ERISA Claim – Standing to Sue

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United States Supreme Court

Case Name: James J. Thole, et al., v. U.S. Bank N.A., et al.,

Case No.: 17-1712

Focus: ERISA Claim – Standing to Sue

Plaintiffs James Thole and Sherry Smith are retired participants in U. S. Bank’s defined-benefit retirement plan, which guarantees them a fixed payment each month regardless of the plan’s value or its fiduciaries’ good or bad investment decisions. Both have been paid all of their monthly pension benefits so far and are legally and contractually entitled to those payments for the rest of their lives. Nevertheless, they filed a putative class-action suit against U. S. Bank and others (collectively, U. S. Bank) under the Employee Retirement Income Security Act of 1974 (ERISA), alleging that the defendants violated ERISA’s duties of loyalty and prudence by poorly investing the plan’s assets. They request the repayment of approximately $750 million to the plan in losses suffered due to mismanagement; injunctive relief, including replacement of the plan’s fiduciaries; and attorney’s fees. The District Court dismissed the case, and the Eighth Circuit affirmed on the ground that the plaintiffs lack statutory standing.

Because Thole and Smith have no concrete stake in the lawsuit, they lack Article III standing. See Lujan v. Defenders of Wildlife, 504 U. S. 555, 560–561. Win or lose, they would still receive the exact same monthly benefits they are already entitled to receive. None of the plaintiffs’ arguments suffices to establish Article III standing. First, the plaintiffs rely on a trust analogy in arguing that an ERISA participant has an equitable or property interest in the plan and that injuries to the plan are therefore injuries to the participants. But participants in a defined-benefit plan are not similarly situated to the beneficiaries of a private trust or to participants in a defined contribution plan, and they possess no equitable or property interest in the plan, see Hughes Aircraft Co. v. Jacobson, 525 U. S. 432, 439–441. Second, the plaintiffs cannot assert representative standing based on injuries to the plan where they themselves have not “suffered an injury in fact,” Hollingsworth v. Perry, 570 U. S. 693, 708, or been legally or contractually appointed to represent the plan. Third, the fact that ERISA affords all participants—including defined-benefit plan participants—a cause of action to sue does not satisfy the injury-in-fact requirement here. “Article III standing requires a concrete injury even in the context of a statutory violation.” Spokeo, Inc. v. Robins, 578 U. S. ___, ___. Fourth, the plaintiffs contend that meaningful regulation of plan fiduciaries is possible only if they may sue to target perceived fiduciary misconduct. But this Court has long rejected that argument for Article III standing, see Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U. S. 464, 489, and defined-benefit plans are regulated and monitored in multiple ways.

The plaintiffs’ amici assert that defined-benefit plan participants have standing to sue if the plan’s mismanagement was so egregious that it substantially increased the risk that the plan and the employer would fail and be unable to pay the participants’ future benefits. The plaintiffs do not assert that theory of standing here, nor did their complaint allege that level of mismanagement.

Affirmed

Dissenting: SOTOMAYOR, J., filed a dissenting opinion, in which GINSBURG, BREYER, and KAGAN, JJ., joined.

Concurring: THOMAS, J., filed a concurring opinion, in which GORSUCH, J., joined.

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.