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Will Supreme Court find a remedy for ERISA fiduciary breach?
November 25, 2007 by Ross Runkel at LawMemo
James LaRue had a 401(k) plan, but the plan's administrator didn't follow his investment instructions.
LaRue's 401(k) would have made a lot more money if the administrator had followed his instructions.
So LaRue sued DeWolff, Boberg & Associates, the administrator, claiming a breach of fiduciary duties. The suit came under ERISA, and the lower courts said that ERISA does not allow a remedy for this kind of case.
On November 26, 2007 the US Supreme Court will listen to oral arguments, and then make a decision some time in 2008. LaRue v. DeWolff, Boberg & Associates Inc. [Details; briefs] The United States Solicitor General participates in this oral argument as amicus curiae arguing in support of LaRue.
LaRue was a participant in a defined-contribution ERISA-covered 401(k) plan sponsored by his employer DeWolff. DeWolff administered the plan and thus was an ERISA fiduciary. LaRue claimed that DeWolff breached its fiduciary duties by failing to follow LaRue's instructions as to allocating funds among investment options, thus causing a loss of approximately $150,000 to his "interest in the plan."
LaRue sued under ERISA seeking to have DeWolff reimburse the ERISA plan. The trial court entered judgment on the pleadings in favor of DeWolff on the ground that the monetary relief sought by LaRue was unavailable under ERISA. The 4th Circuit affirmed on two grounds: (1) LaRue was claiming a loss to his account rather than a loss to the plan as a whole, and (2) LaRue was not seeking "equitable relief" within the meaning of ERISA Section 502(a).
The "Question Presented" in the petition for certiorari:
(1) Does § 502(a)(2) of ERISA permit a participant to bring an action to recover losses attributable to his account in a 'defined contribution plan' that were caused by fiduciary breach?(2) Does § 502(a)(3) permit a participant to bring an action for monetary “make-whole” relief to compensate for losses directly caused by fiduciary breach (known in pre-merger courts of equity as "surcharge")?
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Editor: Ross Runkel, Professor of Law Emeritus. email Ross@LawMemo.Com, Phone 503-399-8028. Copyright LawMemo, Inc.
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