Earlier today, the U.S. Supreme Court affirmed a decision by the Eighth Circuit holding that ERISA plan participants lack Article III standing to sue for breach of fiduciary duty to recover investment losses in a defined benefit fund that was not underfunded.  The Court concluded that the participants lacked a concrete stake in the dispute because they would receive the full value of their promised benefits regardless of the outcome.  In so holding, the Court rejected all four of plaintiffs’ alternative standing arguments, finding that: (i) in the defined benefit plan context, the trust law principle that an injury to the plan is an injury to the participant is inapplicable because participants’ benefits are fixed and do not depend on the value of the plan; (ii) asserting a claim on behalf of an ERISA plan under Section 502(a) does not alleviate the requirement under Article III that the named plaintiff suffer an injury-in-fact; (iii) satisfying statutory standing (i.e., being a person authorized to sue to vindicate the statute) does not mean that a plaintiff “automatically” satisfies Article III’s injury-in-fact requirement; and (iv) the question of whether there are independent means to regulate fiduciary conduct is irrelevant to the Article III standing issue and, in any event, defined benefit plans are regulated and monitored in multiple ways, including by the Department of Labor.

Justice Thomas concurred in the Court’s opinion but wrote separately to again set forth his objection to the Court’s practice of using the common law of trusts as a “starting point” for interpreting ERISA instead of the language of ERISA itself.  Justice Sotomayor authored a lengthy dissent arguing that plan participants have standing to sue for violations of ERISA fiduciary duties regardless of whether the plan’s losses reduced participant benefits.

The case is Thole v. U.S. Bank, Nat’l Ass’n, 2020 WL 2814294 (U.S. June 1, 2020).

We will write separately to set forth Proskauer’s perspective on some of the potential implications of the Court’s ruling.

Posted in Standing
Tags: Article III, consitution, defined benefit plan, Standing, Thole, US Bank
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Photo of Russell Hirschhorn Russell Hirschhorn

“Russell has strong subject matter expertise.”

“Russ is extremely responsive and practical. He listens to the client perspective and is hands on and engaged, while also delegating work as appropriate.” 

-Chambers USA

Russell L. Hirschhorn is co-head of Proskauer’s premier ERISA Litigation Group…

“Russell has strong subject matter expertise.”

“Russ is extremely responsive and practical. He listens to the client perspective and is hands on and engaged, while also delegating work as appropriate.” 

-Chambers USA

Russell L. Hirschhorn is co-head of Proskauer’s premier ERISA Litigation Group, which is a significant component of the firm’s ERISA Practice Center and globally renowned Labor and Employment Law Department.  Russell’s practice focuses on employee benefits issues arising under the Employee Retirement Income Security Act of 1974 (ERISA), including class action and complex litigation, U.S. Department of Labor and Internal Revenue Service investigations, and counseling clients on best practices to avoid litigation.

Russell has more than two decades of experience representing plan sponsors, fiduciaries, trustees, and service providers across the country.  His work on behalf of clients has included all types of plans, including 401(k) plans, 403(b) plans, defined benefit plans, employee stock ownership plans, executive compensation plans, health and welfare plans, multiemployer plans, multiple employer plans, and severance plans.  And, it has included the full gamut of claims arising under ERISA, including excessive investment and plan administration fees and investment underperformance claims; cash balance plan litigation; claims for benefits; company stock fund cases; claims for delinquent contributions; ERISA § 510 claims; ERISA statutory claims; ESOP litigation; executive compensation claims; independent contractor claims; independent fiduciary representations; multiemployer fund litigation; plan service provider claims; recoupment of plan overpayments; retiree benefits claims; severance plan claims; and withdrawal liability claims.

Deeply dedicated to pro bono work, Russell has been recognized on several occasions for his commitment to pro bono work including by President George W. Bush in receiving the U.S. President’s Volunteer Service Award.  His pro bono work has included serving as lead litigation counsel in several impact litigations: on behalf of social security recipients whose benefits were unlawfully suspended based on an outstanding warrant, deaf and hard of hearing prisoners in Louisiana prisons seeking disability accommodations, and Swartzentruber Amish in upstate New York to obtain religious exemptions from certain building code requirements. Russell also was a principal drafter of several amicus briefs for the Innocence Project, a legal non-profit committed to exonerating wrongly convicted people.

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