plain-
tiffs to plead and disprove any potentially relevant separate 
§ 1108 exemptions. That burden, moreover, would not be 
limited to those statutory exemptions: Beyond the 21 exemp-
tions enumerated in § 1108, the Secretary of Labor has pro-
mulgated hundreds of regulatory exemptions pursuant to 
§ 1108. See § 1108(a) (authorizing the Secretary to “grant a 
conditional or unconditional exemption of any fduciary or 
transaction, or class of fduciaries or transactions, from all or 
part of the restrictions imposed by sectio[n] 1106”); see also 
Brief for United States as Amicus Curiae 3, and n. 1. 
When statutory exceptions “are numerous,” “fairness usu-
ally requires that the adversary give notice of the particular 
exception upon which it relies and therefore that it bear the 
burden of pleading.” 2 R. Mosteller et al., McCormick on 
Evidence § 337, p. 699 (8th ed. 2020); cf. NLRB v. Kentucky 
River Community Care, Inc., 532 U. S. 706, 711 (2001). 
That Congress enumerated 21 separate exceptions and then 
authorized the Secretary to add additional classes of ex-
empted transactions thereto only heightens the fairness con-
cern, as respondents' proposed approach would require plain-
tiffs to plead and dispute myriad exceptions before knowing 
which of them the defendant will seek to invoke. That 
would be especially illogical here, where several of the § 1108 
exemptions turn on facts one would expect to be in the fdu-
ciary's possession. See, e. g., § 1108(b)(16) (exempting trans-
actions involving the purchase or sale of securities or other 
property between a plan and a party in interest, provided 
the transaction occurred over certain approved platforms 
and complied with applicable rules of the Securities and Ex-
Page Proof Pending Publication

706 CUNNINGHAM v. CORNELL UNIV . 
Opinion of the Court 
change Commission, the price and compensation refect an 
arm's-length transaction, and the plan fduciary received no-
tice of the execution of such transaction through the 
approved platform, among other criteria); § 1108(b)(19) 
(exempting certain prohibited “cross-trading” transactions 
based on the satisfaction of nine separate conditions related 
to a plan manager's dealings and receipt of information from 
an investment manager). 
B 
Respondents' argument from precedent is similarly un-
availing. Respondents rely on this Court's decision in 
United States v. Cook, 17 Wall. 168 (1872), to support their 
construction of § 1108(b)(2)(A) as an additional element of a 
§ 1106(a)(1)(C) claim. Cook held that, “[w]here a statute de-
fning an offence contains an exception,” the pleadings must 
allege that the prohibited conduct does not fall within the 
exception whenever the exception “is so incorporated with 
the language defning the offence that the ingredients of the 
offence cannot be accurately and clearly described if the ex-
ception is omitted.” Id., at 173. In respondents' telling, 
§ 1106(a)(1)(C) is the kind of statute the Court contemplated 
in Cook. Respondents aver that it is routine for service pro-
viders to “perform many necessary and valuable functions 
for plan participants and fduciaries,” such as “offer[ing] in-
vestment funds and platforms, investment assistance, and 
recordkeeping services,” as well as “perform[ing] critical ac-
counting and legal functions.” Brief for Respondents 11. 
Many of those transactions are legal, respondents maintain, 
even though they fall within the scope of § 1106(a)(1)(C), be-
cause they are “reasonable arrangements” that are “neces-
sary for the . . . operation of the plan” and involve “rea-
sonable compensation” under § 1108(b)(2)(A). Thus, in 
respondents' view, § 1108(b)(2)(A) is a missing “ingredien[t]” 
“incorporated with the language” of a § 1106(a)(1)(C) viola-
tion, for the lawfulness of these transactions will often turn 
on their necessity and reasonableness. Cook, 17 Wall., at 173. 
Page Proof Pending Publication

Cite as: 604 U. S. 693 (2025) 707 
Opinion of the Court 
Respondents ignore, however, that this Court has said 
Cook created a “rule of criminal pleading” for indictments 
intended to ensure that defendants have fair notice “of every 
fact which is legally essential to the punishment to be in-
ficted.” United States v. Reese, 92 U. S. 214, 232 (1876) (em-
phasis added). Indeed, Cook “construed” the “constitutional 
right `to be informed of the nature and cause of' ” a criminal 
accusation. United States v. Cruikshank, 92 U. S. 542, 557– 
558 (1876). Hence, it rested on constitutional considerations 
not present in the civil context. Moreover, the Court has 
applied the Cook rule narrowly, such as when an exception 
to a criminal offense is contained within the same sentence 
of the provision defning the offense. See, e. g., United 
States v. Britton, 107 U. S. 655, 669–670 (1883); United States 
v. Vuitch, 402 U. S. 62, 67–68, 70 (1971). Even in the crimi-
nal context, it remains a “ `settled rule' ” “ `that an indictment 
or other pleading . . . need not negative the matter of an 
exception made by a proviso or other distinct clause.' ” 
Dixon v. United States, 548 U. S. 1, 13 (2006). Cook is thus 
of no help to respondents. 
C 
Lastly, respondents contend that there will be an avalanche 
of meritless litigation if disproving the applicability of 
§ 1108(b)(2)(A) is not treated as a required element of pleading 
§ 1106(a)(1)(C) violations. ERISA plans, after all, often have 
thousands of participants and hold millions of dollars in 
assets. The “realities of modern trust administration,” re-
spondents attest, therefore require fduciaries to transact with 
service providers. Brief for Respondents 47; see also Law of 
Trusts and Trustees § 555, at 48 (3d ed. 2024) (“[E]xpecting a 
trustee to personally perform every single act necessary to 
execute a modern trust not only is unreasonable but may not 
even be the best way to assure effcient and knowledgable 
administration of the trust”). To the extent such transac-
tions fall within the scope of § 1106(a)(1)(C), respondents 
argue, most would be lawful in light of § 1108(b)(2)(A)'s 
Page Proof Pending Publication

708 CUNNINGHAM v. CORNELL UNIV . 
Opinion of the Court 
exemption for “necessary” and “reasonable” transactions. 
Yet if plaintiffs must plead only that a transaction barred 
by § 1106(a)(1)(C)'s plain text occurred, respondents argue, 
plaintiffs could too easily get past the motion-to-dismiss 
stage and subject defendants to costly and time-intensive 
discovery. Such meritless litigation, respondents claim, 
would harm the administration of plans and force plan fdu-
ciaries and sponsors to bear most of the associated costs. 
These are serious concerns but they cannot overcome the 
statutory text and structure. Here, Congress “set the bal-
ance” in “creating [an] exemption and writing it in the ortho-
dox format of an affrmative defense,” so the Court must 
“read it the way Congress wrote it.” Meacham, 554 U. S., 
at 101–102. 
To the extent future plaintiffs do bring barebones § 1106(a) 
(1)(C) suits, district courts can use existing tools at their dis-
posal to screen out meritless claims before discovery. For 
instance, if a fduciary believes an exemption applies to bar 
a plaintiff's suit and fles an answer showing as much, Fed-
eral Rule of Civil Procedure 7 empowers district courts to 
“insist that the plaintiff” fle a reply “ `put[ting] forward spe-
cifc, nonconclusory factual allegations' ” showing the exemp-
tion does not apply. Crawford-El v. Britton, 523 U. S. 574, 
598 (1998); cf. Cole v. Carson, 935 F. 3d 444, 446 (CA5 2019) 
(“[C]ourts have developed procedures and pretrial practices, 
including . . . a reply to an answer under Rule 7(a) on order 
of the district court, particularized to address the defense of 
immunity”). Lower courts may then dismiss the suits of 
those plaintiffs who cannot plausibly do so. District courts 
must also, consistent with Article III standing, dismiss suits 
that allege a prohibited transaction occurred but fail to iden-
tify an injury. Cf. Thole v. U. S. Bank N. A., 590 U. S. 538, 
544 (2020) (explaining that “ `Article III standing requires a 
concrete injury even in the context of a statutory violation' ” 
and affrming the dismissal of an ERISA claim because 
“plaintiffs . . . failed to plausibly and clearly allege a concrete 
Page Proof Pending Publication

Cite as: 604 U. S. 693 (2025) 709 
Alito, J., concurring 
injury” (quoting Spokeo, Inc. v. Robins, 578 U. S. 330, 341 
(2016)). For § 1106(a)(1)(C) claims that do proceed past the 
motion to dismiss stage, moreover, district courts retain dis-
cretionary authority to expedite or limit discovery as neces-
sary to mitigate unnecessary costs. Additionally, in cases 
where an exemption obviously applies, and a plaintiff and his 
counsel lack a good-faith basis to believe otherwise, Rule 11 
may permit a district court to impose sanctions against 
them. Lastly, it bears mention that ERISA itself gives dis-
trict courts an additional tool to ward off meritless litigation: 
cost shifting. See § 1132(g)(1) (“[T]he court in its discretion 
may allow a reasonable attorney's fee and costs of action to 
either party”). District courts therefore have available a 
variety of means to address the concerns raised by respond-
ents and the court below. 
* * * 
The Court today holds that plaintiffs seeking to state a 
§ 1106(a)(1)(C) claim must plausibly allege that a plan fdu-
ciary engaged in a transaction proscribed therein, no more, 
no less. Plaintiffs are not required to plead and prove that 
the myriad § 1108 exemptions pose no barrier to ultimate 
relief. The judgment of the Second Circuit is reversed, and 
the case is remanded for further proceedings consistent with 
this opinion. 
It is so ordered. 
Justice Alito, with whom Justice Thomas and Justice 
Kavanaugh join, concurring. 
I join all of the opinion of the Court for the simple reason 
that 29 U. S. C. § 1108 sets out affrmative defenses, and it is 
black letter law that a plaintiff need not plead affrmative 
defenses.
1 See Fed. Rule Civ. Proc. 8(c); Taylor v. Sturgell, 
1 The decision does not rely on the common law of trusts. As the Court 
points out, the Employee Retirement Income Security Act of 1974 
(ERISA) departs in important ways from that body of case law; ERISA 
Page Proof Pending Publication

710 CUNNINGHAM v. CORNELL UNIV . 
Alito, J., concurring 
553 U. S. 880, 907 (2008). Here, as the Court points out, 
§ 1108 sets out a long list of affrmative defenses, and it would 
make no sense to require a complaint to anticipate and at-
tempt to refute all the affrmative defenses that a defendant 
might raise. 
Unfortunately, this straightforward application of estab-
lished rules has the potential to cause—and, indeed, I expect 
it will cause—untoward practical results. The administra-
tor of an ERISA plan like the one at issue will almost always 
fnd it necessary to employ outside frms to provide services 
that the plan needs. When it does so, these outside frms 
become “ `part[ies] in interest' ” under the terms of ERISA, 
see § 1002(14)(B), and as a result, their provision of services 
to the plan is unlawful under § 1106 unless one of the exemp-
tions in § 1108 applies. The upshot is that all that a plaintiff 
must do in order to fle a complaint that will get by a motion 
to dismiss under Federal Rule of Civil Procedure 12(b)(6) is 
to allege that the administrator did something that, as a 
practical matter, it is bound to do. 
In this case, for example, Cornell set up a plan under which 
employees could invest in the Teachers Insurance and An-
nuity Association of America-College Retirement Equities 
Fund and Fidelity funds, and then those companies provided 
the recordkeeping services for their own funds, as they cus-
tomarily do. There is nothing nefarious about any of that. 
Yet under our decision that is all that a plaintiff must plead 
to survive a motion to dismiss. And, in modern civil litiga-
tion, getting by a motion to dismiss is often the whole ball 
game because of the cost of discovery. Defendants facing 
those costs often calculate that it is effcient to settle a case 
even though they are convinced that they would win if the 
litigation continued. See J. Beisner, Discovering a Better 
plans like Cornell's are vastly different from garden variety common law 
trusts; and in my judgment, reliance here on the common law of trusts 
would be unhelpful and, indeed, misleading. 
Page Proof Pending Publication

Cite as: 604 U. S. 693 (2025) 711 
Alito, J., concurring 
Way: The Need for Effective Civil Litigation Reform, 60 
Duke L. J. 547, 550 (2010); see also Dura Pharmaceuticals, 
Inc. v. Broudo, 544 U. S. 336, 347 (2005); Chubb, Excessive 
Litigation Over Excessive Plan Fees in 2023, pp. 2–3 (Apr. 
2023), https://www.chubb.com/content/dam/chubb-sites / 
chubb-com/us-en/ business-insurance/fiduciary-liability/pdfs/ 
excessive-litigation-over-excessive-plan-fees-infographic.pdf 
(noting that the number of excessive plan fee cases that set-
tle has increased six-fold since 2016 and that these cases can 
“cost more to defend than to settle”). When that happens 
in a case like the one now before us, the few plan participants 
named as plaintiffs and their attorneys get a windfall, and a 
cost that the administrator incurs may be passed on to the 
other plan participants. 
With a realistic appreciation of this dynamic, the Second 
Circuit tried to formulate a rule that would weed out plainly 
unmeritorious suits at the pleading stage. The court at-
tempted to achieve an admirable goal, but established plead-
ing rules do not allow that workaround. 
In Part III–C of its opinion, the Court sets out some alter-
native safeguards. Perhaps the most promising of these is 
the suggestion, offered by the Solicitor General, that a dis-
trict court may insist that a plaintiff fle a reply to an answer 
that raises one of the § 1108 exemptions as an affrmative 
defense.
2 Ante, at 708. It does not appear that this is a 
commonly used procedure, but the Court has endorsed its 
use in the past. See Crawford-El v. Britton, 523 U. S. 574, 
598 (1998). District courts should strongly consider utiliz-
ing this option—and employing the other safeguards that the 
Court describes—to achieve “the prompt disposition of in-
substantial claims.” Id., at 597. Whether these measures 
will be used in a way that adequately addresses the problem 
that results from our current pleading rules remains to be 
seen. 
2 See Brief for United States as Amicus Curiae 30–31. 
Page Proof Pending Publication

Page Proof Pending Publication
Reporter’s Note 
The attached opinion has been revised to refect the usual publication 
and citation style of the United States Reports. The revised pagination 
makes available the offcial United States Reports citation in advance of 
publication. The syllabus has been prepared by the Reporter of Decisions 
for the convenience of the reader and constitutes no part of the opinion of 
the Court. A list of counsel who argued or fled briefs in this case, and 
who were members of the bar of this Court at the time this case was 
argued, has been inserted following the syllabus. Other revisions may 
include adjustments to formatting, captions, citation form, and any errant 
punctuation. The following additional edits were made: 
None

Retrieval chunks

• #1

  PRELIMINARY PRINT Volume 604 U. S. Part 2 Pages 693–711 OFFICIAL REPORTS OF THE SUPREME COURT April 17, 2025 REBECCA A. WOMELDORF reporter of decisions Page Proof Pending Publication NOTICE: This preliminary print is subject to formal revision before the bound volume is published. Users are requested to not…

• #2

  allege the elements contained in that provision itself, without address- ing potential § 1108 exemptions. Pp. 700–709. (a) Section 1106(a)(1)(C) contains three elements: It prohibits fduci- aries from (1) “caus[ing a] plan to engage in a transaction” (2) that the fduciary “knows or should know . . . constitutes a …

• #3

  matter of an exception made by a proviso or other distinct clause.' ” Dixon v. United States, 548 U. S. 1, 13. Pp. 706–707. (d) Finally, respondents' practical concerns about meritless litigation cannot overcome the statutory text and structure. District courts have various tools at their disposal to screen out me…

• #4

  Briefs of amici curiae urging affrmance were fled for AT&T Services, Inc., et al. by Allyson N. Ho, Ashley E. Johnson, Stephen J. Hammer, David W. Casazza, and Robert A. Batista; for the American Benefts Coun- cil et al. by Meaghan VerGow and Deanna M. Rice; for the American Council on Education et al. by Jessica …

• #5

  sure that a plan receives all funds to which it is entitled,” Central Transport, 472 U. S., at 571. Page Proof Pending Publication Cite as: 604 U. S. 693 (2025) 697 Opinion of the Court Section 1106 “supplements the fduciary's general duty of loyalty to the plan's benefciaries . . . by categorically barring cer…

• #6

  performance of employee and employer contributions, less expenses.” Tibble v. Edison Int'l, 575 U. S. 523, 525 (2015). Those expenses include fees paid to service providers. In 2011, Cornell retained the Teachers Insurance and An- nuity Association of America-College Retirement Equities Fund (TIAA) and Fidelity I…

• #7

  isolation,” “would appear to prohibit payments by a plan to any entity providing it with any services.” Id., at 973. Other Courts of Appeals determined that such a reading would lead to “ `absurd results,' ” the Second Circuit noted, because it would seemingly “ `prohibit fduciaries from pay- ing third parties to…

• #8

  do no more than plead a violation of § 1106(a)(1)(C), and we therefore reverse. II Section 1106(a)(1)(C) contains three elements. It prohib- its fduciaries from (1) “caus[ing a] plan to engage in a trans- action” (2) that the fduciary “knows or should know . . . constitutes a direct or indirect . . . furnishing …

• #9

  them. Meacham v. Knolls Atomic Power Laboratory , 554 U. S. 84, 91, 95 (2008). That describes exactly how ERISA is structured: The exemptions to § 1106(a) prohibited trans- actions are enumerated separately in § 1108, and § 1108 rec- ognizes that the substantive “prohibitions” are “provided in section 1106” of th…

• #10

  tablishes that a § 1108 exemption applies, the § 1106(a)(1)(C) claim will ultimately fail. As relevant here, this means that if respondents establish that a transaction prohibited under § 1106(a)(1)(C) was for “services necessary for the . . . opera- tion of the plan” and “no more than reasonable compensation [wa…

• #11

  agency only upon a showing that “the agent's employment was necessary, that the trustee entered into a reasonable contract of employment with the agent, and that the agent rendered services to the trust.” A. Hess, G. Bogert, & G. Bogert, Law of Trusts and Trustees § 555, p. 48 (3d ed. 2024). Critically, the common…

• #12

  546 U. S. 49, 57 (2005) (emphasis added). Structural considerations also weigh against respondents' reading of § 1106(a)(1)(C) and § 1108(b)(2)(A). Respondents' interpretation of the “except as provided” language would imply that all of the § 1108 exemptions are incorporated as elements of every § 1106(a) violati…

• #13

  River Community Care, Inc., 532 U. S. 706, 711 (2001). That Congress enumerated 21 separate exceptions and then authorized the Secretary to add additional classes of ex- empted transactions thereto only heightens the fairness con- cern, as respondents' proposed approach would require plain- tiffs to plead and dis…

• #14

  Many of those transactions are legal, respondents maintain, even though they fall within the scope of § 1106(a)(1)(C), be- cause they are “reasonable arrangements” that are “neces- sary for the . . . operation of the plan” and involve “rea- sonable compensation” under § 1108(b)(2)(A). Thus, in respondents' view, …

• #15

  execute a modern trust not only is unreasonable but may not even be the best way to assure effcient and knowledgable administration of the trust”). To the extent such transac- tions fall within the scope of § 1106(a)(1)(C), respondents argue, most would be lawful in light of § 1108(b)(2)(A)'s Page Proof Pending P…

• #16

  “plaintiffs . . . failed to plausibly and clearly allege a concrete Page Proof Pending Publication Cite as: 604 U. S. 693 (2025) 709 Alito, J., concurring injury” (quoting Spokeo, Inc. v. Robins, 578 U. S. 330, 341 (2016)). For § 1106(a)(1)(C) claims that do proceed past the motion to dismiss stage, moreover, di…

• #17

  lished rules has the potential to cause—and, indeed, I expect it will cause—untoward practical results. The administra- tor of an ERISA plan like the one at issue will almost always fnd it necessary to employ outside frms to provide services that the plan needs. When it does so, these outside frms become “ `part[…

• #18

  in a case like the one now before us, the few plan participants named as plaintiffs and their attorneys get a windfall, and a cost that the administrator incurs may be passed on to the other plan participants. With a realistic appreciation of this dynamic, the Second Circuit tried to formulate a rule that would w…